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Published: 2008-03-26

Reseller Agreement - Pitney Bowes of Canada Ltd. and Pitney Bowes Office Systems, Inc.



 
                              ___________, 2001


Pitney Bowes Office Systems, Inc.
100 Oakview Drive
Trumbull, Connecticut  06611

     Re:       Pitney Bowes of Canada Ltd./Pitney Bowes Office Systems, Inc. -
               ----------------------------------------------------------------
               Reseller Agreement
               ------------------


Ladies and Gentlemen:

     In connection with the distribution of the capital stock of Pitney Bowes
Office Systems, Inc. ("Office Systems" or "you") by Pitney Bowes Inc. ("Pitney
Bowes") to its stockholders (the "Distribution"), Office Systems and Pitney
Bowes of Canada Ltd., a wholly-owned subsidiary of Pitney Bowes ("PBC," "we" or
"us") hereby enter into this reseller agreement to provide for the purchase of
equipment by PBC from Office Systems (the "Reseller Agreement").  This letter
agreement together with the term sheet attached hereto as Exhibit A (the "Term
Sheet") constitute the Reseller Agreement.  The terms set forth in the Term
Sheet are hereby incorporated by reference into this Reseller Agreement as if
they were set out herein in full.  The entering into and purchasing under the
Reseller Agreement by the parties herein described and the other transactions
contemplated hereby, entered into and consummated in connection therewith are
herein referred to as the "Transactions".

     Subject to the terms and conditions of this Reseller Agreement, we hereby
agree with you as follows:

     1.  Confidentiality.  You agree that the confidentiality provisions of the
         ---------------                                                       
Distribution Agreement dated as of [date] between Pitney Bowes and Office
Systems (the "Distribution Agreement") shall apply in all respects to any and
all confidential information related to, or provided under, this Reseller
Agreement.

     2.   Use of "Pitney Bowes" brand.  You agree that the terms of the
          ---------------------------                                  
Distribution Agreement and the Intellectual Property Agreement dated as of
[date] between Pitney Bowes and Office Systems (the "Intellectual Property
Agreement") regarding the use of the "Pitney Bowes" brand shall apply in all

 
respects to use of the "Pitney Bowes" brand as used in connection with
transaction under or related to this Reseller Agreement.

     3.  Non-compete.  You agree that the terms of the Distribution Agreement
         -----------                                                         
and the Intellectual Property Agreement regarding non-competition, including the
provisions for termination thereof, shall apply in all respects to this Reseller
Agreement.

     4.  Dispute Resolution.  You agree that all disputes arising between the
         ------------------                                                  
parties under this Reseller Agreement shall be resolved pursuant to the terms of
the Transition Services Agreement dated as of _________ between Pitney Bowes and
Office Systems (the "Transition Services Agreement"), including submission of
all disputes to the Operating Committee (as such term is defined in the
Transition Services Agreement) for resolution, subject to Section 8 herein.

     5.  Assignment.  The provisions of this Reseller 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 Reseller
Agreement without the consent of the other parties hereto.  If any party or any
of its successors or assigns (1) shall consolidate with or merge into any other
Person (as such term is defined in the Distribution Agreement) and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (2) 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 this Reseller Agreement.

     6.   Notices.  All notices and other communications to any party hereunder
          -------                                                              
shall be in writing (including telecopy or similar writing) and shall be deemed
given when addressed as follows:

If to us, to:

     Pitney Bowes of Canada Ltd.
     2200 Yonge Street, Suite 100
     Toronto, ON
     M4S 3E1
     Canada
     Attn: Chief Financial Officer
     Tel.: 416-484-2211
     Fax: 416-484-3975


                                       2

 
with a copy to:

     Pitney Bowes Inc.
     1 Elmcroft Drive
     Stamford, CT 06926-0700
     Telecopy: (203) 351-7984
     Attention: Sara Moss
     Title: Vice President and General Counsel

with a copy to:

     Davis Polk & Wardwell
     450 Lexington Avenue
     New York, New York  10017
     Telecopy: (212) 450-4800
     Attention: Sarah J. Beshar
 
If to you, to:

     Pitney Bowes Office Systems, Inc.
     100 Oakview Drive
     Trumbull, CT  06611
     Telecopy: (203) [   -       ]
     Attention: Chief Executive Officer

with a copy to:

     Pitney Bowes Office Systems, Inc.
     100 Oakview Drive
     Trumbull, CT  06611
     Telecopy: (203) 365-2353
     Attention: General Counsel

     7.    Governing Law and Waiver of Jury Trial.  This Reseller 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.  Each of the
parties hereto waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) related to or
arising out of any of the Transactions or the other transactions contemplated
hereby, or the performance by either party of the services contemplated hereby.

     8.    Jurisdiction.  Any action seeking to enforce any provision of, or
           ------------                                                     
based on any matter arising out of or in connection with, this Reseller
Agreement or the 


                                       3

 
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 6
above shall be deemed effective service of process on such party.
 
     9.    Amendments.  This Reseller Agreement is the only agreement between
           ----------                                                        
the parties hereto with respect to the matters contemplated hereby and thereby
and sets forth the entire understanding of the parties with respect thereto. The
parties hereby agree to be bound by the covenants and obligations set forth in
this Reseller Agreement.  No amendment or waiver of any provision of this
Reseller Agreement shall be effective unless in writing and signed by the
parties hereto and then only in the specific instance and for the specific
purpose for which given.  Each of the parties hereto waives all right to trial
by jury in any action, proceeding or counterclaim (whether based upon contract,
tort or otherwise) related to or arising out of any of the Transactions or the
other transactions contemplated hereby, or the performance by either party of
the services contemplated hereby.

     Please confirm that the foregoing correctly sets forth our agreement by
signing and returning to us the duplicate copy of this Agreement enclosed
herewith.
                         Very truly yours,

                         PITNEY BOWES OF CANADA LTD.


                         By:  ____________________________
                              Name:
                              Title:

Accepted and agreed to as of
the date first written above:

PITNEY BOWES OFFICE SYSTEMS, INC.


By:  _______________________________
     Name:
     Title:


                                       4

 
                                                                                

                          PITNEY BOWES OF CANADA LTD.
                       PITNEY BOWES OFFICE SYSTEMS INC.
                  RESELLER AGREEMENT ("AGREEMENT") TERM SHEET
                                       ---------             


I.    Parties
      -------

      A.  Purchaser:  Pitney Bowes of Canada Ltd.  ("PBC")
          ---------                                  ---  

      B.  Supplier:  Pitney Bowes Office Systems, Inc. ("PBOS")
          --------                                       ----  

II.   Term and Renewals
---   -----------------

      A.  The term of the Agreement shall be for a period of two (2) years
          commencing as of the date of the spin-off (the "Spin-Off Date"). The
                                                          -------------
          Agreement may be renewed by the parties for an additional year
          provided that any such renewal is at arm's length and agreement as to
          such renewal is reached by the parties no later than nine (9) months
          prior to the end of the term.

      B.  One year prior to the end of the term, the parties shall meet to
          discuss (i) whether or not the Agreement will be renewed for an
          additional year and (ii) the terms and conditions upon which the
          Agreement will be renewed.

      C.  PBOS and PBC shall have the right to terminate this Agreement upon the
          occurrence of any of the following events of default:

          i)    A party fails to perform any material obligation under this
                Agreement and such failure continues unremedied for a period of
                thirty (30) days after the non-defaulting party provides written
                notice as to the failure to perform;

          ii)   A proceeding is commenced by or against a party under any law
                relating to bankruptcy, or a court assumes jurisdiction of a
                party's assets under any law authorizing reorganization of its
                debts, or a trustee or receiver shall be appointed for all or a
                substantial portion of the party's assets;

          iii)  A party shall become insolvent or suspends its business for any
                length of time; or

           iv)  A party shall make an assignment of its assets for the benefit
                of its creditors.

III.  Equipment Ordering and Administration
      -------------------------------------

      A.  Ordering: All PBC orders with PBOS will be placed by the Purchasing
          --------
          Department of PBC (PD) in the form of Exhibit A attached hereto;
                                                ---------
          provided, however, that orders (1) with respect to New Equipment (as
          --------  -------
          hereinafter defined) that request delivery outside of the standard
          lead times as agreed to by the parties from time to time (2) with
          respect to equipment other

 
          than New Equipment (e.g. Used Equipment, Remanufactured Equipment and
          Refurbished Equipment) and (3) with respect to equipment that has been
          discontinued by the manufacturer will be subject to the prior approval
          of PBOS, which shall be provided to PBC within 5 business days from
          receipt of a PBC order.

     All parts & supply orders will be placed by the PD with a Purchase Order
     (PO) reference. All Order Agreements and parts & supply orders will be
     processed by the PD, and no orders may be accepted from any other location.
     All supply orders will note a PO number, which must be noted in the section
     reserved for Purchase Order number on the PBOS invoice.

     Once an order is accepted, PBOS will use reasonably commercial efforts to
     ensure that the manufacturer delivers the product to PBC at the F.O.B.
     point in a timely and marketable condition in accordance with applicable
     deadlines, and will not be diverted for any reason.  In the event that the
     ship date is delayed for any reason by the manufacturer, PBOS shall pass on
     to PBC the benefit of any remedies from the manufacturer in connection with
     any such delay.

     A single point of contact will be provided by PBOS for PBC to place orders.

     B.  Billing:  The sole "Bill To" address for PBC is:
         --------                                        

         Pitney Bowes of Canada Ltd.,
         2200 Yonge Street,
         Suite 100,
         Toronto, ON,
         M4S 3E1
         Canada

         Attention:  Accounts Payable

     All invoices sent by PBOS to PBC shall be accompanied with a copy of the
     manufacturer's invoice for such equipment.  Invoices may not be sent to any
     other location for any reason.  All inquiries for billing and collection,
     including aging statements and dunning letters, will be directed to the PD
     at the address shown above.

     C.  Payment:  Payment on all invoices will be due to PBOS upon invoice
         -------
     receipt; provided, however that in no event shall payment on an
              --------  -------
     invoice(s) exceed the amount of the related purchase order(s) except if
     due to currency fluctuations (excluding yield sharing arrangements).
     Payment method will be made by wire transfer of immediately available
     funds to such account as PBOS shall advise from time to time.

     D.  Invoice Adjustments. PBC shall have 30 days from the date it
         -------------------
     receives a shipment to (1) notify PBOS with respect to any discrepancies
     between the invoices received in respect of such shipment and the
     shipment actually received and (2) request adjustments with respect to
     any such discrepancies. Any such adjustments will be billed or credited
     to PBC in a separate invoice within 10 days after receipt of notification
     by PBOS.


 
E.  Product Delivery: PBOS and PBC will agree to standard delivery lead-times
    -----------------                                                        
    for different type of purchases including but not limited to those set forth
    below:
    -----        

    i)   Used Equipment - Subject to order approval by PBOS based on the
         availability of such equipment.

         For purposes of this Agreement, "Used Equipment" shall mean
         equipment that has been operated and sold to PBC by PBOS "as is"
         in the configuration agreed upon by the parties.

    ii)  Refurbished/Remanufactured Equipment - Subject to order approval by
         PBOS (based on availability of such equipment in light of quantity and
         excess in stock and whether such excess is reserved), which approval
         shall be notified to PBC within two (2) business days of receipt by
         PBOS of a request for same by PBC via email or facsimile.

         For purposes of this Agreement, "Refurbished/Remanufactured
         Equipment" shall mean used units of equipment that are
         disassembled and their parts cleaned and reconditioned.  The
         units are reassembled from new, used, and reprocessed parts
         meeting component specifications.  The units are then retested to
         ensure that they meet model specifications.

    iii) Emergency Parts - PBC shall be entitled to submit a maximum of 1 order
         per week with 3 line items per order and 3 pieces per line item. The
         foregoing limitations shall not apply with respect to epidemic failures
         where 5% or more of the population of product fails in a 12 month
         period as a result of the same cause (excluding products under
         warranty). To the extent that PBOS cannot provide Emergency Parts to
         PBC, it shall notify PBC immediately of same.

         PBC shall pay to PBOS a premium of $100 per order for each order
         for Emergency Parts.

         If PBC is not able to obtain Emergency Parts from PBOS due to the
         fact that it has exceeded the above noted limitation or PBOS
         cannot provide such Emergency Parts, PBC may obtain such parts
         from any other supplier and such Emergency Parts shall not be
         included for purposes of determining PBC's total sourcing
         requirements when determining PBC's compliance with Section
         VII.A.; provided, however, that if PBC requires Emergency Parts
                 --------  -------            
         in excess of the above noted limitation it shall first request
         same from PBOS and PBOS shall immediately notify PBC whether it
         will provide such additional Emergency Parts.

         For purposes of this Agreement, "Emergency Parts" shall mean any
         part PBC requires to meet an urgent customer request.

    FOB point shall be (1) with respect to New Equipment, FOB point of
    origin, and  with respect to equipment other than New Equipment as
    negotiated by the parties.


 
   IV.  Equipment and Pricing
        ---------------------

        A.  All New Equipment, Parts, Emergency Parts, and Supplies prices shall
            be calculated as follows:

            i)    For those provided to PBC from PBOS' inventory at the request
                  of PBC, the price shall be PBOS' standard cost plus ten
                  percent (10%).

            ii)   For those provided to PBC directly from a third party vendor,
                  the price shall be calculated at 10% over the price paid by
                  PBOS for such equipment, net of all rebates, volume discounts
                  or other reductions in the price of such equipment.

            iii)  PBC shall pay all costs of shipping said items, including
                  freight, duty and insurance, from either PBOS or the third
                  party vendor to PBC, as applicable, provided that PBC has
                  approved such costs in advance.

            iv)   Emergency Parts shall additionally include the fee set forth
                  in Section III. E. (iii).

            v)    If PBOS at its own discretion chooses to fill a standard order
                  (excluding Emergency Parts) from PBOS' inventory, PBC will pay
                  the lower of (x) the price as calculated pursuant to clause
                  (ii) above and (y) the price as calculated pursuant to (i)
                  above.

            vi)   Refurbished/Remanufactured and Used Equipment shall be priced
                  as quoted by PBOS at the time of such request for same.

        B.  Prices will be quoted in the currency of the vendor agreement. PBOS
            will bill in US$ but will not accept the currency risk for equipment
            sourced in foreign currency. The conversion rate from Yen to US
            dollars will be the rate published in the Wall Street Journal the
            day before the invoice date. Purchaser will be party to any currency
            sharing agreements. These must be fully disclosed in advance and the
            details provided.

        C.  In the case of large deals (defined as 1500 or more units to a
            single account), PBOS will use its best efforts to obtain special
            pricing from its suppliers and will pass these onto PBC using the
            formula in IV A. above.

        D.  PBC agrees that it shall not develop any direct relationship with
            any current PBOS supplier, unless (1) PBOS chooses not to supply
            equipment to PBC for any reason (unless such failure to supply is
            due to a circumstance outside the reasonable control of PBOS) after
            PBC has presented it with a request for same, (2) this Agreement has
            been terminated or is no longer in effect, (3) either party has
            provided the other party of its intention to not renew this
            Agreement or (4) notice of termination of the covenant not to
            compete has been given pursuant to Section 8.12(b) of the
            Distribution Agreement. For the avoidance of doubt, any equipment,
            parts or supplies purchased from a supplier other than PBOS for the
            foregoing reasons shall not be included for purposes of determining
            PBC's total sourcing requirements when determining PBC's compliance
            with Section VII.A. 

 
            In addition, PBC shall be free to contact any vendor/supplier in
            Canada, or any other vendor outside of Canada who is not a then
            current vendor of PBOS (1) for purposes of obtaining the 10% of its
            sourcing requirements that are not subject to Section VII.A hereof
            and (2) with respect to equipment purchases with respect to which
            PBOS fails to satisfy the terms of Section VII.A., clauses (i), (ii)
            or (iii).

V.   Warranty
     --------

     For each PBOS product purchased by PBC, PBOS shall transfer to PBC all
     warranties and indemnifications that it holds from the equipment
     manufacturer. If any warranty and/or indemnification is not transferable,
     PBOS will covenant to provide PBC with the practical benefits of such
     warranty and/or indemnification. PBOS will provide a list of all warranties
     and indemnifications provided to PBOS by the equipment manufacturer with
     respect to existing equipment, supplies and parts.

     PBOS shall obtain any normal product certifications (e.g. United Lab "small
     c", international access standards, etc.) to meet local law requirements,
     including, without limitation, those relating to safety and language;
                                                                          
     provided, however, that to the extent that there are incremental costs
     --------  -------                                                     
     associated with obtaining any certifications, PBC shall bear the costs and
     expenses relating to same.  PBOS shall use its best efforts to get
     additional features at the lowest possible price from its suppliers to
     satisfy local requirements.


VI.  Audit Rights
     ------------

     A.  PBC, at its sole cost and expense, shall have the right to an annual
         audit of PBOS books and records (including agreements and modifications
         to same) by an independent accountant from an internationally
         recognized firm) to verify pricing and warranties.

     B.  PBOS, at its sole cost and expense, shall have the right to an annual
         audit of PBC's books and records by an independent accountant from an
         internationally recognized firm) to verify PBC's compliance with
         Section VII.A. hereof.

VII.  Nonexclusivity
      --------------

      A.  Subject to clauses (i), (ii), (iii) of this paragraph VII.A. and
          paragraphs VII.B., VII.C., VII.D. and VII.E. below, PBOS shall be the
          exclusive provider of PBC with respect to at least 90% of PBC's total
          sourcing requirements relating to copiers and facsimile machines,
          supplies, peripherals and all associated parts; provided, however,
          that the equipment to be provided by PBOS (i) meets the specifications
          and requirements (including legal, language, and safety requirements
          required under Canadian Federal and Provincial regulations) for its
          intended use, (ii) is priced competitively with similar equipment that
          may be purchased in Canada (e.g. to the extent that similar equipment
          can be purchased in Canada at a lower price, PBC will not be obligated
          to purchase same from PBOS) and (iii) is available to meet PBC's
          delivery requirements.

          Equipment that will be subject to the provisions of paragraph VII.A.
          will be as agreed to by the parties from time to time.


 
          In the event PBC requests equipment falling outside of such
          list in terms of features or functionality, paragraph VII.B. shall
          govern.

      B.  During the term of the Agreement, as and when PBC wishes to source
          product outside of PBOS' then current portfolio of products for
          distribution in connection with individual tenders, requests for
          proposals (RFP's) and individual customer requests, it may provide
          PBOS as soon as it has knowledge of same with reasonable written
          notice (which shall in no event be less than ten (10) days) of the
          type and quantity of machine(s) it desires, together with the required
          level of product functionality and requested delivery schedule. If
          PBOS responds to PBC prior to the end of such ten (10) day period that
          it is willing to provide products meeting PBC's requirements
          (including delivery requirements), PBOS shall be granted the order on
          the specified terms, provided that PBOS's price is competitive with
          pricing of comparable equipment that may be purchased in Canada. If
          PBOS fails to timely respond to or affirmatively rejects PBC's notice,
          PBC shall be permitted to pursue other vendors with respect to the
          particular order on an unencumbered basis. In no event, however, shall
          PBOS' failure to respond favorably to a particular order prejudice its
          ability to fulfill the future sourcing needs of PBC on a preferred
          basis provided that PBOS meets the provisions outlined above with
                -------- ----
          respect to those future orders.

          To the extent that PBC acquires a dealership that distributes
          equipment in Canada that is competitive with the equipment to be
          supplied by PBOS to PBC under this Agreement, PBC shall use its best
          efforts to transition out such portion of competitive products as soon
          as reasonably possible in order to honor the exclusivity provisions
          set forth in paragraph VII.A. above.

      C.  For purposes of obtaining the benefit of pricing set forth in 
          Section IV. of this Agreement, PBC shall have no minimum volume
          purchase requirements with PBOS except as provided in paragraph VII.A.
          above.

      D.  The provisions of Section VII.A. above shall cease to apply upon (1)
          notice by any party of termination of the covenant not to compete
          pursuant to Section 8.12(b) of the Distribution Agreement and (2) the
          termination of this Agreement..

      E.  Upon notice by either party of its intention to not renew this
          Agreement, the 90% requirement pursuant to Section VII.A. shall be
          reduced by 50% of the declining percentage for each remaining quarter
          until the termination date of the Agreement.

VIII.  Indemnification

      A.  PBOS shall indemnify, defend and hold harmless PBC, its affiliates,
          directors, officers, and employees, from and against any losses,
          claims of losses, damages and expenses (including without limitation
          court costs and attorneys' fees) caused by:

           i)   Defective Equipment to the extent provided by the equipment
                manufacturers to PBOS;
           ii)  Copyright or other intellectual property right infringements as
                set forth in Section VIII.E. below; and

 
          iii)  any other matters with respect to which PBOS has obtained
                indemnities and/or defense from its vendors/suppliers or third
                parties.

      B.  PBC shall promptly notify PBOS of any indemnification claims. PBOS
          shall have the right to control the defense of such claim including
          the right, with the consent of PBC, to compromise or settle such
          claim. PBC shall participate in such defense if request by PBOS and
          shall be reimbursed for the expenses incurred as a result of such
          participation.

      C.  As previously agreed, PBOS will transfer warranties and
          indeminifcations it receives from its suppliers for the equipment
          purchased by PBC hereunder. If any such warranties and/or
          indemnifications are not transferable, PBOS hereby covenants to
          provide to PBC the practical benefits of such warranties and/or
          indemnifications. PBOS hereby waives all warranties (express or
          implied), other than the indemnities or warranties referred to in this
          Agreement. Further, PBOS will not be providing maintenance service on
          equipment sold to PBC.

      D.  PBOS shall provide PBC with notice prior to changing any provisions in
          any supplier/vendor contract relating to indemnities, warranties or
          any other provisions with respect to which PBOS has agreed to pass on
          the benefits to PBC.

 
        E.  PBOS will, at its sole expense, indemnify, defend, and hold harmless
            PBC, its parent, directors, officers and employees from and against
            all liability as a result of a claim or action asserted by any third
            party based upon PBC's or its customer's use and/or possession of
            modifications to, or designs of equipment requested or completed by
            PBOS, which equipment has then been supplied to PBC by PBOS pursuant
            to this Agreement ("Infringing Equipment") infringing any patent,
            copyright, trade secret, trademark or other intellectual property
            right or interest of any third party ("Infringement") or any
            customer claim against PBC relating to any Infringement, and PBOS
            will pay damages, costs, expenses, settlement amounts and judgments
            finally awarded against PBC or PBC's customers relating thereto
            (including court costs and attorneys' fees). PBC agrees to promptly
            notify PBOS in writing of any matters in respect to which the
            foregoing indemnity may apply. PBOS shall have the exclusive right
            to control and conduct the defense and settlement of all such claims
            or actions. PBC agrees to provide such assistance at PBOS' expense
            that may be reasonably required by PBOS in connection with such
            settlement or defense. If final judgment shall be obtained against
            PBC's or its customer's use or operation of the equipment supplied
            by PBOS to PBC pursuant to this Agreement, or any part thereof, by
            reason of such Infringement, or if in PBOS's opinion, such equipment
            is likely to become subject to a claim of Infringement, PBOS shall,
            at its sole expense and option, either (a) modify the Infringing
            Equipment so that it becomes non-infringing without materially
            altering its capacity or performance; (b) procure for PBC or PBC's
            customer the right to continue to use the Infringing Equipment; or
            (c) substitute for the Infringing Equipment other equipment having a
            capability equivalent to that of the Infringing Equipment. If
            neither (a) through (c) above is available to PBOS, then PBOS shall
            refund to PBC the purchase price of such unit of Infringing
            Equipment paid, pro ratable, based upon a thirty-six (36) month
            useful life and shall remove the Infringing Equipment at its sole
            cost and expense. PBOS shall have no liability with respect to any
            such claim or action to the extent caused by the combination,
            operation or use of the Infringing Equipment with any equipment,
            device, or alteration to the Infringing Equipment not made or
            authorized in writing by PBOS. The foregoing states the entire
            liability of PBOS to PBC for Infringement.

IX.     Service Level Agreements 
        -------------------------

        PBOS will provide the following to PBC at no charge:

        A.   Marketing & Sales Support
             -------------------------

             i)    Monthly updates of new products.
             ii)   PBOS Creative for all brochures (electronically)
             iii)  A PBOS product launch binder for each product
             iv)   One time "train the trainer" session training on new
                   products, provided that PBC is responsible for the cost of
                   travel and lodging of its personnel participating in such
                   training
             v)    A master copy on a per product basis of training materials to
                   be used for training the sales force
             vi)   Ability for PBC to participate in events (Seminars, Trade
                   Shows, etc.)

        B.   Technical & Service Support
             ---------------------------

 
        i)   Quality assurance testing, engineering and R&D
        ii)  One technical training (train the Trainer program) class per new
             product introduction including all new product/feature
             introductions, as well as iLearning. PBC may elect at their
             discretion to arrange technical training at a Canadian facility of
             their choice. PBC will pay the travel and living expenses of the
             trainer provided that PBC has approved such costs in advance.
        iii) Service bulletins and updates, trouble database, including access
             to all web related information and problem resolution procedures
             currently available.
        iv)  Technical & engineering bulletins
        v)   Patches & interface kits (including software updates for existing
             products) provided that they are free to PBOS; PBC shall pay any
             incremental costs specific to PBC with respect to the foregoing
             provided that PBC has approved such costs in advance
        vi)  Hotline support for technical issues (third level only; i.e., after
             their customer engineer and technical support people have failed)
        vii) Diagnostic tools (software based) provided that they are free to
             PBOS; PBC shall pay any incremental costs specific to PBC with
             respect to the foregoing provided that PBC has approved such costs
             in advance

        PBOS will provide the following at a mutually agreed upon reasonable
        price:

        .  Customization to products - Parties to include a co-development
           policy to meet Canadian requirements, including agreement delivery
           timetable, pre and post sales support, intellectual property rights
           etc.
        .  On-Site assistance
        .  Coordination of third party engineering support for unique
           engineering requirements

        The Parties will work in good faith to mutually agree to the following
        within 90 days of the execution of the Agreement:

        .  On-site assistance procedure
        .  High profile event procedure
        .  Complaint procedure
        .  Standardized fault resolution process
        .  Contacts for technical product information
        .  Problem resolution process (including emergency, out of hours
           coverage etc.)
        .  Monthly reporting and review of service level measures
        .  Process for dealing with epidemic failure of components

X.  Cross Border Transactions
    -------------------------

    A.  With respect to cross border transactions, regardless of whether PBOS or
        any of its employees, associates, agents, distributors, affiliates or
        subsidiaries or PBC or any of its employees, associates, agents,
        distributors, affiliates or subsidiaries, other than PBMS, initiates the
        transactions, all revenue from sales or service and the associated costs
        shall belong to the company in the territory where installation of the
        equipment occurs.

 
        Each party may contract directly with the customer for the sale, rental
        or service in its home country or, if the customer requires a single
        point of contact, the parties shall enter into a subcontract arrangement
        with the party in the country in which the customer's applicable
        purchasing office is located serving as the prime contractor. Each party
        shall decide the price and terms to be charged within its respective
        country, provided, however, that with respect to large transactions,
                 --------  -------
        each party's Contact for Cross Border Transactions shall meet to decide
        the pricing to be charged to the customer.

B.      Each of PBOS and PBC shall appoint a single contact person to handle any
        such cross border transactions ("Contact for Cross Border
                                         ------------------------
        Transactions"). As of the date of this Agreement, the primary Contact
        ------------
        for Cross Border Transactions for each of PBOS and PBC is set forth
        below:

        For PBC:    Rob Medved
                    Telephone: 416-484-3803
                    Facsimile: 416-484-3975
                    Email: rob.medved@pitneybowes.ca

        For PBOS:   Christopher Dewart
                    Telephone: 203-365-7101
                    Facsimile: 203-365-6135
                    Email: Chris.Dewart@pb.com

        Each of the above shall be responsible for appointing a deputy to act
        on his behalf in his absence.

C.      PBOS and PBC shall schedule periodic meetings for its sales people
        involved in cross border transaction to ensure open communications
        between PBC and PBOS with respect to same.

XI.  Product Sourcing
     ----------------

     PBOS, through its product sourcing, will use its best efforts to ensure
     that Canadian product requirements are being met.  The parties agree to
     meet at least twice per year to obtain PBC input in the types and qualities
     of products required to allow PBC to remain competitive in the Canadian
     market place.