Exhibit 10.47
EMPLOYMENT AGREEMENT
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AGREEMENT, made and entered into as of the 10th day of May, 1999 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 0000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (the "Executive");
W I T N E S S E T H:
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WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment;
WHEREAS, the Executive desires to accept 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 that 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;
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(2) Executive breaches his material obligations under the terms of
this Agreement; or
(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 15% 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
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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.
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(J) "Constructive Termination Without Cause" shall mean a termination by
the Executive of his employment hereunder on 30 days' written notice given 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 award opportunity set forth herein;
(II) any material failure to timely grant, or timely honor, any
equity or long-term incentive award under Section 6;
(III) any material breach of any 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
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enjoyed by the Executive at the time of such Change in Control, or the failure
by the Company to maintain a vacation policy with respect to the Executive that
is at least as favorable as the vacation policy (whether formal or informal) in
place with respect to the Executive immediately prior to such Change in Control;
(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, 1999, 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.
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(Q) "Restricted Stock" shall mean the Common Stock referred to in
Section 6(C).
(R) "Special Stock Option" shall mean the stock option referred to in
Section 6(A).
(S) "Term of Employment" shall mean the period specified in Section
2.
(T) "Termination Date" shall mean the date on which the Executive's
employment hereunder terminates in accordance with this Agreement.
(U) "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 Employment.
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The Company hereby employs the Executive under this Agreement, and the
Executive hereby accepts such employment, for the Term of Employment. The Term
of Employment shall commence as of the Effective Date and shall end on the
second anniversary thereof. Notwithstanding the foregoing, the Term of
Employment may be earlier terminated in accordance with the provisions of
Section 8.
3. Positions, Duties and Responsibilities.
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(A) During the Term of Employment, 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 Employment, 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.
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4. Base Salary.
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Commencing as of the Effective Date, the Executive shall be paid an
annualized Base Salary of $400,000, 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 Awards.
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The Executive shall be eligible for an annual incentive bonus award
from the Company in respect of each fiscal year of the Company that ends during
the Term of Employment. He shall be eligible for an annual bonus opportunity of
no less than $300,000, 50% of which shall be based upon the performance of the
Company and 50% of which shall be based on the performance of the Executive (the
criteria for which shall be set forth as agreed upon between the CEO and the
Executive). In addition, in the sole discretion of the CEO, the Executive may
be eligible for an additional annual overachievement bonus opportunity of up to
$150,000. 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. Long-Term Incentive Awards.
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(A) Special Stock Option Award. As of the Effective Date, the Company
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shall grant the Executive a ten-year option to purchase 50,000 shares of Common
Stock. Such option shall become exercisable over a period of five years from the
Effective Date in five equal annual installments commencing on the first
anniversary date of the Effective Date, subject to the terms, conditions and
adjustments set forth in Section 8 below.
(B) Regular Stock Option Award. In addition to the Special Stock
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Option described above, as of the Effective Date, the Company shall grant the
Executive a ten-year option to purchase 75,000 shares of Common Stock. Such
option shall become exercisable over a period of five years from the Effective
Date in five equal annual installments commencing on the first anniversary date
of the Effective Date, subject to the terms, conditions and adjustments set
forth in Section 8 below.
(C) Restricted Stock Award. As of the Effective Date, the Company
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shall grant the Executive 50,000 shares of restricted Common Stock. Such
restricted Common Stock shall vest as follows: (1) 25,000 shares shall over a
period of five years from the Effective Date in three equal annual installments
commencing on the third anniversary date of the Effective Date; (2) 12,500
shares shall vest on the fifth anniversary date of the Effective Date, and (3)
12,500 shares shall vest on the tenth anniversary date of the Effective Date in
each case subject to the terms, conditions and adjustments set forth in Section
8 below.
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7. Other Benefits.
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(A) Other Executive Compensation Plans. During the Term of
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Employment, the Executive shall be entitled to participate in all compensation
plans and programs made generally available to senior executives of the Company,
including, without limitation, the Executive Deferred Compensation Plan.
(B) Employee Benefits. During the Term of Employment, the Executive
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shall participate in all employee benefit plans and programs made available
generally to the Company's senior executives, including, without limitation,
pension, profit-sharing, 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
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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
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per year.
8. Termination of Employment.
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(A) Termination Due to Death. In the event that the Executive's
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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 period of 12 months, all such
options to become fully exercisable as of the date of his death, and the
immediate vesting of all shares of Restricted Stock as of the date of his death;
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(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(I)(I).
(B) Termination Due to Disability. In the event that the Executive's
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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 period of 12 months, all such
options to become fully exercisable as of the Termination Date, and the
immediate vesting of all shares of Restricted Stock of the Company 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
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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;
(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(I)(I).
No termination of the Executive's employment for Disability shall
be effective unless the Company first gives 15 days written notice of such
termination to Executive.
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(C) Termination by the Company for Cause.
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(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 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)(I) or Section 1(E)(III) 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) expiration and forfeiture of any stock options, including
the Special Stock Option, unexercisable on the Termination Date;
(b) 30 days to exercise any stock option exercisable on the
Termination Date; and
(c) the benefits described in Section 8(I)(I).
(D) Termination Without Cause. In the event that the Executive's
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employment hereunder is terminated by the Company without Cause and Sections
8(A), (B) or (F) 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, provided, however, that
if Executive earns any employment income, self-employment income or consulting
income from other sources during such two-year period, Executive shall provide
written notice to the Company setting forth the nature and amount of such
income, which shall be offset against Base Salary payments otherwise due to the
Executive hereunder in excess of $400,000 (so that the Executive will receive no
less than $400,000 pursuant to this Section 8(D)(I), regardless of other
income);
(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) the continued right to exercise the Special Stock Option for a period
of two years from the Termination Date, such Special Stock Option to become
fully exercisable
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as of the Termination Date, and the immediate vesting of all shares of
Restricted Stock as of the Termination Date;
(IV) the continued right to exercise any outstanding stock option, other
than the Special Stock Option, for a period of 3 months from the Termination
Date;
(V) 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
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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;
(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(I)(I).
(E) Constructive Termination Without Cause. In the event that (x) a
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Constructive Termination Without Cause occurs and (y) Section 8(F) 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
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Change in Control. In the event that (x) the Executive's employment hereunder is
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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;
(III) an annual incentive award for a period of 24 months following
the Termination Date, based on 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;
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(IV) the continued right to exercise the Special Stock Option for a
period of two years from the Termination Date, such Special Stock Option to
become fully exercisable as of the Termination Date;
(V) the continued right to exercise any outstanding stock option,
other than the Special Stock Option, for a period of 3 months from the
Termination Date, all such options to become fully exercisable as of the
Termination Date;
(VI) the immediate vesting of all shares of 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 (i) 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 (ii)
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;
(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)
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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(I)(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; 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
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his employment with the Company on his own initiative (other than by death, for
Disability, by a Constructive Termination without Cause or by giving notice in
accordance with Section 2, 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) Termination by the Expiration of the Term of Employment. In the event
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that the Executive's employment hereunder is terminated due to the Company's
failure to renew this Agreement on terms at least as favorable to Executive as
the terms set forth herein, such termination shall be considered a termination
by the Company Without Cause, and the Executive shall be entitled to the
benefits set forth in Section 8(D).
(I) 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;
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(b) any amounts due him under Section 7;
(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, provided that Executive shall
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not 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
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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.
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(A) Indemnification. The Company agrees that (i) if the Executive is
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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 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 to the fullest extent legally permitted or authorized by the
Company's Articles of Incorporation,
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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 Employment and for a period of
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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 Employment and thereafter,
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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
(i) to the Company or to any authorized (or apparently authorized) agent or
representative of the Company, (ii) in connection with performing his duties
under this Agreement, or (iii) 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,
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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,
without the prior consent of the Company the Executive shall not:
(a) 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
(b) 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 instead become a customer of, or vendor to, any Person not affiliated with
the Company.
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(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: (i) 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; (ii)
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, (iii) 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 (iv) 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 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
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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
15
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
attorneys' fees, incurred by the Executive or his beneficiaries in resolving any
such Claim. Pending the resolution of any Claim, the Executive (and his
beneficiaries) shall continue to receive all payments and benefits due under
this Agreement.
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
16
been given to such Person (i) when delivered personally to such Person or (ii),
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 (iii) 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 the Executive or
of the Executive: 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.
(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 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.
17
(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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
The Company
By: ______________________________
Title:
The Executive
_________________________________
Xxxxxxx X. Xxxxxx
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