EXHIBIT (v)
Page 1 of 16
PITNEY BOWES SENIOR EXECUTIVE
SEVERANCE POLICY
(As Amended and Restated
Effective as of January 1, 2000)
FOR BOARD APPROVAL JULY 2000
EXHIBIT (v)
Page 2 of 16
PITNEY BOWES
SENIOR EXECUTIVE SEVERANCE POLICY
INDEX
SECTION ONE—Introduction and Purpose
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1.1
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Introduction and Purpose
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3
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SECTION
TWO—Definitions
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2.1
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Annual Incentive
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4
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2.2
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Annual Incentive Award
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4
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2.3
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Annual Salary
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4
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2.4
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Board
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4
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2.5
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Change of Control
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4
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2.6
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Code
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5
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2.7
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Company
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5
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2.8
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Date of the Change of Control
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5
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2.9
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Date of Termination
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5
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2.10
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Employee
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5
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2.11
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ERISA
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5
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2.12
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Participant
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5
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2.13
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Plan
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5
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2.14
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Restatement Effective Date
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5
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2.15
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Separation Period
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5
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SECTION THREE—Participation
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6
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SECTION FOUR—Separation
Benefits
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7
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SECTION FIVE—Termination of
Employment
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9
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SECTION SIX—Administration and
Claims
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11
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SECTION SEVEN—Amendment and
Termination
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12
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SECTION EIGHT—Certain Additional
Payments
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13
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SECTION NINE—Miscellaneous
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9.1
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Non-Alienability
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16
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9.2
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Eligibility for Other Benefits
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16
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9.3
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Unfunded Plan Status
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16
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9.4
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Validity and Severability
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16
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9.5
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Governing Law
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16
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9.6
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Plan Records
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16
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9.7
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Legal Service
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16
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EXHIBIT (v)
Page 3 of 16
SECTION ONE
INTRODUCTION AND
PURPOSE
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1.1
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The Pitney Bowes Senior Executive
Severance Policy was initially adopted in December 1995 and is
hereby amended and restated effective as of January 1, 2000. The
purpose of the Plan is to provide certain designated senior
executive employees with continued compensation and benefits,
subject to the specific terms and conditions set forth in the Plan,
in the event there is a Change of Control and the covered executive
incurs a Termination of Employment. In addition, the Plan is
intended to provide an incentive to covered executives to continue
to perform their job duties on behalf of the Company where the
Company is faced with a Change of Control. No Change of Control
occurred under the terms of the Plan as in effect prior to January
1, 2000.
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EXHIBIT (v)
Page 4 of 16
SECTION TWO
DEFINITIONS
For the purposes of the Plan, the following
words and phrases shall have the following respective meanings
unless the context clearly indicates otherwise.
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2.1
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“ Annual Incentive
” shall mean the annual Performance Based Compensation
Incentive that a Participant is eligible to earn pursuant to the
Pitney Bowes Key Employee Incentive Plan.
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2.2
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“ Annual Incentive
Award ” shall mean the highest Annual Incentive amount
Participant received in any of the three consecutive twelve month
periods prior to the Date of Termination.
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2.3
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“ Annual Salary ”
shall mean the Participant’s regular annual base salary in
effect immediately prior to his or her Date of Termination,
including cash compensation converted to other benefits under a
flexible benefit arrangement maintained by the Company or deferred
pursuant to a written plan or agreement with the Company, but
excluding any type of allowances, reimbursements, premium pay, Cash
Incentive Units, sign-on bonus, stock options and any actual gain
thereon, prizes, awards, special bonuses and incentive payments
other than the Annual Incentive Award.
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2.4
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“ Board ” shall
mean the Board of Directors of the Company.
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2.5
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“ Change of Control
” For purposes of this Plan, a “Change of
Control” shall be deemed to have occurred if:
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(i) there is an acquisition, in any
one transaction or a series of transactions other than from Pitney
Bowes Inc., by any individual, entity or group (within the meaning
of Section l3(d)(3) or l4(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), of beneficial
ownership (within the meaning of Rule 13(d)(3) promulgated under
the Exchange Act) of 20% or more of either the then outstanding
shares of common stock or the combined voting power of the then
outstanding voting securities of Pitney Bowes Inc. entitled to vote
generally in the election of directors, but excluding, for this
purpose, any such acquisition by Pitney Bowes Inc. or any of its
subsidiaries, or any employee benefit plan (or related trust) of
Pitney Bowes Inc. or its subsidiaries, or any corporation with
respect to which, following such acquisition, more than 50% of the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
the individuals and entities who were the beneficial owners,
respectively, of the common stock and voting securities of Pitney
Bowes Inc. immediately prior to such acquisition in substantially
the same proportion as their ownership, immediately prior to such
acquisition, of the then outstanding shares of Common stock or the
combined voting power of the then outstanding voting securities of
Pitney Bowes Inc. entitled to vote generally in the election of
directors, as the case may be; or
(ii) individuals who, as of January
1, 2000, constitute the Board (as of such date, the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board, provided that any individual
becoming a
EXHIBIT (v)
Page 5 of 16
director subsequent to January 1,
2000, whose election, or nomination for election by Pitney Bowes
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of
Pitney Bowes Inc. (as such terms are used in Rule 14(a)(l 1) or
Regulation l4A promulgated under the Exchange Act); or
(iii) there occurs either (A) the
consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of
the Company, in each case, with respect to which the individuals
and entities who were the respective beneficial owners of the
common stock and voting securities of Pitney Bowes Inc. immediately
prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization,
merger or consolidation, or (B) an approval by the shareholders of
Pitney Bowes Inc. of a complete liquidation of dissolution of
Pitney Bowes Inc. or of the sale or other disposition of all or
substantially all of the assets of Pitney Bowes Inc.
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2.6
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“ Code ” shall
mean the Internal Revenue Code of 1986, as amended from time to
time.
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2.7
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“ Company ” shall
mean Pitney Bowes Inc. and any successor thereto
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2.8
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“ Date of the Change of
Control ” shall mean the date on which a Change of
Control is determined to first occur.
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2.9
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“ Date of Termination
” shall mean the date on which a Participant incurs a
Termination of Employment as defined in Section hereof.
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2.10
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“ Employee ”
shall mean any regular full-time employee of the Company or a
subsidiary or affiliate of the Company, as determined by the
Company.
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2.11
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“ ERISA ” shall
mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations there under.
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2.12
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“ Participant ”
shall mean an Employee who is designated as a Participant pursuant
to Section III hereof
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2.13
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“ Plan ” shall
mean the Pitney Bowes Senior Executive Severance Policy.
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2.14
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“ Restatement Effective
Date ” shall mean January 1, 2000.
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2.15
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“ Separation Period
” shall mean (i) for Participants who are in Executive Bands
A, B, C, or D, the period beginning on a Participant’s Date
of Termination and ending on the third anniversary thereof (ii) for
Participants who are in Executive Bands E, F or G or who are
corporate officers of Pitney Bowes Inc. but do not participate in
the Long Term Incentive Program, the period beginning on a
Participant’s Date of Termination and ending on the second
anniversary thereof.
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EXHIBIT (v)
Page 6 of 16
SECTION THREE
PARTICIPATION
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3.1
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Each Employee who falls within
Executive Bands A, B, C, D, E, F or G, or who is a corporate
officer of Pitney Bowes Inc. shall be a Participant in the
Plan.
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3.2
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Prior to the time a Change of
Control has occurred, the Board may, in its sole discretion,
without notice, amend, modify or terminate the eligibility of
certain individual Employees or classes of Employees or
Participants to participate in the Plan; provided, however, that
such eligibility or participation may not be so amended, modified
or terminated in connection with an actual, threatened, or proposed
Change of Control in any manner which would result in an Employee
or Participant otherwise becoming ineligible to participate in the
Plan; and provided further that any amendment, modification or
termination of an Employee is or Participant’s participation
in the Plan occurring within one year prior to a Change of Control
shall be deemed to be in connection with an actual, threatened, or
proposed Change of Control and shall be void.
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In addition, when a Change of
Control occurs, all rights of an Employee or Participant to
eligibility and participation under the Plan shall vest and shall
be considered a contract right enforceable against the Company and
any successors thereto, subject to the terms and conditions
hereof.
EXHIBIT (v)
Page 7 of 16
SECTION FOUR
SEPARATION
BENEFITS
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4.1
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If any Participant incurs a
Termination of Employment within two years after a Change of
Control occurs (whether or not such termination is a result of such
Change of Control) or a Participant is terminated before a Change
of Control at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or otherwise in
connection with or in anticipation of a Change of Control, and a
Change of Control subsequently occurs, the Company shall pay such
Participant, within ten days of the Date of Termination, a cash
payment in one lump sum as determined in Section 4.2 hereof and the
benefits as determined in Sections 4.3 and 4.4 hereof. For purposes
of determining the benefits set forth in Sections 4.3 and 4.4, if
the Participant incurs a Termination of Employment following a
reduction of the Participant’s Annual Salary, opportunity to
earn an Annual Incentive, or other compensation or employee
benefits, such reduction shall be not be given effect.
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4.2
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The cash payment in one lump sum
described in Section 4.1 hereof shall be determined by aggregating
amounts described in Sections 4.2(a) and (b).
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(a)
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For a Participant in Executive Bands
A, B, C, or D, an amount equal to the product of (1) three times
(2) the sum of (x) the Participant’s Annual Salary and (y)
the Participant’s Annual Incentive Award.
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For a Participant in Executive Bands
E, F, or G, or who is a corporate officer of Pitney Bowes Inc but
does not participate in the Long Term Incentive Program, an amount
equal to the product of (1) two times (2) the sum of (x) the
Participant’s Annual Salary and (y) the Participant’s
Annual Incentive Award.
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(b)
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An amount equal to the difference
between (1) the lump sum actuarial equivalent of the benefit under
the Company’s qualified defined benefit retirement plan (the
“Retirement Plan”) and any excess or supplemental
retirement plans in which the Participant participates
(collectively, the “SERP”) which the Participant would
receive if his or her employment continued during the Separation
Period, assuming that the Participant’s compensation during
the Separation Period would have been equal to his or her
compensation as in effect immediately before the termination and
assuming the Participant is fully vested in his or her benefit
under the Retirement Plan as of the Date of Termination, and (2)
the lump sum actuarial equivalent of the Participant’s actual
benefit (paid or payable), if any, under the Retirement Plan and
the SERP as of the Date of Termination. The actuarial determination
hereunder shall be made as of the Date of Termination and the
actuarial assumptions used for purposes of determining actuarial
equivalence shall be no less favorable to the Participant than the
most favorable of those in effect under the Retirement Plan and the
SERP on the Date of Termination and the Effective Date.
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4.3
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During the Separation Period, the
Participant and his or her Dependents shall continue to be provided
with the medical, prescription drug, dental and life insurance and
other health and welfare benefits in which the
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EXHIBIT (v)
Page 8 of 16
Participant has coverage under the
plans or programs of the Company or its affiliates at the Date of
Termination as if the Participant’s employment had not been
terminated; provided, however, that if the Participant becomes
reemployed with another employer and is eligible to receive a
particular benefit described above under another employer-provided
plan, the medical and other welfare benefits described herein shall
be secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Participant for retiree medical, dental and life insurance benefits
under the Company’s plans, practices, programs and policies,
the Participant shall be considered to have remained employed
during the Separation Period and to have retired or terminated
employment on the last day of such period. The “COBRA”
continuation period for a Participant shall commence following the
last day of the Separation Period.
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4.4
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The Company shall, at its sole
expense as incurred, provide the Participant with outplacement
services the scope and provider of which shall be selected by the
Company, but at a cost to the Company of not more than the lesser
of (i) 12% of Annual Salary and (ii) fifty thousand dollars
($50,000.00).
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4.5
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To the extent any benefits described
in this Section 4.1 cannot be provided to the Participant pursuant
to the appropriate plan or program maintained for Company employees
in which a Participant participates, the Company shall provide such
benefits outside such plan or program at no additional cost
(including without limitation tax cost) to the
Participant.
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4.6
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The cash lump sum payment and
continuation benefits set forth in Sections 4.1, 4.2, 4.3 and 4.4
shall be payable in addition to, and not in lieu of, all other
accrued or vested or earned but deferred rights, options or other
benefits which may be owed to a Participant upon or following
termination, including but not limited to regular Annual Salary
earned but unpaid as of the Date of Termination, Annual Incentives
earned but unpaid as of the Date of Termination, accrued vacation
or sick pay, amounts or benefits payable under any incentive (other
than the Annual Incentive) or other compensation plans, stock
option plan, stock ownership plan, stock purchase plan,
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