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Exhibit 10.5
February 2, 1999
X. Xxxx Xxxxxxxxx
Chief Financial Officer
Danka
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Dear Xxxx:
The Board of Directors of Danka Business Systems, PLC
("Company") has approved, effective January 1, 1999, certain changes to your
Employment Agreement dated as of 1 August 1998 ("Employment Agreement") and the
Committee under The Danka 1996 Share Option Plan (including amendments approved
by shareholders on 24 July 1998 and approved by the Board on 25 August 1998)
("Option Plan") has determined to grant you options as described herein. Except
as modified herein, all terms of your Employment Agreement remain in full force
and effect and nothing contained herein shall affect any Change in Control
Agreement provided to you.
1. Salary. Effective January 1, 1999, "$450,000" shall be substituted for
"$360,000" in Section 3.1 of the Employment Agreement in each place it
occurs. Further, "Chief Financial Officer" shall be substituted for
"President - Latin America, Canada and Specialty Markets" in the
Employment Agreement in each place it occurs.
2. Bonus. For performance periods commencing on and after April 1, 1999,
Executive shall have a target bonus of up to 100% of Base Compensation
("Target Bonus") based upon achievement of strategic restructuring
goals as determined by the Board of Directors.
3. Special Cash Bonus. Executive shall be entitled to a special bonus
("Special Bonus") equal to the product of (i) 500,000 and (ii) the
lesser of (a) $2 and (b) the excess of the price of a Danka American
Depository Share (ADS) at the close of trading on NASDAQ immediately
following the expiration of the closed period over $4 5/16 which was
the closing price of a Danka ADS on NASDAQ on January 14, 1999. Such
Special Bonus shall be paid in installments in the same proportions as
the options described in item 5 of this letter are exercised. For
example, if options with respect to 50,000 shares from the options
described in item 5 are exercised, 50,000/500,000 or 10% of the Special
Bonus shall be paid at the time of such option exercise. As another
example, if options with respect to all 500,000 shares described in
item 5 of this letter are exercised at one time, 100% of the Special
Bonus shall be paid at such time of exercise. The Special Bonus shall
accrue no interest.
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4. Severance. The liquidated damages payment under Section 5.3 of the
Employment Agreement shall be paid in one lump sum and shall not be
less than the aggregate of Base Compensation for 12 months and the
Target Bonus.
5. Options. The Committee under the Option Plan has irrevocably determined
to grant to you Options with respect to 500,000 American Depository
Shares ("Option Shares") at the expiration of the closed period. Such
Options shall have a term or Exercise Period of ten years from the date
of grant and shall be fully exercisable on the third anniversary of the
date of grant. Options with respect to one-third of the Option Shares
shall become exercisable on the first anniversary of the date of grant
or at such earlier time that the price of a Danka ADS traded on NASDAQ
is at least $7.50. Options with respect to an additional one-third of
the Option Shares (for a total of two-thirds of the Option Shares)
shall become exercisable on the second anniversary of the date of grant
or at such earlier time after the first anniversary of the date of
grant that the price of a Danka ADS traded on NASDAQ is at least
$12.50. Options with respect to the remaining one third of the Option
Shares (for a total of all Option Shares) shall become exercisable on
the third anniversary of the date of such grant or at such earlier time
after the second anniversary of the date of grant that the price of a
Danka ADS traded on NASDAQ is at least $20.
If you agree to the changes in the Employment Agreement and the
granting of options by the Committee, please execute and return a copy of this
letter.
Sincerely,
Xxxxx X. Xxxxxxx
Chief Executive Officer
Danka Business Systems PLC
Agreed to by:
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X. Xxxx Xxxxxxxxx
