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EXHIBIT (iv) 





SEPARATION
AGREEMENT



     AGREEMENT
dated as of December 5, 2003 between Pitney Bowes Inc., a Delaware corporation (the
"Company"), and Karen M. Garrison  ("the Executive"). 



     
WHEREAS, the Company has announced that it is realigning its organizational
structure to deliver enhanced customer and shareholder value; and



     WHEREAS,
the Executive, as part of the design of the new structural alignment, decided to
accelerate her previously planned  retirement; and 



     WHEREAS,
the parties desire to enter into this Agreement; 



     NOW,
THEREFORE, in consideration of the premises and mutual covenants herein and for
other good and valuable consideration, the parties agree as follows:




     SECTION
1 Definitions



     For
purposes of this Agreement, the following terms shall have the meanings
indicated.



     “Board”
means the Board of Directors of the Company.



     “Separation
Date” means July 31, 2004.



     “Severance
Period” means the period from August 1, 2004 up to and including July 31,
2006.



     “Transition
Period” means the period from January 1, 2004 up to and including July 31,
2004.




     SECTION
2 Term of the Agreement



     This
Agreement shall be in effect from the date hereof.



     SECTION
3  Transition Duties 



     During
the Transition Period, the Executive will complete her work on the
Company’s real estate and facilities optimization plan and will continue to
assist in the development and implementation of the Company’s mail and
document management strategy. The Executive will continue to receive her current
base salary and participate in all other Company benefit plans as an active
employee. At the conclusion of the Transition Period, the Executive will begin
the Severance Period.








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     SECTION
4  Severance 



     During
the Severance Period, the Executive will receive severance pay of $64,583.33 per
month through the Severance Period. Severance will be paid on regular paydays.



     SECTION
5  Other Incentives 



     (a)
The Company shall pay the Executive the gross amount of $360,416.67 in lieu of
any 2004 incentive bonus, which would normally be payable in February 2005, or
any other compensation claims. Payment will be included in the Executive’s
pay check no later than 30 business days after the Separation Date.



     (b)
The Company shall pay the Executive a payout of outstanding Cash Incentive Units
(“CIUs”) pursuant to the KEIP at the close of each respective cycle in
accordance with the terms of KEIP; provided, however, that such payout of CIUs
shall be based on the Executive’s total number of completed months of
active service with the Company during each 36 month CIU cycle and on the
achievement of performance-based targets associated with the CIUs. For purposes
of this prorated calculation, the targeted payout shall be multiplied by a
fraction, the numerator of which is the Executive’s total number of
completed months of active service with the Company during the particular CIU
cycle and the denominator of which is 36.



     (c)
Any payments made under this Section 5 shall be in lieu of any 2004 incentive
pay, or any other compensation claims to which the Executive may otherwise be
entitled under the KEIP and any other practice or policy of the Company with
respect to short and long term incentives. The Executive will not be eligible
for any stock options grant in 2004.



     SECTION
6 Medical and Dental 



     (a)
The Executive and her eligible dependents may at her option elect to continue to
participate in the Company’s group medical and dental plans (or any
successor medical or dental plans adopted by the Company) (collectively,
“Medical Plans”) during the Severance Period on the same terms
applicable from time to time to active employees. The Executive understands that
although she and her eligible dependents may continue to participate in the
Company’s Medical Plans, in accordance with the terms of the Medical Plans,
the Company reserves the right to change carriers, modify plan designs and
pricing and make other changes to the Medical Plans and policies.



     (b)
Upon the Executive’s retirement at the conclusion of the Severance Period,
the Executive and her eligible dependents shall be eligible for coverage under
the Company’s retiree group medical and dental plans, in accordance with
the terms of such plans as of that date. In accordance with the terms of the
Medical Plans, the Company reserves the right to amend future plan design and
active employee contribution rates.





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     (c)
As of the Separation Date, the Executive’s coverage under the
Company’s disability plans, including long and short-term disability
insurance and Accidental Death & Dismemberment insurance, shall cease.



     SECTION
7  Perquisites



     (a)
As of the Separation Date, the Company shall cease to provide the Executive with
an automobile allowance.



     (b)
The Executive shall be provided at the Company’s sole expense with
professional financial counseling and tax preparation services for a period of
12 months following the Separation Date, subject to reasonable limitations as to
dollar amounts established by the Company on a uniform basis for similarly
situated executives. In addition, the Company shall pay the Executive the net
amount of $1,500 for expenses resulting from the preparation of the
Executive’s 2005 federal and state tax return. This payment shall be made
within 30 business days after the Separation date.



     (c)
Any payments made under this Section 7 shall be in lieu of any other perquisites
to which the Executive may otherwise be entitled under the programs, plans,
practices or policies of the Company following the Separation Date.



     SECTION
8  Covenants



     (a)
Confidentiality. 



          (i)
The Executive will at all times (whether during or after her employment with the
Company) hold all Confidential Information in strictest confidence and not use  or
disclose directly or indirectly any Confidential Information to any  individual,
partnership, corporation, limited liability company, trust or other  entity (each, a
“Person”), without prior written authorization of the  Board. “Confidential
Information” means any Company proprietary  information, technical data, trade
secrets and know-how, including but not  limited to research, product plans, products,
services, passwords, customer  lists and customers (including but not limited to
customers of the Company on  whom the Executive called or with whom the Executive became
acquainted during  her employment), markets, software, developments, inventions,
processes,  formulas, technology, designs, drawings, engineering, hardware configuration
information, marketing, finances and other business information disclosed to the
Executive by the Company either directly or indirectly in writing, orally or by  drawings
or observation or generated by the Executive during her employment with  the Company. The
Executive further understands that Confidential Information  does not include any of the
foregoing items which has become publicly known and  made generally available through no
wrongful act of hers or of others who were  under confidentiality obligations as to the
item or items involved.




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     (b)
Non-Competition. At all times during her employment and during the Severance
Period, the Executive will not, except with the prior written consent of the
Company:



	 	     (i)  become
engaged in or become interested, directly or indirectly, as a director,  officer,
employee, manager, 10% or greater stockholder of, partner in, or  consultant to any
business which provides facilities management services, record  management services,
document services, incoming mail services, EDP to mail  service, mail management
services, copying or reprographic services, imaging  services, automated document factory
services, or any combination of the same,  which are competitive with Pitney Bowes
Management Services or Pitney Bowes  Government Services, or any type of services the
Company or any of its  subsidiaries is currently providing or identified for introduction
into the  marketplace up through the strategy most recently approved by senior management; 







	 	     (ii)  become
engaged or become interested, directly or indirectly, as a director,  officer, employee,
manager, 10% or greater stockholder of, partner in, or  consultant to any business which
is engaged in the development, manufacture, or  distribution of desktop or network
printers, mail finishing or sorting  equipment, including production mail or postage
meters, shipping and logistics  equipment, or software and services or supplies which are
used in mailing and  shipping functions and which are competitive with categories of
equipment,  firmware, software, or supplies manufactured or distributed by the Company or
any of its subsidiaries for the functions described above, or identified for
introduction into the marketplace up through the strategy most recently approved  by
senior management. Mailing and shipping functions include both in-bound and  out-bound
mail and physical and hybrid mail. 







     The
Executive may request the Company’s approval to become a Director in a  tangential
competitor deemed insignificant by the Company which approval shall  not be unreasonably
withheld. 



     (c)
Non-Solicitation of Employees. At all times during her employment and during the
Severance Period, the Executive shall not directly or indirectly,



	(i)	 	solicit,
entice, or encourage any employee of the Company or any independent  contractor of the
Company, to terminate his or her relationship with the  Company, or 







	(ii)	 	hire
any such individual, or







	(iii)	 	otherwise
knowingly approve the taking of such actions by any other person,  except with the prior
written consent of the Company.







     (d)
Non-Diversion of Customers. At all times during her employment and during the
Severance Period, the Executive will not directly or indirectly, divert or take
away, or attempt to divert or to take away, the business or patronage of any of
the customers or accounts, or prospective customers or




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accounts, of
the Company. 



     (e)
Non-Disparagement. At all times during her employment with the Company and
thereafter, the Executive and, to the extent set forth in the next sentence, the
Company agree that each party will not knowingly make any statement, written or
oral, which disparages or is derogatory to the other party in any communications
with any customer or client or in any communications made in a public manner.
The Company’s obligations under the preceding sentence shall be limited to
communications by its senior corporate executives.



     (f)
Cooperation. At any time on or after the Separation Date, the Executive agrees
to cooperate fully with the Company in the handling or investigation of any
administrative charges, government inquiries or lawsuits involving the Company
and to provide such information as the Company may reasonably request with
respect to any Company-related transaction, investment or other matter in which
the Executive was involved in any way while employed by the Company.



     SECTION
9 Remedies



     (a)
The Executive acknowledges and agrees that the Company’s remedies at law
for a breach or threatened breach of any of the provisions of Section 8 hereof
would be inadequate and, in recognition of this fact, the Executive agrees that,
in the event of such a breach or threatened breach, in addition to any remedies
at law, the Company, without posting any bond, shall be entitled to seek
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which may
then be available.



     (b)
Notwithstanding any provision of this Agreement to the contrary, from and after
any breach by the Executive of the provisions of Section 8 hereof, the Company
shall provide written notice to the Executive of such breach. If the Executive
fails to correct her violation within 30 days, the Company shall cease to have
any obligations to make payments or provide benefits to the Executive under this
Agreement. The Executive also agrees to return to the Company the full value of
any compensation and benefits provided to the Executive while she was in
violation of any of the provisions in Section 8 hereof, and to compensate the
Company for any actual economic damages suffered by the Company as a result of a
breach of any of the provisions of Section 8 hereof.



     (c)
It is expressly understood and agreed that the Executive and the Company
consider the restrictions contained in Section 8 hereof to be reasonable. If a
final judicial determination is made by a court of competent jurisdiction that
the time or territory or any other restriction contained in this Agreement is an
unenforceable restriction against the Executive, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if the final
decision of any tribunal of competent jurisdiction determines that a particular
restriction contained herein is unenforceable, and such restriction





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cannot be
amended so as to make it enforceable, such finding shall not effect the  enforceability
of any of the other restrictions contained herein. 




     SECTION
10 Release and Waiver of Claims



     (a)
It  is understood and agreed that as a condition to the Executive becoming entitled  to
any payments or benefits under this Agreement, the Executive agrees, that on  behalf of
herself, her heirs and personal representatives, she releases and  discharges the Company
from 



          (i)   any
and all charges, claims and causes of action arising, directly or indirectly  out of her
employment or her separation from the Company, whether known or  unknown, including but
not limited to any claims involving tortious course of  conduct, breach of contract,
defamation and public policy, claims for wages and  benefits, monetary and equitable
release, punitive or compensatory damages,  outrage, outrageous conduct, fraud,
promissory estoppel, negligence, intentional  or negligent infliction of mental or
emotional distress, breach of promise, and  breach of the covenant of good faith and fair
dealing; and



          (ii)   any
and all charges, claims and causes or action she may have, whether known or  unknown,
under Title VII of the Civil Rights Act of 1964, as amended; the Age  Discrimination in
Employment Act of 1967, as amended; the National Labor  Relations Act, as amended; the
Civil Rights Act of 1991, as amended; 42 U. S. C.  1981, as amended; the Americans with
Disability Act of 1990; the Family and  Medical Leave Act; the Connecticut Fair
Employment Practices Act, as amended;  the Employee Retirement Income Security Act of
1974, as amended; and various  state and local human rights laws of contract and tort,
otherwise relating to  her employment at the Company. 



     (b)
The release and waiver referred to herein shall not apply to the  Executive’s vested
rights under the Company’s benefit plans and  Workers’ Compensation laws, any
rights or claims that may arise after the  date that the Executive signs this Agreement,
and any rights under the  provisions of this Agreement. The release and waiver shall be
effective with  respect to the Company, its subsidiaries, affiliates and divisions and
their  respective successors and assigns (“Affiliates”), the directors,
officers, representatives, shareholders, agents, employees of the Company and  the
affiliates, and their respective heirs and personal representatives. The  Executive
represents and warrants that she has not suffered any on-the-job  personal injury for
which she has not already filed a claim. 



     (c)
Following the Separation Date, the payments and benefits described in Section 4,  5 and 6
of this Agreement shall not be paid until the Executive has delivered to  the Company an
executed, additional Waiver and Release covering the Transition  Period in the form of
Exhibit A. 




     SECTION
11 Death of Executive after Entitlement to Payment






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     If
the Executive dies at any time after having become entitled to payments under
Section 4 and 5 of this Agreement and prior to having received all amounts owed
thereunder, any of the amounts otherwise payable under Sections 4 and 5 of this
Agreement remaining unpaid at her death shall be paid to the Executive’s
designated beneficiary or, if none is designated, to her estate.




     SECTION
12 Miscellaneous



     (a)
Governing Law/Jurisdiction. This Agreement shall be governed by and construed in
accordance with the laws of Connecticut, without reference to principles of  conflict of
laws. 



     (b)
Payment. Compensation and benefits described in Sections 3, 4, 5 and 6 of this  Agreement
will be paid except if (i) the Executive violates the terms of this  Agreement,
including, without limitation, Section 8, or (ii) the Executive is  terminated for Cause
before August 1, 2004. “Cause” means (i) the  Executive, in the performance of
her duties for the Company, to the material and  demonstrable detriment of the Company,
engages in (A) willful misconduct, (B)  willful or gross neglect, (C) fraud, (D)
misappropriation, (E) embezzlement or  (F) theft; or (ii) the Executive’s
acknowledgement in writing in any  agreement or stipulation to, or the adjudication in,
any civil or criminal  action, of the commission of any crime, theft, embezzlement,
fraud, or other  intentional act of dishonesty, breach of trust or unethical behavior
involving  the business of the Company. No act or failure to act on the Executive’s
part shall be deemed willful unless done or omitted to be done by the Executive  not in
good faith and without reasonable belief that the Executive’s action  or omission
was in the best interest of the Company. 



     (c)
Arbitration. With respect to any dispute between the parties hereto arising from
or relating to the terms of this Agreement, the parties agree to submit such
dispute to arbitration in Connecticut under the auspices of and the employment
rules of the American Arbitration Association. The determination of the
arbitrator(s) shall be conclusive and binding on the Company and the Executive
and judgment upon the award conclusive and binding on the Company and the
Executive and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. The Company and the Executive
will each pay one-half of the costs and expenses of such arbitration, and each
party will separately pay for their counsel fees and expenses.



     (d)
Entire Agreement/Amendments. This Agreement contains the entire understanding of
the parties with respect to the severance payable to the Executive in the event
of a termination of employment during the term of this Agreement. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth herein. This Agreement may not be altered, modified, or
amended except by written instruction signed by the parties hereto.





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     (e)
No Waiver. The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver of such
party’s or deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.



     (f)
Severability. In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby. It is understood that this Agreement
does not constitute an admission by the Company of violation of any statute, law
or regulation.



     (g)
Assignment. This Agreement shall not be assignable by the Executive and shall be
assignable by the Company only with the consent of the Executive, which shall
not be unreasonably withheld; provided, however, that the Company shall require
any successor to substantially all of the stock, assets or business of the
Company to assume this Agreement.



     (h)
Successors; Binding Agreement. This Agreement shall inure to the benefit of and
be binding upon the personal or legal representatives, executors,
administrators, successors, including successors to all or substantially all of
the stock, business and/or assets of the Company, heirs, distributees, devisees
and legatees of the parties.



     (i)
Notice. For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed to the respective addresses
set forth on the execution page of this Agreement, provided that all notices to
the Company shall be directed to the attention of the Chairman of the Board with
a copy to the Secretary of the Company, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.



     (j)
Withholding Taxes. The Company may withhold from any amounts payable under this
Agreement such U.S. federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.



     (k)
Counterparts. This Agreement may be signed in counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.



     (l)
Integration of Other Plans and Programs. The Executive shall continue to have  such
rights and privileges under the Company’s executive and employee plans  and programs
as the terms and conditions of such plans and programs may provide  taking into account
the commitments of the Company under this Agreement;  provided, however, that any
severance pay shall be determined solely under this  Agreement.







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     (m)
Review Period. The Executive acknowledges that she was given the opportunity to  consider
the terms of this Agreement and to discuss them with legal counsel,  that she has 21 days
to consider this Agreement, and that she has 7 days to  revoke her execution of this
Agreement in writing in accordance with Section  12(i).



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



	 	                                          PITNEY
     BOWES INC.
   
                                          By: _____________________
                                                      Johnna G. Torsone
                                          Senior  Vice President
and Chief Human Resources Officer
                                          World Headquarters
                                          One Elmcroft Road
                                          Stamford, CT
06926-0700








	 	                                          By:
_____________________
                                                      Karen M. Garrison 










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EXHIBIT
A
WAIVER AND RELEASE TO BE SIGNED ON THE EXECUTIVE'S SEPARATION DATE





It is
understood and agreed that as a condition to the Executive becoming entitled to
any payments or benefits under this Agreement and the continuation of employment
during the Transition Period, the Executive agrees, that on behalf of herself,
her heirs and personal representatives, she releases and discharges the Company
from



          (iii)  any
and all charges, claims and causes of action arising, directly or indirectly  out of her
employment or her separation from the Company, whether known or  unknown, including but
not limited to any claims involving tortious course of  conduct, breach of contract,
defamation and public policy, claims for wages and  benefits, monetary and equitable
release, punitive or compensatory damages,  outrage, outrageous conduct, fraud,
promissory estoppel, negligence, intentional  or negligent infliction of mental or
emotional distress, breach of promise, and  breach of the covenant of good faith and fair
dealing; and



          (iv)  any
and all charges, claims and causes or action she may have, whether known or  unknown,
under Title VII of the Civil Rights Act of 1964, as amended; the Age  Discrimination in
Employment Act of 1967, as amended; the National Labor  Relations Act, as amended; the
Civil Rights Act of 1991, as amended; 42 U. S. C.  1981, as amended; the Americans with
Disability Act of 1990; the Family and  Medical Leave Act; the Connecticut Fair
Employment Practices Act, as amended;  the Employee Retirement Income Security Act of
1974, as amended; and various  state and local human rights laws of contract and tort,
otherwise relating to  her employment at the Company.



     (d)
The release and waiver referred to herein shall not apply to the  Executive’s vested
rights under the Company’s benefit plans and  Workers’ Compensation laws, any
rights or claims that may arise after the  date that the Executive signs this Agreement,
and any rights under the  provisions of this Agreement. The release and waiver shall be
effective with  respect to the Company, its subsidiaries, affiliates and divisions and
their  respective successors and assigns (“Affiliates”), the directors,
officers, representatives, shareholders, agents, employees of the Company and  the
affiliates, and their respective heirs and personal representatives. The  Executive
represents and warrants that she has not suffered any on-the-job  personal injury for
which she has not already filed a claim.



     (e)
The Executive acknowledges that she was given the opportunity to consider the  terms of
this Waiver and Release and to discuss them with legal counsel, that  she has had 21 days
to consider this Waiver and Release, and that she has 7 days  to revoke her execution of
this Waiver and Release in writing in accordance with  Section 12(i) of the Agreement.


		
	By:________________________	 	Date:_________________________	 
	             Karen M. Garrison	 






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