Exhibit (vii)
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October 27, 2000
Xxxx X. Xxxxxxxxxx
RE: Separation Agreement
Dear Marc:
This letter is intended to provide you with the Company's understanding of how
the Separation Agreement between you and the Company dated October 27, 2000 (the
"Separation Agreement") will affect certain employee and executive benefit and
incentive plans and programs in which you participate if you incur a termination
of employment pursuant to the Separation Agreement. This letter will also serve
as the Company's commitment to administer these plans and programs in the manner
set forth below. The defined terms in this letter have the meanings that are
contained in the Separation Agreement unless a term is more specifically defined
in this Agreement.
Stock Options
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As of the Resignation Date, all outstanding stock options granted to you prior
to October 20, 2000 pursuant to the Company's 1991 Stock Plan or any successor
plan shall remain exercisable in accordance with their existing terms. Such
options shall expire on their stated expiration date; provided, however, options
granted prior to 1999 will expire on the earlier of (i) the fourth anniversary
of your termination from the Company or any company that is a spin-off of the
Company, as defined in the 1991 Stock Plan (a "Spin Off"), whichever occurs
later, and (ii) their original term.
The special option granted on October 20, 2000 ("Accelerated Option Grant")
shall vest and be exercisable in accordance with the terms and conditions set
forth in your award agreement. Such terms shall include a provision requiring
the forfeiture of the entire Accelerated Option Grant if you retire or
voluntarily resign from the Company or the Spin Off, prior to February 1, 2002.
If you retire or voluntarily resign from the Company or the Spin-off on or after
February 1, 2002, the Accelerated Option Grant shall become immediately 100%
vested and exercisable as of such retirement or voluntary resignation.
If you are terminated pursuant to Section 3 of the Separation Agreement prior to
February 1, 2002, the entire Accelerated Option Grant shall be immediately 100%
vested and exercisable as of the date of such termination. For purposes of the
1991 Stock Plan and options granted to you thereunder, your termination of
employment from the Company as a result of your employment with the Spin Off
shall not be treated as a retirement or other termination of employment from the
Company. The 1991 Stock Plan will be amended to reflect the terms and
conditions of the Accelerated Option Grant and other commitments described
herein, including the retirement, termination of employment, vesting and
exercise treatment with respect to the Spin Off.
The treatment of your stock options following the execution of the Separation
Agreement do not differ from that of any similarly situated executive of the
Company.
Deferred Incentive Savings Plan
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The Company will pay you as soon as practicable following the Resignation Date a
lump sum amount in cash equal to the balance of your accounts under the Deferred
Incentive Savings Plan pursuant to the payment provisions of the plan.
Retirement Plans
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The Company will treat your retirement plan benefits in the following manner:
(a) 401(k) Plan
As of the Resignation Date, your participation in and contributions to the
Pitney Xxxxx 401(k) Plan ("401(k) Plan") will cease. Your rights to a
distribution, rollover, forms of payment and deferral regarding your account
balance will be determined in accordance with the terms of the 401(k) Plan.
(b) Pension Plan
You will be credited during your Severance Period with service through March 31,
2004 in lieu of actual years of service with the Company for all purposes under
the Pitney Xxxxx Pension Plan, including determining your basic pension benefit
and any transition credits to which you may be entitled under the Pension Plan.
Your severance payment under Section 3 of the Separation Agreement and any PBC
incentive award under Section 4(a) of the Separation Agreement will be credited
as pensionable earnings. Any CIU payment made under Section 4(b) of the
Separation Agreement will not be credited as pensionable earnings in accordance
with the plan's existing provisions. If, after providing the service credit and
determining pensionable earnings as described in the preceding sentences, your
pension benefit under the Pension Plan exceeds the limits imposed by the plan
and applicable law, the excess amounts will be paid from the Pitney Xxxxx
Supplemental Pension Plan ("SERP"). If your employment with the Company
continues beyond March 31, 2004, you will continue to accrue pension benefits in
accordance with the terms and conditions of the Pension Plan and SERP.
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The determination and payment of your pension benefits under the Pension Plan
and the SERP remain in all respects subject to the terms and conditions of the
respective plans.
Sincerely,
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
AGREED TO AND ACCEPTED BY
__________________________
Xxxx X. Xxxxxxxxxx
__________________________
Date
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