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                                                                   Exhibit 10.4





February 2, 1999

Brian Merriman
Chief Operating Officer - Americas
Danka
11201 Danka Circle North
St. Petersburg, FL 33716


Dear Brian:

                The Board of Directors of Danka Business Systems, PLC
("Company") has approved, effective January 1, 1999, certain changes to your
Employment Agreement dated as of 1 August 1998 ("Employment Agreement") and the
Committee under The Danka 1996 Share Option Plan (including amendments approved
by shareholders on 24 July 1998 and approved by the Board on 25 August 1998)
("Option Plan") has determined to grant you options as described herein. Except
as modified herein, all terms of your Employment Agreement remain in full force
and effect and nothing contained herein shall affect any Change in Control
Agreement provided to you.

1.       Bonus. For performance periods commencing on and after April 1, 1999,
         Executive shall have a target bonus of up to 100% of Base Compensation
         ("Target Bonus") based upon achievement of strategic restructuring
         goals as determined by the Board of Directors.

2.       Special Cash Bonus. Executive shall be entitled to a special bonus
         ("Special Bonus") equal to the product of (i) 700,000 and (ii) the
         lesser of (a) $2 and (b) the excess of the price of a Danka American
         Depository Share (ADS) at the close of trading on NASDAQ immediately
         following the expiration of the closed period over $4 5/16 which was
         the closing price of a Danka ADS on NASDAQ on January 14, 1999. Such
         Special Bonus shall be paid in installments in the same proportions as
         the options described in item 4 of this letter are exercised. For
         example, if options with respect to 35,000 shares from the options
         described in item 4 are exercised, 35,000/700,000 or 5% of the Special
         Bonus shall be paid at the time of such option exercise. As another
         example, if options with respect to all 700,000 shares described in
         item 4 of this letter are exercised at one time, 100% of the Special
         Bonus shall be paid at such time of exercise. The Special Bonus shall
         accrue no interest.

3.       Severance. The liquidated damages payment under Section 5.3 of the
         Employment Agreement shall be paid in one lump sum and shall not be
         less than the aggregate of Base Compensation for 12 months and the
         Target Bonus.


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4.       Options. The Committee under the Option Plan has irrevocably determined
         to grant to you Options with respect to 700,000 American Depository
         Shares ("Option Shares") at the expiration of the closed period. Such
         Options shall have a term or Exercise Period of ten years from the date
         of grant and shall be fully exercisable on the third anniversary of the
         date of grant. Options with respect to one-third of the Option Shares
         shall become exercisable on the first anniversary of the date of grant
         or at such earlier time that the price of a Danka ADS traded on NASDAQ
         is at least $7.50. Options with respect to an additional one-third of
         the Option Shares (for a total of two-thirds of the Option Shares)
         shall become exercisable on the second anniversary of the date of grant
         or at such earlier time after the first anniversary of the date of
         grant that the price of a Danka ADS traded on NASDAQ is at least
         $12.50. Options with respect to the remaining one third of the Option
         Shares (for a total of all Option Shares) shall become exercisable on
         the third anniversary of the date of such grant or at such earlier time
         after the second anniversary of the date of grant that the price of a
         Danka ADS traded on NASDAQ is at least $20.

         If you agree to the changes in the Employment Agreement and the
granting of options by the Committee, please execute and return a copy of this
letter.


                                                     Sincerely,



                                                     Larry K. Switzer
                                                     Chief Executive Officer
                                                     Danka Business Systems PLC


Agreed to by:


-----------------------------
Brian Merriman