{"id":43753,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/tax-separation-agreement-pitney-bowes-inc-and-pitney-bowes.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"tax-separation-agreement-pitney-bowes-inc-and-pitney-bowes","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/tax-separation-agreement-pitney-bowes-inc-and-pitney-bowes.html","title":{"rendered":"Tax Separation Agreement &#8211; Pitney Bowes Inc. and Pitney Bowes Office Systems, Inc."},"content":{"rendered":"<pre>                           TAX SEPARATION AGREEMENT\n\n                                    between\n\n                              Pitney Bowes Inc.,\n                              on behalf of itself\n                                and the members\n                           of the Pitney Bowes Group\n\n                                      and\n\n                      Pitney Bowes Office Systems, Inc.,\n                              on behalf of itself\n                                and the members\n                   of the Pitney Bowes Office Systems Group\n\n \n                            TAX SEPARATION AGREEMENT\n\n\n     This Tax Separation Agreement (the \"Agreement\") is entered into as of the\n___ day of August, 2001 between Pitney Bowes Inc. (\"PBI\"), a Delaware\ncorporation, on behalf of itself and the members of PBI Group, and Pitney Bowes\nOffice Systems, Inc. (\"Office Systems\"), a Delaware corporation, on behalf of\nitself and the members of Office Systems Group.\n\n                              W I T N E S S E T H:\n\n     WHEREAS, pursuant to the tax laws of various jurisdictions, certain members\nof Office Systems Group, as defined below, will file certain tax returns on a\nstand-alone basis as well as on an affiliated, consolidated, combined, unitary,\nfiscal unit or other group basis (including as permitted by Section 1501 of the\nInternal Revenue Code of 1986, as amended (the \"Code\") with certain members of\nPBI Group, as defined below, for taxable periods beginning prior to the\nDistribution, as defined below;\n\n     WHEREAS, PBI and Office Systems intend that PBI distribute to its\nshareholders all of the Office Systems common stock held by PBI (the\n\"Distribution\");\n\n     WHEREAS, PBI has received a private letter ruling from the Internal Revenue\nService confirming the qualification of the Distribution as tax-free to PBI and\nits shareholders, which, together with the underlying Ruling Request, as defined\nbelow, has been provided to, and reviewed by, Office Systems;\n\n     WHEREAS, PBI and Office Systems desire to set forth their agreement on the\nrights and obligations of PBI, Office Systems and the members of PBI Group and\nOffice Systems Group, respectively, with respect to the handling and allocation\nof federal, state, local and foreign taxes incurred in taxable periods beginning\nprior to the Distribution Date, as defined below, and various other tax matters;\n\n     NOW, THEREFORE, in consideration of the mutual covenants and agreements\nhereinafter set forth, the parties agree as follows:\n\n     1.   Definitions.\n\n     (a)  As used in this Agreement:\n\n     \"2001 Short Year\" shall mean the short taxable year beginning on the first\nday of Office Systems' first taxable period in 2001 and ending on the\nDistribution Date.\n\n \n     \"After-Tax Amount\" shall mean an additional amount necessary to reflect the\nhypothetical tax consequences of the receipt or accrual of any payment that is\ntreated as income of the recipient of such payment, using the maximum statutory\ntax rate (or tax rates, in the case of an item that affects more than one tax)\napplicable to the recipient of such payment for the relevant year.  The After-\nTax Amount shall reflect, for example, the effect of the deductions available\nfor interest paid or accrued and for taxes such as state and local income taxes.\n\n     \"Combined Income Tax\" shall mean, with respect to each state, local or\nforeign taxing jurisdiction, any income, franchise or similar tax (together with\nany related interest or penalty) payable to such state, local or foreign taxing\njurisdiction in which a member of Office Systems Group files tax returns with a\nmember of PBI Group, on a consolidated, combined or unitary basis.\n\n     \"Distribution Agreement\"  shall mean the Distribution Agreement between\nPitney Bowes Inc. and Pitney Bowes Office Systems, Inc. dated as of August __,\n2001.\n\n     \"Distribution Date\" shall mean the date on which the Distribution is\neffected.\n\n     \"Federal Tax\" shall mean any tax imposed under Subtitle A of the Code and\nany related interest or penalty imposed under Subtitle F of the Code.\n\n     \"Final Determination\" shall mean (i) with respect to Federal Taxes, a\n\"determination\" as defined in Section 1313(a) of the Code or execution of an IRS\nForm 870AD and, with respect to taxes other than Federal Taxes, any final\ndetermination of liability in respect of a tax that, under applicable law, is\nnot subject to further appeal, review or modification through proceedings or\notherwise, (ii) any final disposition of a tax issue by reason of the expiration\nof a statute of limitations or (iii) the payment of tax by PBI with respect to\nany item disallowed or adjusted by any taxing authority where PBI determines in\ngood faith that no action should be taken to recoup such payment.\n\n     \"Income Tax\" shall mean Federal Tax, Combined Income Tax and Separate\nIncome Tax.\n\n     \"IRS\" shall mean the Internal Revenue Service.\n\n     \"Non-Income Taxes\" shall mean all taxes, levies, charges or fees including,\nwithout limitation, gross receipts, transfer, excise, property, sales, use,\nvalue-added, goods and services, license, payroll, withholding, social security\nor other governmental taxes or charges (including any interest, penalties or\nadditional taxes attributable thereto), imposed by the United States or any\nstate, county, local or foreign government, but excluding any Income Taxes.\n\n                                       3\n\n \n     \"Office Systems 2001 Federal Tax Liability\" shall mean the Federal Tax\nliability of the Office Systems Group for the 2001 Short Year computed as if the\nOffice Systems Group were not and never were part of any consolidated group,\nprovided, however, that transactions with members of PBI Group shall be\nreflected according to the provisions of the consolidated return regulations\npromulgated under the Code governing intercompany transactions, and that the\nDistribution will trigger any deferred amounts or similar items.  The Office\nSystems 2001 Federal Tax Liability shall be determined (i) without regard to the\nincome, deductions (including net operating loss and capital loss deductions)\nand credits in any year of any member of PBI Group that is not a member of\nOffice Systems Group, (ii) as though the highest rate of tax specified in\nsubsection (b) of Section 11 of the Code (or any other similar rates applicable\nto specific types of income) were the only rates set forth in that subsection,\nand with other similar adjustments as described in Section 1561 of the Code,\n(iii) reflecting the positions, elections and accounting methods used by PBI in\npreparing the consolidated federal income tax return for PBI Consolidated Group,\nand (iv) by not permitting Office Systems Group any compensation deductions\narising in respect of any exercise of options on PBI stock by, or the issuance\nor vesting of PBI restricted stock to, any employee of Office Systems Group.\n\n     \"Office Systems Group\" shall mean, at any time, Office Systems and each of\nits direct or indirect corporate subsidiaries.\n\n     \"Office Systems Tax Liability\" shall mean, with respect to any taxable year\nthat includes any date in 2001 and any jurisdiction, the sum of (i) Office\nSystems 2001 Federal Tax Liability and (ii) the amount of Combined Income Taxes\nplus the amount of Separate Income Taxes determined in accordance with the\nprinciples set forth in the definition of Office Systems 2001 Federal Tax\nLiability.\n\n     \"Office Systems UK\" shall mean Pitney Bowes Office Systems Limited, a\nwholly owned direct subsidiary of Office Systems incorporated in the United\nKingdom and that will purchase certain assets from Pitney Bowes Limited under\nthe Agreement for the Sale and Purchase of the Office Systems Division of Pitney\nBowes Limited.\n\n     \"PBI Consolidated Group\" shall mean PBI and each direct and indirect\ncorporate subsidiary, including a member of Office Systems Group, that is\neligible to join with PBI or a member of the PBI Group in the filing of (i) for\nFederal Tax purposes, a consolidated federal income tax return, and (ii) for\nCombined Income Tax purposes, a Combined Income Tax Return.\n\n     \"PBI Group\" shall mean, at any time, PBI and each of its direct and\nindirect corporate subsidiaries other than those subsidiaries that are members\nof Office Systems Group.\n\n                                       4\n\n \n     \"Post-Distribution Tax Period\" means (i) any tax period beginning after the\nDistribution Date and (ii) with respect to a tax period that begins on or before\nand ends after the Distribution Date, the portion of the tax period that\ncommences on the day immediately after the Distribution Date.\n\n     \"Pre-Distribution Tax Period\" means (i) any tax period ending before or on\nthe Distribution Date and (ii) with respect to a period that begins before and\nends after the Distribution Date, the portion of the tax period ending on and\nincluding the Distribution Date.\n\n     \"Prime\" shall mean, the rate announced from time to time as \"prime\" as\nreported in the Wall Street Journal's Money Rates table as the prime rate with\nrespect to the applicable currency.\n\n     \"Return\" shall mean any tax return, statement, report or form (including\nestimated tax returns and reports, extension requests and forms, and information\nreturns and reports) required to be filed with any taxing authority.\n\n     \"Ruling Request\" shall mean the request for rulings under Sections 355 and\n368(a)(1)(D) of the Code filed by PBI with the Internal Revenue Service on\nDecember 19, 2000, together with all supplemental materials subsequently filed\nwith the IRS in connection therewith.\n\n     \"Separate Income Tax\" shall mean, with respect to each state, local or\nforeign taxing jurisdiction, any income, franchise or similar tax (together with\nany related interest or penalty) payable to such state, local or foreign taxing\njurisdiction in which a member of Office Systems Group files a separate tax\nreturn.\n\n     \"Tax Asset\" shall mean any net operating loss, net capital loss, investment\ntax credit, foreign tax credit, deduction or any loss, credit or tax attribute\nthat could be carried forward or back to reduce taxes (including without\nlimitation deductions and credits related to alternative minimum taxes).\n\n     \"Tax Benefit\" shall mean an amount derived with respect to a Tax Asset that\nis equal to the excess of (A) the amount of Federal Taxes, or Combined Income\nTaxes, as the case may be, that would have been payable by the recipient of the\nTax Benefit without the use a Tax Asset (including, but not limited to, a\ncarryback, carryforward, or reattribution of the Tax Asset), over (B) the amount\nof Federal Taxes or Combined Income Taxes, as the case may be, actually payable\nby such recipient.  In the case of a tax refund arising out the use of a Tax\nAsset, the Tax Benefit shall be equal to the amount of the refund that was\nactually received over the amount of the refund that would have been received in\nthe absence of such Tax Asset.\n\n     \"Tax Packages\" shall mean one or more packages of information that are (i)\nreasonably necessary for the purpose of preparing tax Returns of PBI\n\n                                       5\n\n \nConsolidated Group with respect to any tax period in which the information is\nrelevant, and (ii) completed in all material respects in accordance with the\nstandards that PBI has established for its subsidiaries.\n\n     \"Tax Proceeding\" shall mean any tax audit, dispute or proceeding (whether\nadministrative or judicial).\n\n     (b)  Any term used in this Agreement that is not defined in this Agreement\nshall, to the extent the context requires, have the meaning assigned to it in\nthe Code or the applicable Treasury regulations promulgated thereunder (as\ninterpreted in administrative pronouncements and judicial decisions) or in\ncomparable provisions of applicable law.\n\n     2.  Administrative and Compliance Matters.\n\n     (a) Sole Tax Sharing Agreement. Any and all existing tax sharing agreements\nor arrangements, written or unwritten, between any member of PBI Group and any\nmember of Office Systems Group shall be terminated as of the date of this\nAgreement.  As of the date of this Agreement, neither the members of Office\nSystems Group nor the members of PBI Group shall have any further rights or\nliabilities under any such preexisting tax sharing agreements, and this\nAgreement shall be the sole tax sharing agreement between the members of Office\nSystems Group and the members of PBI Group.\n\n     (b) Designation of Agent.  Office Systems and each member of Office Systems\nGroup hereby irrevocably authorizes and designates PBI as its agent,\ncoordinator, and administrator, for the purpose of taking any and all actions\n(including the execution of waivers of applicable statutes of limitation)\nnecessary or incidental to the filing of any Return, any amended Return, or any\nclaim for refund (even where an item or Tax Asset giving rise to an amended\nReturn or refund claim arises in a Post-Distribution Tax Period), credit or\noffset of tax or any other proceedings, and for the purpose of making payments\nto, or collecting refunds from, any taxing authority, in each case relating only\nto any Pre-Distribution Tax Period.\n\n     (c) Pre-Distribution Tax Period Returns.\n\n         (i) Preparation of Income Tax Returns.  PBI will prepare and file,\nwith the assistance of Office Systems Group, all Returns of PBI Consolidated\nGroup and all Separate Income Tax Returns of any member of that group for all\nPre-Distribution Tax Periods.  PBI shall have the right with respect to such\nReturns to determine (A) the manner in which such returns, documents or\nstatements shall be prepared and filed, including, without limitation, the\nmanner in which any item of income, gain, loss, deduction or credit shall be\nreported, (B) whether any extensions should be requested, and (C) the elections\nthat will be made by any member of PBI Group or Office Systems Group; provided,\nhowever, that PBI will consult with Office Systems regarding the manner in which\nitems \n\n                                       6\n\n \nrelated to Office Systems Group will be reflected in such returns and will\nundertake in good faith to prepare such Returns in a manner that PBI determines\nmay be substantively beneficial to the Office Systems Group for any Post-\nDistribution Tax Period, but only to the extent that such manner of preparing\nReturns has no adverse impact on PBI.\n\n          (ii) Audits and Refunds.  With respect to all Returns of PBI\nConsolidated Group and all Separate Income Tax Returns of any member of that\ngroup for all Pre-Distribution Tax Periods, except as otherwise provided in\nSection 8, PBI shall have the right to (A) contest, compromise or settle any\nadjustment or deficiency proposed, asserted or assessed as a result of any audit\nof any such return, (B) file, prosecute, compromise or settle any claim for\nrefund, and (C) determine whether any refunds to which any member of PBI Group\nmay be entitled shall be received by way of refund or credit against tax\nliability.\n\n          (iii) Delivery of Tax Packages.  No later than 60 days after the\nDistribution Date, Office Systems shall prepare and deliver to PBI Tax Packages\nthat include information of Office Systems Group for the Pre-Distribution Tax\nPeriod.\n\n     (d)  Allocation.  Immediately after the Distribution, PBI and the Office\nSystems Group will close their books utilizing a \"cut off\" method and the\nprovisions of 1.1502-76(b)(1)(ii)(A), End of Day Rule, shall be applied to the\n2001 Short Year.\n\n     (e)  Non-Income Tax Returns and Post-Distribution Tax Period Income Tax\nReturns of Office Systems Group. Office Systems shall be solely responsible for\nthe preparation and filing of (i) Income Tax Returns of Office Systems Group for\nall Post-Distribution Tax Periods and (ii) the Returns of Office Systems Group\nfor Non-Income Taxes for any tax period.\n\n     (f)  2001 Short-Year State, Local and Foreign Returns.  PBI and Office\nSystems agree that Combined Income Tax Returns and Separate Income Tax Returns\nfiled for tax periods that begin prior to the Distribution Date will reflect a\nshort taxable year for Office Systems ending on the Distribution Date in any\nstate, local or foreign taxing jurisdiction in which such tax year is allowed by\nadministrative practice, whether or not required by law.\n\n     3.  Tax Sharing.\n\n     (a) General. For each Taxable period during which income, profits, gains,\nnet worth, receipts, sales, loss or credit against tax of at least one member of\neach of the PBI Group and Office Systems Groups are includible in a Return of\nPBI Consolidated Group, (i) no later than 45 days after the Distribution Date\nthe Office Systems Group shall pay to the PBI Group an amount equal to the\nOffice Systems Tax Liability for such Taxable period, if any, and (ii) at the\ntime the PBI Group realizes any such benefit, the PBI Group shall pay to the\nOffice Systems \n\n                                       7\n\n \nGroup the Tax Benefit received by PBI Consolidated Group from the use of any net\noperating loss of Office Systems Group arising in such period.\n\n     (b) True-Up When Return Filed. At the time PBI files PBI Consolidated\nGroup's consolidated Federal Tax Returns for the calendar year ended December\n31, 2001, PBI shall deliver to Office Systems a copy of the portion of such\nreturns relating to Office Systems together with a statement setting forth the\ndifference between (A) Office Systems 2001 Federal Tax Liability and (B) the\naggregate amount of payments with respect to the Office Systems 2001 Federal Tax\nLiability made by Office Systems to PBI prior to that time. At the time PBI\nfiles any Combined Income Tax Return and any Separate Income Tax Return prepared\nby PBI in accordance with Section 2(c) that include any member of Office Systems\nGroup, PBI shall deliver a copy of such Return to Office Systems, together with\na statement setting forth the difference between (C) the Office Systems Tax\nLiability for such Return and (D) the aggregate amount of payments with respect\nto the Office Systems Tax Liability for such Return made by Office Systems to\nPBI prior to that time. Any amount shown as payable on any statement described\nin this Section 3(b) shall be paid pursuant to Section 9.\n\n     (c)  Carrybacks From Post-Distribution Years.\n\n          (i) Office Systems agrees not to carry back any Tax Asset of Office\nSystems Group from a Post-Distribution Tax Period without the advance written\nconsent of PBI, which shall not be unreasonably withheld.  If PBI consents to\nsuch carryback, PBI agrees to pay to Office Systems the Tax Benefit received by\nPBI Consolidated Group from the use in any Pre-Distribution Tax Period of a\ncarryback of any Tax Asset of Office Systems Group from a Post-Distribution Tax\nPeriod.\n\n          (ii)  If, subsequent to the payment by PBI Group to Office Systems\nGroup of any amount, there is (A) a Final Determination that results in a\ndisallowance or a reduction of the Tax Asset so carried back or (B) a reduction\nin the amount of the benefit realized by PBI Consolidated Group from such Tax\nAsset as a result of a Final Determination or the use by PBI Consolidated Group\nof a Tax Asset of PBI Group, Office Systems Group shall repay to PBI, within 30\ndays of such event described in (A) or (B) (an \"Event\"), any amount which would\nnot have been payable to Office Systems Group pursuant to the subparagraph\n3(c)(i) had the amount of the benefit been determined in light of such Event.\nIn addition, Office Systems Group shall hold each member of PBI Group harmless\nfrom any penalty or interest payable by any member of PBI Group as a result of\nany such Event.  Any such amount shall be paid by Office Systems Group within 30\ndays of the payment by PBI Group of any such interest or penalty.  Nothing in\nthis Section 3(c) shall require PBI to file a claim for refund of Federal Taxes\nor Combined Income Taxes that PBI, in its sole discretion, has determined is not\nmore likely than not to succeed.  Provisions of this subparagraph 3(c)(ii) shall\nbe carried out consistently with provisions of Sections 7, 9 and 11.\n\n                                       8\n\n \n     (d)   Audit Payments.\n\n          (i) Responsibility for Payment.  Except as provided in paragraph\n(d)(ii) below or in Section 8, PBI shall be responsible for any payment due to\nany taxing authority as a result of an audit adjustment to any Income Tax Return\nwhich relates solely to a Pre-Distribution Tax Period.  Office Systems shall be\nresponsible for any payment due to any taxing authority as a result of an\nadjustment to any Return of Office Systems Group which relates solely to a Post-\nDistribution Tax Period.  In the case of any adjustment not covered in the\npreceding sentence, PBI shall determine the amount to be paid by each party in a\nmanner consistent with the principles of this Agreement and with past practice.\n\n          (ii) Timing Differences.  To the extent that any audit adjustment of\nan Income Tax Return relating to a Pre-Distribution Tax Period is attributable\nto timing differences attributable to Office Systems, PBI shall pay to Office\nSystems, or Office Systems shall pay to PBI, as appropriate, an amount\nreflecting the timing differences.  In the case of Federal Tax Return, this\namount shall be equal to the actual amount of the adjustment to PBI's tax\nliability which is attributable to the timing differences as determined by PBI\nwith the consent of Office Systems, which consent may not be unreasonably\nwithheld.  In the case of Combined Income Tax Return or Separate Income Tax\nReturn, the amount shall be equal to the difference between the tax actually due\non the adjusted Return and the amount that would have been due on the adjusted\nReturn had Office Systems not been included as a member of PBI Consolidated\nGroup.\n\n     4.  Certain Representations and Covenants.\n\n     (a) (i)  Office Systems Representations.  Office Systems and each member of\nOffice Systems Group represent as of the date hereof, and covenant that on the\nDistribution Date, there is no plan or intention (A) to liquidate Office Systems\nor to merge or consolidate Office Systems, or any member of Office Systems Group\nwith any other person subsequent to the Distribution, (B) to sell or otherwise\ndispose of any asset of Office Systems or any member of Office Systems Group\nsubsequent to the Distribution, except in the ordinary course of business, (C)\nto take any action inconsistent with the information and representations\nfurnished to the Internal Revenue Service in connection with the Ruling Request\nor (D) to enter into any negotiations, agreements, or arrangements with respect\nto transactions or events (including stock issuances, pursuant to the exercise\nof options or otherwise, option grants, capital contributions, or acquisitions,\nbut not including the Distribution) that may cause the Distribution to be\ntreated as part of a plan pursuant to which one or more persons acquire directly\nor indirectly Office Systems stock representing a \"50-percent or greater\ninterest\" within the meaning of Section 355(d)(4) of the Code.\n\n          (ii)  PBI Representations.  PBI represents as of the date hereof, and\ncovenants that on the Distribution Date, there is no plan or intention to take\nany \n\n                                       9\n\n \naction inconsistent with the information and representations furnished to\nthe Internal Revenue Service in connection with the Ruling Request.\n\n          (iii)  Office Systems and PBI Representations.  Each of Office\nSystems, PBI and the members of Office Systems Group, respectively, represent as\nof the date hereof, and covenant that on the Distribution Date, neither Office\nSystems, PBI nor the members of Office Systems Group, respectively (as\napplicable), is aware of any present plan or intention by the current\nshareholders of PBI to sell, exchange, transfer by gift, or otherwise dispose of\nany of their stock in, or securities of, PBI or Office Systems subsequent to the\nDistribution, other than pursuant to open market transactions.\n\n     (b)  Office Systems Covenants.  Office Systems covenants to PBI that,\nexcept as provided in paragraph (c) below, during the two-year period following\nthe Distribution Date:\n\n          (i) neither Office Systems nor any member of Office Systems Group will\nliquidate, merge or consolidate with any other person;\n\n          (ii) Office Systems will not sell, exchange, distribute or otherwise\ndispose of its assets or those of any member of Office Systems Group, except in\nthe ordinary course of business;\n\n          (iii) Office Systems will continue the active conduct of the historic\nbusiness that was conducted by Office Systems throughout the five year period\nprior to the Distribution;\n\n          (iv) Office Systems will not, nor will it permit any member of Office\nSystems Group, to take any action inconsistent with the information and\nrepresentations furnished to the Internal Revenue Service in connection with the\nRuling Request;\n\n          (v) Office Systems will not repurchase stock of Office Systems in a\nmanner contrary to the requirements of Revenue Procedure 96-30 or in a manner\ncontrary to the representations made in connection with the Ruling Request and\n\n          (vi) Office Systems will not enter into any transaction or make any\nchange in equity structure (including stock issuances, pursuant to the exercise\nof options, option grants or otherwise, capital contributions, or acquisitions,\nbut not including the Distribution) that may cause the Distribution to be\ntreated as part of a plan pursuant to which one or more persons acquire directly\nor indirectly Office Systems stock representing a \"50-percent or greater\ninterest\" within the meaning of Section 355(d)(4) of the Code.\n\n     Further, Office Systems covenants to PBI that:\n\n                                      10\n\n \n          (vii) it will not, nor will it permit any member of Office Systems\nGroup, to make or change any tax accounting method, change its taxable year,\namend any tax Return or take any tax position on any Return, take any other\naction, omit to take any action or enter into any transaction that results in\nany increased tax liability or reduction of any Tax Asset of PBI Consolidated\nGroup or any member thereof in respect of any Pre-Distribution Tax Period;\n\n          (viii) it will file federal consolidated returns, to the extent\napplicable, with its subsidiaries for the tax period that begins immediately\nafter the Distribution Date, and\n\n          (ix) it will execute all necessary forms, including powers of\nattorney, requested by PBI in connection with exercise of PBI's rights and\nresponsibilities under this Agreement, including those described in Section\n2(b).\n\n     (c)  Exceptions.  Notwithstanding the foregoing, Office Systems and the\nmembers of Office Systems Group may take actions inconsistent with the covenants\ncontained in Section 4(b)(i) through (vi) above, if:\n\n          (i)  Office Systems notifies PBI of its proposal to take such action\nand Office Systems and PBI obtain a ruling from the IRS to the effect that such\nactions will not result in the Distribution being taxable to PBI or its\nshareholders, provided that Office Systems agrees in writing to bear any\nexpenses associated with obtaining such a ruling and, provided further, that\nOffice Systems shall not be relieved of any liability under Section 5 of this\nAgreement by reason of seeking or having obtained such a ruling; or\n\n          (ii)  Office Systems notifies PBI of its proposal to take such action\nand obtains an opinion of counsel recognized as an expert in federal income tax\nmatters and acceptable to PBI to the same effect as in subparagraph 4(c)(i),\nprovided that such opinion is acceptable to PBI in its sole discretion.\n\n     (d)  Deductions and Certain Taxes Related to Options.\n\n     PBI shall file Returns claiming (i) the tax deductions attributable to the\nexercise of options to purchase stock of PBI or the vesting of PBI restricted\nstock that are held by employees or former employees of Office Systems Group or\n(ii) any other similar stock-based compensation-related tax deductions.  The\nReturns of PBI Group and Office Systems Group shall reflect the entitlement of\nPBI Group to such deductions.  To the extent such deductions are disallowed\nbecause a taxing authority determines that Office Systems Group should have\nclaimed such deductions, as consideration for PBI's issuance of shares of its\nstock as a result of the exercise described in clause (i) of the preceding\nsentence, Office Systems Group shall in good faith and to the extent permitted\nby law, file all applicable returns or claims for refund claiming such\ndeductions and pay to PBI Group an amount equal to the Tax Benefit if any,\nactually received by Office Systems with respect to the applicable returns or\nclaims for refund.  \n\n                                      11\n\n \nNotwithstanding the foregoing, Office Systems Group shall not be required to pay\nto PBI Group any amount with respect to deductions attributable to a year for\nwhich, at the time PBI notifies Office Systems of its claim pursuant to this\nSection 4(d), the applicable statute of limitations has run or which is\notherwise closed. Upon the exercise of any option or the vesting of any\nrestricted stock described in clause (i), or the occurrence of any other event\nthat would result in a compensation-related tax deduction, as the case may be,\nPBI shall prepare and file all applicable Returns and pay the applicable tax\nliability under the Federal Insurance Contributions Act, the Federal\nUnemployment Tax Act or any state employment tax law in connection with such\nevent.\n\n     5.  Indemnities.\n\n     (a)  Office Systems Indemnity.  Office Systems and each member of Office\nSystems Group will jointly and severally indemnify PBI and the members of PBI\nGroup against and hold them harmless from:\n\n          (i)  any liability or damage resulting from a breach by Office Systems\nor any member of Office Systems Group of any representation or covenant made by\nOffice Systems herein,\n\n          (ii) any tax liability resulting from the Distribution and\nattributable to any action of Office Systems or any member of Office Systems\nGroup, without regard to whether PBI or any agent or officer of PBI has\nconsented to such action, and\n\n          (iii)  all liabilities, costs, expenses (including, without\nlimitation, reasonable expenses of investigation and attorneys' fees and\nexpenses), losses, damages, assessments, settlements or judgments arising out of\nor incident to the imposition, assessment or assertion of any tax liability or\ndamage described in (i) or (ii) of this Section 5(a), including those incurred\nin the contest in good faith in appropriate proceedings relating to the\nimposition, assessment or assertion of any such tax, liability or damage.\n\n          (b) PBI Indemnity.  PBI will indemnify Office Systems and the members\nof Office Systems Group against and hold them harmless from:\n\n          (i)  any tax liability of PBI Group and any tax liability resulting\nfrom the Distribution, other than any such liabilities described in Section\n5(a),\n\n          (ii) any liability or damage resulting from a breach by PBI or any\nmember of PBI Group of any representation or covenant made by PBI herein, and\n\n          (iii)  all liabilities, costs, expenses (including, without\nlimitation, reasonable expenses of investigation and attorneys' fees and\nexpenses), losses, damages, assessments, settlements or judgments arising out of\nor incident to the imposition, assessment or assertion of any tax liability or\ndamage described in \n\n                                      12\n\n \nparagraphs (i) and (ii) of this Section 5(b), including those incurred in the\ncontest in good faith in appropriate proceedings relating to the imposition,\nassessment or assertion of any such tax, liability or damage.\n\n     (d)  Tax Benefits.  If an indemnification obligation of any member of PBI\nGroup or any member of Office Systems Group, as the case may be, under this\nSection 5 with respect to PBI Consolidated Group arises in respect of an\nadjustment that makes allowable to a member of Office Systems Group or a member\nof PBI Group, respectively, any Tax Benefit that would not, but for such\nadjustment, be allowable, then any payment by any member of PBI Group or any\nmember of Office Systems Group, respectively, pursuant to this Section 5 shall\nbe an amount equal to (A) the amount otherwise due but for this subsection (d),\nminus (B) the tax savings actually realized as a result of such Tax Benefit.\n\n     6.  Subsidiaries.\n\n     PBI agrees and acknowledges that PBI shall be responsible for the\nperformance by each member of PBI Group of the obligations hereunder applicable\nto such member.  Office Systems agrees and acknowledges that Office Systems\nshall be responsible for the performance by each member of Office Systems Group\nof the obligations hereunder applicable to such member.\n\n     7.  Communication and Cooperation.\n\n     (a)  Consult and Cooperate.  Office Systems and PBI shall consult and\ncooperate (and shall cause each member of Office Systems Group or PBI Group,\nrespectively, to cooperate) fully at such time and to such extent as are\nreasonably requested by the other party in connection with all matters subject\nto this Agreement.  Such cooperation shall include, without limitation:\n\n          (i)  the retention and provision on reasonable request of any and all\ninformation including all books, records, documentation or other information\npertaining to tax matters (including Income Taxes and Non-Income Taxes) relating\nto PBI Group and Office Systems Group, any necessary explanations of\ninformation, and access to personnel, in each case until two years after the\nexpiration of the applicable statute of limitation (giving effect to any\nextension, waiver, or mitigation thereof);\n\n          (ii)  the execution of any document that may be necessary or helpful\nin connection with any required Return or in connection with any audit,\nproceeding, suit or action and\n\n          (iii)  the use of the parties' best efforts to obtain any\ndocumentation from a governmental authority or a third party that may be\nnecessary or helpful in connection with the foregoing.\n\n                                      13\n\n \n     (b)  Provide Information.  PBI and Office Systems shall keep each other\nfully informed with respect to any material development relating to the matters\nsubject to this Agreement.\n\n     (c)  Tax Attribute Matters.  PBI and Office Systems shall advise each other\nwith respect to any proposed tax adjustments relating to a Pre-Distribution Tax\nPeriod, which are the subject of an audit or investigation, or are the subject\nof any proceeding or litigation, and which may affect any tax liability or any\ntax attribute of PBI, Office Systems, PBI Group, Office Systems Group or any\nmember of Office Systems Group or PBI Group (including, but not limited to,\nbasis in an asset or the amount of earnings and profits).  Except as otherwise\nprovided herein, PBI shall in good faith determine the apportionment of tax\nattributes between PBI Group and Office Systems Group in accordance with\napplicable laws.\n\n     8.  Audits and Contest.\n\n     (a)  PBI Control.  Notwithstanding anything in this Agreement to the\ncontrary, except to the extent provided in paragraphs (b) and (c) below, PBI\nshall have the right to control all matters relating to any tax Return or any\nTax Proceeding with respect to any tax matters of PBI Consolidated Group or any\nmember of PBI Consolidated Group, other than Non-Income Tax Returns relating to\nthe Office Systems business and any Tax Proceedings related to them.  PBI shall\nhave absolute discretion with respect to any decisions to be made, or the nature\nof any action to be taken, with respect to any Income Tax matter described in\nthe preceding sentence provided, however, that PBI shall keep Office Systems\ninformed of all material developments and events relating to such matters to the\nextent they affect the Office Systems Tax Liability or may give rise to a claim\nfor indemnity by PBI against Office Systems under Section 5(a) of this\nAgreement; and at its own cost and expense, Office Systems shall have the right\nto participate in (but not to control) the defense of any such tax claim.  In\ncases where an audit adjustment or refund claim related to a Pre-Distribution\nTax Period is reasonably likely to have the effect of increasing the tax\nliability of Office Systems in a Post Distribution Tax Period, PBI shall consult\nwith Office Systems and to the extent practicable, avoid taking any action that\nis reasonably likely to have a material adverse effect on Tax Returns, Tax\nAssets or Tax liabilities of Office Systems Group for any Post-Distribution Tax\nPeriod.\n\n     (b)  Office Systems Assumption of Control; Non-Section 355 Matters.  If\nPBI determines that the resolution of any matter relating to a Tax Return or Tax\nProceeding (other than a Tax Proceeding relating to the qualification of the\nDistribution  under Section 355 of the Internal Revenue Code) is reasonably\nlikely to have an adverse effect on Office Systems Group with respect to any\nPost-Distribution Tax Period, PBI shall permit Office Systems Group to elect to\nassume control over disposition of such matter at Office Systems' sole cost and\nexpense provided, however, that if Office Systems so elects, it will (i) be\nresponsible for the payment of any liability arising from the disposition of\nsuch matter notwithstanding any other provision of this Agreement to the\ncontrary and \n\n                                      14\n\n \n(ii) indemnify PBI Group for any increase in a liability and any reduction of a\nTax Asset of PBI Group arising from such matter.\n\n     (c)  Office Systems Assumption of Control; Section 355 Matters. In the\nevent of a Tax Proceeding relating to the qualification of the Distribution\nunder Section 355 of the Internal Revenue Code, PBI shall have the right to\ncontrol the defense of the matter in all proceedings before the Internal Revenue\nService, provided that PBI shall keep Office Systems fully informed of all\nmaterial developments and shall permit Office Systems a reasonable opportunity\nto participate in the defense of the matter.   If the issues relating to the\nqualification of the Distribution under Section 355 of the Internal Revenue Code\n(x) do not involve Section 355(e) of the Internal Revenue Code, (y) are not\nfavorably resolved in proceedings before the Internal Revenue Service and (z)\nPBI has determined that Office Systems would be required to indemnify PBI as a\nresult of the disqualification of the Distribution, PBI shall permit Office\nSystems Group to elect to assume control over final disposition of such matter\npursuant to judicial proceedings at Office Systems' sole cost and expense\nprovided, however, that if Office Systems so elects, it will (i) be responsible\nfor the payment of any liability arising from the disposition of such matter\nnotwithstanding any other provision of this Agreement to the contrary and (ii)\nindemnify PBI Group for any increase in a liability and any reduction of a Tax\nAsset of PBI Group arising from such matter.\n\n     (d)  Office Systems Control.  Office Systems shall have full control over\nall matters relating to any Tax Proceeding with respect to Returns of Office\nSystems Group relating to any Post-Distribution Tax Period.\n\n     9.  Payments.\n\n     (a)  Timing, After-tax Amounts.  All payments to be made hereunder shall be\nmade in immediately available funds.  Except as otherwise provided, all payments\nrequired to be made pursuant to this Agreement will be due 30 days after the\nreceipt of notice of such payment or, where no notice is required, 30 days after\nthe fixing of liability or the resolution of a dispute.  Payments shall be\ndeemed made when received.  Any payment that is not made when due shall bear\ninterest at a rate equal to Prime for each day until paid.  If, pursuant to a\nFinal Determination, any amount paid by PBI or the members of PBI Group, or\nOffice Systems or the members of Office Systems Group, as the case may be,\npursuant to this Agreement results in any increased tax liability or reduction\nof any Tax Asset of Office Systems or any member of Office Systems Group, or PBI\nor any member of PBI Group, respectively, then PBI or Office Systems, as\nappropriate, shall indemnify the other party and hold it harmless from any\ninterest or penalty attributable to such increased tax liability or the\nreduction of such Tax Asset and shall pay to the other party, in addition to\namounts otherwise owed, the After-Tax Amount.\n\n     (b)  Netting of Payments.  If, on the day payment is due under this\nAgreement, each of Office Systems and PBI (each, a \"Party\") owes an amount to\n\n                                      15\n\n \nthe other Party pursuant to this Agreement and any other agreement between the\nParties, including, without limitation, the Distribution Agreement and any\nAncillary Agreement, as defined in the Distribution Agreement, the Parties shall\nsatisfy their respective obligations to each other by netting the aggregate\namounts due to one Party against the aggregate amounts due to the other Party,\nwith the Party, if any, owning the greater aggregate amount paying the other\nParty the difference between the amounts owed.  Such net payment shall be made\npursuant to the provision of Section 9(a).\n\n     10.  Injunction.\n\n     The parties hereto agree that the payment of monetary compensation would\nnot be an adequate remedy to a breach of the obligations contained in Section\n4(b) hereof, and Office Systems consents to the issuance and entry of an\ninjunction to prevent a breach of those obligations; provided, however, that the\nforegoing shall be without prejudice to and shall not constitute waiver of any\nother remedy either party may be entitled to at law or at equity hereunder.\n\n     11.  U.K. Tax Separation Agreement.\n\n     (a) Office Systems UK Returns.  Notwithstanding anything in this Agreement\nto the contrary, Office Systems UK shall be solely responsible for (i) preparing\nand filing of  all Returns for any taxes payable by it to any tax authorities in\nthe United Kingdom for all Tax Periods, (ii) paying any taxes shown on such\nReturns, (iii) contesting, compromising or settling adjustment or deficiency\nproposed, asserted or assessed as a result of any audit of any such Return and\n(iv) filing, prosecuting, compromising or settling any claim for refund with\nrespect to taxes shown on such Returns.\n\n     (b)  Any matters related to taxes other than those described in Section\n11(a) above shall be resolved in accordance with the provisions of the Agreement\nfor the Sale and Purchase of the Office Systems Division of Pitney Bowes Limited\nbetween Pitney Bowes Limited and Office Systems UK.\n\n     12.  Notices.\n\n     Any notice, demand, claim, or other communication under this Agreement\nshall be in writing and shall be deemed to have been given upon the delivery or\nmailing thereof, as the case may be, if delivered personally or sent by\ncertified mail, return receipt requested, postage prepaid, to the parties at the\nfollowing addresses (or at such other address as a party may specify by notice\nto the other):\n\n     If to PBI:\n\n     Pitney Bowes Inc.\n     One Elmcroft Road\n     Stamford, CT 06926-0700\n\n                                      16\n\n \n     Attn: Arlen F. Henock\n     Vice President-Finance\n\n     with copies to:\n     Executive Director, Global Tax Planning &amp; General Tax Counsel and\n     Director of Tax Compliance and Audits\n\n     If to Office Systems:\n\n     Pitney Bowes Office Systems, Inc.\n     100 Oakview Drive\n     Trumbull, CT 06611\n     Attn: Joseph Skrzypczak\n     Chief Financial Officer\n\n     with copies to:\n     General Counsel\n     and Vice President-Taxes\n\n     13.  Costs and Expenses.\n\n     (a) Reimbursement for Certain Services. PBI shall provide services in\nconnection with this Agreement, including determination of Office Systems Tax\nLiability as described in Sections 2 and 3 and other services described in\nServices Agreement between Office Systems and PBI (the \"Transition Services\nAgreement\").  Payments for these services shall be made consistent with the\ninvoice and payment procedures provided for in the Transition Services\nAgreement.\n\n     (b) Others.  Except as expressly set forth in this Agreement, each party\nshall bear its own costs and expenses incurred pursuant to this Agreement.  For\npurposes of this Agreement, \"out-of-pocket\" expenses shall include reasonable\nattorneys' fees, accountant fees and other related professional fees and\ndisbursements.\n\n     14.  Effectiveness; Termination and Survival.\n\n     This Agreement shall become effective upon the consummation of the\nDistribution.  All rights and obligations arising hereunder with respect to a\nPre-Distribution Tax Period shall survive until they are fully effectuated or\nperformed.  Notwithstanding anything in this Agreement to the contrary, this\nAgreement shall remain in effect and its provisions shall survive for the full\nperiod of all applicable statutes of limitation (giving effect to any extension,\nwaiver or mitigation thereof).\n\n     15.  Headings.\n\n                                      17\n\n \n     The headings contained in this Agreement are inserted for convenience only\nand shall not constitute a part hereof or in any way affect the meaning or\ninterpretation of this Agreement.\n\n     16.  Entire Agreement; Amendments and Waivers; Severability.\n\n     (a)  Entire Agreement.  This Agreement contains the entire understanding of\nthe parties hereto with respect to the subject matter contained herein.  No\nalteration, amendment, modification, or waiver of any of the terms of this\nAgreement shall be valid unless made by an instrument signed by an authorized\nofficer of each of PBI and Office Systems, or in the case of a waiver, by the\nparty against whom the waiver is to be effective.\n\n     (b)  Amendments and Waivers.  No failure or delay by any party in\nexercising any right, power or privilege hereunder shall operate as a waiver\nthereof nor shall any single or partial exercise thereof preclude any other or\nfurther exercise thereof, or the exercise of any right, power or privilege.\nThis Agreement shall not be waived, amended or otherwise modified except as in\nwriting, duly executed by all of the parties hereto.\n\n     (c)  Severability.  If any provision of this Agreement or the application\nof any such provision to any party or circumstances shall be determined by any\ncourt of competent jurisdiction to be invalid, illegal or unenforceable to any\nextent, the remainder of this Agreement or such provision or the application of\nsuch provision to such party or circumstances, other than those determined to be\nso invalid, illegal or unenforceable, shall remain in full force and effect to\nthe fullest extent permitted by law and shall not be affected by such\ndetermination, unless such a construction would be unreasonable.\n\n     17.  Governing Law and Interpretation.\n\n     This Agreement has been made in, and shall be construed and enforced in\naccordance with the laws of, the State of  New York without giving effect to\nlaws and principles relating to conflicts of law.\n\n     18.  Dispute Resolution.\n\n     The parties shall endeavor in good faith promptly to resolve any\ndisagreement or dispute relating to this Agreement.  If the parties are unable\nto resolve any disagreement or dispute relating to the matters referred to in\nparagraph (d)(ii) of Section 3 or in paragraphs (a), (b) or (c) of Section 4, or\nthe related indemnities, of this Agreement within 20 days, such disagreement or\ndispute shall be resolved by PBI acting in good faith and so as to avoid a\nwindfall to either party.  Any such resolution shall be binding on the parties\nto this Agreement without further recourse.\n\n     19.  Counterparts.\n\n                                      18\n\n \n     This Agreement may be executed in any number of counterparts, each of which\nshall be deemed an original, but all of which together shall constitute one and\nthe same Agreement.\n\n     20.  Assignments; Third Party Beneficiaries.\n\n     Except as provided below, this Agreement shall be binding upon and shall\ninure only to the benefit of the parties hereto and their respective successors\nand assigns, by merger, acquisition of assets or otherwise (including but not\nlimited to any successor of a party hereto succeeding to the tax attributes of\nsuch party under applicable law).  This Agreement is not intended to benefit any\nperson other than the parties hereto and such successors and assigns, and no\nother person shall be a third party beneficiary hereof.\n\n     21.  Further Assurances.\n\n     PBI and Office Systems shall execute, acknowledge and deliver, or cause to\nbe executed, acknowledged and delivered, such instruments and take such other\naction as may be necessary or advisable to carry out their obligations under\nthis Agreement and under any exhibit, document or other instrument delivered\npursuant hereto.\n\n     22.  Authorization.\n\n     Each of the parties hereto hereby represents and warrants that it has the\npower and authority to execute, deliver and perform this Agreement, that this\nAgreement has been duly authorized by all necessary corporate action on the part\nof such party, that this Agreement constitutes a legal, valid and binding\nobligation of each such party and that the execution, delivery and performance\nof this Agreement by such party does not contravene or conflict with any\nprovision or law or of its charter or bylaws or any agreement, instrument or\norder binding on such party.\n\n                                      19\n\n \n     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement\nas of the day and year first written above.\n\n\n                         PBI on its own behalf and on behalf of each member of\n                         PBI Group.\n\n\n\n                         By:__________________________\n                         Name:  Arlen F. Henock\n                         Title: Vice President-Finance\n\n\n\n                         Office Systems on its own behalf and on \n                         behalf of each member of Office Systems \n                         Group.\n\n\n\n                         By:__________________________\n                         Name:  Joseph D. Skrzypczak\n                         Title: Chief Financial Officer\n\n                                      20\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7831,8530],"corporate_contracts_industries":[9454],"corporate_contracts_types":[9622,9628],"class_list":["post-43753","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-imagistics-international-inc","corporate_contracts_companies-pitney-bowes-inc","corporate_contracts_industries-manufacturing__industrial","corporate_contracts_types-planning","corporate_contracts_types-planning__separation"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43753","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43753"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43753"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43753"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43753"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}