Transition Services Agreement - Pitney Bowes Inc. and Pitney Bowes Office Systems, Inc.


                         TRANSITION SERVICES AGREEMENT



                                    between



                               Pitney Bowes Inc.



                                      and



                       Pitney Bowes Office Systems, Inc.



                          Dated as of __________, 2001

 
                               TABLE OF CONTENTS



                                                                    Page
                                                                    ----



                                   ARTICLE 1
               Definitions
Section 1.01.  Definitions...........................................1
                                                                    
                                   ARTICLE 2 
               Purchase and Sale of Services
Section 2.01.  Purchase and Sale of Services.........................5
Section 2.02.  Subsidiaries..........................................6
Section 2.03.  Additional Services...................................6
Section 2.04.  Services Provided by Office Systems...................6
                                                                    
                                   ARTICLE 3 
               Service Costs; Other Charges                                   
Section 3.01.  Service Costs Generally...............................6
Section 3.02.  Sales Tax.............................................7
Section 3.03.  Certain Benefits Matters..............................7
Section 3.04.  Invoicing and Settlement of Costs.....................7
                                                                    
                                   ARTICLE 4
               The Services                                                   
Section 4.01.  General Standard of Service...........................8
Section 4.02.  Personnel.............................................9
Section 4.03.  Systems Support.......................................9
Section 4.04.  Delegation............................................9
Section 4.05.  Limitation of Liability..............................10
Section 4.06.  Indemnification of Pitney Bowes by Office Systems....11
Section 4.07.  Indemnification of Office Systems by Pitney Bowes....11
Section 4.08.  Further Indemnification..............................11
Section 4.09.  Notice of Certain Matters............................12

                                  ARTICLE 5
               Term and Termination
Section 5.01.  Term.................................................12
Section 5.02.  Termination..........................................13
Section 5.03.  Effect of Termination................................13

                                   ARTICLE 6
               Operating Committee
Section 6.01.  Organization.........................................14

 
                                                                    Page
                                                                    ----

Section 6.02.  Decision Making......................................15
Section 6.03.  Meetings.............................................15

                                   ARTICLE 7
               Third Party Consents and Licenses
Section 7.01.  Separation...........................................15
Section 7.02.  Additional Licenses..................................15
Section 7.03.  Fees.................................................15

                                   ARTICLE 8
               Additional Agreements
Section 8.01.  Confidential Information.............................16
Section 8.02.  Security.............................................17
Section 8.03.  Service Level at Termination of Transition Period....17

                                   ARTICLE 9
               Miscellaneous
Section 9.01.  Prior Agreements.....................................18
Section 9.02.  Other Agreements.....................................18
Section 9.03.  No Agency............................................18
Section 9.04.  Subcontractors.......................................18
Section 9.05.  Force Majeure........................................18
Section 9.06.  Entire Agreement.....................................19
Section 9.07.  Information..........................................19
Section 9.08.  Notices..............................................19
Section 9.09.  Governing Law........................................20
Section 9.10.  WAIVER OF JURY TRIAL.................................20
Section 9.11.  Severability.........................................21
Section 9.12.  Amendment............................................21
Section 9.13.  Counterparts.........................................21

                                       ii

 
Schedule 1 -   Summary of Non-IT Service Agreements

                                                               Schedule
                                                               --------
                                                       
Service Parts Logistics                                        1A
                                                       
Real Estate Transaction Services                               1B
                                                       
Accounting                                             

     Sales, Use and Property Tax                               1C-1

     Payroll, Travel Reimbursement, Accounts Payable           1C-2

     General Ledger                                            1C-3

     Fixed Assets                                              1C-4

     Inventory Accounting                                      1C-5

     Accounts Receivable                                       1C-6

Benefits Administration                                        1D

Supplies Line Order Entry System                               1E

Customer Care Call Dispatch                                    1F

Safety and Environmental                                       1G

Field Service Systems Support                                  1H

Non-Focus Field Service                                        1J

Telecom Costs in Shared Locations                              1K

Mailroom Services                                              1L

Import and Customs Compliance                                  1M

Document Services Group Services                               1N


Schedule 2 -   Service Provisioning and Service Level Agreement

 
                         TRANSITION SERVICES AGREEMENT
                         -----------------------------


     This Transition Services Agreement (this "Agreement") is entered into as of
__________, 2001 by and between Pitney Bowes Inc., a Delaware corporation
("Pitney Bowes"), and Pitney Bowes Office Systems, Inc., a Delaware corporation
("Office Systems").

                                     RECITALS

     WHEREAS, Pitney Bowes owns 100% of the outstanding common stock of Office
Systems prior to the consummation of the Distribution (as defined below);

     WHEREAS, Pitney Bowes will no longer own any of the outstanding common
stock of Office Systems after the consummation of the Distribution; and

     WHEREAS, Pitney Bowes has heretofore directly or indirectly provided
certain administrative, financial, management and other services to the Office
Systems Group (as defined below).

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pitney Bowes and Office Systems,
for themselves, their successors and assigns, hereby agree as follows:



                                   ARTICLE 1

                                  Definitions

     Section 1.01.  Definitions.  (a) As used in this Agreement, the following
terms shall have the following meanings, applicable both to the singular and the
plural forms of the terms described:

    "Actions" has the meaning set forth in Section 4.07.

    "Affiliate" has the meaning set forth in the Distribution Agreement,
provided, however, that the Affiliates of each party for purposes of this
agreement shall be determined after giving effect to the consummation of the
Distribution.

    "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 Canada
ReSeller Agreement, the Management Services ReSeller Agreements, the Vendor
Financing Agreement, the Sublease Agreements, the Credit Agreement, the Rights
Agreement, the Sublease and License Agreements, and the Assignment and Novation
Agreements.

    "Benefits Services" has the meaning set forth in Section 3.03.

    "Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.

    "Change of Control" means (i) the direct or indirect acquisition (by merger,
consolidation, business combination or otherwise) by any Person or group of
Persons of beneficial ownership (as defined in Rule 13d-1 and Rule 13d-5 under
the Securities Exchange Act of 1934) of 40% or more of the Total Voting Power of
Office Systems (ii) any merger, consolidation or other business combination of
Office Systems or a Subsidiary of Office Systems with any Person after giving
effect to which (x) the shareholders of Office Systems immediately prior to such
transaction do not own at least 60% of the Total Voting Power of the ultimate
parent entity of the parties to such transaction or (y) individuals who were
directors of Office Systems immediately prior to such transaction (or their
designees) do not constitute a majority of the board of directors of such
ultimate parent entity and (iii) the direct or indirect acquisition by any
Person or group of Persons of all or substantially all of the assets of Office
Systems.

    "Common Stock" means the Common Stock, par value $.01 per share, of Office
Systems.

    "Confidential Information" has the meaning set forth in Section 8.01.

    "Credit Agreement" has the meaning set forth in the Distribution Agreement.

    "Distribution" has the meaning set forth in the Distribution Agreement.

    "Distribution Agreement" means the Distribution Agreement dated as of the
date hereof between Pitney Bowes and Office Systems.

    "Distribution Date" has the meaning set forth in the Distribution Agreement.

                                       2

 
    "Employee Benefit Plans" has the meaning set forth in Section 4.04.

    "force majeure" has the meaning set forth in Section 9.05.

    "Group" means, as the context requires, the Office Systems Group or the
Pitney Bowes Group.

    "IT Services" has the meaning set forth in Section 2.01(b).

    "Intellectual Property Agreement" has the meaning set forth in the
Distribution Agreement.

    "Non-Compliance Notice" has the meaning set forth in Section 4.09.

    "Non-IT Services" has the meaning set forth in Section 2.01(a).

    "Office Systems" has the meaning set forth in the preamble hereto.

    "Office Systems Group" means Office Systems and its Subsidiaries as of and
after the Distribution Date (including all predecessors to such Persons).

    "Office Systems Indemnified Person" has the meaning set forth in Section
4.07.

    "Operating Committee" has the meaning set forth in Section 6.01.

    "Payment Date" has the meaning set forth in Section 3.04(b).

    "Person" means individual, corporation, limited liability company,
partnership association, trust or agency thereof) or other entity or
organization, including a governmental or political subdivision or an agency or
instrumentality thereof.

    "Pitney Bowes" has the meaning set forth in the preamble hereto.

    "Pitney Bowes Group" means Pitney Bowes and its Subsidiaries (other than any
Subsidiary or member of, or other entity in, the Office Systems Group).

    "Pitney Bowes Indemnified Person" has the meaning set forth in Section 
4.05(a).

    "Pitney Bowes Plans" has the meaning set forth in Section 3.03.

                                       3

 
    "Prior Agreements" has the meaning set forth in Section 9.01.

    "Reseller Agreements" has the meaning set forth in the Distribution
Agreement.

    "Schedules" means Schedules 1 (and all subschedules thereto) and 2 hereto.

    "Service Costs" has the meaning set forth in Section 3.01.

    "Service Level Breach" has the meaning set forth in Section 4.01(b).

    "Services" has the meaning set forth in Section 2.01(b).

    "Sublease/License Agreements" has the meaning set forth in the Distribution
Agreement.

    "Subsidiary" means, with respect to any Person, any other entity of which
securities or other ownership interests having a 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.

    "Systems Support" has the meaning set forth in Section 4.03.

    "Tax Separation Agreement" has the meaning set forth in the Distribution
Agreement.

    "Total Voting Power" with respect to any Person means the total combined
voting power of all securities of such Person entitled to vote generally in the
election of directors of such Person.

    "Transition Period" has the meaning set forth in Section 5.01.

    "Transition Services Agreement" has the meaning set forth in the preamble
hereto.

    "Vendor Financing Agreement" has the meaning set forth in the Distribution
Agreement.

                                       4

 
                                   ARTICLE 2

                         Purchase and Sale of Services

     Section 2.01.  Purchase and Sale of Services.  On the terms and subject to
the conditions of this Agreement and in consideration of the Service Costs
described below, Pitney Bowes agrees to:

       (a)  provide to Office Systems, or procure the provision to Office
Systems of, and Office Systems agrees to purchase from Pitney Bowes, the
transition services (the "Non-IT Services") as set forth on Schedule 1 (and the
subschedules thereto), as such may be amended by the parties and any other
services that (i) Office Systems, in the ordinary course prior to the
Distribution Date, received in whole or in part from the Pitney Bowes Group or
in reliance upon or in connection with Pitney Bowes' business (but, in the case
of a service provided only in part by the Pitney Bowes Group, only to the extent
such service was provided in the ordinary course by the Pitney Bowes Group prior
to the Distribution Date); (ii) are provided to Office Systems pursuant to (i)
above and are identified in writing by Office Systems to Pitney Bowes within
forty-five days of the Distribution Date; or (iii) are reasonably necessary for
Office Systems to conduct its operations as conducted in the ordinary course
prior to the Distribution Date, consistent with the historical provision of such
services and the other terms of this agreement, or otherwise upon pricing and
other terms and conditions reasonably acceptable to both parties.

       (b)  provide to Office Systems, or procure the provision to Office
Systems of, and Office Systems agrees to purchase from Pitney Bowes, the
information technology, computing and telecommunications services (the "IT
Services" and, together with the Non-IT Services, the "Services" and each, a
"Service") as set forth on Schedule 2.  Unless otherwise specifically agreed by
Pitney Bowes and Office Systems, the IT Services to be provided or procured by
Pitney Bowes hereunder shall be substantially similar in scope, quality, and
nature to those customarily provided to, or procured on behalf of, the Office
Systems Group prior to the Distribution Date and shall include IT Services that
(i) Office Systems, in the ordinary course prior to the Distribution Date,
received in whole or in part from the Pitney Bowes Group; (ii) are identified in
writing by Office Systems to Pitney Bowes within forty-five days of the
Distribution Date; or (iii) are reasonably necessary for Office Systems to
conduct its operations as conducted in the ordinary course prior to the
Distribution Date, consistent with the historical provision of such services and
the other terms of this agreement, or otherwise upon pricing and other terms and
conditions reasonably acceptable to both parties.

                                       5

 
     Section 2.02.  Subsidiaries.  It is understood that (i) the Services to be
provided to Office Systems under this Agreement shall, at Office Systems'
request, be provided to Subsidiaries of Office Systems and (ii Pitney Bowes may
satisfy its obligation to provide or procure Services hereunder by causing one
or more of its Subsidiaries to provide or procure such Services.  With respect
to Services provided to, or procured on behalf of, any Subsidiary of Office
Systems, Office Systems agrees to pay on behalf of such Subsidiary all amounts
payable by or in respect of such Services pursuant to this Agreement.

     Section 2.03.  Additional Services.  In addition to the Services to be
provided in accordance with Section 201, if requested by Office Systems and as
needed by Office Systems to conduct its business, as conducted in the ordinary
course prior to the Distribution Date (or as needed by Office Systems to
facilitate its transition to a stand-alone business following the Distribution
Date), and to the extent that Pitney Bowes and Office Systems may mutually
agree, Pitney Bowes shall provide reasonable additional services (including
services not provided by Pitney Bowes to the Office Systems prior to the
Distribution Date) to Office Systems.  The scope of any such services, as well
as the term, costs, and other terms and conditions applicable to such services,
shall be as mutually agreed by Pitney Bowes and Office Systems.

     Section 2.04.  Services Provided by Office Systems.  If it is necessary for
Office Systems to provide any services or resources to Pitney Bowes or any third
party regarding any aspect of the Office Systems Group business (the "Office
Systems Services") so that Pitney Bowes may provide or have provided the
Services hereunder, Office Systems shall provide such Services (i) without cost
to Pitney Bowes or any third party and (ii) of a nature, quality, service level
and standard of care substantially similar to the Office Systems Services as
provided to the Office Systems Group.



                                   ARTICLE 3

                          Service Costs; Other Charges

     Section 3.01.  Service Costs Generally.  (a) Unless any Schedule hereto
indicates otherwise or the parties shall agree in writing to a different
arrangement, for each period in which Office Systems receives a Service, Office
Systems shall pay Pitney Bowes its actual out-of-pocket cost for such Service,
including a proportionate share of Pitney Bowes' overhead, if applicable,
computed in accordance with Pitney Bowes' internal chargeback practices
("Service Costs").

                                       6

 
       (b)  If the volume of transactions for a specific Service provided to
Office Systems exceeds the level which historically has been utilized by the
Office Systems Group during the twelve months prior to the date hereof and, as a
result, requires human or equipment resources in excess of the level of
resources allocated to such Service by Pitney Bowes, the additional cost
associated with the increased volume shall be included in the Service Costs.

     Section 3.02.  Sales Tax.  Office Systems shall pay all applicable sales or
use taxes incurred with respect to provision of the Services.  These taxes shall
be incremental to other payments or charges identified in this Agreement.

     Section 3.03.  Certain Benefits Matters.  (a) Prior to the Distribution
Date, certain employees of Office Systems participated in certain benefit plans
sponsored by Pitney Bowes ("Pitney Bowes Plans").

       (b)  The costs payable by Office Systems for Services relating to
employee plans and benefit arrangements ("Benefits Services") shall be
determined and, to the extent specified in Schedule 1D, billed as set forth on
Schedule ID.  It is the express intent of the parties that Service Costs
relating to the administration of Office Systems employee plans and the
performance of related Services shall not exceed reasonable compensation for
such Services as defined in 29 CFR (S)2550.408c-2.

       (c)  Pitney Bowes and Office Systems agree to cooperate fully with each
other in the administration and coordination of regulatory and administrative
requirements associated with Pitney Bowes Plans and Benefits Services.

     Section 3.04.  Invoicing and Settlement of Costs.  (a)  Pitney Bowes shall
invoice or notify in writing the Chief Financial Officer of Office Systems on a
monthly basis (not later than the tenth day of each month), in a manner
substantially consistent with the billing practices used in connection with
services provided to the Office Systems Group prior to the Distribution Date
(except as otherwise agreed), of the Service Costs.  In connection with the
invoicing described in this Section 3.04, Pitney Bowes shall provide to Office
Systems the same billing data and level of detail as it customarily provided to
the Office Systems Group prior to the Distribution Date and such other data as
may be reasonably requested by Office Systems.

       (b)  Office Systems agrees to pay on or before 30 days after the date on
which Pitney Bowes invoices or notifies Office Systems of the Service Costs (or
the next Business Day, if such day is not a Business Day) (each, a "Payment
Date") by wire transfer of immediately available funds payable to the order of
Pitney Bowes all amounts invoiced by Pitney Bowes pursuant to Section 3.04(a)

                                       7

 
during the preceding calendar month. If Office Systems fails to pay any monthly
payment within 30 days of the relevant Payment Date, Office Systems shall be
obligated to pay, in addition to the amount due on such Payment Date, interest
on such amount at the prime, or best, rate (as quoted from time to time in the
Wall Street Journal) compounded monthly from the relevant Payment Date through
the date of payment.

       (c)  Office Systems agrees to pay on or before 30 days after the date on
which it is invoiced or otherwise notified (or on or before any other due date
previously established) any amount owed by Office Systems to any third party
vendor in relation to any Service provided hereunder.  In the event that Office
Systems fails to pay any such amount due in a timely manner and Pitney Bowes
becomes liable for such amount, Pitney Bowes may pay any such amount to any
vendor and Office Systems shall be obligated to pay Pitney Bowes the full amount
due plus any interest due on such amount and any delinquency or other fees
accrued.

                                   ARTICLE 4

                                  The Services

     Section 4.01.  General Standard of Service.  (a) Except as otherwise agreed
with Office Systems or described in this Agreement or the Schedules hereto, and
provided that Pitney Bowes is not restricted by contract with third parties or
by applicable law, Pitney Bowes agrees that the nature, quality, service level
and standard of care applicable to the delivery of the Services hereunder shall
be substantially the same as that of the Services which Pitney Bowes provides
from time to time throughout its businesses.  If Pitney Bowes and Office Systems
do not have comparable operations with respect to a certain Service, then the
service level shall be consistent with the standards provided to Office Systems
for the twelve months prior to the Distribution Date.  Pitney Bowes shall use
its reasonable efforts to ensure that the nature and quality of Services
provided to Office Systems employees either by Pitney Bowes directly or through
administrators under contract shall be undifferentiated as compared with the
same services provided to or on behalf of Pitney Bowes employees under Pitney
Bowes Plans.  Subject to Pitney Bowes' express obligations under this Agreement,
the management of and control over the provision of the Services shall reside
solely with Pitney Bowes.  Without limiting the generality of the foregoing, all
labor matters relating to employees of Pitney Bowes and its Subsidiaries
(including, without limitation, employees involved in the provision of Services
to Office Systems) shall be within the exclusive control of Pitney Bowes, and
Office Systems shall not take any action affecting such matters.

                                       8

 
       (b)  If Office Systems becomes aware of a material deficiency in the
performance of a Service provided or procured by Pitney Bowes or one of its
subsidiaries (a "Service Level Breach"), Office Systems may deliver a written
notice of the Service Level Breach to the Service Provider.  Upon receipt of
such notice, Pitney Bowes shall use it reasonable best efforts to remedy the
Service Level Breach as soon as reasonably possible.

     Section 4.02.  Personnel.  Subject to Schedule 1D hereof, Pitney Bowes
shall, at its own expense, employ and retain staff, and contract with third
parties and other vendors with a level of experience, skill, diligence and
expertise consistent with Pitney Bowes' normal business practices, needed to
perform the Services.  The provisions of this paragraph shall not apply to
contracts entered into by Pitney Bowes and third parties prior to the
Distribution Date.

     Section 4.03.  Systems Support.  In each instance where Pitney Bowes
provides application, technical or infrastructure support to Office Systems
under this Agreement ("Systems Support"), such Systems Support shall, except as
limited by this Agreement and the Schedules hereto, be provided in a scope and
manner substantially consistent with past practices.

     Section 4.04. Delegation. Subject to Section 4.01(a), Office Systems hereby
delegates to Pitney Bowes final, binding, and exclusive authority,
responsibility, and discretion to interpret and construe the provisions of
employee welfare benefit plans in which Office Systems has elected to
participate and which are administered by Pitney Bowes under this Agreement
(collectively, "Employee Benefit Plans"). Pitney Bowes may further delegate such
authority to plan administrators to:

     (i)   provide administrative and other services;

     (ii)  reach factually supported conclusions consistent with the terms of
the Employee Benefit Plans;

     (iii) make a full and fair review of each claim denial and decision related
to the provision of benefits provided or arranged for under the Employee Benefit
Plans, pursuant to the requirements of ERISA, if within 60 days after receipt of
the notice of denial, a claimant requests in writing a review for
reconsideration of such decisions.  The plan administrator shall notify the
claimant in writing of its decision on review.  Such notice shall satisfy all
ERISA requirements relating thereto; and

     (iv)  notify the claimant in writing of its decision on review.

                                       9

 
     Section 4.05.  Limitation of Liability.  (a) Office Systems agrees that
none of the members of the Pitney Bowes Group and their respective directors,
officers, agents, and employees (each, a "Pitney Bowes Indemnified Person")
shall have any liability, whether direct or indirect, in contract or tort or
otherwise, to any Office Systems Entity or any other Person for or in connection
with the Services rendered or to be rendered by any Pitney Bowes Indemnified
Person pursuant to this Agreement, the transactions contemplated hereby or any
Pitney Bowes Indemnified Person's actions or inactions in connection with any
such Services or transactions, except for damages which have resulted from such
Pitney Bowes Indemnified Person's gross negligence or willful misconduct in
connection with any such Services, actions or inactions.

       (b)  Notwithstanding the provisions of Section 4.05(a), none of the
Pitney Bowes Group shall be liable for any special, indirect, incidental, or
consequential damages of any kind whatsoever (including, without limitation,
attorneys' fees) in any way due to, resulting from or arising in connection with
any of the Services or the performance of or failure to perform Pitney Bowes'
obligations under this Agreement.  This disclaimer applies without limitation
to claims arising from the provision of the Services or any failure or delay in
connection therewith; to claims for lost profits;  regardless of the form of
action, whether in contract, tort (including negligence), strict liability, or
otherwise; and  regardless of whether such damages are foreseeable or whether
Pitney Bowes has been advised of the possibility of such damages.

       (c)  None of the Pitney Bowes Group shall have any liability to any
Office Systems Entity or any other Person for failure to perform Pitney Bowes'
obligations under this Agreement or otherwise, where such failure to perform is
not caused by the gross negligence or willful misconduct of the Pitney Bowes
Entity providing such Services and such failure to perform similarly affects
the Pitney Bowes Group receiving such Services and does not have a
disproportionately adverse effect on the Office Systems Group, taken as a whole.

       (d)  In addition to the foregoing, Office Systems agrees that it shall,
in all circumstances, use commercially reasonable efforts to mitigate and
otherwise minimize its damages and those of the other Office Systems Group,
whether direct or indirect, due to, resulting from or arising in connection with
any failure by Pitney Bowes to comply fully with its obligations under this
Agreement.

       (e)  Notwithstanding the foregoing provisions of this Section 4.05, in
the event of a substantial and continuing failure on the part of Pitney Bowes to
provide or procure any material Services, where such failure is reasonably
expected to have a material adverse effect on Office Systems and its
Subsidiaries,
                                       10

 
considered as a whole, Office Systems shall be entitled to seek specific
performance to cause Pitney Bowes to provide or procure such Services.

     Section 4.06.  Indemnification of Pitney Bowes by Office Systems.  Office
Systems agrees to indemnify and hold harmless each Pitney Bowes Indemnified
Person from and against any damages, and to reimburse each Pitney Bowes
Indemnified Person for all reasonable expenses as they are incurred in
investigating, preparing, pursuing, or defending any claim, action, proceeding,
or investigation, whether or not in connection with pending or threatened
litigation and whether or not any Pitney Bowes Indemnified Person is a party
(collectively, "Actions"), arising out of or in connection with Services
rendered or to be rendered by any Pitney Bowes Indemnified Person pursuant to
this Agreement, the transactions contemplated hereby or any Pitney Bowes
Indemnified Person's actions or inactions in connection with any such Services
or transactions; provided that Office Systems shall not be responsible for any
damages of any Pitney Bowes Indemnified Person that have resulted from such
Pitney Bowes Indemnified Person's gross negligence or willful misconduct in
connection with any of the advice, actions, inactions, or Services referred to
above (it being understood and agreed that the provision by any Pitney Bowes
Entity of any of the Services contemplated by Schedule 2 hereof without
obtaining the consent of any party to any contract or agreement to which any
Pitney Bowes Entity is a party as of the date hereof shall not constitute gross
negligence or wilful misconduct by any Pitney Bowes Entity; provided that the
relevant Pitney Bowes Entity has used commercially reasonable efforts to obtain
the relevant consent).  Sections 4.04 and 4.05 of the Distribution Agreement
shall apply in the event that any indemnification is sought pursuant to this
Section 4.06.

     Section 4.07.  Indemnification of Office Systems by Pitney Bowes.  Pitney
Bowes agrees to indemnify and hold harmless each member of the Office Systems
Group and their respective directors, officers, agents, and employees (each, a
"Office Systems Indemnified Person") from and against any damages, and shall
reimburse each Office Systems Indemnified Person for all reasonable expenses as
they are incurred in investigating, preparing, or defending any Action, arising
out of the gross negligence or willful misconduct of any Pitney Bowes
Indemnified Person in connection with the Services rendered or to be rendered
pursuant to this Agreement.  Sections 4.04 and 4.05 of the Distribution
Agreement shall apply in the event that any indemnification is sought pursuant
to this Section 4.07.

     Section 4.08.  Further Indemnification.  To the extent that any other
Person has agreed to indemnify any Pitney Bowes Indemnified Person or to hold a
Pitney Bowes Indemnified Person harmless and such Person provides services to
Pitney Bowes or any affiliate of Pitney Bowes relating directly or indirectly to
any employee plan or benefit arrangement for which Benefit Services are provided

                                       11

 
under this Agreement, Pitney Bowes shall exercise reasonable efforts (a) to make
such agreement applicable to any Office Systems Indemnified Person so that each
Office Systems Indemnified Person is held harmless or indemnified to the same
extent as any Pitney Bowes Indemnified Person or (b) otherwise make available to
each Office Systems Indemnified Person the benefits of such agreement.

     Section 4.09.  Notice of Certain Matters. If Office Systems at any time
believes that Pitney Bowes is not in full compliance with its obligations under
Section 4.01(a) of this Agreement, Office Systems shall so notify Pitney Bowes
in writing promptly (but not later than 30 days) after becoming aware of such
possible non-compliance by Pitney Bowes. Failure to notify Pitney Bowes within
30 days shall not relieve Pitney Bowes of liability except to the extent Pitney
Bowes is actually prejudiced due to such failure to notify. Such notice (a "Non-
Compliance Notice") shall set forth in reasonable detail the basis for Office
Systems' belief as well as Office Systems's view as to the steps to be taken by
Pitney Bowes to address the possible non-compliance. For the 30 days after
receipt of such a notice, appropriate representatives of Pitney Bowes and Office
Systems shall work in good faith to develop a plan to resolve the matters
referred to in the Non-Compliance Notice. In the event such matters are not
resolved through such discussions, Office Systems may elect to terminate Pitney
Bowes' obligation to provide or procure, and its obligation to purchase, the
Service or Services referred to in its Non-Compliance Notice in accordance with
Section 5.02. In the event such matters are resolved through such discussions
and Office Systems does not elect to terminate such Service or Services within
60 days of the end of the 30-day period referred to in the third sentence of
this Section 4.09, Office Systems shall not be entitled to deliver another Non-
Compliance Notice or pursue other remedies with respect to same or any
substantially similar matter so long as Pitney Bowes complies in all material
respects with the terms of such resolution. In no event shall any termination of
this Agreement pursuant to this Section 4.09 limit or affect Office Systems's
right to seek remedies in accordance with Section 4.08 in respect of any breach
by Pitney Bowes of any of its obligations under this Agreement prior to such
termination.

                                   ARTICLE 5

                              Term and Termination

     Section 5.01.  Term.  Except as otherwise provided in this Article 5, in
Section 9.05 or as otherwise agreed in writing by the parties, Pitney Bowes 
shall provide (through one or more of its Affiliates and/or outside service
providers to the extent utilized by Office systems as of the date hereof or
engaged hereafter with the prior written consent of Office Systems) to the
Office Systems Group, the

                                       12

 
Non-IT Services and any additional services as identified and agreed upon by
Pitney Bowes and Office Systems pursuant to Section 2.03 for an initial term of
twelve months from the Distribution Date (the "Transition Period"). Pitney Bowes
shall provide the IT Services (in the manner provided in the preceding sentence)
for an initial term from the Distribution Date until December 31, 2002. Pitney
Bowes' obligation to provide or procure, and Office Systems' obligation to
purchase, a Service shall cease as of the applicable date set forth in the
applicable Schedules or such earlier date determined in accordance with Section
5.02. The Transition Period shall be deemed to be extended, as and for the
period needed but, in any event, not to exceed six months, on account of any one
of the following: (i) a requirement by a Government Authority; (ii) at the
discretion of the non-breaching party, any failure by Office Systems or Pitney
Bowes, as the case may be, to perform any action required on its part under this
agreement including the schedules hereto, but only to the extent of such
failure; or (iii) the inability of the parties to achieve a suitable replacement
for provision of the Services as set forth in any schedule hereto after applying
reasonable efforts, provided that, to the extent the Transition Period is
extended pursuant to clause (i) or (iii), in addition to the amounts otherwise
due pursuant to Section 3.01 of this Agreement, Office Systems shall pay all
costs actually incurred by reason of the extension. Pitney Bowes shall make
commercially reasonable efforts (which shall not require it to incur any out of
pocket costs) to minimize the costs referred to in the immediately preceding
proviso.

     Section 5.02.  Termination.  (a) Except as otherwise provided in any
Schedule hereto, Office Systems may (i) from time to time terminate this
Agreement with respect to one or more of the Services, in whole or in part, upon
giving at least 180 days' prior notice to Pitney Bowes or (ii) terminate this
Agreement at any time upon 180 days' written notice.

       (b)  Pitney Bowes may terminate any Service at any time if Office Systems
shall have failed to perform any of its material obligations under this
Agreement relating to any such Service, Pitney Bowes has notified Office Systems
in writing of such failure and such failure shall have continued for a period of
60 days after receipt by Office Systems of written notice of such failure.

       (c)  Office Systems may terminate any Service at any time if Pitney Bowes
shall have failed to perform any of its material obligations under this
Agreement relating to any such Service, Office Systems has notified Pitney Bowes
in writing of such failure, and such failure shall have continued for a period
of 60 days after receipt by Pitney Bowes of written notice of such failure.

     Section 5.03.  Effect of Termination.  (a) Other than as required by law,
upon termination of any Service pursuant to Section 5.02, or upon termination of

                                       13

 
this Agreement in accordance with its terms, Pitney Bowes shall have no further
obligation to provide the terminated Service (or any Service, in the case of
termination of this Agreement) and Office Systems shall have no obligation to
pay any fees relating to such Services or make any other payments hereunder;
provided that notwithstanding such termination, (i) Office Systems shall remain
liable to Pitney Bowes for fees owed and payable in respect of Services provided
prior to the effective date of the termination; (ii) Pitney Bowes shall continue
to charge Office Systems for administrative and program costs relating to
benefits paid after but incurred prior to the termination of any Service and
other services required to be provided after the termination of such Service and
Office Systems shall be obligated to pay such expenses in accordance with the
terms of this Agreement; and (iii) the provisions of Articles 4, 5, 6 and 8.01
shall survive any such termination indefinitely.  All program and administrative
costs attributable to employees of any of the Office Systems Group for Pitney
Bowes Plans that relate to any period after the effective date of any such
termination shall be for the account of Office Systems.

       (b)  Following termination of this Agreement with respect to any Service,
Pitney Bowes and Office Systems agree to cooperate in providing for an orderly
transition of such Service to Office Systems or to a successor service provider.
Without limiting the foregoing, Pitney Bowes agrees to (i) provide, within 60
days of the termination, copies in a usable format designated by Pitney Bowes,
of all records relating directly or indirectly to benefit determinations of
Office Systems employees, including but not limited to compensation and service
records, correspondence, plan interpretive policies, plan procedures,
administration guidelines, minutes, or any data or records required to be
maintained by law and (ii) work with Office Systems in developing a transition
schedule.



                                   ARTICLE 6

                              Operating Committee

     Section 6.01.  Organization.  The parties shall use an operating committee
(the "Operating Committee") to implement the terms of this Agreement.  Each of
Pitney Bowes and Office Systems shall appoint three employees, at least one of
whom shall be a senior executive, to the Operating Committee for a two year
term.  The Operating Committee will oversee the implementation and ongoing
operation of this Agreement and shall attempt in good faith to resolve disputes
between the parties.  Each of the parties shall have the right to replace one or
more of its Operating Committee members at any time with employees or officers
with comparable knowledge, expertise and decision-making authority.


                                       14

 

     Section 6.02.  Decision Making.  The Operating Committee shall act by a
majority vote of its members.  If the Operating Committee fails to make a
decision, resolve a dispute, agree upon any necessary action, or if Office
Systems so requests in the event of a material breach significantly and
adversely affecting the business of Office Systems, a senior officer of Pitney
Bowes and a senior officer of Office Systems, neither of whom shall have direct
responsibility for the subject matter in dispute, shall attempt in good faith
within a period of 14 days to conclusively resolve any such unresolved matter.

     Section 6.03.  Meetings.  During the Transition Period, the full Operating
Committee shall meet, in person or via teleconference at least once every
quarter.  In addition, the Operating Committee shall meet as necessary to
promptly resolve any disputes submitted to it by any representative of Pitney
Bowes or of Office Systems.



                                   ARTICLE 7

                       Third Party Consents and Licenses

     Section 7.01.  Separation.  With respect to any hardware or software
licenses that are utilized as of the date hereof by both the Pitney Bowes Group
and the Office Systems Group related to the Services to be provided hereunder,
Pitney Bowes and Office Systems agree to cooperate and use their reasonable
efforts to cause, on or before the expiration of the relevant terms hereunder,
such licenses to be separated and allocated between the parties so that the
Office Systems Group receives a number of such licenses that is consistent with
the historical usage of the licensed hardware or software by the Office Systems
Group.

     Section 7.02.  Additional Licenses.  The Pitney Bowes Group and the Office
Systems Group shall obtain and maintain all material permits, approvals and
licenses necessary or appropriate so that the Pitney Bowes Group may perform its
duties and obligations (including the provision of the Services) hereunder.  To
the extent that it is necessary for the Pitney Bowes Group to obtain and
maintain all such material permits, approvals and licenses, the Pitney Bowes
Group shall use commercially reasonable efforts to obtain and maintain all such
material permits, approvals and licenses.  Each of the Pitney Bowes Group and
the Office Systems Group shall at all times comply with the terms and conditions
of such permits, approvals and licenses.

     Section 7.03.  Fees.  If any consent or license to provide or have provided
any of the Services contemplated by the Agreement cannot be obtained by the
Pitney Bowes Group or by the Office Systems Group, the Pitney Bowes Group

                                       15


 
will not provide the Services until such consent or license consent can be
obtained unless such consent has been sought and is reasonably expected to be
approved. Costs relating to obtaining such consents or licenses shall be paid by
the Office Systems Group.

                                   ARTICLE 8

                             Additional Agreements

     Section 8.01.  Confidential Information.  (a) Office Systems and Pitney
Bowes hereby covenant and agree to hold in trust and maintain confidential all
Confidential Information relating to the other party or any of such other
party's Subsidiaries.  Without limiting the generality of the foregoing,
Confidential Information relating to a party or any of its Subsidiaries shall be
disclosed only to those employees of the other party who need to know such
information in connection with their ordinary course employment activities and
in no event shall any such Confidential Information be disclosed to any other
Person. "Confidential Information" shall mean all information, materials and
processes relating to a party or any Subsidiary of such party obtained by the
other party or any Subsidiary of such other party at any time (whether prior to
or after the date hereof and whether in connection with this Agreement or
otherwise) in any format whatsoever (whether orally, visually, in writing,
electronically or in any other form) and shall include, but not be limited to,
economic and business information or data, business plans, computer software and
information relating to employees, vendors, customers, products, financial
performance and projections, processes, strategies and systems but shall not
include (i) information which becomes generally available other than by release
in violation of the provisions of this Section 8.01, (ii) information which
becomes available on a non-confidential basis to a party from a source other
than the other party to this Agreement, provided the party in question
reasonably believes that such source is not or was not bound to hold such
information confidential and (iii) information acquired or developed
independently by a party without violating this Section 8.01 or any other
confidentiality agreement with the other party. Each party shall use
commercially reasonable efforts to restrict access to the other party's
Confidential Information to those employees of such party requiring access for
the purpose of providing Services hereunder. Notwithstanding any provision of
this Section 8.01 to the contrary, a party may disclose such portion of the
Confidential Information relating to the other party to the extent, but only to
the extent, the disclosing party reasonably believes that such disclosure is
required under law or the rules of a securities exchange; provided that the
disclosing party first notifies the other party hereto of such requirement and
allows such party a reasonable opportunity to seek protective order or other
appropriate remedy to prevent such disclosure. The parties acknowledge that
money damages would not be a sufficient remedy for any breach of the provisions
of this Section 8.01 and that the non-breaching party

                                       16



shall be entitled to equitable relief in a court of law
in the event of, or to prevent, a breach or threatened breach of this Section
8.01.

       (b)  Notwithstanding the provisions of Section 8.01(a), upon a Change of
Control, Office Systems shall, if requested by Pitney Bowes, (i) promptly (but
in no event later than 30 days after the occurrence of such Change of Control)
return to Pitney Bowes or destroy all Confidential Information in its possession
(or that of any of its Subsidiaries) relating to Pitney Bowes or any of its
Subsidiaries, (ii) no longer be permitted to use such Confidential Information
in its business or operations (or the business or operations of any of its
Subsidiaries) and (iii) promptly (but in no event later than 30 days after the
occurrence of such Change of Control) deliver a written certificate to Pitney
Bowes executed by Office Systems' Chief Executive Officer expressly
acknowledging the obligations set forth in clauses (i) and (ii) of this sentence
and certifying that Office Systems has and shall continue to adhere to such
requirements.

     Section 8.02.  Security.  Pitney Bowes shall provide physical and data
security for the businesses or functions to which the Services relate at a level
at least comparable to security provided to other comparable Pitney Bowes
businesses or functions.  Office Systems shall be responsible for all security
issues at Office Systems facilities.  Each party agrees to comply with the other
party's systems security procedures and shall not circumvent such procedures.
Each party retains the right to monitor and audit the other party's compliance
with such systems and security procedures.  If either party reasonably
determines that personnel from the other party have attempted to circumvent its
systems security procedures, that party may immediately terminate such
personnel's access to its systems security procedures, that party may
immediately terminate such personnel's access to it systems and shall
immediately advise the other party of such incident and termination.

     Section 8.03.  Service Level at Termination of Transition Period.  At least
90 days prior to the termination of the Transition Period, Office Systems shall
provide to Pitney Bowes a written notice of its plan for termination of each
Service and for transition to a provider of each Service other than Pitney Bowes
or any such third party that Pitney Bowes has caused to provide such Service
(the "Transition Plan") for Pitney Bowes' review and comment.  To the extent the
Transition Plan indicates that any such Service provided by Pitney Bowes or
caused to be provided by Pitney Bowes under this Agreement shall be provided by
any other party at the termination of the Transition Period, Pitney Bowes shall
use commercially reasonable efforts to assist in the transfer of all required
data and otherwise facilitate the transfer of responsibility for such Service to
such other party and to continue the provision of each Service during the
transition to such party prior to the termination of the Transition Period or
other termination of this

                                       17


Agreement. Following the termination of the Transition Period or upon any other
termination of this Agreement, Pitney Bowes shall have no obligation to continue
to provide any of the Services identified in the Agreement or otherwise agreed
to by the parties prior to the termination of this Agreement.


                                   ARTICLE 9

                                 Miscellaneous

     Section 9.01.  Prior Agreements.  In the event there is any conflict
between the provisions of this Agreement, on the one hand, and provisions of
prior services agreements among any Pitney Bowes Entity and any Office Systems
Entity (the "Prior Agreements"), on the other hand, the provisions of this
Agreement shall govern and such provisions in the Prior Agreements are deemed to
be amended so as to conform with this Agreement.

     Section 9.02.  Other Agreements.  In the event there is any inconsistency
between the provisions of this Agreement, on the one hand, and the provisions of
the Distribution Agreement, on the other hand, the provisions of the
Distribution Agreement shall govern.

     Section 9.03.  No Agency.  Nothing in this Agreement shall constitute or be
deemed to constitute a partnership or joint venture between the parties hereto
or, except to the extent provided in Section 4.04, constitute or be deemed to
constitute any party the agent or employee of the other party for any purpose
whatsoever and neither party shall have authority or power to bind the other or
to contract in the name of, or create a liability against, the other in any way
or for any purpose.

     Section 9.04.  Subcontractors.  Pitney Bowes may hire or engage one or more
subcontractors to perform all or any of its obligations under this Agreement;
provided that, subject to Section 4.05, Pitney Bowes shall in all cases remain
primarily responsible for all obligations undertaken by it in this Agreement
with respect to the scope, quality and nature of the Services provided to Office
Systems.

     Section 9.05.  Force Majeure.  (a) For purposes of this Section, "force
majeure" means an event beyond the control of either party, which by its nature
could not have been foreseen by such party, or, if it could have been foreseen,
was unavoidable, and includes without limitation, acts of God, storms, floods,
riots, fires, sabotage, civil commotion or civil unrest, interference by civil
or military authorities, acts of war (declared or undeclared) and failure of
energy sources.


                                       18

 
       (b)  Without limiting the generality of Section 4.05(a), neither party
shall be under any liability for failure to fulfill any obligation under this
Agreement, so long as and to the extent to which the fulfillment of such
obligation is prevented, frustrated, hindered, or delayed as a consequence of
circumstances of force majeure; provided that such party shall have exercised
all due diligence to minimize to the greatest extent possible the effect of
force majeure on its obligations hereunder.

       (c)  Promptly on becoming aware of force majeure causing a delay in
performance or preventing performance of any obligations imposed by this
Agreement (and termination of such delay), the party affected shall give written
notice to the other party giving details of the same, including particulars of
the actual and, if applicable, estimated continuing effects of such force
majeure on the obligations of the party whose performance is prevented or
delayed.  If such notice shall have been duly given, the actual delay resulting
from such force majeure shall be deemed not to be a breach of this Agreement,
and the period for performance of the obligation to which it relates shall be
extended accordingly; provided that if force majeure results in the performance
of a party being delayed by more than 60 days, the other party shall have the
right to terminate this Agreement with respect to any Service affected by such
delay forthwith by written notice.

     Section 9.06.  Entire Agreement.  This Agreement (including the Schedules
constituting a part of this Agreement) and any other writing signed by the
parties that specifically references this Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof.  This
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.

     Section 9.07.  Information.  Subject to applicable law and privileges, each
party hereto covenants and agrees to provide the other party with all
information regarding itself and transactions under this Agreement that the
other party reasonably believes are required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.

                                       19

 
     Section 9.09.  Notices.  Any notice, instruction, direction or demand under
the terms of this Agreement required to be in writing shall be duly given upon
delivery, if delivered by hand, facsimile transmission, or mail, to the
following addresses:

     (a)   If to Pitney Bowes to:

            Pitney Bowes Inc.
            1 Elmcroft Road
            Stamford, CT 06926-0700
            Telecopy: (203) [            ]
            Attention:     [                    ]

            with a copy to:

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

     (b)   If to Office Systems to:

            Pitney Bowes Office Systems, Inc.
            100 Oakview Drive
            Trumbull, CT 06611
            Telecopy: (203) 365-7497
            Attention: Joseph Skrzypczak

            with a copy to:
   
            Pitney Bowes Office Systems, Inc.
            100 Oakview Drive
            Trumbull, CT 06611
            Telecopy: (203) 365-2353
            Attention: Mark S. Flynn

or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.

     Section 9.09.  Governing Law.  This Agreement shall be construed in
accordance with and governed by the substantive internal laws of the State of
New York.

     Section 9.10.  WAIVER OF JURY TRIAL.  THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

                                       20

 

     Section 9.11.  Severability.  If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid.  Rather, the Agreement shall be construed as if
not containing the particular invalid or unenforceable provision, and the rights
and obligations of each party shall be construed and enforced accordingly.

     Section 9.12.  Amendment.  This Agreement may only be amended by a written
agreement executed by both parties hereto.

     Section 9.13.  Counterparts.  This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement.

                                       21

 
     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized representatives.

                                PITNEY BOWES INC.
                        
                        
                        
                                By:
                                   ----------------------------------
                                   Name:
                                   Title:
                        
                        
                                PITNEY BOWES OFFICE
                                SYSTEMS, INC.
                        
                        
                        
                                By:
                                   ----------------------------------
                                   Name:
                                   Title:

 
                                                                   Schedule 1

                    PBI / PBOS Transition Services Agreement

               Schedule 1 - Summary of Non-IT Service Agreements
               -------------------------------------------------

                                                                   Schedule
                                                                   --------

Service Parts Logistics                                            1A

Real Estate Transaction Services                                   1B

Accounting                                        

  Sales, Use and Property Tax                                      1C-1

  Payroll, Travel Reimbursement, Accounts Payable                  1C-2

  General Ledger                                                   1C-3

  Fixed Assets                                                     1C-4

  Inventory Accounting                                             1C-5

  Accounts Receivable                                              1C-6

Benefits Administration                                            1D

Supplies Line Order Entry System                                   1E

Customer Care Call Dispatch                                        1F

Safety and Environmental                                           1G

Field Service Systems Support                                      1H

Non-Focus Field Service                                            1J

Telecom Costs in Shared Locations                                  1K

Mailroom Services                                                  1L

Import and Customs Compliance                                      1M

Document Services Group Services                                   1N

 
                    PBI / PBOS Transition Services Agreement

                     Schedule 1A - Service Parts Logistics
                     -------------------------------------


General
-------

PBI will furnish PBOS with logistics support for its U.S. service parts.  This
service will cover warehousing and outbound logistics for service parts.
Finished goods logistics are excluded from this agreement.

Duration
--------

The period commencing at the Distribution Date and concluding December 31, 2002.

Cost
----

$211,000 per month (excluding carrier costs).

Costs for outbound carrier services and repackaging of parts will be billed to
PBOS by PB based on the percentage of parts that are shipped on a monthly basis.
This charge will be an allocation of total outbound freight costs, based on PBOS
monthly line-item volumes as a percentage of total line-items shipped.

At the termination of the agreement, PBOS will pay for all expenses related to
the pick/pack and transport of parts to a new facility.  This charge will be
based on actual costs and overheads incurred.

PBOS volume levels are assumed to be equal to levels supported in 2000.  Should
PBOS annual parts volumes (defined by SKUs) or space usage vary from 2000 levels
by more than 10%, a revised charge will be calculated by PB and will not be
unreasonably refused by PBOS.

Included Services
-----------------

PB will provide logistics for service parts:
  .  Receipt and repackaging of parts from vendors.
  .  Storage of parts in warehouse.
  .  Pick/pack of parts for field service.
  .  Load shipments onto outbound carriers.

                                       2

 
In addition, PB will provide the following services:
--------------------------------------------------- 
Negotiate terms with outbound carriers.
Support IT systems related to parts logistics (PARTS system, Inventory Control
Integration ICI system).
Provide access to PBOS to the ICI system to allow them to analyze and manage
inventory levels).
Insure inventory from physical loss.
Provide inventory controls.
Conduct track and trace on lost/late outbound shipments.  Reship if necessary.

Excluded Services
-----------------
Procurement and payment for all parts is the sole responsibility of PBOS.
Parts inventory will be owned by PBOS.
Ongoing support of ACESS system is covered by Field Service agreement Schedule
1H.
Any liability for damages to parts shipments or for third party claims of
damages as a result of parts shipments to PBOS will be the sole responsibility
of PBOS unless caused by willful misconduct by PB.

                                       3

 
                    PBI - PBOS Transition Services Agreement

                 Schedule 1B - Real Estate Transaction Services
                 ----------------------------------------------


General
-------

PBI Corporate Real Estate (CRE) will furnish Real Estate Transaction Services to
PBOS for delivery of real estate projects that are commenced prior to the
Distribution Date and deliverable prior to December 31, 2001 on an as needed
basis.  PBOS will be responsible for all PBOS real-estate projects that commence
after the Distribution Date or that are deliverable after December 31, 2001.  As
soon as practical, PBI will transfer responsibility for delivery of all PBOS
projects deliverable after December 31, 2001 to PBOS.

Real Estate Transaction Services are specifically related to facility
acquisition and project management support for PBOS operations in PBI locations
with expiring leases.  The services are based on current practices and standards
employed by the Corporate Real Estate Department (CRE) to fulfill MSD/OSD
district requirements.  The procedure includes coordination with PBOS management
as well as outside vendors.  PBOS represents that it accepts the current process
and costs for all outside services currently engaged in project delivery as
reflected in Exhibit B to this Schedule 1B.

The existing process between CRE and TechCentral IT will be used to provide the
resources needed for design, acquisition or installation of telephone or data
infrastructure or services.  The costs of these services will be identified and
budgeted in the scope of the project and paid for by PBOS.  PBOS IT will oversee
these resources and provide input as required to ensure services and timeliness
to meet project objectives.

Transaction Services do not include ongoing property management and lease
administration services.  These services for locations where PBOS is a subtenant
in PBI leaseholds, are detailed in the appropriate Sublease Agreements.  Lease
Administration and Property Management for locations where PBOS is the Primary
Tenant on the lease will be the responsibility of PBOS.

Duration
--------

Beginning on the Distribution Date and ending no later than December 31, 2001.

                                       4

 
Cost
----

At the Distribution Date, PBI will furnish estimates of hours required to
complete all projects that have commenced prior to the Distribution Date.  Due
to the large number of variables, interdependencies and uncontrollables,
estimates for a project timeframe will not be considered guarantees.   Projects
will be billed for actual time spent by the CRE department.  As a frame of
reference, a typical project from inception to delivery requires 170 hours of
CRE oversight over a 9 month period.

PBI will invoice PBOS for all actual labor (at a rate of $100 per hour) and
reimbursables including travel expenses, supplies, copying plans and other
materials used in the course of the business (at cost).  Out-sourced services
including project management/implementation, lease negotiation, legal due
diligence, architectural services, environmental and security reviews will be
requisitioned and approved by PBI CRE and paid directly by PBOS within 10 days
of receiving an approved invoice.

Specific Services
-----------------

PBI CRE will appoint a project manager who will be responsible for coordinating
the provision of services to PBOS.  In general, with the participation of PBOS
personnel and outside vendors, PBI will coordinate the following services.
These services and their accountabilities are more specifically detailed on
Exhibit A (attached).

  .  Identify property requirements (i.e. Size, location, attributes based on
     operating requirements and based on standard PBI guidelines).
  .  Engage outside vendors to perform various activities including brokerage
     services, architectural, project implementation, lease negotiation.
  .  Coordinate and oversee vendor performance.
  .  Identify financial parameters based on market conditions and develop and
     circulate a standard CRE CIP for approval by PBOS management.
  .  Negotiate business terms to obtain leaseholds for those properties on
     behalf of PBOS.
  .  Oversee lease language negotiation by outside counsel.
  .  Initiate environmental and security reviews.
  .  Oversee and coordinate construction and move process.
     o  Design projects based on current PBI construction standards
     o  Review/approve Construction Documents (CDs).  Approval of CDs is not a
        professional approval of design.
     o  Oversee landlord's implementation of construction.
     o  Identify furniture inventory and order furniture requirements.

                                       5

 
     o  Advise TechCentral identified resources of necessary timeframes for
        coordination of tele/data installations. The identified TechCentral
        resources and PBOS IT will be responsible for tele/data equipment and
        service installation.
  .  Issue RFPs and contracts for support services.
  .  Oversee vendor/landlord inspection and close-out of vacated properties.

PBI CRE will not be responsible for costs associated with PBOS failure to act or
make decisions in a timely fashion.

PBI will manage project expenses within the proposed financial guidelines
presented to PBOS based on market conditions (i.e. Capital Investment Proposals
(CIP)) which will be based on current PBI Real Estate practices.  PBI will
approve invoices for payment of all vendors during the transition services
period.  The payment will be made by PBOS within 30 days of receipt of an
approved invoice. PBI CRE will review over-runs of projects with PBOS management
(defined as the person who signed-off the project CIP).  CRE will not be
responsible for project over runs due to failure of PBOS to approve or make
timely decisions, force majeure or other delays not reasonably within control of
PBI.

Upon the earlier of substantial completion of a project in accordance with
generally accepted construction practices of the project locale or occupancy by
PBOS personnel - PBOS will become accountable for all requirements of the
property including lease administration and property management.

Additional project management and training support may be provided if both
parties agree to specific terms.

                                       6

 
CRE - PBOS REAL ESTATE PROJECT PROCESS  Sched. 1B - Exhibit A


PROJECT CONTACTS:

. PBOS Facolities:
  .  Office Systems Districts (Commercial Sales & Service and National Sales).
  .  Business Products Centers ("BPC")
 
. PBOS Home Office Contacts:
  . Office Systems District : Georgia Ludovico, 365-2371 fax 365-6193 Mail
    Loc: 17-20
  . Office Systems BPC: George Clark (ph PB external 365) 430-7061 fax
    203-396-5641 Mail Loc: 17-23
  . PBOS IT  - Voice and Data Requirements - Gary Geiger (ph PB external
    365) 430-7036
 
. PBI CRE Contacts
  . CRE West Wendi Gruskin 351-7296
  . CRE East Jessica Bray - 351-6286
 

  IMPLEMENTATION DESCRIPTION:

I.   PROJECT KICKOFF:

. Identify Space Alternatives:
  .  Consolidation & Relocation of Operations
  .  Relocation of District Office
  .  Separation from PBI (demise in same facility or separate locations)
  .  Lease Renewal (maybe w/ a consolidation of another group)
  .  New space requirement (New District Office or BPC).

. Calculate Facility Requirement
  .  Incorporate Personnel ("PSN") into standard PSN spreadsheet
  .  Circulate Completed PSN spreadsheet to PBOS Home Office Contacts for
     approval
  .  Once facility requirement is established, compare to existing facility (to
     determine if existing space meets current requirements).

                                       7

 
. Request Telecomm Budget From TechCentral Resources
  .  Forward approved Personnel Spreadsheet to TechCentral Resources.
  .  CRE to provide TechCentral Resources with projected move in date, local
     PBOS contacts and a description of all options that will be explored
     (Consolidation & Relocation of PBOS, Lease Renewal (maybe w/ a
     consolidation and/or demise existing space) and/or New space requirement).
  .  TechCentral Resources to review all phone/data requirements with local PBOS
     contacts.
  .  TechCentral Resources to provide CRE with tele/data budget for all facility
     options.
  .  PBOS IT will review, approve and manage provided budgets and equipment
     requirements.

. Contact Local PBOS Service Management  to discuss:
  .  Approved Personnel
  .  Service Requirements
  .  Preferred Geographic Areas (request 1st 2nd & 3rd choice and a Map based on
     growth areas and current customer base).
  .  Condition and Functionality of Existing space and improvements needed.

. Contact Local PBOS Sales Management (Commercial and National Sales Manager's)
  to review:
  .  Requirements provided by Service Management.

. Contact Local PBOS Commercial and National Region Management (Commercial
  Region Service and Sales VP and National Region VP to review:
  .  Requirements provided by their respective Local PBOS Management.

II.    MARKET SURVEY

. Provide Cushman & Wakefield with the following information:
  .  Preferred Geographic Area (request 1st 2nd & 3rd choice and a Map showing
     areas with instruction to educate as to the entire market).
  .  Space requirement and Type of facility (flex, warehouse, and retail)
  .  Lease expiration date and Target move in date.
  .  Existing facility info (address, Local PBOS Management, and, if exploring
     lease renewal, provide copy of lease, landlord contact, renewal terms,
     rental rate, and desired improvements).

                                       8

 
III. SITE TOUR

. Preparation:
  .  Review market survey provided by local C&W broker.
  .  Select 5-10 properties (if available) that meet requirement and desired
     rental rates.
  .  Schedule site tour. Advise Local PBOS Management of date and time of tour
  .  One-week prior, confirm the local PBOS Management attendees and fax tour
     itinerary.
  .  Mail Copy of CRE Procedures Guide to local PBOS Management.
  .  Request local Broker to prepare books (must include map, market scope,
     property profile) and to have enough on hand for all attendees.

IV.  SITE SELECTION

. Develop Short List and proceed as follows:
  .  Local Broker to send out PB standard RFP and Environmental Questionnaire to
     prospective landlords.
  .  Review all RFP's and Counter
  .  Review Counter proposals and select 2 to 3 properties (if available) and
     counter again (include PB standard lease document).
  .  Request Landlords to provide proposed layout (Provide them with program
     requirement (Personnel spreadsheet) and sample space plan of a similar
     space requirement.).
  .  Upon receipt of 2nd round of counters, C&W to run comparison analysis.
  .  Select 1st and 2nd choice properties.

VI.  SITE APPROVAL

. PB Due Diligence:
  .  Environmental Assessment
  .  Corporate Security- CAP Index Report

V.   SITE DEVELOPMENT

. Financial  Approval
  .  CRE PM to Prepare CIP for new facility lease or lease renewal.
  .  CIP to identify: Total Estimated Facility Expense (Lease, Opex, Cam,
     Utilities, janitorial and moving costs) and Total Estimated Capital request
     (LHI, Furniture and Phone and Data)
  .  Attach to CIP; the approved Personnel spreadsheet, Telecomm budget and site
     comparison analysis.

                                       9

 
  .  Forward CIP to respective PBOS Home Office Management for Approval.

. Space Plan
  .  CRE PM to forward landlord's proposed layout or As-Built (request plan on
     CAD) to PB Architect for review and incorporation of PB standards.

. Approval of Space Plan
  .  CRE PM to forward proposed space plan (once all of CRE PM's comments have
     been incorporated) to:
  .  Local PBOS Management and Region Management for review/approval and/or
     comments. If reasonable modifications are requested, incorporate and
     forward modified plan to local PBOS management and Region Management for
     approval.
  .  CRE PM to provide TCC PM with Proposed TI language, Landlord's work letter
     and Base Building Info.
  .  TCC PM visits proposed site for pre-design review and existing facility.
  .  Also if CRE PM has not seen the proposed facility, TCC PM to inspect the
     HVAC units (if applicable) and take pictures of the interior space (ceiling
     tile, lights, doors, restrooms, etc).

. Telephone/Data Services
  .  CRE or TCC PM to Provide TechCentral Resources (ASAP) with the following
     info:
  .  New facility address, landlord contact, a name and phone number of a tenant
     in the proposed building, any revised Personnel, proposed space plan,
     confirm target completion date.
  .  Confirm with TechCentral Resources that local PBOS management requirements
     were discussed. Confirm with TechCentral Resources installation date for
     new or existing phone switch and data lines.

. Development of Base Plans and Construction Documents
  .  Depending upon agreement with landlord, either PB Architect will prepare a
     full set of base plans (Demolition, construction, tele/elect/, reflected
     ceiling, and finish schedule) and forward to landlord's architect for
     preparation of CD's (review for code compliance, and M.E.P's) or Landlord's
     architect will prepare all drawings.

. Lease
  .  Prepare Lease Objective Sheet
  .  Forward Proposed Lease Document or Lease Amendment (whether it be PB
     standard lease that LL has marked up or Landlord's standard lease
     document), Lease Objective Sheet and Accepted RFP to PB outside counsel.

                                      10

 
. Furniture
  .  Request furniture inventory. Forward proposed layout (if completed) to
     furniture vendor, Name and Phone number of local PBOS management.

VI.  PRE-CONSTRUCTION THROUGH MOVE IN

. Trammell Crow Scope of Services
. TCC shall:
  .  Coordinate with PBOS IT for procurement and installation of Telecomm and
     Data requirements.
  .  Coordinate order and installation of Telecom/Data Cabling
  .  Coordinate specification and procurement for new furniture (work with PB
     vendors.
  .  Furniture Vendor to provide TCC with the furniture inventory.
  .  Coordinate the development of Construction Documents
  .  Obtain a minimum of Three Bids for all work.
  .  Secure issuance of  Building Permit (may be via Contractor or Landlord)
  .  Manage Construction Process
  .  Coordinate installation of Furniture
  .  Obtain final Certificate of Occupancy
  .  Administer move process (includes completion and distribution of PB
     standard relocation schedule to local PBOS Contacts).
  .  Develop, issue and manage completion of final Punch List.

                                      11

 
.  Project Management Activity Responsibilities

----------------------------------------------------------------------------------- Activity Responsible Parties ----------------------------------------------------------------------------------- PBOS CRE Vendor ----------------------------------------------------------------------------------- Project Request and Assignment x ----------------------------------------------------------------------------------- Identify strategy/ Define geographic area x ----------------------------------------------------------------------------------- Provide CRE personnel information in standard x spreadsheet format (attached) ----------------------------------------------------------------------------------- Propose alternatives x x ----------------------------------------------------------------------------------- Dimension Size requirement based on approved x standards (attached) ----------------------------------------------------------------------------------- Approve Size and Geographic search area x ----------------------------------------------------------------------------------- Determine Telecomm/data requirements and provide x TCC PM budget TechCentral Data Resource ----------------------------------------------------------------------------------- Obtain market data, develop short list and coordinate x x RE broker schedule for market tour ----------------------------------------------------------------------------------- Tour short list of sites x x ----------------------------------------------------------------------------------- Analyze RFP's , Counter proposals, propose property x ----------------------------------------------------------------------------------- Prepare and circulate facility CIP for approval x ----------------------------------------------------------------------------------- Review and approve facility CIP x ----------------------------------------------------------------------------------- Finalize site selection x ----------------------------------------------------------------------------------- Request Environmental and Security review of property x ----------------------------------------------------------------------------------- Conduct Environmental assessment PBI Corporate Safety ----------------------------------------------------------------------------------- Conduct Security review Security Firm ----------------------------------------------------------------------------------- Negotiate and finalize lease document x RE Atty ----------------------------------------------------------------------------------- Execute Lease Agreement x ----------------------------------------------------------------------------------- Request and analyze furniture inventory. Develop x Furniture furniture installation drawing. Order components Distributor - needed to complete new configurations or to replace Inventory/ damaged furniture. design ----------------------------------------------------------------------------------- Develop space plan x x Architect ----------------------------------------------------------------------------------- Approve final space plan x ----------------------------------------------------------------------------------- Develop construction documents x Architect ----------------------------------------------------------------------------------- Manage construction process x TCCS ----------------------------------------------------------------------------------- Manage installation of voice and data x TCCS ----------------------------------------------------------------------------------- Manage installation of new furniture and the tear down x Furniture and rebuild or move of existing furniture Distributor & TCCS ----------------------------------------------------------------------------------- Schedule and Coordinate move into new facility x x Move vendor & TCCS -----------------------------------------------------------------------------------
12 PBI / PBOS Transition Services Agreement Schedule 1C-1 - Accounting Services - Sales, Use and Property Tax ----------------------------------------------------------------- General ------- PBI will provide PBOS with transitional accounting services to cover tax compliance, research and tax-audit planning for sales, use and property taxes. Duration -------- Distribution Date to December 31, 2001 (general support excluding maintenance of tables) Distribution Date to December 31, 2002 (maintenance of all tax tables) Cost ---- $11,250 per month until December 31, 2001. $1,000 per month from January 1, 2002 until December 31, 2002. Included Services ----------------- . Maintenance of tax tables includes: o Maintain Spitab tables. o Maintain use-tax tables. o Maintain property tax depreciation tables for tangible personal tax. o Maintain PTMS (fixed asset) tax tables. . General Support includes: o Train PBOS tax group to maintain the PTMS table post-transition period. o Support PBOS tax group as consultant to help build competence. o Support tax compliance efforts (business licences, sales and use returns, property tax returns). o Provide tax data and backup documents to PBOS upon request. o Provide PBOS with three offices/cubicles equipped with online desktop computers and printer, in or near the PBI tax department. o Advise PBOS of any sales, use or property tax audit issues which result or may result in additional tax (or refund) or written advice by taxing authority on suggested or required corrective measures. These issues could include audit adjustments that affected the facsimile and/or copier component of PBI compliance, or adjustments or issues that could affect prospective or post-distribution PBOS compliance or audits. 13 Excluded Services ----------------- . PBI will not conduct any tax research on behalf of PBOS after August 1, 2001. Conditions ---------- . PBOS will sign all tax returns submitted by PBOS. . PBOS will indemnify PBI for all returns completed by PBI on the behalf of PBOS, consistent with the appropriate terms in the tax separation agreement. 14 PBI / PBOS Transition Services Agreement Schedule 1C-2 - Accounting Services - Payroll, Travel Reimbursement, -------------------------------------------------------------------- Accounts Payable ---------------- General ------- PBI will provide PBOS with transitional accounting services to cover payroll, accounts payable and travel reimbursement. Duration -------- Distribution Date to December 31, 2001 (Payroll and Travel Reimbursement). Distribution Date to December 31, 2002 (Accounts Payable) Cost ---- Monthly charges will be as follows: Payroll $34,870 Travel Reimbursement 4,855 Accounts Payable 22,650 ------ Total $62,375 ======= Included Services ----------------- Payroll services include: ------------------------ . Set-up of new employees in Payroll system, assuming ordinary changes to payrolls. Extraordinary numbers of new employees brought on by acquisitions or business practice changes may incur higher fees. . Processing regular payroll and overtime payments. . Payroll tax deposits, returns, payments and W-2 processing. . Account reconciliations for all payroll accounts (FICA, unemployment insurance, federal/state and local with-holding, other appropriate deductions, and payroll). Travel Reimbursement services include: ------------------------------------- . Processing approved Travel Reimbursement Payments and adjustments, consistent with existing PB suppliers and practices. . Assigning travel expenses to appropriate GL account. . Does not include approval of expenses which will be conducted by PBOS. 15 Accounts Payable services include: --------------------------------- . Provide system space for PBOS Accounts Payable on SAP system. . Schedule systems runs. . Maintain SAP and vendor file. . Control systems security. . Provide training for PBOS staff to process reports etc in SAP system. . Does not include processing, matching and paying bills (done by PBOS staff). 16 PBI / PBOS Transition Services Agreement Schedule 1C-3 - Accounting Services - General Ledger ---------------------------------------------------- General ------- PBOS will continue to use the general ledger system within PB's SAP environment during the transition period. Maintenance of the system will be provided by PB, while most accounting activities related to the general ledger will be conducted by PBOS. PBOS accounting system structure will be maintained at a level consistent with the period preceding the spin-off. Any changes to this structure will be made at the sole discretion of PB. Duration -------- Distribution Date to December 31, 2002 Cost ---- $34,500 per month. Included Services ----------------- . Maintenance of the SAP system (including Chart of Accounts, cost center structure, product hierarchy, Accrual reversal, open and close posting periods). . Maintenance of access security to SAP. . Reconciliation of feeder systems to general ledger. . Reconciliation of shared accounts to general ledger. . Prepare the feeder closing schedule for Danbury Data Center. . Facilitate closing entries based on requests from PBOS. . Training of PBOS staff to utilize general ledger within SAP. Metrics/Service Levels ---------------------- PBI will ensure that closing schedules for PBOS books will conform to a monthly closing schedule that will be provided to PBOS management, consistent with the pre-spin-off practice. It is expected that PBOS's monthly close of feeder systems will conform closely with that of PBI (timing is dictated by the timing of the run of PBI and PBOS unique feeder systems). 17 PBI / PBOS Transition Services Agreement Schedule 1C-4 - Accounting Services - Fixed Assets -------------------------------------------------- General ------- PBOS will continue to use the fixed asset ledger within PB's SAP system during the transition period. Duration -------- Distribution Date to December 31, 2002 Cost ---- $2,000 per month. Included Services ----------------- . Set-up of fixed assets into SAP system. . Ongoing maintenance of the account structure. . Process write-offs and accounting entries upon request of PBOS. . Provide ad-hoc reporting as required by PBOS. . Training of PBOS staff to utilize fixed asset ledger within SAP. 18 PBI / PBOS Transition Services Agreement Schedule 1C-5 - Accounting Services - Inventory Accounting ---------------------------------------------------------- General ------- PBOS will continue to use the inventory accounting system within PB's financial system during the transition period. Duration -------- Distribution Date to December 31, 2002 Cost ---- $20,400 per month. Included Services ----------------- . Maintenance of the CIS Inventory system (includes all product code hierarchy, depreciation rates, etc.) . Reconciliation of feeder systems to general ledger (demos, finished goods, rental assets). . Ensure output from inventory system is accurately reflected within G/L and Income Statement. . Calculation of Purchase Material Variances on facsimile equipment and parts. . Ensure reconciliations are accurate and current for shared accounts. 19 PBI / PBOS Transition Services Agreement Schedule 1C-6 - Accounting Services - Accounts Receivable --------------------------------------------------------- General ------- PBOS will continue to use the Mechanical Accounts Receivable System during the transition period. Maintenance of the system will be provided by PB. PB will support reconciliation of Accounts Receivable to the General Ledger, and will work in conjunction with PBOS to ensure that cash application through the separate lock-boxes is correct. PB will continue to issue over-due statements to PBOS customers with outstanding invoices greater than 40 days. There will be no cross-divisional (i.e. Inter-company) file corrections within the Accounts Receivable system. PBOS will make no changes to the A/R system beyond normal customer maintenance functions defined below. Duration -------- Distribution Date to December 31, 2002 (A/R systems usage and maintenance) Distribution Date to January 31, 2002 (Reconciliation and accounting support) Cost ---- Monthly charges are as follows: Salaries $ 590 A/R System Maintenance 5,700 Forms and Envelopes 1,840 Postage 8,300 ----- Total $16,430 ======= Commencing January 1, 2002, monthly charge will be reduced by $590 (all salary charges related to reconciliations and accounting support will cease). Included Services ----------------- PB will: 20 . Maintain Spitab tables (A/R aging, Bad debts, Statements/Commissions). . Tie-out daily Trial Balance to Mechanical Invoice Load (until 1/31/02). . Tie-out and reconciliation monthly (until 1/31/02): o Cashbook (JV#004) o Refunds and Manual A/R Feeder (JV#99) o A/R to General Ledger . Analyze, in conjunction with PBOS, misapplied cash through lockbox process: o Determine if any cash received through PB lockbox is for payment of PBOS invoices. o Remove from PB G/L and A/R systems any misapplied cash. o Wire any misapplied PBOS cash to PBOS on a timely basis, to be determined jointly by both parties. . Train PBOS staff on Reconciliation procedures on G/L. . Set-up & maintain PBOS employees for A/R Security. . Provide to PBOS usage of the A/R system, including: o On-line functionality of A/R System (entries made by PBOS staff): . Write-Off. . File Correction. . Refund. o Use of all existing A/R screens: . CMS. . Payment history/Fiche information. o Reporting (access to PBOS staff to generate following reports): . A/R Aging Report. . Bad Debt Reporting. . Refund Reporting. . Issue weekly overdue statements to PBOS customers with invoices outstanding more than 40 days (including cost of statement, envelope and postage). PBOS Services provided to PB ---------------------------- . Analyze, in conjunction with PB, misapplied cash through lockbox process: o Determine if any cash received through PBOS lockbox is for payment of PB invoices. o Remove from PBOS G/L and A/R systems any misapplied PB cash. o Wire any misapplied PB cash to PB on a timely basis, to be determined jointly by both parties. Excluded Services ----------------- . All PBOS Fax Accounts Receivable Processes (not presently conducted by PB). . Management of PBOS lockboxes. 21 . Cash application of cash received through PBOS lockboxes (conducted by PBOS A/R staff). . All A/R functions related PBOS customers (conducted by PBOS A/R staff) including: o Write-Off. o File Correction. o Refund. . All daily/monthly reconciliations of PBOS A/R will be assumed by PBOS after 1/31/02. 22 PBPSI / PBOS Transition Services Agreement Schedule 1D - Benefits Administration ------------------------------------- General ------- PBI agrees to provide certain administrative services related to employee benefits to be offered by PBI to PBOS employees as set forth below. Duration -------- . Except for specific items that are noted in Section 5 below, all benefits administration support will terminate on December 31, 2001. Cost ---- . $74,100 per month (from Distribution Date through December 31, 2001) . PBI and PBOS agree to negotiate jointly with 3rd party vendors with respect to costs incurred related to pension transition service credit to be provided by such vendors on behalf of PBOS employees where the services pertain to employee benefits provided by Pitney Bowes. PBOS agrees to pay the fees of such vendors directly to the vendors without involvement of Pitney Bowes. Included Services ----------------- 1. General Benefits Administration ------------------------------- . Health Care, Dependent Care claims and administration of flex benefits. . Processing of retirees from PBOS transferred from Pitney Bowes, including pension and retiree medical benefits. 2. Administration of Disability Programs ------------------------------------- . Services to be provided are comparable to historical service provided to PBOS employees. 3. Benefits Customer Service Center ------------------------------- . Services to be provided are comparable to historical service provided to PBOS employees. 4. PBI Systems Access -------------------- . Access to PARS, DSS, Benesoft, MDA. 5. 2002 and Beyond --------------- . Benefits Call Center 8:00 - 6:00 PM - (ends 3/31/02) 23 . Dependant Care/Healthcare account claims processing - (ends 3/31/02) . Disability - run-out of all open claims as of 12/31/01 (ends 6/15/02) . Processing of retirees from PBOS transferred from Pitney Bowes, including pension and retiree medical benefits. PBOS Responsibilities --------------------- . PBOS agrees to provide Towers Perrin or other provider designated by Pitney Bowes with data monthly that tracks employee pay and employment duration for PBOS employees. Data must be provided in a format that is compatible with Pitney Bowes' pension benefits software. 24 PBI / PBOS Transition Services Agreement Schedule 1E - Supplies Line Order Entry System ---------------------------------------------- General ------- PBOS will continue to use the PBI Telemarketing order entry system for the Supplies Line for all Copier orders. Fax orders will not use the PBI Telemarketing order entry system. The order entry system described in this agreement includes the order entry system, the customer database, pricing database, product master, credit card, shipping database and invoicing which are also key support for the overall Telemarketing system. Duration -------- Distribution Date to December 31, 2002 Cost ---- Normal maintenance of the system, including updates for changes in products and or pricing, will be provided through the same arrangement as existed pre- Spinoff. Postage, envelopes, letter stock and other soft-costs (such as credit card fees and other chargebacks) will be charged back to PBOS at actual cost incurred. Approved PBOS-requested system changes and testing will charged at a rate of $150 per hour. Included Services ----------------- Maintenance of the Order Entry System, including Cost of Sales and Billing. Daily feed of order information to invoicing system and revenue tie-outs. Feed to general ledger and all required reconciliations. Limited systems changes will be provided at rates shown above. All systems changes must be approved in advance by PBI, and tested by PBI prior to implementation. 25 Fax supply line orders will not use the PBI Order entry system except when customers use purchase power account to pay for purchase. PBOS will make no changes to the PBI supply line order entry system, except the daily maintenance of the PBOS-related portions of the following modules, which are sole responsibility of PBOS: . Products . Contracts . Cost of Sales/Accounting . Product Routing . Pricing Note that each of the above modules are maintained by PBOS in the period prior to the spin-off. 26 PBI / PBOS Transition Services Agreement Schedule 1F - Customer Care --------------------------- General ------- The PB Customer Care Group will support PBOS by providing incoming service call receipt and service call dispatch. This service includes use of both human and electronic (Integrated Voice Response, or IVR) call receipt. Duration -------- This agreement will terminated concurrently with the termination of the Field Service agreement. If a long-term arm's length Field Service agreement is negotiated, this Customer Care agreement will be deemed to be cancelled concurrently with the termination of the transitional services agreement for Field Service, and a subsequent agreement covering the services provided by the Customer Care Group would need to be agreed to by both parties. Cost ---- $158,100 per month based on an annual non-IVR call volume of 900,000 to 1,000,000 PBOS calls per year. On or around August 1, 2002, an annual reconciliation of non-IVR calls will be completed by the Customer Care Group. All billing adjustments as a result of this reconciliation will be made in the next monthly bill following the reconciliation. The reconciliation will be based on the following methodology: Annual Call Range (Credit)/Charge to PBOS ----------------- ----------------------- Below 840,000 $(50,000) for every 30,000 calls under 900K 840,000 - 869,999 $(100,000) 870,000 - 899,999 $(50,000) 900,000 - 1,000,000 No adjustment 1,000,001 - 1,030,000 $50,000 1,030,001 - 1,060,000 $100,000 Above 1,060,000 $50,000 for every 30,000 calls over 1 million Subsequent reconciliations will be undertaken annually. If this agreement is cancelled or expires in the middle of a year, a reconciliation will be completed at time of cancellation based on monthly call volumes, using an equal monthly pro- 27 ration of the annual call volume target range of 900,000 to 1,000,000 calls. Likewise, any incremental charges or credits will be pro-rated in equal monthly amounts based on the above ranges. For example, if this agreement were cancelled after 5 months (or 5 months after the last reconciliation period), a target range of 5/12s of the above Call Ranges and Charges would apply. Any adjustments will be made in a separate bill following the reconciliation. Included Services ----------------- Access to both customer service representatives and the integrated voice response system (IVR) to accept inbound telephone calls requesting service calls or service call information related to PBOS products. The representative will assess the nature of inbound calls and route calls to field service representatives via the ACESS system. Monthly reporting of call volumes will be provided to PBOS at comparable levels as existed prior to spin-off. Only service-related calls are handled by the Customer Care group. All billing issues are routed to PBOS agents in Denver. Upon receipt of completed call information, the agent will assess whether the call is billable or covered by a service contract. The agent will then code the order appropriately in the system. PB will provide disaster recovery services for the Melbourne fax diagnostic center only. Disaster Recovery service will allow customer telephone calls to be routed to PB call centers. PB agents will provide limited service to such customers at best-efforts level, following previously agreed upon plans. If additional expenses are incurred by PB in support of this service, they will be charged to PBOS. Excluded Services ----------------- Service does not include the provision disaster recovery service for PBOS call centers except as noted above. 28 PBI / PBOS Transition Services Agreement Schedule 1G - Safety and Environmental -------------------------------------- General ------- PBI will furnish PBOS with Safety and Environmental consulting support during the transition period. These services cover the regulatory mandated programs of EPA, OSHA, DOT and other employee safety, health, property protection, energy management and environmental compliance initiatives. PBI will accept no liability for any claims or damages related to any services provided herein. PBOS will save harmless PBI from any claims or damages related to Safety or Environmental concerns. Duration -------- The period commencing at the Distribution Date and concluding December 31, 2001. Cost ---- $12,000 per month. This fee will cover reasonable personnel and travel expenses related to on-going business requirements. If extra-ordinary expenses are required due to unusual business situations, PBI will advise PBOS of the expected cost of services and PBOS will not unreasonably reject payment of those expenses. Included Services ----------------- Service will include the provision of consulting and training support related to the following areas: . Industrial Hygiene Programs . Environmental Compliance Audits . Environmental Compliance Support . Asset Recovery Operations . Supply Chain Environmental Management (SCEM) . Environmental Training . Packaging Compliance . Marketing Support . Sales Support 29 . Property Assessments (EHS Focus) . Environmental Metrics . Energy Management Services . Vendor Audits . Chemical Safety . Safety Consulting . Property Protection . Air Permit Administration . OSHA Record-keeping . BLS Record-keeping/Reporting . Field Safety Program . Safety and Health Audits . MSDS Program . Office Ergonomics Program . Contractor Safety/Customer Support . Motor Vehicle Safety Program . Asbestos Management Limits of Liability ------------------- PBI will accept no liability for any claims or damages related to any services provided herein. PBOS will save harmless PBI from any claims or damages related to Safety or Environmental concerns. 30 PBI / PBOS Transition Services Agreement Schedule 1H - Field Service Systems Support --------------------------------------------- General ------- PBI will furnish PBOS with systems support related to call dispatch, parts order, customer billing and service history for all US regions through the ACESS system. Duration -------- The period commencing at the Distribution Date and concluding December 31, 2002. Cost ---- Support of the ACESS system and handhelds will be charged at a monthly rate of $208,000 ($2.5 Mil annually). At the termination of this agreement, all costs associated with migrating data to a new system will be borne by PBOS. Included Services ----------------- For all PBOS business, PB will provide the following services: . Ongoing support of the ACESS system. . Access to the ACESS system by PBOS staff. . Daily batch feeds from ACESS to PBOS billing system. . Update and maintenance of hardware and software required for wireless communication system (including handheld devices and AIM system). . Logistics for repair and redistribution of wireless devices. 31 PBI / PBOS Transition Services Agreement Schedule 1J - Non-Focus Area Field Service ------------------------------------------- General ------- PBI will furnish PBOS with maintenance service to PBOS products in areas that were serviced on June 1, 2001 by global mailing systems representatives (the "Non-Focus Areas"). Duration -------- The period commencing at the Distribution Date and concluding December 31, 2002. This agreement can be cancelled with 90 days written notice by either party. This agreement may be renewed annually for a one-year period if specific terms including cost can be agreed between both parties. Cost ---- $492,000 per month based on a target service population of 6,200 copiers and 13,000 faxes. Volumes will be re-evaluated quarterly. A machine is included in the service volume if it is a rental or has a valid EMA or has had service work conducted upon it within the past twelve months. Pricing will remain consistent if volume remains within 5% of the target volume. Pricing will be modified on a quarterly basis if volume changes by more than 5% from the target volume. Revised pricing will be based on a mutually agreed formula that takes into account changes in volume and model mix. All initial costs associated with training of new and existing service technicians on product updates or new products will be borne by PBOS. All costs associated with supply of parts to field service representatives for repairs on PBOS products will be borne by PBOS. Included Services ----------------- For the specific territories described below, customer service of specific products (listed below), including: . Preventative, remedial and emergency customer service. 32 . Installation of new products. . Preparation and reinstallation of relocated products (excluding actual transport of products which will be charged directly to PBOS). . Customer training and/or consulting. . Specific operating procedures have been mutually agreed upon and are on file with PB. These operating procedures may be changed upon mutual consent of both parties. Included Territories -------------------- . The included territories are identified in a list previously provided and agreed by PBOS, which is maintained on file by PB. Changes to the list of included territories will be allowed if the changes are mutually agreed to by PBOS and PB. Specific Products Covered ------------------------- . Facsimile/Multifunction devices - products whose primary function is the transmission and receipt of scanned images. May also have scan and store, printing or copying functions as secondary options. May connect to a PC as a standalone print device. . Analog Copier/Unconnected Digital Copiers - products whose primary function is the reproduction of scanned images locally, not connected to a LAN or WAN. May have built-in facsimile functions as a secondary function. May connect to a PC as a standalone print device. . Digital Connected Copiers - products whose primary function is the reproduction of scanned images, which are connected to a LAN or WAN via an external print services device or an embedded printer controller. PB will service the copier/print device only. PBOS will install and service networking options/software at its own expense. . Color Copiers (connected and unconnected) - products whose primary function is the reproduction of scanned images in a CMYK (Color) environment, locally or connected to a LAN or WAN. PB is not required to service color copiers in any locations. Services provided by PBOS ------------------------- For the products listed above and for mutually agreed to approved new products, PBOS is obligated to provide initial technician training to all PB service technicians working in the Included Territories. The level of training will be equivalent to that provided to PBOS service technicians. PBOS will train a PB rep at no cost to PB, within 30 days, if a machine is moved into a non-focus area by a major or national account. 33 Technical product changes: Timing of training to the PB service techs will be reasonably concurrent with training of PBOS, with both parties making best- efforts to make themselves available for such training. New technician training: New technicians will be trained at regularly scheduled PBOS training courses. PBOS will offer free technical training to all PB reps at regularly scheduled PBOS training courses if space is available. All costs associated with initial training for new territories/equipment, not previously trained will be borne by PBOS (including travel-related costs and all costs related to training materials and facilities, but excluding any charges from PB techs for time spent in training). Where additional training is required due to unsatisfactory performance by a previously trained PB rep, all costs associated with this training will be borne by PB. Where additional training is required due to turnover of PB reps (defined as any rep with less than 2 years experience with PB), all travel costs associated with this training will be borne by PB. Technical telephone support of specified products will be provided in timely fashion by PBOS and at no cost to PB. OS technical support may facilitate local OS support at no cost to PB if the technical support hotline fails to lend the support to properly repair the product. PBOS will provide parts to PBI service technicians in the specified regions according to the terms of the Service Parts Logistics Schedule at no cost to PB. Service Standards Definitions ----------------------------- Response time - the amount of time elapsed from customer call to arrival of rep at customer location. Average Uptime percentage - the average of the Uptime Percentages calculated for each month in a rolling 3-month period. Monthly Uptime Percentages is calculated as follows: Uptime Percentage = Hours of Operation - Equipment Downtime --------------------------------------- Hours of Operation "Hours of Operation" means the hours of operation of a unit of Equipment, during the hours of 8:00 a.m. to 5:00 p.m., Monday through Friday, for each week of each calendar month. 34 "Equipment Downtime" means the Equipment is not functioning in substantial compliance with its specifications, begins (during the Hours of Operation) from the time the Customer speaks to an authorized Pitney Bowes Service Representative about the malfunction to the Equipment, and does not include time when the Equipment is inoperable due to: (i) scheduled preventative maintenance and inspections; (ii) damage by misuse, malintent, casualty, or force majeure events; (iii) failure of Customer to perform, or cause to be performed, adequate preventative maintenance and inspections, including, without limitation proper cleaning, handling and servicing of the Equipment; (iv) use of damaged, improper, or non-PBOS approved materials and supplies in the Equipment; (v) changes in incoming power beyond published specifications; (vi) maintenance or repairs required as a result of the Equipment being used in excess of the Hours of Operation; (vii) maintenance provided by parties other than Pitney Bowes; (viii) failure of a non-standard part; (ix) malfunction of equipment or software provided by Customer or third parties which interfaces with the Equipment; (x) the use of the Equipment for training exercises; (xi) failure of Customer to provide suitable temperature, humidity, line voltage, or any specified environmental conditions; and (xii) the Equipment not being used in accordance with the agreed applications and for the ordinary purpose for which it is designed and intended. Zone 1 - 0-35 Miles from a PB District Office. Zone 2 - 35.1-75 Miles from a PB District Office. Zone 3 - 75.1-100 Miles from a PB District Office. Zone 4 - 100.1+ Miles from a PB District Office. Service Standards ----------------- Response Time ------------- Zone 1,2 - Average 4 hours Zone 3 - Average 5.5 hours Zone 4 - Average 7 hours Uptime Zone 1,2 - Average 98% Zone 3 - Average 96% Zone 4 - Average 94% 35 PBI / PBOS Transition Services Agreement Schedule 1K - Telecom Expenses in Shared Locations -------------------------------------------------- General ------- PBOS will continue to use the PB telephone systems specified shared locations. This will include local and long distance service for the PBOS employees in the specified locations. Duration -------- Distribution Date to the termination or expiry of shared lease locations. PB may at its sole discretion, require PBOS to acquire at PBOS expense their own telephone switches for any of the specified locations with 90 days written notice. Such an action will terminate the specific allocation related to the impacted location, but will not cause the cancellation of the agreement as relates to the other specified locations. Cost ---- Actual monthly local and long distance charges in the specified shared locations will be allocated to PBOS based on the proportion of the PBOS rented space as a percentage of the total square footage of the location. In addition, PBOS will be charged a proportionate amount of depreciation (based on PB's standard accounting practice for depreciation) of all shared switches based on the above allocation methodology. Charges will be billed monthly in arrears at cost incurred. Average PBOS historic monthly charges have been approximately $18-$20,000 per month. Included Services ----------------- Local and Long Distance Service. 36 Specified Office Locations -------------------------- The included office locations are identified in a list previously provided and agreed by PBOS, which is maintained on file by PB. This list will be reviewed on a quarterly basis by both parties and modified to adjust for any changes in switches in the shared locations. 37 PBI / PBOS Transition Services Agreement Schedule 1L - Mailroom Services ------------------------------- General ------- PBOS will continue to receive the same services from the PBMS mailroom as were provided prior to the spin-off. The services will include the sorting and delivery of inbound mail as well as the printing and mailing of outbound mail for PBOS locations in Connecticut. Duration -------- Agreement will terminate on December 31, 2002 or upon termination of the IT Services agreement between TechCentral and PBOS (whichever is sooner). Printing of PBOS payroll checks will be provided between August 2001 and December 2001. Cost ---- Sorting and physical handling of mail will be provided for a flat rate of $10,127 per month. Payroll checks printing will be charged at $1,000 per month and is incremental to the base charge. Postage will be billed at actual cost, one month in arrears and is additional to the base charge. Overtime charges will be pre-approved by PBOS and included as required to support unusual print requests. All business forms and stationary used in the mailroom are provided by PBMS Document Services Group at additional charge to PBOS. Included Services ----------------- Incoming PBOS mail to the Stamford hub will be sorted and couriered to the appropriate PBOS mail drop locations. 38 PBOS invoices will be laser printed onto preprinted stock provided by Document Services Group (at additional cost to PBOS per Schedule 1N), inserted and mailed to customers. Printing of PBOS payroll checks will be laser printed onto preprinted check- stock also provided by Document Services Group (at additional cost to PBOS per Schedule 1N), inserted and mailed as applicable. Printing of PBOS payables checks will be laser printed onto preprinted check- stock also provided by Document Services Group (at additional cost to PBOS per Schedule 1N), inserted and mailed as applicable. 39 PBI / PBOS Transition Services Agreement Schedule 1M - Import and Customs Compliance ------------------------------------------- General ------- PBI will provide PBOS with all import, customs compliance, international transportation and post entry audit advisory services for all copier and facsimile imports. Duration -------- Agreement will terminate on December 31, 2001. Cost ---- $10,000 per month (excluding cost of third-party service providers for international transportation, customs brokerage fees, customs duties, legal and classification services) Included Services ----------------- PBI will provide: . assistance with hiring and training of import personnel for OSD (not including any out-of-pocket expenses) . guidance/assistance with establishing PBOS import operations including SOPs (standard operating procedure for import brokerage and international transportation) . day-to-day import customer service and problem resolution concerning freight movement and communication through the appointed Customs Broker. . coding and transmission of all OSD import related freight invoices to CTSI & related monthly reports . general guidance and assistance with payment of customs duties through ACH (Automated Clearing House) and preparation of monthly journal vouchers . consultation and guidance concerning the resolution of customs compliance issues . consultation and guidance concerning the resolution of international transportation and customs brokerage service related issues . post-entry audit function & maintenance of OSD classification database (as required) 40 . coordination of "in-house import compliance seminars" (as required) . recordkeeping of all OSD imports from pre-spin and transition period for 5 years and related services (data entry and insurance) . shipping and documentation instructions to new vendors (as required) . updated invoicing instruction (as required) . ongoing customs regulations updates (as applicable) . monthly international freight cost reports & comparisons . monitoring implementation of new procedures (compliance improvement plan) as required . guidance and assistance with reporting of any tooling/assists on OSD imports (as required) 41 PBI / PBOS Transition Services Agreement Schedule 1N - Document Services Group Services ---------------------------------------------- General ------- PBMS Document Services Group (DSG) will provide PBOS with conventional and digital print production, warehousing, fulfillment and distribution services for PBOS document management needs. Duration -------- Through December 31, 2001. This duration may be extended or modified if both parties can agree mutually on terms and pricing (including changes to the existing product/service range). Cost ---- Cost will be dependant on services requested by PBOS. Pricing to PBOS will be consistent with the established internal PB pricing structure, which is the same methodology as was used to charge PBOS for these services prior to the spin-off. Any product/service requirement will be cost-estimated in advance by DSG to facilitate ordering by PBOS, however all costs will be billed according to above methodology, regardless of whether this exceeds or is under the estimated cost. Upon cancellation or expiration of this agreement, all costs associated with moving PBOS document inventories will be borne by PBOS. Included Services ----------------- DSG will provide the following services related to PBOS document management needs: . Graphics Design and Creative Services . Business Cards and Stationary (letterhead and envelopes) o Set-up, type-setting and printing . Printing and assembly as required, including, but not limited to: o Preprinted statements and envelopes for invoices o Brochures and training materials o Operating guides, parts lists and service manuals o Assembly of kits, books, brochures etc. 42 . Warehousing, fulfillment and distribution of documents o Inventory owned by PBOS o Inventory and fulfillment (warehousing, pick, pack and ship) 43 Schedule 2 [LOGO] Pitney Bowes Pitney Bowes Office Systems Service Provisioning and Service Level Agreement TechCentral SECTION 1. Introduction. The purpose of this Service Level Agreement ("SLA") is to establish measurable and mutually agreeable targets for service delivery to Pitney Bowes Office Systems ("PBOS") by the Pitney Bowes TechCentral organization. This SLA will act as a guide for establishing expectations for both parties for the scope of services, the metrics associated with the services, as well as tracking and reporting of the metrics. Locations and Business Functions The following locations and functions are considered to be part of PBOS: Locations --------- . 100 Oakview Drive, Trumbull CT . 7555 East Hampden Ave, Denver CO . PepsiCola Drive, Melbourne FL . Nationwide (BPC's, RDC's, Sales Offices) Business Functions ------------------ . "Back Office" Support (GL, HR, Marketing, Product Development, etc) . Customer Call Centers . Sales Support . Service . FAX Diagnostics . Regional Distribution Centers Tech Central Contacts --------------------- Janice Heatley Lou Menendez Sr. Technical Advisor Mgr., Service Level Management Internal - 440-6401 Internal - 421-3785 External (203) 351-6401 External (203) 739-3785 Brian Bonacci Art Conklin Director, End User Computing Director, Operations & Network Internal - 436-4270 Services External (203) 922-4270 Internal - 421-3979 External (203) 739-3979 Jack Rabuse Matthew Wessendorf Vice President, Computer Service Vice President, Customer Internal - 421-3673 Support External - (203) 739-3673 Services Internal - 421-3686 External - (203) 739-3686 OSD IT ------ Bob Butler, CIO Gary Geiger, Director Customer Internal - 430-7431 Support External - (203) 365-7431 Services Internal - 430- 7036 External - (203) 365-7036 SECTION 2. Scope of Service. Scope of Service TechCentral agrees to provide PBOS with the services summarized below for a period not to extend beyond December 31, 2002. . Application maintenance support of all shared applications. . Operational support services for all PBOS and shared applications hosted in Danbury including turnover, DBA services, Scheduling, data recovery, printing, and mailing services. . End user support through the Service Delivery Support Center ("SDSC") to respond to system password resets, Lotus Notes server issues, and network connectivity issues. The PBOS IT team would handle all other desktop related issues directly. SDSC will continue to support OSD Designated Support Center to SDSC calls on services provided by PBI that OSD will continue to use through 12/31/2002, for example: password resets on Mainframe applications. . Maintenance and administration of the Lotus Notes server(s). No support related to any future Notes based applications. . Access to PBI voice network using service provided by PBI's carriers. . Access to and availability of the PBI mainframe computers through 12/31/02. 2 . Call Center application support and technical services support for the A/S 400 and dialer server environment on a best effort, time and materials basis. . TechCentral will provide voice and data consultative and resource support to PBOS and Trammel Crow through 12/31/01 to facilitate relocations. PBOS will manage Trammel Crow and assigned data resource as well as maintain overall project responsibility. . Tech Central will provide telecom consultative support associated with disaster recovery at any core PBOS site until 12/31/01. Exceptions . Support of Wide Area Network ("WAN") services to all existing PBOS facilities on PBI's WAN through December 31, 2001. Within PBOS dedicated facilities, these services will be inclusive of the network routers only. After December 31, 2001, PBOS will be responsible for providing WAN services to their dedicated facilities and for any linkage to the PBI WAN that is required. PBI will provide troubleshooting assistance related to linkage between PBOS and the PBI WAN as required to restore service to optimal levels until such linkage is not required. TechCentral will continue to provide WAN support to shared PBI / PBOS locations until final separation - through October 2006 based on the termination of the last shared lease. As shared facility leases terminate or as facilities are relocated, PBOS will provide its own WAN services to these then dedicated facilities. . TechCentral will not provide any programming support of PBOS dedicated applications except as follows: - ManMan on best effort, maintenance only, time and materials basis . TechCentral will not provide application development services related to the implementation of any new ERP system by PBOS with the exception of: . TechCentral will provide MQ Series support through the management of external resources contracted by and billed directly to PBOS as necessary to redirect message traffic to alternate clients. 3 . TechCentral will provide reasonable subject matter expertise for shared applications in support of PBOS data conversion/interface efforts. These services and related charges will be negotiated on a project basis. . Continuation of consulting support of telephone systems to all existing PBOS facilities through December 31, 2001. Any new PBOS facilities after December 31, 2001 will be the responsibility of PBOS. After December 31, 2001, PBOS will be responsible for providing and supporting all telephone systems and services to their dedicated facilities. TechCentral will continue to provide support to shared PBI / PBOS locations until final separation - through October 2006 based on the termination of the last shared lease. As shared facility leases terminate or as facilities are relocated, PBOS will provide its own WAN services to these then dedicated facilities. PBOS Responsibilities . PBOS will acquire and implement their own Wide Area Network (WAN) and network equipment for PBOS dedicated facilities by December 31, 2001. Any new or relocated PBOS dedicated facilities will be transitioned to the PBOS WAN by December 31, 2001. PBOS will also be responsible for the initial setup cost plus the recurring cost of the circuits to connect the PBI WAN to the PBOS WAN. . PBOS will develop the capability (internal or external) to design, implement and support all data and telephone network systems and services for dedicated PBOS locations by December 31, 2001. Any additional costs incurred by TechCentral above its baseline operating expenses, to support unique technology platforms for PBOS (e.g. ManMan) will be borne in total, by PBOS. Any increased licensing cost incurred as a result of the spin off will be passed through to PBOS 4
------------------------------------------------------------------------------------- HELP DESK - SDSC Hours of Coverage ------------------------------------------------------------------------------------- Period Monday-Friday Saturday-Sunday Specifications ------------------------------------------------------------------------------------- Normal 6AM-1AM EST Saturday Standard Help Desk support via Help Business 8AM-4PM EST Desk Support Analysts. Hours Sunday Pager Support ------------------------------------------------------------------------------------- After 1AM-6AM EST 4PM-8AM EST Calls will be transferred to a Help Hours Desk voice mailbox. An "on call" Help Desk Analyst will be paged. ------------------------------------------------------------------------------------- Holidays The SDSC will be closed on the following holidays: New Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, Day after Thanksgiving, and Christmas -------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------- Service Description --------------------------------------------------------------------------------------------------- Service Description Specifications --------------------------------------------------------------------------------------------------- Level 1 Level 1 support for approved technologies and Password resets, Technical applications. The OSD technical staff will support Data Networks, Support desktop hardware, software, and servers. Mainframe, and Lotus Notes Support. --------------------------------------------------------------------------------------------------- Level 2 Problems that are beyond the training of Help Desk Predefined escalation Technical Analysts, less than 10 minutes to be resolved at lists will facilitate the Support Level 1, or are undocumented will be assigned to assignment of an appropriate Level 2 Technical Support problems to the Specialist. appropriate individual or group. --------------------------------------------------------------------------------------------------- Level 3 Problems that are beyond the training of Level 2 Predefined escalation Technical Technical Support Specialists, or are lists will facilitate the Support undocumented will be assigned to an appropriate assignment of Level 3 Technical Support Specialist. problems to the appropriate individual or group. --------------------------------------------------------------------------------------------------- Sr. Sr. management within TechCentral will be Help Desk Analysts Management notified when Urgent (Catastrophic) problems have during or after normal Escalation been opened. IT Management will also be notified business hours will when problems have not been closed and are notify senior approaching their agreed upon Resolution Time. management via phone or pager. ----------------------------------------------------------------------------------------------
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-------------------------------------------------------------------------------------------- Help Desk Outage Resolution Targets -------------------------------------------------------------------------------------------- Severity Code Customer Impact Response to Resolution Escalation Customer* Time -------------------------------------------------------------------------------------------- Severity 1 Core Business Updates every less than Notify applicable Urgent Process outage 30 minutes. 2 Hours TechCentral and (Catastrophic) designated Business management within 10 minutes -------------------------------------------------------------------------------------------- Severity 2 Subset of a Core Every 60 minutes less than Notify applicable High Business Process 5 Hours TechCentral and (Urgent) outage designated Business management if not resolved within 3 hours -------------------------------------------------------------------------------------------- Severity 3 Single User Daily less than Notify applicable Medium Outage 24 Hours TechCentral (Important) Management if not resolved within 21 hours --------------------------------------------------------------------------------------------
Appropriate IVR messages will also be employed.
------------------------------------------------------------------------ Help Desk Call Handling Targets ------------------------------------------------------------------------ Performance Metric Target ------------------------------------------------------------------------ Calls Abandoned by Caller less than 8% ------------------------------------------------------------------------ Time before speaking with HD analyst less than 75 seconds - 90% of the time ------------------------------------------------------------------------ Severity 3 Tickets resolved in 24 hours 90% (100% within 3 days) ------------------------------------------------------------------------
----------------------------------------------------------------------------------------------- System Availability ----------------------------------------------------------------------------------------------- Service Description Hours of Availability ----------------------------------------------------------------------------------------------- IMSPROD IMS transaction region hosted 07:00 - 23:00 Monday - Friday on the IBM mainframe System 07:00 - 20:00 Saturday A, not specific business No availability on Sunday. applications. No availability on Holidays - Memorial Day, July 4/th/, Labor Day, Christmas Day. ----------------------------------------------------------------------------------------------- CICSFAXP The CICS transaction region 07:00 - 21:00 Monday - Friday hosted on the IBM mainframe 07:00 - 20:00 Saturday System C, not specific business No availability on Sunday. applications. No availability on Holidays - Memorial Day, July 4/th/, Labor Day, Christmas Day. ----------------------------------------------------------------------------------------------- AS/400 Denver Application and Technical 07:00 - 21:30 (EST) Monday - Friday. Services support on a best No availability on Saturday or Sunday. effort basis ----------------------------------------------------------------------------------------------- Digital The DEC system supports the 07:00 - 23:00 Monday - Friday -----------------------------------------------------------------------------------------------
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----------------------------------------------------------------------------------------------- System Availability ----------------------------------------------------------------------------------------------- Service Description Hours of Availability ----------------------------------------------------------------------------------------------- Equipment Manman application. The 07:00 - 20:00 Saturday Corp. support for the application and No availability on Sunday hardware is "best effort", maintenance only. ----------------------------------------------------------------------------------------------- Tandem - Tandem hardware functioning 07:00 - 23:00 Monday - Friday AIM1/AIM2 as front-end processor converting x25 to SNA, No availability on Saturday or Sunday. supporting the ACESS application. ----------------------------------------------------------------------------------------------- Voice Availability of PBX's the 24 hours a day/7 days a week Communication voice network (AT&T), PB Voice Technology provides consultant network routing and voice level services. mail. ----------------------------------------------------------------------------------------------- Data Manage and support routers 24 hours a day/7 days a week. Communication and circuits for all OSD locations. ----------------------------------------------------------------------------------------------- E-mail Lotus Notes Mail services over 24 hours a day/7 days a week the Pitney Bowes network, the PBOS network, or the internet through 12/31/02. (PBI Notes domain) ----------------------------------------------------------------------------------------------- MQ Series Support of all current message 24 hours a day/7 days a week queues serving PBOS applications. Configuration of additional MQ clients and redirection of existing Queues on a chargeable project basis. -----------------------------------------------------------------------------------------------
---------------------------------------------- System Availability Metrics ---------------------------------------------- Service Prime Shift (7am - 11pm EST) System Availability ---------------------------------------------- IMSPROD 99.7% ---------------------------------------------- CICSFAXP 99.7% ---------------------------------------------- AS/400 - Denver Best Effort ---------------------------------------------- Digital Equipment Corp. 99.7% ---------------------------------------------- Tandem AIM1/AIM2 99.7% ---------------------------------------------- Voice Communications 99.7% ---------------------------------------------- Data Communications 99.7% ---------------------------------------------- PBI Notes Domain 99.7% ---------------------------------------------- 7 SECTION 3. Service Tracking and Reporting Procedures. . PBOS or Designated PBOS Help Desk must call SDSC with all service requests and open up a trouble ticket to be logged into the TechCentral SDSC tracking system (REMEDY). The call record is completed by the SDSC and forwarded to the appropriate support team for resolution. The SDSC is responsible to ensure timely closure of supported technologies as outlined in Service Description (page 7). Any service requests not recorded by the SDSC tracking system cannot be governed by this SLA. . Monthly Service Level Compliance Reports will be distributed to PBOS. Reports will be available by the 15/th/ business day of the month following the reporting period. The Monthly Service Level Compliance Report shall consist of: . High Level Availability Metrics - The report describes the failing component that caused the outages, the SLA target %, the SLA Attainment %, and the Outage Hours. . High Level Outage Explanation - A detailed explanation of what happened, what we did to correct or circumvent the problem, and what we are doing to prevent its reoccurrence. . Year-to-date Availability Charts - Charts depicting the current and previous 11-month attainment percentages for all components tracked for availability. . Help Desk (SDSC) Call & Ticket Metrics - Current and year-to-date charts indicating attainment percentages for all Help Desk SLA's 8 SECTION 4. Responsibilities. PBOS Customer Calling the SDSC . Provide name, department and location. . Provide your unique identifier (desktop-ID, user-ID, device information, etc.) . Provide as clear a description of the problem as possible. . Provide individual to be contacted, if not the caller, then an alternate with telephone number. TechCentral SDSC . Log all problems called in using the Remedy tracking system. . Determine severity of problem . Dispatch problem to appropriate Level 2 technical support group . Keep customer up to date on status of outage . Maintain support matrix at all times (identifying Primary/Secondary/Tertiary support personnel assignments, phone, and pager numbers for all systems supported). . Ensure that SDSC personnel receive formal and informal technical training for supported applications and technologies. . Recommend additional preventative work (if any identified). . Maintain and report actual performance against the targets in the SLA. PBOS IT Personnel . Return service to the customer. . Provide any support requested for PBOS managed applications or technical components. . Identify and resolve cause of the outage for problems occurring within PBOS managed applications, PBOS technical components, or areas outside the scope of this agreement. . Recommend additional preventative work (if any identified). 9 SECTION 5. Proposed Charges. Computer Support Services TechCentral's proposed 2001 charge to PBOS for Computer Support Services is approximately $2.8 million and includes all direct charges (e.g. ManMan), mainframe computer utilization based on past utilization rates, and other indirect expenses. Customer Support Services The proposed 2001 charge to PBOS for Customer Support Services is $908,499 which covers internet access, limited SDSC support, data network utilization, and Lotus Notes e-mail. This charge, which is consistent with last years rate, is based on the number of users. Voice Charges Charges for Fairfield County voice network access and long distance usage billed each month based on actual usage. The estimated charges for 2001 based on prior years usage is $89,756. Additional charges for AT&T Global Network billed as incurred. Chargeback Summary Application Support Services $ 0 Computer Support Services 2,790,223 Customer Support Services 908,499 Voice 89,756 ------ Total 2001 Charges $3,788,478 ========== Future Charges To be determined 12/01; not withstanding any increase in transaction volumes, cost increases should not exceed 10% except in instances of unique platforms where PBOS will incur the total actual costs. In the event transaction volumes and/or services requirements decrease, costs will be reduced proportionately. 10