Tax Separation Agreement - Pitney Bowes Inc. and Imagistics International Inc.


                            TAX SEPARATION AGREEMENT

                                     between

                               Pitney Bowes Inc.,
                               on behalf of itself
                                 and the members
                            of the Pitney Bowes Group

                                       and

                         Imagistics International Inc.,
                               on behalf of itself
                                 and the members
                             of the Imagistics Group


                            TAX SEPARATION AGREEMENT

     This Tax Separation Agreement (the "Agreement") is entered into as of the
1st day of November, 2001 between Pitney Bowes Inc. ("PBI"), a Delaware
corporation, on behalf of itself and the members of PBI Group, and Imagistics
International Inc. ("Imagistics"), a Delaware corporation, on behalf of itself
and the members of Imagistics Group.

                              W I T N E S S E T H:

     WHEREAS, pursuant to the tax laws of various jurisdictions, certain members
of Imagistics Group, as defined below, will file certain tax returns on a
stand-alone basis as well as on an affiliated, consolidated, combined, unitary,
fiscal unit or other group basis (including as permitted by Section 1501 of the
Internal Revenue Code of 1986, as amended (the "Code") with certain members of
PBI Group, as defined below, for taxable periods beginning prior to the
Distribution, as defined below;

     WHEREAS, PBI and Imagistics intend that PBI distribute to its shareholders
all of the Imagistics common stock held by PBI (the "Distribution");

     WHEREAS, PBI has received a private letter ruling from the Internal Revenue
Service confirming the qualification of the Distribution as tax-free to PBI and
its shareholders, which, together with the underlying Ruling Request, as defined
below, has been provided to, and reviewed by, Imagistics;

     WHEREAS, PBI and Imagistics desire to set forth their agreement on the
rights and obligations of PBI, Imagistics and the members of PBI Group and
Imagistics Group, respectively, with respect to the handling and allocation of
federal, state, local and foreign taxes incurred in taxable periods beginning
prior to the Distribution Date, as defined below, and various other tax matters;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:

     1. Definitions.

     (a) As used in this Agreement:

     "2001 Short Year" shall mean the short taxable year beginning on the first
day of Imagistics' first taxable period in 2001 and ending on the Distribution
Date.

     "After-Tax Amount" shall mean an additional amount necessary to reflect the
hypothetical tax consequences of the receipt or accrual of any payment




that is treated as income of the recipient of such payment, using the maximum
statutory tax rate (or tax rates, in the case of an item that affects more than
one tax) applicable to the recipient of such payment for the relevant year. The
After-Tax Amount shall reflect, for example, the effect of the deductions
available for interest paid or accrued and for taxes such as state and local
income taxes.

     "Combined Income Tax" shall mean, with respect to each state, local or
foreign taxing jurisdiction, any income, franchise or similar tax (together with
any related interest or penalty) payable to such state, local or foreign taxing
jurisdiction in which a member of Imagistics Group files tax returns with a
member of PBI Group, on a consolidated, combined or unitary basis.

     "Distribution Agreement" shall mean the Distribution Agreement between
Pitney Bowes Inc. and Imagistics, dated as of November 1, 2001.

     "Distribution Date" shall mean the date on which the Distribution is
effected.

     "Federal Tax" shall mean any tax imposed under Subtitle A of the Code and
any related interest or penalty imposed under Subtitle F of the Code.

     "Final Determination" shall mean (i) with respect to Federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of an IRS
Form 870AD and, with respect to taxes other than Federal Taxes, any final
determination of liability in respect of a tax that, under applicable law, is
not subject to further appeal, review or modification through proceedings or
otherwise, (ii) any final disposition of a tax issue by reason of the expiration
of a statute of limitations or (iii) the payment of tax by PBI with respect to
any item disallowed or adjusted by any taxing authority where PBI determines in
good faith that no action should be taken to recoup such payment.

     "Imagistics 2001 Federal Tax Liability" shall mean the Federal Tax
liability of the Imagistics Group for the 2001 Short Year computed as if the
Imagistics Group were not and never were part of any consolidated group,
provided, however, that transactions with members of PBI Group shall be
reflected according to the provisions of the consolidated return regulations
promulgated under the Code governing intercompany transactions, and that the
Distribution will trigger any deferred amounts or similar items. The Imagistics
2001 Federal Tax Liability shall be determined (i) without regard to the income,
deductions (including net operating loss and capital loss deductions) and
credits in any year of any member of PBI Group that is not a member of
Imagistics Group, (ii) as though the highest rate of tax specified in subsection
(b) of Section 11 of the Code (or any other similar rates applicable to specific
types of income) were the only rates set forth in that subsection, and with
other similar adjustments as described in Section 1561 of the Code, (iii)
reflecting the positions, elections and accounting methods used by PBI in
preparing the consolidated federal income tax return for PBI Consolidated Group,
and (iv) by not permitting Imagistics Group


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any compensation deductions arising in respect of any exercise of options on PBI
stock by, or the issuance or vesting of PBI restricted stock to, any employee of
Imagistics Group.

     "Imagistics Group" shall mean, at any time, Imagistics and each of its
direct or indirect corporate subsidiaries.

     "Imagistics Tax Liability" shall mean, with respect to any taxable year
that includes any date in 2001 and any jurisdiction, the sum of (i) Imagistics
2001 Federal Tax Liability and (ii) the amount of Combined Income Taxes plus the
amount of Separate Income Taxes determined in accordance with the principles set
forth in the definition of Imagistics 2001 Federal Tax Liability.

     "Imagistics UK" shall mean Pitney Bowes Office Systems Limited, a wholly
owned direct subsidiary of Imagistics incorporated in the United Kingdom and
that will purchase certain assets from Pitney Bowes Limited under the Agreement
for the Sale and Purchase of the Office Systems Division of Pitney Bowes
Limited.

     "Income Tax" shall mean Federal Tax, Combined Income Tax and Separate
Income Tax.

     "IRS" shall mean the Internal Revenue Service.

     "Non-Income Taxes" shall mean all taxes, levies, charges or fees including,
without limitation, gross receipts, transfer, excise, property, sales, use,
value-added, goods and services, license, payroll, withholding, social security
or other governmental taxes or charges (including any interest, penalties or
additional taxes attributable thereto), imposed by the United States or any
state, county, local or foreign government, but excluding any Income Taxes.

     "PBI Consolidated Group" shall mean PBI and each direct and indirect
corporate subsidiary, including a member of Imagistics Group, that is eligible
to join with PBI or a member of the PBI Group in the filing of (i) for Federal
Tax purposes, a consolidated federal income tax return, and (ii) for Combined
Income Tax purposes, a Combined Income Tax Return.

     "PBI Group" shall mean, at any time, PBI and each of its direct and
indirect corporate subsidiaries other than those subsidiaries that are members
of Imagistics Group.

     "Post-Distribution Tax Period" means (i) any tax period beginning after the
Distribution Date and (ii) with respect to a tax period that begins on or before
and ends after the Distribution Date, the portion of the tax period that
commences on the day immediately after the Distribution Date.


                                       4


     "Pre-Distribution Tax Period" means (i) any tax period ending before or on
the Distribution Date and (ii) with respect to a period that begins before and
ends after the Distribution Date, the portion of the tax period ending on and
including the Distribution Date.

     "Prime" shall mean, the rate announced from time to time as "prime" as
reported in the Wall Street Journal's Money Rates table as the prime rate with
respect to the applicable currency.

     "Return" shall mean any tax return, statement, report or form (including
estimated tax returns and reports, extension requests and forms, and information
returns and reports) required to be filed with any taxing authority.

     "Ruling Request" shall mean the request for rulings under Sections 355 and
368(a)(1)(D) of the Code filed by PBI with the Internal Revenue Service on
December 19, 2000, together with all supplemental materials subsequently filed
with the IRS in connection therewith.

     "Separate Income Tax" shall mean, with respect to each state, local or
foreign taxing jurisdiction, any income, franchise or similar tax (together with
any related interest or penalty) payable to such state, local or foreign taxing
jurisdiction in which a member of Imagistics Group files a separate tax return.

     "Tax Asset" shall mean any net operating loss, net capital loss, investment
tax credit, foreign tax credit, deduction or any loss, credit or tax attribute
that could be carried forward or back to reduce taxes (including without
limitation deductions and credits related to alternative minimum taxes).

     "Tax Benefit" shall mean an amount derived with respect to a Tax Asset that
is equal to the excess of (A) the amount of Federal Taxes, or Combined Income
Taxes, as the case may be, that would have been payable by the recipient of the
Tax Benefit without the use a Tax Asset (including, but not limited to, a
carryback, carryforward, or reattribution of the Tax Asset), over (B) the amount
of Federal Taxes or Combined Income Taxes, as the case may be, actually payable
by such recipient. In the case of a tax refund arising out the use of a Tax
Asset, the Tax Benefit shall be equal to the amount of the refund that was
actually received over the amount of the refund that would have been received in
the absence of such Tax Asset.

     "Tax Packages" shall mean one or more packages of information that are (i)
reasonably necessary for the purpose of preparing tax Returns of PBI
Consolidated Group with respect to any tax period in which the information is
relevant, and (ii) completed in all material respects in accordance with the
standards that PBI has established for its subsidiaries.

     "Tax Proceeding" shall mean any tax audit, dispute or proceeding (whether
administrative or judicial).


                                       5


     (b) Any term used in this Agreement that is not defined in this Agreement
shall, to the extent the context requires, have the meaning assigned to it in
the Code or the applicable Treasury regulations promulgated thereunder (as
interpreted in administrative pronouncements and judicial decisions) or in
comparable provisions of applicable law.

     2. Administrative and Compliance Matters.

     (a) Sole Tax Sharing Agreement. Any and all existing tax sharing agreements
or arrangements, written or unwritten, between any member of PBI Group and any
member of Imagistics Group shall be terminated as of the date of this Agreement.
As of the date of this Agreement, neither the members of Imagistics Group nor
the members of PBI Group shall have any further rights or liabilities under any
such preexisting tax sharing agreements, and this Agreement shall be the sole
tax sharing agreement between the members of Imagistics Group and the members of
PBI Group.

     (b) Designation of Agent. Imagistics and each member of Imagistics Group
hereby irrevocably authorizes and designates PBI as its agent, coordinator, and
administrator, for the purpose of taking any and all actions (including the
execution of waivers of applicable statutes of limitation) necessary or
incidental to the filing of any Return, any amended Return, or any claim for
refund (even where an item or Tax Asset giving rise to an amended Return or
refund claim arises in a Post-Distribution Tax Period), credit or offset of tax
or any other proceedings, and for the purpose of making payments to, or
collecting refunds from, any taxing authority, in each case relating only to any
Pre-Distribution Tax Period.

     (c) Pre-Distribution Tax Period Returns.

          (i) Preparation of Income Tax Returns. PBI will prepare and file, with
     the assistance of Imagistics Group, all Returns of PBI Consolidated Group
     and all Separate Income Tax Returns of any member of that group for all
     Pre-Distribution Tax Periods. PBI shall have the right with respect to such
     Returns to determine (A) the manner in which such returns, documents or
     statements shall be prepared and filed, including, without limitation, the
     manner in which any item of income, gain, loss, deduction or credit shall
     be reported, (B) whether any extensions should be requested, and (C) the
     elections that will be made by any member of PBI Group or Imagistics Group;
     provided, however, that PBI will consult with Imagistics regarding the
     manner in which items related to Imagistics Group will be reflected in such
     returns and will undertake in good faith to prepare such Returns in a
     manner that PBI determines may be substantively beneficial to the
     Imagistics Group for any Post-Distribution Tax Period, but only to the
     extent that such manner of preparing Returns has no adverse impact on PBI.

          (ii) Audits and Refunds. With respect to all Returns of PBI
     Consolidated Group and all Separate Income Tax Returns of any member of
     that


                                       6


     group for all Pre-Distribution Tax Periods, except as otherwise provided in
     Section 8, PBI shall have the right to (A) contest, compromise or settle
     any adjustment or deficiency proposed, asserted or assessed as a result of
     any audit of any such return, (B) file, prosecute, compromise or settle any
     claim for refund, and (C) determine whether any refunds to which any member
     of PBI Group may be entitled shall be received by way of refund or credit
     against tax liability.

          (iii) Delivery of Tax Packages. No later than 60 days after the
     Distribution Date, Imagistics shall prepare and deliver to PBI Tax Packages
     that include information of Imagistics Group for the Pre-Distribution Tax
     Period.

     (d) Allocation. Immediately after the Distribution, PBI and the Imagistics
Group will close their books utilizing a "cut off" method and the provisions of
1.1502-76(b)(1)(ii)(A), End of Day Rule, shall be applied to the 2001 Short
Year.

     (e) Non-Income Tax Returns and Post-Distribution Tax Period Income Tax
Returns of Imagistics Group. Imagistics shall be solely responsible for the
preparation and filing of (i) Income Tax Returns of Imagistics Group for all
Post-Distribution Tax Periods and (ii) the Returns of Imagistics Group for
Non-Income Taxes for any tax period.

     (f) 2001 Short-Year State, Local and Foreign Returns. PBI and Imagistics
agree that Combined Income Tax Returns and Separate Income Tax Returns filed for
tax periods that begin prior to the Distribution Date will reflect a short
taxable year for Imagistics ending on the Distribution Date in any state, local
or foreign taxing jurisdiction in which such tax year is allowed by
administrative practice, whether or not required by law.

     3. Tax Sharing.

     (a) General. For each Taxable period during which income, profits, gains,
net worth, receipts, sales, loss or credit against tax of at least one member of
each of the PBI Group and Imagistics Groups are includible in a Return of PBI
Consolidated Group, (i) no later than 45 days after the Distribution Date the
Imagistics Group shall pay to the PBI Group an amount equal to the Imagistics
Tax Liability for such Taxable period, if any, and (ii) at the time the PBI
Group realizes any such benefit, the PBI Group shall pay to the Imagistics Group
the Tax Benefit received by PBI Consolidated Group from the use of any net
operating loss of Imagistics Group arising in such period.

     (b) True-Up When Return Filed. At the time PBI files PBI Consolidated
Group's consolidated Federal Tax Returns for the calendar year ended December
31, 2001, PBI shall deliver to Imagistics a copy of the portion of such returns
relating to Imagistics together with a statement setting forth the difference
between (A) Imagistics 2001 Federal Tax Liability and (B) the aggregate amount
of payments with respect to the Imagistics 2001 Federal Tax


                                       7


Liability made by Imagistics to PBI prior to that time. At the time PBI files
any Combined Income Tax Return and any Separate Income Tax Return prepared by
PBI in accordance with Section 2(c) that include any member of Imagistics Group,
PBI shall deliver a copy of such Return to Imagistics, together with a statement
setting forth the difference between (C) the Imagistics Tax Liability for such
Return and (D) the aggregate amount of payments with respect to the Imagistics
Tax Liability for such Return made by Imagistics to PBI prior to that time. Any
amount shown as payable on any statement described in this Section 3(b) shall be
paid pursuant to Section 9.

     (c) Carrybacks From Post-Distribution Years.

          (i) Imagistics agrees not to carry back any Tax Asset of Imagistics
     Group from a Post-Distribution Tax Period without the advance written
     consent of PBI, which shall not be unreasonably withheld. If PBI consents
     to such carryback, PBI agrees to pay to Imagistics the Tax Benefit received
     by PBI Consolidated Group from the use in any Pre-Distribution Tax Period
     of a carryback of any Tax Asset of Imagistics Group from a
     Post-Distribution Tax Period.

          (ii) If, subsequent to the payment by PBI Group to Imagistics Group of
     any amount, there is (A) a Final Determination that results in a
     disallowance or a reduction of the Tax Asset so carried back or (B) a
     reduction in the amount of the benefit realized by PBI Consolidated Group
     from such Tax Asset as a result of a Final Determination or the use by PBI
     Consolidated Group of a Tax Asset of PBI Group, Imagistics Group shall
     repay to PBI, within 30 days of such event described in (A) or (B) (an
     "Event"), any amount which would not have been payable to Imagistics Group
     pursuant to the subparagraph 3(c)(i) had the amount of the benefit been
     determined in light of such Event. In addition, Imagistics Group shall hold
     each member of PBI Group harmless from any penalty or interest payable by
     any member of PBI Group as a result of any such Event. Any such amount
     shall be paid by Imagistics Group within 30 days of the payment by PBI
     Group of any such interest or penalty. Nothing in this Section 3(c) shall
     require PBI to file a claim for refund of Federal Taxes or Combined Income
     Taxes that PBI, in its sole discretion, has determined is not more likely
     than not to succeed. Provisions of this subparagraph 3(c)(ii) shall be
     carried out consistently with provisions of Sections 7, 9 and 11.

     (d) Audit Payments.

          (i) Responsibility for Payment. Except as provided in paragraph
     (d)(ii) below or in Section 8, PBI shall be responsible for any payment due
     to any taxing authority as a result of an audit adjustment to any Income
     Tax Return which relates solely to a Pre-Distribution Tax Period.
     Imagistics shall be responsible for any payment due to any taxing authority
     as a result of an adjustment to any Return of Imagistics Group which
     relates solely to a Post-Distribution Tax Period. In the case of any
     adjustment not covered in the


                                       8


     preceding sentence, PBI shall determine the amount to be paid by each party
     in a manner consistent with the principles of this Agreement and with past
     practice.

          (ii) Timing Differences. To the extent that any audit adjustment of an
     Income Tax Return relating to a Pre-Distribution Tax Period is attributable
     to timing differences attributable to Imagistics, PBI shall pay to
     Imagistics, or Imagistics shall pay to PBI, as appropriate, an amount
     reflecting the timing differences. In the case of Federal Tax Return, this
     amount shall be equal to the actual amount of the adjustment to PBI's tax
     liability which is attributable to the timing differences as determined by
     PBI with the consent of Imagistics, which consent may not be unreasonably
     withheld. In the case of Combined Income Tax Return or Separate Income Tax
     Return, the amount shall be equal to the difference between the tax
     actually due on the adjusted Return and the amount that would have been due
     on the adjusted Return had Imagistics not been included as a member of PBI
     Consolidated Group.

     4. Certain Representations and Covenants.

     (a) (i) Imagistics Representations. Imagistics and each member of
Imagistics Group represent as of the date hereof, and covenant that on the
Distribution Date, there is no plan or intention (A) to liquidate Imagistics or
to merge or consolidate Imagistics, or any member of Imagistics Group with any
other person subsequent to the Distribution, (B) to sell or otherwise dispose of
any asset of Imagistics or any member of Imagistics Group subsequent to the
Distribution, except in the ordinary course of business, (C) to take any action
inconsistent with the information and representations furnished to the Internal
Revenue Service in connection with the Ruling Request or (D) to enter into any
negotiations, agreements, or arrangements with respect to transactions or events
(including stock issuances, pursuant to the exercise of options or otherwise,
option grants, capital contributions, or acquisitions, but not including the
Distribution) that may cause the Distribution to be treated as part of a plan
pursuant to which one or more persons acquire directly or indirectly Imagistics
stock representing a "50-percent or greater interest" within the meaning of
Section 355(d)(4) of the Code.

          (ii) PBI Representations. PBI represents as of the date hereof, and
     covenants that on the Distribution Date, there is no plan or intention to
     take any action inconsistent with the information and representations
     furnished to the Internal Revenue Service in connection with the Ruling
     Request.

          (iii) Imagistics and PBI Representations. Each of Imagistics, PBI and
     the members of Imagistics Group, respectively, represent as of the date
     hereof, and covenant that on the Distribution Date, neither Imagistics, PBI
     nor the members of Imagistics Group, respectively (as applicable), is aware
     of any present plan or intention by the current shareholders of PBI to
     sell, exchange, transfer by gift, or otherwise dispose of any of their
     stock in, or securities of, PBI


                                       9


     or Imagistics subsequent to the Distribution, other than pursuant to open
     market transactions.

     (b) Imagistics Covenants. Imagistics covenants to PBI that, except as
provided in paragraph (c) below, during the two-year period following the
Distribution Date:

          (i) neither Imagistics nor any member of Imagistics Group will
     liquidate, merge or consolidate with any other person;

          (ii) Imagistics will not sell, exchange, distribute or otherwise
     dispose of its assets or those of any member of Imagistics Group, except in
     the ordinary course of business;

          (iii) Imagistics will continue the active conduct of the historic
     business that was conducted by Imagistics throughout the five year period
     prior to the Distribution;

          (iv) Imagistics will not, nor will it permit any member of Imagistics
     Group, to take any action inconsistent with the information and
     representations furnished to the Internal Revenue Service in connection
     with the Ruling Request;

          (v) Imagistics will not repurchase stock of Imagistics in a manner
     contrary to the requirements of Revenue Procedure 96-30 or in a manner
     contrary to the representations made in connection with the Ruling Request
     and

          (vi) Imagistics will not enter into any transaction or make any change
     in equity structure (including stock issuances, pursuant to the exercise of
     options, option grants or otherwise, capital contributions, or
     acquisitions, but not including the Distribution) that may cause the
     Distribution to be treated as part of a plan pursuant to which one or more
     persons acquire directly or indirectly Imagistics stock representing a
     "50-percent or greater interest" within the meaning of Section 355(d)(4) of
     the Code.

     Further, Imagistics covenants to PBI that:

          (vii) it will not, nor will it permit any member of Imagistics Group,
     to make or change any tax accounting method, change its taxable year, amend
     any tax Return or take any tax position on any Return, take any other
     action, omit to take any action or enter into any transaction that results
     in any increased tax liability or reduction of any Tax Asset of PBI
     Consolidated Group or any member thereof in respect of any Pre-Distribution
     Tax Period;

          (viii) it will file federal consolidated returns, to the extent
     applicable, with its subsidiaries for the tax period that begins
     immediately after the Distribution Date, and


                                       10


          (ix) it will execute all necessary forms, including powers of
     attorney, requested by PBI in connection with exercise of PBI's rights and
     responsibilities under this Agreement, including those described in Section
     2(b).

     (c) Exceptions. Notwithstanding the foregoing, Imagistics and the members
of Imagistics Group may take actions inconsistent with the covenants contained
in Section 4(b)(i) through (vi) above, if:

          (i) Imagistics notifies PBI of its proposal to take such action and
     Imagistics and PBI obtain a ruling from the IRS to the effect that such
     actions will not result in the Distribution being taxable to PBI or its
     shareholders, provided that Imagistics agrees in writing to bear any
     expenses associated with obtaining such a ruling and, provided further,
     that Imagistics shall not be relieved of any liability under Section 5 of
     this Agreement by reason of seeking or having obtained such a ruling; or

          (ii) Imagistics notifies PBI of its proposal to take such action and
     obtains an opinion of counsel recognized as an expert in federal income tax
     matters and acceptable to PBI to the same effect as in subparagraph
     4(c)(i), provided that such opinion is acceptable to PBI in its sole
     discretion.

     (d) Deductions and Certain Taxes Related to Options.

     PBI shall file Returns claiming (i) the tax deductions attributable to the
exercise of options to purchase stock of PBI or the vesting of PBI restricted
stock that are held by employees or former employees of Imagistics Group or (ii)
any other similar stock-based compensation-related tax deductions. The Returns
of PBI Group and Imagistics Group shall reflect the entitlement of PBI Group to
such deductions. To the extent such deductions are disallowed because a taxing
authority determines that Imagistics Group should have claimed such deductions,
as consideration for PBI's issuance of shares of its stock as a result of the
exercise described in clause (i) of the preceding sentence, Imagistics Group
shall in good faith and to the extent permitted by law, file all applicable
returns or claims for refund claiming such deductions and pay to PBI Group an
amount equal to the Tax Benefit if any, actually received by Imagistics with
respect to the applicable returns or claims for refund. Notwithstanding the
foregoing, Imagistics Group shall not be required to pay to PBI Group any amount
with respect to deductions attributable to a year for which, at the time PBI
notifies Imagistics of its claim pursuant to this Section 4(d), the applicable
statute of limitations has run or which is otherwise closed. Upon the exercise
of any option or the vesting of any restricted stock described in clause (i), or
the occurrence of any other event that would result in a compensation-related
tax deduction, as the case may be, PBI shall prepare and file all applicable
Returns and pay the applicable tax liability under the Federal Insurance
Contributions Act, the Federal Unemployment Tax Act or any state employment tax
law in connection with such event.


                                       11


     5. Indemnities.

     (a) Imagistics Indemnity. Imagistics and each member of Imagistics Group
will jointly and severally indemnify PBI and the members of PBI Group against
and hold them harmless from:

          (i) any liability or damage resulting from a breach by Imagistics or
     any member of Imagistics Group of any representation or covenant made by
     Imagistics herein,

          (ii) any tax liability resulting from the Distribution and
     attributable to any action of Imagistics or any member of Imagistics Group,
     without regard to whether PBI or any agent or officer of PBI has consented
     to such action, and

          (iii) all liabilities, costs, expenses (including, without limitation,
     reasonable expenses of investigation and attorneys' fees and expenses),
     losses, damages, assessments, settlements or judgments arising out of or
     incident to the imposition, assessment or assertion of any tax liability or
     damage described in (i) or (ii) of this Section 5(a), including those
     incurred in the contest in good faith in appropriate proceedings relating
     to the imposition, assessment or assertion of any such tax, liability or
     damage.

     (b) PBI Indemnity. PBI will indemnify Imagistics and the members of
Imagistics Group against and hold them harmless from:

          (i) any tax liability of PBI Group and any tax liability resulting
     from the Distribution, other than any such liabilities described in Section
     5(a),

          (ii) any liability or damage resulting from a breach by PBI or any
     member of PBI Group of any representation or covenant made by PBI herein,
     and

          (iii) all liabilities, costs, expenses (including, without limitation,
     reasonable expenses of investigation and attorneys' fees and expenses),
     losses, damages, assessments, settlements or judgments arising out of or
     incident to the imposition, assessment or assertion of any tax liability or
     damage described in paragraphs (i) and (ii) of this Section 5(b), including
     those incurred in the contest in good faith in appropriate proceedings
     relating to the imposition, assessment or assertion of any such tax,
     liability or damage.

     (d) Tax Benefits. If an indemnification obligation of any member of PBI
Group or any member of Imagistics Group, as the case may be, under this Section
5 with respect to PBI Consolidated Group arises in respect of an adjustment that
makes allowable to a member of Imagistics Group or a member of PBI Group,
respectively, any Tax Benefit that would not, but for such adjustment, be
allowable, then any payment by any member of PBI Group or any member of
Imagistics Group, respectively, pursuant to this Section 5 shall be an amount
equal to (A) the amount otherwise due but for this subsection (d), minus (B) the
tax savings actually realized as a result of such Tax Benefit.


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     6. Subsidiaries.

     PBI agrees and acknowledges that PBI shall be responsible for the
performance by each member of PBI Group of the obligations hereunder applicable
to such member. Imagistics agrees and acknowledges that Imagistics shall be
responsible for the performance by each member of Imagistics Group of the
obligations hereunder applicable to such member.

     7. Communication and Cooperation.

     (a) Consult and Cooperate. Imagistics and PBI shall consult and cooperate
(and shall cause each member of Imagistics Group or PBI Group, respectively, to
cooperate) fully at such time and to such extent as are reasonably requested by
the other party in connection with all matters subject to this Agreement. Such
cooperation shall include, without limitation:

          (i) the retention and provision on reasonable request of any and all
     information including all books, records, documentation or other
     information pertaining to tax matters (including Income Taxes and
     Non-Income Taxes) relating to PBI Group and Imagistics Group, any necessary
     explanations of information, and access to personnel, in each case until
     two years after the expiration of the applicable statute of limitation
     (giving effect to any extension, waiver, or mitigation thereof);

          (ii) the execution of any document that may be necessary or helpful in
     connection with any required Return or in connection with any audit,
     proceeding, suit or action and

          (iii) the use of the parties' best efforts to obtain any documentation
     from a governmental authority or a third party that may be necessary or
     helpful in connection with the foregoing.

     (b) Provide Information. PBI and Imagistics shall keep each other fully
informed with respect to any material development relating to the matters
subject to this Agreement.

     (c) Tax Attribute Matters. PBI and Imagistics shall advise each other with
respect to any proposed tax adjustments relating to a Pre-Distribution Tax
Period, which are the subject of an audit or investigation, or are the subject
of any proceeding or litigation, and which may affect any tax liability or any
tax attribute of PBI, Imagistics, PBI Group, Imagistics Group or any member of
Imagistics Group or PBI Group (including, but not limited to, basis in an asset
or the amount of earnings and profits). Except as otherwise provided herein, PBI
shall in good faith determine the apportionment of tax attributes between PBI
Group and Imagistics Group in accordance with applicable laws.


                                       13


     8. Audits and Contest.

     (a) PBI Control. Notwithstanding anything in this Agreement to the
contrary, except to the extent provided in paragraphs (b) and (c) below, PBI
shall have the right to control all matters relating to any tax Return or any
Tax Proceeding with respect to any tax matters of PBI Consolidated Group or any
member of PBI Consolidated Group, other than Non-Income Tax Returns relating to
the Imagistics business and any Tax Proceedings related to them. PBI shall have
absolute discretion with respect to any decisions to be made, or the nature of
any action to be taken, with respect to any Income Tax matter described in the
preceding sentence provided, however, that PBI shall keep Imagistics informed of
all material developments and events relating to such matters to the extent they
affect the Imagistics Tax Liability or may give rise to a claim for indemnity by
PBI against Imagistics under Section 5(a) of this Agreement; and at its own cost
and expense, Imagistics shall have the right to participate in (but not to
control) the defense of any such tax claim. In cases where an audit adjustment
or refund claim related to a Pre-Distribution Tax Period is reasonably likely to
have the effect of increasing the tax liability of Imagistics in a Post
Distribution Tax Period, PBI shall consult with Imagistics and to the extent
practicable, avoid taking any action that is reasonably likely to have a
material adverse effect on Tax Returns, Tax Assets or Tax liabilities of
Imagistics Group for any Post-Distribution Tax Period.

     (b) Imagistics Assumption of Control; Non-Section 355 Matters. If PBI
determines that the resolution of any matter relating to a Tax Return or Tax
Proceeding (other than a Tax Proceeding relating to the qualification of the
Distribution under Section 355 of the Internal Revenue Code) is reasonably
likely to have an adverse effect on Imagistics Group with respect to any
Post-Distribution Tax Period, PBI shall permit Imagistics Group to elect to
assume control over disposition of such matter at Imagistics' sole cost and
expense provided, however, that if Imagistics so elects, it will (i) be
responsible for the payment of any liability arising from the disposition of
such matter notwithstanding any other provision of this Agreement to the
contrary and (ii) indemnify PBI Group for any increase in a liability and any
reduction of a Tax Asset of PBI Group arising from such matter.

     (c) Imagistics Assumption of Control; Section 355 Matters. In the event of
a Tax Proceeding relating to the qualification of the Distribution under Section
355 of the Internal Revenue Code, PBI shall have the right to control the
defense of the matter in all proceedings before the Internal Revenue Service,
provided that PBI shall keep Imagistics fully informed of all material
developments and shall permit Imagistics a reasonable opportunity to participate
in the defense of the matter. If the issues relating to the qualification of the
Distribution under Section 355 of the Internal Revenue Code (x) do not involve
Section 355(e) of the Internal Revenue Code, (y) are not favorably resolved in
proceedings before the Internal Revenue Service and (z) PBI has determined that
Imagistics would be required to indemnify PBI as a result of the
disqualification of the Distribution, PBI shall permit Imagistics Group to elect
to assume control over final disposition of such


                                       14


matter pursuant to judicial proceedings at Imagistics' sole cost and expense
provided, however, that if Imagistics so elects, it will (i) be responsible for
the payment of any liability arising from the disposition of such matter
notwithstanding any other provision of this Agreement to the contrary and (ii)
indemnify PBI Group for any increase in a liability and any reduction of a Tax
Asset of PBI Group arising from such matter.

     (d) Imagistics Control. Imagistics shall have full control over all matters
relating to any Tax Proceeding with respect to Returns of Imagistics Group
relating to any Post-Distribution Tax Period.

     9. Payments.

     (a) Timing, After-tax Amounts. All payments to be made hereunder shall be
made in immediately available funds. Except as otherwise provided, all payments
required to be made pursuant to this Agreement will be due 30 days after the
receipt of notice of such payment or, where no notice is required, 30 days after
the fixing of liability or the resolution of a dispute. Payments shall be deemed
made when received. Any payment that is not made when due shall bear interest at
a rate equal to Prime for each day until paid. If, pursuant to a Final
Determination, any amount paid by PBI or the members of PBI Group, or Imagistics
or the members of Imagistics Group, as the case may be, pursuant to this
Agreement results in any increased tax liability or reduction of any Tax Asset
of Imagistics or any member of Imagistics Group, or PBI or any member of PBI
Group, respectively, then PBI or Imagistics, as appropriate, shall indemnify the
other party and hold it harmless from any interest or penalty attributable to
such increased tax liability or the reduction of such Tax Asset and shall pay to
the other party, in addition to amounts otherwise owed, the After-Tax Amount.

     (b) Netting of Payments. If, on the day payment is due under this
Agreement, each of Imagistics and PBI (each, a "Party") owes an amount to the
other Party pursuant to this Agreement and any other agreement between the
Parties, including, without limitation, the Distribution Agreement and any
Ancillary Agreement, as defined in the Distribution Agreement, the Parties shall
satisfy their respective obligations to each other by netting the aggregate
amounts due to one Party against the aggregate amounts due to the other Party,
with the Party, if any, owning the greater aggregate amount paying the other
Party the difference between the amounts owed. Such net payment shall be made
pursuant to the provision of Section 9(a).

     10. Injunction.

     The parties hereto agree that the payment of monetary compensation would
not be an adequate remedy to a breach of the obligations contained in Section
4(b) hereof, and Imagistics consents to the issuance and entry of an injunction
to prevent a breach of those obligations; provided, however, that the


                                       15


foregoing shall be without prejudice to and shall not constitute waiver of any
other remedy either party may be entitled to at law or at equity hereunder.

     11. U.K. Tax Separation Agreement.

     (a) Imagistics UK Returns. Notwithstanding anything in this Agreement to
the contrary, Imagistics UK shall be solely responsible for (i) preparing and
filing of all Returns for any taxes payable by it to any tax authorities in the
United Kingdom for all Tax Periods, (ii) paying any taxes shown on such Returns,
(iii) contesting, compromising or settling adjustment or deficiency proposed,
asserted or assessed as a result of any audit of any such Return and (iv)
filing, prosecuting, compromising or settling any claim for refund with respect
to taxes shown on such Returns.

     (b) Any matters related to taxes other than those described in Section
11(a) above shall be resolved in accordance with the provisions of the Agreement
for the Sale and Purchase of the Office Systems Division of Pitney Bowes Limited
between Pitney Bowes Limited and Imagistics UK.

     12. Notices.

     Any notice, demand, claim, or other communication under this Agreement
shall be in writing and shall be deemed to have been given upon the delivery or
mailing thereof, as the case may be, if delivered personally or sent by
certified mail, return receipt requested, postage prepaid, to the parties at the
following addresses (or at such other address as a party may specify by notice
to the other):

     If to PBI:

     Pitney Bowes Inc.
     One Elmcroft Road
     Stamford, CT 06926-0700
     Attn: Arlen F. Henock
     Vice President-Finance

     with copies to:
     Executive Director, Global Tax Planning & General Tax Counsel and
     Director of Tax Compliance and Audits

     If to Imagistics:

     Imagistics International Inc.
     100 Oakview Drive
     Trumbull, CT 06611
     Attn: Joseph Skrzypczak
     Chief Financial Officer


                                       16


     with copies to:
     General Counsel
     and Vice President-Taxes

     13. Costs and Expenses.

     (a) Reimbursement for Certain Services. PBI shall provide services in
connection with this Agreement, including determination of Imagistics Tax
Liability as described in Sections 2 and 3 and other services described in
Services Agreement between Imagistics and PBI (the "Transition Services
Agreement"). Payments for these services shall be made consistent with the
invoice and payment procedures provided for in the Transition Services
Agreement.

     (b) Others. Except as expressly set forth in this Agreement, each party
shall bear its own costs and expenses incurred pursuant to this Agreement. For
purposes of this Agreement, "out-of-pocket" expenses shall include reasonable
attorneys' fees, accountant fees and other related professional fees and
disbursements.

     14. Effectiveness; Termination and Survival.

     This Agreement shall become effective upon the consummation of the
Distribution. All rights and obligations arising hereunder with respect to a
Pre-Distribution Tax Period shall survive until they are fully effectuated or
performed. Notwithstanding anything in this Agreement to the contrary, this
Agreement shall remain in effect and its provisions shall survive for the full
period of all applicable statutes of limitation (giving effect to any extension,
waiver or mitigation thereof).

     15. Headings.

     The headings contained in this Agreement are inserted for convenience only
and shall not constitute a part hereof or in any way affect the meaning or
interpretation of this Agreement.

     16. Entire Agreement; Amendments and Waivers; Severability.

     (a) Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter contained herein. No
alteration, amendment, modification, or waiver of any of the terms of this
Agreement shall be valid unless made by an instrument signed by an authorized
officer of each of PBI and Imagistics, or in the case of a waiver, by the party
against whom the waiver is to be effective.

     (b) Amendments and Waivers. 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


                                       17


further exercise thereof, or the exercise of any right, power or privilege. This
Agreement shall not be waived, amended or otherwise modified except as in
writing, duly executed by all of the parties hereto.

     (c) Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid, illegal or unenforceable to any
extent, the remainder of this Agreement or such provision or the application of
such provision to such party or circumstances, other than those determined to be
so invalid, illegal or unenforceable, shall remain in full force and effect to
the fullest extent permitted by law and shall not be affected by such
determination, unless such a construction would be unreasonable.

     17. Governing Law and Interpretation.

     This Agreement has been made in, and shall be construed and enforced in
accordance with the laws of, the State of New York without giving effect to laws
and principles relating to conflicts of law.

     18. Dispute Resolution.

     The parties shall endeavor in good faith promptly to resolve any
disagreement or dispute relating to this Agreement. If the parties are unable to
resolve any disagreement or dispute relating to the matters referred to in
paragraph (d)(ii) of Section 3 or in paragraphs (a), (b) or (c) of Section 4, or
the related indemnities, of this Agreement within 20 days, such disagreement or
dispute shall be resolved by PBI acting in good faith and so as to avoid a
windfall to either party. Any such resolution shall be binding on the parties to
this Agreement without further recourse.

     19. Counterparts.

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same Agreement.

     20. Assignments; Third Party Beneficiaries.

     Except as provided below, this Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto and their respective successors
and assigns, by merger, acquisition of assets or otherwise (including but not
limited to any successor of a party hereto succeeding to the tax attributes of
such party under applicable law). This Agreement is not intended to benefit any
person other than the parties hereto and such successors and assigns, and no
other person shall be a third party beneficiary hereof.


                                       18


     21. Further Assurances.

     PBI and Imagistics shall execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such instruments and take such other
action as may be necessary or advisable to carry out their obligations under
this Agreement and under any exhibit, document or other instrument delivered
pursuant hereto.

     22. Authorization.

     Each of the parties hereto hereby represents and warrants that it has the
power and authority to execute, deliver and perform this Agreement, that this
Agreement has been duly authorized by all necessary corporate action on the part
of such party, that this Agreement constitutes a legal, valid and binding
obligation of each such party and that the execution, delivery and performance
of this Agreement by such party does not contravene or conflict with any
provision or law or of its charter or bylaws or any agreement, instrument or
order binding on such party.


                                       19


     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the day and year first written above.


                              PBI on its own behalf and on behalf of each
                              member of PBI Group.

                              By: /s/ Arlen F. Henock
                                 ----------------------------------
                              Name: Arlen F. Henock
                              Title: Vice President-Finance



                              Imagistics on its own behalf and on behalf
                              of each member of Imagistics Group.

                              By: /s/ Joseph D. Skrzypczak
                                 ----------------------------------
                              Name: Joseph D. Skrzypczak
                              Title: Chief Financial Officer


                                       20