Pitney Bowes (PBI)

Change of Control with Termination

Change of control entitles named officers to the following upon termination:

• For each named officer, a payment equal to three times the sum of the participant’s current annual salary and the participant’s average annual incentive award in the preceding three years is payable.

• A prorated annual incentive award based on the participant’s current annual incentive target.

• CIU payments based on the total of the outstanding grants for each of the open cycles paid at target value.

• The Pitney Bowes Stock Plan provides that all stock options will vest upon termination and options can be exercised during their remaining term. For purposes of valuing options in the “Post-Termination Payments” tables, we assume that upon a change of control, all vested outstanding options will be cashed out using the difference between the option exercise price and $38.04, the closing price of the company’s common stock on December 31, 2007.

• Restrictions on shares of outstanding restricted stock will be removed.

• Only age and service credits, not earnings, are included in the pension calculation for the associated severance period.

• Health and welfare benefits will continue for the executive and his or her dependents for a three-year period.

• The company will provide outplacement services.

• A tax gross-up covering all additional taxes due (e.g., excise, income, employment taxes) will be provided to U.S. employees if an excise tax is due on the parachute payments. However, there is a condition that allows the severance payments to be reduced if the parachute value is within 110% of the safe-harbor amount, and therefore no tax gross-up would then be payable.

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Change of Control with Termination

Change of control entitles executive officers to the following upon termination:

• For each named executive officer, a payment equal to three times the sum of the participant’s current annual salary and the participant’s average annual incentive award in the preceding three years is payable.
  
  
• A prorated annual incentive award based on the average of the executive’s performance rating and the average company’s performance rating during the three-year period prior to the change of control.
  
  
• Prorated CIU payments based on actual performance metrics realized for each outstanding three-year CIU cycle prior to the change of control.
  
  
• All stock options will vest upon termination and options can be exercised during the remaining term of the options.
  
  
• Restrictions on shares of outstanding restricted stock will be removed.
  
  
• Only age and service credits, not earnings, are included in the pension calculation for the associated severance period.
  
  
• Health and welfare benefits will continue for the executive and his or her dependents for a three-year period.
  
  
• The company will provide outplacement services.
  
  
• A tax gross-up covering all additional taxes due (e.g., excise, income, employment taxes) will be provided to U.S. employees if an excise tax is due on the parachute payments. However, there is a condition that allows the severance payments to be reduced if the parachute value is within 110% of the safe-harbor amount, and therefore no tax gross-up would then be payable.