Exhibit 10.33
3/3/99
EMPLOYMENT AGREEMENT
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AGREEMENT, made and entered into as of the 1st day of October, 1998 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 Xxxxx X. Xxxxxx, who resides at 000 Xxxxxxxx Xxxx, Xx. Xxxxxx,
Xxxxxxxxxxxx 00000 (the "Executive");
WITNESSETH:
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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 premises 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 three Exhibits.
(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:
(i) the Executive is convicted of a felony involving moral
turpitude; or
(ii) the Executive engages in conduct that constitutes willful
gross neglect or willful gross misconduct in carrying out his duties under this
Agreement, resulting, in either
case, in material economic harm to the Company, unless the Executive believed in
good faith that such conduct was in, or not opposed to, the best interests of
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.
(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
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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
target or maximum annual bonus opportunity as a percentage of Base Salary;
(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 to appoint, elect or reelect him to any of the
positions described in Section 3(a); the removal of him from any such position;
or any change in the reporting structure so that he reports to someone other
than the Board;
(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 or Potential 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 or Potential 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
or Potential 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 or
Potential Change in Control;
(viii) following any Change in Control or Potential 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 or Potential Change in Control, the taking of any action
by the Company which would directly or indirectly materially reduce any of such
benefits
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or deprive the Executive of any perquisite enjoyed by the Executive at the time
of such Change in Control or Potential 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 or
Potential Change in Control; or
(ix) 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 the Executive's inability, due to
physical or mental incapacity, to substantially perform his duties and
responsibilities under this Agreement for a period of 180 consecutive days as
determined by an approved medical doctor, selected by the Parties. If the
Parties cannot agree on a medical doctor, each Party shall select a medical
doctor and the two doctors shall select a third who shall be the approved
medical doctor for this purpose.
(l) "Effective Date" shall mean October 1, 1998.
(m) "Long-Term Incentive Plan" shall mean any of the long-term
incentive plans referred to in Section 6(b).
(n) "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.
(o) "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.
(p) "Proceeding" shall mean any threatened or actual action, suit or
proceeding, whether civil, criminal, administrative, investigative, appellate or
other.
(q) "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
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the case of an annual bonus and a performance cycle in the case of an award
under the Long-Term Incentive Plan) and the denominator of which shall be the
number of days in the applicable performance period.
(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 September
30, 2001; provided, however, that the Term of Employment shall thereafter be
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automatically extended for two additional one-year periods ("extension periods")
unless either Party shall give the other written notice at least six months
prior to the commencement of the pertinent extension period, that such Party is
electing not to so extend the Term of Employment. 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 the
President and Chief Executive Officer of the Company and as a member of the
Board; 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 Board; 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 Board.
(b) Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from (i) serving, with prior notice to the Board, on the
boards of directors of a
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reasonable number of other corporations or the boards of a reasonable number of
trade associations and/or charitable organizations, (ii) engaging in charitable
activities and community affairs, and (iii) managing his personal investments
and affairs; provided that such activities do not materially interfere with the
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performance of the Executive's duties and responsibilities hereunder.
4. Base Salary.
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Commencing as of the Effective Date, the Executive shall be paid an
annualized Base Salary of $750,000, 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 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. His annual target award opportunity shall be no less
than 75% of his annualized Base Salary in effect on the start of the fiscal year
and his maximum annual award opportunity shall be no less than 150% of his
annualized Base Salary in effect on the start of the fiscal year. 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 500,000 shares of Common
Stock. Such option shall become exercisable to purchase: (i) 250,000 shares of
Common Stock at a price of $7.50 per share beginning as of the third anniversary
of the Effective Date; (ii) 150,000 shares of Common Stock at a price of $15.00
per share beginning as of the fourth anniversary of the Effective Date; and
(iii) 100,000 shares of Common Stock at a price of $22.00 per share beginning as
of the fifth anniversary of the Effective Date, subject in each case to the
terms, conditions and adjustments set forth in Exhibit A attached hereto and in
Section 8 below.
(b) Long-Term Incentive Plans.
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(i) The Executive shall be entitled to participate in the
Company's Long-Term Incentive Compensation Plan (applying to the performance
period October 1, 1998 through September 30, 2001), with a cash participation
award equal to 135% of his annualized Base Salary and a corresponding ten-year
option grant to purchase 135,000 shares of Common Stock at an exercise price of
$7.50 per share.
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(ii) Beginning on each anniversary of the Effective Date that
occurs during the Term of Employment, the Executive shall be entitled to
participate in a Long-Term Incentive Plan that provides a cash award opportunity
ranging, in the Committee's discretion, from 90% to 180% of his annualized Base
Salary and that includes a corresponding stock option grant.
(iii) The Executive shall be paid any amount due under the cash
award portion of any Long-Term Incentive Plan no later than the earlier of (A)
the date that payouts are made under such Plan to other senior executives of the
Company and (B) 90 days after the end of the performance period that is covered
by such Plan.
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 Benefit. 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 or to its employees, 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. The
Executive shall be entitled to post-retirement welfare benefits on the same
basis as other similarly situated senior executives of the Company, provided
that for this purpose the Executive's period of employment shall, in accordance
with the last sentence of this Section 7(b), be deemed to be the period
necessary to obtain the maximum level of such benefits.
(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. The
Company shall promptly reimburse the Executive for all expenses (including,
without limitation, attorneys' fees and other charges of counsel) incurred by
him in connection with the negotiation and documentation of these employment
arrangements, up to a maximum of $75,000. The Executive shall be entitled to
reimbursement of expenses, and other benefits, in connection with his relocation
from the United Kingdom to the United States to the maximum extent consistent
with the Company's relocation programs and policies.
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(d) Perquisites. During the Term of Employment, the Executive shall
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participate in all perquisites available to senior executives of the Company at
levels, and on terms and conditions, that are commensurate with his positions
and responsibilities at the Company, and shall receive such additional fringe
benefits and perquisites as the Company may, in its discretion, from time-to-
time provide, including without limitation:
(i) one country club (initiation and dues);
(ii) a leased automobile for the Executive's use (including,
without limitation, all costs of insurance, maintenance, repairs, oil and gas);
(iii) a complete annual executive physical examination;
(iv) appropriate home office equipment, including without
limitation a personal computer, fax machine, lap-top computer and similar
equipment;
(v) a cellular telephone and related service;
(vi) tax preparation and financial counseling services, up to
$5,000 per calendar year; and
(vii) five 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
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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 target bonus for the year of death, payable
in a lump sum promptly following his death;
(iii) the continued right to exercise each outstanding stock
option for a period of 12 months, all such options to become fully exercisable
as of the date of his death;
(iv) the continued right to exercise the Special Stock Option
for the lesser of (A) 5 years and (B) the remainder of its stated term;
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(v) Pro-Rata Long-Term Incentive Plan payouts, payable in a
lump sum, if earned, promptly following the end of the performance periods; and
(vi) 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) to receive, through age 65 and no less frequently than
monthly, periodic disability payments at a rate equal to 60% of the Base Salary
in effect as of the Termination Date, less the amount of any periodic disability
benefits provided to him by the Company (other than benefits attributable to his
own contributions) under any disability insurance plan or program of the Company
in effect during such period;
(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 employment terminates, based on the target bonus for the year of
termination, payable in a lump sum promptly following the Termination Date;
(iv) the continued right to exercise each outstanding stock
option for a period of 12 months, all such options to become fully exercisable
as of the Termination Date;
(v) the continued right to exercise the Special Stock Option
for the lesser of (A) 5 years and (B) the remainder of its stated term;
(vi) Pro-Rata Long-Term Incentive Plan payouts, payable in a
lump sum, if earned, promptly following the end of the performance periods;
(vii) continued participation, through age 65, 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
(viii) the benefits described in Section 8(i)(i).
No termination of the Executive's employment for Disability shall
be effective unless the Party terminating his employment first gives 15 days
written notice of such termination to the other Party.
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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 Board 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. 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, the Executive shall
then be entitled to a hearing before the Board. Such hearing shall be held
within 20 days of his receiving such notice, provided that he requests such
hearing within 15 days of receiving such notice. If, within five days following
such hearing, the Board gives written notice to the Executive confirming that,
in the judgment of at least two thirds of the members of the Board, Cause for
terminating his employment on the basis set forth in the original notice exists,
his employment hereunder shall thereupon be terminated for Cause, subject to de
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novo review, at the Executive's election, through arbitration in accordance with
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Section 14.
(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
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 Section 8(f)
does not apply, then the Executive shall be entitled to:
(i) Base Salary through the later of (A) September 30, 2001 and
(B) 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 target bonus for the year of
termination, payable in a lump sum promptly following the Termination Date;
(iii) an annual incentive award for a period of 24 months
following the Termination Date, based on the target bonus for the year of
termination, payable on a Pro-Rata
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basis in equal installments over the 24-month period for which Base Salary is
continued, plus a Pro-Rata payment for a partial year, if termination is prior
to September 30, 1999.
(iv) the continued right to exercise the Special Stock Option, for
the lesser of (A) 5 years and (B) the remainder of its term, such 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, all such options
to become fully exercisable as of the Termination Date;
(vi) full payout, at maximum levels, under each ongoing Long-Term
Incentive Plan in which the Executive is participating as of the Termination
Date, with the payouts due in a lump sum promptly following the Termination
Date;
(vii) continued participation, through the later of (A) September 30,
2001 and (B) 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
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under this Section 8(d)(vii) 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
(viii) 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
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Potential Change in Control. In the event that (x) the Executive's employment
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hereunder is terminated (A) through a Constructive Termination Without Cause or
(B) by the Company without Cause and (y) the termination of employment occurs in
connection with, or within two years following, a Change in Control or Potential
Change in Control, then the Executive shall be entitled to:
(i) Base Salary through the third anniversary of the Termination
Date, payable as provided in Section 4;
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(ii) a Pro-Rata annual incentive award for the fiscal year in which
his employment terminates based on the greater of (A) the Executive's actual
bonus for the year preceding termination and (B) the maximum bonus for the year
of termination, payable in a lump sum promptly following the Termination Date;
(iii) an annual incentive award for a period of 36 months following
the Termination Date, based on the greater of (A) his maximum incentive bonus
for the year of termination and (B) his actual bonus for the year preceding
termination, payable in equal installments over the 36-month period for which
Base Salary is continued.
(iv) the continued right to exercise any stock option, for the
lesser of (A) 24 months and (B) the remainder of its term, such option to become
fully exercisable as of the Termination Date;
(v) full payout, at maximum levels, under each ongoing Long-Term
Incentive Plan in which the Executive is participating as of the Termination
Date, with the payouts due in a lump sum promptly following the Termination
Date;
(vi) 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 plans;
(vii) 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 36 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 36th month following the Termination Date;
(viii) continued participation, through the third anniversary of the
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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)(vi) 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
(ix) the benefits described in Section 8(i)(i).
(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 Retirement. In the event that the Executive's
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employment hereunder is terminated (x) by the Executive or the Company through
notice in accordance with Section 2 or (y) by expiration of the second extension
period referred to in Section 2, then the Executive shall be entitled to:
(i) the continued right to exercise any outstanding stock option,
except the Special Stock Option, for 12 months, all such options to become fully
exercisable as of the Termination Date;
(ii) the Special Stock Option to become exercisable as originally
scheduled and remain exercisable for the lesser of (A) five years following the
Termination Date and (B) the remainder of its term; and
(iii) the benefits described in Section 8(i)(i).
(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;
(B) the balance of any incentive awards earned (but not yet
paid);
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(C) any amounts due him under Section 7;
(D) a lump-sum payment in respect of accrued but unused
vacation days at his Base Salary rate in effect as of the Termination Date;
(E) payment, promptly when due, of all amounts owed to him in
connection with the termination; and
(F) 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) In the event that the Executive, or any member of his family,
is precluded from continuing full participation in any employee benefit plan,
program or arrangement, then the Executive shall be provided with the after-tax
economic equivalent of any benefit or coverage foregone. For this purpose, the
economic equivalent of any benefit or coverage foregone shall be deemed to be
the total cost to the Executive of obtaining such benefit or coverage himself on
an individual basis. Payment of such after-tax economic equivalent shall be made
quarterly in advance, without discount.
(iii) In the event of any termination of the Executive's employment
hereunder, the Executive shall be under no obligation to seek other employment
or otherwise mitigate the obligations of the Company under this Agreement.
(iv) In the event of a termination of Executive's employment due to
(x) a Termination without Cause pursuant to Section g(d) or (y) a Constructive
Termination without Cause pursuant to Section 8(e), the Base Salary continuation
payments shall be offset to the extent of the Executive's earnings from full-
time employment with another employer during the period of Base Salary
continuation.
(v) 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. Change in Control.
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(a) Vesting. In the event that a Change in Control or Potential
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Change in Control occurs after the Effective Date, then each outstanding stock
option (including, without limitation, the Special Stock Option) shall become
fully exercisable as of the date of such Change in Control or Potential Change
in Control and shall remain fully exercisable for the remainder of its maximum
stated term except as otherwise provided in Section 8. In the event that holders
of Common Stock receive cash, securities or other property in respect to their
Common Stock in connection with a Change in Control transaction, the Company
shall use its
14
best reasonable efforts to enable the Executive (if he so elects) to exercise
any stock option at a time and in a fashion that will entitle him to receive in
exchange for any shares thus acquired the same consideration as is received in
such Change in Control transaction by other holders of Common Stock.
Notwithstanding the foregoing, in the event that a Change in Control or
Potential Change in Control occurs within 180 days following the Effective Date,
then the Executive's right to exercise the Special Stock Option in respect of
the shares referred to in Section 6(a) shall not accelerate.
(b) 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 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 certificate of incorporation, bylaws or Board resolutions or, if
greater, by the laws of the State of Ohio, against any and all costs, expenses,
liabilities and losses (including, without limitation, attorneys' 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
15
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 15 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
-------------
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,
---------------
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) 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 II (a), or (ii) is known or generally available within
any trade or industry of the Company.
(b) Non-Solicitation. 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:
(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;
(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 instead become a customer of, or vendor to, any Person not affiliated
with the Company.
(c) Non-Competition. During the 12 month period that commences on the
---------------
Termination Date and ends on the first 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
16
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,"
and provided further, that the foregoing restriction of this Section 11 (c)
shall not apply following a Change of Control Event or a Potential Change in
Control Event if (v) the Executive's employment has been terminated by the
Company without Cause, (w) the Executive terminates his employment as the result
of a Constructive Termination or (x) the Company elects not to extend the Term
of Employment.
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
-------------
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 fights to compensation and benefits, which may be
transferred only by will or operation of law, except as provided in Section
16(e) or in Exhibit A.
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'
fights generally.
17
(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 and the Guarantor, 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 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: General Counsel
Facsimile #:______________
If to the Executive: Xxxxx X. Xxxxxx
18
000 Xxxxxxxx Xxxx
Xx. Xxxxxx, Xxxxxxxxxxxx 00000
(with a copy to the Executive at the Company's
address)
If to a beneficiary The address most recently specified by the
of the Executive: 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.
(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.
(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.
19
(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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
The Company
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Title: Chairman
The Executive
/s/ Xxxxx X. Xxxxxx
------------------
Xxxxx X. Xxxxxx
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