\nSECTION 8.15. Survival……………………………………………………24
\nSECTION 8.16. Captions……………………………………………………24
\nSECTION 8.17. Specific Performance…………………………………………24<\/p>\nSchedule 2.01 — Contributed Subsidiaries
\nSchedule 4.04 — Non-Income Tax Claims
\nSchedule 5.01 — Employee Matters
\n<\/c><\/s><\/caption>\n<\/table>\n
EXHIBITS
\nExhibit A Tax Separation Agreement
\nExhibit B Transition Services Agreement
\nExhibit C Intellectual Property Agreement
\nExhibit D Pitney Bowes Management Services Reseller Agreement
\nExhibit E Pitney Bowes of Canada Ltd. Reseller Agreement
\nExhibit F Vendor Financing Agreement
\nExhibit G-1 Form of Assignment and Novation Agreements
\nExhibit G-2 Form of Sublease Agreements
\nExhibit G-3 Form of Sublease and License Agreements<\/p>\n
iii<\/p>\n
DISTRIBUTION AGREEMENT<\/p>\n
DISTRIBUTION AGREEMENT dated as of _________________, 2001 (the
\n“Agreement”) between Pitney Bowes Inc., a Delaware corporation (“Pitney
\nBowes”), and Pitney Bowes Office Systems, Inc., a Delaware corporation
\n(“Office Systems”).<\/p>\n
W I T N E S S E T H:
\n——————-<\/p>\n
WHEREAS, Pitney Bowes, acting through the Office Systems Group
\n(as defined herein), currently conducts a number of businesses, including
\nproviding document imaging solutions through copiers, facsimile machines,
\nmulti-functional products and other related products.<\/p>\n
WHEREAS, Pitney Bowes has determined to transfer certain assets
\nto Office Systems and cause Office Systems to assume certain Liabilities (as
\ndefined herein) of Pitney Bowes;<\/p>\n
WHEREAS, the Board of Directors of Pitney Bowes has authorized
\nthe distribution to the holders of the issued and outstanding shares of common
\nstock, par value $.01 per share, of Pitney Bowes (together with the associated
\npreferred share purchase rights, the “Pitney Bowes Common Stock”) as of the
\nrecord date of 100% of the issued and outstanding shares of common stock, par
\nvalue $.01 per share, of Office Systems (together with the associated preferred
\nshare purchase rights, the “Office Systems Common Stock”), on the basis of 0.08
\nshares of Office Systems Common Stock for each one share of Pitney Bowes Common
\nStock (the “Distribution”); and<\/p>\n
WHEREAS, the parties hereto have determined to set forth the
\nprincipal corporate and other transactions required to effect the Distribution
\nand to set forth other agreements that will govern certain other matters prior
\nto and following the Distribution.<\/p>\n
NOW, THEREFORE, in consideration of the mutual covenants
\ncontained in this Agreement, the parties hereby agree as follows:<\/p>\n
ARTICLE 1
\n DEFINITIONS<\/p>\n
SECTION 1.01. Definitions. The following terms, as used herein,
\nhave the following meanings:<\/p>\n
“Action” means any demand, claim, suit, action, arbitration,
\ninquiry, investigation or other proceeding by or before or any Governmental
\nAuthority or any arbitration or mediation tribunal.<\/p>\n
“Affiliate” means, with respect to any Person, any Person
\ndirectly or indirectly controlling, controlled by, or under common control with,
\nsuch other Person; provided, however, that for purposes of this Agreement, any
\nPerson who was a member of both Groups prior to the Distribution shall be deemed
\nto be an Affiliate only of the Group of which such Person is a member following
\nthe Distribution. For the purposes of this definition, “control” means the
\npossession, directly or indirectly, of the power to direct or cause the
\ndirection of the management and policies of a Person, whether through the
\nownership of voting securities, by contract or otherwise; and the terms
\n“controlling” and “controlled” have meanings correlative to the foregoing. Any
\ncontrary provision of this Agreement notwithstanding, neither Pitney Bowes nor
\nany of its Subsidiaries shall be deemed to be an Affiliate of Office Systems.<\/p>\n
“Agreement” has the meaning set forth in the preamble hereto, as
\nsuch agreement may be amended and supplemented from time to time in accordance
\nwith its terms.<\/p>\n
“Ancillary Agreement” means each of the Tax Separation Agreement,
\nthe Transition Services Agreement, the Intellectual Property Agreement, the
\nReseller Agreements, the Vendor Financing Agreement, the Assignment and Novation
\nAgreements, the Sublease Agreements, the Sublease and License Agreements and the
\nCredit Agreement.<\/p>\n
“Assignment and Novation Agreements” means the Assignment and
\nNovation Agreements entered or to be entered into among Pitney Bowes, Office
\nSystems and the several landlords party thereto in connection with the
\nDistribution.<\/p>\n
“Canada Reseller Agreement” means the Reseller Agreement dated as
\nof the date hereof between Pitney Bowes of Canada Ltd. and Office Systems.<\/p>\n
“Commission” means the Securities and Exchange Commission.<\/p>\n
2<\/p>\n
“Credit Agreement” means the Credit Agreement dated
\n ——
\nbetween Office Systems and Merrill Lynch.<\/p>\n
“Distribution” has the meaning set forth in the recitals to this
\nAgreement.<\/p>\n
“Distribution Agent” means EquiServe Trust Company, N.A.<\/p>\n
“Distribution Date” means the day as of which the Distribution
\nshall be effected.<\/p>\n
“Distribution Documents” means all of the agreements and other
\ndocuments entered into in connection with the Distribution as contemplated
\nhereby, including, without limitation, this Agreement and the Ancillary
\nAgreements.<\/p>\n
“Environmental Laws” means any and all federal, state, local and
\nforeign statutes, laws, judicial decisions, regulations, ordinances, rules,
\njudgments, orders, decrees, codes, plans, permits, licenses and governmental
\nrestrictions, whether now or hereafter in effect, relating to the environment,
\nthe effect of the environment on human health or to emissions, discharges,
\nreleases, manufacturing, storage, processing, distribution, use, treatment,
\ndisposal, transportation or handling of pollutants, contaminants, petroleum or
\npetroleum products, chemicals or industrial, toxic, radioactive or hazardous
\nsubstances or wastes or the clean-up or other remediation thereof.<\/p>\n
“Exchange Act” means the Securities Exchange Act of 1934, as
\namended, and the rules and regulations promulgated thereunder.<\/p>\n
“Finally Determined” means, with respect to any Action or other
\nmatter, that the outcome or resolution of such Action or matter has been
\njudicially determined by judgment or order not subject to further appeal or
\ndiscretionary review.<\/p>\n
“Form 10” means the registration statement on Form 10 initially
\nfiled by Office Systems with the Commission on April 18, 2001 to effect the
\nregistration of Office Systems Common Stock pursuant to the Exchange Act in
\nconnection with the Distribution, as such registration statement may be amended
\nor supplemented from time to time.<\/p>\n
“Group” means, as the context requires, the Office Systems Group
\nor the Pitney Bowes Group.<\/p>\n
3<\/p>\n
“Income Taxes” has the meaning set forth in the Tax Separation
\nAgreement.<\/p>\n
“Indemnified Party” has the meaning set forth in Section 4.04.<\/p>\n
“Indemnifying Party” has the meaning set forth in Section 4.04.<\/p>\n
“Information Statement” means the Final Information Statement to
\nbe sent to each holder of Pitney Bowes Common Stock in connection with the
\nDistribution.<\/p>\n
“Intellectual Property Agreement” means the Intellectual Property
\nAgreement dated as of the date hereof between Pitney Bowes and Office Systems.<\/p>\n
“IRS” means the Internal Revenue Service.<\/p>\n
“Liabilities” means any and all claims, debts, liabilities and
\nobligations, absolute or contingent, matured or not matured, liquidated or
\nunliquidated, accrued or unaccrued, known or unknown, whenever arising,
\nincluding all costs and expenses relating thereto, and including, without
\nlimitation, those debts, liabilities and obligations arising under this
\nAgreement, any law, rule, regulation, any action, order, injunction or consent
\ndecree of any governmental agency or entity, or any award of any arbitrator of
\nany kind, and those arising under any agreement, commitment or undertaking.<\/p>\n
“Losses” means, with respect to any Person, any and all damage,
\nloss, liability and expense incurred or suffered by such Person (including,
\nwithout limitation, reasonable expenses of investigation and reasonable
\nattorneys’ fees and expenses in connection with any and all Actions or
\nthreatened Actions).<\/p>\n
“Management Services Reseller Agreement” means the Reseller
\nAgreement dated as of the date hereof between Pitney Bowes Management Services
\nand Office Systems.<\/p>\n
“Non-Income Taxes” has the meaning set forth in the Tax
\nSeparation Agreement.<\/p>\n
“NYSE” has the meaning set forth in Section 3.01.<\/p>\n
“Office Systems” has the meaning set forth in the preamble.<\/p>\n
“Office Systems Balance Sheet” means the most recent balance
\nsheet of Office Systems as reflected in the final Information Statement of
\nOffice Systems.<\/p>\n
4<\/p>\n
“Office Systems Business” means the business of Office Systems
\nand its Subsidiaries as conducted by the office systems division of Pitney Bowes
\n(except for the facsimile business conducted by Pitney Bowes of Canada Ltd.) as
\nof the date hereof, including document imaging solutions and related products
\nand maintenance.<\/p>\n
“Office Systems Common Stock” has the meaning set forth in the
\nrecitals to this Agreement.<\/p>\n
“Office Systems Group” means Office Systems and its Subsidiaries
\nas of and after the Distribution Date (including all predecessors to such
\nPersons).<\/p>\n
“Office Systems Liabilities” means all (i) Liabilities of the
\nOffice Systems Group under this Agreement, (ii) except for the liabilities
\naccrued as of the Distribution Date to the accounts reflected on Schedule 2.02
\nand as otherwise specifically provided herein or in any Ancillary Agreement,
\nother Liabilities, whether arising before, on or after the Distribution Date, of
\nor relating to the Office Systems Group or arising from or in connection with
\nthe conduct of the Office Systems Business or the ownership or use of assets in
\nconnection therewith, including without limitation any Liabilities for
\nNon-Income Taxes and any Liabilities arising under or relating to Environmental
\nLaws, and (iii) Liabilities of the Office Systems Group set forth in Schedule
\n5.01 hereto. Notwithstanding the foregoing, “Office Systems Liabilities” shall
\nexclude: (x) any Liabilities for Income Taxes (since such Liabilities shall be
\ngoverned by the Tax Separation Agreement), (y) any Liabilities specifically
\nretained or assumed by Pitney Bowes pursuant to this Agreement.<\/p>\n
“Person” means an individual, corporation, limited liability
\ncompany, partnership, association, trust or other entity or organization,
\nincluding a governmental or political subdivision or an agency or
\ninstrumentality thereof.<\/p>\n
“Pitney Bowes” has the meaning set forth in the preamble.<\/p>\n
“Pitney Bowes Common Stock” has the meaning set forth in the
\nrecitals to this Agreement.<\/p>\n
“Pitney Bowes Group” means Pitney Bowes and its Subsidiaries
\n(other than any Subsidiary or member of, or other entity in, the Office Systems
\nGroup).<\/p>\n
“Pitney Bowes Liabilities” means all Liabilities of the Pitney
\nBowes Group under this Agreement, including the liabilities accrued as of the
\nDistribution Date to the accounts reflected on Schedule 2.02, except as
\notherwise specifically provided herein or in any Ancillary Agreements, other
\nLiabilities,<\/p>\n
5<\/p>\n
5<\/p>\n
whether arising before, on or after the Distribution Date, of or relating to the
\nPitney Bowes Group or arising from or in connection with the conduct of the
\nbusinesses of the Pitney Bowes Group (other than the Office Systems Business) or
\nthe ownership or use of assets in connection therewith, including without
\nlimitation any Liabilities arising under or relating to Environmental Laws.
\nNotwithstanding the foregoing, “Pitney Bowes Liabilities” shall exclude (x) any
\nLiabilities for Income Taxes (since such Liabilities shall be governed by the
\nTax Separation Agreement) and (y) any Liabilities specifically retained or
\nassumed by Office Systems pursuant to this Agreement.<\/p>\n
“Record Date” means the date determined by Pitney Bowes’ Board of
\nDirectors (or determined by a committee of such Board of Directors pursuant to
\nauthority delegated to such committee by Pitney Bowes’ Board of Directors) as
\nthe record date for determining the holders of Pitney Bowes Common Stock
\nentitled to receive the Distribution.<\/p>\n
“Restated Office Systems Charter” has the meaning set forth in
\nSection 3.02.<\/p>\n
“Securities Act” means the Securities Act of 1933, as amended,
\nand the rules and regulations promulgated thereunder.<\/p>\n
“Sublease Agreements” means each of the Sublease Agreements
\nentered or to be entered into between Pitney Bowes and Office Systems.<\/p>\n
“Sublease and License Agreements” means each of the Sublease
\nAgreements entered or to be entered into between Pitney Bowes and Office
\nSystems.<\/p>\n
“Subsidiary” means, with respect to any Person, any other entity
\nof which securities or other ownership interests having ordinary voting power to
\nelect a majority of the board of directors or other persons performing similar
\nfunctions are at the time directly or indirectly owned by such Person.<\/p>\n
“Tax” means Income Taxes and Non-Income Taxes, each as defined in
\nthe Tax Separation Agreement.<\/p>\n
“Tax Separation Agreement” means the Tax Separation Agreement
\ndated as of the date hereof between Pitney Bowes and Office Systems.<\/p>\n
“Third-Party Claim” has the meaning set forth in Section 4.05.<\/p>\n
“Transfer” has the meaning set forth in Section 2.02.<\/p>\n
6<\/p>\n
“Transition Services Agreement” means the Transition Services
\nAgreement dated as of the date hereof between Pitney Bowes and Office Systems.<\/p>\n
“Vendor Financing Agreement” means the Vendor Financing Agreement
\ndated as of the date hereof between Pitney Bowes Credit Corporation and Office
\nSystems.<\/p>\n
ARTICLE 2
\n CONTRIBUTIONS TO OFFICE SYSTEMS<\/p>\n
SECTION 2.01. Contribution of Contributed Subsidiaries. Prior to
\nthe Distribution Date, Pitney Bowes shall contribute or transfer to Office
\nSystems or to one or more wholly owned Subsidiaries of Office Systems, as
\nspecified by Office Systems, all the outstanding shares of capital stock of, or
\nother ownership interests in, each of the subsidiaries set forth in Schedule
\n2.01 hereto.<\/p>\n
SECTION 2.02. Transfers of Certain Assets; Assumption of Certain
\nLiabilities. (a) Prior to the Distribution Date, subject to receipt of any
\nnecessary consents or approvals of third parties or of Governmental Authorities
\nand subject to Section 7.03, Pitney Bowes shall, or shall cause the relevant
\nmember of the Pitney Bowes Group to, assign, contribute, convey, transfer and
\ndeliver (“Transfer”) to Office Systems or to one or more wholly-owned
\nSubsidiaries of Office Systems, as specified by Office Systems, all of the
\nright, title and interest of Pitney Bowes or such member of the Pitney Bowes
\nGroup in and to all assets held by any member of the Pitney Bowes Group that
\nrelate solely to the Office Systems Business (and not to the businesses of the
\nPitney Bowes Group including, without limitation, all assets reflected in the
\nOffice Systems Balance Sheet, subject to transactions in the ordinary course)
\nand Office Systems shall assume and take transfer of all Office Systems
\nLiabilities.<\/p>\n
SECTION 2.03. Agreement Relating to Consents Necessary to
\nTransfer Assets. Notwithstanding anything in this Agreement to the contrary,
\nthis Agreement shall not constitute an agreement to transfer or assign any asset
\nor any claim or right or any benefit arising thereunder or resulting therefrom
\nif an attempted assignment thereof, without the necessary consent of a third
\nparty, would constitute a breach or other contravention thereof or in any way
\nadversely affect the rights of Office Systems, or any member of the Office
\nSystems Group, or Pitney Bowes, or any member of the Pitney Bowes Group,
\nthereunder. Office Systems and Pitney Bowes will, subject to Section 7.03, use,
\nand cause the relevant members of the Office Systems Group or the Pitney Bowes
\nGroup, respectively, to use, their reasonable efforts to obtain the consent of
\nany third<\/p>\n
7<\/p>\n
party or any Governmental Authority, if any, required in connection with the
\ntransfer or assignment pursuant to Section 2.02 of any such asset or any claim
\nor right or any benefit arising thereunder. Until such required consent is
\nobtained, or if such consent cannot be obtained, or an attempted assignment
\nthereof would be ineffective or would adversely affect the rights of the
\ntransferor thereunder so that the intended transferee would not in fact receive
\nall such rights, Office Systems and Pitney Bowes will cooperate in a mutually
\nagreeable arrangement under which the intended transferee would obtain the
\nbenefits and assume the obligations thereunder in accordance with this
\nAgreement, including (but not limited to) sub-contracting, sub-licensing or
\nsub-leasing to such transferee, or under which the transferor would enforce for
\nthe benefit of the transferee and (except as otherwise provided herein or in any
\nAncillary Agreement) at the transferee’s expense any and all rights of the
\ntransferor against, with the transferee assuming the transferor’s obligations
\nto, each third party thereto. In the case of any Transfer involving a third
\nparty consent, the transferor shall not agree to any terms of transfer (without
\nprior written consent of the transferee) which have the effect of materially
\naltering the rights or benefits arising under any of the particular assets
\nsubject to the Transfer.<\/p>\n
ARTICLE 3
\n THE DISTRIBUTION<\/p>\n
SECTION 3.01. Cooperation Prior to the Distribution. (a) Pitney
\nBowes and Office Systems shall prepare, and Office Systems shall file with the
\nCommission, the Form 10, which shall include the Information Statement, and
\nwhich shall set forth appropriate disclosure concerning Office Systems and the
\nDistribution. Pitney Bowes and Office Systems shall use reasonable efforts to
\ncause the Form 10 to become effective under the Exchange Act as soon as
\npracticable. After the Form 10 has become effective, Pitney Bowes shall mail the
\nInformation Statement to the holders of Pitney Bowes Common Stock as of the
\nRecord Date.<\/p>\n
(b) Pitney Bowes and Office Systems shall cooperate in
\npreparing, filing with the Commission and causing to become effective any
\nregistration statements or amendments thereto that are appropriate to reflect
\nthe establishment of or amendments to any employee benefit and other plans
\ncontemplated by this Agreement and the Ancillary Agreements.<\/p>\n
(c) Pitney Bowes and Office Systems shall take all such action
\nas may be necessary or appropriate under the securities or blue sky laws of
\nstates or other political subdivisions of the United States and shall take
\nreasonable efforts to<\/p>\n
8<\/p>\n
comply with all applicable foreign securities laws in connection with the
\ntransactions contemplated by this Agreement and the Ancillary Agreements.<\/p>\n
(d) Office Systems shall prepare, file and pursue an
\napplication to permit listing of the Office Systems Common Stock on the New York
\nStock Exchange, Inc. (“NYSE”).<\/p>\n
SECTION 3.02. Pitney Bowes Board Action; Conditions Precedent to
\nthe Distribution. Pitney Bowes’ Board of Directors shall, in its discretion,
\nestablish (or delegate authority to establish) the Record Date and the
\nDistribution Date and any appropriate procedures in connection with the
\nDistribution. In no event shall the Distribution occur unless the following
\nconditions shall have been waived by Pitney Bowes or shall have been satisfied:<\/p>\n
(i) the Form 10 shall have become effective under the
\n Exchange Act;<\/p>\n
(ii) the Office Systems Common Stock to be delivered in the
\n Distribution shall have been approved for listing on the NYSE,
\n subject to official notice of issuance;<\/p>\n
(iii) the Board of Directors of Pitney Bowes shall be
\n satisfied that the Distribution will be made out of surplus
\n within the meaning of Section 170 of the General Corporation Law
\n of the State of Delaware;<\/p>\n
(iv) Pitney Bowes’ Board of Directors shall have approved
\n the Distribution and shall not have abandoned, deferred or
\n modified the Distribution at any time prior to the Record Date;<\/p>\n
(v) the contributions referred to in Section 2.01 of this
\n Agreement shall have been effected and the parties hereto shall
\n have complied with Section 2.02 of this Agreement;<\/p>\n
(vi) Office Systems’ Board of Directors, as named in the
\n Information Statement, shall have been elected by Pitney Bowes,
\n as sole stockholder of Office Systems, and Office Systems’
\n certificate of incorporation (the “Restated Office Systems
\n Charter”) and bylaws, in substantially the forms filed as
\n exhibits to the Form 10, shall be in effect;<\/p>\n
(vii) each of the Ancillary Agreements shall have been duly
\n executed and delivered by the parties thereto; and<\/p>\n
9<\/p>\n
(viii) Pitney Bowes shall have received a favorable ruling
\n from the Internal Revenue Service or a legal opinion from Pitney
\n Bowes’ counsel, Davis Polk & Wardwell, or another nationally
\n recognized law firm, stating that the Distribution qualifies as
\n tax-free to Pitney Bowes and its stockholders for United States
\n federal income tax purposes.<\/p>\n
SECTION 3.03. The Distribution. Subject to the terms and
\nconditions set forth in this Agreement, (i) prior to the Distribution Date,
\nPitney Bowes shall deliver to the Distribution Agent for the benefit of holders
\nof record of Pitney Bowes Common Stock on the Record Date, a stock certificate
\nor certificates, endorsed by Pitney Bowes in blank, representing 100% of the
\noutstanding shares of Office Systems Common Stock, (ii) the Distribution shall
\nbe effective on the Distribution Date and (iii) Pitney Bowes shall instruct the
\nDistribution Agent to distribute, on or as soon as practicable after the
\nDistribution Date, to each holder of record of Pitney Bowes Common Stock as of
\nthe Record Date 0.08 shares of Office Systems Common Stock for each one share of
\nPitney Bowes Common Stock so held. Office Systems agrees to provide all
\ncertificates for shares of Office Systems Common Stock that Pitney Bowes shall
\nrequire (after giving effect to Sections 3.04 and 3.05) in order to effect the
\nDistribution.<\/p>\n
SECTION 3.04. Subdivision of Office Systems Common Stock to
\nAccomplish the Distribution. Effective upon the filing of the Restated Office
\nSystems Charter with the Secretary of State of the State of Delaware, each share
\nof Office Systems Common Stock then issued and outstanding shall, without any
\naction on the part of the holder thereof, be subdivided and converted into that
\nnumber of fully paid and non-assessable shares of Office Systems Common Stock
\nissued and outstanding equal to the number of shares of Pitney Bowes Common
\nStock outstanding on the Record Date times 0.08 divided by the number of shares
\nof Office Systems Common Stock outstanding immediately prior to such filing.<\/p>\n
SECTION 3.05. Fractional Shares. No certificates representing
\nfractional shares of Office Systems Common Stock will be distributed in the
\nDistribution. The Distribution Agent will be directed to determine the number of
\nwhole shares and fractional shares of Office Systems Common Stock allocable to
\neach holder of Pitney Bowes Common Stock as of the Record Date. Upon the
\ndetermination by the Distribution Agent of such number of fractional shares, as
\nsoon as practicable after the Distribution Date, the Distribution Agent, acting
\non behalf of the holders thereof, shall sell such fractional shares for cash on
\nthe open market and shall disburse to each holder entitled thereto the
\nappropriate portion of the resulting cash proceeds (calculated by multiplying
\nthe average gross selling price per share times the number of fractional shares
\nallocable to such holder). Pitney Bowes shall bear the cost of all commissions
\nincurred in connection with the sale of fractional shares pursuant to this
\nSection 3.05.<\/p>\n
10<\/p>\n
ARTICLE 4
\n INDEMNIFICATION<\/p>\n
SECTION 4.01. Office Systems Indemnification of the Pitney
\nBowes Group. (a) Subject to Section 4.03, on and after the Distribution Date,
\nOffice Systems shall indemnify, defend and hold harmless the Pitney Bowes Group
\nand the respective directors, officers and Affiliates of each Person in the
\nPitney Bowes Group (the “Pitney Bowes Indemnitees”) from and against any and all
\nLosses incurred or suffered by any of the Pitney Bowes Indemnitees arising out
\nof, or due to the failure of any Person in the Office Systems Group to pay,
\nperform or otherwise discharge, any of the Office Systems Liabilities.<\/p>\n
(b) Subject to Section 4.03, on and after the Distribution
\nDate, Office Systems shall indemnify, defend and hold harmless each of the
\nPitney Bowes Indemnitees from and against the failure of Office Systems to
\nreimburse Pitney Bowes for the employee benefit related costs, expenses and fees
\nas set forth in Schedule 5.01 hereof.<\/p>\n
(c) Subject to Section 4.03, Office Systems shall indemnify,
\ndefend and hold harmless each of the Pitney Bowes Indemnitees and each Person,
\nif any, who controls any Pitney Bowes Indemnitee within the meaning of either
\nSection 15 of the Securities Act or Section 20 of the Exchange Act from and
\nagainst any and all Losses caused by any untrue statement or alleged untrue
\nstatement of a material fact contained in the Form 10 or any amendment thereof
\nor the Information Statement (as amended or supplemented if Office Systems shall
\nhave furnished any amendments or supplements thereto), or caused by any omission
\nor alleged omission to state therein a material fact necessary to make the
\nstatements therein, in the light of the circumstances under which they were
\nmade, not misleading, except insofar as such Losses are caused by any such
\nuntrue statement or omission or alleged untrue statement or omission arising out
\nof information furnished to Office Systems in writing by Pitney Bowes expressly
\nfor use therein.<\/p>\n
SECTION 4.02. Pitney Bowes Indemnification of Office Systems
\nGroup. (a) Subject to Section 4.03, on and after the Distribution Date, Pitney
\nBowes shall indemnify, defend and hold harmless the Office Systems Group and the
\nrespective directors, officers and Affiliates of each Person in the Office
\nSystems Group (the “Office Systems Indemnitees”) from and against any and all
\nLosses incurred or suffered by any of the Office Systems Indemnitees and arising
\nout of, or due to the failure of any Person in the Pitney Bowes Group to pay,
\nperform or otherwise discharge, any of the Pitney Bowes Liabilities.<\/p>\n
(b) Subject to Section 4.03, Pitney Bowes shall indemnify,
\ndefend and hold harmless each of the Office Systems Indemnitees and each Person,
\nif any,<\/p>\n
11<\/p>\n
who controls any Office Systems Indemnitee within the meaning of either Section
\n15 of the Securities Act or Section 20 of the Exchange Act from and against any
\nand all Losses caused by any untrue statement or alleged untrue statement of a
\nmaterial fact contained in the Form 10 or any amendment thereof or the
\nInformation Statement (as amended or supplemented if Office Systems shall have
\nfurnished any amendments or supplements thereto), or caused by any omission or
\nalleged omission to state therein a material fact necessary to make the
\nstatements therein, in the light of the circumstances under which they were
\nmade, not misleading, in each case to the extent, but only to the extent, that
\nsuch Losses are caused by any such untrue statement or omission or alleged
\nuntrue statement or omission arising out of information furnished to Office
\nSystems in writing by Pitney Bowes expressly for use therein.<\/p>\n
SECTION 4.03. Insurance; Third Party Obligations; Tax Benefits.
\nAny indemnification pursuant to Sections 4.01 or 4.02 shall be paid net of the
\namount of any insurance or other amounts that would be payable by any third
\nparty to the Indemnified Party (as defined below) in the absence of this
\nAgreement (irrespective of time of receipt of such insurance or other amounts)
\nand net of any tax benefit to the Indemnified Party attributable to the relevant
\npayment or Liability. Such indemnification shall be increased to reflect any tax
\nliability of the indemnified party so that the indemnified party receives 100%
\nof the after-tax amount of any payment or liability. It is expressly agreed that
\nno insurer or any other third party shall be (i) entitled to a benefit it would
\nnot be entitled to receive in the absence of the foregoing indemnification
\nprovisions, (ii) relieved of the responsibility to pay any claims to which it is
\nobligated or (iii) entitled to any subrogation rights with respect to any
\nobligation hereunder.<\/p>\n
SECTION 4.04. Notice and Payment of Claims. If any Pitney Bowes
\nIndemnitee or Office Systems Indemnitee (the “Indemnified Party”) determines
\nthat it is or may be entitled to indemnification by any party (the “Indemnifying
\nParty”) under Article 4 (other than in connection with any Action subject to
\nSection 4.05), the Indemnified Party shall deliver to the Indemnifying Party a
\nwritten notice specifying, to the extent reasonably practicable, the basis for
\nits claim for indemnification and the amount for which the Indemnified Party
\nreasonably believes it is entitled to be indemnified. The methodology for
\ndetermining claims for indemnification related to sales, use and personal
\nproperty taxes is set forth on Schedule 4.04 hereto. Within 30 days after
\nreceipt of such notice, the Indemnifying Party shall pay the Indemnified Party
\nsuch amount in cash or other immediately available funds unless the Indemnifying
\nParty objects to the claim for indemnification or the amount thereof. If the
\nIndemnifying Party does not give the Indemnified Party written notice objecting
\nto such indemnity claim and setting forth the grounds therefor within such
\n30-day period, the Indemnified Party shall give the Indemnifying Party an
\nadditional notice of its <\/p>\n
12<\/p>\n
claims for indemnification and if the Indemnifying Party does not give the
\nIndemnified Party written notice objecting to such claims within 10 days after
\nreceipt of such additional notice, the Indemnifying Party shall be deemed to
\nhave acknowledged its liability for such claim and the Indemnified Party may
\nexercise any and all of its rights under applicable law to collect such amount.
\nIn the event of such a timely objection by the Indemnifying Party, the amount,
\nif any, that is Finally Determined to be required to be paid by the Indemnifying
\nParty in respect of such indemnity claim shall be paid by the Indemnifying Party
\nto the Indemnified Party in cash within 15 days after such indemnity claim has
\nbeen so Finally Determined. Notice and payment of all Non-Income Tax Claims
\nshall be in accordance with the provisions of this Agreement and with a copy of
\nthe notice to:<\/p>\n
Pitney Bowes Office Systems, Inc.
\n 100 Oakview Drive
\n Trumbull, CT 06611
\n Telecopy: (203) 365-2349
\n Attention: Vice President-Tax<\/p>\n
SECTION 4.05. Notice and Defense of Third-Party Claims. Promptly
\nfollowing the earlier of (i) receipt of notice of the commencement by a third
\nparty of any Action against or otherwise involving any Indemnified Party or (ii)
\nreceipt of information from a third party alleging the existence of a claim
\nagainst an Indemnified Party, in either case, with respect to which
\nindemnification may be sought pursuant to this Agreement (a “Third-Party
\nClaim”), the Indemnified Party shall give the Indemnifying Party written notice
\nthereof. The failure of the Indemnified Party to give notice as provided in this
\nSection 4.05 shall not relieve the Indemnifying Party of its obligations under
\nthis Agreement, except to the extent that the Indemnifying Party is prejudiced
\nby such failure to give notice. Within 15 days after receipt of such notice, the
\nIndemnifying Party may (i) by giving written notice thereof to the Indemnified
\nParty, acknowledge liability for such indemnification claim and at its option
\nelect to assume the defense of such Third-Party Claim at its sole cost and
\nexpense (except as provided for in Schedule 4.04) or (ii) object to the claim
\nfor indemnification set forth in the notice delivered by the Indemnified Party
\npursuant to the first sentence of this Section 4.05; provided that if the
\nIndemnifying Party does not within such 15-day period give the Indemnified Party
\nwritten notice objecting to such indemnification claim and setting forth the
\ngrounds therefor, the Indemnified Party shall give the Indemnifying Party an
\nadditional notice of its claims for indemnification and if the Indemnifying
\nParty does not give the Indemnified Party written notice objecting to such
\nclaims within 10 days after receipt of such additional notice, the Indemnifying
\nParty shall be deemed to have acknowledged its liability for such
\nindemnification claim. If the Indemnifying Party has elected to assume the<\/p>\n
13<\/p>\n
defense of a Third-Party Claim, (x) the defense shall be conducted by counsel
\nretained by the Indemnifying Party and reasonably satisfactory to the
\nIndemnified Party, provided that the Indemnified Party shall have the right to
\nparticipate in such proceedings and to be represented by counsel of its own
\nchoosing at the Indemnified Party’s sole cost and expense; and (y) the
\nIndemnifying Party may settle or compromise the Third Party Claim without the
\nprior written consent of the Indemnified Party so long as such settlement
\nincludes an unconditional release of the Indemnified Party from all claims that
\nare the subject of such Third Party Claim, provided that the Indemnifying Party
\nmay not agree to any such settlement pursuant to which any remedy or relief,
\nother than monetary damages for which the Indemnifying Party shall be
\nresponsible hereunder, shall be applied to or against the Indemnified Party,
\nwithout the prior written consent of the Indemnified Party, which consent shall
\nnot be unreasonably withheld. If the Indemnifying Party does not assume the
\ndefense of a Third-Party Claim for which it has acknowledged liability for
\nindemnification hereunder, the Indemnified Party may require the Indemnifying
\nParty to reimburse it on a current basis for its reasonable expenses of
\ninvestigation, reasonable attorneys’ fees and reasonable out-of-pocket expenses
\nincurred in defending against such Third-Party Claim and the Indemnifying Party
\nshall be bound by the result obtained with respect thereto by the Indemnified
\nParty; provided that the Indemnifying Party shall not be liable for any
\nsettlement effected without its consent, which consent shall not be unreasonably
\nwithheld. The Indemnifying Party shall pay to the Indemnified Party in cash the
\namount, if any, for which the Indemnified Party is entitled to be indemnified
\nhereunder within 15 days after such Third Party Claim has been Finally
\nDetermined, in the case of an indemnity claim as to which the Indemnifying Party
\nhas acknowledged liability or, in the case of any indemnity claim as to which
\nthe Indemnifying Party has not acknowledged liability, within 15 days after such
\nIndemnifying Party’s objection to liability hereunder has been Finally
\nDetermined.<\/p>\n
SECTION 4.06. Contribution. If for any reason the indemnification
\nprovided for in Section 4.01 or 4.02 is unavailable to any Indemnified Party, or
\ninsufficient to hold it harmless, then the Indemnifying Party shall contribute
\nto the amount paid or payable by such Indemnified Party as a result of such
\nLosses in such proportion as is appropriate to reflect all relevant equitable
\nconsiderations.<\/p>\n
SECTION 4.07. Non-Exclusivity of Remedies. The remedies provided
\nfor in this Article 4 are not exclusive and shall not limit any rights or
\nremedies which may otherwise be available to any Indemnified Party at law or in
\nequity.<\/p>\n
14<\/p>\n
ARTICLE 5
\n EMPLOYEE MATTERS AND SERVICES<\/p>\n
SECTION 5.01. Employee Matters Generally. With respect to
\nemployee matters and employee benefits arrangements, the parties hereto agree as
\nset forth in Schedule 5.01.<\/p>\n
SECTION 5.02. Restriction on Solicitation or Employment of
\nEmployees. For a period of two years following the Distribution Date, each of
\nthe Pitney Bowes Group and the Office Systems Group agrees that (without the
\nprior written consent of the other) it will not, directly or indirectly, (i)
\nsolicit or otherwise attempt to induce or influence any employee of the other
\nGroup to terminate employment with his or her then-current employer or (ii)
\nemploy any employee of the other Group.<\/p>\n
Notwithstanding the foregoing, if an employee of either Group is
\nterminated or terminates employment within such two year period, the terminated
\nemployee may be hired by the other Group at any time after 180 days following
\nsuch employee’s termination; provided that the Group hiring such employee has
\nnot violated the provisions of the immediately preceding paragraph with respect
\nto such employee.<\/p>\n
SECTION 5.03. Notification of Termination of Employees. Office
\nSystems shall notify Pitney Bowes in writing within seven business days of the
\ndate of termination of employment of any Transferred Employee (as defined in
\nSection 2 of Schedule 5.01 hereof) from the Office System Group or a related
\ncompany.<\/p>\n
ARTICLE 6
\n ACCESS TO INFORMATION<\/p>\n
SECTION 6.01. Provision of Corporate Records. Immediately prior
\nto or as soon as practicable following the Distribution Date, each Group shall
\nprovide to the other Group all documents, contracts, books, records and data
\n(including but not limited to minute books, stock registers, stock certificates
\nand documents of title) in its possession relating to such other Group or such
\nother Group’s business and affairs; provided that if any such documents,
\ncontracts, books, records or data relate to both Groups or the business and
\noperations of both Groups, each such Group shall provide to the other Group true
\nand complete copies of such documents, contracts, books, records or data. Data
\nstored in electronic form shall be provided in the format in which it existed at
\nthe Distribution Date and, if requested, in hard copy (at the expense of the
\nrequesting party), except as otherwise specifically set forth in this Agreement
\nor any Ancillary Agreement.<\/p>\n
15<\/p>\n
SECTION 6.02. Access to Information. From and after the
\nDistribution Date, each Group shall, for a reasonable period of time, afford
\npromptly to the other Group and its accountants, counsel and other designated
\nrepresentatives reasonable access during normal business hours to all documents,
\ncontracts, books, records, computer data and other data in such Group’s
\npossession relating to such other Group or the business and affairs of such
\nother Group (other than data and information subject to an attorney\/client or
\nother privilege), insofar as such access is reasonably required by such other
\nGroup, including, without limitation, for audit, accounting, litigation,
\nregulatory compliance and disclosure and reporting purposes.<\/p>\n
SECTION 6.03. Litigation Cooperation. Each Group shall use
\nreasonable efforts to make available to the other Group and its accountants,
\ncounsel, and other designated representatives, upon written request, its
\ndirectors, officers, employees and representatives as witnesses, and shall
\notherwise cooperate with the other Group, to the extent reasonably required in
\nconnection with any Action arising out of either Group’s business and operations
\nprior to the Distribution Date in which the requesting party may from time to
\ntime be involved.<\/p>\n
SECTION 6.04. Reimbursement. Each Group providing information or
\nwitnesses to the other Group, or otherwise incurring any expense in connection
\nwith cooperating, under Sections 6.01, 6.02 or 6.03 shall be entitled to receive
\nfrom the recipient thereof, upon the presentation of invoices therefor, payment
\nfor all out-of-pocket costs and expenses as may be reasonably incurred in
\nproviding such information, witnesses or cooperation.<\/p>\n
SECTION 6.05. Retention of Records. Except as otherwise required
\nby law or agreed to in writing, each party shall, and shall cause the members of
\nits respective Group to, retain all information relating to the other Group’s
\nbusiness and operations in accordance with the past practice of such party.
\nNotwithstanding the foregoing, any party may destroy or otherwise dispose of any
\nsuch information at any time, provided that, prior to such destruction or
\ndisposal, (i) such party shall provide not less than 90 days’ prior written
\nnotice to the other party, specifying the information proposed to be destroyed
\nor disposed of and the scheduled date for such destruction or disposal, and (ii)
\nif the recipient of such notice shall request in writing prior to the scheduled
\ndate for such destruction or disposal that any of the information proposed to be
\ndestroyed or disposed of be delivered to such requesting party, the party
\nproposing the destruction or disposal shall promptly arrange for the delivery of
\nsuch of the information as was requested at the expense of the requesting party.<\/p>\n
SECTION 6.06. Confidentiality. Each party shall hold and shall
\ncause its directors, officers, employees, agents, consultants and advisors<\/p>\n
16<\/p>\n
(“Representatives”) to hold in strict confidence all information (other than any
\nsuch information relating solely to the business or affairs of such party)
\nconcerning the other party unless (i) such party is compelled to disclose such
\ninformation by judicial or administrative process or, in the opinion of its
\ncounsel, by other requirements of law or (ii) such information can be shown to
\nhave been (A) in the public domain through no fault of such party or (B)
\nlawfully acquired after the Distribution Date on a non-confidential basis from
\nother sources. Notwithstanding the foregoing, such party may disclose such
\ninformation to its Representatives so long as such Persons are informed by such
\nparty of the confidential nature of such information and are directed by such
\nparty to treat such information confidentially. If such party or any of its
\nRepresentatives becomes legally compelled to disclose any documents or
\ninformation subject to this Section, such party will promptly notify the other
\nparty so that the other party may seek a protective order or other remedy or
\nwaive such party’s compliance with this Section. If no such protective order or
\nother remedy is obtained or waiver granted, such party will furnish only that
\nportion of the information which it is advised by counsel is legally required
\nand will exercise its reasonable efforts to obtain reliable assurance that
\nconfidential treatment will be accorded such information. Such party agrees to
\nbe responsible for any breach of this Section by it and its Representatives.<\/p>\n
SECTION 6.07. Inapplicability of Article 6 to Tax Matters.
\nNotwithstanding anything to the contrary in Article 6, Article 6 shall not apply
\nwith respect to information, records and other matters relating to Taxes, all of
\nwhich shall be governed by the Tax Separation Agreement.<\/p>\n
ARTICLE 7
\n CERTAIN OTHER AGREEMENTS AND COVENANTS<\/p>\n
SECTION 7.01. Amounts Payable and Intercompany Accounts. (a) On
\nthe Distribution Date, Office Systems shall pay to Pitney Bowes an amount equal
\nto the sum of (i) $161,000,000 plus (ii) the aggregate amount of any additional
\nfunds advanced to the Office Systems Business by the Pitney Bowes Group between
\nAugust 1, 2001 and the Distribution Date. The amount of such payment which
\nexceeds the net intercompany balance payable from Office Systems to Pitney Bowes
\nshall be paid as a dividend.<\/p>\n
(b) All intercompany receivable, payable and loan balances in
\nexistence as of the Distribution Date between the Pitney Bowes Group and Office
\nSystems Group will be settled by payment of the amount set forth in Section
\n7.01(a).<\/p>\n
17<\/p>\n
SECTION 7.02. Covenants Not to Compete. (a) In consideration of
\nthe promises and representations of Pitney Bowes under this Agreement, Office
\nSystems covenants and agrees that, for a period of two years following the
\nDistribution Date, neither Office Systems nor any member of the Office Systems
\nGroup nor any of their respective successors or assigns will, directly or
\nindirectly, engage in, or have any interest (including, as agent, partner,
\nconsultant or shareholder) in any other person, firm, corporation or other
\nentity engaged in, any business activities, in the United States, the United
\nKingdom, Canada and Europe, competitive with or similar or related to the
\nbusiness or products (current and future) of the Pitney Bowes Group, as
\nreflected in Pitney Bowes’ most recent strategic plan dated March 2001 (the
\n“March 2001 Strategic Plan”) which includes the facilities management business,
\nas more fully described in paragraph (b) below.<\/p>\n
(b) The parties hereby agree that Pitney Bowes is engaged in
\nthe facilities management business. The parties further agree that the
\nfacilities management business consists of on site, off site, near site and
\nmultiple client location facilities management and outsourcing services aimed at
\nproviding total Integrated Mail and Document Management, and Document Resource
\nPlanning solutions defined as the delegation to a supplier of the creation,
\nproduction, mailing or electronic transmission, or fulfillment of any type of
\nprinted or electronic document. Included in this is mail center operations, mail
\ndelivery, literature fulfillment and supplies management, shipping and
\nreceiving, network fax, on-line image retrieval, central reprographics, color
\ncopy, convenience copy\/fleet management including asset management,
\nmicrofilming, color print, print-on-demand, network print, computer output to
\nmicrofilm (COM), CD output and electronic scanning and indexing. The facilities
\nmanagement vendor may assign specific business functions to either a business
\nspecializing in those functions or one that offers the service as a complement
\nto other offerings. The facilities management vendor may acquire a customer’s
\ndistributed network printers, copiers and operating personnel and could be
\nresponsible for all maintenance, network support services, equipment upgrades,
\nstaff training, and other activities. Notwithstanding the provisions of
\nparagraph (a) above, the parties acknowledge that (x) Office Systems may, within
\nthe facilities management business, engage in the business of selling,
\nmaintenance of and placing copier, facsimile and multi-functional products that
\nfax, copy, print and scan and related sales of software and supplies, even if
\nthis business competes with Pitney Bowes’ business; provided that (i) such
\ncompeting business is the only activity of Office Systems within the facilities
\nmanagement business and (ii) that such business is operated in a manner and on a
\nscale substantially consistent with past practice and the business of Office
\nSystems as of the Distribution Date, (y) Office Systems may engage in such
\ncompeting business to the extent required so that Office Systems may fulfill its
\nobligations under its existing contracts as of <\/p>\n
18<\/p>\n
the Distribution Date and (z) to the extent that Office Systems notifies Pitney
\nBowes of its desire to enter into a business, pursuant to a specific contract or
\ncustomer requirement, not otherwise permitted to be engaged in by Office Systems
\npursuant to Section 7.02 (a) or (b), Pitney Bowes may consent to Office Systems’
\nengaging in such competing business; provided that such consent shall not be
\nunreasonably withheld if but only if such competing business is limited to such
\nspecific contract or customer requirement and is determined by Pitney Bowes to
\nbe outside the scale and scope of its facilities management business. In such
\ncase, Pitney Bowes will use reasonable efforts to respond to Office Systems’
\nrequest in a timely manner.<\/p>\n
(c) In consideration of the promises and representations of
\nOffice Systems under this Agreement, Pitney Bowes covenants and agrees that, for
\na period of two years following the Distribution Date, neither Pitney Bowes nor
\nany member of the Pitney Bowes Group nor any of their respective successors or
\nassigns will, directly or indirectly, engage in, or have any interest
\n(including, as agent, partner, consultant or shareholder) in any other person,
\nfirm, corporation or other entity engaged in, any business activities, in the
\nUnited States, the United Kingdom or Europe (except the marketing and
\nmaintenance of copiers in the United Kingdom in a manner and on a scale
\nsubstantially consistent with past practice), competitive with the business or
\ncurrent products of the Office Systems Group as of the Distribution Date.<\/p>\n
(d) Notwithstanding the preceding paragraphs, if either party
\nacquires a firm, corporation or other entity (the “Acquired Business”) after the
\nDistribution Date, that party may operate the Acquired Business in a manner
\nsubstantially consistent with past practice, even if a portion of the Acquired
\nBusiness is in competition with the other party’s business; provided that the
\ncompeting portion of the Acquired Business is incidental to the Acquired
\nBusiness, taken as a whole.<\/p>\n
(e) If Pitney Bowes at any time asserts that Office Systems is
\nin violation of the non-compete clause set forth in Section 7.02 of this
\nAgreement, based on Office Systems engagement in business activities which
\nPitney Bowes believes to be competitive with or similar or related to business
\nor products reflected in the March 2001 Strategic Plan, Office Systems shall be
\nentitled to an audit of the March 2001 Strategic Plan by a nationally-recognized
\nauditing firm. The scope of any such audit shall be limited to a determination
\nof Pitney Bowes’ plans to enter into any such business or offer any products
\nthat it asserts Office Systems has entered into or offered in violation of
\nSection 7.02. All costs of any such audit shall be borne by the party against
\nwhom the dispute is resolved.<\/p>\n
SECTION 7.03. Further Assurances and Consents. In addition to the
\nactions specifically provided for elsewhere in this Agreement, each of the
\nparties <\/p>\n
19<\/p>\n
hereto shall use its reasonable efforts to take, or cause to be taken, all
\nactions, and to do, or cause to be done, all things, reasonably necessary,
\nproper or advisable under applicable laws, regulations and agreements or
\notherwise to consummate and make effective the transactions contemplated by this
\nAgreement, including but not limited to using its reasonable efforts to obtain
\nany consents and approvals and to make any filings and applications necessary or
\ndesirable in order to consummate the transactions contemplated by this
\nAgreement; provided that no party hereto shall be obligated to pay any
\nconsideration therefor (except for filing fees and other similar charges) to any
\nthird party from whom such consents or approvals are requested or to take any
\naction or omit to take any action if the taking of or the omission to take such
\naction would be unreasonably burdensome to the party, its Group or its Group’s
\nbusiness.<\/p>\n
ARTICLE 8
\n MISCELLANEOUS<\/p>\n
SECTION 8.01. Notices. All notices and other communications to any party
\nhereunder shall be in writing (including telecopy or similar writing) and,
\nexcept as noted, shall be deemed given when received addressed as follows:<\/p>\n
If to Pitney Bowes, to:<\/p>\n
Pitney Bowes Inc.
\n 1 Elmcroft Road
\n Stamford, CT 06926-0700
\n Telecopy: (203) 351-7691
\n Attention: Amy C. Corn
\n Title: Vice President and Corporate Secretary<\/p>\n
With a copy to:<\/p>\n
Davis Polk & Wardwell
\n 450 Lexington Avenue
\n New York, New York 10017
\n Telecopy: (212) 450-4800
\n Attention: Sarah J. Beshar<\/p>\n
If to Office Systems, to:<\/p>\n
Pitney Bowes Office Systems, Inc.
\n 100 Oakview Drive
\n Trumbull, CT 06611
\n Telecopy: (203) [ – ]
\n Attention: Chief Executive Officer<\/p>\n
20<\/p>\n
With a copy to:<\/p>\n
Pitney Bowes Office Systems, Inc.
\n 100 Oakview Drive
\n Trumbull, CT 06611
\n Telecopy: (203) 365-2353
\n Attention: General Counsel<\/p>\n
Any party may, by written notice so delivered to the other parties, change the
\naddress to which delivery of any notice shall thereafter be made.<\/p>\n
SECTION 8.02. Amendments; No Waivers. (a) Any provision of this
\nAgreement may be amended or waived if, and only if, such amendment or waiver is
\nin writing and signed, in the case of an amendment, by Pitney Bowes and Office
\nSystems, or in the case of a waiver, by the party against whom the waiver is to
\nbe effective.<\/p>\n
(b) No failure or delay by any party in exercising any right,
\npower or privilege hereunder shall operate as a waiver thereof nor shall any
\nsingle or partial exercise thereof preclude any other or further exercise
\nthereof or the exercise of any other right, power or privilege. The rights and
\nremedies herein provided shall be cumulative and not exclusive of any rights or
\nremedies provided by law.<\/p>\n
SECTION 8.03. Expenses. Except as specifically provided otherwise
\nin this Agreement or any Ancillary Agreement, all costs and expenses incurred by
\nthe Pitney Bowes Group in connection with the Distribution and related
\ntransactions shall be paid by Pitney Bowes, and all costs and expenses incurred
\nby the Office Systems Group in connection with the Distribution and related
\ntransactions shall be paid by Office Systems. Without limiting the foregoing,
\nthe parties agree that Office Systems shall be responsible for and pay the fees,
\nexpenses and other amounts payable to the lenders under Office Systems’ credit
\nfacilities and all other fees and expenses incurred in connection therewith.<\/p>\n
SECTION 8.04. Insurance Matters. (a) From and after the date of
\nthis Agreement, Pitney Bowes shall not take or fail to take any action if such
\naction or inaction, as the case may be, would adversely affect the applicability
\nof the insurance in effect on the date of this Agreement, listed on Schedule
\n8.04 hereto, including renewals thereof and applicable predecessor policies,
\nthat covers all or any part of the assets, liabilities, business or employees of
\nthe Office Systems Group with respect to events occurring prior to the
\nDistribution Date (“Applicable Insurance”), it being understood that in no event
\nshall Pitney Bowes be obligated to pay premiums with respect to periods after
\nthe Distribution Date in respect of Applicable Insurance.<\/p>\n
(b) Office Systems shall, with respect to any event pursuant to which
\ncoverage may be available under Applicable Insurance (without regard to whether
\nany deductible or coverage limits would apply), provide prompt notice (which
\nnotice shall, in any event, provide sufficient time for Pitney Bowes to provide
\nany required notices, make any required filings or otherwise obtain the benefit
\nof such Applicable Insurance) to Pitney Bowes of all applicable facts and
\ncircumstances relating to such event.<\/p>\n
(c) (i) With respect to claims under Applicable Insurance, Pitney
\nBowes will assist Office Systems in the processing of any such claims as to
\nwhich notice has been timely submitted by Office Systems to Pitney Bowes, it
\nbeing understood that Office Systems shall be liable for any and all costs,
\nexpenses, damages and liabilities associated with such claims to the extent not
\ncovered by Applicable Insurance, including deductibles payable as further
\ndescribed in this Section 8.04(c).<\/p>\n
(ii) With respect to Applicable Insurance where the relevant deductible
\nhas not been included in the accrual (referred to as “accrued insurance” on
\nSchedule 2.02 hereof) established by Pitney Bowes for such purpose, Office
\nSystems shall be liable for all of its costs and expenses in connection with
\nsuch claims, and Pitney Bowes will remit to Office Systems any insurance
\nproceeds paid through the Applicable Insurance policies subject to, and
\nsubsequent to, satisfaction of the condition that applicable deductible(s) have
\nbeen satisfied by Office Systems consistent with the terms of the Applicable
\nInsurance policy.<\/p>\n
(iii) With respect to Applicable Insurance where a deductible is not
\npayable either pursuant to the terms of the Applicable Insurance policy or
\nbecause the deductible is satisfied through accruals (referred to as “accrued
\ninsurance” on Schedule 2.02 hereof), as reflected on Schedule 8.04 hereto,
\nestablished by Pitney Bowes for such purpose, Office Systems shall not bear the
\nliability of an insurance deductible.<\/p>\n
(iv) With respect to all claims under any Applicable Insurance, in matters
\nwhere legal counsel is retained, Office Systems shall be required to use counsel
\nselected by Pitney Bowes and Pitney Bowes shall have the right to control any
\nsuch litigation, to the extent covered by Applicable Insurance and, provided,
\nhowever that Pitney Bowes shall not settle such litigation without the prior
\nconsent of Office Systems which consent shall not be unreasonably withheld,
\nalthough Office Systems shall be liable for all of its costs and expenses in
\nconnection with such claims (including the fees and expenses in connection with
\nsuch claims to the extent not covered by Applicable Insurance (including the
\nfees and expenses of such counsel)), provided that Office Systems shall have the
\nright to reject such counsel, subject to the approval of Pitney Bowes, such
\napproval not to be unreasonably withheld.<\/p>\n
(d) The parties agree that, to the extent that the Applicable Insurance
\napplies directly or indirectly to any assets, liabilities, business or employees
\nof the Office Systems Group, such Applicable Insurance shall be limited to
\ninsured events occurring prior to the Distribution Date. It is further
\nunderstood that such Applicable Insurance shall also be for the benefit of
\nPitney Bowes Group to the extent directly or indirectly applicable to any
\nassets, liabilities, business or employees of Pitney Bowes Group. In no event
\nshall Pitney Bowes be liable to Office Systems for any amounts in excess of
\nmoneys received by Pitney Bowes in respect of Applicable Insurance.<\/p>\n
(e) All notices to be delivered to Pitney Bowes pursuant to this Section
\n8.04 shall be delivered to Deborah Fasoli, Risk Manager, Pitney Bowes Inc., 1
\nElmcroft Road, Stamford, CT 06926-0700, Telecopy: 203-351-6878, with a copy to:
\nAmy C. Corn, Vice President and Corporate Secretary, Pitney Bowes Inc., 1
\nElmcroft Road, Stamford, CT 06926-0700, Telecopy: 203-351-7691.<\/p>\n
21<\/p>\n
SECTION 8.05. Successors and Assigns. The provisions of this
\nAgreement shall be binding upon and inure to the benefit of the parties hereto
\nand their respective successors and assigns; provided that neither party may
\nassign, delegate or otherwise transfer any of its rights or obligations under
\nthis Agreement without the consent of the other parties hereto. If any party or
\nany of its successors or assigns (i) shall consolidate with or merge into any
\nother Person and shall not be the continuing or surviving corporation or entity
\nof such consolidation or merger or (ii) shall transfer all or substantially all
\nof its properties and assets to any Person, then, and in each such case, proper
\nprovisions shall be made so that the successors and assigns of such party shall
\nassume all of the obligations of such party under the Distribution Documents.<\/p>\n
SECTION 8.06. Governing Law. This Agreement shall be construed in
\naccordance with and governed by the law of the State of New York, without regard
\nto the conflicts of laws rules thereof.<\/p>\n
SECTION 8.07. Counterparts; Effectiveness. This Agreement may be
\nsigned in any number of counterparts, each of which shall be an original, with
\nthe same effect as if the signatures thereto and hereto were upon the same
\ninstrument. This Agreement shall become effective when each party hereto shall
\nhave received a counterpart hereof signed by the other parties hereto.<\/p>\n
SECTION 8.08. Entire Agreement. This Agreement and the other
\nDistribution Documents constitute the entire understanding of the parties with
\nrespect to the subject matter hereof and thereof and supersedes all prior
\nagreements, understandings and negotiations, both written and oral, between the
\nparties with respect to the subject matter hereof and thereof. No
\nrepresentation, inducement, promise, understanding, condition or warranty not
\nset forth herein or in the other Distribution Documents has been made or relied
\nupon by any party hereto. Neither this Agreement nor any provision hereof is
\nintended to confer upon any Person other than the parties hereto any rights or
\nremedies hereunder. To the extent that the provisions of this Agreement are
\ninconsistent with the provisions of any other Distribution Document, the
\nprovisions of such other Distribution Document shall prevail.<\/p>\n
SECTION 8.09. Tax Separation Agreement. Except as otherwise
\nprovided herein and not inconsistent with the Tax Separation Agreement, this
\nAgreement shall not govern any Income Tax, and any and all Liabilities relating
\nto Income Taxes shall be exclusively governed by the Tax Separation Agreement.<\/p>\n
SECTION 8.10. Jurisdiction. Any Action seeking to enforce any
\nprovision of, or based on any matter arising out of or in connection with, this
\nAgreement or the transactions contemplated hereby may be brought in the United
\nStates District <\/p>\n
22<\/p>\n
Court for the Southern District of New York or any other New York State court
\nsitting in New York County, and each of the parties hereby consents to the
\njurisdiction of such courts (and of the appropriate appellate courts therefrom)
\nin any such suit, action or proceeding and irrevocably waives, to the fullest
\nextent permitted by law, any objection which it may now or hereafter have to the
\nlaying of the venue of any such suit, action or proceeding in any such court or
\nthat any such suit, action or proceeding which is brought in any such court has
\nbeen brought in an inconvenient form. Process in any such suit, action or
\nproceeding may be served on any party anywhere in the world, whether within or
\nwithout the jurisdiction of any such court. Without limiting the foregoing, each
\nparty agrees that service of process on such party as provided in Section 8.01
\nshall be deemed effective service of process on such party.<\/p>\n
SECTION 8.11. Existing Arrangements. Except as otherwise
\ncontemplated hereby or by the other Distribution Documents, all prior agreements
\nand arrangements, including those relating to goods, rights or services provided
\nor licensed, between the Office Systems Group and the Pitney Bowes Group shall
\nbe terminated effective as of the Distribution Date, if not theretofore
\nterminated. No such agreements or arrangements shall be in effect after the
\nDistribution Date unless embodied in the Distribution Documents.<\/p>\n
SECTION 8.12. Termination Prior to the Distribution. The Pitney
\nBowes Board of Directors may at any time prior to the Distribution abandon the
\nDistribution and, by notice to Office Systems, terminate this Agreement (whether
\nor not the Pitney Bowes Board of Directors has theretofore approved this
\nAgreement and\/or the Distribution).<\/p>\n
SECTION 8.13. Termination After the Distribution.<\/p>\n
(a) Termination of the Agreement. Except upon the mutual consent
\nof both parties hereto or an automatic termination as set forth in Section 8.13,
\nthis Agreement shall not be terminable until the third anniversary of the
\nDistribution Date, and thereafter shall be terminable upon six months’ prior
\nwritten notice by either party to the other party. Notwithstanding the
\nimmediately preceding sentence, (i) Pitney Bowes may terminate this Agreement
\n(but not Sections 5.02 and 7.02) at any time if Office Systems shall have failed
\nto perform any of its material obligations under this Agreement, Pitney Bowes
\nhas notified Office Systems in writing of such failure and such failure shall
\nhave continued for a period of 60 days after receipt by Office Systems of
\nwritten notice of such failure and (ii) Office Systems may terminate this
\nAgreement (but not Sections 5.02 and 7.02) at any time if Pitney Bowes shall
\nhave failed to perform any of its material obligations under this Agreement,
\nOffice Systems has notified Pitney Bowes in writing of such failure and such
\nfailure shall have continued for a period of 60 <\/p>\n
23<\/p>\n
days after receipt by Pitney Bowes of written notice of such failure. In
\naddition, a material default by one party of its obligations under Section 7.02
\nwill relieve the other party of its obligations under such Section 7.02, without
\nrelieving the defaulting party of any liability or obligation under such Section
\n7.02.<\/p>\n
(b) Termination of Covenant Not to Compete. Each party may, at
\nits option, terminate the provisions of Section 7.02 effective upon or after the
\nexpiration of one year from the Distribution Date; provided that such party has
\ngiven six months prior written notice of termination to the other party. Upon
\nsuch termination (i) all of the provisions of the non-compete set forth in
\nSection 7.02 shall cease to apply to each party; (ii) the license of the name
\nPitney Bowes (and the associated trademarks) to Office Systems as set forth
\nunder the provisions of the Intellectual Property Agreement shall terminate, (as
\nset forth in Section 11.04(d) of such Agreement) and (iii) the Canada Reseller
\nAgreement shall be automatically amended, upon notice of termination, to permit
\nPitney Bowes Canada to source its equipment requirements from alternative
\nsuppliers and to require Office Systems to continue to fulfill its obligations
\nto supply product, as required for an interim period not to exceed nine months
\nfrom the date of such notice, during which Pitney Bowes Canada can establish
\nalternative suppliers on acceptable terms.<\/p>\n
SECTION 8.14. Severability. If any one or more of the provisions
\ncontained in this Agreement should be declared invalid, illegal or unenforceable
\nin any respect, the validity, legality and enforceability of the remaining
\nprovisions contained in this Agreement shall not in any way be affected or
\nimpaired thereby so long as the economic or legal substance of the transactions
\ncontemplated hereby is not affected in any manner materially adverse to any
\nparty. Upon such a declaration, the parties shall modify this Agreement so as to
\neffect the original intent of the parties as closely as possible in an
\nacceptable manner so that the transactions contemplated hereby are consummated
\nas originally contemplated to the fullest extent possible.<\/p>\n
SECTION 8.15. Survival. All covenants and agreements of the
\nparties contained in this Agreement shall survive the Distribution Date
\nindefinitely, unless a specific survival or other applicable period is expressly
\nset forth herein.<\/p>\n
SECTION 8.16. Captions. The captions herein are included for
\nconvenience of reference only and shall be ignored in the construction or
\ninterpretation hereof.<\/p>\n
SECTION 8.17. Specific Performance. Each party to this Agreement
\nacknowledges and agrees that damages for a breach or threatened breach of any of
\nthe provisions of this Agreement would be inadequate and irreparable harm would<\/p>\n
24<\/p>\n
occur. In recognition of this fact, each party agrees that, if there is a breach
\nor threatened breach, in addition to any damages, the other nonbreaching party
\nto this Agreement, without posting any bond, shall be entitled to seek and
\nobtain equitable relief in the form of specific performance, temporary
\nrestraining order, temporary or permanent injunction, attachment, or any other
\nequitable remedy which may then be available to obligate the breaching party (i)
\nto perform its obligations under this Agreement or (ii) if the breaching party
\nis unable, for whatever reason, to perform those obligations, to take any other
\nactions as are necessary, advisable or appropriate to give the other party to
\nthis Agreement the economic effect which comes as close as possible to the
\nperformance of those obligations (including, but not limited to, transferring,
\nor granting liens on, the assets of the breaching party to secure the
\nperformance by the breaching party of those obligations).<\/p>\n
25<\/p>\n
IN WITNESS WHEREOF the parties hereto have caused this
\nDistribution Agreement to be duly executed by their respective authorized
\nofficers as of the date first above written.<\/p>\n
PITNEY BOWES INC.<\/p>\n
By: ——————————
\n Name:
\n Title:<\/p>\n
PITNEY BOWES OFFICE SYSTEMS, INC.<\/p>\n
By: ——————————
\n Name:
\n Title:<\/p>\n
26<\/p>\n
Schedule 2.01<\/p>\n
Contributed Subsidiaries<\/p>\n
None.<\/p>\n
Schedule 2.02<\/p>\n
Specified Accrued Liabilities<\/p>\n
ACCOUNT DESCRIPTION
\n——- ———–<\/p>\n
10600 PAYROLL ADVANCES
\n13000 PREPAID INSURANCE
\n13010 PREPAID POSTAGE
\n13050 PREPAID FIELD TRAVEL EXPENSE
\n13060 PREPAID RENT EXPENSE
\n13100 PREPAID REAL ESTATE TAXES
\n16590 RETIREMENT PAYROLL MISC ADJUSTS
\n16700 RELOCATION CLEARING ACCOUNT
\n16720 GRP UNIV LIFE EMP DEDUCTIONS
\n16730 PROP 7 CAS EMP DEDUCTIONS
\n16740 LONG TERM CARE-EMP DEDUCTIONS
\n16750 LEGAL – EMP DEDUCTIONS
\n16760 FIN PLANNING EMP DEDUCTIONS
\n16860 FICA TAXES CLEARING ACCOUNT
\n16880 UNEMPLOYMENT INS CLEARING ACCT
\n16910 DEFERRED 401K & 401A
\n16920 SPOUSE LIFE INSURANCE
\n16950 PERSONAL LIFE (PRE-TAX)
\n16970 CHILD LIFE INSURANCE
\n20140 UNCLAIMED COMPENSATION
\n20200 EMPLOYEE SAVINGS BOND DEDUCTION
\n20230 EMPLOYEE STOCK PURCH INSTALLMENT
\n20240 EMPLOYEE UNITED FUND DEDUCTIONS
\n20250 EMPLOYEES CR UND DED
\n20260 EMPLOYEE GARNISHMENT DEDUCTIONS
\n20280 RET EMPL WITH – GARNISHMENTS
\n20290 LTD EMPL WITH – GARNISHMENTS
\n21100 EMPLOYEES INCOME TAX DEDUCTIONS
\n21120 UNEMPLOYMENT INS TAX ACCRUED
\n21130 FEDERAL INS CONTRIBUTION TAX
\n21140 OTHER SALARY TAX ACCRUED
\n21200 SALES AND USE TAX ACCRUED
\n21190 ACCRUED M M I P
\n21340 ACCRUED PERFORMANCE BASED COMPEN
\n21380 ACCRUED KE EMPL INCEN PLAN COMP
\n21620 PAYROLL ACCRUAL
\n21640 LONG TERM DISABILITY-PRE TAX <\/p>\n
Schedule 2.02-Page 1<\/p>\n
21740 LONG TERM DISABILITY-POST TAX
\n21300 ACCRUED COMPANY-PAID 401K CONTRIB.
\n21320 RESERVE FOR EARLY RETIREMENT
\n21630 RETIREMENT PLAN TRUST FUND
\n21650 EXCESS BENEFIT PLAN
\n21610 ACCIDENT COMPENSATION
\n21760 DEFERRED INCENTIVE SAVINGS PLAN
\n21770 PBC BONUS EXCESS PRINCIPAL
\n21590 RETIREMENT MEDICAL LIABILITY
\n21560 POST EMPLOYMENT BENEFITS LIABILITY
\n21580 SUPPLEMENTAL OTHER POSTEMP BENE
\n20170 ACCRUED INSURANCE
\n21290 401K PLUS
\n21300 401K MATCH
\n21900 SHARE POWER
\n21910 ACCRUED 401K PLUS
\n16930 ACCIDENTAL DEATH
\n16950 PERSONAL LIFE ISN.
\n16560 EMPLOYEE GROUP MEDICAL
\n16770 EMPLOYEE METROPOOL COMMUTER DEDUCTION
\n21230 FIELD MISCELLANEOUS TAXES<\/p>\n
Schedule 2.02-Page 2<\/p>\n
Schedule 4.04<\/p>\n
Non-Income Tax Claims<\/p>\n
Sales, Use and Personal Property Taxes<\/p>\n
1. Sales and Use Taxes<\/p>\n
(a) Use Taxes. In the event of an audit adjustment related to any
\n ———
\nuse tax payable by Pitney Bowes for any period prior to August 1, 2001, Office
\nSystems will indemnify Pitney Bowes for the portion of such adjustment
\nreflecting Office Systems’ actual use tax liability.<\/p>\n
(b) Sales Taxes. In the event of an audit adjustment related to
\n ———–
\nany sales tax payable by Pitney Bowes for any period prior to August 1, 2001,
\nOffice Systems will indemnify Pitney Bowes for the same portion of such
\nadjustment that the total sales tax related to the Office Systems Business for
\nthe relevant period (excluding the effect of such adjustment) bears to the total
\nsales tax of Pitney Bowes (including the Office Systems Business) for the same
\nperiod (excluding the effect of such adjustment). The relevant period referred
\nto in the previous sentence shall be the period used by the tax auditor in
\ndetermining the sales tax audit adjustment.<\/p>\n
2. Personal Property Taxes<\/p>\n
(a) Fixed Assets Taxes. Office Systems will indemnify Pitney
\n ——————
\nBowes for any personal property taxes imposed on fixed assets that are a part of
\nthe Office Systems Business for any period prior to August 1, 2001 based on the
\nDistrict Office number, a plant code number or a cost center number of a
\nparticular asset.<\/p>\n
(b) Rental Equipment. Office Systems will indemnify Pitney Bowes
\n —————-
\nfor any personal property taxes imposed on rental equipment for any period prior
\nto August 1, 2001 in an amount equal to the same portion of the total personal
\nproperty taxes imposed on rental equipment that the Office Systems rental
\nequipment summary (“Schedule C-2”) value bears to the total Schedule C-2 value
\nas determined by the April, 2000 data used in preparation of the assessed value
\nfilings.<\/p>\n
3. Audit Cooperation<\/p>\n
In the case of any audits of taxes related to sales, use of
\nproperty or possession of personal property in any period prior to August 1,
\n2001, Pitney Bowes shall control such audits, provided that Pitney Bowes shall
\nkeep Office Systems fully informed of all material developments and shall permit
\nOffice<\/p>\n
Schedule 4.04-Page 1<\/p>\n
Systems a reasonable opportunity to participate in the resolution of any audit-
\nrelated issues.<\/p>\n
Schedule 4.04-Page 2<\/p>\n
Schedule 5.01<\/p>\n
Employee Matters<\/p>\n
SECTION 1. General. Except as otherwise set forth in this
\nSchedule 5.01, (a) Pitney Bowes shall retain (i) any and all liabilities
\nrelating to or arising out of any employee benefit or compensation arrangement
\nsponsored, maintained or contributed to by any member of the Pitney Bowes Group
\n(a “Plan”) in respect of any employee or former employee of any member of the
\nPitney Bowes Group who is not a Transferred Employee (as hereinafter defined),
\nand (ii) any and all liabilities relating to or arising out of any Plan in
\nrespect of all Transferred Employees that were incurred or are otherwise related
\nto any period prior to and including the Distribution Date and<\/p>\n
(b) Pitney Bowes shall have no liability relating to or arising
\nout of any Plan or otherwise in respect of Transferred Employees to the extent
\nthat any such liability is incurred or otherwise relates to any period after the
\nDistribution Date.<\/p>\n
SECTION 2. Employees. With respect to each individual who, as of
\nthe Distribution Date, is employed (including persons absent from active service
\nby reason of Short Term Disability or Long Term Disability, as hereinafter
\ndefined, or absent for reasons not relating to disability, whether paid or
\nunpaid) in the Office Systems Business (“Transferred Employees”), Office Systems
\nshall cause the employment of each Transferred Employee to be continued on the
\nDistribution Date, provided that nothing stated herein shall limit the right of
\nOffice Systems or any Subsidiary to terminate the employment of any Transferred
\nEmployee following the Distribution Date or to reduce or otherwise modify the
\nposition, responsibilities, compensation or benefits of any Transferred Employee
\nat any time. The employee benefit plans and arrangements maintained by Office
\nSystems shall give full service credit for purposes of eligibility and vesting
\n(and in connection with any vacation policy, for purposes of determining the
\nlevel of benefit) for any service on or prior to the Distribution Date of a
\nTransferred Employee with any member of the Pitney Bowes Group. For purposes of
\nthis Agreement, (i) “Short Term Disability” shall mean a condition with respect
\nto which an employee is receiving benefits, as of the Distribution Date, under
\nthe Pitney Bowes Short Term Disability Plan, and (ii) “Long Term Disability
\nBenefits” shall mean benefits under the Pitney Bowes Long Term Disability Plan.<\/p>\n
Schedule 5.01-Page 1<\/p>\n
SECTION 3. Qualified Retirement Plans.<\/p>\n
(a) (i) Pitney Bowes Pension Plan. Effective as of the Distribution
\n ————————-
\nDate, Transferred Employees (other than Transferred Employees whose age and
\nservice totaled more than 50 as of September 1, 1997, referred to herein as
\n“Transition Credit Employees”) shall cease accruals under the Pitney Bowes
\nPension Plan (“Pension Plan”). Subject to Section 3(a)(ii) hereof, Transferred
\nEmployees who have met the Pension Plan’s requirements for commencement of
\npayment of their Pension Plan benefits may begin to receive such benefits
\nfollowing the Distribution Date (it being understood that in some cases
\ncommencement of benefit payments will be required) in accordance with Pension
\nPlan provisions.<\/p>\n
(ii) Transition Credit Employees. Transition Credit Employees
\n —————————
\n shall continue to participate in the Pension Plan following the
\n Distribution for up to 3 years from the Distribution Date unless
\n a proper election is made to receive a distribution from the
\n Plan. Transition Credit Employees shall be eligible to receive a
\n distribution of their Pension Plan accruals in accordance with
\n Pension Plan provisions. Any Transition Credit Employee who
\n continues to participate in the Pension Plan following the
\n Distribution Date shall do so on the same terms and conditions as
\n other Pitney Bowes employees and shall have their service and
\n pensionable compensation with the Office Systems Group taken into
\n account in determining their benefit under the Pension Plan. The
\n rights and benefits of Transition Credit Employees under the
\n Pension Plan shall be set forth in the special amendment to the
\n Pension Plan intended to specifically govern such rights and
\n benefits, consistent with the provisions hereof, effective as of
\n the Distribution Date.<\/p>\n
(iii) Transferred Employees with at Least One and Less than 5
\n ————————————————————-
\n Years of Service. Transferred Employees who have completed at
\n —————-
\n least one and less than 5 years of service as of the Distribution
\n Date (“Short Service Employees”) shall have their period of
\n employment with the Office Systems Group credited towards
\n completion of the applicable vesting schedule under the Pension
\n Plan with full vesting occurring no later than December 31, 2003,
\n subject to their continued employment with Office Systems.
\n Transferred Employees who have not completed one year of service
\n as of the Distribution Date shall not be eligible to participate
\n in the Pension Plan and shall not have their periods of
\n employment at the Office Systems Group credited under the Pension
\n Plan for any purpose. The accrued benefit, if any, under the
\n Pension Plan of Short Service Employees shall not increase on
\n account of future service and compensation with the Office
\n Systems Group.<\/p>\n
specifically govern such rights and benefits, consistent with the
\n terms hereof, effective as of October 1, 2000.<\/p>\n
Schedule 5.01-Page 2<\/p>\n
(iv) No Transfer of Pension Plan Assets and Liabilities. No
\n ————————————————–
\n assets or liabilities of the Pension Plan shall be transferred to
\n or assumed by any member of the Office Systems Group in
\n connection with the Distribution. No member of the Office Systems
\n Group shall make any contributions to Pitney Bowes with respect
\n to the Pension Plan.<\/p>\n
(v) No Office Systems Pension Plan. No member of the Office
\n ——————————
\n Systems Group shall be required, or have any obligation, to
\n sponsor a defined benefit plan on or after the Distribution Date.<\/p>\n
(b) Pitney Bowes 401(k) Plan. (i) Prior to the Distribution
\n ————————
\nDate, Office Systems shall establish a defined contribution plan (the “OS 401(k)
\nPlan”) for the benefit of Transferred Employees, shall take all necessary
\naction, if any, to qualify such Plan under Section 401(a) and (k) of the Code
\nand shall make any and all filings and submissions to the appropriate
\ngovernmental agencies required to be made by it in connection with the transfer
\nof assets described below.<\/p>\n
(ii) As soon as practicable following the Distribution Date,
\n Pitney Bowes shall cause the trustee of the Pitney Bowes 401(k)
\n Plan (the “PB 401(k) Plan”) to transfer in the form of cash
\n (except to the extent otherwise provided below) the full account
\n balances of Transferred Employees (and beneficiaries thereof)
\n under the PB 401(k) Plan to the appropriate trustee as designated
\n by Office Systems under the trust agreement forming a part of the
\n OS 401(k) Plan; provided, however, that the portion of any such
\n account to which shares of Pitney Bowes common stock or Office
\n Systems common stock is credited or to which an outstanding plan
\n loan exists shall be transferred in kind to the OS 401(k) Plan.
\n As of the date of transfer, the account balances of the
\n Transferred Employees shall be credited with appropriate earnings
\n attributable to the period from the Distribution Date to the date
\n of transfer described herein or shall have been reduced by any
\n necessary benefit or withdrawal payments to or in respect of
\n Transferred Employees occurring during the period from the
\n Distribution Date to the date of transfer described herein.<\/p>\n
(iii) In consideration for the transfer of assets described
\n herein, Office Systems, shall, effective as of the date of
\n transfer described herein, assume all of the obligations of
\n Pitney Bowes in respect of the account balances accumulated by
\n Transferred Employees under the PB 401(k) Plan (exclusive of any
\n portion of such account balances that are paid or otherwise
\n withdrawn prior to the date of transfer described herein) with
\n respect to the account balances transferred to the OS 401(k)
\n Plan. Pitney Bowes hereby indemnifies Office Systems against and
\n agrees to hold it <\/p>\n
Schedule 5.01-Page 3<\/p>\n
harmless from any liabilities or claims (including claims for
\n benefits or for breach of fiduciary duties, but excluding claims
\n for benefits to the extent of the assets transferred hereunder)
\n relating to the PB 401(k) Plan (or the qualified status of that
\n Plan) that arose prior to the transfer of assets described herein
\n or that relate to the operation or administration of such Plan
\n prior to the transfer of assets. Office Systems hereby
\n indemnifies Pitney Bowes against and agrees to hold it harmless
\n from any liabilities or claims relating to the qualified status
\n of the OS 401(k) Plan or the operation or administration of such
\n Plan following the transfer of assets described herein.<\/p>\n
(iv) The rights and benefits of Transferred Employees under the
\n PB 401(k) Plan shall be set forth in a special amendment to such
\n Plan, consistent with the foregoing, effective as of the
\n Distribution Date.<\/p>\n
SECTION 4. Welfare Benefit Plans.<\/p>\n
(a) Welfare Plans. (i) For the period from the Distribution Date
\n ————-
\nthrough December 31, 2001 (“Benefit Transition Period”), Pitney Bowes shall
\ncontinue to provide benefits for Transferred Employees (and their eligible
\nspouses and dependants) to the extent provided to such individuals immediately
\nprior to the Distribution Date under its medical plan, dental plan, long-term
\ndisability plan, short-term disability policy, life insurance plan and
\naccidental death and dismemberment plan (“Pitney Bowes Welfare Plans”). Office
\nSystems shall promptly reimburse Pitney Bowes for the costs of such benefits
\nincurred during the Benefit Transition Period as follows:<\/p>\n
(A) Office Systems shall transfer to an
\n account designated by Pitney Bowes a cash amount,
\n based on historical claim levels, on the first day
\n of October 2001, November 2001, December 2001,
\n January 2002 and February 2002 as stipulated in
\n writing by Pitney Bowes to cover the payment of
\n claims by Transferred Employees and their eligible
\n spouses and dependants incurred under the Pitney
\n Bowes Medical Plan and Pitney Bowes Dental Plan
\n during the Benefit Transition Period. No later than
\n December 31, 2002, if the actual claims incurred
\n for these individuals during the Benefit Transition
\n Period are less than the aggregate estimated
\n payments described above, Pitney Bowes shall
\n transfer to Office Systems an amount equal to the
\n excess, and if the actual claims incurred for such
\n period are greater than the aggregate estimated
\n payments, Office Systems shall transfer in cash an
\n amount equal to the underpayment.<\/p>\n
SECTION 8. Severance. The continued employment by the Office
\nSystems Group of Transferred Employees after the Distribution Date shall not be
\ndeemed a<\/p>\n
Schedule 5.01-Page 4<\/p>\n
(B) As soon as practicable following the
\n Distribution Date, Pitney Bowes shall cause any
\n Transferred Employee who was receiving benefits
\n under the Pitney Bowes Long Term Disability Plan
\n to be covered by UNUM, or other replacement
\n carrier, such that following such transfer of
\n coverage, neither Pitney Bowes nor Office
\n Systems will be responsible or liable for the
\n income replacement benefits which would
\n otherwise be provided by the Pitney Bowes Long
\n Term Disability Plan. In addition, as soon as
\n practicable following December 31, 2001, Pitney
\n Bowes shall cause any Transferred Employee who
\n becomes entitled to benefits under the Pitney
\n Bowes Long Term Disability Plan during the
\n Benefit Transition Period to be covered by UNUM,
\n or other replacement carrier, such that
\n following such transfer of coverage, neither
\n Pitney Bowes nor Offices Systems will be
\n responsible or liable for the income replacement
\n benefits which would otherwise be provided by
\n the Pitney Bowes Long Term Disability Plan.
\n Office Systems shall reimburse Pitney Bowes in
\n cash on the last day of September 2001, October
\n 2001, November 2001 and December 2001, an amount
\n equal to the income replacement benefits
\n provided to Transferred Employees who become
\n eligible for such benefits under the Pitney
\n Bowes Long Term Disability Plan.<\/p>\n
(C) Office Systems shall provide to
\n Transferred Employees who are receiving income
\n replacement benefits under the Pitney Bowes Long
\n Term Disability Plan as of the Distribution Date
\n medical benefits which are comparable, in terms of
\n coverage and cost sharing arrangements, to the
\n medical benefits provided to active Transferred
\n Employees for a period of three years following the
\n Distribution Date.<\/p>\n
(ii) As of December 31, 2001, Office Systems will
\n cease participation in the foregoing Pitney Bowes Welfare Plans
\n and will establish or designate welfare plans within the meaning
\n of Section 3(2) of the Employee Retirement Income Security Act of
\n 1974, as amended, for the benefit of Transferred Employees (the
\n “Replacement Welfare Plans”). Claims incurred by Transferred
\n Employees on and after January 1, 2002 shall be the
\n responsibility of the Replacement Welfare Plans.<\/p>\n
(iii) During the Benefit Transition Period, Pitney
\n Bowes shall provide coverage and benefits for Transferred
\n Employees and their beneficiaries under Title X of the
\n Consolidated Omnibus Budget Reconciliation Act of 1985 and
\n Section 4980B of the Code and Office<\/p>\n
Schedule 5.01-Page 5<\/p>\n
Systems shall reimburse to Pitney Bowes the cost of providing
\n such benefits. For periods beginning after the Benefit Transition
\n Period, Office Systems shall assume full responsibility for the
\n provision of such benefits and Pitney Bowes shall have no
\n liability therefor.<\/p>\n
(b) Retiree Medical Plan. As of the Distribution Date,
\n ——————–
\nTransferred Employees shall not be eligible, or become eligible, to participate
\nin or receive benefits under the Pitney Bowes Retiree Medical Plan (the “Retiree
\nMedical Plan”) except as set forth below:<\/p>\n
(i) 55\/10 on the Distribution Date: Any Transferred Employee
\n ——————————
\n who has completed at least 10 years of service with Pitney Bowes
\n on or after attainment of age 45 and has attained at least age 55
\n as of the Distribution Date (each such Transferred Employee is
\n referred to as an “Eligible Transferred Employee” and is listed
\n on Schedule 5.4(b)(i) hereto) shall be entitled to participate in
\n the Retiree Medical Plan following termination of employment from
\n Office Systems. Each Eligible Transferred Employee’s
\n participation in the Retiree Medical Plan shall be subject to the
\n terms and conditions of such Plan as in effect at the time such
\n Employee claims benefits thereunder (other than the requirements
\n relating to eligibility to participate in such Plan), including
\n provisions of such Plan regarding the ability of Pitney Bowes to
\n amend, modify and terminate such Plan.<\/p>\n
(ii) 55\/10 within 3 years of the Distribution Date: Any
\n ———————————————
\n Transferred Employee who has (x) completed at least 10 years of
\n service with Pitney Bowes and Office Systems on or after
\n attainment of age 45 within 3 years of the Distribution Date and
\n (y) has attained age 55 within 3 years of the Distribution Date
\n (“Qualified Transferred Employee”) shall be entitled to
\n participate in the Retiree Medical Plan following termination of
\n employment from Office Systems. Each Qualified Transferred
\n Employee’s participation in the Retiree Medical Plan shall be
\n subject to the terms and conditions of such Plan as in effect at
\n the time such Employee claims benefits thereunder including any
\n requirements relating to eligibility to participate in such Plan
\n and Pitney Bowes’ right to amend, modify or terminate such Plan.
\n For example, if the eligibility requirements at the time such
\n Employee terminates employment from Office Systems and seeks
\n benefits under such Plan are age 60 with 15 years if service,
\n such Qualified Transferred Employee must satisfy such 60\/15
\n requirements.<\/p>\n
(iii) At least age 45: Any Transferred Employee who is at
\n —————<\/p>\n
least age 45 on the Distribution Date and (x) attains age 55 and
\n (y) completes at <\/p>\n
Schedule 5.01-Page 6<\/p>\n
least 10 years of service with Pitney Bowes and Office Systems on
\n or after attainment of age 45 and who is not covered in the above
\n eligibility groups shall be entitled to participate in the
\n Retiree Medical Plan as provided hereinafter. Such Transferred
\n Employee shall pay the entire cost of such coverage as determined
\n by Pitney Bowes. Such Transferred Employee’s participation in the
\n Retiree Medical Plan shall be subject to the terms and conditions
\n of such Plan as in effect at the time such Transferred Employee
\n claims benefits thereunder, including any requirements relating
\n to eligibility to participate in such Plan and Pitney Bowes’
\n right to amend, modify or terminate such Plan.<\/p>\n
SECTION 5. Workers Compensation. Office Systems shall be
\nresponsible for all workers compensation obligations related to claim events
\noccurring on or after the Distribution Date, with respect to any employee or
\nformer employee of the Office Systems Business, including, but not limited to,
\nany Transferred Employee. Pitney Bowes shall be responsible for all workers
\ncompensation obligations related to claim events occurring prior to the
\nDistribution Date with respect to any employee or former employee of the Office
\nSystems Business, including, but not limited to, any Transferred Employee.<\/p>\n
SECTION 6. Stock-Based Plans.<\/p>\n
(a) Pitney Bowes Stock Plan. Pitney Bowes and Office Systems
\n ———————–
\nshall use their reasonable best efforts to take all actions necessary or
\nappropriate so that each Transferred Employee who has been granted options on
\nthe common stock of Pitney Bowes pursuant to the Pitney Bowes Stock Plan and who
\nhas outstanding options as of the Distribution Date shall have such options
\nequitably adjusted to reflect a change in the fair market value of Pitney Bowes
\nfollowing the Distribution Date. In addition, such Transferred Employees shall
\nbe granted options on the common stock of Office Systems under the Office
\nSystems Stock Plan following the Distribution Date with an intrinsic value
\nintended to make up for the reduced intrinsic value occurring by reason of their
\nPitney Bowes options being adjusted. Transferred Employees shall not receive any
\nfurther grants of Pitney Bowes stock options following the Distribution Date.
\nFor purposes of Pitney Bowes stock options granted to Transferred Employees
\ndescribed herein, service with Office Systems will be recognized to satisfy any
\nvesting schedule with respect to such options that has not been satisfied as of
\nthe Distribution Date. The Distribution will not result in a termination of
\nemployment or otherwise be considered an exercise or forfeiture event under such
\nPlan or option award agreement. However, termination of employment from Office
\nSystems will be treated as a termination event under such Plan or option award
\nagreement. In any event, the rights and benefits of Transferred Employees under
\nthe Pitney Bowes Stock Plan shall be set forth in the special amendment to such
\nPlan intended to specifically govern such rights and benefits, consistent with
\nthe terms hereof, effective as of October 1, 2000.<\/p>\n
Schedule 5.01-Page 7<\/p>\n
(b) Employee Stock Purchase Plan. Transferred Employees shall
\n —————————-
\ncease participation in the Pitney Bowes Employee Stock Purchase Plan as of the
\nDistribution Date and shall have their payroll deductions as of such date paid
\nto them in accordance with the terms of such Plan. Transferred Employees shall
\nnot participate in such Plan following the Distribution Date.<\/p>\n
SECTION 7. Bonus and Profit Incentive Plans.<\/p>\n
(a) PBC and Annual Incentive Awards. Any Transferred Employee who
\n ——————————-
\nis eligible for incentive compensation pursuant to the Pitney Bowes Performance
\nBased Compensation Program or who is eligible for incentive compensation under
\nthe Pitney Bowes Key Employees’ Incentive Plan shall have any such incentive
\ncompensation paid to him or her as soon as practicable following the
\nDistribution Date. Any payments referred to in the preceding sentence shall be
\npaid by Pitney Bowes and based on the period of employment with Pitney Bowes
\nduring calendar year 2001 through the Distribution Date and shall be further
\nbased on the evaluation criteria customarily applied pursuant to the respective
\nincentive pay Program or Plan in which the Transferred Employee participates.
\nTransferred Employees shall not participate in any such Pitney Bowes Program or
\nPlan following the Distribution Date.<\/p>\n
(b) CIUs. Any Transferred Employee who is eligible for cash
\n —-
\nincentive units (“CIUs”) under the Pitney Bowes Long Term Incentive Program
\nshall have the value of his or her CIUs paid in cash in accordance with the
\nterms and conditions of such Program based on the number of completed months of
\nservice with Pitney Bowes during each 36 month CIU cycle and on the extent that
\nperformance-based targets associated with the CIUs are achieved. Any such CIU
\nshall be paid to each eligible Transferred Employee at the time other
\nparticipants in the CIU program receive their payments based on the completion
\nof a 36 month cycle. For purposes of this prorated calculation, the targeted
\npayout shall be multiplied by a fraction, the numerator of which is the
\nTransferred Employee’s total number of completed months of active service with
\nthe relevant Group during the particular CIU cycle through the Distribution Date
\nand the denominator of which is 36. Transferred Employees shall not participate
\nin such Program following the Distribution Date.<\/p>\n
(c) Excluded Arrangements. Mr. Marc C. Breslawsky entered into a
\n ———————
\nSeparation Agreement with Pitney Bowes effective as of October 27, 2000 and a
\nrelated letter agreement of the same date (collectively, the “MB Agreements”) in
\nwhich his rights and obligations under certain plans and arrangements of Pitney
\nBowes, identified therein, are separately described. Pitney Bowes and Offices
\nSystems agree that, in the case of Mr. Breslawsky, the MB Agreements shall not
\nbe affected by, and shall supersede any contrary provisions of, this
\nDistribution Agreement.<\/p>\n
Schedule 5.01 -Page 8<\/p>\n
SECTION 8. Severance. The continued employment by the Office
\nSystems Group of Transferred Employees after the Distribution Date shall not be
\ndeemed a severance of employment of such Transferred Employees from Pitney Bowes
\nfor purposes of any policy, Plan, program or agreement of Pitney Bowes or any of
\nits Subsidiaries that provides for the payment of severance, salary continuation
\nor similar benefits.<\/p>\n
SECTION 9. Deferred Compensation. Pitney Bowes shall retain as of
\nthe Distribution Date all of the obligations and liabilities of Pitney Bowes and
\nany of its Affiliates (including, without limitation, office systems as a
\ndivision thereof) for any Transferred Employee under all non-qualified deferred
\ncompensation and retirement plans of Pitney Bowes and its Affiliates and any
\nreserve or accrual in respect of such Transferred Employees shall be retained by
\nPitney Bowes.<\/p>\n
SECTION 10. No Third Party Beneficiaries. Neither Transferred
\nEmployees nor any current, former or retired employee of the Pitney Bowes Group
\nshall be entitled to enforce the provisions of this Schedule 5.01 against the
\nrespective parties as third party beneficiaries thereof.<\/p>\n
Schedule 5.01 -Page 9<\/p>\n
SCHEDULE 8.04
\n INSURANCE
\nOccurrence Policies
\nComprehensive Automobile Liability*
\nCommercial General\/Products Liability*
\nWorkers’ Compensation and Employers Liability*
\nAircraft Liability (Non-Owned)
\nFinancial Services Excess Umbrella
\nInternational Excess and Difference-In-Conditions
\nHealthCare Purchases Professional Liability
\nProperty (Global) including Ocean Cargo
\nTravel Accident
\nUmbrella (Excess) Liability<\/p>\n
*Accruals have been established to cover deductibles<\/p>\n
Claims Made Policies
\nSpecialty Errors & Ommissions Liability
\nEmployment Practices Liability
\nExecutive Risk Policies
\n Directors & Officers Liability
\n Fiduciary Liability
\n Kidnap\/Ransom and Extortion
\n Outside Directorship
\nExcess Directors & Officers Liability
\nExcess Fiduciary Liability
\nPollution and Remediation Legal Liability (3rd Party Dispositions)<\/p>\n
Schedule 8.04 -Page 1<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7831,8530],"corporate_contracts_industries":[9454],"corporate_contracts_types":[9622,9628],"class_list":["post-43382","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-imagistics-international-inc","corporate_contracts_companies-pitney-bowes-inc","corporate_contracts_industries-manufacturing__industrial","corporate_contracts_types-planning","corporate_contracts_types-planning__separation"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43382","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43382"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43382"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43382"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43382"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}