SENIOR EXECUTIVE AGREEMENT

SENIOR EXECUTIVE AGREEMENT

 

THIS AGREEMENT is made as of January 23^rd, 2005 and is effective as of January 20, 2005, between GLOBAL IMAGING SYSTEMS, INC., a Delaware corporation (the “Company”) and MICHAEL SHEA (“Executive”).

 

Recitals

 

A. The Company and Executive desire to enter into an agreement pursuant to which Executive will be employed as the President and Chief Operating Officer of the Company on the terms and conditions set forth in this Agreement.

 

B. Certain definitions are set forth in Section 4 of this Agreement.

 

Agreement

 

The parties hereto agree as follows:

 

1. Employment. The Company hereby engages Executive to serve as the President and Chief Operating Officer of the Company, and Executive agrees to serve the Company, during the Service Term (as defined in Section 1(d) hereof) in the capacities, and subject to the terms and conditions, set forth in this Agreement.

 

(a) Services. During the Service Term, Executive, as President and Chief Operating Officer of the Company, shall have all the duties and responsibilities as may be reasonably assigned from time to time by the Board and/or the Company’s Chief Executive Officer (the “CEO”). Executive will devote his best efforts and substantially all of his business time and attention (except for vacation periods and periods of illness or other incapacity) to the business of the Company and its Affiliates. Notwithstanding the foregoing, and provided that such activities do not interfere with the fulfillment of Executive’s obligations hereunder, Executive may (A) serve as an officer, director or trustee of any charitable or non-profit entity; (B) own a passive investment in any private company and own up to 5% of the outstanding voting securities of any public company; or (C) serve as a director of up to two other companies so long as such companies do not compete with the Company. Unless the Company and Executive agree to the contrary, Executive’s place of employment shall be at the Company’s principal executive offices in Tampa, Florida; provided, however, that Executive will travel to such other locations of the Company and its Affiliates as may be reasonably necessary and/or as required by the Board in its sole discretion in order to discharge his duties hereunder.

 

(b) Salary, Bonus and Benefits.

 

(i) Salary and Bonus. During the Service Term, the Company will pay Executive a base salary (the “Annual Base Salary”) as the Board may

 

designate from time to time, at the rate of not less than $390,000 per annum; provided, however, that the Annual Base Salary shall be subject to review annually by the Board for upward increases thereon. The Executive will be eligible to receive an annual bonus in an amount of up to 60% to 115% (but 50-100% with respect to periods of employment with the Company prior to January 20,2005) of Executive’s Annual Base Salary for such year, as determined by the Board based upon the Company’s achievement of budgetary and other objectives set by the Board in good faith and consistent with past practice in consultation with the Executive, which bonus criteria calculation shall be reasonable in light of the Company’s past year’s performance. The annual bonus, if any, shall be due and payable to Executive prior to June 30 of the following fiscal year. For the fiscal year ended March 31, 2005, 80.55% of Executive’s bonus (April 1, 2004 to January 19,2005) shall be calculated and allocated as determined in accordance with Executive’s current Executive Agreement with the Company dated as of September 1, 2002 (the “Existing Executive Agreement”) and the balance (19.45%) shall be calculated as set forth above.

 

(ii) Benefits. During the Service Term, Executive will be entitled to such other benefits approved by the Board including those made available to the Company’s other senior executives, including participation in the Company’s healthcare plan. Executive shall be reimbursed for customary travel, civic and luncheon club dues and other expenses, subject to standard and reasonable documentation requirements. In addition, Executive will receive a stipend of $1,200 per month for lease of an automobile and other related expenses during the Service Term. Executive shall also be eligible to receive four weeks paid vacation per annum. Any unused vacation time during each fiscal year shall be “rolled-over” to the following fiscal year to the extent permitted by the Company’s policies for other senior executives of the Company.

 

(iii) Stock Options. As of the date hereof, Executive will be granted a stock option grant for the purchase of 20,000 shares of the common stock of the Company at an exercise price equal to the closing price of the Company’s common stock (the “Common Stock”) on the NASDAQ National Market System as of the date such option is granted. In addition, Executive shall receive additional grants of stock options for the purchase of 20,000 shares of the Common Stock on April l^st of each succeeding year (beginning April 1, 2006), to the extent he remains an employee of the Company as of such April 1^st grant dates. All options shall (i) be exercisable at the fair market value of the Company’s common stock on the date of grant; (ii) vest annually over a five-year period on March 31 of each year (subject to accelerated vesting upon certain events of termination as provided for in Section 1(c)(ii) hereof, a change of control or permanent disability to the extent permitted by the Company’s stock option plan); and (iii) expire not later than the tenth anniversary of the date of grant. The terms and conditions of the stock options shall otherwise be those set forth under the Company’s stock option plan and shall be

 

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consistent with the terms contained in stock option agreements provided to other key executives of the Company.

 

(iv) Restricted Stock Grant. The Company shall provide Executive with a restricted stock grant (the “Restricted Stock Grant”) of 20,000 shares of the Company’s Common Stock pursuant to a customary restricted stock agreement on April 1, 2005. The Restricted Stock Grant will vest over five years from April 1,2005 with 20% vesting on the third anniversary of the date of grant, an additional 30% vesting on the fourth anniversary of the date of grant and the balance (50%) vesting on the fifth anniversary of the date of grant.

 

(c) Termination.

 

(i) Events of Termination. Executive’s employment with the Company shall cease upon:

 

(A) Executive’s death.

 

(B) Executive’s voluntary retirement.

 

(C) Executive’s permanent disability, which means his incapacity due to physical or mental illness such that he is unable to perform the essential functions of his previously assigned duties for a period of six months in any twelve month period and such permanent incapacity has been determined to exist by either (x) the Company’s disability insurance carrier or (y) by the Board in good faith based on competent medical advice in the event that the Company does not maintain disability insurance on the Executive.

 

(D) Termination by the Company by the delivery to Executive of a written notice from the Board or the CEO that Executive has been terminated (“Notice of Termination”) with or without Cause. “Cause” shall mean:

 

(1) Executive’s (aa) conviction of a felony; (bb) Executive’s commission of any other material act or omission involving dishonesty or fraud with respect to the Company or any of its Affiliates or any of the customers, vendors or suppliers of the Company or its Subsidiaries; (cc) Executive’s misappropriation of material funds or assets of the Company for personal use; or (dd) Executive’s engagement in unlawful harassment or other discrimination with respect to the employees of the Company or its Subsidiaries;

 

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(2) Executive’s continued substantial and repeated neglect of his duties, after written notice thereof from the Board, and such neglect has not been cured within 30 days after Executive receives notice thereof from the Board;

 

(3) Executive’s gross negligence or willful misconduct in the performance of his duties hereunder that results, or is reasonably expected to result, in material damage to the Company; or

 

(4) Executive’s engaging in conduct constituting a breach of Sections 2 or 3 hereof that is not cured in full within 15 days after notice of default thereof from the Company.

 

In order for the termination to be effective: Executive must be notified in writing (which writing shall specify the cause in reasonable detail) of any termination of his employment for Cause. Executive will then have the right, within ten days of receipt of such notice, to file a written request for review by the Company. In such case, Executive will be given the opportunity to be heard, personally or by counsel, by the Board and a majority of the Directors must thereafter confirm that such termination is for Cause. If the Directors do not provide such confirmation, the termination shall be treated as other than for Cause. Notwithstanding anything to the contrary contained in this paragraph, Executive shall have the right after termination has occurred to appeal any determination by the Board that such termination was for “Cause” to arbitration in accordance with the provisions of Section 8(g) hereof.

 

The delivery by the Company of notice to Executive that it does not intend to renew this Agreement as provided in Section 1(d) shall constitute a termination by the Company without Cause unless such notice fulfills the requirements of Section 1(c)(i)(D)(1), (2), (3) or (4) above.

 

(E) Executive’s voluntary resignation by the delivery to the Company and the Board of at least 45 days written notice from Executive that Executive has resigned with or without Good Reason. “Good Reason” shall mean Executive’s resignation from employment with the Company within 45 days after the occurrence of any one of the following:

 

(1) the failure of the Company to pay an amount owing to Executive hereunder after Executive has provided the Company and the Board with written notice of such failure and such payment has not thereafter been made within 15 days of the delivery of such written notice;

 

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(2) any material reduction or diminution in the Executive’s title, duties or responsibilities without his consent after Executive has provided the Company with written notice within 30 days thereafter of such reduction and such reduction has not thereafter been rescinded within 15 days of the delivery of such written notice;

 

(3) the Executive’s resignation within one year after the Effective Date of a Change of Control (as defined in Section 6 hereof); or

 

(4) the relocation of Executive from the State of Florida; provided, however, that Executive understands and agrees that customary business travel to other locations of the Company shall not be deemed to be a violation of this Section l(c)(i)(E)(4).]

 

The delivery by the Executive of notice to the Company that he does not intend to renew this Agreement as provided in Section 1(d) shall constitute a resignation by the Executive without Good Reason unless such notice fulfills the requirements of Section 1(c)(i)(E)(1) (2), (3) or (4) above.

 

(ii) Rights on Termination.

 

(A) In the event that termination is by the Company without Cause (including by operation of the last paragraph of Section l(c)(i)(D) above) or by Executive with Good Reason, the Company will continue to pay Executive a monthly amount equal to 150%¹ of the monthly portion of the Annual Base Salary for a period equal to 24-months commencing on the date of termination on regular salary payment dates. The payments to Executive pursuant to the foregoing sentence are referred to as the “Severance Payments.” In either event, (i) the Company will continue to provide Executive with healthcare coverage during any period during which Executive is receiving Severance Payments following the date of termination; (ii) all stock options granted to Executive shall become 100% fully vested and shall remain exercisable for a period of one year after the date of termination and the Restricted Stock Grant will become 100% vested; and (iii) the Company will pay to Executive in a lump sum any accrued but unused vacation time.

 

(B) If the Company terminates Executive’s employment for Cause, if Executive retires before the third anniversary of the date hereof or if Executive resigns without Good Reason (including by operation of the last paragraph of Section 1(c)(i)(E)), the Company’s obligations to pay any

1	100% of Annual Base Salary plus 50% bonus.

 

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compensation or benefits under this Agreement (other than accrued but unused vacation time which shall be paid to Executive in a lump sum payment) and all vesting on the stock options and the Restricted Stock Grant held by the Executive will cease effective as of the date of termination. Executive’s right to receive any other health or other benefits, if any, will be determined under the provisions of applicable plans, programs or other coverages.

 

(C) If Executive retires after the third anniversary of the date hereof but prior to the fifth anniversary of the date hereof, the Company’s obligations to pay any compensation or benefits under this Agreement (other than accrued but unused vacation time which shall be paid to Executive in a lump sum payment) will cease effective as of the date of termination. Notwithstanding the foregoing, all stock options held by Executive shall become 100% vested and shall remain exercisable for a period of one year after the date of termination. Executive’s right to receive any other health or other benefits, if any, will be determined under the provisions of applicable plans, programs or other coverages.

 

(D) If Executive retires after the fifth anniversary of the date hereof, the Company’s obligations to pay any compensation or benefits under this Agreement (other than accrued but unused vacation time which shall be paid to Executive in a lump sum payment) will cease effective as of the date of termination. Notwithstanding the foregoing, all stock options held by Executive shall become 100% vested and shall remain exercisable for a period of one year after the date of termination and the Restricted Stock Grant will become 100% vested. Executive’s right to receive any other health or other benefits, if any, will be determined under the provisions of applicable plans, programs or other coverages.

 

(E) If Executive’s employment terminates because of Executive’s death or permanent disability, the Company will pay Executive or his estate an amount, if any, equal to the sum of (i) his accrued but unused vacation time and (ii) his bonus for the current year prorated to reflect the number of days Executive has worked during the year in which he dies or becomes permanently disabled (such amount to be paid after the end of such year when bonuses are normally paid to other senior executives of the Company). Notwithstanding the foregoing, all stock options held by Executive shall become 100% vested and shall remain exercisable for a period of one year after the date of death or permanent disability. Executive’s or his estate’s right