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