Exhibit 10.3
DISTRIBUTION AGREEMENT
between
Pitney Xxxxx Inc.
and
Imagistics International Inc.
Dated as of November 1, 2001
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions...................................................1
ARTICLE 2
CONTRIBUTIONS TO IMAGISTICS
Section 2.01. Contribution of Contributed Subsidiaries......................6
Section 2.02. Transfers of Certain Assets; Assumption of Certain
Liabilities..................................................7
Section 2.03. Agreement Relating to Consents Necessary to Transfer Assets...7
ARTICLE 3
THE DISTRIBUTION
Section 3.01. Cooperation Prior to the Distribution.........................8
Section 3.02. Pitney Xxxxx Board Action; Conditions Precedent to the
Distribution.................................................8
Section 3.03. The Distribution..............................................9
Section 3.04. Subdivision of Imagistics Common Stock to Accomplish the
Distribution.................................................9
Section 3.05. Fractional Shares............................................10
ARTICLE 4
INDEMNIFICATION
Section 4.01. Imagistics Indemnification of the Pitney Xxxxx Group.........10
Section 4.02. Pitney Xxxxx Indemnification of Imagistics Group.............11
Section 4.03. Insurance; Third Party Obligations; Tax Benefits.............11
Section 4.04. Notice and Payment of Claims.................................11
Section 4.05. Notice and Defense of Third-Party Claims.....................12
Section 4.06. Contribution.................................................13
Section 4.07. Non-Exclusivity of Remedies..................................14
ARTICLE 5
EMPLOYEE MATTERS AND SERVICES
Section 5.01. Employee Matters Generally...................................14
Section 5.02. Restriction on Solicitation or Employment of Employees.......14
Section 5.03. Notification of Termination of Employees.....................14
ARTICLE 6
ACCESS TO INFORMATION
Section 6.01. Provision of Corporate Records...............................14
Section 6.02. Access to Information........................................15
Section 6.03. Litigation Cooperation.......................................15
Section 6.04. Reimbursement................................................15
Section 6.05. Retention of Records.........................................15
Section 6.06. Confidentiality..............................................16
Section 6.07. Inapplicability of Article 6 to Tax Matters..................16
ARTICLE 7
CERTAIN OTHER AGREEMENTS AND COVENANTS
Section 7.01. Amounts Payable and Intercompany Accounts....................16
Section 7.02. Covenants Not to Compete.....................................17
Section 7.03. Further Assurances and Consents..............................18
ARTICLE 8
MISCELLANEOUS
Section 8.01. Notices......................................................19
Section 8.02. Amendments; No Waivers.......................................20
Section 8.03. Expenses.....................................................20
Section 8.04. Insurance Matters............................................20
Section 8.05. Successors and Assigns.......................................22
Section 8.06. Governing Law................................................22
Section 8.07. Counterparts; Effectiveness..................................22
Section 8.08. Entire Agreement.............................................23
Section 8.09. Tax Separation Agreement.....................................23
Section 8.10. Jurisdiction.................................................23
Section 8.11. Existing Arrangements........................................23
Section 8.12. Termination Prior to the Distribution........................23
Section 8.13. Termination After the Distribution...........................24
Section 8.14. Severability.................................................24
Section 8.15. Survival.....................................................25
Section 8.16. Captions.....................................................25
Section 8.17. Specific Performance.........................................25
Schedule 2.01 -- Contributed Subsidiaries
Schedule 4.04 -- Non-Income Tax Claims
Schedule 5.01 -- Employee Matters
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EXHIBITS
Exhibit A Tax Separation Agreement
Exhibit B Transition Services Agreement
Exhibit C Intellectual Property Agreement
Exhibit D Pitney Xxxxx Management Services Reseller Agreement
Exhibit E Pitney Xxxxx of Canada Ltd. Reseller Agreement
Exhibit F Vendor Financing Agreement
Exhibit G-1 Form of Assignment and Novation Agreements
Exhibit G-2 Form of Sublease Agreements
Exhibit G-3 Form of Sublease and License Agreements
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DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT dated as of November 1, 2001 (the "Agreement")
between Pitney Xxxxx Inc., a Delaware corporation ("Pitney Xxxxx"), and
Imagistics International Inc., a Delaware corporation ("Imagistics").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Pitney Xxxxx, acting through the Imagistics Group (as defined
herein), currently conducts a number of businesses, including providing document
imaging solutions through copiers, facsimile machines, multi-functional products
and other related products.
WHEREAS, Pitney Xxxxx has determined to transfer certain assets to
Imagistics and cause Imagistics to assume certain Liabilities (as defined
herein) of Pitney Xxxxx;
WHEREAS, the Board of Directors of Pitney Xxxxx has authorized the
distribution to the holders of the issued and outstanding shares of common
stock, par value $.01 per share, of Pitney Xxxxx (together with the associated
preferred share purchase rights, the "Pitney Xxxxx Common Stock") as of the
record date of 100% of the issued and outstanding shares of common stock, par
value $.01 per share, of Imagistics (together with the associated preferred
share purchase rights, the "Imagistics Common Stock"), on the basis of 0.08
shares of Imagistics Common Stock for each one share of Pitney Xxxxx Common
Stock (the "Distribution"); and
WHEREAS, the parties hereto have determined to set forth the principal
corporate and other transactions required to effect the Distribution and to set
forth other agreements that will govern certain other matters prior to and
following the Distribution.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Action" means any demand, claim, suit, action, arbitration, inquiry,
investigation or other proceeding by or before or any Governmental Authority or
any arbitration or mediation tribunal.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such other
Person; provided, however, that for purposes of this Agreement, any Person who
was a member of both Groups prior to the Distribution shall be deemed to be an
Affiliate only of the Group of which such Person is a member following the
Distribution. For the purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. Any
contrary provision of this Agreement notwithstanding, neither Pitney Xxxxx nor
any of its Subsidiaries shall be deemed to be an Affiliate of Imagistics.
"Agreement" has the meaning set forth in the preamble hereto, as such
agreement may be amended and supplemented from time to time in accordance with
its terms.
"Ancillary Agreement" means each of the Tax Separation Agreement, the
Transition Services Agreement, the Intellectual Property Agreement, the Reseller
Agreements, the Vendor Financing Agreement, the Assignment and Novation
Agreements, the Sublease Agreements, the Sublease and License Agreements and the
Credit Agreement.
"Assignment and Novation Agreements" means the Assignment and Novation
Agreements entered or to be entered into among Pitney Xxxxx, Imagistics and the
several landlords party thereto in connection with the Distribution.
"Canada Reseller Agreement" means the Reseller Agreement dated as of the
date hereof between Pitney Xxxxx of Canada Ltd. and Imagistics.
"Commission" means the Securities and Exchange Commission.
"Credit Agreement" means the $225,000,000 Credit Agreement proposed to be
entered into in connection with the Distribution, among Imagistics, the
Guarantors party thereto, Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated, as Lead Arranger, Sole Book-Runner and Syndication Agent,
and Fleet Capital Corporation, as Administrative Agent, and Mizuho Financial
Group, as Documentation Agent, and the Lenders party thereto.
"Distribution" has the meaning set forth in the recitals to this Agreement.
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"Distribution Agent" means EquiServe Trust Company, N.A.
"Distribution Date" means the day as of which the Distribution shall be
effected.
"Distribution Documents" means all of the agreements and other documents
entered into in connection with the Distribution as contemplated hereby,
including, without limitation, this Agreement and the Ancillary Agreements.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, permits, licenses and governmental restrictions,
whether now or hereafter in effect, relating to the environment, the effect of
the environment on human health or to emissions, discharges, releases,
manufacturing, storage, processing, distribution, use, treatment, disposal,
transportation or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic, radioactive or hazardous substances or
wastes or the clean-up or other remediation thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Finally Determined" means, with respect to any Action or other matter,
that the outcome or resolution of such Action or matter has been judicially
determined by judgment or order not subject to further appeal or discretionary
review.
"Form 10" means the registration statement on Form 10 initially filed by
Imagistics (under its former name, Pitney Xxxxx Office Systems, Inc.) with the
Commission on April 18, 2001 to effect the registration of Imagistics Common
Stock pursuant to the Exchange Act in connection with the Distribution, as such
registration statement may be amended or supplemented from time to time.
"Group" means, as the context requires, the Imagistics Group or the Pitney
Xxxxx Group.
"Imagistics" has the meaning set forth in the preamble.
"Imagistics Balance Sheet" means the most recent balance sheet of
Imagistics as reflected in the final Information Statement of Imagistics.
"Imagistics Business" means the business of Imagistics and its Subsidiaries
as conducted by the office systems division of Pitney Xxxxx (except for the
facsimile business conducted by Pitney Xxxxx of Canada Ltd.) as of the
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date hereof, including document imaging solutions and related products and
maintenance.
"Imagistics Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Imagistics Group" means Imagistics and its Subsidiaries as of and after
the Distribution Date (including all predecessors to such Persons).
"Imagistics Liabilities" means all (i) Liabilities of the Imagistics Group
under this Agreement, (ii) except for the liabilities accrued as of the
Distribution Date to the accounts reflected on Schedule 2.02 and as otherwise
specifically provided herein or in any Ancillary Agreement, other Liabilities,
whether arising before, on or after the Distribution Date, of or relating to the
Imagistics Group or arising from or in connection with the conduct of the
Imagistics Business or the ownership or use of assets in connection therewith,
including without limitation any Liabilities for Non-Income Taxes and any
Liabilities arising under or relating to Environmental Laws, and (iii)
Liabilities of the Imagistics Group set forth in Schedule 5.01 hereto.
Notwithstanding the foregoing, "Imagistics Liabilities" shall exclude: (x) any
Liabilities for Income Taxes (since such Liabilities shall be governed by the
Tax Separation Agreement), (y) any Liabilities specifically retained or assumed
by Pitney Xxxxx pursuant to this Agreement.
"Income Taxes" has the meaning set forth in the Tax Separation Agreement.
"Indemnified Party" has the meaning set forth in Section 4.04.
"Indemnifying Party" has the meaning set forth in Section 4.04.
"Information Statement" means the Final Information Statement to be sent to
each holder of Pitney Xxxxx Common Stock in connection with the Distribution.
"Intellectual Property Agreement" means the Intellectual Property Agreement
dated as of the date hereof between Pitney Xxxxx and Imagistics.
"IRS" means the Internal Revenue Service.
"Liabilities" means any and all claims, debts, liabilities and obligations,
absolute or contingent, matured or not matured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including all costs
and expenses relating thereto, and including, without limitation, those debts,
liabilities and obligations arising under this Agreement, any law, rule,
regulation, any action, order, injunction or consent decree of any governmental
agency or
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entity, or any award of any arbitrator of any kind, and those arising under any
agreement, commitment or undertaking.
"Losses" means, with respect to any Person, any and all damage, loss,
liability and expense incurred or suffered by such Person (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any and all Actions or threatened Actions).
"Management Services Reseller Agreement" means the Reseller Agreement dated
as of the date hereof between Pitney Xxxxx Management Services and Imagistics.
"Non-Income Taxes" has the meaning set forth in the Tax Separation
Agreement.
"NYSE" has the meaning set forth in Section 3.01.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
governmental or political subdivision or an agency or instrumentality thereof.
"Pitney Xxxxx" has the meaning set forth in the preamble.
"Pitney Xxxxx Common Stock" has the meaning set forth in the recitals to
this Agreement.
"Pitney Xxxxx Group" means Pitney Xxxxx and its Subsidiaries (other than
any Subsidiary or member of, or other entity in, the Imagistics Group).
"Pitney Xxxxx Liabilities" means all Liabilities of the Pitney Xxxxx Group
under this Agreement, including the liabilities accrued as of the Distribution
Date to the accounts reflected on Schedule 2.02 , except as otherwise
specifically provided herein or in any Ancillary Agreements, other Liabilities,
whether arising before, on or after the Distribution Date, of or relating to the
Pitney Xxxxx Group or arising from or in connection with the conduct of the
businesses of the Pitney Xxxxx Group (other than the Imagistics Business) or the
ownership or use of assets in connection therewith, including without limitation
any Liabilities arising under or relating to Environmental Laws. Notwithstanding
the foregoing, "Pitney Xxxxx Liabilities" shall exclude (x) any Liabilities for
Income Taxes (since such Liabilities shall be governed by the Tax Separation
Agreement) and (y) any Liabilities specifically retained or assumed by
Imagistics pursuant to this Agreement.
"Record Date" means the date determined by Pitney Xxxxx' Board of Directors
(or determined by a committee of such Board of Directors pursuant to authority
delegated to such committee by Pitney Xxxxx' Board of Directors) as
5
the record date for determining the holders of Pitney Xxxxx Common Stock
entitled to receive the Distribution.
"Restated Imagistics Charter" has the meaning set forth in Section 3.02.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Sublease Agreements" means each of the Sublease Agreements entered or to
be entered into between Pitney Xxxxx and Imagistics.
"Sublease and License Agreements" means each of the Sublease Agreements
entered or to be entered into between Pitney Xxxxx and Imagistics.
"Subsidiary" means, with respect to any Person, any other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"Tax" means Income Taxes and Non-Income Taxes, each as defined in the Tax
Separation Agreement.
"Tax Separation Agreement" means the Tax Separation Agreement dated as of
the date hereof between Pitney Xxxxx and Imagistics.
"Third-Party Claim" has the meaning set forth in Section 4.05.
"Transfer" has the meaning set forth in Section 2.02.
"Transition Services Agreement" means the Transition Services Agreement
dated as of the date hereof between Pitney Xxxxx and Imagistics.
"Vendor Financing Agreement" means the Operating Agreement dated as of the
date hereof between Pitney Xxxxx Credit Corporation and Imagistics.
ARTICLE 2
CONTRIBUTIONS TO IMAGISTICS
Section 2.01. Contribution of Contributed Subsidiaries. Prior to the
Distribution Date, Pitney Xxxxx shall contribute or transfer to Imagistics or to
one or more wholly owned Subsidiaries of Imagistics, as specified by Imagistics,
all the outstanding shares of capital stock of, or other ownership interests in,
each of the subsidiaries set forth in Schedule 2.01 hereto.
6
Section 2.02.Transfers of Certain Assets; Assumption of Certain
Liabilities. Prior to the Distribution Date, subject to receipt of any necessary
consents or approvals of third parties or of Governmental Authorities and
subject to Section 7.03, Pitney Xxxxx shall, or shall cause the relevant member
of the Pitney Xxxxx Group to, assign, contribute, convey, transfer and deliver
("Transfer") to Imagistics or to one or more wholly-owned Subsidiaries of
Imagistics, as specified by Imagistics, all of the right, title and interest of
Pitney Xxxxx or such member of the Pitney Xxxxx Group in and to all assets held
by any member of the Pitney Xxxxx Group that relate solely to the Imagistics
Business (and not to the businesses of the Pitney Xxxxx Group including, without
limitation, all assets reflected in the Imagistics Balance Sheet, subject to
transactions in the ordinary course) and Imagistics shall assume and take
transfer of all Imagistics Liabilities.
Section 2.03. Agreement Relating to Consents Necessary to Transfer Assets.
Notwithstanding anything in this Agreement to the contrary, this Agreement shall
not constitute an agreement to transfer or assign any asset or any claim or
right or any benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the necessary consent of a third party, would
constitute a breach or other contravention thereof or in any way adversely
affect the rights of Imagistics, or any member of the Imagistics Group, or
Pitney Xxxxx, or any member of the Pitney Xxxxx Group, thereunder. Imagistics
and Pitney Xxxxx will, subject to Section 7.03, use, and cause the relevant
members of the Imagistics Group or the Pitney Xxxxx Group, respectively, to use,
their reasonable efforts to obtain the consent of any third party or any
Governmental Authority, if any, required in connection with the transfer or
assignment pursuant to Section 2.02 of any such asset or any claim or right or
any benefit arising thereunder. Until such required consent is obtained, or if
such consent cannot be obtained, or an attempted assignment thereof would be
ineffective or would adversely affect the rights of the transferor thereunder so
that the intended transferee would not in fact receive all such rights,
Imagistics and Pitney Xxxxx will cooperate in a mutually agreeable arrangement
under which the intended transferee would obtain the benefits and assume the
obligations thereunder in accordance with this Agreement, including (but not
limited to) sub-contracting, sub-licensing or sub-leasing to such transferee, or
under which the transferor would enforce for the benefit of the transferee and
(except as otherwise provided herein or in any Ancillary Agreement) at the
transferee's expense any and all rights of the transferor against, with the
transferee assuming the transferor's obligations to, each third party thereto.
In the case of any Transfer involving a third party consent, the transferor
shall not agree to any terms of transfer (without prior written consent of the
transferee) which have the effect of materially altering the rights or benefits
arising under any of the particular assets subject to the Transfer.
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ARTICLE 3
THE DISTRIBUTION
SECTION 3.01. Cooperation Prior to the Distribution. (a) Pitney Xxxxx and
Imagistics shall prepare, and Imagistics shall file with the Commission, the
Form 10, which shall include the Information Statement, and which shall set
forth appropriate disclosure concerning Imagistics and the Distribution. Pitney
Xxxxx and Imagistics shall use reasonable efforts to cause the Form 10 to become
effective under the Exchange Act as soon as practicable. After the Form 10 has
become effective, Pitney Xxxxx shall mail the Information Statement to the
holders of Pitney Xxxxx Common Stock as of the Record Date.
(b) Pitney Xxxxx and Imagistics shall cooperate in preparing, filing with
the Commission and causing to become effective any registration statements or
amendments thereto that are appropriate to reflect the establishment of or
amendments to any employee benefit and other plans contemplated by this
Agreement and the Ancillary Agreements.
(c) Pitney Xxxxx and Imagistics shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of states or
other political subdivisions of the United States and shall take reasonable
efforts to comply with all applicable foreign securities laws in connection with
the transactions contemplated by this Agreement and the Ancillary Agreements.
(d) Imagistics shall prepare, file and pursue an application to permit
listing of the Imagistics Common Stock on the New York Stock Exchange, Inc.
("NYSE").
Section 3.02. Pitney Xxxxx Board Action; Conditions Precedent to the
Distribution. Pitney Xxxxx' Board of Directors shall, in its discretion,
establish (or delegate authority to establish) the Record Date and the
Distribution Date and any appropriate procedures in connection with the
Distribution. In no event shall the Distribution occur unless the following
conditions shall have been waived by Pitney Xxxxx or shall have been satisfied:
(i) the Form 10 shall have become effective under the Exchange Act;
(ii) the Imagistics Common Stock to be delivered in the Distribution
shall have been approved for listing on the NYSE, subject to official
notice of issuance;
(iii) the Board of Directors of Pitney Xxxxx shall be satisfied that
the Distribution will be made out of surplus within the meaning of Section
170 of the General Corporation Law of the State of Delaware;
8
(iv) Pitney Xxxxx' Board of Directors shall have approved the
Distribution and shall not have abandoned, deferred or modified the
Distribution at any time prior to the Record Date;
(v) the contributions referred to in Section 2.01 of this Agreement
shall have been effected and the parties hereto shall have complied with
Section 2.02 of this Agreement;
(vi) Imagistics' Board of Directors, as named in the Information
Statement, shall have been elected by Pitney Xxxxx, as sole stockholder of
Imagistics, and Imagistics' certificate of incorporation (the "Restated
Imagistics Charter") and bylaws, in substantially the forms filed as
exhibits to the Form 10, shall be in effect;
(vii) each of the Ancillary Agreements shall have been duly executed
and delivered by the parties thereto; and
(viii) Pitney Xxxxx shall have received a favorable ruling from the
Internal Revenue Service or a legal opinion from Pitney Xxxxx' counsel,
Xxxxx Xxxx & Xxxxxxxx, or another nationally recognized law firm, stating
that the Distribution qualifies as tax-free to Pitney Xxxxx and its
stockholders for United States federal income tax purposes.
SECTION 3.03. The Distribution. Subject to the terms and conditions set
forth in this Agreement, (i) prior to the Distribution Date, Pitney Xxxxx shall
deliver to the Distribution Agent for the benefit of holders of record of Pitney
Xxxxx Common Stock on the Record Date, a stock certificate or certificates,
endorsed by Pitney Xxxxx in blank, representing 100% of the outstanding shares
of Imagistics Common Stock, (ii) the Distribution shall be effective on the
Distribution Date and (iii) Pitney Xxxxx shall instruct the Distribution Agent
to distribute, on or as soon as practicable after the Distribution Date, to each
holder of record of Pitney Xxxxx Common Stock as of the Record Date 0.08 shares
of Imagistics Common Stock for each one share of Pitney Xxxxx Common Stock so
held. Imagistics agrees to provide all certificates for shares of Imagistics
Common Stock that Pitney Xxxxx shall require (after giving effect to Sections
3.04 and 3.05) in order to effect the Distribution.
Section 3.04. Subdivision of Imagistics Common Stock to Accomplish the
Distribution. Effective upon the filing of the Restated Imagistics Charter with
the Secretary of State of the State of Delaware, each share of Imagistics Common
Stock then issued and outstanding shall, without any action on the part of the
holder thereof, be subdivided and converted into that number of fully paid and
non-assessable shares of Imagistics Common Stock issued and outstanding equal to
the number of shares of Pitney Xxxxx Common Stock outstanding on the
9
Record Date times 0.08 divided by the number of shares of Imagistics Common
Stock outstanding immediately prior to such filing.
Section 3.05. Fractional Shares. No certificates representing fractional
shares of Imagistics Common Stock will be distributed in the Distribution. The
Distribution Agent will be directed to determine the number of whole shares and
fractional shares of Imagistics Common Stock allocable to each holder of Pitney
Xxxxx Common Stock as of the Record Date. Upon the determination by the
Distribution Agent of such number of fractional shares, as soon as practicable
after the Distribution Date, the Distribution Agent, acting on behalf of the
holders thereof, shall sell such fractional shares for cash on the open market
and shall disburse to each holder entitled thereto the appropriate portion of
the resulting cash proceeds (calculated by multiplying the average gross selling
price per share times the number of fractional shares allocable to such holder).
Pitney Xxxxx shall bear the cost of all commissions incurred in connection with
the sale of fractional shares pursuant to this Section 3.05.
ARTICLE 4
INDEMNIFICATION
Section 4.01. Imagistics Indemnification of the Pitney Xxxxx Group. (a)
Subject to Section 4.03, on and after the Distribution Date, Imagistics shall
indemnify, defend and hold harmless the Pitney Xxxxx Group and the respective
directors, officers and Affiliates of each Person in the Pitney Xxxxx Group (the
"Pitney Xxxxx Indemnitees") from and against any and all Losses incurred or
suffered by any of the Pitney Xxxxx Indemnitees arising out of, or due to the
failure of any Person in the Imagistics Group to pay, perform or otherwise
discharge, any of the Imagistics Liabilities.
(b) Subject to Section 4.03, on and after the Distribution Date, Imagistics
shall indemnify, defend and hold harmless each of the Pitney Xxxxx Indemnitees
from and against the failure of Imagistics to reimburse Pitney Xxxxx for the
employee benefit related costs, expenses and fees as set forth in Schedule 5.01
hereof.
(c) Subject to Section 4.03, Imagistics shall indemnify, defend and hold
harmless each of the Pitney Xxxxx Indemnitees and each Person, if any, who
controls any Pitney Xxxxx Indemnitee within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all Losses caused by any untrue statement or alleged untrue statement of a
material fact contained in the Form 10 or any amendment thereof or the
Information Statement (as amended or supplemented if Imagistics shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein,
10
in the light of the circumstances under which they were made, not misleading,
except insofar as such Losses are caused by any such untrue statement or
omission or alleged untrue statement or omission arising out of information
furnished to Imagistics in writing by Pitney Xxxxx expressly for use therein.
Section 4.02. Pitney Xxxxx Indemnification of Imagistics Group. (a) Subject
to Section 4.03, on and after the Distribution Date, Pitney Xxxxx shall
indemnify, defend and hold harmless the Imagistics Group and the respective
directors, officers and Affiliates of each Person in the Imagistics Group (the
"Imagistics Indemnitees") from and against any and all Losses incurred or
suffered by any of the Imagistics Indemnitees and arising out of, or due to the
failure of any Person in the Pitney Xxxxx Group to pay, perform or otherwise
discharge, any of the Pitney Xxxxx Liabilities.
(b) Subject to Section 4.03, Pitney Xxxxx shall indemnify, defend and hold
harmless each of the Imagistics Indemnitees and each Person, if any, who
controls any Imagistics Indemnitee within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all Losses caused by any untrue statement or alleged untrue statement of a
material fact contained in the Form 10 or any amendment thereof or the
Information Statement (as amended or supplemented if Imagistics shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such Losses are caused by any such untrue statement or omission or alleged
untrue statement or omission arising out of information furnished to Imagistics
in writing by Pitney Xxxxx expressly for use therein.
Section 4.03. Insurance; Third Party Obligations; Tax Benefits. Any
indemnification pursuant to Sections 4.01 or 4.02 shall be paid net of the
amount of any insurance or other amounts that would be payable by any third
party to the Indemnified Party (as defined below) in the absence of this
Agreement (irrespective of time of receipt of such insurance or other amounts)
and net of any tax benefit to the Indemnified Party attributable to the relevant
payment or Liability. Such indemnification shall be increased to reflect any tax
liability of the indemnified party so that the indemnified party receives 100%
of the after-tax amount of any payment or liability. It is expressly agreed that
no insurer or any other third party shall be (i) entitled to a benefit it would
not be entitled to receive in the absence of the foregoing indemnification
provisions, (ii) relieved of the responsibility to pay any claims to which it is
obligated or (iii) entitled to any subrogation rights with respect to any
obligation hereunder.
Section 4.04. Notice and Payment of Claims. If any Pitney Xxxxx Indemnitee
or Imagistics Indemnitee (the "Indemnified Party") determines that
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it is or may be entitled to indemnification by any party (the "Indemnifying
Party") under Article 4 (other than in connection with any Action subject to
Section 4.05), the Indemnified Party shall deliver to the Indemnifying Party a
written notice specifying, to the extent reasonably practicable, the basis for
its claim for indemnification and the amount for which the Indemnified Party
reasonably believes it is entitled to be indemnified. The methodology for
determining claims for indemnification related to sales, use and personal
property taxes is set forth on Schedule 4.04 hereto. Within 30 days after
receipt of such notice, the Indemnifying Party shall pay the Indemnified Party
such amount in cash or other immediately available funds unless the Indemnifying
Party objects to the claim for indemnification or the amount thereof. If the
Indemnifying Party does not give the Indemnified Party written notice objecting
to such indemnity claim and setting forth the grounds therefor within such
30-day period, the Indemnified Party shall give the Indemnifying Party an
additional notice of its claims for indemnification and if the Indemnifying
Party does not give the Indemnified Party written notice objecting to such
claims within 10 days after receipt of such additional notice, the Indemnifying
Party shall be deemed to have acknowledged its liability for such claim and the
Indemnified Party may exercise any and all of its rights under applicable law to
collect such amount. In the event of such a timely objection by the Indemnifying
Party, the amount, if any, that is Finally Determined to be required to be paid
by the Indemnifying Party in respect of such indemnity claim shall be paid by
the Indemnifying Party to the Indemnified Party in cash within 15 days after
such indemnity claim has been so Finally Determined. Notice and payment of all
Non-Income Tax Claims shall be in accordance with the provisions of this
Agreement and with a copy of the notice to:
Imagistics International Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Vice President-Tax
Section 4.05. Notice and Defense of Third-Party Claims. Promptly following
the earlier of (i) receipt of notice of the commencement by a third party of any
Action against or otherwise involving any Indemnified Party or (ii) receipt of
information from a third party alleging the existence of a claim against an
Indemnified Party, in either case, with respect to which indemnification may be
sought pursuant to this Agreement (a "Third-Party Claim"), the Indemnified Party
shall give the Indemnifying Party written notice thereof. The failure of the
Indemnified Party to give notice as provided in this Section 4.05 shall not
relieve the Indemnifying Party of its obligations under this Agreement, except
to the extent that the Indemnifying Party is prejudiced by such failure to give
notice. Within 15 days after receipt of such notice, the Indemnifying Party may
(i) by giving written notice thereof to the Indemnified Party, acknowledge
liability for
12
such indemnification claim and at its option elect to assume the defense of such
Third-Party Claim at its sole cost and expense (except as provided for in
Schedule 4.04) or (ii) object to the claim for indemnification set forth in the
notice delivered by the Indemnified Party pursuant to the first sentence of this
Section 4.05; provided that if the Indemnifying Party does not within such
15-day period give the Indemnified Party written notice objecting to such
indemnification claim and setting forth the grounds therefor, the Indemnified
Party shall give the Indemnifying Party an additional notice of its claims for
indemnification and if the Indemnifying Party does not give the Indemnified
Party written notice objecting to such claims within 10 days after receipt of
such additional notice, the Indemnifying Party shall be deemed to have
acknowledged its liability for such indemnification claim. If the Indemnifying
Party has elected to assume the defense of a Third-Party Claim, (x) the defense
shall be conducted by counsel retained by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party, provided that the Indemnified Party shall
have the right to participate in such proceedings and to be represented by
counsel of its own choosing at the Indemnified Party's sole cost and expense;
and (y) the Indemnifying Party may settle or compromise the Third Party Claim
without the prior written consent of the Indemnified Party so long as such
settlement includes an unconditional release of the Indemnified Party from all
claims that are the subject of such Third Party Claim, provided that the
Indemnifying Party may not agree to any such settlement pursuant to which any
remedy or relief, other than monetary damages for which the Indemnifying Party
shall be responsible hereunder, shall be applied to or against the Indemnified
Party, without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld. If the Indemnifying Party does not assume
the defense of a Third-Party Claim for which it has acknowledged liability for
indemnification hereunder, the Indemnified Party may require the Indemnifying
Party to reimburse it on a current basis for its reasonable expenses of
investigation, reasonable attorneys' fees and reasonable out-of-pocket expenses
incurred in defending against such Third-Party Claim and the Indemnifying Party
shall be bound by the result obtained with respect thereto by the Indemnified
Party; provided that the Indemnifying Party shall not be liable for any
settlement effected without its consent, which consent shall not be unreasonably
withheld. The Indemnifying Party shall pay to the Indemnified Party in cash the
amount, if any, for which the Indemnified Party is entitled to be indemnified
hereunder within 15 days after such Third Party Claim has been Finally
Determined, in the case of an indemnity claim as to which the Indemnifying Party
has acknowledged liability or, in the case of any indemnity claim as to which
the Indemnifying Party has not acknowledged liability, within 15 days after such
Indemnifying Party's objection to liability hereunder has been Finally
Determined.
Section 4.06. Contribution. If for any reason the indemnification provided
for in Section 4.01 or 4.02 is unavailable to any Indemnified Party, or
13
insufficient to hold it harmless, then the Indemnifying Party shall contribute
to the amount paid or payable by such Indemnified Party as a result of such
Losses in such proportion as is appropriate to reflect all relevant equitable
considerations.
Section 4.07. Non-Exclusivity of Remedies. The remedies provided for in
this Article 4 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Party at law or in equity.
ARTICLE 5
EMPLOYEE MATTERS AND SERVICES
Section 5.01. Employee Matters Generally. With respect to employee matters
and employee benefits arrangements, the parties hereto agree as set forth in
Schedule 5.01.
Section 5.02. Restriction on Solicitation or Employment of Employees. For a
period of two years following the Distribution Date, each of the Pitney Xxxxx
Group and the Imagistics Group agrees that (without the prior written consent of
the other) it will not, directly or indirectly, (i) solicit or otherwise attempt
to induce or influence any employee of the other Group to terminate employment
with his or her then-current employer or (ii) employ any employee of the other
Group.
Notwithstanding the foregoing, if an employee of either Group is terminated
or terminates employment within such two year period, the terminated employee
may be hired by the other Group at any time after 180 days following such
employee's termination; provided that the Group hiring such employee has not
violated the provisions of the immediately preceding paragraph with respect to
such employee.
Section 5.03. Notification of Termination of Employees. Imagistics shall
notify Pitney Xxxxx in writing within seven business days of the date of
termination of employment of any Transferred Employee (as defined in Section 2
of Schedule 5.01 hereof) from the Office System Group or a related company.
ARTICLE 6
ACCESS TO INFORMATION
Section 6.01. Provision of Corporate Records. Immediately prior to or as
soon as practicable following the Distribution Date, each Group shall provide to
the other Group all documents, contracts, books, records and data (including but
not limited to minute books, stock registers, stock certificates and documents
of title) in its possession relating to such other Group or such other Group's
business
14
and affairs; provided that if any such documents, contracts, books, records or
data relate to both Groups or the business and operations of both Groups, each
such Group shall provide to the other Group true and complete copies of such
documents, contracts, books, records or data. Data stored in electronic form
shall be provided in the format in which it existed at the Distribution Date
and, if requested, in hard copy (at the expense of the requesting party), except
as otherwise specifically set forth in this Agreement or any Ancillary
Agreement.
Section 6.02. Access to Information. From and after the Distribution Date,
each Group shall, for a reasonable period of time, afford promptly to the other
Group and its accountants, counsel and other designated representatives
reasonable access during normal business hours to all documents, contracts,
books, records, computer data and other data in such Group's possession relating
to such other Group or the business and affairs of such other Group (other than
data and information subject to an attorney/client or other privilege), insofar
as such access is reasonably required by such other Group, including, without
limitation, for audit, accounting, litigation, regulatory compliance and
disclosure and reporting purposes.
Section 6.03. Litigation Cooperation. Each Group shall use reasonable
efforts to make available to the other Group and its accountants, counsel, and
other designated representatives, upon written request, its directors, officers,
employees and representatives as witnesses, and shall otherwise cooperate with
the other Group, to the extent reasonably required in connection with any Action
arising out of either Group's business and operations prior to the Distribution
Date in which the requesting party may from time to time be involved.
Section 6.04. Reimbursement. Each Group providing information or witnesses
to the other Group, or otherwise incurring any expense in connection with
cooperating, under Sections 6.01, 6.02 or 6.03 shall be entitled to receive from
the recipient thereof, upon the presentation of invoices therefor, payment for
all out-of-pocket costs and expenses as may be reasonably incurred in providing
such information, witnesses or cooperation.
Section 6.05. Retention of Records. Except as otherwise required by law or
agreed to in writing, each party shall, and shall cause the members of its
respective Group to, retain all information relating to the other Group's
business and operations in accordance with the past practice of such party.
Notwithstanding the foregoing, any party may destroy or otherwise dispose of any
such information at any time, provided that, prior to such destruction or
disposal, (i) such party shall provide not less than 90 days' prior written
notice to the other party, specifying the information proposed to be destroyed
or disposed of and the scheduled date for such destruction or disposal, and (ii)
if the recipient of such notice shall request in writing prior to the scheduled
date for such destruction or disposal that any of the information proposed to be
destroyed or disposed of be
15
delivered to such requesting party, the party proposing the destruction or
disposal shall promptly arrange for the delivery of such of the information as
was requested at the expense of the requesting party.
Section 6.06. Confidentiality. Each party shall hold and shall cause its
directors, officers, employees, agents, consultants and advisors
("Representatives") to hold in strict confidence all information (other than any
such information relating solely to the business or affairs of such party)
concerning the other party unless (i) such party is compelled to disclose such
information by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law or (ii) such information can be shown to
have been (A) in the public domain through no fault of such party or (B)
lawfully acquired after the Distribution Date on a non-confidential basis from
other sources. Notwithstanding the foregoing, such party may disclose such
information to its Representatives so long as such Persons are informed by such
party of the confidential nature of such information and are directed by such
party to treat such information confidentially. If such party or any of its
Representatives becomes legally compelled to disclose any documents or
information subject to this Section, such party will promptly notify the other
party so that the other party may seek a protective order or other remedy or
waive such party's compliance with this Section. If no such protective order or
other remedy is obtained or waiver granted, such party will furnish only that
portion of the information which it is advised by counsel is legally required
and will exercise its reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded such information. Such party agrees to
be responsible for any breach of this Section by it and its Representatives.
Section 6.07. Inapplicability of Article 6 to Tax Matters. Notwithstanding
anything to the contrary in Article 6, Article 6 shall not apply with respect to
information, records and other matters relating to Taxes, all of which shall be
governed by the Tax Separation Agreement.
ARTICLE 7
CERTAIN OTHER AGREEMENTS AND COVENANTS
Section 7.01. Amounts Payable and Intercompany Accounts. (a) Prior to the
Distribution, Imagistics shall pay to Pitney Xxxxx an amount equal to the sum of
(i) $150,000,000 plus (ii) the aggregate amount of any additional funds advanced
to the Imagistics Business by the Pitney Xxxxx Group between August 1, 2001 and
the Distribution Date. The amount of such payment which exceeds the net
intercompany balance payable from Imagistics to Pitney Xxxxx shall be paid as a
dividend.
16
(b) All intercompany receivable, payable and loan balances in existence as
of the Distribution Date between the Pitney Xxxxx Group and Imagistics Group
will be settled by payment of the amount set forth in Section 7.01(a).
Section 7.02. Covenants Not to Compete. (a) In consideration of the
promises and representations of Pitney Xxxxx under this Agreement, Imagistics
covenants and agrees that, for a period of two years following the Distribution
Date, neither Imagistics nor any member of the Imagistics Group nor any of their
respective successors or assigns will, directly or indirectly, engage in, or
have any interest (including, as agent, partner, consultant or shareholder) in
any other person, firm, corporation or other entity engaged in, any business
activities, in the Xxxxxx Xxxxxx, xxx Xxxxxx Xxxxxxx, Xxxxxx and Europe,
competitive with or similar or related to the business or products (current and
future) of the Pitney Xxxxx Group, as reflected in Pitney Xxxxx' most recent
strategic plan dated March 2001 (the "March 2001 Strategic Plan") which includes
the facilities management business, as more fully described in paragraph (b)
below.
(b) The parties hereby agree that Pitney Xxxxx is engaged in the facilities
management business. The parties further agree that the facilities management
business consists of on site, off site, near site and multiple client location
facilities management and outsourcing services aimed at providing total
Integrated Mail and Document Management, and Document Resource Planning
solutions defined as the delegation to a supplier of the creation, production,
mailing or electronic transmission, or fulfillment of any type of printed or
electronic document. Included in this is mail center operations, mail delivery,
literature fulfillment and supplies management, shipping and receiving, network
fax, on-line image retrieval, central reprographics, color copy, convenience
copy/fleet management including asset management, microfilming, color print,
print-on-demand, network print, computer output to microfilm (COM), CD output
and electronic scanning and indexing. The facilities management vendor may
assign specific business functions to either a business specializing in those
functions or one that offers the service as a complement to other offerings. The
facilities management vendor may acquire a customer's distributed network
printers, copiers and operating personnel and could be responsible for all
maintenance, network support services, equipment upgrades, staff training, and
other activities. Notwithstanding the provisions of paragraph (a) above, the
parties acknowledge that (x) Imagistics may, within the facilities management
business, engage in the business of selling, maintenance of and placing copier,
facsimile and multi-functional products that fax, copy, print and scan and
related sales of software and supplies, even if this business competes with
Pitney Xxxxx' business; provided that (i) such competing business is the only
activity of Imagistics within the facilities management business and (ii) that
such business is operated in a manner and on a scale substantially consistent
with past practice and the business of Imagistics as of the Distribution Date,
(y) Imagistics may engage in such competing business to the extent required so
that Imagistics may fulfill its
17
obligations under its existing contracts as of the Distribution Date and (z) to
the extent that Imagistics notifies Pitney Xxxxx of its desire to enter into a
business, pursuant to a specific contract or customer requirement, not otherwise
permitted to be engaged in by Imagistics pursuant to Section 7.02 (a) or (b),
Pitney Xxxxx may consent to Imagistics' engaging in such competing business;
provided that such consent shall not be unreasonably withheld if but only if
such competing business is limited to such specific contract or customer
requirement and is determined by Pitney Xxxxx to be outside the scale and scope
of its facilities management business. In such case, Pitney Xxxxx will use
reasonable efforts to respond to Imagistics' request in a timely manner.
(c) In consideration of the promises and representations of Imagistics
under this Agreement, Pitney Xxxxx covenants and agrees that, for a period of
two years following the Distribution Date, neither Pitney Xxxxx nor any member
of the Pitney Xxxxx Group nor any of their respective successors or assigns
will, directly or indirectly, engage in, or have any interest (including, as
agent, partner, consultant or shareholder) in any other person, firm,
corporation or other entity engaged in, any business activities, in the United
States, the United Kingdom or Europe (except the marketing and maintenance of
copiers in the United Kingdom in a manner and on a scale substantially
consistent with past practice), competitive with the business or current
products of the Imagistics Group as of the Distribution Date.
(d) Notwithstanding the preceding paragraphs, if either party acquires a
firm, corporation or other entity (the "Acquired Business") after the
Distribution Date, that party may operate the Acquired Business in a manner
substantially consistent with past practice, even if a portion of the Acquired
Business is in competition with the other party's business; provided that the
competing portion of the Acquired Business is incidental to the Acquired
Business, taken as a whole.
(e) If Pitney Xxxxx at any time asserts that Imagistics is in violation of
the non-compete clause set forth in Section 7.02 of this Agreement, based on
Imagistics' engagement in business activities which Pitney Xxxxx believes to be
competitive with or similar or related to business or products reflected in the
March 2001 Strategic Plan, Imagistics shall be entitled to an audit of the March
2001 Strategic Plan by a nationally-recognized auditing firm. The scope of any
such audit shall be limited to a determination of Pitney Xxxxx' plans to enter
into any such business or offer any products that it asserts Imagistics has
entered into or offered in violation of Section 7.02. All costs of any such
audit shall be borne by the party against whom the dispute is resolved.
Section 7.03. Further Assurances and Consents. In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things, reasonably necessary,
proper or advisable
18
under applicable laws, regulations and agreements or otherwise to consummate and
make effective the transactions contemplated by this Agreement, including but
not limited to using its reasonable efforts to obtain any consents and approvals
and to make any filings and applications necessary or desirable in order to
consummate the transactions contemplated by this Agreement; provided that no
party hereto shall be obligated to pay any consideration therefor (except for
filing fees and other similar charges) to any third party from whom such
consents or approvals are requested or to take any action or omit to take any
action if the taking of or the omission to take such action would be
unreasonably burdensome to the party, its Group or its Group's business.
ARTICLE 8
MISCELLANEOUS
Section 8.01. Notices. All notices and other communications to any party
hereunder shall be in writing (including telecopy or similar writing) and,
except as noted, shall be deemed given when received addressed as follows:
If to Pitney Xxxxx, to:
Pitney Xxxxx Inc.
0 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxx
Title: Vice President and Corporate Secretary
With a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
If to Imagistics, to:
Imagistics International Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Executive Officer
19
With a copy to:
Imagistics International Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: General Counsel
Any party may, by written notice so delivered to the other parties, change the
address to which delivery of any notice shall thereafter be made.
Section 8.02. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Pitney Xxxxx and Imagistics, or in
the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 8.03. Expenses. Except as specifically provided otherwise in this
Agreement or any Ancillary Agreement, all costs and expenses incurred by the
Pitney Xxxxx Group in connection with the Distribution and related transactions
shall be paid by Pitney Xxxxx, and all costs and expenses incurred by the
Imagistics Group in connection with the Distribution and related transactions
shall be paid by Imagistics. Without limiting the foregoing, the parties agree
that Imagistics shall be responsible for and pay the fees, expenses and other
amounts payable to the lenders under Imagistics' credit facilities and all other
fees and expenses incurred in connection therewith.
Section 8.04. Insurance Matters. (a) From and after the date of this
Agreement, Imagistics is responsible to take whatever action is needed or
appropriate to provide notice to the appropriate insurance companies of, and to
process, claims under the insurance in effect on the date of this Agreement,
listed on Schedule 8.04 hereto, including applicable predecessor policies,
("Applicable Insurance") that may cover all or any part of the assets,
liabilities, business or employees of the Imagistics Group with respect to
events occurring prior to the earlier to occur, with respect to each type of
insurance, of the effective date of insurance coverage obtained by Imagistics or
the Distribution Date (any such claims being referred to as ("Imagistics
Claims"), it being understood that in no event shall Pitney Xxxxx be obligated
to process any such claims or to pay premiums with respect to the Applicable
Insurance beyond what it has already paid. It is further understood that Pitney
Xxxxx does not warrant that there will be any coverage or payment made under the
Applicable Insurance for any
20
Imagistics Claims and that Pitney Xxxxx shall not be responsible in any respect
if a claim for such coverage does not result in such coverage. Pitney Xxxxx
agrees that the consummation of this agreement will not eliminate or reduce any
rights that Imagistics has or otherwise would have under the Applicable
Insurance and Imagistics agrees that Pitney Xxxxx does not warrant the existence
or extent of any such rights. Pitney Xxxxx is also not responsible to obtain any
renewal of any policy that is part of the Applicable Insurance. Subject to the
foregoing, Pitney Xxxxx agrees that, to the extent coverage under the Applicable
Insurance is available for Imagistics Claims, the Applicable Insurance shall be
for the benefit of Imagistics and Pitney Xxxxx shall, at Imagistics' expense,
take all action reasonably requested by Imagistics, necessary to permit
Imagistics to make claims against and otherwise enforce the Applicable Insurance
with respect to Imagistics Claims.
(b) On or about the following respective dates, Imagistics will purchase
(or will have purchased) the following insurance policy(ies) for its immediate
and future interests which will respond to loss before any insurance maintained
by Pitney Xxxxx: (i) October 20, 2001, Property; (ii) November 1, 2001, Workers'
Compensation, General Liability, Auto Liability, Umbrella policy(ies), Aircraft
(non-owned). Should any loss not be covered under Imagistics' policy(ies),
consistent with and limited by the terms and conditions of this section an
Imagistics Claim for such uncovered amounts may be made under Pitney Xxxxx'
Applicable Insurance covering property losses which may respond in
Excess/Difference in Conditions capacity.
(c) Imagistics shall be liable for any and all costs, expenses, damages,
liabilities and deductibles associated with Imagistics Claims under the
Applicable Insurance to the extent not covered by Applicable Insurance (the
"Imagistics Claims Costs and Expenses"), except where the deductible is
satisfied through accruals (referred to as "accrued insurance" on Schedule 2.02
hereof), as reflected on Schedule 8.04 hereto, established by Pitney Xxxxx for
such purpose. Imagistics shall not be responsible for a deductible in connection
with claims made under "accrued insurance."
(d) Imagistics will provide prompt written notice to Pitney Xxxxx of all
insurance claims submitted by Imagistics under Applicable Insurance and will
provide Pitney Xxxxx with regular reports, in writing, at least on a quarterly
basis, as to the status of, significant developments in, costs and expenses
being incurred in, and payments made in connection with the underlying claims
involved in any such insurance claim, including any underlying litigation (an
"Underlying Claim or Litigation") and the status of the insurance claim itself.
(e) Imagistics will in good faith take all appropriate steps to minimize
the costs, expenses and liabilities incurred in connection with an Underlying
21
Claim or Litigation and will in good faith consider any recommendations made by
Pitney Xxxxx to minimize such costs, expenses and liabilities.
(f) Imagistics will not settle any Underlying Claim or Litigation for more
than $250,000 without the consent of Pitney Xxxxx, such consent not to be
unreasonably withheld.
(g) The parties agree that, to the extent that the Applicable Insurance
applies directly or indirectly to any assets, liabilities, business or employees
of the Imagistics Group, such Applicable Insurance shall be limited to insured
events occurring prior to the Distribution Date. It is further understood that
such Applicable Insurance shall also be for the benefit of Pitney Xxxxx Group to
the extent directly or indirectly applicable to any assets, liabilities,
business or employees of Pitney Xxxxx Group.
(h) All notices and reports to be delivered to Pitney Xxxxx pursuant to
this Section 8.04 shall be delivered to Xxxxxxx Xxxxxx, Risk Manager, Pitney
Xxxxx Inc., 0 Xxxxxxxx Xxxx, XXX 00-00, Xxxxxxxx, XX 00000-0000, Telecopy:
000-000-0000, with a copy to: Xxx X. Xxxx, Vice President and Corporate
Secretary, Pitney Xxxxx Inc., 0 Xxxxxxxx Xxxx, XXX 00-00, Xxxxxxxx, XX
00000-0000, Telecopy: 000-000-0000.
Section 8.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto. If any party or any
of its successors or assigns (i) shall consolidate with or merge into any other
Person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provisions shall be made so that the successors and assigns of such party shall
assume all of the obligations of such party under the Distribution Documents.
Section 8.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York, without regard
to the conflicts of laws rules thereof.
Section 8.07. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
22
Section 8.08. Entire Agreement. This Agreement and the other Distribution
Documents constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth herein or in the
other Distribution Documents has been made or relied upon by any party hereto.
Neither this Agreement nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder. To the
extent that the provisions of this Agreement are inconsistent with the
provisions of any other Distribution Document, the provisions of such other
Distribution Document shall prevail.
Section 8.09. Tax Separation Agreement. Except as otherwise provided herein
and not inconsistent with the Tax Separation Agreement, this Agreement shall not
govern any Income Tax, and any and all Liabilities relating to Income Taxes
shall be exclusively governed by the Tax Separation Agreement.
Section 8.10. Jurisdiction. Any Action seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may be brought in the United States
District Court for the Southern District of New York or any other New York State
court sitting in New York County, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient form. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 8.01
shall be deemed effective service of process on such party.
Section 8.11. Existing Arrangements. Except as otherwise contemplated
hereby or by the other Distribution Documents, all prior agreements and
arrangements, including those relating to goods, rights or services provided or
licensed, between the Imagistics Group and the Pitney Xxxxx Group shall be
terminated effective as of the Distribution Date, if not theretofore terminated.
No such agreements or arrangements shall be in effect after the Distribution
Date unless embodied in the Distribution Documents.
Section 8.12. Termination Prior to the Distribution. The Pitney Xxxxx Board
of Directors may at any time prior to the Distribution abandon the Distribution
and, by notice to Imagistics, terminate this Agreement (whether or
23
not the Pitney Xxxxx Board of Directors has theretofore approved this Agreement
and/or the Distribution).
Section 8.13. Termination After the Distribution.
(a) Termination of the Agreement. Except upon the mutual consent of both
parties hereto or an automatic termination as set forth in Section 8.13, this
Agreement shall not be terminable until the third anniversary of the
Distribution Date, and thereafter shall be terminable upon six months' prior
written notice by either party to the other party. Notwithstanding the
immediately preceding sentence, (i) Pitney Xxxxx may terminate this Agreement
(but not Sections 5.02 and 7.02) at any time if Imagistics shall have failed to
perform any of its material obligations under this Agreement, Pitney Xxxxx has
notified Imagistics in writing of such failure and such failure shall have
continued for a period of 60 days after receipt by Imagistics of written notice
of such failure and (ii) Imagistics may terminate this Agreement (but not
Sections 5.02 and 7.02) at any time if Pitney Xxxxx shall have failed to perform
any of its material obligations under this Agreement, Imagistics has notified
Pitney Xxxxx in writing of such failure and such failure shall have continued
for a period of 60 days after receipt by Pitney Xxxxx of written notice of such
failure. In addition, a material default by one party of its obligations under
Section 7.02 will relieve the other party of its obligations under such Section
7.02, without relieving the defaulting party of any liability or obligation
under such Section 7.02.
(b) Termination of Covenant Not to Compete. Each party may, at its option,
terminate the provisions of Section 7.02 effective upon or after the expiration
of one year from the Distribution Date; provided that such party has given six
months prior written notice of termination to the other party. Upon such
termination (i) all of the provisions of the non-compete set forth in Section
7.02 shall cease to apply to each party; (ii) the license of the name Pitney
Xxxxx (and the associated trademarks) to Imagistics as set forth under the
provisions of the Intellectual Property Agreement shall terminate, (as set forth
in Section 11.04(d) of such Agreement) and (iii) the Canada Reseller Agreement
shall be automatically amended, upon notice of termination, to permit Pitney
Xxxxx Canada to source its equipment requirements from alternative suppliers and
to require Imagistics to continue to fulfill its obligations to supply product,
as required for an interim period not to exceed nine months from the date of
such notice, during which Pitney Xxxxx Canada can establish alternative
suppliers on acceptable terms.
Section 8.14. Severability. If any one or more of the provisions contained
in this Agreement should be declared invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement shall not in any way be affected or impaired thereby
so long as the economic or legal substance of the transactions contemplated
24
hereby is not affected in any manner materially adverse to any party. Upon such
a declaration, the parties shall modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner so
that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.
Section 8.15. Survival. All covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date indefinitely,
unless a specific survival or other applicable period is expressly set forth
herein.
Section 8.16. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
Section 8.17. Specific Performance. Each party to this Agreement
acknowledges and agrees that damages for a breach or threatened breach of any of
the provisions of this Agreement would be inadequate and irreparable harm would
occur. In recognition of this fact, each party agrees that, if there is a breach
or threatened breach, in addition to any damages, the other nonbreaching party
to this Agreement, without posting any bond, shall be entitled to seek and
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction, attachment, or any other
equitable remedy which may then be available to obligate the breaching party (i)
to perform its obligations under this Agreement or (ii) if the breaching party
is unable, for whatever reason, to perform those obligations, to take any other
actions as are necessary, advisable or appropriate to give the other party to
this Agreement the economic effect which comes as close as possible to the
performance of those obligations (including, but not limited to, transferring,
or granting liens on, the assets of the breaching party to secure the
performance by the breaching party of those obligations).
25
IN WITNESS WHEREOF the parties hereto have caused this Distribution
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
PITNEY XXXXX INC.
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Executive Vice President &
Title: Chief Financial Officer
IMAGISTICS INTERNATIONAL INC.
By:/s/ Xxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
26
Schedule 2.01
Contributed Subsidiaries
None.
Schedule 2.01 - Page 1
Schedule 2.02
Specified Accrued Liabilities
ACCOUNT DESCRIPTION
10600 PAYROLL ADVANCES
13000 PREPAID INSURANCE
13010 PREPAID POSTAGE
13050 PREPAID FIELD TRAVEL EXPENSE
13060 PREPAID RENT EXPENSE
13100 PREPAID REAL ESTATE TAXES
16590 RETIREMENT PAYROLL MISC ADJUSTS
16700 RELOCATION CLEARING ACCOUNT
16720 GRP UNIV LIFE EMP DEDUCTIONS
16730 PROP 7 CAS EMP DEDUCTIONS
16740 LONG TERM CARE-EMP DEDUCTIONS
16750 LEGAL - EMP DEDUCTIONS
16760 FIN PLANNING EMP DEDUCTIONS
16860 FICA TAXES CLEARING ACCOUNT
16880 UNEMPLOYMENT INS CLEARING ACCT
16910 DEFERRED 401K & 401A
16920 SPOUSE LIFE INSURANCE
16950 PERSONAL LIFE (PRE-TAX)
16970 CHILD LIFE INSURANCE
20140 UNCLAIMED COMPENSATION
20200 EMPLOYEE SAVINGS BOND DEDUCTION
20230 EMPLOYEE STOCK PURCH INSTALLMENT
20240 EMPLOYEE UNITED FUND DEDUCTIONS
20250 EMPLOYEES CR UND DED
20260 EMPLOYEE GARNISHMENT DEDUCTIONS
20280 RET EMPL WITH - GARNISHMENTS
20290 LTD EMPL WITH - GARNISHMENTS
21100 EMPLOYEES INCOME TAX DEDUCTIONS
21120 UNEMPLOYMENT INS TAX ACCRUED
21130 FEDERAL INS CONTRIBUTION TAX
21140 OTHER SALARY TAX ACCRUED
21200 SALES AND USE TAX ACCRUED
21190 ACCRUED M M I P
21340 ACCRUED PERFORMANCE BASED COMPEN
21380 ACCRUED KE EMPL INCEN PLAN COMP
21620 PAYROLL ACCRUAL
21640 LONG TERM DISABILITY-PRE TAX
21740 LONG TERM DISABILITY-POST TAX
21300 ACCRUED COMPANY-PAID 401K CONTRIB.
Schedule 2.02 - Page 1
21320 RESERVE FOR EARLY RETIREMENT
21630 RETIREMENT PLAN TRUST FUND
21650 EXCESS BENEFIT PLAN
21610 ACCIDENT COMPENSATION
21760 DEFERRED INCENTIVE SAVINGS PLAN
21770 PBC BONUS EXCESS PRINCIPAL
21590 RETIREMENT MEDICAL LIABILITY
21560 POST EMPLOYMENT BENEFITS LIABILITY
21580 SUPPLEMENTAL OTHER POSTEMP BENE
20170 ACCRUED INSURANCE
21290 401K PLUS
21300 401K MATCH
21900 SHARE POWER
21910 ACCRUED 401K PLUS
16930 ACCIDENTAL DEATH
16950 PERSONAL LIFE ISN.
16560 EMPLOYEE GROUP MEDICAL
16770 EMPLOYEE METROPOOL COMMUTER DEDUCTION
21230 FIELD MISCELLANEOUS TAXES
Schedule 2.02 - Page 2
Schedule 4.04
Non-Income Tax Claims
Sales, Use and Personal Property Taxes
1. Sales and Use Taxes
(a) Use Taxes. In the event of an audit adjustment related to any use tax
payable by Pitney Xxxxx for any period prior to August 1, 2001, Imagistics will
indemnify Pitney Xxxxx for the portion of such adjustment reflecting Imagistics'
actual use tax liability.
(b) Sales Taxes. In the event of an audit adjustment related to any sales
tax payable by Pitney Xxxxx for any period prior to August 1, 2001, Imagistics
will indemnify Pitney Xxxxx for the same portion of such adjustment that the
total sales tax related to the Imagistics Business for the relevant period
(excluding the effect of such adjustment) bears to the total sales tax of Pitney
Xxxxx (including the Imagistics Business) for the same period (excluding the
effect of such adjustment). The relevant period referred to in the previous
sentence shall be the period used by the tax auditor in determining the sales
tax audit adjustment.
2. Personal Property Taxes
(a) Fixed Assets Taxes. Imagistics will indemnify Pitney Xxxxx for any
personal property taxes imposed on fixed assets that are a part of the
Imagistics Business for any period prior to August 1, 2001 based on the District
Office number, a plant code number or a cost center number of a particular
asset.
(b) Rental Equipment. Imagistics will indemnify Pitney Xxxxx for any
personal property taxes imposed on rental equipment for any period prior to
August 1, 2001 in an amount equal to the same portion of the total personal
property taxes imposed on rental equipment that the Imagistics rental equipment
summary ("Schedule C-2") value bears to the total Schedule C-2 value as
determined by the April, 2000 data used in preparation of the assessed value
filings.
3. Audit Cooperation
In the case of any audits of taxes related to sales, use of property or
possession of personal property in any period prior to August 1, 2001, Pitney
Xxxxx shall control such audits, provided that Pitney Xxxxx shall keep
Imagistics fully informed of all material developments and shall permit
Imagistics a reasonable opportunity to participate in the resolution of any
audit-related issues.
Schedule 4.04 - Page 1
Schedule 5.01
Employee Matters
Section 1. General. Except as otherwise set forth in this Schedule 5.01,
(a) Pitney Xxxxx shall retain (i) any and all liabilities relating to or arising
out of any employee benefit or compensation arrangement sponsored, maintained or
contributed to by any member of the Pitney Xxxxx Group (a "Plan") in respect of
any employee or former employee of any member of the Pitney Xxxxx Group who is
not a Transferred Employee (as hereinafter defined), and (ii) any and all
liabilities relating to or arising out of any Plan in respect of all Transferred
Employees that were incurred or are otherwise related to any period prior to and
including the Distribution Date and
(a) Pitney Xxxxx shall have no liability relating to or arising out of any
Plan or otherwise in respect of Transferred Employees to the extent that any
such liability is incurred or otherwise relates to any period after the
Distribution Date.
Section 2. Employees. With respect to each individual who, as of the
Distribution Date, is employed (including persons absent from active service by
reason of Short Term Disability or Long Term Disability, as hereinafter defined,
or absent for reasons not relating to disability, whether paid or unpaid) in the
Imagistics Business ("Transferred Employees"), Imagistics shall cause the
employment of each Transferred Employee to be continued on the Distribution
Date, provided that nothing stated herein shall limit the right of Imagistics or
any Subsidiary to terminate the employment of any Transferred Employee following
the Distribution Date or to reduce or otherwise modify the position,
responsibilities, compensation or benefits of any Transferred Employee at any
time. The employee benefit plans and arrangements maintained by Imagistics shall
give full service credit for purposes of eligibility and vesting (and in
connection with any vacation policy, for purposes of determining the level of
benefit) for any service on or prior to the Distribution Date of a Transferred
Employee with any member of the Pitney Xxxxx Group. For purposes of this
Agreement, (i) "Short Term Disability" shall mean a condition with respect to
which an employee is receiving benefits, as of the Distribution Date, under the
Pitney Xxxxx Short Term Disability Plan, and (ii) "Long Term Disability
Benefits" shall mean benefits under the Pitney Xxxxx Long Term Disability Plan.
Section 3. Qualified Retirement Plans.
(a) (i) Pitney Xxxxx Pension Plan. Effective as of the Distribution Date,
Transferred Employees (other than Transferred Employees whose age and service
totaled more than 50 as of September 1, 1997, referred to herein as "Transition
Credit Employees") shall cease accruals under the Pitney Xxxxx
Schedule 5.01 - Page 1
Pension Plan ("Pension Plan"). Subject to Section 3(a)(ii) hereof, Transferred
Employees who have met the Pension Plan's requirements for commencement of
payment of their Pension Plan benefits may begin to receive such benefits
following the Distribution Date (it being understood that in some cases
commencement of benefit payments will be required) in accordance with Pension
Plan provisions.
(ii) Transition Credit Employees. Transition Credit Employees shall
continue to participate in the Pension Plan following the Distribution for
up to 3 years from the Distribution Date unless a proper election is made
to receive a distribution from the Plan. Transition Credit Employees shall
be eligible to receive a distribution of their Pension Plan accruals in
accordance with Pension Plan provisions. Any Transition Credit Employee who
continues to participate in the Pension Plan following the Distribution
Date shall do so on the same terms and conditions as other Pitney Xxxxx
employees and shall have their service and pensionable compensation with
the Imagistics Group taken into account in determining their benefit under
the Pension Plan. The rights and benefits of Transition Credit Employees
under the Pension Plan shall be set forth in the special amendment to the
Pension Plan intended to specifically govern such rights and benefits,
consistent with the provisions hereof, effective as of the Distribution
Date.
(iii) Transferred Employees with at Least One and Less than 5 Years of
Service. Transferred Employees who have completed at least one and less
than 5 years of service as of the Distribution Date ("Short Service
Employees") shall have their period of employment with the Imagistics Group
credited towards completion of the applicable vesting schedule under the
Pension Plan with full vesting occurring no later than December 31, 2003,
subject to their continued employment with Imagistics. Transferred
Employees who have not completed one year of service as of the Distribution
Date shall not be eligible to participate in the Pension Plan and shall not
have their periods of employment at the Imagistics Group credited under the
Pension Plan for any purpose. The accrued benefit, if any, under the
Pension Plan of Short Service Employees shall not increase on account of
future service and compensation with the Imagistics Group.
(iv) No Transfer of Pension Plan Assets and Liabilities. No assets or
liabilities of the Pension Plan shall be transferred to or assumed by any
member of the Imagistics Group in connection with the Distribution. No
member of the Imagistics Group shall make any contributions to Pitney Xxxxx
with respect to the Pension Plan.
Schedule 5.01 - Page 2
(v) No Imagistics Pension Plan. No member of the Imagistics Group
shall be required, or have any obligation, to sponsor a defined benefit
plan on or after the Distribution Date.
(b) Pitney Xxxxx 401(k) Plan. (i) Prior to the Distribution Date,
Imagistics shall establish a defined contribution plan (the "OS 401(k) Plan")
for the benefit of Transferred Employees, shall take all necessary action, if
any, to qualify such Plan under Section 401(a) and (k) of the Code and shall
make any and all filings and submissions to the appropriate governmental
agencies required to be made by it in connection with the transfer of assets
described below.
(ii) As soon as practicable following the Distribution Date, Pitney
Xxxxx shall cause the trustee of the Pitney Xxxxx 401(k) Plan (the "PB
401(k) Plan") to transfer in the form of cash (except to the extent
otherwise provided below) the full account balances of Transferred
Employees (and beneficiaries thereof) under the PB 401(k) Plan to the
appropriate trustee as designated by Imagistics under the trust agreement
forming a part of the OS 401(k) Plan; provided, however, that the portion
of any such account to which shares of Pitney Xxxxx common stock or
Imagistics common stock is credited or to which an outstanding plan loan
exists shall be transferred in kind to the OS 401(k) Plan. As of the date
of transfer, the account balances of the Transferred Employees shall be
credited with appropriate earnings attributable to the period from the
Distribution Date to the date of transfer described herein or shall have
been reduced by any necessary benefit or withdrawal payments to or in
respect of Transferred Employees occurring during the period from the
Distribution Date to the date of transfer described herein.
(iii) In consideration for the transfer of assets described herein,
Imagistics, shall, effective as of the date of transfer described herein,
assume all of the obligations of Pitney Xxxxx in respect of the account
balances accumulated by Transferred Employees under the PB 401(k) Plan
(exclusive of any portion of such account balances that are paid or
otherwise withdrawn prior to the date of transfer described herein) with
respect to the account balances transferred to the OS 401(k) Plan. Pitney
Xxxxx hereby indemnifies Imagistics against and agrees to hold it harmless
from any liabilities or claims (including claims for benefits or for breach
of fiduciary duties, but excluding claims for benefits to the extent of the
assets transferred hereunder) relating to the PB 401(k) Plan (or the
qualified status of that Plan) that arose prior to the transfer of assets
described herein or that relate to the operation or administration of such
Plan prior to the transfer of assets. Imagistics hereby indemnifies Pitney
Xxxxx against and agrees to hold it harmless from any liabilities or claims
relating to the qualified status of the OS 401(k) Plan or the operation or
Schedule 5.01 - Page 3
administration of such Plan following the transfer of assets described
herein.
(iv) The rights and benefits of Transferred Employees under the PB
401(k) Plan shall be set forth in a special amendment to such Plan,
consistent with the foregoing, effective as of the Distribution Date.
Section 4. Welfare Benefit Plans.
(a) Welfare Plans. (i) For the period from the Distribution Date through
December 31, 2001 ("Benefit Transition Period"), Pitney Xxxxx shall continue to
provide benefits for Transferred Employees (and their eligible spouses and
dependants) to the extent provided to such individuals immediately prior to the
Distribution Date under its medical plan, dental plan, long-term disability
plan, short-term disability policy, life insurance plan and accidental death and
dismemberment plan ("Pitney Xxxxx Welfare Plans"). Imagistics shall promptly
reimburse Pitney Xxxxx for the costs of such benefits incurred during the
Benefit Transition Period as follows:
(A) Imagistics shall transfer to an account designated by Pitney
Xxxxx a cash amount, based on historical claim levels, on the first
day of October 2001, November 2001, December 2001, January 2002 and
February 2002 as stipulated in writing by Pitney Xxxxx to cover the
payment of claims by Transferred Employees and their eligible spouses
and dependants incurred under the Pitney Xxxxx Medical Plan and Pitney
Xxxxx Dental Plan during the Benefit Transition Period. No later than
December 31, 2002, if the actual claims incurred for these individuals
during the Benefit Transition Period are less than the aggregate
estimated payments described above, Pitney Xxxxx shall transfer to
Imagistics an amount equal to the excess, and if the actual claims
incurred for such period are greater than the aggregate estimated
payments, Imagistics shall transfer in cash an amount equal to the
underpayment.
(B) As soon as practicable following the Distribution Date,
Pitney Xxxxx shall cause any Transferred Employee who was receiving
benefits under the Pitney Xxxxx Long Term Disability Plan to be
covered by UNUM, or other replacement carrier, such that following
such transfer of coverage, neither Pitney Xxxxx nor Imagistics will be
responsible or liable for the income replacement benefits which would
otherwise be provided by the Pitney Xxxxx Long Term Disability Plan.
In addition, as soon as practicable following December 31, 2001,
Pitney Xxxxx shall cause any Transferred Employee who becomes entitled
to
Schedule 5.01 - Page 4
benefits under the Pitney Xxxxx Long Term Disability Plan during the
Benefit Transition Period to be covered by UNUM, or other replacement
carrier, such that following such transfer of coverage, neither Pitney
Xxxxx nor Offices Systems will be responsible or liable for the income
replacement benefits which would otherwise be provided by the Pitney
Xxxxx Long Term Disability Plan. Imagistics shall reimburse Pitney
Xxxxx in cash on the last day of September 2001, October 2001,
November 2001 and December 2001, an amount equal to the income
replacement benefits provided to Transferred Employees who become
eligible for such benefits under the Pitney Xxxxx Long Term Disability
Plan.
(C) Imagistics shall provide to Transferred Employees who are
receiving income replacement benefits under the Pitney Xxxxx Long Term
Disability Plan as of the Distribution Date medical benefits which are
comparable, in terms of coverage and cost sharing arrangements, to the
medical benefits provided to active Transferred Employees for a period
of three years following the Distribution Date.
(ii) As of December 31, 2001, Imagistics will cease participation in
the foregoing Pitney Xxxxx Welfare Plans and will establish or designate
welfare plans within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended, for the benefit of Transferred
Employees (the "Replacement Welfare Plans"). Claims incurred by Transferred
Employees on and after January 1, 2002 shall be the responsibility of the
Replacement Welfare Plans.
(iii) During the Benefit Transition Period, Pitney Xxxxx shall provide
coverage and benefits for Transferred Employees and their beneficiaries
under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985
and Section 4980B of the Code and Imagistics shall reimburse to Pitney
Xxxxx the cost of providing such benefits. For periods beginning after the
Benefit Transition Period, Imagistics shall assume full responsibility for
the provision of such benefits and Pitney Xxxxx shall have no liability
therefor.
(b) Retiree Medical Plan. As of the Distribution Date, Transferred
Employees shall not be eligible, or become eligible, to participate in or
receive benefits under the Pitney Xxxxx Retiree Medical Plan (the "Retiree
Medical Plan") except as set forth below:
(i) 55/10 on the Distribution Date: Any Transferred Employee who has
completed at least 10 years of service with Pitney Xxxxx on or
Schedule 5.01 - Page 5
after attainment of age 45 and has attained at least age 55 as of the
Distribution Date (each such Transferred Employee is referred to as an
"Eligible Transferred Employee" and is listed on Schedule 5.4(b)(i) hereto)
shall be entitled to participate in the Retiree Medical Plan following
termination of employment from Imagistics. Each Eligible Transferred
Employee's participation in the Retiree Medical Plan shall be subject to
the terms and conditions of such Plan as in effect at the time such
Employee claims benefits thereunder (other than the requirements relating
to eligibility to participate in such Plan), including provisions of such
Plan regarding the ability of Pitney Xxxxx to amend, modify and terminate
such Plan.
(ii) 55/10 within 3 years of the Distribution Date: Any Transferred
Employee who has (x) completed at least 10 years of service with Pitney
Xxxxx and Imagistics on or after attainment of age 45 within 3 years of the
Distribution Date and (y) has attained age 55 within 3 years of the
Distribution Date ("Qualified Transferred Employee") shall be entitled to
participate in the Retiree Medical Plan following termination of employment
from Imagistics. Each Qualified Transferred Employee's participation in the
Retiree Medical Plan shall be subject to the terms and conditions of such
Plan as in effect at the time such Employee claims benefits thereunder
including any requirements relating to eligibility to participate in such
Plan and Pitney Xxxxx' right to amend, modify or terminate such Plan. For
example, if the eligibility requirements at the time such Employee
terminates employment from Imagistics and seeks benefits under such Plan
are age 60 with 15 years if service, such Qualified Transferred Employee
must satisfy such 60/15 requirements.
(iii) At least age 45: Any Transferred Employee who is at least age 45
on the Distribution Date and (x) attains age 55 and (y) completes at least
10 years of service with Pitney Xxxxx and Imagistics on or after attainment
of age 45 and who is not covered in the above eligibility groups shall be
entitled to participate in the Retiree Medical Plan as provided
hereinafter. Such Transferred Employee shall pay the entire cost of such
coverage as determined by Pitney Xxxxx. Such Transferred Employee's
participation in the Retiree Medical Plan shall be subject to the terms and
conditions of such Plan as in effect at the time such Transferred Employee
claims benefits thereunder, including any requirements relating to
eligibility to participate in such Plan and Pitney Xxxxx' right to amend,
modify or terminate such Plan.
Section 5. Workers Compensation. Imagistics shall be responsible for all
workers compensation obligations related to claim events occurring on or after
the Distribution Date, with respect to any employee or former employee of the
Imagistics Business, including, but not limited to, any Transferred Employee.
Schedule 5.01 - Page 6
Pitney Xxxxx shall be responsible for all workers compensation obligations
related to claim events occurring prior to the Distribution Date with respect to
any employee or former employee of the Imagistics Business, including, but not
limited to, any Transferred Employee.
Section 6. Stock-Based Plans.
(a) Pitney Xxxxx Stock Plan. Pitney Xxxxx and Imagistics shall use their
reasonable best efforts to take all actions necessary or appropriate so that
each Transferred Employee who has been granted options on the common stock of
Pitney Xxxxx pursuant to the Pitney Xxxxx Stock Plan and who has outstanding
options as of the Distribution Date shall have such options equitably adjusted
to reflect a change in the fair market value of Pitney Xxxxx following the
Distribution Date. In addition, such Transferred Employees shall be granted
options on the common stock of Imagistics under the Imagistics Stock Plan
following the Distribution Date with an intrinsic value intended to make up for
the reduced intrinsic value occurring by reason of their Pitney Xxxxx options
being adjusted. Transferred Employees shall not receive any further grants of
Pitney Xxxxx stock options following the Distribution Date. For purposes of
Pitney Xxxxx stock options granted to Transferred Employees described herein,
service with Imagistics will be recognized to satisfy any vesting schedule with
respect to such options that has not been satisfied as of the Distribution Date.
The Distribution will not result in a termination of employment or otherwise be
considered an exercise or forfeiture event under such Plan or option award
agreement. However, termination of employment from Imagistics will be treated as
a termination event under such Plan or option award agreement. In any event, the
rights and benefits of Transferred Employees under the Pitney Xxxxx Stock Plan
shall be set forth in the special amendment to such Plan intended to
specifically govern such rights and benefits, consistent with the terms hereof,
effective as of October 1, 2000.
(b) Employee Stock Purchase Plan. Transferred Employees shall cease
participation in the Pitney Xxxxx Employee Stock Purchase Plan as of the
Distribution Date and shall have their payroll deductions as of such date paid
to them in accordance with the terms of such Plan. Transferred Employees shall
not participate in such Plan following the Distribution Date.
Section 7. Bonus and Profit Incentive Plans.
(a) PBC and Annual Incentive Awards. Any Transferred Employee who is
eligible for incentive compensation pursuant to the Pitney Xxxxx Performance
Based Compensation Program or who is eligible for incentive compensation under
the Pitney Xxxxx Key Employees' Incentive Plan shall have any such incentive
compensation paid to him or her as soon as practicable following the
Distribution Date. Any payments referred to in the preceding
Schedule 5.01 - Page 7
sentence shall be paid by Pitney Xxxxx and based on the period of employment
with Pitney Xxxxx during calendar year 2001 through the Distribution Date and
shall be further based on the evaluation criteria customarily applied pursuant
to the respective incentive pay Program or Plan in which the Transferred
Employee participates. Transferred Employees shall not participate in any such
Pitney Xxxxx Program or Plan following the Distribution Date.
(b) CIUs. Any Transferred Employee who is eligible for cash incentive units
("CIUs") under the Pitney Xxxxx Long Term Incentive Program shall have the value
of his or her CIUs paid in cash in accordance with the terms and conditions of
such Program based on the number of completed months of service with Pitney
Xxxxx during each 36 month CIU cycle and on the extent that performance-based
targets associated with the CIUs are achieved. Any such CIU shall be paid to
each eligible Transferred Employee at the time other participants in the CIU
program receive their payments based on the completion of a 36 month cycle. For
purposes of this prorated calculation, the targeted payout shall be multiplied
by a fraction, the numerator of which is the Transferred Employee's total number
of completed months of active service with the relevant Group during the
particular CIU cycle through the Distribution Date and the denominator of which
is 36. Transferred Employees shall not participate in such Program following the
Distribution Date.
(c) Excluded Arrangements. Xx. Xxxx X. Xxxxxxxxxx entered into a Separation
Agreement with Pitney Xxxxx effective as of October 27, 2000 and a related
letter agreement of the same date (collectively, the "MB Agreements") in which
his rights and obligations under certain plans and arrangements of Pitney Xxxxx,
identified therein, are separately described. Pitney Xxxxx and Offices Systems
agree that, in the case of Xx. Xxxxxxxxxx, the MB Agreements shall not be
affected by, and shall supersede any contrary provisions of, this Distribution
Agreement.
Section 8. Severance. The continued employment by the Imagistics Group of
Transferred Employees after the Distribution Date shall not be deemed a
severance of employment of such Transferred Employees from Pitney Xxxxx for
purposes of any policy, Plan, program or agreement of Pitney Xxxxx or any of its
Subsidiaries that provides for the payment of severance, salary continuation or
similar benefits.
Section 9. Deferred Compensation. Pitney Xxxxx shall retain as of the
Distribution Date all of the obligations and liabilities of Pitney Xxxxx and any
of its Affiliates (including, without limitation, office systems as a division
thereof) for any Transferred Employee under all non-qualified deferred
compensation and retirement plans of Pitney Xxxxx and its Affiliates and any
reserve or accrual in respect of such Transferred Employees shall be retained by
Pitney Xxxxx.
Schedule 5.01 - Page 8
Section 10. No Third Party Beneficiaries. Neither Transferred Employees nor
any current, former or retired employee of the Pitney Xxxxx Group shall be
entitled to enforce the provisions of this Schedule 5.01 against the respective
parties as third party beneficiaries thereof.
Schedule 5.01 - Page 9
SCHEDULE 8.04
INSURANCE
Occurrence Policies
Comprehensive Automobile Liability*
Commercial General/Products Liability*
Employers Liability (other than Workers' Compensation)*
Aircraft Liability (Non-Owned)
Financial Services Excess Umbrella
International Excess and Difference-In-Conditions
HealthCare Purchasers Professional Liability
Property (Global) including Ocean Cargo
Travel Accident
Umbrella (Excess) Liability
* Accruals have been established to cover deductibles
Claims Made Policies
Specialty Errors & Omissions Liability
Employment Practices Liability
Executive Risk Policies
Directors & Officers Liability
Fiduciary Liability
Kidnap/Xxxxxx and Extortion
Outside Directorship
Crime
Excess Directors & Officers Liability
Excess Fiduciary Liability
Pollution and Remediation Legal Liability (3rd Party Dispositioners)
Schedule 8.04 - Page 1
