AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, made and entered into as of the 10th day of May, 2001 by and
between IKON Office Solutions, Inc., an Ohio corporation with its principal
office located at 00 Xxxxxx Xxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000
(together with its successors and assigns permitted under this Agreement, the
"Company") and Xxxxxxx X. Xxxxxx, who currently resides at 0 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxx 00000 (the "Executive");
W I T N E S S E T H:
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WHEREAS, the Company desires to continue to employ the Executive and to
enter into an agreement embodying the terms of such continued employment;
WHEREAS, the Executive desires to accept continued employment with the
Company, subject to the terms and provisions of this Employment Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (together, the
"Parties") agree as follows:
1. Definitions.
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(A) "Affiliate" of a Person shall mean a Person who directly or
indirectly controls, is controlled by, or is under common control with, the
Person specified.
(B) "Agreement" shall mean this Employment Agreement, which includes
for all purposes its Exhibits hereto.
(C) "Base Salary" shall mean the salary provided for in Section 4 or
any increased salary granted to the Executive pursuant to Section 4.
(D) "Board" shall mean the Board of Directors of the Company.
(E) "Cause" shall mean:
(1) Executive fails to comply with any material written Company
policy, as the same may from time to time be adopted and/or modified by the
Company, including, but not limited to, the Company's Code of Ethics;
(2) Executive breaches his material obligations under the terms
of this Agreement; or
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(3) the Executive has committed an act of dishonesty, moral
turpitude or theft against the Company or has breached his duties of loyalty to
the Company.
(F) "Change in Control" shall mean the occurrence of any of the
following events:
(I) any "person," as such term is currently used in Section 13(d)
of the Securities Exchange Act of 1934, as amended, becomes a "beneficial
owner," as such term is currently used in Rule 13d-3 promulgated under that act,
of 20% or more of the Voting Stock of the Company;
(II) a majority of the Board consists of individuals other than
Incumbent Directors, which term means the members of the Board on the Effective
Date; provided that any individual becoming a director subsequent to such date
whose election or nomination for election was supported by a majority of the
directors who then comprised the Incumbent Directors shall be considered to be
an Incumbent Director;
(III) the Company adopts any plan of liquidation providing for
the distribution of all or substantially all of its assets;
(IV) 50% or more of the assets of the Company is disposed of
pursuant to a merger, consolidation or other transaction or series of
transactions (unless the shareholders of the Company immediately prior to such
merger, consolidation or other transaction or series of transactions
beneficially own, directly or indirectly, in substantially the same proportion
as they owned the Voting Stock of the Company, more than 50% of the Voting Stock
or other ownership interests of the entity or entities, if any, that succeed to
the business of the Company); or
(V) the Company combines with another company and is the
surviving corporation but, immediately after the combination, the shareholders
of the Company immediately prior to the combination hold 50% or less of the
Voting Stock of the combined company, (there being excluded from the number of
shares held by such shareholders, but not from the Voting Stock of the combined
company, any shares received by Affiliates of such other company in exchange for
stock of such other company).
(G) "Claim" shall mean any claim, demand, request, investigation,
dispute, controversy, threat, discovery request, or request for testimony or
information.
(H) "Committee" shall mean the Human Resources Committee of the Board;
(I) "Common Stock" shall mean common stock of the Company.
(J) "Constructive Termination Without Cause" shall mean a termination
by the Executive of his employment hereunder on 30 days' written notice given
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by him to the Company following the occurrence, without his prior written
consent, of any of the following events, unless the Company shall have fully
cured all grounds for such termination within 15 days after the Executive gives
notice thereof:
(I) any reduction in his then current Base Salary or in his
annual bonus opportunity set forth herein;
(II) any material failure to timely grant, or timely honor, any
equity or long-term incentive award under Sections 1 (Q) through 1 (S);
(III) any material breach of the Company's obligations,
representations or warranties in this Agreement;
(IV) any failure during the term of this Agreement to appoint,
elect or reelect him to any of the positions described in Section 3(A); the
removal of him during the term of this Agreement from any such position; or any
change in the reporting structure so that he reports to someone other than the
Chief Executive Officer of the Company;
(V) any material diminution in his duties or the assignment to
him of duties that materially impair his ability to perform his duties;
(VI) following any Change in Control, any relocation of the
Company's principal office, or of his own office as assigned to him by the
Company, to a location more than 50 miles from Malvern, Pennsylvania;
(VII) following any Change in Control, any failure by the Company
to continue in effect any compensation plan in which the Executive participated
immediately prior to such Change in Control and which is material to the
Executive's total compensation, including but not limited to the Company's stock
option, incentive compensation, deferred compensation, stock purchase, bonus and
other plans or any substitute plans adopted prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or any failure by the
Company to continue the Executive's participation therein (or in such substitute
or alternative plan) on a basis no less favorable to the Executive, both in
terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed immediately prior to
such Change in Control;
(VIII) following any Change in Control, any failure by the
Company to continue to provide the Executive with benefits substantially similar
to those enjoyed by the Executive under any of the Company's pension, life
insurance, medical, health and accident, or disability plans in which the
Executive was participating immediately prior to such Change in Control, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any
perquisite enjoyed by the Executive at the time of such Change in Control, or
the failure by the Company to maintain the vacation allowance provided in
Section 7 with respect to the Executive;
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(IX) following any Change in Control, any failure to elect
Executive as Chief Financial Officer of the Person acquiring the Company with
duties and responsibilities of comparable scope to Executive's duties and
responsibilities immediately prior to such Change in Control; or
(X) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all or
substantially all of the assets of the Company within 15 days after a merger,
consolidation, sale or similar transaction.
(K) "Disability" shall mean Total Disability as defined in the
Company's Long-Term Disability Plan, as amended from time to time.
(L) "Effective Date" shall mean May 10, 2001, or such later date as
the Parties may mutually agree to.
(M) "Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, estate, board, committee,
agency, body, employee benefit plan, or other person or entity.
(N) "Potential Change in Control" shall mean the occurrence of any of
the following events:
(I) the Company enters into an agreement, the consummation of
which will result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, will constitute a
Change in Control; or
(III) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(O) "Proceeding" shall mean any threatened or actual action, suit or
proceeding, whether civil, criminal, administrative, investigative, appellate or
other.
(P) "Pro-Rata" shall mean a fraction, the numerator of which is the
number of days that the Executive was employed in the applicable performance
period (a fiscal year in the case of an annual bonus) and the denominator of
which shall be the number of days in the applicable performance period.
(Q) "Regular Stock Option" shall mean the regular stock option
provided to Executive under the terms of the Employment Agreement dated May 10,
1999 between Executive and the Company, which option is to purchase 75,000
shares of Common Stock and becomes exercisable over a five-year vesting period
in five equal annual installments
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beginning May 10, 2000, subject to the terms, conditions and adjustments set
forth in Section 8 below.
(R) "Special Restricted Stock" shall mean the 50,000 shares of
restricted Common Stock provided to Executive under the terms of the Employment
Agreement dated May 10, 1999 between Executive and the Company, which restricted
stock is to be issued and distributed to Executive as follows: (1) 25,000 shares
which shall vest over a period of five years beginning May 10, 1999 in three
equal annual installments commencing on May 10, 2002, (2) 12,500 shares which
shall vest on May 10, 2004, and (3) 12,500 shares which shall vest on May 10,
2009, subject to the terms, conditions and adjustments set forth in Section 8
below.
(S) "Special Stock Option" shall mean the special stock option
provided to Executive under the terms of the Employment Agreement dated May 10,
1999 between Executive and the Company, which option is to purchase 50,000
shares of Common Stock and becomes exercisable over a five-year vesting period
in five equal annual installments beginning May 10, 2000, subject to the terms,
conditions and adjustments set forth in Section 8 below.
(T) "Term of Agreement" shall mean the period specified in Section 2.
(U) "Termination Date" shall mean the date on which the Executive's
employment with the Company terminates in accordance with this (or any
subsequent) Agreement.
(V) "Voting Stock" shall mean issued and outstanding capital stock or
other securities of any class or classes having general voting power, under
ordinary circumstances in the absence of contingencies, to elect, in the case of
a corporation, the directors of such corporation and, in the case of any other
entity, the corresponding governing Person(s).
2. Term of Agreement.
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The Company hereby agrees to continue to employ the Executive under this
Agreement, and the Executive hereby accepts such continued employment, for the
Term of Agreement. The initial Term of Agreement shall commence as of the
Effective Date and shall end on the second anniversary thereof. Thereafter, the
Term of Agreement shall be automatically extended for additional one-year
periods ("extension periods") unless either party provides notice of non-renewal
at least sixty (60) days prior to the expiration of the Initial Term or
extension period. Termination of Executive's employment as a result of
non-renewal by the Company shall be treated as a termination subject to the
provisions of Section 8(D) (Termination without Cause) of this Agreement. Notice
of non-renewal by Executive shall be treated as a termination subject to the
provisions of Section 8(G) (Voluntary Termination) of this Agreement.
Notwithstanding the foregoing, the Term of Agreement may be terminated at any
time prior to the expiration of the Initial Term and/or any extension period in
accordance with the provisions of Section 8.
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3. Positions, Duties and Responsibilities.
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(A) During the Term of Agreement, the Executive shall serve as Senior
Vice President and Chief Financial Officer of the Company; shall have the
authority, duties and responsibilities customarily exercised by an individual
serving in those positions in a corporation of the size and nature of the
Company; shall perform such duties relating to the management and operations of
the Company, consistent with the foregoing, as may from time to time be assigned
to him by the Chief Executive Officer of the Company (the "CEO"); shall be
assigned no duties or responsibilities that are materially inconsistent with, or
that materially impair his ability to discharge, the foregoing duties and
responsibilities; and shall report solely and directly to the CEO.
(B) During the Term of Agreement, Executive will (1) devote
substantial and full-time attention and energies to the business of the Company,
particularly to its financial function, and diligently perform all duties
incident to his employment; (2) use his best efforts to promote the interests
and goodwill of the Company; and (3) perform such duties commensurate with his
office as Senior Vice President and Chief Financial Officer of the Company as
may be assigned to him by the CEO.
4. Base Salary.
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Commencing as of the Effective Date, the Executive shall be paid an
annualized Base Salary of $420,000, payable in accordance with the regular
payroll practices of the Company. The Base Salary shall be reviewed no less
frequently than annually for increase in the discretion of the CEO and, if
applicable, the Board.
5. Annual Incentive Award Opportunity.
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The Executive shall be eligible for an annual incentive bonus award
opportunity from the Company in respect of each fiscal year of the Company that
ends during the Term of Agreement. He shall be eligible for an annual bonus
opportunity of no less than $315,000, which shall be based upon the performance
of the Company and the Executive. In addition, in the sole discretion of the
CEO, the Executive may be eligible to receive an additional annual
overachievement bonus. To the extent earned, the Executive shall be paid his
annual incentive awards at the same time that other senior-level executives
receive their incentive awards.
6. [intentionally left blank]
7. Other Benefits.
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(A) Other Executive Compensation Plans. During the Term of Agreement,
the Executive shall be entitled to participate in all compensation plans and
programs that are, from time to time, made generally available to senior
executives of the Company, including, without limitation, the Executive Deferred
Compensation Plan.
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(B) Employee Benefits. During the Term of Agreement, the Executive
shall participate in all employee benefit plans and programs made available
generally to the Company's senior executives, including, without limitation,
pension, savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life insurance plans or
programs, accidental death and dismemberment protection, travel accident
insurance, and any other employee welfare or retirement benefit plans or
programs that may be sponsored by the Company from time to time, including any
plans or programs that supplement the above-listed types of plans or programs,
whether funded or unfunded.
(C) Expenses. The Executive is authorized to incur reasonable expenses
in carrying out his duties and responsibilities hereunder and the Company shall
promptly reimburse him for all such expenses, subject to documentation in
accordance with reasonable policies of the Company.
(D) Vacation. Executive shall be entitled to four weeks paid vacation
per year.
8. Termination of Employment.
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(A) Termination Due to Death. In the event that the Executive's
employment hereunder is terminated due to his death, his estate or his
beneficiaries (as the case may be) shall be entitled to:
(I) Base Salary through the end of the month in which his death
occurs;
(II) a Pro-Rata annual incentive award for the fiscal year in
which his death occurs, based on the Executive's annual bonus opportunity for
the year of death (excluding any overachievement bonus opportunity), payable in
a lump sum promptly following his death, regardless of the Executive's and
Company's performance during such fiscal year;
(III) the continued right to exercise each outstanding stock
option, including the Special Stock Option, for a minimum period of 12 months
(provided, however, that no options can be exercised beyond their expiration
date), all such options to become fully vested and exercisable as of the date of
his death, and the immediate vesting of all shares of restricted stock,
including the Special Restricted Stock, as of the date of his death;
(IV) immediate vesting in the Company's Retirement Savings Plan
(or any successor 401(k) plan), pension plan, supplemental retirement plan and
deferred compensation plans; and
(V) the benefits described in Section 8(H)(I).
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(B) Termination Due to Disability. In the event that the Executive's
employment hereunder is terminated due to Disability, he shall be entitled to
the following:
(I) periodic disability payments in accordance with the Company's
Long-Term Disability Plan;
(II) Base Salary through the end of the month in which the
Termination Date occurs;
(III) a Pro-Rata annual incentive award for the fiscal year in
which his Termination Date occurs, based on the Executive's annual bonus
opportunity for such fiscal year (excluding any overachievement bonus
opportunity), payable in a lump sum promptly following the Termination Date,
regardless of the Executive's and Company's performance during such fiscal year;
(IV) the continued right to exercise each outstanding stock
option, including the Special Stock Option, for a minimum period of 12 months
(provided, however, that no options can be exercised beyond their expiration
date), all such options to become fully vested and exercisable as of the
Termination Date, and the immediate vesting of all shares of restricted stock,
including the Special Restricted Stock, as of the Termination Date; and
(V) continued participation, for a period of two years from the
Termination Date, in all medical, dental, vision, hospitalization, disability
and life insurance coverages and in all other employee welfare benefit plans,
programs and arrangements in which he was participating on the date on which his
employment terminates, on terms and conditions that are no less favorable to him
than those that applied on such date, and with COBRA benefits commencing
thereafter; provided that the Company's obligation under this Section 8(B)(V)
shall be reduced to the extent that equivalent coverages and benefits
(determined on a coverage-by-coverage and benefit-by-benefit basis) are provided
under the plans, programs or arrangements of a subsequent employer; and
(VI) immediate vesting in the Company's Retirement Savings Plan
(or any successor 401(k) plan), pension plan, supplemental retirement plan and
deferred compensation plans; and
(VII) the benefits described in Section 8(H)(I).
No termination of the Executive's employment for Disability shall
be effective until the Company first gives 15 days written notice of such
termination to Executive.
(C) Termination by the Company for Cause.
------------------------------------
(I) No termination of the Executive's employment hereunder by the
Company for Cause shall be effective unless the provisions of this Section
8(C)(I) shall
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have been complied with. The Executive shall be given written notice by the CEO
of the intention to terminate him for Cause, such notice to state in detail the
particular circumstances that constitute the grounds on which the proposed
termination for Cause is based. Except in the case of a termination for Cause
pursuant to Section 1(E)(1) or Section 1(E)(3) which will be effective, in the
sole discretion of the CEO, on the date set forth in the notice, the Executive
shall have 15 days after receiving such notice in which to cure such grounds, to
the extent such cure is possible. If he fails to cure such grounds, his
employment hereunder shall thereupon be terminated for Cause.
(II) In the event that the Executive's employment hereunder is
terminated by the Company for Cause in accordance with Section 8(C)(I), he shall
be entitled to:
(A) 30 days to exercise any stock option which is vested and
exercisable on the Termination Date (provided, however, that no options shall be
exercisable after their expiration date). All stock options, including the
Special Stock Option, which are not vested and exercisable as of the Termination
Date will be forfeited, and all restricted stock, including the Special
Restricted Stock, which has not vested and been distributed as of the
Termination Date will be forfeited; and
(B) the benefits described in Section 8(H)(I).
(D) Termination Without Cause. In the event that the Executive's
employment hereunder is terminated by the Company without Cause and Sections
8(A) (death), (B) (disability) and (F) (change in control) do not apply, then
the Executive shall be entitled to:
(I) Base Salary for a two-year period ending on the second
anniversary of the Termination Date, payable as provided in Section 4;
(II) a Pro-Rata annual incentive award for the fiscal year in
which the Termination Date occurs, based on the Executive's annual bonus
opportunity for such fiscal year (excluding any overachievement bonus
opportunity), payable in a lump sum promptly following the Termination Date,
regardless of the Executive's and Company's performance during such fiscal year;
(III) an amount equal to twice the Executive's annual bonus
opportunity for the year of termination (excluding any overachievement bonus
opportunity), payable in equal installments over the two-year period ending on
the second anniversary of the Termination Date;
(IV) the continued right to exercise the Special Stock Option for
a period of two years from the Termination Date (provided, however, that no
options can be exercised after their expiration date), such Special Stock Option
to become fully vested and exercisable as of the Termination Date, and the
immediate vesting of all shares of Special Restricted Stock as of the
Termination Date;
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(V) the continued right to exercise any vested and exercisable
stock option, other than the Special Stock Option, for a minimum period of 12
months from the Termination Date (provided, however, that no options can be
exercised after their expiration date). During the 12-month period following the
Termination Date, all unvested stock options (other than the Special Stock
Option) will continue to vest as if the Executive were still employed with the
Company. All stock options, other than the Special Stock Option, which are not
vested or exercised as of 12 months following the Termination Date will be
forfeited. In addition, all restricted stock, other than the Special Restricted
Stock, which has not been distributed as of the Termination Date will be
forfeited;
(VI) continued participation, through the second anniversary of
the Termination Date, in all medical, dental, vision, hospitalization,
disability and life insurance coverages and in all other employee welfare
benefit plans, programs and arrangements in which he or his family members were
participating on such date, on terms and conditions that are no less favorable
to him than those that applied on such date and with COBRA benefits commencing
thereafter; provided that the Company's obligation under this Section 8(D)(V)
shall be reduced to the extent that equivalent coverages and benefits
(determined on a coverage-by-coverage and benefit-by-benefit basis) are provided
under the plans, programs or arrangements of a subsequent employer;
(VII) immediate vesting in the Company's Retirement Savings Plan
(or any successor 401(k) plan), pension plan, supplemental retirement plan, and
deferred compensation plans; and
(VIII) the benefits described in Section 8(H)(I).
(E) Constructive Termination Without Cause. In the event that: (x) a
Constructive Termination Without Cause occurs and (y) Section 8(F) (change in
control) does not apply, then the Executive shall have the same entitlements as
provided under Section 8(D) for a termination by the Company without Cause.
(F) Termination Without Cause Following a Change in Control or
Potential Change in Control. In the event that: (x) the Executive's employment
hereunder is terminated (A) through a Constructive Termination without Cause or
(B) by the Company without Cause and (y) the termination of employment occurs
within two years following a Change in Control then the Executive shall be
entitled to:
(I) Base Salary through the second anniversary of the Termination
Date, payable as provided in Section 4;
(II) a Pro-Rata annual incentive award for the fiscal year in
which his employment terminates based on the Executive's annual bonus
opportunity for the year of termination (excluding any overachievement bonus
opportunity), payable in a lump sum promptly following the Termination Date,
regardless of the Executive's and Company's performance during such fiscal year;
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(III) an amount equal to twice the Executive's annual bonus
opportunity for the year of termination (excluding any overachievement bonus
opportunity) payable in equal installments over the 24-month period for which
Base Salary is continued;
(IV) the continued right to exercise the Special Stock Option for
a period of two years from the Termination Date (provided, however, that no
options may be exercised after their expiration date), such Special Stock Option
to become fully vested and exercisable as of the Termination Date;
(V) the continued right to exercise any outstanding stock option,
other than the Special Stock Option, for a minimum period of 3 months from the
Termination Date (provided, however, that no options may be exercised after
their expiration date), all such options to become fully vested and exercisable
as of the Termination Date;
(VI) the immediate vesting of all shares of restricted stock,
including the Special Restricted Stock, as of the Termination Date;
(VII) an amount equal to the Company's contributions to which the
Executive would have been entitled under the Company's Retirement Savings Plan
(or any successor thereto) if the Executive had continued working for the
Company and the Retirement Savings Plan continued in force during the Separation
Period at the highest annual rate of Base Salary achieved during the Executive's
period of actual employment with the Company, and making the maximum amount of
employee contributions, if any, as are required under such plan;
(VIII) an amount equal to the excess of (A) the present value of
the benefits to which the Executive would be entitled under the Company's
pension plan and Company's supplemental retirement plan (and any successor
thereto) if the Executive had continued working for the Company for a period of
24 months following the Termination Date at the highest annual rate of Base
Salary achieved during the Executive's period of actual employment with the
Company, and the pension plan continued in force during the Separation Period,
over (B) the present value of the benefits to which the Executive is actually
entitled under the Company's pension plan and supplemental retirement plan, each
computed as of the date of the Executive's Date of Termination, with present
values to be determined using the discount rate used by the Pension Benefits
Guaranty Corporation to calculate the benefit liabilities under the pension plan
in the event of a plan termination on the Date of Termination, compounded
monthly, the mortality tables prescribed in the Company's Pension Plan for
determining actuarial equivalence, and the reduction factor (if any) for the
early commencement of pension payments based on the Executive's age on the last
day of the 24th month following the Termination Date;
(IX) immediate vesting in the Company's Retirement Savings Plan
(or any successor 401(k) plan), pension plan, supplemental retirement plan and
deferred compensation plans;
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(X) continued participation, through the second anniversary of
the Termination Date, in all medical, dental, vision, hospitalization,
disability and life insurance coverages and in all other employee welfare
benefit plans, programs and arrangements in which he or his family members were
participating on such date, on terms and conditions that are no less favorable
to him than those that applied on such date and with COBRA benefits commencing
thereafter, provided that the Company's obligation under this Section 8(F)(X)
shall be reduced to the extent that equivalent coverages and benefits
(determined on a coverage-by-coverage and benefit-by-benefit basis) are provided
under the plans, programs or arrangements of a subsequent employer; and
(XI) the benefits described in Section 8(H)(I).
For purposes of this Section 8(F), if preceded by a
Potential Change in Control, any of the following events (if such event occurs
within two years following such Potential Change in Control) shall be deemed to
be a Termination of Executive's Employment without Cause following a Change in
Control: 1) the Executive's employment is terminated without Cause and such
termination is at the request or direction of or pursuant to negotiations with a
Person who has entered into an agreement with the Company the consummation of
which will constitute a Change in Control; 2) the Executive's employment is
terminated through a Constructive Termination Without Cause and the
circumstances or events which constitute the basis for Executive's claim of
Constructive Termination occur at the request or direction of, or pursuant to
negotiations with, such Person, or 3) the Executive's employment is terminated
without Cause and such termination is otherwise in connection with or in
anticipation of a Change in Control which actually occurs.
The Company agrees that the Executive is not required to seek other
employment or to attempt in any way to reduce amounts payable to Executive under
this Section 8(F), and the amounts payable to pursuant to this Section 8(F)
shall not be reduced by any amounts earned by or payable to Executive, except as
provided in Section 8(F)(X).
(G) Voluntary Termination. In the event that the Executive terminates
his employment with the Company on his own initiative, other than by death, for
Disability, or by a Constructive Termination without Cause, then he shall have
the same entitlements as provided in Section 8(C)(II) in the case of a
termination by the Company for Cause. A voluntary termination under this Section
8(G) shall be effective upon written notice to the Company and shall not be
deemed a breach of this Agreement.
(H) Miscellaneous.
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(I) On any termination of the Executive's employment hereunder,
he shall be entitled to:
(A) Base Salary through the Termination Date;
(B) any amounts due him under Section 7;
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(C) a lump-sum payment in respect of accrued but unused
vacation days at his Base Salary rate in effect as of the Termination Date;
(D) payment, promptly when due, of all amounts owed to him
in connection with the termination; and
(E) other benefits, if any, in accordance with applicable
plans, programs and arrangements of the Company. This provision will permit the
Executive to elect to take advantage of any provisions of, or changes to, the
IKON benefit plans which are applicable to IKON employees generally (including,
without limitation, provisions relating to the vesting/exercisability of stock
options in the event of retirement or disability), provided that Executive opts
to have such general provisions applied on his/her behalf instead of those set
forth in this Agreement. In no event, however, will this provision entitle
Executive to duplicative or double benefits, nor shall he/she be eligible to
receive payments under any severance program of the Company applicable to
employees generally.
(II) Any amounts due under this Section 8 are considered to be
reasonable by the Company and are not in the nature of a penalty.
9. Golden Parachute Tax. In the event that any payment or benefit made or
provided to or for the benefit of the Executive in connection with this
Agreement, the Executive's employment with the Company, or the termination
thereof (a "Payment") is determined to be subject to any excise tax ("Excise
Tax") imposed by Section 4999 of the Code (or any successor to such Section),
the Company shall pay to the Executive, prior to the time any Excise Tax is
payable with respect to such Payment (through withholding or otherwise), an
additional amount which, after the imposition of all income, employment, excise
and other taxes, penalties and interest thereon, is equal to the sum of (i) the
Excise Tax on such Payment plus (ii) any penalty and interest assessments
associated with such Excise Tax. The determination of whether any Payment is
subject to an Excise Tax and, if so, the amount to be paid by the Company to the
Executive and the time of payment shall be made by an independent auditor (the
"Auditor") selected jointly by the Parties and paid by the Company. Unless the
Executive agrees otherwise in writing, the Auditor shall be a nationally
recognized United States public accounting firm that has not, during the two
years preceding the date of its selection, acted in any way on behalf of the
Company or any of its Affiliates. If the Parties cannot agree on the firm to
serve as the Auditor, then the Parties shall each select one accounting firm and
those two firms shall jointly select the accounting firm to serve as the
Auditor.
10. Indemnification; D&O Insurance.
------------------------------
(A) Indemnification. The Company agrees that: (i) if the Executive is
made a party, or is threatened to be made a party, to any Proceeding by reason
of the fact that he is or was a director, officer, employee, agent, manager,
consultant or representative of the Company or is or was serving at the request
of the Company or any of its Affiliates as a director, officer, member,
employee, agent, manager, consultant or representative of another
13
Person or (ii) if any Claim is made, or threatened to be made, that arises out
of or relates to this Agreement or the Executive's service hereunder or in any
of the foregoing capacities, then the Executive shall promptly be indemnified
and held harmless by the Company for any Claims brought by a third party against
the Executive to the fullest extent legally permitted or authorized by the
Company's Articles of Incorporation, Code of Regulations or Board resolutions or
by the laws of the State of Ohio, against any and all costs, expenses,
liabilities and losses (including, without limitation, attorney's fees,
judgments, interest, expenses of investigation, penalties, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) incurred or
suffered by the Executive in connection therewith, and such indemnification
shall continue as to the Executive even if he has ceased to be a director,
member, employee, agent, manager, consultant or representative of the Company or
other Person and shall inure to the benefit of the Executive's heirs, executors
and administrators. The Company shall advance to the Executive all costs and
expenses incurred by him in connection with any such Proceeding or Claim within
20 days after receiving written notice requesting such an advance. Such notice
shall include, to the extent required by applicable law, an undertaking by the
Executive to repay the amount advanced if he is ultimately determined not to be
entitled to indemnification against such costs and expenses.
(B) D&O Insurance. During the Term of Agreement and for a period of
six years thereafter, the Company shall keep in place a directors' and officers'
liability insurance policy (or policies) providing comprehensive coverage to the
Executive to the extent that the Company provides such coverage for any other
senior executive or director.
11. Covenants.
---------
(A) Confidentiality. During the Term of Agreement and thereafter, the
Executive shall not, without the prior written consent of the Company, divulge,
disclose or make accessible to any Person any confidential non-public document,
record or information concerning the business or affairs of the Company that he
has acquired in the course of his employment hereunder, except (x) to the
Company or to any authorized (or apparently authorized) agent or representative
of the Company, (y) to authorized third parties in connection with performing
his duties under this Agreement, or (z) when required to do so by law or by a
court, governmental agency, legislative body, or other Person with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information; provided that these restrictions shall not apply to any document,
record or other information that: (i) has previously been disclosed to the
public, or is in the public domain, other than as a result of the Executive's
breach of this Section 11(A), or (ii) is known or generally available within any
trade or industry of the Company.
(B) Non-Solicitation. During the 12-month period that commences on the
Termination Date and ends on the second anniversary of the Termination Date, the
Executive shall not without the prior consent of the Company:
(I) solicit, on his own behalf or on behalf of any other Person,
any individual known by the Executive to be an employee of the Company to
instead become an employee of any Person not affiliated with the Company; or
14
(II) solicit, on his own behalf or on behalf of any other Person,
any Person known by the Executive to be customer of, or vendor to, the Company
to cease to be a customer or vendor of the Company and/or to become a customer
of, or vendor to, any Person not affiliated with the Company.
(C) Non-Competition. During the 24-month period that commences on the
Termination Date and ends on the second anniversary of the Termination Date, the
Executive shall not, without the prior consent of the Company, directly or
indirectly own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be employed by or otherwise connected in
any substantial manner with any business which directly or indirectly competes
to a material extent with any line of business of the Company or its
subsidiaries which was operated by the Company or its subsidiaries at the
Termination Date; provided that nothing in this paragraph shall prohibit the
Executive from acquiring up to 5% of any class of outstanding equity securities
of any corporation whose equity securities are regularly traded on a national
securities exchange or in the "over-the-counter market".
The foregoing noncompetition restriction of this Section 11(C) shall
not apply following a Change of Control Event if (v) the Executive's employment
has been terminated by the Company without Cause within two years following such
Change in Control Event, (w) the Executive terminates his employment as the
result of a Constructive Termination within two years following such Change in
Control Event or (x) the Company elects, within two years following such Change
in Control Event, not to extend the term of employment.
The foregoing noncompetition restriction of this Section 11(C) shall
not apply following a Potential Change in Control if: 1) the Executive's
employment is terminated without Cause within two years following such Potential
Change in Control, and such termination is at the request or direction of or
pursuant to negotiations with a Person who has entered into an agreement with
the Company the consummation of which will constitute a Change in Control; 2)
the Executive's employment is terminated through a Constructive Discharge
without Cause within two years following such Potential Change in Control, and
the circumstances or events which constitute the basis for Executive's claim of
Constructive Discharge occur at the request or direction of, or pursuant to
negotiations with, such Person, 3) the Company elects, within two years
following such Potential Change in Control, not to extend the term of
employment, and such election was at the request or direction of or pursuant to
negotiations with such Person; or 4) the Executive's employment is terminated
without Cause within two years following such Potential Change in Control and
such termination is otherwise in connection with or in anticipation of a Change
in Control which actually occurs.
12. Assignability; Binding Nature.
-----------------------------
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the
15
Company except that such rights or obligations may be assigned or transferred
pursuant to a merger or consolidation in which the Company is not the continuing
entity, or a sale or liquidation of all or substantially all of the assets of
the Company; provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law. In the event of any
sale of assets or liquidation as described in the preceding sentence, the
Company shall use its best efforts to cause such assignee or transferee to
expressly assume the liabilities, obligations and duties of the Company
hereunder. No rights or obligations of the Executive under this Agreement may be
assigned or transferred by the Executive other than his rights to compensation
and benefits, which may be transferred only by will or operation of law, except
as provided in Section 16(E).
13. Representations.
---------------
(A) The Company's Representations. The Company represents and warrants
that: (i) it is fully authorized by action of its Board (and of any other Person
or body whose action is required) to enter into this Agreement and to perform
its obligations under it; (ii) the execution, delivery and performance of this
Agreement by the Company does not violate any applicable law, regulation, order,
judgment or decree or any agreement, plan or corporate governance document of
the Company; and (iii) upon the execution and delivery of this Agreement by the
Parties, this Agreement shall be the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except to
the extent enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally.
(B) The Executive's Representations. The Executive represents and
warrants that, to the best of his knowledge and belief, (i) delivery and
performance of this Agreement by him does not violate any applicable law,
regulation, order, judgment or decree or any agreement to which the Executive is
a party or by which he is bound, and (ii) upon the execution and delivery of
this Agreement by the Parties, this Agreement shall be the valid and binding
obligation of the Executive, enforceable against him in accordance with its
terms, except to the extent enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
14. Resolution of Disputes.
----------------------
Any Claim arising out of or relating to this Agreement or the
Executive's employment with the Company or the termination thereof shall be
resolved by binding confidential arbitration, to be held in Philadelphia,
Pennsylvania, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
Company shall promptly pay all costs and expenses, including without limitation
reasonable attorneys' fees, incurred by the Executive or his beneficiaries in
resolving any successful Claim. Pending the resolution of any Claim (and
provided that Executive is not in breach of his post-termination obligations
under this Agreement), the Executive (and his
16
beneficiaries) shall be advanced any payments which are allegedly due under the
Agreement (with the timing of such payments to be made in accordance with terms
of this Agreement). Any amounts advanced under this Section 14 will be subject
to offset by the Company from any award obtained by the Executive (and/or
reimbursement by the Executive to the Company in the event that his award (if
any) is less than the amount advanced).
15. Notices.
-------
Any notice, consent, demand, request, or other communication given to
a Person in connection with this Agreement shall be in writing and shall be
deemed to have been given to such Person (a) when delivered personally to such
Person or (b), provided that a written acknowledgment of receipt is obtained,
two days after being sent by prepaid certified or registered mail, or by a
nationally recognized overnight courier, to the address specified below for such
Person (or to such other address as such Person shall have specified by ten days
advance notice given in accordance with this Section 15), or (c) in the case of
the Company only, on the first business day after it is sent by facsimile to the
facsimile number set forth for the Company (or to such other facsimile number as
the Company shall have specified by ten days advance notice given in accordance
with this Section 15), with a confirmatory copy sent by certified or registered
mail or by overnight courier to the Company in accordance with this Section 15.
If to the Company: IKON Office Solutions, Inc.
00 Xxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attn: Chief Executive Officer
Facsimile #: 000-000-0000
If to the Executive: Xxxxxxx X. Xxxxxx, at the last address
known to the Company
(with a copy to the Executive at the
Company's address)
If to a beneficiary The address most recently specified by
of the Executive: the Executive or beneficiary through
notice given in accordance with this
Section 15.
16. Miscellaneous.
-------------
(A) Entire Agreement. This Agreement contains the entire understanding
and agreement between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Parties with respect thereto.
Executive specifically agrees that he is not entitled to any relief under
Section 8(H) of his prior Employment Agreement, dated May 10, 1999.
(B) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in
17
part, the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law so
as to achieve the purposes of this Agreement.
(C) Amendment or Waiver. No provision in this Agreement may be amended
unless such amendment is set forth in a writing signed by the Parties. No waiver
by either Party of any breach of any condition or provision contained in this
Agreement shall be deemed a waiver of any similar or dissimilar condition or
provision at the same or any prior or subsequent time. To be effective, any
waiver must be set forth in a writing signed by the waiving Party.
(D) Headings. The headings of the Sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
(E) Beneficiaries/References. The Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit hereunder following the
Executive's death by giving the Company written notice thereof. In the event of
the Executive's death or a judicial determination of his incompetence,
references in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.
(F) Survivorship. Except as otherwise set forth in this Agreement, the
respective rights and obligations of the Parties hereunder shall survive any
termination of the Executive's employment.
(G) Governing Law/Jurisdiction. This Agreement shall be governed,
construed, performed and enforced in accordance with the laws of the State of
Pennsylvania, without reference to principles of conflict of laws.
(H) Counterparts. This Agreement may be executed in two or more
counterparts.
(I) Employee Benefit Plans. In the event that the terms of any of the
Company's employee benefit plans provide for the vesting or distribution of
benefits on a date earlier than the date set forth in this Agreement, such
earlier date shall prevail.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
The Company
By:
-----------------------------
Xxxxx X. Xxxxxx
Chairman & CEO
The Executive
---------------------------------
Xxxxxxx X. Xxxxxx
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