UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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IKON Office Solutions, Inc.
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(Name of Registrant as Specified In Its Charter)
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Notes:
[LOGO OF IKON OFFICE SOLUTIONS]
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Notice of Annual Meeting of Shareholders
February 23, 2000
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To the Shareholders of IKON Office Solutions, Inc. ("IKON" or the "Company"):
You are invited to be present either in person or by proxy at the 2000
annual meeting of shareholders of IKON to be held at the Company's offices at
70 Valley Stream Parkway, Malvern, Pennsylvania 19355 on Wednesday, February
23, 2000, at 9:00 a.m. to consider and act upon the following proposals:
1. To elect nine directors to serve for a term ending on the date of the
2001 annual meeting of shareholders;
2. To approve the 2000 IKON Office Solutions, Inc. Non-Employee
Directors' Compensation Plan;
3. To approve the 2000 IKON Office Solutions, Inc. Executive Incentive
Plan; and
4. To transact such other business as may properly come before the
meeting.
Shareholders of IKON of record at the close of business on December 28, 1999
are entitled to vote at the annual meeting and any adjournments thereof. All
shareholders are urged to attend the meeting or to vote by proxy.
In order to attend the meeting, you must present an admission ticket or
provide separate verification of share ownership. If you do not expect to
attend the meeting in person, please sign and return the accompanying proxy in
the enclosed postage prepaid envelope. If you later find that you can be
present or for any other reason desire to revoke your proxy, you can do so at
any time before the voting.
/s/ James J. Forese
President and Chief Executive
Officer
Malvern, Pennsylvania
January 11, 2000
IKON Office Solutions, Inc.
P.O. Box 834
Valley Forge, Pennsylvania 19482-0834
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of IKON Office Solutions, Inc. ("IKON" or the
"Company") of proxies to be voted at its annual meeting of shareholders on
February 23, 2000 and all adjournments thereof. The proxy statement and proxy
card will be first mailed to shareholders on or about January 11, 2000.
Only holders of record of common stock at the close of business on December
28, 1999 will be entitled to vote. On that date, there were 148,809,908 shares
of common stock outstanding. Each share of common stock entitles the holder
thereof to one vote.
I. ELECTION OF DIRECTORS
Nominees for Election as Directors
A board consisting of nine directors is proposed to be elected for a term
ending on the date of the 2001 annual shareholders' meeting. Unless authority
to do so is specifically withheld, the persons named in the accompanying proxy
will vote for the election of the nominees named below. The nine nominees who
receive the most votes at the meeting will be elected as directors. All of the
nominees are now directors of IKON, holding office until election of their
successors.
Year
Principal occupation or employment for past became
Name five years director Age
---- ------------------------------------------- -------- ---
Judith M. Bell..... President, Bell Retail Group (1994- 1998 63
Present); Managing Partner, Bell's Market
Grill (1984-Present); Proprietor, The
Men's Shop at the Broadmoor (1973-1999);
Co-Proprietor, A Short Story Inc. (1994-
1999); President, United States Golf
Association (1996-1997) (also a director
of Hayden Hays Gallery, Southern Colorado
Chapter of the Arthritis Foundation and a
trustee of the El Pomar Foundation)
James R. Birle..... Chairman, Resolute Partners, LLC, a private 1996 63
investment firm (1994-Present); General
Partner, The Blackstone Group (1988-1994)
(also a director of Massachusetts Mutual
Life Insurance Company, Drexel Industries
LLC, The Connecticut Health and Education
Facilities Authority, Transparency
International and a Trustee of Villanova
University)
Philip E. Cushing.. Former Group Chief Executive (1996-1999), 1997 49
Group Managing Director (1995-1996),
Director-Services (1992-1995), Inchcape
PLC, a British-based international
distribution business
James J. Forese.... President and Chief Executive Officer 1998 64
(1998-Present), Executive Vice President
of International Operations (1996-1998),
Executive Vice President and Chief
Operating Officer (1996), IKON Office
Solutions, Inc.; IBM Vice President and
Chairman of IBM Credit Corporation (1993-
1995), Vice President-Finance,
International Business Machines (1990-
1993) (also a director of American
Management Systems and NUI Corporation)
1
Year
Principal occupation or employment for Became
Name past five years Director Age
---- -------------------------------------- -------- ---
Robert M. Furek...... Chairman, State Board of Trustees, 1999 57
Hartford, Connecticut School System
(1997-Present); Partner, Resolute
Partners, LLC, a private investment
firm (1997-Present); President and
Chief Executive Officer, Heublein,
Inc. (1987-1996); Executive Director
of International Distillery and
Vintner (1992-1996) (also a director
of Dexter Corporation and
Massachusetts Mutual Life Insurance
Company)
Thomas R. Gibson..... Chairman, Chief Executive Officer and 1999 57
Co-Founder, Asbury Automotive Group
(1994-Present)
Richard A. Jalkut.... Non-Executive Chairman, IKON Office 1996 55
Solutions, Inc. (1998-Present);
President and Chief Executive Officer,
PathNet, a telecommunications company
(1997-Present); President and Group
Executive, Nynex Telecommunications
Group (1992-1997); President and Chief
Executive Officer, New York Telephone
(predecessor to Nynex
Telecommunications) (1991-1992) (also
a director of HSBC-USA, Home Wireless
Network and DIGEX)
Arthur E. Johnson.... Vice President, Corporate Strategic 1999 52
Development, Lockheed Martin
Corporation (1999-Present); President
and Chief Operating Officer, Lockheed
Martin Information and Services Sector
(1997-1999); President, Lockheed
Martin Systems Integration Group
(1997); President, Lockheed Martin
Federal System (1996-1997); Group Vice
President, Loral Federal System (1994-
1996)
Kurt M. Landgraf..... Executive Vice President and Chief 2000 53
Operating Officer, E.I. DuPont de
Nemours & Company (1998-Present);
Chairman of DuPont Europe (1997-
Present) and The DuPont Pharmaceutical
Company (1997-Present); Executive Vice
President, DuPont U.S. (1997-1998);
Chief Financial Officer, E.I. DuPont
de Nemours & Company (1996-1997);
President and Chief Executive Officer,
The DuPont Merck Pharmaceutical
Company (1993-1996) (also Board
Chairman of Christiana Care Health
Services, Inc. and a director of
University of Delaware Research
Foundation and the Delaware
Biotechnology Institute)
Barbara Barnes Hauptfuhrer, who served as a director of the Company since
1988, and who acted as Chairman of the Independent Directors from 1995 through
1998, has reached the mandatory retirement age of 70, and therefore will not
be standing for reelection at the 2000 annual meeting of shareholders.
Thomas P. Gerrity, who served as a director of the Company since 1997, and who
acted as Chairman of a management committee overseeing investments for the
Company's retirement plans, resigned as a director, effective December 7,
1999. The Company wishes to thank Mrs. Hauptfuhrer and Mr. Gerrity for their
significant contributions to IKON's Board of Directors and to the Company.
2
Security Ownership
As of December 28, 1999, shares of common stock of IKON were beneficially
owned (as determined by rules of the Securities and Exchange Commission) by
the current directors and nominees, by each of the individuals named in the
Summary Compensation Table (on page 9), by all current directors and executive
officers of IKON as a group, and by each person or group known to beneficially
own more than 5% of the outstanding shares of IKON, as follows:
Ownership
-----------------------------------------------
Sole Voting Shared Voting Percentage
and and/or Acquirable of
Investment Investment within Ownership
Power Power 60 Days (%)
----------- ------------- ---------- ----------
Judith M. Bell................. 1,704 0 24,513 .018
James R. Birle................. 16,946 0 50,131 .045
Philip E. Cushing.............. 6,194 0 31,000 .025
James J. Forese................ 92,751 1,116 310,216 .272
Robert M. Furek................ 5,000 0 0 .003
David M. Gadra................. 4,199 930 14,519 .013
Thomas R. Gibson............... 8,000 0 0 .005
Lynn B. Graham................. 28,675 1,846 11,884 .029
Barbara B. Hauptfuhrer......... 14,650 0 87,713 .069
Richard A. Jalkut.............. 9,099 0 61,360 .047
Arthur E. Johnson.............. 0 0 0 .000
Kurt M. Landgraf .............. 0 0 0 .000
Dennis P. LeStrange............ 9,775 7,389 27,570 .030
David Mills.................... 7,937 0 21,147 .020
Peter W. Shoemaker............. 1,906 8,130 107,905 .080
All directors and current
executive officers as a group. 170,378 17,274 630,985 .550
Barrow Hanley Mewhinney &
Strauss....................... 0 16,971,010 0 11.404
3232 McKinney Avenue, 15th
Floor
Dallas, TX 75204-2429
Capital Research & Management.. 0 17,377,400 0 11.678
333 South Hope Street, 55th
Floor
Los Angeles, CA 21348-9200
Prudential Investment
Corporation................... 0 9,899,000 0 6.652
100 Mulberry Street
Two Gateway Center, 4th Floor
Newark, NJ 07102-5096
Section 16(a) Beneficial Ownership Reporting Compliance
For the fiscal year ended September 30, 1999, all reports required to be
filed pursuant to Section 16(a) of the Securities Exchange Act of 1934 on
behalf of IKON's directors and officers to reflect beneficial ownership of
IKON's securities were timely filed, except that Mr. Cushing was required to
file amended reports on Form 4 for the months of December 1998 and January
1999 in order to report his December purchase of 98 shares of IKON common
stock through a broker-sponsored investment plan.
Committees of the Board of Directors; Meetings
During fiscal 1999, there were four standing committees of the Board of
Directors: the Audit Committee, the Human Resources Committee, the Investment
Committee and the Executive Committee. Between meetings of the Board of
Directors, certain of its powers may be exercised by these standing
committees, and these committees, as well as the Board of Directors, sometimes
act by unanimous written consent. A description of the foregoing committees
and their composition follows. Messrs. Furek, Gibson, Johnson and Landgraf are
new directors and have not yet received committee appointments.
3
The Audit Committee is chaired by Mr. Birle. Messrs. Cushing, Jalkut, Ms.
Bell and Mrs. Hauptfuhrer are also members of this Committee. Its functions
are to review the report of IKON's independent auditors relating to their
audit of the financial statements of IKON, and to review and discuss internal
financial controls and accounting procedures with both the independent
auditors and the internal auditors. The Audit Committee met four times during
the fiscal year ended September 30, 1999.
The Human Resources Committee is chaired by Mr. Jalkut. Messrs. Birle,
Cushing, Ms. Bell and Mrs. Hauptfuhrer are also members of this Committee. It
is responsible for reviewing and evaluating persons who are suggested as
nominees for election as members of the Board of Directors or as executive
officers of IKON, and for making recommendations to the Board of Directors
concerning such nominees. The Human Resources Committee is also responsible
for evaluating the performance of the Chief Executive Officer, setting
policies regarding executive compensation and determining the salaries and
other compensation of each of the executive officers of IKON (See "Human
Resources Committee Report on Executive Compensation" on page 6). The
Committee has all of the powers and exercises all of the duties of the Board
of Directors as described in IKON's stock option, stock purchase, deferred
compensation and other similar plans. The Human Resources Committee met four
times during the fiscal year ended September 30, 1999.
The Investment Committee is chaired by Mr. Cushing. Messrs. Birle, Jalkut,
Ms. Bell and Mrs. Hauptfuhrer are also members of this Committee. Its
functions are to review and approve acquisitions and divestitures of
businesses, and to recommend to the Board the issuance of stock or debt with
respect thereto, to approve capital expenditures and to review any investment-
related activity of the Company. Because the Company curtailed its acquisition
program during the fiscal year ended September 30, 1999, the Investment
Committee did not meet during the 1999 fiscal year, and its functions were
performed by the full Board of Directors.
The Executive Committee is co-chaired by Messrs. Jalkut and Birle. Mr.
Forese and Mrs. Hauptfuhrer are also members of the Committee. The Executive
Committee has been granted and exercises the powers of the Board between
regular meetings of the Board. The Executive Committee met five times during
the fiscal year ended September 30, 1999.
During the fiscal year ended September 30, 1999, the Board of Directors met
nine times. Each director attended at least 75% of the total number of the
meetings of the Board of Directors and the meetings of all committees on which
he or she served.
4
PERFORMANCE OF IKON COMMON STOCK
The following graph compares the cumulative total shareholder return of IKON
common stock with the cumulative total return of: (i) the Standard & Poor's 500
Stock Index; (ii) a newly selected industry peer group consisting of the
following companies: Danka Business Systems, Inc., Global Imaging Systems,
Inc., Hewlett Packard Company, Lanier Worldwide, Inc., Lexmark International
Group, Inc., Pitney Bowes, Inc., and Xerox Corporation (the "Peer Group"); and
(iii) the industry peer group used in the performance chart contained in the
Company's 1999 proxy statement, consisting of the S&P 500 Office Equipment &
Supplies SubIndex (the "SubIndex"). Cumulative total shareholder return is
measured by assuming an investment of $100 made on October 1, 1994 (with
dividends reinvested). The newly selected Peer Group was chosen because it is
more representative of companies comparable to IKON than the SubIndex.
IKON vs. S&P 500 vs. Peer Group v. SubIndex
[GRAPH]
Year
------------------------------------------------------------------
Date IKON S&P 500 SubIndex Peer Group
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10/01/94 $100.00 $100.00 $100.00 $100.00
12/31/94 101.58 115.59 111.85 109.13
03/31/95 117.95 126.85 130.07 131.02
06/30/95 130.53 138.96 136.48 154.99
09/30/95 139.06 150.00 150.95 177.72
12/31/95 150.29 159.04 158.79 177.44
03/31/96 172.35 167.58 159.20 198.23
06/30/96 150.03 175.10 174.35 204.03
09/30/96 165.98 180.51 190.72 204.70
12/31/96 172.41 195.56 200.50 212.36
03/31/97 173.28 200.80 213.17 225.21
06/30/97 129.17 235.86 246.18 240.12
09/31/97 132.62 253.53 288.12 290.11
12/31/97 146.10 260.81 303.16 257.65
03/31/98 179.75 297.19 339.82 279.54
06/30/98 75.88 307.00 322.06 269.42
09/30/98 37.64 276.47 345.46 243.21
12/31/98 45.01 335.34 431.36 325.60
03/31/99 67.55 352.05 416.36 313.06
06/30/99 79.31 376.86 419.18 424.89
09/30/99 56.69 353.33 399.36 383.44
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On December 31, 1996, the Company completed a spin-off of its wholly-owned
subsidiary, Unisource Worldwide, Inc. ("Unisource"), its paper and supply
systems distribution business, by distributing a tax-free dividend to the
Company's shareholders consisting of all of the common shares of Unisource. In
the graph shown above, the prices for the Company's common stock for the period
from October 1, 1994 through December 31, 1996 have been adjusted downward by
an amount equal to the value of the Unisource dividend, measured as of the date
of the spin-off.
5
EXECUTIVE COMPENSATION
Human Resources Committee Report on Executive Compensation
IKON's executive compensation program is administered by the Human Resources
Committee of the Board of Directors, which has responsibility for all aspects
of the compensation program for the executive officers of IKON. The Human
Resources Committee (the "Committee") is comprised of the directors listed at
the end of this report, none of whom is an employee of IKON and each of whom
qualifies as a non-employee director for purposes of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and an outside director for
purposes of Section 162(m) of the Internal Revenue Code (the "Code").
The Committee's primary objective is to establish and administer programs
which attract and retain key executives, and to align their compensation with
IKON's performance, business strategies and growth in shareholder value. To
this end, the Committee has established, and the Board of Directors has
endorsed, an executive compensation philosophy which includes the following
elements:
--A "pay-for-performance" orientation under which compensation reflects
corporate, business unit and individual performance;
--An emphasis on stock incentives to closely align the interest of
executives with the long-term interests of shareholders;
--An emphasis on total compensation under which base salaries are generally
set at or near competitive levels but which motivates and rewards executives
with total compensation, including incentive programs, at or above competitive
levels if corporate and/or individual performance is superior;
--An appropriate balance of short-term and long-term compensation which
facilitates retention of talented executives, rewards long-term strategic
planning, and encourages IKON stock ownership;
--Recognition that as an executive's level of responsibility increases, a
greater portion of the total compensation opportunity should be based on stock
and other performance incentives and less on salary and benefits; and
--Recognition that selective use of executive employment, noncompete and
change-in-control agreements will enable IKON to attract and retain talented
key executives, and will enable management to place its exclusive focus on
strategic planning and operational issues affecting the business.
As a matter of policy, the Committee has structured the Company's executive
compensation plans so that cash and option awards under such plans generally
will be excluded from compensation subject to the $1,000,000 deduction limit
of Section 162(m) of the Code, subject to consideration of other corporate
objectives.
The primary components of IKON's executive compensation program are (a) base
salaries; (b) annual cash bonus opportunities; (c) long-term incentive
opportunities; and (d) executive employment, noncompete and change-in-control
agreements.
Base Salaries
Base salaries for executive officers are established at the beginning of the
term of the executive's employment contract based on a comparison to
competitive market levels for the executive's job function. During the term of
the contract, the executive's base salary is subject to upward adjustment on
the basis of individual, corporate, and/or business unit performance, as well
as competitive, inflationary and internal equity considerations. Prior to
expiration of the contract term, the Committee evaluates the executive's
contribution to the Company, makes a determination as to whether to continue
the executive in his or her current position, and reviews the executive's
current base salary (in light of current market levels and the executive's
performance) to determine whether such base salary should be adjusted upward
or downward.
6
In determining the compensation of IKON's executives, the Committee has not
considered the relevant market to be limited to the companies included in the
industry peer group used for the performance graph on page 5. Because of the
Company's previous distribution focus, the companies considered to be
comparable to IKON for compensation purposes have historically included a
broad cross-section of companies which are representative of distribution
companies generally.
In setting the base salary of $750,000 for Mr. Forese for fiscal 1999
(pursuant to the negotiation of his employment contract), the Committee
evaluated the factors described above, which are used for setting compensation
generally, Mr. Forese's record and leadership abilities as IKON's Executive
Vice President and President of International Operations, and Mr. Forese's
success in implementing initiatives to reduce costs and increase
organizational discipline during the period from July 8, 1998 (when he assumed
the role of President and Chief Executive Officer) through the end of the 1998
fiscal year.
Annual Bonus
Annual bonus payments to executive officers are awarded pursuant to the IKON
Office Solutions, Inc. Annual Bonus Plan, and are based on corporate and/or
business unit performance compared to the targets established for the year.
These annual bonus payments are in amounts equal to a percentage of base
salary. For fiscal 1999, the Committee determined that annual bonus targets
for executive officers, including the individuals named in the Summary
Compensation Table, would be based on achievement of operating income, cash
flow and revenue targets for IKON and/or the executive's relevant business
unit. For executive officers other than Mr. Forese, individual objective
performance criteria (established at the beginning of the fiscal year) were
also used to determine bonus amounts.
In addition to the bonus amounts described above, if certain executive
officers deliver outstanding business unit and individual performance, they
are eligible to earn a discretionary "overachievement" bonus in amounts equal
to a percentage of their base salary. In order to receive this additional
overachievement bonus, the executive must demonstrate outstanding execution of
operational plan and individual performance criteria. No overachievement
bonuses will be paid unless the executive has already earned the full bonus
entitlement described in the foregoing paragraph.
For fiscal 1999, Mr. Forese received a bonus of $750,000, which represents
66 2/3% of his fiscal 1999 bonus opportunity, based on achievement of a 88.4 %
of the Company's pre-established operating income target; 118% of the
Company's pre-established cash flow target, and 98% of the Company's pre-
established revenue growth target. For the other executive officers named in
the Summary Compensation Table, bonus awards for fiscal 1999 were based on the
Company's performance described above, as well as business unit and individual
objective performance criteria.
Long Term Incentive Compensation
LTIP Cash Awards
Cash awards are granted pursuant to the IKON Office Solutions, Inc. Long
Term Incentive Compensation Plan ("LTIP"), and vest only if certain
performance criteria are met. The executive's entitlement to receive an LTIP
cash award is based on the achievement of objective performance goals over
successive three-year periods (with a new three-year period beginning every
fiscal year), and LTIP cash awards, if vested, are paid at the end of each
such three-year period.
In fiscal 1999, the Committee determined that Mr. Forese would be the only
executive officer eligible to earn an LTIP cash award for the 1999-2001 LTIP
plan period (beginning October 1, 1998 and ending September 30, 2001).
Accordingly, effective October 1, 1998, the Committee granted Mr. Forese a
maximum LTIP cash award of $1,012,500, to be earned based on achievement of
objective financial and operating performance goals established by the
Committee for the three-year plan period. Such award, to the extent earned,
will be paid after September 30, 2001.
7
LTIP Restricted Stock Awards
Restricted stock awards are granted pursuant to the LTIP, and vest only if
the executive remains in the continuous employment of IKON through the
applicable vesting date. Such awards are made in order to reward performance
that contributes to IKON's success, and in order to attract, motivate and
retain qualified senior executives. The shares of IKON common stock underlying
the restricted stock award generally are issued and distributed in equal
annual installments over a three-year period beginning on the third
anniversary of the grant date, if the executive remains a full-time active
employee of the Company on the applicable distribution date. During fiscal
1999, all of the individuals named in the Summary Compensation Table on page 9
received restricted stock awards, in amounts set forth in such table.
Stock Options
Stock options are granted as a reward for past performance and as motivation
for future performance which maximizes shareholder value. Stock options are
generally granted for ten-year terms and vest over specified employment
periods. Stock options generally have an exercise price equal to the fair
market value of IKON common stock on the date of grant, although, in order to
provide an incentive to Mr. Forese to deliver performance which increases
shareholder value, certain options granted to Mr. Forese pursuant to his
employment contract have exercise prices above fair market value, as set forth
in the Option Grant Table on page 10.
On January 22, 1999, all of the individuals named in the Summary
Compensation Table, except Mr. Forese, received option grants as an incentive
for future performance. The amounts of such option grants are set forth in the
Summary Compensation Table on page 9. In addition to the foregoing grants,
during fiscal 1999, Messrs. LeStrange, Mills and Graham received option grants
in connection with their appointments as executive officers of the
corporation.
Employment Contracts
The Committee believes that the selective use of employment, noncompete and
change-in-control contracts provides leadership continuity which benefits the
Company's shareholders and employees, and safeguards the Company against the
risks associated with former key executives entering into certain competitive
business or employment relationships. In addition, such contracts allow senior
management to focus exclusively on strategic planning and financial and
operational issues affecting the business, and create an incentive for
executives to drive performance which will contribute to shareholder value and
future growth. Accordingly, employment and noncompete agreements are in place
with Messrs. Forese, LeStrange, Gadra, Mills and certain senior executives. In
addition, change-in-control arrangements are in place with certain senior
executives, including all of the current executives named in the Summary
Compensation Table. For further information on executive employment,
noncompete and change-in-control contracts see "Change-in-Control
Arrangements, Executive Employment Contracts and Severance Arrangements"
beginning on page 14.
Summary of Compensation Philosophy
The Committee is firmly committed to the ongoing review and evaluation of
the Company's executive compensation practices. The Committee believes that
such review will ensure that IKON's pay practices are in keeping with the
practices of comparable companies and will ensure that such practices create
significant performance incentives for executives while maximizing shareholder
value.
The Human Resources Committee of the Board of Directors
Richard A. Jalkut (Chairman)
Judith M. Bell
James R. Birle
Philip E. Cushing
Barbara Barnes Hauptfuhrer
8
Summary of Executive Compensation
The following table sets forth information concerning compensation paid by
the Company during the fiscal years ended September 30, 1999, 1998 and 1997
to: 1) James J. Forese, President and Chief Executive Officer of the Company,
2) each of the next four most highly compensated executive officers of IKON as
of September 30, 1999, and 3) one individual who served as an executive
officer during fiscal 1999 and who ceased serving in such capacity before
September 30, 1999:
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
-----------------------------------------------------------------------------------
Awards Payouts
Name --------------------- -------------
And Securities Restricted All Other
Principal Fiscal Underlying Stock LTIP Compensation
Position(1) Year Salary($) Bonus($) Options Awards Payouts($)(2) ($)(3)
----------- ------ ---------- --------- ---------- ---------- ------------- ------------
James J. Forese 1999 750,000 750,000 635,000 12,500 0 18,760
President and 1998 450,000 0 13,500 0 194,375 42,922
Chief Executive Officer 1997 425,000 0 5,000 0 0 31,825
Dennis P. LeStrange 1999 287,192 200,000 40,000 20,000 0 304,944
Senior Vice President, 1998 228,231 244,000 59,000 0 0 210,693
IKON North America 1997 199,230 255,000 5,413 0 0 23,008
Lynn B. Graham 1999 297,999 129,000 65,000 20,000 0 11,764
Former IKON Senior 1998 235,620 0 10,500 0 47,884 46,078
Vice President and 1997 215,344 226,153 3,468 0 1,248,441(4) 19,520
Former President, IKON
Document Services
David M. Gadra 1999 270,000 170,000 30,000 15,000 0 11,872
Senior Vice President
and 1998 234,167 0 9,100 0 0 29,450
Chief Information
Officer 1997 225,000 157,500 4,250 0 0 21,063
David Mills (5) 1999 272,000 160,000 50,000 20,000 0 5,833
Vice President, 1998 218,000 0 5,087 0 12,959 43,768
IKON Europe 1997 195,713 200,000 12,984 0 0 17,299
Peter W. Shoemaker 1999 376,442 103,000 45,000 30,000 0 23,637
Former IKON Senior 1998 287,608 0 10,000 0 51,824 39,400
Vice President and 1997 250,000 162,500 5,000 0 170,017 22,510
Former President, IKON
Business Services
(1) During fiscal 1997 and the first half of fiscal 1998, Mr. Forese was
Executive Vice President and President of International Operations, and in
July 1998, he assumed the position described above. During fiscal 1997 and
the first half of fiscal 1998, Mr. Le Strange was President of IKON's
Northeast District; in August 1998, he became Senior Vice President-
Marketing of IKON Business Services, and in May 1999, he was promoted to
the position described above. During fiscal 1997 and 1998, Mr. Graham (who
ceased to be an executive officer effective October 29, 1999, and whose
employment terminated effective December 1, 1999) served as President of
IKON Document Services, and he became Senior Vice President in addition to
this role in 1998. During fiscal 1997 and the first half of fiscal 1998,
Mr. Mills was President of IKON-United Kingdom, and he was promoted to the
above position in July 1998. During fiscal 1997, Mr. Shoemaker (who ceased
to be an executive officer effective May 17, 1999, and whose active
employment terminated effective October 1, 1999) was Senior Vice
President, and during fiscal 1998 and 1999, he served in the position
described above.
9
(2) LTIP payouts for fiscal 1998 were distributed in the form of cash. For
fiscal 1997, LTIP payouts were distributed in the form of shares of common
stock, based on the fair market value of the Company's common stock on
September 30, 1997. For fiscal 1997 and 1998, LTIP payouts represent
awards attributable to fiscal 1995 and/or 1996 performance, except the
1997 LTIP payout to Mr. Graham, as described in note 4, below.
(3) Includes the value of shares of IKON common stock purchased with matching
company contributions under IKON's stock purchase plans, calculated as of
the date of purchase. For fiscal 1999, such matching company contributions
were as follows: James J. Forese--$18,760; Dennis P. LeStrange--$36,618;
Lynn B. Graham--$11,764; David M. Gadra--$11,872; David Mills--$5,833;
Peter W. Shoemaker-- $21,887. For Mr. Shoemaker, the remaining amounts
represent above-market interest earned on deferred compensation, and for
Mr. LeStrange, the remaining amounts represent relocation compensation
(including a gross-up for taxes) totaling $262,326 in 1999 and $151,400 in
1998 (as further described under Executive Employment Contracts and
Severance Arrangements on page 15), and an automobile allowance of $6,000
for fiscal 1999, 1998 and 1997.
(4) Represents two LTIP awards paid to Mr. Graham as a member of the senior
management of IKON Document Services, an operating unit of IKON, for
superior operating performance. The awards were paid in IKON common stock,
and the value shown above is based upon the fair market value of such
stock at the time of distribution.
(5) Mr. Mills is a resident of the United Kingdom. All amounts in the above
table for Mr. Mills have been converted from British pounds sterling at an
exchange rate of US $1.60 per British pound sterling.
Option Grants
The following table shows option grants to the individuals named in the
Summary Compensation Table during the fiscal year ended September 30, 1999:
Option Grants in Last Fiscal Year
- -------------------------------------------------------------------------------
% of Total
Number Options
of Securities Granted to Exercise
Underlying Employees or Base Grant
Options in Fiscal Price Expiration Date
Name Granted (#) Year (%) ($/Sh) Date Value ($)
---- ------------- ---------- -------- ---------- ---------
James J. Forese....... 385,000(1) 11.5363 7.5000 10/01/2008 1,213,600
150,000(2) 4.4946 15.0000 10/01/2008 355,500
100,000(3) 2.9964 22.0000 10/01/2008 189,000
Dennis P. LeStrange... 30,000(4) 0.8989 16.0000 01/22/2009 236,100
10,000(5) 0.2996 14.1250 07/21/2009 70,200
Lynn B. Graham........ 35,000(6) 1.0488 10.4375 11/03/2008 164,500
30,000(4) 0.8989 16.0000 01/22/2009 236,100
David M. Gadra........ 30,000(4) 0.8989 16.0000 01/22/2009 236,100
David Mills........... 25,000(6) 0.7491 10.4375 11/03/2008 117,500
25,000(4) 0.7491 16.0000 01/22/2009 196,750
Peter W. Shoemaker.... 45,000(4) 1.3484 16.0000 01/22/2009 354,150
(1) The above figure represents two grants of nonqualified stock options to
purchase 250,000 and 135,000 shares of common stock, respectively. The
options were granted at an exercise price equal to the fair market value
of IKON common stock on the date of grant. As to the grant of stock
options to purchase 250,000 shares of common stock, the present value of
each stock option was $3.31 on the date of grant, calculated using the
Black-Scholes option valuation methodology, based on the following
assumptions: (a) ten-year option term; (b) the options become exercisable
100% on the third anniversary of the date of grant; (c) 4.53% expected
risk-free rate of return; (d) 58.58% expected volatility; and (e) 2.13%
expected dividend yield. As to the grant of options to purchase 135,000
shares of common stock, the present value of each stock option was $2.86
on the date of grant, calculated using the Black-Scholes option valuation
10
methodology, based on the following assumptions: (a) ten-year option term;
(b) the options become 33 1/3% on the third, fourth and fifth anniversaries
of the date of grant (but vesting may be accelerated if LTIP performance
criteria are met); (c) 4.53% expected risk-free rate of return; (d) 58.58%
expected volatility; and (e) 2.13% expected dividend yield.
(2) These nonqualified stock options were granted at an exercise price 100%
above the fair market value of IKON common stock on the date of grant. The
present value of each stock option was $2.37 on the date of grant,
calculated using the Black-Scholes option valuation methodology, based on
the following assumptions: (a) ten-year option term; (b) the options
become exercisable 100% on the fourth anniversary of the date of grant;
(c) 4.53% expected risk-free rate of return; (d) 58.58% expected
volatility; and (e) 2.13% expected dividend yield.
(3) These nonqualified stock options were granted at an exercise price 200%
above the fair market value of IKON common stock on the date of grant. The
present value of each stock option was $1.89 on the date of grant,
calculated using the Black-Scholes option valuation methodology, based on
the following assumptions: (a) ten-year option term; (b) the options
become exercisable 100% on the fifth anniversary of the date of grant; (c)
4.53% expected risk-free rate of return; (d) 58.58% expected volatility;
and (e) 2.13% expected dividend yield.
(4) These nonqualified stock options were granted at an exercise price equal
to the fair market value of IKON common stock on the date of grant. The
present value of each stock option was $7.87 on the date of grant,
calculated using the Black-Scholes option valuation methodology, based on
the following assumptions: (a) ten-year option term; (b) the options
become exercisable 20% per year beginning on the first anniversary of the
date of grant; (c) 4.72% expected risk-free rate of return; (d) 64.88%
expected volatility; and (e) 1.0% expected dividend yield.
(5) These nonqualified stock options were granted at an exercise price equal
to the fair market value of IKON common stock on the date of grant. The
present value of each stock option was $7.02 on the date of grant,
calculated using the Black-Scholes option valuation methodology, based on
the following assumptions: (a) ten-year option term; (b) the options
become exercisable 20% per year beginning on the first anniversary of the
date of grant; (c) 5.79% expected risk-free rate of return; (d) 65.2%
expected volatility; and (e) 1.13% expected dividend yield.
(6) These nonqualified stock options were granted at an exercise price equal
to the fair market value of IKON common stock on the date of grant. The
present value of each stock option was $4.70 on the date of grant,
calculated using the Black-Scholes option valuation methodology, based on
the following assumptions: (a) ten-year option term; (b) the options
become exercisable 20% per year beginning on the first anniversary of the
date of grant; (c) 4.83% expected risk-free rate of return; (d) 61.03%
expected volatility; and (e) 1.53% expected dividend yield.
11
Long Term Incentive Compensation Plan
The following table shows the only Long Term Incentive Plan Award granted to
an individual named in the Summary Compensation Table during the fiscal year
ended September 30, 1999:
Long Term Incentive Plans--Awards in Last Fiscal Year
- -------------------------------------------------------------------------------
Performance
Potential or Other
Cash Period Until
Award Maturation or
Name ($)(1) Payment Estimated Future Payouts ($)
---- --------- --------------- ----------------------------
James J. Forese....... 1,012,500 10/1/98-9/30/01 0-1,012,500
(1) Represents the LTIP cash award granted, which, if earned and vested, will
entitle Mr. Forese to receive a cash payout. For a description of the LTIP
and the basis for the award shown in the above table, see "Human Resources
Committee Report on Executive Compensation" on page 6.
Option Exercises
The following table shows option exercises and fiscal year-end option values
for each of the individuals named in the Summary Compensation Table for the
fiscal year ended September 30, 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- --------------------------------------------------------------------------------
Number of Number of Value of
Securities Securities Unexercised Value of
Underlying Underlying In-the- Unexercised
Shares Unexercised Unexercised Money In-the-
Acquired Options at Options at Options at Money Options
on Value FY-End FY-End FY-End at FY-End
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($)/(1) ($)/(1)
---- -------- -------- ----------- ------------- ----------- -------------
James J. Forese......... 0 0 228,326 813,947 -- 1,227,188
Dennis P. LeStrange..... 0 0 19,176 95,111 -- --
Lynn B. Graham (2)...... 0 0 3,690 77,129 -- 8,750
David M. Gadra.......... 0 0 7,135 47,940 -- --
David Mills............. 0 0 7,258 66,013 -- 6,250
Peter W. Shoemaker (3).. 9,500 1,554 103,614 62,403 -- --
(1) Value of unexercised options equals fair market value of IKON common stock
as of September 30, 1999 less exercise price, multiplied by the number of
shares underlying the stock options.
(2) Pursuant to the terms of Mr. Graham's separation agreement, Mr. Graham's
options continued to vest in accordance with their terms through December
1, 1999, and Mr. Graham has the right to exercise any options which
vested on or before December 1, 1999 for a three-month period after such
date.
(3) Pursuant to the terms of Mr. Shoemaker's employment contract, Mr.
Shoemaker's options will continue to vest during the two-year period
ending January 31, 2002, and he has the right to exercise any options
which have vested on or before January 31, 2002 for a three-month period
after such date.
Pension Plan and Supplemental Retirement Plans
IKON employees who are United States residents are participants in a pension
plan (the "Pension Plan") for salaried employees, which provides to eligible
retired employees at age 65 annual pension benefits equal to the number of
years of credited service multiplied by 1% of average annual compensation
earned during the three consecutive years within the employee's last ten years
of participation in the Pension Plan which yield the highest average. All
Pension Plan costs are paid by IKON and the Pension Plan and benefits are
funded on an actuarial basis. The years of credited service as of September
30, 1999 for the individuals named in the Summary
12
Compensation Table were: James J. Forese-- 3.8 years; Dennis P. LeStrange--
11.8 years; Lynn B. Graham--5.0 years; David M. Gadra--3.2 years; and Peter W.
Shoemaker--16.1 years. Mr. Mills is a resident of the United Kingdom and is
not eligible to participate in the Pension Plan.
IKON also has a Supplemental Executive Retirement Plan ("SERP"). Coverage
under the SERP is limited to participants in the Pension Plan who are not
commissioned sales employees and whose benefits under the Pension Plan are
limited because of (a) restrictions imposed by the Code on the amount of
benefits which may be paid from a tax-qualified plan, (b) restrictions imposed
by the Code on the amount of an employee's compensation that may be taken into
account in calculating benefits to be paid from a tax-qualified plan, or
(c) any reductions in the amount of compensation taken into account under the
Pension Plan because of an employee's participation in certain deferred
compensation plans sponsored by IKON or one of its subsidiaries. The SERP
provides for a supplement to the annual pension paid under the Pension Plan to
participants who attain early or normal retirement under the Pension Plan or
who suffer a total and permanent disability while employed by IKON or one of
its subsidiaries and to the pre-retirement death benefits payable under the
Pension Plan on behalf of such participants who die with a vested interest in
the Pension Plan. The amount of the supplement will be the difference, if any,
between the pension or pre-retirement death benefit paid under the Pension
Plan and that which would otherwise have been payable but for the restrictions
imposed by the Code and any reduction in the participant's compensation for
purposes of the Pension Plan because of his participation in certain deferred
compensation plans of IKON or one of its subsidiaries. The maximum amount of
annual compensation upon which such supplement may be based is $500,000 per
participant.
The following table shows estimated annual retirement benefits that would be
payable to participants under IKON's Pension Plan and, if applicable, the
SERP, upon normal retirement at age 65 under various assumptions as to final
average annual compensation and years of credited service and on the
assumption that benefits will be paid in the form of a single life annuity.
The benefits are not subject to any deduction for Social Security benefits.
Estimated Annual Retirement Benefits
---------------------------------------------------------------------------
Years of Credited Service
------------------------------------------
Final Average Compensation 5 10 20 30 35
-------------------------- ------- ------- -------- -------- --------
$200,000........................ $10,000 $20,000 $ 40,000 $ 60,000 $ 70,000
250,000........................ 12,500 25,000 50,000 75,000 87,500
300,000........................ 15,000 30,000 60,000 90,000 105,000
400,000........................ 20,000 40,000 80,000 120,000 140,000
500,000 or above............... 25,000 50,000 100,000 150,000 175,000
Covered compensation under the Pension Plan and SERP of individuals named in
the Summary Compensation Table (excluding Mr. Mills) includes salary and bonus
as set forth in the Summary Compensation Table.
Pension Plan for European Employees
Mr. Mills, who is a resident of the United Kingdom, participates in a
pension plan (the "UK Pension Plan"), which provides to eligible retired
employees at age 65 annual pension benefits equal to the number of years of
credited service, divided by 60, multiplied by average annual compensation
less the Lower Earnings Limit for UK National Insurance. Average annual
compensation is calculated on the basis of the average compensation earned
during three consecutive years within the employee's last ten years of
participation in the UK Pension Plan which yield the highest average. All UK
Pension Plan costs in respect of Mr. Mills are paid by IKON and the UK Pension
Plan and benefits are funded on an actuarial basis. As of September 30, 1999,
Mr. Mills had 10.5 years of credited service under the U.K. Pension Plan, and
his estimated monthly pension benefit at age 65, assuming continued full-time
employment until age 65, was (Pounds)10,000 (approximately US $16,000).
13
Certain Transactions
At the beginning of fiscal 1999, IKON had a loan program in place which made
loans to eligible management employees. The loans are secured by the
borrower's pledge of IKON stock having a value at the time of the loan equal
to twice the amount of the loan, and bear interest at an annual rate of 6%.
Effective November 30, 1998, the loan program was terminated, and all loans
must be paid in full by December 31, 2000. During the fiscal year ended
September 30, 1999, loans were outstanding to current executive officers of
the Company in the maximum aggregate amount of $212,000, and at December 31,
1999, such aggregate amount was reduced to $40,000.
Mr. Shoemaker has a 20% partnership interest in real estate located in
Glastonbury, Connecticut leased to IKON at a fair market value rate on terms
no more favorable than those available from third parties. The lease has a
ten-year term which expires on April 30, 2001, with annual rental payments of
$267,750. The lease also has provisions for renewal, at IKON's discretion, for
an additional five-year term.
Change-in-Control Arrangements, Executive Employment Contracts and Severance
Arrangements
Change-in-Control Arrangements--Employee Benefit Plans and Executive
Arrangements
IKON's stock option plans, deferred compensation plans, LTIP and
supplemental executive retirement plan provide for accelerated vesting (and,
for certain plans, accelerated payout of benefits) for all participants upon a
change-in-control. In addition, accelerated vesting is provided to
participants in the Company's 401(k) plan and Pension Plan upon a change-in-
control followed by the participant's involuntary employment termination
within two years following the change-in-control.
The Committee has authorized change-in-control agreements with corporate
officers and other key executives. For Messrs. LeStrange, Gadra and Mills, the
agreements provide that, in the event of a change-in-control (or, in some
circumstances, a potential change-in-control) followed by the executive's
involuntary termination of employment (or termination of employment by the
executive for good reason) within two years after such change-in-control, the
executive will receive the following: 1) full vesting in IKON's Stock Option
Plan and 401(k) plan (if participating in such plans), 2) the executive's
annual bonus opportunity for the year in which termination occurs, prorated to
the date of termination, 3) an accelerated maximum LTIP payout for all
outstanding LTIP plan periods, 4) a severance benefit equal to two times
salary and two times bonus opportunity, 5) continued group hospitalization,
health, dental care, life insurance and disability insurance for two years,
6) an amount equal to the benefit associated with two years of credited
service under the Company's pension plans, 7) an amount equal to the value of
two years of company contributions under the 401(k) plan (if participating),
8) a one-year extension of any partner's loan repayment obligation to the
Company, and 9) reimbursement for excise taxes (if any) payable as a result of
benefits received upon a change-in-control. In the event that the terms of any
employee benefit plan require vesting or payment upon an earlier date than the
executive's change-in-control agreement, the earlier date will prevail. The
change-in-control agreements further provide that, in the event of a change-
in-control (or, in some circumstances, a potential change-in-control),
followed by the executive's involuntary termination of employment (or
termination by the executive for good reason) within two years following the
change-in-control, any noncompete restrictions otherwise applicable to the
executive shall be void.
The employment contract for Mr. Forese (described on the following page)
contains change-in-control provisions which are identical to the provisions in
the executive change-in-control arrangements described above, except that,
upon involuntary employment termination within two years following a change-
in-control, Mr. Forese will receive a severance benefit equal to three times
salary and three times maximum bonus. Mr. Forese will also receive continued
group hospitalization, health, dental care, life insurance and disability
insurance for three years, and will receive an amount equal to three years of
company contributions or credited service under the Company's 401(k) plan and
pension plans. Mr. Forese will also be entitled to the continued right to
exercise each outstanding stock option (except the Special Stock Option
described on the following page) for the lesser
14
of two years or the remainder of its stated term, and he will be entitled to
exercise the Special Stock Option for the lesser of five years or the
remainder of its stated term. Mr. Forese is subject to nonsolicitation and
noncompetition restrictions upon employment termination except under certain
circumstances following a change-in-control.
Executive Employment Contracts and Severance Arrangements
The following describes the executive employment contracts which are in
place for the current executives named in the Summary Compensation Table and
severance arrangements for the other individuals named in the Summary
Compensation Table.
James J. Forese
Mr. Forese executed a three-year employment contract with the Company
effective October 1, 1998, subject to two annual automatic renewal provisions
after expiration of the initial term unless either Mr. Forese or the Company
provide appropriate notice of an intention not to renew. The contract sets Mr.
Forese's annual salary at $750,000, subject to annual increase in the
discretion of the Human Resources Committee, and provides that Mr. Forese
shall be eligible to earn an annual bonus of at least 150% of annual salary
(subject to achievement of applicable performance goals). Mr. Forese is also
eligible to receive cash awards pursuant to the Company's LTIP, ranging from
90% to 180% of his base salary (upon achievement of certain performance
goals), and a corresponding option grant. For the LTIP plan period from
October 1, 1998 through September 30, 2001 (1999-2001 LTIP), Mr. Forese is
eligible to receive a maximum cash award of $1,012,500 (135% of base salary),
and received a corresponding grant of 135,000 options.
Pursuant to Mr. Forese's employment contract, Mr. Forese received options to
purchase 500,000 shares of common stock (the "Special Stock Option"), in
addition to the 135,000 options described above. The terms of such options are
set forth in the Option Grant Table on page 10.
If Mr. Forese voluntarily terminates employment during the term of the
contract, or is terminated for cause, no severance benefit is provided and Mr.
Forese shall forfeit all stock options not exercisable on the termination
date. If Mr. Forese's employment is terminated without cause (or due to
constructive discharge), Mr. Forese will receive: 1) base salary continuation
through the later of September 30, 2001 or the second anniversary of his
termination date, 2) a pro rata bonus for the year of termination, 3) bonus
payments for a two-year period after termination, 4) the right to exercise any
outstanding stock option, other than the Special Stock Option, for a three-
month period following employment termination or the option's stated term, 5)
the right to exercise the Special Stock Option for the lesser of five years or
the remainder of its stated term, 6) an accelerated LTIP payout for all
outstanding plan periods, and 7) continued participation in all medical,
dental, vision, hospitalization, disability and life insurance coverage
through the later of September 30, 2001 or the second anniversary of his
termination date. Mr. Forese's contract also provides that Mr. Forese is
subject to noncompetition and nonsolicitation restrictions upon employment
termination except under certain circumstances following a change-in-control.
Finally, Mr. Forese's employment contract contains certain additional
provisions regarding payment of benefits upon employment termination following
a change-in-control, which are further described under "Change-in-Control
Arrangements--Employee Benefit Plans and Executive Arrangements," beginning on
page 14.
Dennis P. LeStrange
Mr. LeStrange executed a five-year employment contract with the Company
effective October 1, 1996, which was amended effective August 1, 1998. The
employment contract, as amended, provides for a minimum annual base salary of
$250,000 per year and bonus opportunity of at least 100% of base salary.
Pursuant to Mr. LeStrange's employment contract, he received a one-time grant
of 3,500 stock options on January 23, 1997, and a one-time grant of 50,000
stock options on July 30, 1998. Mr. LeStrange also received a $100,000 moving
bonus and relocation assistance in connection with his 1998 relocation to the
Company's headquarters in Pennsylvania.
15
If Mr. LeStrange's employment is involuntarily terminated by the Company
without cause during the contract term, he will receive base salary
continuation for the remainder of the contract term (until October 1, 2001).
Unless otherwise determined by the Human Resources Committee, all unvested
options will be forfeited upon any termination of employment (other than due
to death, disability or a change-in-control). Mr. LeStrange is subject to
noncompetition and nonsolicitation restrictions upon employment termination
except under certain circumstances following a change-in-control.
Mr. LeStrange is also subject to a change-in-control arrangement, which is
further described under "Change-in-Control Arrangements--Employee Benefit
Plans and Executive Arrangements," beginning on page 14.
Lynn B. Graham
Mr. Graham executed a three-year employment contract with the Company
effective April 1, 1997. The contract was terminated effective December 1,
1999, when Mr. Graham's employment with the Company terminated. Pursuant to
the terms of the contract and Mr. Graham's separation agreement, Mr. Graham
will receive base salary continuation, and continued participation in the
Company's group hospitalization, health, dental care, life insurance and
disability plans until November 30, 2001. As of December 1, 1999, 6,667 shares
of IKON common stock subject to Mr. Graham's restricted stock award became
vested, and Mr. Graham also received full vesting in the Company's deferred
compensation plans and outplacement counseling. Mr. Graham remains subject to
noncompetition and nonsolicitation restrictions, which will expire on December
1, 2001.
David M. Gadra
Mr. Gadra executed a three-year employment contract effective August 1,
1996, which was extended by amendment to expire on January 31, 2000. The
contract provides for a guaranteed annual salary of at least $225,000, and
bonus opportunity of at least 100% of base salary. Pursuant to the contract,
Mr. Gadra received a one-time payment of $100,000 (to compensate Mr. Gadra for
the forfeiture of options attributable to his previous employment), relocation
compensation of $25,000, and certain guaranteed bonus payments in fiscal 1996
and fiscal 1997. In addition, Mr. Gadra received a grant of options to
purchase 11,725 shares of IKON common stock. If Mr. Gadra's employment is
involuntarily terminated by the Company without cause during the contract
term, he will receive a severance benefit equal to the base salary he would
have received for the remainder of the contract term (payable in equal
bimonthly installments for the remainder of the contract term), accrued bonus
for the fiscal year in which his employment terminates, continued vesting
under the Company's employee benefit plans and continued participation in the
Company's group hospitalization, health, dental care, life insurance and
disability plans until the end of the term. If Mr. Gadra voluntarily
terminates employment during the term, or his employment terminates due to
disability or death, or for cause, he shall be entitled to receive unpaid base
salary until the date of termination, and any unpaid accrued benefits under
IKON's benefit plans as of the date of termination. Unless otherwise
determined by the Human Resources Committee, all unvested options will be
forfeited upon any termination of employment (other than due to death,
disability or a change-in-control). Mr. Gadra is subject to noncompetition and
nonsolicitation restrictions upon employment termination except under certain
circumstances following a change-in-control.
Mr. Gadra is also subject to a change-in-control arrangement, which is
further described under "Change-in-Control Arrangements--Employee Benefit
Plans and Executive Arrangements," beginning on page 14.
David Mills
Mr. Mills executed an employment contract with the Company, effective
October 22, 1997, which provides that Mr. Mills shall remain in the employ of
the Company until either the Company or Mr. Mills shall give the other three
months written notice of termination of Mr. Mills' employment. The employment
contract provides for a minimum annual base salary of (Pounds)125,000
(approximately US $200,000) and bonus opportunity of at least 100% of base
salary. The contract also states that Mr. Mills shall receive benefits
generally available to other
16
executives and salaried employees. The employment contract further provides
that upon termination of Mr. Mills' employment, he shall be entitled to
receive base salary continuation for a twelve-month period, a bonus
entitlement equal to his annual bonus opportunity, and a sum equal to the
value of twelve months of certain other benefit entitlements. Unless otherwise
determined by the Human Resources Committee, all unvested options will be
forfeited upon any termination of employment (other than due to death,
disability or a change-in-control). Mr. Mills is subject to noncompetition and
nonsolicitation restrictions upon employment termination except under certain
circumstances following a change-in-control.
Mr. Mills is also subject to a change-in-control arrangement, which is
further described under "Change-in-Control Arrangements--Employee Benefit
Plans and Executive Arrangements," beginning on page 14.
Peter W. Shoemaker
On May 17, 1999, Mr. Shoemaker ceased to serve as President-IKON Business
Services, and his active employment terminated on October 1, 1999. Pursuant to
the terms of Mr. Shoemaker's employment contract, Mr. Shoemaker will receive
annualized compensation of $375,000 per year through January 31, 2002 and
continued vesting and participation in all benefit plans through the end of
this period. At the end of this period, any unvested options will be
forfeited. During this period, Mr. Shoemaker is not entitled to participate in
any new bonus, stock option or LTIP opportunities. Mr. Shoemaker remains
subject to noncompetition and nonsolicitation restrictions which will expire
on January 31, 2004.
Directors' Compensation
The Company's 1999 directors' compensation year began on February 1, 1999
and will end on January 31, 2000. All independent directors receive a base
director's fee of $30,000 per year for service on the Board. No attendance
fees are paid for attendance at regular quarterly Board and committee
meetings, but a fee of $1,000 per meeting is paid for attendance at special
meetings and attendance at Executive Committee meetings. In addition to the
foregoing base director's fee, during the 1999 directors' compensation year,
Mr. Jalkut received a fee of $99,700 for serving as Non-Executive Chairman,
Chairman of the Human Resources Committee and Co-Chairman of the Executive
Committee, Mr. Birle received a fee of $38,000 for serving as Chairman of the
Audit Committee and Co-Chairman of the Executive Committee, Mr. Cushing
received a fee of $3,000 for serving as Chairman of the Investment Committee,
and Mr. Gerrity received a fee of $3,000 for serving as Chairman of a
management committee overseeing investments for the Company's retirement
plans. In addition, Mr. Gerrity and Mrs. Hauptfuhrer each received a fee of
$15,000 for serving on the Executive Committee. All of the Company's non-
employee directors elected to receive the foregoing fees in the form of
options to purchase IKON common stock (as further described below under
"Option Grants in Respect of Directors' Fees"), except that Mr. Jalkut
received $36,700 of the foregoing fees in cash.
For the directors' compensation year beginning on February 1, 2000, the
Company expects that the directors' fees as described above will remain
substantially unchanged, except that, in accordance with the recommendations
of the Company's independent compensation consultants, Mr. Jalkut's annual
compensation for the services described above (not including the $30,000 base
fee) will be increased to $173,000.
Option Grants in Respect of Directors Fees
IKON's Stock Option Plan for Non-Employee Directors (the "Directors' Option
Plan") enables directors of IKON to receive all or a portion of their
directors' fees in the form of options to purchase IKON common stock. The
exercise price of such options equals 100% of the fair market value of IKON
common stock on the date of grant, with 25% of the exercise price payable with
directors' fees applied to the option exercise price at the time of grant, and
the remaining 75% payable in cash upon exercise. The Directors' Option Plan
provides for an annual grant of such stock options to each director who has
filed with IKON an election to receive options
17
in lieu of all or a portion of his or her Board and/or committee fees. The
options are exercisable for twenty years (except in the case of death), but
generally may not be exercised prior to the twelve-month anniversary of the
date of grant.
Annual Option Grant
In addition to the above options, each independent director receives an
automatic annual grant of options to purchase 7,000 shares of IKON common
stock pursuant to the Directors' Option Plan. Options are granted at an
exercise price equal to the fair market value of IKON common stock on the date
of grant. Options are immediately exercisable and remain exercisable for a
period of ten years from the date of grant.
Restricted Stock Awards
Each non-employee director also receives an annual award of 1,750 shares of
restricted common stock, which vest 20% per year beginning on the first
anniversary of the date of grant.
New Director Options
Each new non-employee director of IKON receives a one-time grant of 25,000
options to purchase IKON common stock. The options are granted at an exercise
price equal to the fair market value of IKON common stock on the date of
grant, vest 20% per year beginning on the first anniversary of the date of
grant, and have a ten-year term.
18
II. ADOPTION OF 2000 IKON OFFICE SOLUTIONS NON-EMPLOYEE
DIRECTORS' COMPENSATION PLAN
The Board of Directors proposes and recommends that the shareholders approve
the 2000 IKON Office Solutions, Inc. Non-Employee Directors' Compensation Plan
(the "2000 Directors' Plan"), which provides for the granting of stock options
and restricted stock to directors who are not employees of the Company. The
Company estimates that a maximum of sixteen individuals may be eligible to
participate in the 2000 Directors' Plan.
General
The 2000 Directors' Plan was adopted by the Board on October 20, 1999,
subject to shareholder approval, as a continuation of the directors
compensation program which the Company had adopted pursuant to two directors'
stock option plans previously approved by shareholders.
A total of 1,000,000 shares of common stock are to be reserved for issuance
under the 2000 Directors' Plan, subject to adjustment for subsequent stock
splits, stock dividends and other changes in the common stock. Upon the
exercise of an option or the vesting of restricted stock, IKON may issue new
shares or treasury shares. If an option or share of restricted stock under the
2000 Directors' Plan is terminated or cancelled without having been exercised
or issued, the shares which were not issued will again become available for
issuance.
Administration
The 2000 Directors' Plan will be administered by the Board, which has the
authority to grant of stock options and/or restricted stock awards, determine
the terms and conditions of such grants and exercise all other powers as set
forth in the 2000 Directors' Plan.
Options to be Granted Pursuant to the 2000 Directors' Plan
The 2000 Directors' Plan provides for four types of options that may be
granted to non-employee directors of IKON: 1) a one-time grant of options to
purchase 25,000 shares of IKON common stock to each person who is not an
employee of IKON who becomes a member of IKON's Board ("New Director
Options"), as adjusted from time to time; 2) an annual grant of options to
purchase 7,000 shares of IKON common stock ("Annual Options"), as adjusted
from time to time; 3) options that may be granted in the Board's discretion
("Discretionary Options"); and 4) options that a non-employee director may
elect to receive in lieu of director's fees ("Retainer Options"). The exercise
price for New Director Options and Annual Options is equal to 100% of the fair
market value of IKON common stock on the date of grant. The exercise price for
Retainer Options is equal to 100% of the fair market value of IKON common
stock on the date of grant, with 25% of the exercise price payable using
directors' fees applied to the exercise price in lieu of cash at the time of
grant, and the remaining 75% of the exercise price payable in cash upon
exercise. The exercise price for Discretionary Options is determined by the
Board at the time of grant, but shall not be less than the fair market value
of IKON stock on the date of grant.
Restricted Stock to be Granted Pursuant to the 2000 Directors' Plan
The 2000 Directors' Plan provides for two types of restricted stock grants
that may be made to non-employee directors of IKON: 1) an annual restricted
stock grant of 1,750 shares of common stock, as adjusted from time to time;
and 2) restricted stock grants of common stock that may be made in the Board's
discretion. The shares underlying the annual restricted stock grant generally
vest in five equal annual installments, beginning on the first anniversary of
the date of grant.
Change-in-Control and Adjustments in Capitalization
The 2000 Directors' Plan provides that, in the event of a change-in-control
or potential change-in-control (as defined in the 2000 Directors' Plan), the
vesting of all options and/or restricted stock granted pursuant to the
19
2000 Directors' Plan will accelerate and such options will become exercisable
and/or restricted stock will be issued. The 2000 Directors' Plan further
provides that, in the event of any stock dividend, stock split, combination of
shares, merger, consolidation, reorganization, spin-off, or recapitalization
affecting the outstanding shares of the Company's common stock (the "Event"),
the maximum number and kind of shares that may be issued under the Plan, the
number of shares with respect to which future New Director Options and Annual
Options are to be granted, the number and kind of shares subject to then
outstanding options or restricted stock awards, and the price for each share
subject to any then outstanding options shall be appropriately and equitably
adjusted as necessary to maintain the same proportionate number of shares as
existed immediately prior to the Event and the same aggregate option price.
Tax Consequences
Options to be granted under the 2000 Directors' Plan are nonqualified stock
options, which are not entitled to special tax treatment under Section 422 of
the Code. Generally, there are no tax consequences to IKON or to a non-
employee director when a nonqualified option is granted. When such an option
is exercised, the excess of the then fair market value of the shares over the
exercise price of the option will constitute ordinary income to the non-
employee director and IKON will be entitled to deduct an equal amount as
compensation expense.
If a non-employee director makes an election to receive Retainer Options
instead of director's fees before the period in which the fees are earned, the
non-employee director will not recognize income on the date the fees would
otherwise be paid. The non-employee director will recognize ordinary income at
the time of option exercise in the same manner as other options, i.e. to the
extent that the fair market value of the shares exceeds the exercise price of
the option. However, if a non-employee director makes an election to receive
Retainer Options after the period in which the fees are earned, the non-
employee director will recognize income on the date the fees would otherwise
be paid. IKON will generally be entitled to corresponding deduction at the
time the non-employee director recognizes income.
Generally, there are no tax consequences to IKON or to a non-employee
director when a restricted stock award is granted. When such award vests and
is distributed, the director will recognize ordinary income in the amount of
the fair market value of the common stock underlying the award at the time of
the distribution, and IKON will be entitled to deduct an equal amount as
compensation expense.
A non-employee director may elect to recognize ordinary income when a
restricted stock award is granted in an amount equal to the fair market value
of the shares at the date of grant. This election is referred to as a "section
83(b) election." IKON, generally, will be entitled to a corresponding
deduction in the same year. Any gain or loss recognized by a non-employee
director upon a later disposition of the shares will be capital gain or loss.
If a non-employee director makes a section 83(b) election at the time of an
award and then forfeits the shares, he or she will not be entitled to any tax
deduction or tax refund with respect to the tax previously paid.
Upon disposition of the shares acquired pursuant to an option exercise or
pursuant to the vesting of a restricted stock award, long-term or short-term
capital gain or loss, as the case may be, will be recognized, equal to the
difference between the amount realized on such disposition and the basis in
the shares, which will include the amount previously recognized as ordinary
income. The capital gain holding period will commence on the date the shares
are acquired pursuant to the exercise of an option or distribution of
restricted stock.
The foregoing is not a complete summary of income tax consequences to the
director or IKON, and does not purport to address the effects of foreign,
state or local law or wage withholding requirements.
Amendment or Termination of the 2000 Directors' Plan
The Board may amend the 2000 Directors' Plan in any manner and at any time,
and may terminate the 2000 Directors' Plan in whole or in part, provided,
however that no such amendment or termination may materially affect the rights
of any person who has received an option or restricted stock award under the
2000 Directors' Plan without such person's consent, other than as set forth in
the 2000 Directors' Plan.
20
Term of Plan
No option or restricted stock award may be granted under the 2000 Directors'
Plan after October 20, 2009, but options and awards outstanding as of such
date shall continue to be governed by the terms of the 2000 Directors' Plan.
New Plan Benefits
Based on the Company's current directors' compensation program, the Company
expects that each current non-employee director of IKON will receive, on an
annual basis, the following grants pursuant to the 2000 Directors' Plan: 1) a
grant of 7,000 options to purchase IKON common stock, and 2) a restricted
stock grant of 1,750 shares of restricted IKON common stock. Although there
are currently nine non-employee directors, (including Mrs. Hauptfuhrer, who is
not standing for reelection), IKON's Code of Regulations provides that there
may be a maximum of sixteen directors of the Company (including any employee
directors). Because any future grant of Retainer Options, Discretionary
Options, or Discretionary Restricted Stock Awards is elective or discretionary
in nature, the Company is unable to estimate any future amount of such awards
that may be granted pursuant to the 2000 Directors' Plan.
Availability of 2000 Directors' Plan Document
The full text of the 2000 Directors' Plan is included as Exhibit A to this
Notice of Annual Meeting of Shareholders.
Board Recommendation
The Board believes that the adoption of the 2000 Directors' Plan will enable
the Company to provide significant equity-based incentives to non-employee
directors who are expected to contribute materially to IKON's future success.
Accordingly, the Board unanimously recommends approval of the 2000 Directors'
Plan by the shareholders.
Vote Required
The favorable vote of a majority of the votes cast, provided the total votes
actually cast represent at least a majority of the votes entitled to be cast
at the meeting, is required to approve the 2000 Directors' Plan. Member firms
of the New York Stock Exchange have authority to vote on this proposal as a
routine item and, therefore, need not decline to vote in the absence of voting
direction from an investor. Abstentions from voting on this matter will be
treated as votes against, while broker non-votes, if any, will be treated as
shares not voted. An executed proxy that does not indicate a vote for or
against the 2000 Directors' Plan will be voted, in accordance with the
recommendation of the Board of Directors, in favor of the 2000 Directors'
Plan.
III. ADOPTION OF 2000 IKON OFFICE SOLUTIONS, INC. EXECUTIVE INCENTIVE PLAN
The Board of Directors proposes and recommends that the shareholders approve
the 2000 IKON Office Solutions, Inc. Executive Incentive Plan (the "Executive
Plan"), which provides for the granting of stock options and restricted stock
to officers and other key executives of the Company. The Company estimates
that approximately thirty individuals may be eligible to participate in the
Executive Plan.
General
The Executive Plan was adopted by the Board effective October 20, 1999,
subject to shareholder approval. A total of 1,000,000 shares of common stock
are to be reserved for issuance under the Executive Plan, subject to
adjustment for subsequent stock splits, stock dividends and other changes in
the common stock. Upon the exercise of an option or the vesting of restricted
stock under the Executive Plan, IKON may issue new shares or treasury shares.
If an option or restricted stock award under the Executive Plan is terminated
or cancelled without having been exercised or issued, the shares will again
become available for issuance.
21
Administration
The Executive Plan will be administered by the Human Resources Committee of
the Board of Directors of IKON (the "Committee"), or such other committee as
the Board may from time to time designate, which committee will be composed of
not less than two "disinterested persons" for purposes of Rule 16b-3 under the
Securities Exchange Act of 1934 who also qualify as "outside directors" for
purposes of Section 162(m) of the Code.
Relationship to Other Equity-Based Plans
The Company has in effect two employee stock option plans that were
previously approved by shareholders, pursuant to which a total of 961,878 and
4,929,140 options are outstanding, respectively (with an average exercise
price of $19.04 and $22.14 per share, respectively), and a total of 1,191,723
shares remain available for grant (as of December 28, 1999). The Company also
adopted a new broad-based employee stock option plan (the "2000 Employee
Plan"), effective October 20, 1999, which provides for the grant of up to
5,000,000 options to purchase the Company's common stock, pursuant to which
3,038,000 options are outstanding (with an exercise price of $5.9375). IKON's
executive officers and directors are not eligible to participate in the 2000
Employee Plan.
The Company also has in effect a Long Term Incentive Compensation Plan that
was approved by shareholders in 1995, pursuant to which 539,000 restricted
stock grants have been made, and a total of 4,066,645 shares of common stock
remain available for issuance. Upon approval of the Executive Plan by the
shareholders, the Company will amend the Long Term Incentive Compensation Plan
to reduce the number of shares remaining available for issuance from 4,605,645
to 1,500,000, excluding outstanding restricted stock grants.
Options to be Granted Pursuant to the Executive Plan
The Committee shall determine the persons to whom options shall be granted,
the dates of grant, the number of shares to be subject to each option, the
price to be paid for the shares upon the exercise of each option, the period
within which each option may be exercised and the other terms and conditions
of options, provided, that the exercise price of options granted under the
Executive Plan shall not be less than the fair market value of IKON common
stock on the date of grant. The Committee has the authority to determine which
persons exercise such functions or discharge such responsibilities as to merit
consideration as possible optionees under the Executive Plan. The Committee
determines whether to grant options qualifying as "incentive stock options"
under Section 422 of the Code (hereinafter referred to as "ISOs") or options
which do not so qualify (hereinafter referred to as "nonqualified options"),
or a combination of both. The Executive Plan limits the number of shares
subject to options granted to any one optionee to an aggregate of 500,000
shares in any one fiscal year, subject to adjustment as provided in the
Executive Plan.
Restricted Stock to be Granted Pursuant to the Executive Plan
The Committee shall determine the persons to whom restricted stock shall be
granted, the dates of grant, the number of shares to be subject to each
restricted stock grant, the vesting provisions applicable to each restricted
stock grant, and the other terms and conditions of the restricted stock grant.
The Committee has the authority to determine which persons exercise such
functions or discharge such responsibilities as to merit consideration as
possible recipients of restricted stock grants under the Executive Plan.
Change-in-Control and Adjustments in Capitalization
The Executive Plan provides that, in the event of a change-in-control (as
defined in the Executive Plan), the vesting of all options and/or restricted
stock granted pursuant to the Executive Plan will accelerate and such options
will become exercisable and/or restricted stock will be issued. The Executive
Plan further provides that, in the event of any stock dividend, stock split,
combination of shares, merger, consolidation, reorganization, spin-off, or
recapitalization affecting the outstanding shares of common stock (the
"Event"), the maximum number and kind of shares that may be issued under the
Executive Plan, the number and kind of shares subject to then
22
outstanding options or restricted stock awards, and the price for each share
subject to any then outstanding options shall be appropriately and equitably
adjusted as necessary to maintain the same proportionate number of shares as
existed immediately prior to the Event and the same aggregate option price.
Tax Consequences
Options to be granted under the Executive Plan may be nonqualified stock
options or ISOs.
Nonqualified Stock Options
Nonqualified stock options are not entitled to special tax treatment under
Section 422 of the Code. Generally, there are no tax consequences to IKON or
to an optionee when a nonqualified option is granted. When such an option is
exercised, the excess of the then fair market value of the shares over the
exercise price of the option will constitute ordinary income to the optionee
and IKON will be entitled to deduct an equal amount as compensation expense.
Upon disposition of the shares by the optionee, long-term or short-term
capital gain or loss, as the case may be, will be recognized, equal to the
difference between the amount realized on such disposition and the optionee's
basis in the shares, which will include the amount previously recognized as
ordinary income. The capital gain holding period will commence on the date the
optionee acquires the shares pursuant to the option.
ISOs
It is intended that grants of ISOs under the Executive Plan will meet the
requirements for treatment as such under Section 422 of the Code, and that the
stock option awards evidencing ISOs contain such terms and provisions as will,
in the judgment of the Committee, permit such treatment. Under the Code, an
optionee does not recognize federal taxable income upon the grant or exercise
of an ISO and IKON is not entitled to a tax deduction. Upon disposition of the
shares by the optionee, long-term or short-term capital gain or loss, as the
case may be, will be recognized, equal to the difference between the amount
realized on such disposition and the amount the optionee paid to exercise the
option. The capital gain holding period will commence on the date the optionee
acquires the shares pursuant to the option. However, the excess of the fair
market value of the shares at the time of exercise over the option exercise
price (the "spread") will generally be included in alternative minimum taxable
income for purposes of the alternative minimum tax calculation for the year in
which the ISO is exercised.
Restricted Stock Awards
Generally, there are no tax consequences to IKON or to a recipient when a
restricted stock award is granted. When such award vests and is distributed,
the recipient will recognize ordinary income in the amount of the fair market
value of the common stock underlying the award at the time of the
distribution, and IKON will be entitled to deduct an equal amount as
compensation expense. Upon disposition of the shares acquired pursuant to the
vesting of a restricted stock award, long-term or short-term capital gain or
loss, as the case may be, will be recognized, equal to the difference between
the amount realized on such disposition and the basis in the shares, which
will include the amount previously recognized as ordinary income. The capital
gain holding period will commence on the date the shares are acquired pursuant
to the vesting of the restricted stock award.
A recipient may elect to recognize ordinary income when a restricted stock
award is granted in an amount equal to the fair market value of the shares at
the date of grant. This election is referred to as a "section 83(b) election."
IKON, generally, will be entitled to a corresponding deduction in the same
year. Any gain or loss recognized by a recipient upon a later disposition of
the shares will be capital gain or loss. If a recipient elects to make a
section 83(b) election at the time of any award and then forfeits the shares,
he or she will not be entitled to any tax deduction or tax refund with respect
to the tax previously paid.
23
The foregoing is not a complete summary of income tax consequences to the
executive or IKON, and does not purport to address the effects of foreign,
state or local law or wage withholding requirements.
Amendment or Termination of the Executive Plan
The Board may amend the Executive Plan in any manner and at any time, and
may terminate the Executive Plan in whole or in part, provided, however that
no such amendment or termination may materially affect the rights of any
person who has received an option or restricted stock award under the
Executive Plan without such person's consent, except as otherwise provided in
the Executive Plan.
Term of Plan
No option or restricted stock award may be granted under the Executive Plan
after October 20, 2009, but awards outstanding as of such date shall continue
to be governed by the terms of the Executive Plan.
Availability of Executive Plan Document
The full text of the Executive Plan is included as Exhibit B to this Notice
of Annual Meeting of Shareholders.
Board Recommendation
The Board believes that the adoption of the Executive Plan will enable the
Company to provide significant equity-based incentives to executives who are
expected to contribute materially to IKON's future success. Accordingly, the
Board unanimously recommends approval of the Executive Plan by the
shareholders.
Vote Required
The favorable vote of a majority of the votes cast, provided the total votes
actually cast represent at least a majority of the votes entitled to be cast
at the meeting, is required to approve the Executive Plan for all purposes,
including the shareholder approval requirements under Section 162(m) of the
Code. Member firms of the New York Stock Exchange have authority to vote on
this proposal as a routine item and, therefore, need not decline to vote in
the absence of voting direction from an investor. Abstentions from voting on
this matter will be treated as votes against, while broker non-votes, if any,
will be treated as shares not voted. An executed proxy that does not indicate
a vote for or against the Executive Plan will be voted, in accordance with the
recommendation of the Board of Directors, in favor of the Executive Plan.
V.GENERAL AND OTHER MATTERS
The Board knows of no matter, other than as referred to in this proxy
statement, which will be presented at the annual meeting of shareholders.
However, if other matters properly come before the meeting or any of its
adjournments, the person or persons voting the proxies will vote them in
accordance with their judgment in such matters. The Board is not aware that
any nominee named herein will be unable or unwilling to accept nomination or
election. Should any nominee for the office of director become unable to
accept nomination or election, the persons named in the proxy will vote for
the election of such other person, if any, as the Board may recommend.
The cost of soliciting proxies will be borne by IKON. Employees of IKON may
solicit proxies personally or by telephone. In addition to solicitation by
mail and by employees, arrangements have been made with Georgeson Shareholder
Communication, Inc. to solicit proxies, at an expected cost of $9,000 (plus
out-of-pocket expenses).
Votes are tabulated by National City Bank, IKON's transfer agent. Shares
represented by abstentions are counted in determining the number of shares
present at a meeting, but are not counted as a vote in favor of a proposal,
and therefore have the same effect as a vote withheld or a vote against.
Broker non-votes are counted
24
in determining the number of shares present at the meeting, but are treated as
shares not voted with respect to each proposal.
You are urged to sign and return your proxy promptly to make certain your
shares will be voted at the meeting. If you sign and return your proxy, but do
not vote on any director nominee, your shares will be voted in accordance with
the recommendation of the Board of Directors. You may revoke the proxy at any
time before it is voted by giving notice to the Secretary of IKON, and if you
attend the meeting, you may vote your shares in person. For your convenience,
a return envelope is enclosed, requiring no additional postage if mailed in
the United States.
Independent Accountants
On December 15, 1999, the Board and the Audit Committee of the Company
approved the engagement of Pricewaterhouse Coopers LLP ("PWC") as its
independent auditors for the fiscal year ending September 30, 2000 to replace
the firm of Ernst & Young LLP ("E&Y") who were dismissed as auditors of the
Company effective December 28, 1999. On December 28, 1999, the Company filed
its Annual Report on Form 10-K for the fiscal year ended September 30, 1999,
which included the Report of Ernst & Young on the Company's financial
statements. Representatives of both PWC and E&Y are expected to be present at
the meeting, will have the opportunity to make a statement if they desire to
do so, and are expected to be available to respond to appropriate questions.
The reports of E&Y on the Company's consolidated financial statements for
the fiscal years ended September 30, 1998 and 1997 did not contain an adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
In connection with the audits of the Company's financial statements for the
Company's fiscal years ended September 30, 1999 and 1998, and the subsequent
interim period through December 28, 1999 (the date of E&Y's dismissal as the
Company's independent auditor), (1) there were no disagreements with E&Y on
any matters of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of E&Y, would have caused E&Y to make a reference
to the matter of the disagreements in connection with its reports in the
financial statements for such years; and (2) there were no "reportable events"
as that term is described in Item 304(a)(1)(v) of Regulation S-K.
During the two most recent fiscal years, the Company has not consulted PWC
regarding: (1) the application of accounting principles to a specified
transaction, either completed or proposed; (2) the type of audit opinion that
might be rendered on the Company's financial statements, and in no case was a
written report provided to the Company nor was oral advice provided that the
Company concluded was an important factor in reaching a decision as to an
accounting, auditing or financial reporting issue; or (3) any matter
concerning a disagreement, as that term is defined in 304(a)(1)(iv) of
Regulation S-K and the related instructions to Item 304 of Regulation S-K, or
a reportable event with the former auditor (as described in Regulation S-K
Item 304(a)(1)(v)).
2001 Annual Meeting
Shareholders may submit proposals on matters appropriate for shareholder
action at the Company's annual meetings consistent with the Company's Code of
Regulations and regulations adopted by the SEC. For shareholder proposals to
be considered by the Board for inclusion in the Proxy Statement and form of
proxy relating to the 2001 annual meeting of shareholders, they must be
received by the Company not later than September 13, 2000. If any shareholder
wishes to present a proposal to the 2001 annual meeting of shareholders that
is not included in the Company's Proxy Statement relating to such meeting and
fails to submit such proposal to the Secretary of the Company on or before
November 27, 2000, then the Board will be allowed to use its discretionary
voting authority when the proposal is raised at the annual meeting. All
proposals should be
25
addressed to the Company at P.O. Box 834, Valley Forge, PA 19482-0834,
Attention: Secretary. Nothing in this paragraph shall be deemed to require the
Company to permit presentation of a shareholder proposal or to include in its
proxy materials relating to such annual meeting of shareholders any
shareholder proposal which does not meet all of the requirements for
presentation or inclusion established by the Company's Code of Regulations
and/or the regulations of the SEC at that time in effect.
Annual Report on Form 10-K
Upon the written request of any shareholder entitled to vote at the upcoming
Annual Meeting, the Company will furnish to such shareholder, without charge,
a copy of the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1999. Such requests should be directed to IKON's website at
www.IKON.com or to: Investor Relations, IKON Office Solutions, Inc., P.O. Box
834, Valley Forge, PA 19482-0834.
Karin M. Kinney
Secretary
January 11, 2000
26
Exhibit A
2000 IKON OFFICE SOLUTIONS, INC.
NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN
ARTICLE I
Purpose
The purpose of this 2000 IKON Office Solutions, Inc. Non-Employee Directors'
Compensation Plan (the "Plan") is to enable IKON Office Solutions, Inc. (the
"Company") to offer non-employee directors of the Company the opportunity to
acquire equity interests in the Company, thereby attracting, retaining and
rewarding such persons, and strengthening the mutuality of interests between
such persons and the Company's shareholders.
ARTICLE II
Definitions
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Annual Option" shall mean an option to purchase shares of Common Stock
granted pursuant to Section 6.2.
2.2 "Annual Restricted Stock Award " shall mean the right to receive shares
of the Company's Common Stock granted pursuant to Section 6.6.
2.3 "Award," "Stock Option Award," or "Restricted Stock Award" shall mean
the award document evidencing the grant of an Option or Restricted Stock Award
and the terms and conditions of such grant.
2.4 "Board" shall mean the Board of Directors of the Company.
2.5 "Change-in-Control Event" shall mean any of the following events:
(a) any Person, together with its affiliates and associates (as such
terms are used in Rule 12b-2 of the Exchange Act), is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 15% or more of the then outstanding shares of
common stock of the Company; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on
October 20, 1999, constituted the Board and any new director whose
appointment or election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least a majority of the
directors then still in office who either were directors on October 20,
1999 or whose appointment, election or nomination for election was
previously so approved; or
(c) the Company consolidates with, or merges with or into, any other
Person (other than a wholly owned subsidiary of the Company), or any other
Person consolidates with, or merges with or into, the Company, and, in
connection therewith, all or part of the outstanding shares of common stock
shall be changed in any way or converted into or exchanged for stock or
other securities or cash or any other property; or
(d) a transaction or series of transactions in which, directly or
indirectly, the Company shall sell or otherwise transfer (or one or more of
its subsidiaries shall sell or otherwise transfer) assets (i) aggregating
more than 50% of the assets (measured by either book value or fair market
value) or (ii) generating more than 50% of the operating income or cash
flow of the Company and its subsidiaries (taken as a whole) to any other
Person or group of Persons.
A-1
Notwithstanding the foregoing, no "Change-in-Control Event" shall be
deemed to have occurred if there is consummated any transaction or series
of integrated transactions immediately following which the record holders
of the common stock of the Company immediately prior to such transaction or
series of transactions own a majority of the outstanding voting shares and
in substantially the same proportion in an entity which owns all or
substantially all of the assets of the Company immediately following such
transaction or series of transactions.
2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.7 "Common Stock" shall mean the Common Stock, no par value, of the
Company.
2.8 "Company" shall mean IKON Office Solutions, Inc.
2.9 "Director" shall mean a member of the Board.
2.10 "Discretionary Option" shall mean an option to purchase shares of
Common Stock granted pursuant to Section 6.3.
2.11 "Discretionary Restricted Stock Award " shall mean the right to receive
shares of Common Stock granted pursuant to Section 6.3.
2.12 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
2.13 "Fair Market Value" as of any date shall mean, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, the closing sales price of a share of Common Stock for the
applicable trading day as reported on the New York Stock Exchange Composite
Tape.
2.14 "New Director Option" shall mean an option to purchase shares of Common
Stock granted pursuant to Section 6.1.
2.15 "Non-Employee Director" shall mean a Director who is not an employee of
the Company or any parent or subsidiary of the Company (as defined in Section
425 of the Code).
2.16 "Restricted Stock Award " shall mean the right to receive shares of the
Company's Common Stock granted pursuant to Section 6.3 or 6.6 of the Plan.
2.17 "Participant" shall mean a person to whom an Option or Restricted Stock
Award has been granted under this Plan.
2.18 "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act), (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any of its affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
2.19 "Potential Change-in-Control Event" shall mean the occurrence of any
one of the following:
(a) the Company enters into an agreement, the consummation of which will
result in the occurrence of a Change-in-Control Event;
(b) the Company or any Person publicly announces an intention to take or
to consider taking actions which, if consummated, would constitute a
Change-in-Control Event; or
(c) the Board adopts a resolution to the effect that a Potential Change-
in-Control Event has occurred.
2.20 "Retainer Option" shall mean an option to purchase shares of Common
Stock granted pursuant to Section 6.4.
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2.21 "Stock Option" or "Option" shall mean a New Director Option, an Annual
Option, a Discretionary Option or a Retainer Option granted pursuant to
Article VI.
ARTICLE III
Administration
3.1 Administration. The Plan shall be administered and interpreted by the
Board. The Board may from time to time appoint a plan administrator to carry
out the day-to-day duties and responsibilities relating to the Plan.
3.2 Guidelines. Subject to Article VII hereof, the Board shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan as it shall, from time to time, deem advisable;
to interpret the terms and provisions of this Plan and any Option or
Restricted Stock Award granted under this Plan (and any agreements relating
thereto); and to otherwise supervise the administration of this Plan. The
Board may correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any Option or Restricted Stock Award in the
manner and to the extent it shall deem necessary to carry this Plan into
effect.
3.3 Decisions Final. Any decision, interpretation or other action made or
taken in good faith by the Board arising out of or in connection with the Plan
shall be final, binding and conclusive on the Company, all employees,
Directors and Participants and their respective heirs, executors,
administrators, successors and assigns.
ARTICLE IV
Share Limitations
4.1 Shares. The maximum aggregate number of shares of Common Stock that may
be issued under this Plan shall be 1,000,000 (subject to any increase or
decrease pursuant to Section 4.2), which may be either authorized and unissued
Common Stock or issued Common Stock reacquired by the Company. If and to the
extent any Option or Restricted Stock Award granted under this Plan expires,
terminates, or is cancelled, exchanged or surrendered for any reason without
having been issued as Common Stock, the number of unissued shares shall again
be available for the purposes of the Plan.
4.2 Adjustments. In the event of any stock dividend, stock split,
combination of shares, merger, consolidation, reorganization, spin-off, or
recapitalization affecting the outstanding shares of Common Stock (the
"Event"), the maximum number and kind of shares that may be issued under the
Plan, the number of shares with respect to which future New Director Options,
Annual Options and Annual Restricted Stock Awards are to be granted, the
number and kind of shares subject to then outstanding Options and/or
Restricted Stock Awards, and the price for each share subject to any then
outstanding Options shall be appropriately and equitably adjusted as necessary
to maintain the same proportionate number of shares as existed immediately
prior to the Event and the same aggregate option price.
ARTICLE V
Eligibility
5.1 Any person who is a Non-Employee Director, or who is then becoming a
Non-Employee Director, is eligible to be granted New Director Options, Annual
Options, Discretionary Options, Retainer Options, Annual Restricted Stock
Awards and Discretionary Restricted Stock Awards in accordance with the terms
of this Plan.
ARTICLE VI
Stock Options and Restricted Stock Awards
6.1 New Director Options. For as long as this Plan remains in effect, each
Non-Employee Director shall, upon his or her initial election to the Board, or
as soon thereafter as practicable, be granted a New Director
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Option to purchase 25,000 shares of Common Stock (subject to adjustment as
provided in Section 4.2 and/or as determined by the Board).
6.2 Annual Options. Each year for as long as this Plan remains in effect,
each person who is elected a Director at the Company's annual meeting of
shareholders and who is a Non-Employee Director shall automatically be granted
an Annual Option to purchase 7,000 shares of Common Stock, subject to
adjustment as provided in Section 4.2 and/or as determined by the Board. Such
options will generally be granted on the date of the annual organizational
meeting following the annual shareholders' meeting.
6.3 Discretionary Options/Restricted Stock Awards. The Board shall have full
authority to grant Discretionary Options or Discretionary Restricted Stock
Awards to any Non-Employee Director, including the authority:
(a) to select the Non-Employee Directors to whom Discretionary Options or
Discretionary Restricted Stock Awards may from time to time be granted;
(b) to determine whether and to what extent Discretionary Options or
Discretionary Restricted Stock Awards are to be granted to such Non-
Employee Directors;
(c) to determine the number of shares of Common Stock to be covered by
each Discretionary Option or Discretionary Restricted Stock Award granted;
and
(d) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Discretionary Option or Discretionary Restricted
Stock Award granted (including, but not limited to, the exercise price, the
term, any restriction or limitation affecting the exercisability of the
Option or vesting of the Restricted Stock Award, and any conditions under
which the exercisability of the Option or vesting of the Restricted Stock
Award will be accelerated). Notwithstanding the foregoing, the exercise
price for Discretionary Options shall be not less than the fair market
value of the Common Stock or the date of grant.
6.4 Retainer Options. Each year for as long as this Plan remains in effect,
Retainer Options shall be granted to any Non-Employee Director who has filed
with the Company an election to receive stock options in lieu of the Annual
Retainer (as defined below), or some portion thereof, to be earned by such
Director in each Plan Year (as defined below) during which he or she shall
serve as a Director.
(a) Option Formula. The number of shares of Common Stock subject to the
Retainer Options granted to any Director for a Plan Year shall be equal to
the nearest number of whole shares obtained by dividing (i) the Director's
Annual Retainer (as defined below) by (ii) 25% of the Fair Market Value of
a share of Common Stock on the date of grant.
(b) Annual Retainer. For purposes of this Plan, "Annual Retainer" shall
mean the amount of fees which the Director will be entitled to receive
during a Plan Year for serving as a Director or a chairperson or member of
one or more committees of the Board, or a chairperson or trustee of any of
the Company's employee benefit plan trusts, or as Non-Executive Chairman;
provided, however, that if a Director elects to receive a stock option in
lieu of only a portion of the Annual Retainer, the Annual Retainer for
purposes of the formula set forth in Section 6.4(a) shall equal the portion
of the Annual Retainer so elected. For purposes of this Plan, "Annual
Retainer" shall not include attendance fees or fees for any other services
to be provided to the Company except as set forth herein.
(c) Plan Year. For purposes of this Plan, "Plan Year" shall mean the
twelve-month period beginning each February 1 and ending on the last day of
January. However, if the Company's annual meeting of shareholders is held
in a month other than January, the Board may change the Plan Year to a
period that corresponds appropriately to the date of the annual meeting of
shareholders.
6.5 Terms of Options. Unless otherwise determined by the Board, options
granted under this Plan shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Board shall deem desirable:
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(a) Stock Option Award. Each Stock Option shall be evidenced by, and
subject to the terms of, a Stock Option Award. The Stock Option Award shall
specify the number of shares of Common Stock subject to the Stock Option,
the option price, the option term, and the other terms and conditions
applicable to the Stock Option.
(b) Option Price. The option price per share of Common Stock purchasable
upon exercise of a Stock Option shall be determined as follows: (i) in the
case of New Director Options and Annual Options, the option price shall be
100% of the Fair Market Value of a share of Common Stock on the date of
grant; (ii) in the case of Discretionary Options, the option price shall be
determined by the Board at the time of grant but shall not be less than the
Fair Market Value of the Common Stock on the date of the grant; and (iii)
in the case of Retainer Options, the option price shall be 100% of the Fair
Market Value of a share of Common Stock on the date of grant, with 25% of
the exercise price payable using directors' fees applied to the exercise
price in lieu of cash at the time of grant, and the remaining 75% of the
exercise price payable in cash upon exercise.
(c) Option Term. The term of each Stock Option shall be as follows: (i)
in the case of New Director Options and Annual Options, the term shall be
ten years; (ii) in the case of Discretionary Options, the term shall be
fixed by the Board at the time of grant; and (iii) in the case of Retainer
Options, the term shall be twenty years.
(d) Exercisability. Unless otherwise specified in a Stock Option Award,
Stock Options shall be exercisable as follows: (i) New Director Options
shall become exercisable in five equal annual installments, beginning on
the first anniversary of the date of grant; (ii) Annual Options shall be
immediately exercisable beginning the day after the date of grant; (iii)
Discretionary Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Board at
the time of grant; and (iv) Retainer Options shall be exercisable beginning
on the first anniversary of the date of grant. Notwithstanding the
foregoing, the Board may waive the vesting provisions of any Stock Option,
in whole or in part, at any time after the date of grant, based on such
factors as the Board shall, in its sole discretion, deem appropriate.
(e) Method of Exercise. Subject to any applicable vesting provisions,
Stock Options may be exercised in whole or in part at any time during the
option term, by giving written notice of exercise to the Company specifying
the number of shares of Common Stock to be purchased and the option price
for such shares. The option price shall be paid in full by: (i) delivering
cash or a check payable to the order of the Company prior to the delivery
of the shares, (ii) making arrangements for a broker-assisted exercise (in
which the broker forwards the exercise price), or (iii) making payment
using shares of Common Stock owned by the Participant for at least six
months preceding the exercise date. Upon exercise of the Option, a stock
certificate or stock certificates representing the number of shares of
Common Stock to which the Participant is entitled shall be delivered to the
Participant (or, for broker-assisted exercises, to the broker). A
Participant shall not be deemed to be the holder of Common Stock, or to
have the rights of a holder of Common Stock, with respect to shares subject
to the Option, until the Option has been exercised.
(f) Termination. Unless otherwise determined by the Board, or provided in
the particular Stock Option Award, Stock Options held by a Participant who
ceases to be a Director shall be exercisable as follows:
(i) In the case of a Participant who ceases to be a Director because
of death, all Options that were outstanding on the date of the
Participant's death may be exercised by the legal representative of the
Participant's estate for a period of one year after the date of death
or until the expiration of the stated term of the Option, whichever
period is shorter.
(ii) In the case of a Participant who ceases to be a Director for any
other reason (including retirement because of age or disability), all
Options that were exercisable on the date on which the Participant
ceased to be a Director may be exercised by the Participant until the
expiration of the stated term of the Option.
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(iii) Any Option not exercised during the periods specified in
subsections (i) or (ii) shall terminate at the end of such period;
provided, however, that the Board may accelerate the exercisability of
any Option, extend the one-year period specified in subsection (i), or
make such other modifications to the Stock Option Award, not
inconsistent with legal requirements, as the Board shall, in its sole
discretion, deem appropriate.
6.6 Annual Restricted Stock Awards. Each year for so long as this Plan
remains in effect, each person who is elected a Director at the Company's
annual meeting of shareholders and who is a Non-Employee Director shall
automatically be granted a Restricted Stock Award entitling the Director to
receive 1,750 shares of Common Stock, subject to adjustment as provided in
Section 4.2 and/or as determined by the Board.
6.7 Terms of Restricted Stock Awards. Unless otherwise determined by the
Board, Restricted Stock Awards granted under this Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Board shall
deem desirable:
(a) Restricted Stock Award. Each Restricted Stock Award shall be
evidenced by, and subject to the terms of, a Restricted Stock Award. The
Restricted Stock Award shall specify the number of shares of Common Stock
subject to the Restricted Stock Award and the other terms and conditions
applicable to the Restricted Stock Award.
(b) Vesting and Other Conditions. At the time the Restricted Stock Award
is granted, the Board shall determine the vesting conditions, if any,
applicable to the Award, and any other conditions applicable to the Award.
Notwithstanding the foregoing, the Board may waive the vesting provisions
or any other provisions of any Restricted Stock Award, in whole or in part,
at any time after the date of grant, based on such factors as the Board
shall, in its sole discretion, deem appropriate.
(c) Termination. Unless otherwise determined by the Board, or provided in
the particular Restricted Stock Award, Restricted Stock Awards held by a
Participant who ceases to be a Director shall be issuable as follows:
(i) In the case of Participant who ceases to be a Director because of
death, all Restricted Stock Awards that were outstanding on the date of
death will be issued to the legal representative of the Participant's
estate as soon as practicable, but in no event later than one year from
the date of death;
(ii) in the case of a Participant who ceases to be a Director for any
other reason (including retirement because of age or disability), all
Restricted Stock Awards that were outstanding as of the date on which
the Participant ceased to be a Director (the "Termination Date") shall
be forfeited, unless the applicable vesting date for such Award is
prior to the Termination Date and/or except as otherwise determined by
the Board.
6.8 Change-in-Control. All outstanding Options shall automatically become
fully exercisable, and all Restricted Stock Awards shall fully vest upon the
occurrence of a Potential Change-in-Control Event or a Change-in-Control
Event. In no event shall this Section 6.8, or Sections 2.5, 2.19 or 4.2 be
subject to modification after a Potential Change-in-Control Event or Change-
in-Control Event has occurred.
ARTICLE VII
Termination or Amendment
7.1 Termination or Amendment of the Plan. The Board may at any time
terminate this Plan or amend all or any part of this Plan, prospectively or
retroactively; provided, however, that, unless otherwise required by law, the
rights of a Participant with respect to Options or Restricted Stock Awards
granted prior to such termination or amendment may not be materially impaired
without the consent of such Participant, except as otherwise provided in the
Plan.
7.2 Amendment of Options or Restricted Stock Awards. The Board may amend the
terms of any outstanding Option or Restricted Stock Award, prospectively or
retroactively, but no such amendment or other
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action by the Board shall materially impair the rights of any Participant
without the Participant's consent, except as otherwise provided in the Plan.
ARTICLE VIII
General Provisions
8.1 Nonassignment. Except as otherwise provided in this Plan, Options and
Restricted Stock Awards granted hereunder and the rights and privileges
conferred thereby shall not be sold, transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise), and shall
not be subject to execution, attachment or similar process.
8.2 Legend. All certificates representing shares of Common Stock delivered
pursuant to this Plan shall be subject to such stock transfer orders and other
restrictions as the Board may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is listed or traded, any applicable
federal or state securities law, and any applicable corporate law, and the
Board may cause a legend or legends to be put on stock certificates to make
appropriate reference to such restrictions.
8.3 Other Plans. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is desired or required, and such arrangements may be
either generally applicable or applicable only in specific cases.
8.4 No Right to Continue as Director. Neither this Plan nor the grant of any
Option or Restricted Stock Award shall constitute evidence of any agreement or
understanding, express or implied, that a Director will continue as a member
of the Board, or that the Company will nominate any Director for reelection by
the Company's shareholders.
8.5 Withholding of Taxes. The Company shall have the right, prior to
delivering a stock certificate representing the shares of Common Stock
otherwise deliverable to a Participant, to (i) require the Participant to
remit to the Company an amount sufficient to satisfy all federal, state, local
and non-U.S. tax withholding requirements (including social security and
Medicare withholding requirements, if applicable), (ii) reduce the number of
shares of Common Stock otherwise deliverable to the Participant by an amount
that would have a Fair Market Value on the date of exercise equal to the
amount of all federal, state, local and non-U.S. taxes (including social
security and Medicare taxes, if applicable) required to be withheld, or (iii)
deduct the amount of such taxes from cash payments otherwise to be made to the
Participant.
8.6 Listing and Other Conditions.
(a) The Company shall have no obligation to issue any shares of Common
Stock upon exercise of an Option or vesting of a Restricted Stock Award
unless and until the shares are listed on the New York Stock Exchange, and
the right to exercise any Option or receive Common Stock pursuant to a
Restricted Stock Award may be suspended until such listing has been
effected.
(b) If at any time counsel to the Company shall be of the opinion that
any sale or delivery of shares of Common Stock under this Plan is or may
under the circumstances be unlawful or result in the imposition of excise
taxes under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933 or otherwise
with respect to shares of Common Stock or Options, and the right to
exercise any Option or receive Common Stock pursuant to any Restricted
Stock Award shall be suspended until, in the opinion of such counsel, such
sale or delivery shall be lawful or shall not result in the imposition of
excise taxes.
(c) Upon termination of any period of suspension under this Section 8.6,
any Option or Restricted Stock Award affected by such suspension which
shall not then have expired or terminated shall be reinstated
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as to all shares available before such suspension and as to shares which
would otherwise have become available during the period of such suspension,
but no such suspension shall extend the term of any Option or Restricted
Stock Award.
8.7 Governing Law. This Plan and actions taken in connection herewith shall
be governed and construed in accordance with the laws of the Commonwealth of
Pennsylvania.
8.8 Construction. Wherever any words are used in this Plan in the masculine
gender they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply.
8.9 Liability of Plan Administrators. No member or former member of the
Board or employee plan administrator shall be liable, in the absence of bad
faith or willful misconduct, for any act or omission with respect to service
as an administrator of the Plan, which service shall constitute service as a
director or employee of the Company entitling such person to indemnification
and reimbursement pursuant to its Code of Regulations.
8.10 Costs. Unless otherwise determined by the Board, the Company shall bear
all expenses incurred in administering this Plan, including expenses of
issuing Common Stock pursuant to the Plan.
8.11 Severability. If any part of this Plan shall be determined to be
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of this Plan, which shall
continue in full force and effect.
8.12 Successors. This Plan shall be binding upon and inure to the benefit of
any successor or successors of the Company.
8.13 Headings. Article and section headings contained in this Plan are
included for convenience only and are not to be used in construing or
interpreting this Plan.
ARTICLE IX
Effective Date of Plan
9.1 Effective Date. This Plan shall become effective as of October 20, 1999.
ARTICLE X
Term of Plan
10.1 Term. No Stock Option or Restricted Stock Award shall be granted
pursuant to this Plan after October 20, 2009, but Options or Restricted Stock
Awards granted prior to such date may extend beyond that date.
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Exhibit B
2000 IKON OFFICE SOLUTIONS, INC.
EXECUTIVE INCENTIVE PLAN
ARTICLE I
Purpose
The purpose of this 2000 IKON Office Solutions, Inc. Executive Incentive
Plan (the "Plan") is to enable IKON Office Solutions, Inc. (the "Company") to
offer key executives, including but not limited to, executive officers of the
Company and its subsidiaries equity interests in the Company, thereby
attracting, retaining and rewarding such persons, and strengthening the
mutuality of interests between such persons and the Company's shareholders.
ARTICLE II
Definitions
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Award," "Stock Option Award," or "Restricted Stock Award" shall mean
the award document evidencing the grant of an Option or Restricted Stock Award
and the terms and conditions of such grant.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Change-in-Control" shall mean any of the following events:
(a) any Person, together with its affiliates and associates (as such
terms are used in Rule 12b-2 of the Exchange Act), is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 15% or more of the then outstanding shares of
the Company's Common Stock; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on
October 20, 1999, constituted the Board of Directors of the Company and any
new director whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at least a
majority of the directors then still in office who either were directors of
the Company on October 20, 1999 or whose appointment, election or
nomination for election was previously so approved; or
(c) the Company consolidates with, or merges with or into, any other
Person (other than a wholly owned subsidiary of the Company), or any other
Person consolidates with, or merges with or into, the Company, and, in
connection therewith, all or part of the outstanding shares of Common Stock
shall be changed in any way or converted into or exchanged for stock or
other securities or cash or any other property; or
(d) a transaction or series of transactions in which, directly or
indirectly, the Company shall sell or otherwise transfer (or one or more of
its subsidiaries shall sell or otherwise transfer) assets (i) aggregating
more than 50% of the assets (measured by either book value or fair market
value) or (ii) generating more than 50% of the operating income or cash
flow of the Company and its subsidiaries (taken as a whole) to any other
Person or group of Persons.
Notwithstanding the foregoing, no Change-in-Control shall be deemed to have
occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the Company's
Common Stock immediately prior to such transaction or series of transactions
own a majority of the outstanding voting shares and in substantially the same
proportion in an entity which owns all or substantially all of the assets of
the Company immediately following such transaction or series of transactions.
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2.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.5 "Committee" shall mean a committee appointed by the Board to administer
the Plan, consisting of two or more directors, each of whom is a "non-employee
director" as defined in Rule 16b-3 under the Exchange Act and an "outside
director" as defined in regulations under Section 162(m) of the Code.
2.6 "Common Stock" shall mean the Common Stock, no par value, of the
Company.
2.7 "Company" shall mean IKON Office Solutions, Inc.
2.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same may be amended from time to time.
2.9 "Executive Officer" shall mean any executive officer (as such term is
defined under Rule 16a-1(f) of the Securities and Exchange Act of 1934) or any
other individual designated by the Company as an executive officer.
2.10 "Fair Market Value" as of any date shall mean, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, the closing sales price of a share of Common Stock for the
applicable trading day as reported on the New York Stock Exchange Composite
Tape.
2.11 "Incentive Stock Option" shall mean any Stock Option awarded under this
Plan intended to be and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code or any successor section.
2.12 "Nonqualified Stock Option" shall mean any Stock Option awarded under
this Plan that is not an Incentive Stock Option.
2.13 "Participant" shall mean a person to whom an Award has been granted
under this Plan.
2.14 "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its Affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act), (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of the Company's stock.
2.15 "Restricted Stock Award" shall mean the right to receive shares of the
Company's Common Stock granted pursuant to Article VI.
2.16 "Stock Option" or "Option" shall mean any option to purchase shares of
Common Stock granted pursuant to Article VI.
ARTICLE III
Administration
3.1 The Committee. The Plan shall be administered and interpreted by the
Committee. The Committee may from time to time appoint a plan administrator to
carry out the day-to-day duties and responsibilities relating to the Plan.
3.2 Awards. The Committee shall have full and sole authority to grant Awards
to persons eligible under Article V, including the authority:
(a) to select the persons to whom Awards may from time to time be
granted;
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(b) to determine whether and to what extent Restricted Stock Awards,
Incentive Stock Options or Nonqualified Stock Options, or any combination
thereof, are to be granted to one or more persons eligible to receive
Awards under Article V;
(c) to determine the number of shares of Common Stock to be covered by
each Award; and
(d) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Restricted Stock Award or any Option granted
(including, but not limited to, the exercise price of the Option, the term
of the Option, any restriction or limitation affecting the exercisability
of the Option or vesting of the Restricted Stock Award and any conditions
under which the exercisability of the Option or vesting of the Restricted
Stock Award will be accelerated).
3.3 Guidelines. Subject to Article VII hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan as it shall, from time to time, deem advisable;
to interpret the terms and provisions of this Plan and any Award granted under
this Plan (and any agreements relating thereto); and to otherwise supervise
the administration of this Plan. The Committee may correct any defect, supply
any omission or reconcile any inconsistency in this Plan or in any Award in
the manner and to the extent it shall deem necessary to carry this Plan into
effect.
3.4 Decisions Final. Any decision, interpretation or other action made or
taken in good faith by the Committee arising out of or in connection with the
Plan shall be final, binding and conclusive on the Company, all employees and
Participants and their respective heirs, executors, administrators, successors
and assigns.
ARTICLE IV
Share Limitations
4.1 Shares. The maximum aggregate number of shares of Common Stock that may
be issued under this Plan shall be 1,000,000 (subject to any increase or
decrease pursuant to Section 4.3), which may be either authorized and unissued
Common Stock or issued Common Stock reacquired by the Company. If and to the
extent any Option or Restricted Stock Award granted under this Plan expires,
terminates, or is cancelled, exchanged or surrendered for any reason without
having been issued as Common Stock, the number of unissued shares shall again
be available for the purposes of the Plan.
4.2 Individual Limit. The maximum aggregate number of shares with respect to
which Awards may be granted to any individual during any fiscal year shall be
500,000 (subject to increase or decrease pursuant to Section 4.3).
4.3 Adjustments. In the event of any stock dividend, stock split,
combination of shares, merger, consolidation, reorganization, spin-off, or
recapitalization affecting the outstanding shares of Common Stock (the
"Event"), the maximum number and kind of shares that may be issued under the
Plan, the number and kind of shares subject to then outstanding Options and/or
Restricted Stock Awards, and the price for each share subject to then
outstanding Options shall be appropriately and equitably adjusted as necessary
to maintain the same proportionate number of shares as existed immediately
prior to the Event and the same aggregate option price. No fractional shares
will be issued under the Plan on account of any such adjustments.
ARTICLE V
Eligibility
5.1 Eligible Persons Key executives of the Company and its subsidiaries,
including, but not limited to, Executive Officers of the Company or any
subsidiary of the Company, are eligible to be granted Options and Restricted
Stock Awards in accordance with the terms of this Plan.
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ARTICLE VI
Stock Options and Restricted Stock
6.1 Options. Each Stock Option granted under this Plan shall be either an
Incentive Stock Option or a Nonqualified Stock Option.
6.2 Option Grants. The Committee shall have the authority to grant to any
person eligible under Article V one or more Incentive Stock Options,
Nonqualified Stock Options, or both types of Stock Options. To the extent that
any Stock Option does not qualify as an Incentive Stock Option (whether
because of its provisions or the time or manner of its exercise, the
optionee's employment status or otherwise), such Stock Option or the portion
thereof which does not qualify as an Incentive Stock Option shall constitute a
separate Nonqualified Stock Option.
6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options
shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to disqualify the Plan
under Section 422 of the Code, or, without the consent of the Participant
affected, to disqualify any Incentive Stock Option under such Section 422,
except as provided in Section 6.4 hereof.
6.4 Terms of Options. Options granted under this Plan shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem desirable:
(a) Stock Option Award. Each Stock Option shall be evidenced by, and
subject to the terms of, a Stock Option Award document, which shall specify
whether the Option is an Incentive Stock Option or a Nonqualified Stock
Option, the number of shares of Common Stock subject to the Stock Option,
the option price, the option term, and the other terms and conditions
applicable to the Stock Option.
(b) Option Price. The option price per share of Common Stock purchasable
upon exercise of a Stock Option shall be determined by the Committee at the
time of grant, but shall be not less than 100% of the Fair Market Value of
the Common Stock on the date of grant.
(c) Option Term. The term of each Stock Option shall be fixed by the
Committee at the time of grant, but shall not be exercisable more than ten
years after the date of grant if the Stock Option is intended to be an
Incentive Stock Option.
(d) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee at the time of grant; provided, however, that the Committee
may waive any vesting provisions, in whole or in part and may accelerate
the exercisability of any or all outstanding Stock Option Awards, at any
time after the date of grant, based on such factors as the Committee shall,
in its sole discretion, deem appropriate.
(e) Method of Exercise. Subject to such vesting provisions as may be
imposed by the Committee, Stock Options may be exercised in whole or in
part at any time during the option term, by giving written notice of
exercise to the Company specifying the number of shares of Common Stock to
be purchased and the option price for such shares. The option exercise
price shall be paid in full by: i) delivering cash or a check payable to
the order of the Company prior to the delivery of the shares, ii) making
arrangements for a broker-assisted exercise (in which the broker forwards
the exercise price), or iii) making payment using shares of Common Stock
owned by the optionee for at least six months preceding the exercise date.
Upon exercise of the Option, a stock certificate or stock certificates
representing the number of shares of Common Stock to which the Participant
is entitled shall be delivered to the Participant (or, for broker-assisted
exercises, to the broker). A Participant shall not be deemed to be the
holder of Common Stock, or to have the rights of a holder of Common Stock,
with respect to shares subject to the Option, unless and until a stock
certificate representing such shares of Common Stock is issued to the
Participant.
B-4
(f) Termination of Employment. Unless otherwise determined by the
Committee, or provided in the particular Stock Option Award, Stock Options
held by a Participant who ceases to be an employee of the Company and its
subsidiaries shall be exercisable as follows:
(i) In the case of a Participant who ceases to be employed by the
Company because of death, all Options that were outstanding on the date
of the Participant's death may be exercised by the legal representative
of the Participant's estate for a period of one year after the date of
death or until the expiration of the stated term of the Option,
whichever period is shorter.
(ii) In the case of a Participant who ceases to be employed by the
Company because of total disability, all Options that were outstanding
on the date of total disability may be exercised by the Participant for
a period of one year after such date or until the expiration of the
stated term of the Option, whichever period is shorter.
(iii) In the case of a Participant who ceases to be employed by the
Company for any reason other than death or total disability, all
Options that were exercisable on the date of termination of the
Participant's employment may be exercised by the Participant for a
period of three months after such date or until the expiration of the
stated term of the Option, whichever period is shorter.
(iv) Any Option not exercised during the periods specified in
Subsections (i), (ii) or (iii) shall terminate at the end of such
period; provided, however, that the Committee may extend such period,
based on such factors as the Committee shall, in its sole discretion,
deem appropriate. If an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of
Section 422 of the Code, such Option will thereafter be treated as a
Nonqualified Stock Option.
(g) Incentive Stock Option Limitations. To the extent that the aggregate
Fair Market Value (determined as of the date of grant) of the Common Stock
with respect to which Incentive Stock Options are exercisable for the first
time by the Participant during any calendar year under the Plan and/or any
other stock option plan of the Company or any subsidiary or parent
corporation (within the meaning of Section 424 of the Code) exceeds
$100,000, such Options shall be treated as Nonqualified Stock Options.
Should the foregoing provisions not be necessary in order for the Stock
Options to qualify as Incentive Stock Options, or should any additional
provisions be required, the Board may amend this Plan accordingly.
(h) Change-in-Control. Upon a Change-in-Control, all outstanding options
shall automatically become fully exercisable. In no event will the
provisions of this Section 6.4(h) or Sections 2.2 or 4.3 be subject to
amendment or modification after a Change-in-Control has occurred.
6.5 Terms of Restricted Stock. Restricted Stock Awards granted under this
Plan shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the terms of this
Plan, as the Committee shall deem desirable:
(a) Award. Each Restricted Stock Award shall be evidenced by, and subject
to the terms of, a Restricted Stock Award document, which shall specify the
number of shares of Common Stock subject to the Restricted Stock Award and
the other terms and conditions applicable to the Restricted Stock Award.
(b) Vesting and Other Conditions. At the time the Restricted Stock Award
is granted, the Committee shall determine the vesting conditions, voting
rights, dividend rights and any other conditions applicable, if any, to the
grant. Notwithstanding the foregoing, the Committee may waive the vesting
provisions or any other provisions of any Restricted Stock Award, in whole
or in part, at any time after the date of grant, based on such factors as
the Committee shall, in its sole discretion, deem appropriate.
(c) Change-in-Control. Upon a Change-in-Control, all outstanding
Restricted Stock Award shall automatically become fully vested and shall be
distributed. In no event will the provisions of this Section 6.5(c), or
Sections 2.2 or 4.3 be subject to amendment or modification after a Change-
in-Control has occurred.
B-5
ARTICLE VII
Termination or Amendment
7.1 Termination or Amendment of the Plan. The Committee may at any time
terminate this Plan or amend all or any part of this Plan, prospectively or
retroactively, provided, however, that, unless otherwise required by law, the
rights of a Participant with respect to Awards granted prior to such
termination or amendment may not be materially impaired without the consent of
such Participant, except as otherwise provided in the Plan.
7.2 Amendment of Awards. The Committee may amend the terms of any
outstanding Award (subject to the limitations set forth in Section 6.4(h) and
6.5(c)), prospectively or retroactively, but no such amendment or other action
by the Committee shall materially impair the rights of any Participant without
the Participant's consent, except as otherwise provided in the Plan.
ARTICLE VIII
General Provisions
8.1 Nonassignment. Except as otherwise provided in this Plan or as
determined by the Committee, Awards granted hereunder and the rights and
privileges conferred thereby shall not be sold, transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise), and
shall not be subject to execution, attachment or similar process.
8.2 Legend. All certificates representing shares of Common Stock delivered
under this Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is listed or traded, any applicable
federal or state securities law, and any applicable corporate law, and the
Committee may cause a legend or legends to be put on stock certificates to
make appropriate reference to such restrictions, or to any restrictions
applicable to a Restricted Stock Award.
8.3 Other Plans. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is desired or required; and such arrangements may be
either generally applicable or applicable only in specific cases.
8.4 No Right to Employment. Neither this Plan nor the grant of any Award
shall give any Participant or employee any right with respect to continuance
of any employment relationship with the Company or any subsidiary of the
Company, nor shall there be a limitation in any way on the right of the
Company or a subsidiary, as the case may be, to terminate such Participant's
employment at any time.
8.5 Withholding of Taxes. The Company shall have the right, prior to
delivering a stock certificate representing the shares of Common Stock
otherwise deliverable to a Participant upon exercise of an Option or vesting
of a Restricted Stock Award, to (i) require the Participant to remit to the
Company an amount sufficient to satisfy all federal, state, local and non-U.S.
tax withholding requirements (including social security and Medicare
withholding requirements, if applicable), (ii) reduce the number of shares of
Common Stock otherwise deliverable to the Participant by an amount that would
have a Fair Market Value on the date of exercise equal to the amount of all
federal, state, local and non-U.S. taxes (including social security and
Medicare taxes, if applicable) required to be withheld, or (iii) deduct the
amount of such taxes from cash payments otherwise to be made to the
Participant. In connection with such withholding, the Committee may make such
arrangements as are consistent with this Plan as it may deem appropriate.
8.6 Listing and Other Conditions.
(a) The Company shall have no obligation to issue any shares of Common
Stock upon exercise of an Option or vesting of a Restricted Stock Award
unless and until the shares are listed on the New York Stock Exchange, and
the right to exercise any Option or receive Common Stock pursuant to a
Restricted Stock Award may be suspended until such listing has been
effected.
B-6
(b) If at any time counsel to the Company shall be of the opinion that
any sale or delivery of shares of Common Stock under this Plan is or may
under the circumstances be unlawful or result in the imposition of excise
taxes under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933 or otherwise
with respect to shares of Common Stock or Options, and the right to
exercise any Option or receive Common Stock pursuant to any Restricted
Stock Award shall be suspended until, in the opinion of such counsel, such
sale or delivery shall be lawful or shall not result in the imposition of
excise taxes.
(c) Upon termination of any period of suspension under this Section 8.6,
any Option or Restricted Stock Award affected by such suspension which
shall not then have expired or terminated shall be reinstated as to all
shares available before such suspension and as to shares which would
otherwise have become available during the period of such suspension, but
no such suspension shall extend the term of any Option or Restricted Stock
Award.
8.7 Governing Law. This Plan and actions taken in connection herewith shall
be governed and construed in accordance with the laws of the Commonwealth of
Pennsylvania without giving effect to the conflict of law provisions thereof.
8.8 Construction. Wherever any words are used in this Plan in the masculine
gender they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply.
8.9 Liability of Committee Members. No member or former member of the
Committee or employee plan administrator shall be liable, in the absence of
bad faith or willful misconduct, for any act or omission with respect to
service as an administrator of the Plan, which service shall constitute
service as a director or employee of the Company entitling such person to
indemnification and reimbursement as directors or employees of the Company
pursuant to its Code of Regulations.
8.10 Other Benefits. Unless otherwise required by law, the grant of any
Award shall not be deemed compensation for purposes of computing benefits
under any retirement plan nor affect any benefits under any other benefit plan
now or hereafter in effect under which the availability or amount of benefits
is related to the level of compensation.
8.11 Costs. Unless otherwise determined by the Committee, the Company shall
bear all expenses incurred in administering this Plan, including expenses of
issuing Common Stock upon the exercise of Options and the vesting of
Restricted Stock Awards.
8.12 Severability. If any part of this Plan shall be determined to be
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of this Plan, which shall
continue in full force and effect.
8.13 Successors. This Plan shall be binding upon and inure to the benefit of
any successor or successors of the Company.
8.14 Headings. Article and section headings contained in this Plan are
included for convenience only and are not to be used in construing or
interpreting this Plan.
ARTICLE IX
Effective Date of Plan
9.1 Effective Date. This Plan will be effective as of October 20, 1999,
subject to shareholder approval of the Plan.
B-7
ARTICLE X
Term of Plan
10.1 Term. No Award shall be granted pursuant to this Plan on or after
October 20, 2009, but Options and/or Restricted Stock Awards granted prior to
such date may extend beyond that date.
B-8
PROMPTLY COMPLETE AND RETURN THE
PROXY/VOTING INSTRUCTION FORM BELOW
IN THE ENVELOPE PROVIDED
Carefully fold & detach along perforation
- --------------------------------------------------------------------------------
PROXY/VOTING INSTRUCTION CARD
IKON OFFICE SOLUTIONS, INC.
This proxy is solicited on behalf of the Board of
Directors of IKON Office Solutions, Inc. The
undersigned hereby appoints Don H. Liu and Karin
M. Kinney, or either of them, each with power of
substitution, as proxies for the undersigned to
vote all shares of Common Stock of IKON Office
Solutions, Inc. which the undersigned is entitled
to vote at the Annual Meeting of Shareholders to
be held on February 23, 2000, and any adjournments
thereof ("2000 Annual Meeting"), as hereinafter
specified and, in their discretion, upon such
other matters as may properly come before the
meeting. The presence at the 2000 Annual Meeting,
in person or by proxy, of at least a majority of
the votes entitled to be cast at the meeting
constitutes a quorum.
For employees of IKON Office Solutions, Inc.,
this proxy also provides voting instructions for
shares held for the account of the undersigned in
the IKON Office Solutions, Inc. Retirement Savings
Plan. The trustees for the Plan will vote these
shares as directed, provided you sign and return a
proxy containing your voting instructions by
February 18, 2000. If no voting instructions are
received, the trustees of the Plan may vote your
shares in their discretion (in the absence of
voting instructions, the trustees will generally
vote your shares in accordance with the
recommendation of the Board of Directors). Shares
owned by you other than those held in the Plan
will be voted only if you sign and return a proxy,
or attend the meeting and vote by ballot. If you
return a proxy and fail to specify a choice on any
matter, your shares will be voted in accordance
with the recommendation of the Board of Directors.
The Board of Directors recommends a vote in favor
of each of the proposals described below. Member
firms of the New York Stock Exchange have
authority to vote on each of the proposals
described below as a routine item and need not
decline to vote in the absence of voting
instructions from an investor.
1. Election of Directors (Mark only one)
[_] Vote FOR all nominees listed below and
recommended by the Board of Directors
(except as directed to the contrary below)
[_] Vote WITHHELD from all nominees
Judith M. Bell, James R. Birle, Philip E. Cushing,
James J. Forese, Robert M. Furek, Thomas R.
Gibson, Richard A. Jalkut, Arthur E. Johnson, Kurt
M. Landgraf
INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in
the space provided below.
---------------------------------------------------
(continued, and to be signed, on other side)
PROMPTLY COMPLETE AND RETURN THE
PROXY/VOTING INSTRUCTION FORM BELOW
IN THE ENVELOPE PROVIDED
Carefully fold & detach along perforation
- --------------------------------------------------------------------------------
(continued from other side)
NO.
2. Approval of 2000 IKON Office Solutions, Inc.
Non-Employee Directors' Compensation Plan
[_] FOR [_] AGAINST [_] ABSTAIN
3. Approval of 2000 IKON Office Solutions, Inc.
Executive Incentive Plan
[_] FOR [_] AGAINST [_] ABSTAIN
[_] Mark Here if You Plan to Attend 2000 Annual Meeting.
In order to attend the meeting, you must present an *
admission ticket or provide separate verification of
share ownership. An admission ticket will be mailed
to any shareholder who indicates an intention to attend.
PLEASE SIGN, DATE, DETACH AND RETURN THIS PROXY,
USING THE ENCLOSED POSTAGE PREPAID REPLY ENVELOPE.
Dated __________ SIGN HERE __________________________________
When shares are held by joint tenants, both joint tenants
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such. If the signer is a corporation, sign the full corporate
name by duly authorized officer. This proxy revokes all
proxies heretofore given.