Document:

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                                                                   Exhibit 10.39

                        (1) DANKA BUSINESS SYSTEMS PLC

                            (2) DR. PETER WILLIAMS

                    ______________________________________

                               SERVICE AGREEMENT

                    ______________________________________
<PAGE>

                                   CONTENTS

<TABLE>
<CAPTION>
Clause                                                                     Page
<S>                                                                        <C>
1.     Commencement And Term.............................................    2
2.     Obligations During Employment.....................................    2
3.     Further Obligations Of The Executive..............................    3
4.     Remuneration......................................................    4
5.     Pension Scheme....................................................    4
6.     Insurances........................................................    4
7.     Stock Options.....................................................    5
8.     Expenses..........................................................    5
9.     Holidays..........................................................    5
10.    Incapacity........................................................    5
11.    Intellectual Property.............................................    6
12.    Confidentiality...................................................    6
13.    Termination Of Employment.........................................    7
14.    Change of Control.................................................    8
15.    Executive's Covenants.............................................    8
16.    Disciplinary And Grievance Procedures.............................   10
17.    Notices...........................................................   10
18.    Miscellaneous.....................................................   10
19.    Definitions And Interpretation....................................   10
</TABLE>
<PAGE>

THIS AGREEMENT is made the 23 day of July 2001
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BETWEEN:
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(1)  DANKA BUSINESS SYSTEMS PLC whose registered office is at 1230 Arlington
     Business Park, Theale, Berkshire RG7 4TX ("the Company"); and

(2)  Dr. Peter Williams of UK ("the Executive")

WHEREBY it is agreed that the Company shall employ the Executive upon and
-------
subject to the following terms and conditions:-

1    COMMENCEMENT AND TERM

1.1  The Executive's employment shall begin on 23 July 2001 and the Executive's
     period of continuous employment for statutory purposes begin on 23 July
     2001.

1.2  The employment of the Executive shall (subject to the provisions of Clause
     13) be for an indefinite period and shall be terminable by the Company
     giving to the Executive twelve months' notice in writing or the Executive
     giving to the Company three months' notice in writing in either case
     expiring at any time.

1.3  The Company may at its absolute discretion elect to terminate the
     employment of the Executive with immediate effect by paying to the
     Executive salary, and all benefits and allowances for the period of notice
     together with an amount equal to the Target Incentive Bonus for the year in
     which termination occurs. Such payment shall be made in 12 equal monthly
     installments beginning 30 days from the termination date.

2.   OBLIGATIONS DURING EMPLOYMENT

2.1  The Executive shall during the continuance of his employment:-

     (a)  serve the Company to the best of his ability in the capacity of
          Executive Vice President and Chief Operating Officer, Danka
          International, or in such other capacity as the Company CEO may from
          time to time determine; and

     (b)  faithfully and diligently perform such duties and exercise such powers
          consistent with them as the Company CEO may from time to time properly
          assign to or confer upon him; and

     (c)  if and so long as the Company CEO so directs perform and exercise the
          said duties and powers on behalf of any Associated Company and act as
          a director or other officer of any Associated Company; and

     (d)  do all in his power to protect promote develop and extend the business
          interests and reputation of the Group; and

     (e)  promptly give to the Company CEO (in writing if so requested) all such
          information explanations and assistance as he or she may require in
          connection with the business and affairs of the Company and any
          Associated Company for which he is required to perform duties; and

                                      -2-
<PAGE>

    (h) unless prevented by sickness, injury or other incapacity or as otherwise
        agreed by the Company CEO, devote the whole of his time, attention and
        abilities during his hours of work (which shall be normal business hours
        and such additional hours as may be necessary for the proper performance
        of his duties) to the business and affairs of the Company and any
        Associated Company for which he is required to perform duties; and

    (i) work at the Company's offices at Theale or such other place of business
        of the Company or any Associated Company which the Company CEO may
        reasonably require for the proper performance and exercise of his duties
        and powers and the Executive may be required to travel on the business
        of the Company and any Associated Company for which he is required to
        perform duties.

3.  FURTHER OBLIGATIONS OF THE EXECUTIVE

3.1 During the continuance of his employment the Executive shall devote his
    whole time and attention to his duties under this Agreement and shall not
    without the prior written consent of the Company CEO (such consent not to be
    unreasonably withheld or delayed) directly or indirectly carry on or be
    engaged concerned or interested in any other business trade or occupation
    otherwise than as a holder directly or through nominees of not more than two
    per cent in aggregate of any class of shares debentures or other securities
    in issue from time to time of any company which are for the time being
    quoted or dealt in on any recognised investment exchange (as defined by
    Section 207(1) of the Financial Services Act 1986).

3.2 The Executive shall during the continuance of his employment comply (and
    shall procure that his spouse or partner and his minor children shall
    comply) with all applicable rules of law, stock exchange regulations
    (including the "Model Code" issued by The London Stock Exchange Limited and
    the Securities Exchange Commission) and codes of conduct of the Company and
    any Associated Company for the time being in force in relation to dealings
    in shares debentures or other securities of the Company or any Associated
    Company or any unpublished price sensitive information affecting the
    securities of any other company (provided that the Executive shall be
    entitled to exercise any options granted to him under any share option
    scheme established by the Company or any Associated Company subject to the
    rules of any such scheme):

3.3 The Executive shall in relation to any dealings in securities of overseas
    companies comply with all laws of any foreign state affecting dealings in
    the securities of such companies and all regulations of any relevant stock
    exchanges on which such dealings take place.

3.4 During the continuance of his employment the Executive shall be subject to
    the Company's rules concerning personal integrity and shall not without the
    prior permission of the Company CEO directly or indirectly procure accept or
    obtain for his own benefit (or for the benefit of any other person) any
    payment rebate discount commission, vouchers, gift, entertainment or other
    benefit ("Gratuities") from any third party in respect of any business
    transacted or proposed to be transacted (whether or not by him) by or on
    behalf of the Company or any Associated Company but is entitled, without
    such permission, to receive minor gifts, entertainment and other benefits in
    line with normal industry practice where the individual value is less than
    $500.

                                      -3-
<PAGE>

4.  REMUNERATION

4.1 The Company shall pay to the Executive during the continuance of his
    employment a salary (which shall accrue from day to day) at the rate of
    (Pounds)140,000 per year inclusive of any directors' fees payable to the
    Executive under the articles of association of the Company or any Associated
    Company (and any such fees as the Executive shall receive he shall pay to
    the Company). The salary shall be payable by equal monthly instalments in
    arrears on or about the last working day of each calendar month and subject
    to review by the Company CEO annually on 1/st/ April in each year (the first
    such review to take place on 1/st/ April 2002).

4.2 Notwithstanding Section 1.3 hereof, the Executive shall during the
    continuance of his employment be entitled to be paid an annual bonus up to
    an amount equal to (Pounds)100,000 at such times and subject to such
    conditions as the Company CEO or the Compensation Committee of the Company
    Board of Directors may in their discretion decide ("the Target Incentive
    Bonus"). Such payment shall be conditioned on the attainment of such goals
    which shall be set from time to time by the Compensation Committee and may
    be higher in the event such goals are exceeded.

5.  PENSION SCHEME

5.1 The Executive shall be entitled to become and during the continuance of his
    employment to become a member of the Danka UK Pension Plan ("the Pension
    Scheme") and the Company will contribute a sum equal to 9% of his basic
    salary on a monthly basis.

5.2 A contracting-out certificate is not in force in respect of the employment
    of the Executive.

6.  INSURANCES

6.1 Subject to his complying with and satisfying any applicable requirements of
    the relevant insurers the Company shall during the continuance of his
    employment:-

    (a)  provide for the Executive membership of a private medical expenses
         insurance scheme providing such benefits as the Company may in its
         absolute discretion from time to time decide;

    (b)  provide for the Executive membership of the Company's permanent health
         insurance scheme; and

    (c)  during such time as the Company maintains similar life insurance
         arrangements for its employees, provide for life insurance coverage
         equivalent to four times the Executive's salary.

6.2 The Company shall at its absolute discretion be entitled to vary the
    insurances referred to in sub-Clause 6.1. (a), 6.1 (b) and 6.1 (c).

7.  STOCK OPTIONS

7.1 Executive shall be awarded options in respect of 200,000 American Depository
    Shares to vest and be exercisable in accordance with the Stock Option Plan
    of the Company. Executive shall be entitled to such further option grants as
    the Compensation Committee of the Board of Directors shall, in its
    discretion, deem appropriate.

                                      -4-
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8.   EXPENSES

8.1  The Company shall during the continuance of his employment reimburse the
     Executive in respect of all reasonable travelling accommodation
     entertainment and other similar out-of-pocket expenses wholly exclusively
     and necessarily incurred by him in or about the performance of his duties;
     and

8.2  Except where specified to the contrary all expenses shall be reimbursed on
     a monthly basis subject to the Executive providing appropriate evidence
     (including receipts invoices tickets and/or vouchers as may be appropriate)
     of the expenditure in respect of which he claims reimbursement.

8.3  Executive shall be provided with an automobile allowance in accordance with
     Company policy for similarly situated European executives.

9.   HOLIDAYS

9.1  The Executive shall (in addition to the usual public and bank holidays) be
     entitled during the continuance of his employment to 25 days paid holiday
     in each holiday year of the Company which is the calendar year to be taken
     at such times as shall have been approved by the Company CEO.

9.2  The Executive shall not be entitled to carry forward any annual holiday
     entitlement foregone by him for any reason during the holiday year in which
     it accrued without the prior written consent of the Company CEO.

9.3  Upon the termination of his employment the Executive's entitlement to
     accrued holiday pay which shall be calculated on a pro rata basis in
     respect of each completed month of service in the holiday year in which his
     employment terminates and the appropriate amount shall be paid to the
     Executive provided that if the Executive shall have taken more days'
     holiday than his accrued entitlement the Company is hereby authorised to
     make an appropriate deduction from the Executive's final salary payment.

10.  INCAPACITY

10.1 Subject to his complying with the Company's procedures relating to the
     notification and certification of periods of absence from work the
     Executive shall continue to be paid his salary (inclusive of any statutory
     sick pay or social security benefits to which he may be entitled) during
     any periods of absence from work due to sickness injury or other incapacity
     up to a maximum of 26 weeks in aggregate in any period of 52 consecutive
     weeks.

10.2 If any incapacity of the Executive shall be caused by any alleged action or
     wrong of a third party and the Executive shall decide to claim damages in
     respect thereof, then the Executive shall use all reasonable endeavours to
     recover damages for loss of earnings over the period for which salary has
     been or will be paid to him by the Company under Clause 10.1, and shall
     account to the Company for any such damages recovered (in an amount not
     exceeding the actual salary paid or payable to him by the Company under
     Clause 10.1 in respect of the said period) less any costs borne by him in
     achieving such recovery. The Executive shall keep the Company informed of
     the commencement, progress and outcome of any such claim.

                                      -5-
<PAGE>

11.  INTELLECTUAL PROPERTY

11.1 Subject to the relevant provisions of the Patents Act 1977 the Registered
     Designs Act 1949 and the Copyright Designs and Patents Act 1988 if at any
     time in the course of his employment the Executive makes or discovers or
     participates in the making or discovery of any Intellectual Property
     relating to or capable of being used in the business of the Company or any
     Associated Company he shall immediately disclose full details of such
     Intellectual Property to the Company and at the request and expense of the
     Company he shall do all things which may be necessary or desirable for
     obtaining appropriate forms of protection for the Intellectual Property in
     such parts of the world as may be specified by the Company and for vesting
     all rights in the same in the Company or its nominee.

11.2 The Executive hereby irrevocably appoints the Company to be his attorney in
     his name and on his behalf to sign execute or do any instrument or thing
     and generally to use his name for the purpose of giving to the Company or
     its nominee the full benefit of the provisions of this Clause and in favour
     of any third party a certificate in writing signed by any director or the
     secretary of the Company that any instrument or act falls within the
     authority conferred by this Clause shall be conclusive evidence that such
     is the case.

11.3 The Executive hereby waives all of his moral rights (as defined in the
     Copyright Designs and Patents Act 1988) in respect of any acts of the
     Company or any acts of third parties done with the Company's authority in
     relation to any Intellectual Property which is the property of the Company
     by virtue of Clause 11.1.

11.4 All rights and obligations under this Clause in respect of Intellectual
     Property made or discovered by the Executive during his employment shall
     continue in full and force and effect after the termination of his
     employment and shall be binding upon the Executive's personal
     representatives.

12.  CONFIDENTIALITY

12.1 The Executive shall not (other than in the proper performance of his duties
     or without the prior written consent of the Company CEO or unless ordered
     by a court of competent jurisdiction) at any time either during the
     continuance of his employment or after its termination disclose or
     communicate to any person or use for his own benefit or the benefit of any
     person other than the Company or any Associated Company any confidential
     information which may come to his knowledge in the course of his employment
     and the Executive shall during the continuance of his employment use his
     best endeavours to prevent the unauthorised publication or misuse of any
     confidential information provided that such restrictions shall cease to
     apply to any confidential information which may enter the public domain
     other than through the default of the Executive.

12.2 All notes and memoranda of any trade secret or confidential information
     concerning the business of the Company and the Associated Companies or any
     of its or their suppliers, agents, distributors, customers or others which
     shall have been acquired received or made by the Executive during the
     course of his employment shall be the property of the Company and shall be
     surrendered by the Executive to someone duly authorised in that behalf at
     the termination of his employment or at the request of the Danka
     International CEO at any time during the course of his employment.

                                      -6-
<PAGE>

13.  TERMINATION OF EMPLOYMENT

13.1 The employment of the Executive may be terminated by the Company forthwith
     without notice or payment in lieu of notice if the Executive:-

     (a)  commits any serious or persistent breach or non-observance of any of
          the terms, conditions or stipulations contained in this Agreement; or

     (b)  is guilty of any serious negligence or gross misconduct in connection
          with or affecting the business or affairs of the Company or any
          Associated Company for which he is required to perform duties; or

     (c)  is guilty of conduct which brings or is likely to bring himself or the
          Company or any Associated Company into disrepute; or

     (d)  is convicted of an arrestable criminal offence (other than an offence
          under road traffic legislation in the United Kingdom or elsewhere for
          which a non-custodial penalty is imposed); or

     (e)  is adjudged bankrupt or makes any arrangement or composition with his
          creditors or has an interim order made against him pursuant to Section
          252 of the Insolvency Act 1986: or

     (f)  is or becomes prohibited by law from being a director; or

     (g)  voluntarily resigns as a director of the Company.

13.2 The employment of the Executive shall terminate automatically and without
     prior notice upon his attaining the age of 65.

13.3 If the Executive shall have been absent from work due to sickness injury or
     other incapacity for periods in excess of six months in aggregate in any
     period of twelve consecutive months the Company may terminate his
     employment by giving to him not less than six months' notice in writing
     expiring at any time.

13.4 Upon the termination of his employment (for whatever reason and howsoever
     arising) the Executive:-

     (a)  shall not take away conceal or destroy but shall immediately deliver
          up to the Company all documents (which expression shall include but
          without limitation notes memoranda correspondence drawings sketches
          plans designs and any other material upon which data or information is
          recorded or stored) relating to the business or affairs of the Company
          or any Associated Company or any of their clients/customers
          shareholders employees officers suppliers distributors and agents (and
          the Executive shall not be entitled to retain any copies or
          reproductions of any such documents) together with any other property
          belonging to the Company or any Associated Company (including his car
          and its keys) which may then be in his possession or under his
          control;

                                      -7-
<PAGE>

     (b)  shall at the request of the Company CEO immediately resign without
          claim for compensation from office as a director of the Company and
          any Associated Company and from any other office held by him in the
          Company or any Associated Company (but without prejudice to any claim
          he may have for damages for breach of this Agreement) and in the event
          of his failure to do so the Company is hereby irrevocably authorised
          to appoint some person in his name and on his behalf to sign and
          deliver such resignations to the Danka International CEO; and

     (c)  shall not at any time thereafter make any untrue or misleading oral or
          written statement concerning the business and affairs of the Company
          or any Associated Company nor represent himself or permit himself to
          be held out as being in any way connected with or interested in the
          business of the Company or any Associated Company (except as a former
          employee for the purpose of communicating with prospective employers
          or complying with any applicable statutory requirements); and

     (d)  shall immediately repay all outstanding debts or loans dues to the
          Company or any Associated Company and the Company is hereby authorised
          to deduct from any wages (as defined by Section 27 of the Employment
          Rights Act 1996) of the Executive a sum equal to any such debts or
          loans.

14.  CHANGE OF CONTROL

14.1 Upon the consummation of any "Change of Control" event Executive shall
     receive 12 months remuneration as provided in Section 4 hereof. A "Change
     of Control" shall be deemed to have occurred when substantially all of the
     assets or capital stock of the Company which constitute "Danka
     International" shall be sold to or merged into a person or entity which is
     not a wholly-owned subsidiary of the Company or any of its affiliates.

14.2 Executive shall receive 12 additional months remuneration as provided in
     Section 4 hereof in the event that, within 12 months following the above-
     referenced "Change of Control", the Executive experiences: (1) any material
     change in Executive's status, title, authorities or responsibilities which
     represent a demotion from Executive's status, title, position or
     responsibilities prior to the Change of Control; (2) any decrease in
     Executive's annual base salary or annual bonus; (3) any reassignment of
     Executive to a location more than 50 miles from Executive's then-current
     work location; or (4) the successor Company's failure to maintain the
     pension scheme, insurance or other material benefits provided to employee
     under this agreement.

15.  EXECUTIVE'S COVENANTS

15.1 The Executive acknowledges that during the course of his employment with
     the Company he will receive and have access to confidential information of
     the Company and its Associated Companies (including without limitation
     those matters specified in Clause 12.3 of this Agreement) and he will also
     receive and have access to detailed client/customer lists and information
     relating to the operations and business requirements of those
     clients/customers and accordingly he is willing to enter into the covenants
     described in Clause 14.2 in order to provide the Company and its Associated
     Companies with what he considers to be reasonable protection for those
     interests.

                                      -8-
<PAGE>

     15.2 The Executive hereby covenants with the Company that he will not
          without the prior written consent of the Company CEO either alone or
          jointly with or on behalf of any person directly or indirectly:-

          (a)  for the period of 12 months after the date of termination of his
               employment carry on or set up or be employed or engaged by or
               otherwise assist in or be interested in a business anywhere
               within the United Kingdom which is similar to or in competition
               with the business of supply and service of photocopying, fax
               machines, printers and other automated office equipment as such
               business is carried on by the Company at the date of such
               termination;

          (b)  for the period of 12 months after the date of termination of his
               employment in connection with the carrying on of any business in
               competition with the business of service of photocopying, fax
               machines, printers and other automated office equipment canvass
               solicit or approach or cause to be canvassed or solicited or
               approached for orders in respect of any services provided and/or
               any goods sold by the Company or any Associated Company any
               person who or which at the date of termination of his employment
               or at any time during the period of twelve months prior to that
               date is a customer or client of the Company or any Associated
               Company and with whom or which the Executive shall have had
               dealings during the course of his employment;

          (c)  for the period of 12 months after the date of termination of his
               employment in connection with the carrying on of any business in
               competition with the business of service of photocopying, fax
               machines, printers and other automated office equipment do
               business with any person who or which has at any time during the
               period of twelve months immediately preceding the date of such
               termination done business with the Company or any Associated
               Company as a supplier or customer or client or distributor or
               consultant and with whom or which the Executive shall have had
               dealings during the course of his employment;

          (d)  for the period of 12 months after the date of termination of his
               employment solicit or entice away or endeavour to solicit or
               entice away from the Company or any Associated Company for a
               period of twelve months following the date of termination any
               person who at the date of termination of his employment is
               employed or engaged by the Company or any Associated Company in a
               senior or management capacity and with whom the Executive shall
               have had contact during the course of his employment (whether or
               not such person would commit a breach of his contract of
               employment by so doing).

     15.3 The Executive hereby undertakes that he will immediately notify the
          Company of any offer of employment or any other engagement or
          arrangement made to the Executive by any third party or parties which
          may give rise to a breach of one or more of the covenants contained in
          clause 14.2 ("or notifiable offer") and further undertakes that on
          receipt of any notifiable offer he will immediately inform the third
          party or parties responsible for the notifiable offer of the existence
          of those contracts.

                                       9
<PAGE>

     16.  DISCIPLiNARY AND GRIEVANCE PROCEDURES

     16.1 For statutory purposes there is no formal disciplinary procedure in
          relation to the Executive's employment. The Executive shall be
          expected to maintain the highest standards of integrity and behaviour.

     16.2 If the Executive is not satisfied with any disciplinary decision taken
          in relation to him he may apply in writing within 14 days of that
          decision to the Company CEO whose decision shall be final.

     16.3 If the Executive Director has any grievance in relation to his
          employment he may raise it in writing with the Company CEO whose
          decision shall be final.

     17   NOTICES

     17.1 Any notice to be given under this Agreement shall be given in writing
          and shall be deemed to be sufficiently served by one party on the
          other if it is delivered personally or is sent by registered or
          recorded delivery pre-paid post (air mail if overseas) addressed to
          either the Company's registered office for the time being or the
          Executive's last known address as the case may be.

     17.2 Any notice sent by post shall be deemed (in the absence of evidence
          of earlier receipt) to be received 2 days after posting (6 days if
          sent air mail) and in proving the time such notice was sent it shall
          be sufficient to show that the envelope containing it was properly
          addressed stamped and posted.

     18.  MISCELLANEOUS

     18.1 The Executive hereby warrants that by virtue of entering into this
          Agreement he will not be in breach of any express or implied terms of
          any contract or of any other obligation legally binding upon him.

     18.2 Any benefits provided by the Company to the Executive or his family
          which are not expressly referred to in this Agreement shall be
          regarded as ex gratia benefits provided at the entire discretion of
          the Company and shall not form part of the Executive's contract of
          employment. For the avoidance of doubt any bonuses paid under any
          management incentive plan shall not be an ex gratia payment for the
          purposes of this clause.

     18.3 The Company shall be entitled at any time during the Executive's
          employment to make deductions from the Executive's salary or from any
          other sums due to the Executive from the Company or any Associated
          Company in respect of any overpayment of any kind made to the
          Executive or in respect of any debt or other sum due from him.

     19.  DEFINITIONS AND INTERPRETATION

     19.1 In this Agreement unless the context otherwise requires words and
          phrases defined in Part XXVI of the Companies Act 1985 have the same
          meanings thereby attributed to them and the following expressions have
          the following meanings: -

                                       10
<PAGE>

          "Associated Company"

          any company which is a holding company or a subsidiary of the Company
          or a subsidiary of the Company's holding company

          "Company CEO"

          the Chief Executive Officer of Danka Business Systems PLC, currently
          P. Lang Lowrey III.

          "Group"

          the Company and the Associated Companies

          "Intellectual Property"

          letters patent trade marks service marks designs copyrights utility
          models design rights applications for registration of any of the
          foregoing and the right to apply for them in any part of the world
          inventions drawings computer programs Confidential Information know-
          how and rights of like nature arising or subsisting anywhere in the
          world in relation to all of the foregoing whether registered or
          unregistered

     19.2 The headings in this Agreement are for convenience only and shall not
          affect its construction or interpretation.

     19.3 References in this Agreement to Clauses and paragraphs are references
          to Clauses and paragraphs to this Agreement.

     19.4 Any reference in this Agreement to the employment of the Executive is
          a reference to his employment by the Company whether or not during the
          currency of this Agreement.

     19.5 Any reference in this Agreement to a person shall where the context
          permits include a reference to a body corporate and to any
          unincorporated body of persons.

     19.6 Any word in this Agreement which denotes the singular shall where the
          context permits include the plural and vice versa and any word in this
          Agreement which denotes the masculine gender shall where the context
          permits include the feminine and/or the neuter genders and vice versa.

     19.7 Any reference in this Agreement to a statutory provision shall be
          deemed to include a reference to any statutory amendment modification
          or re-enactment of it.

     19.8 This Agreement contains the entire understanding between the parties
          and supersedes all (if any) subsisting agreements arrangements and
          understandings relating to the employment of the Executive which such
          agreements, arrangements and understandings shall be deemed to have
          been terminated by mutual consent.

     19.9 This Agreement is governed by and shall be construed in accordance
          with the laws of England and the parties to this Agreement hereby
          submit to the exclusive jurisdiction of the English courts.

                                      -11-
<PAGE>

IN WITNESS whereof this Agreement has been executed as a deed by the parties
----------
hereto and is intended to be and is hereby delivered on the date first above
written

Executed as a deed by              )

DANKA BUSINESS SYSTEMS PLC         )

/s/ [ILLEGIBLE]
 ..................

Director

 ..................

Director/Secretary

Signed as a deed by                )

/s/ Dr. Peter Williams
DR. PETER WILLIAMS                 )

in the presence of:-

Signature      /s/ GBeal
               ------------------------------------
Name           GBeal
               ------------------------------------
Address        46a Watchet Lane Holmer Green Bucks.
              -------------------------------------
Occupation     S. V. P.
              -------------------------------------

                                     -12-<PAGE>

                                                                   Exhibit 10.40

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (the "Employment Agreement") is made and
entered into as of the 26th day of July 2001, by and among Danka Office Imaging
Company ("Danka Office Imaging"), Danka Business Systems PLC ("Danka Business
Systems"), Danka Holding Company ("Danka Holding"), and David P. Berg, an
individual ("Executive"). Danka Office Imaging, Danka Business Systems, and
Danka Holding are collectively referred to herein as the "Company."

                                   WITNESSETH:

     WHEREAS, the Company wishes to assure itself of the services of Executive,
on the terms and conditions set forth herein; and Executive desires to be so
employed by the Company on said terms.

     NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements herein contained, the parties agree as follows:

1.   EMPLOYMENT. The Company hereby employs Executive, and Executive hereby
     ----------
accepts employment with the Company, all upon the terms and subject to the
conditions set forth in this Employment Agreement.

2.   CAPACITY AND DUTIES. Executive shall be employed in the capacity of
     -------------------
Corporate Executive Vice President/President Americas Group Division reporting
to the Chief Executive Officer of the Company. Executive shall direct and
oversee the management and operations of the Latin America, Canada and
Australian Business Units.

3.   EMPLOYMENT TERM.
     ---------------

     (a)  Term. Employment of Executive by the Company pursuant to this
          -----
     Employment Agreement shall begin on August 6, 2001, and continue until
     terminated by either party as provided herein. The period during which
     Executive is employed by the Company pursuant to this Employment Agreement
     is referred to herein as the "Term" of this Employment Agreement.

4.   PLACE OF EMPLOYMENT. Executive's principal place of work shall be located
     -------------------
in the St. Petersburg, Florida metropolitan area.

5.   COMPENSATION.
     ------------

     (a)  Salary. Beginning on August 6, 2001 and continuing during the Term,
          ------
     the Company shall pay Executive a base salary at the rate of $250,000.00
     per annum (the "Annual Base Salary"), payable in a manner consistent with
     the Company's payroll procedures for U.S. salaried employees. The Human
     Resources Committee of the Board (the "H.R. Committee") shall review
     Executive's Annual Base Salary at least annually and may increase, but not
     decrease, the Annual Base Salary.

                                       1
<PAGE>

         Performance Bonuses. In addition to the Annual Base Salary, Executive
         -------------------
         shall be entitled to receive an annual bonus under the performance
         bonus plan (the "Performance Bonus Plan") approved by the H.R.
         Committee, beginning in the Company's Fiscal Year 2002, which begins
         April 1, 2001. Upon the Company's achievement of one hundred percent
         (100%) of the budgeted target levels of the Performance Bonus Plan, the
         Company shall pay Executive a bonus equal to $167,000.00. Executive
         shall be entitled to bonus consideration under the Performance Bonus
         Plan for the Company's second fiscal quarter (ending September 30,
         2001), and thereafter in accordance with such plan. If the Company
         meets certain stretch objectives defined and set forth in the
         Performance Bonus Plan (as determined by the H.R. Committee), the
         Company will pay Executive additional bonuses in accordance with such
         Plan. The Company shall pay any bonus earned by Executive in a lump sum
         cash payment, less applicable withholdings, as promptly after the end
         of the relevant accounting period as the H.R. Committee is able to
         certify the Company's achievement of the relevant financial goals,
         subject to any deferral election made by Executive under the terms of
         the Company's deferred compensation plan for U.S. executives.

         (b) Initial Bonus. Executive shall receive a bonus of $50,000.00 within
             -------------
         ten business (10) days of execution of this Agreement ("Initial
         Bonus"). If, within twelve (12) months of execution of this Employment
         Agreement, Executive voluntarily resigns, or is terminated for cause,
         as defined herein, Executive shall reimburse Company an amount equal to
         the pro rata portion of the Initial Bonus actually paid hereunder.
         (e.g. If Executive resigns 6 months from the date of execution of this
         Employment Agreement, Executive shall pay Company 50% of Initial Bonus
         received under this Section).

6.   ADDITIONAL COMPENSATION AND BENEFITS. During the Term, the Company shall
     ------------------------------------
pay to or provide Executive with the following additional compensation and
benefits:

     (a)  Stock Options.
          -------------

          (i)  Executive shall be eligible to participate in the Company's stock
          option plans available to the Company's employees in accordance with
          the terms and conditions of such plans.

          (ii) Executive shall receive from the Company a registered stock
          option grant in the amount of 200,000 American Depository Shares
          ("ADSs") representing ordinary shares of Danka Business Systems PLC.
          Vesting of 150,000 of such options will be in accordance with the
          Company Stock Option Plan (1/3 per year for 3 years). Executive shall
          be entitled to immediate vesting of 25,000 options upon achievement of
          100% of the FY2002 goals for Executive's business units and immediate
          vesting of 25,000 options for achievement of 125% of FY2002 goals for
          Executive's business units. In the event the above goals are not met,
          these 50,000 options shall become vested on the fifth anniversary of
          the date such options are granted. The Company shall file a
          registration statement on Form S-8 with the Securities Exchange
          Commission such that all of the ADSs subject to the

                                       2
<PAGE>

          option grant shall be registered shares upon the exercise of the
          option. The exercise price of the options set on the date such grant
          is approved by the H.R. Committee.

          (iii) If Executive seeks to acquire by exercise of any stock option
          all or part of the shares that have become exercisable and the Company
          declines to allow him to acquire such shares, whether because the
          Company has not obtained shareholder approval for the option or
          otherwise, the Company shall pay Executive, within ten (10) days after
          his attempt to acquire such shares, (1) an amount equal to the
          difference between the number of shares Executive sought to acquire
          multiplied by the closing price for a share of the Company's common
          stock as of the date Executive sought to acquire such shares, on the
          one hand, and the option exercise price per share multiplied by the
          number of shares Executive sought to acquire, on the other hand, and
          (2) an additional payment sufficient to pay any federal, state, and
          local income tax and social security, or other employment tax on the
          amount paid under Section 6(a)(iii)(1), as well as any additional
          federal, state and local income tax and social security or other
          employment tax on any such gross-up payment, determined by using the
          top marginal rates of federal, state, and local income taxes and
          social security, or other employment taxes applicable to the
          Executive's taxable income in effect during the year of payment.

     (b)  Executive Deferred Compensation Plan. Executive shall be eligible to
          ------------------------------------
     participate in the Company's Executive deferred compensation plan in
     accordance with its terms and conditions.

     (c)  Insurance. The Company shall provide Executive and his dependents with
          ---------
     reasonable and adequate health, dental, short term disability, long term
     disability, and life insurance. Such insurance coverage shall be no less
     favorable than that from time to time made available to other senior
     executives of the Company located in the United States.

     (d)  401K Plan. Executive shall be entitled to participate in the Company's
          ---------
     401K plan in accordance with its terms and conditions.

     (e)  Vacation. Executive shall be entitled to at least four (4) weeks of
          --------
     paid vacation during each year during the Term, prorated for partial years.
     Such vacation shall be subject to the Company's policies and procedures for
     senior executives.

     (f)  Business Expenses. The Company shall promptly reimburse Executive for
          -----------------
     all reasonable, ordinary and necessary expenses he incurs in connection
     with his employment by the Company (including, but not limited to,
     automobile and other business travel, and customer entertainment expenses)
     on the same basis as other senior executives of the Company.

     (g)  Relocation Expenses. The Company shall pay Executive up to $50,000
          -------------------
     (with tax gross up) for the commission payable upon the sale of Executive's
     Minnesota home

                                       3
<PAGE>

     "Relocation Expense". If, within thirty-six (36) months of execution of
     this Employment Agreement, Executive voluntarily resigns or is terminated
     for cause, as defined herein, Executive shall reimburse the Company an
     amount equal to a pro rata portion of such Relocation Expenses actually
     paid hereunder. (e.g. If Executive resigns eighteen (18) months from the
     date of execution of this Employment Agreement, Executive shall pay the
     Company 50% of the Relocation Expense received under this section.

     (h)  Indemnification. The Company will, to the fullest extent permitted by
          ---------------
     law, indemnify and hold Executive harmless from any and all liability
     (including, without limitation, judgments, fines, settlement payments,
     expenses, costs, and attorneys' fees) arising from his service as an
     employee, officer, or director of the Company. To the fullest extent
     permitted by law, if there is a potential or actual conflict of interest
     between the Company and Executive, the Company will advance legal fees and
     expenses to Executive for counsel selected by Executive in connection with
     any litigation, investigation, action, suit, or other proceeding related to
     Executive's employment with the Company or his performing services for the
     Company, whether as a director, officer, or employee of the Company. During
     the Term, the Company shall maintain adequate and reasonable Directors and
     Officers liability insurance naming Executive as an insured.

     (i)  Other Employee Benefits. Executive shall also be entitled to any other
          -----------------------
     fringe benefits, bonuses, and similar programs, including regular holidays,
     and shall be eligible to participate in all plans or arrangements
     maintained by the Company for the benefit of its employees, officers, or
     directors, including without limitation all compensation, welfare, bonus,
     incentive, retirement, thrift, pension, profit sharing, deferred
     compensation, employee loan, and insurance plans or arrangements. Executive
     shall at all times receive benefits no less favorable than those received
     by other senior executives.

7.   TERMINATION BY THE COMPANY OR BY EXECUTIVE. This Employment Agreement may
     ------------------------------------------
be terminated as follows:

     (a)  By the Company.
          --------------

          (i)  For Cause. The Company may terminate this Employment Agreement
               ---------
          and Executive's employment with the Company at any time for Cause (as
          defined in Section 9) ("Cause Termination"); provided, however, that
                                                       -----------------
          the Company shall give Executive written notice of Cause Termination
          specifying the reason for the termination, and Executive shall have
          the opportunity to address the Board before he is terminated for
          Cause.

          (ii) By Company Notice. The Company may terminate this Employment
               -----------------
          Agreement and Executive's employment with the Company upon sixty (60)
          days written notice for any reason not included in the definition of
          Cause ("Company Notice Termination").

     (b)  Death or Disability. This Employment Agreement and Executive's
          -------------------
     employment with the Company will terminate immediately upon Executive's
     death or Disability (as

                                       4
<PAGE>

     defined in Section 9) ("Death or Disability Termination"). If either party
     terminates Executive's employment due to Disability, the terminating party
     shall give the other party written notice to that effect.

     (c)  By Executive.
          ------------

          (i)  For Good Reason. Executive may terminate this Employment
               ---------------
          Agreement and Executive's employment by the Company at any time for
          Good Reason (as defined in Section 9) ("Good Reason Termination"). In
          the event the Company disputes Executive's Good Reason Termination,
          the Company shall notify Executive in writing of such dispute within
          ten (10) days of receiving notice of such termination for Good Reason.
          If the Company does not so notify Executive within the ten (10) day
          period, the Company shall be deemed to have accepted Executive's
          determination of Good Reason.

          (ii) By Executive Notice. Executive may terminate this Employment
               -------------------
          Agreement and Executive's employment with the Company for any reason
          not included in the definition of Good Reason by giving the Company
          sixty (60) days written notice of such termination ("Executive Notice
          Termination").

8.   PAYMENTS UPON TERMINATION.
     -------------------------

     (a)  Company Notice Termination and Good Reason Termination. If the Company
          ------------------------------------------------------
     terminates Executive's employment for any reason other than for Cause (as
     defined in Section 9) or if Executive terminates his employment for Good
     Reason (as defined in Section 9), in the first year of employment the
     Company shall pay to Executive (subject to withholding of applicable taxes)
     a severance of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00);
     and, if thereafter, Five Hundred Thousand and 00/100 Dollars ($500,000.00).
     Such severance shall be paid in equal installments over twelve (12) months
     on the Company's standard bi-weekly Company payroll dates, beginning one
     (1) month following the date of termination. The Company shall continue to
     provide Executive and his family, for a period of twenty-four (24) months
     after the date of termination, with the same insurance benefits coverage
     being provided to Executive under Section 6(c) on the date the notice of
     termination is given. Executive shall also be entitled to a pro-rata
     portion of the performance bonus under Section 5(b) to which he would have
     been entitled in the year of termination if his employment had not
     terminated. Executive shall also be entitled to any of his Annual Base
     Salary accrued through the date of termination, payments for any accrued
     but unused vacation for the year of termination, any bonuses earned but not
     previously paid with respect to the accounting period of the Company most
     recently ended, and any vested benefits payable to Executive under the
     terms of any deferred compensation plan, 401K plan, stock option plan, or
     other benefit plans maintained by the Company in which Executive
     participated. Additionally, notwithstanding the terms of the Company's
     stock option plan(s), all stock options received by Executive shall become
     fully vested and immediately exercisable upon a Company Notice Termination
     or Good Reason Termination. Such stock options shall remain exercisable for
     a period of not less than twenty-four (24) months. All of

                                       5
<PAGE>

     Executive's other unvested benefits, including, without limitation, any
     Company 401K contributions or profit sharing contributions, shall
     immediately vest upon a Company Notice Termination or Good Reason
     Termination.

     (b)  Cause Termination and Executive Notice Termination. If Executive's
          --------------------------------------------------
     employment is terminated by the Company for Cause (as defined in Section 9)
     or if Executive terminates his employment for any reason other than Good
     Reason (as defined in Section 9), Executive shall be entitled to receive
     any of his Annual Base Salary accrued through the date of termination, any
     accrued but unpaid vacation pay for the year of termination, any bonuses
     earned but not previously paid with respect to the accounting period of the
     Company most recently ended, and any vested benefits payable to Executive
     under the terms of any deferred compensation plan, 401K plan, stock option
     plan, or other plans maintained by the Company in which Executive
     participates. Notwithstanding the terms of the Company's stock option
     plan(s), Executive shall not forfeit any vested options upon a Cause
     Termination or Executive Notice Termination, and all such vested options
     shall remain exercisable for a period of at least twenty-four (24) months

     (c)  Death or Disability Termination. If Executive's employment is
          -------------------------------
     terminated due to his death or Disability (as defined in Section 9), the
     Company will also continue to pay Executive (or his estate), as severance,
     the Annual Base Salary through the end of the month of termination.
     Executive (or his estate) shall also be entitled to receive any of his
     Annual Base Salary accrued through the date of termination, any accrued but
     unpaid vacation pay for the year of termination, any bonuses earned but not
     previously paid with respect to the accounting period of the Company most
     recently ended, and any vested benefits payable to Executive under the
     terms of any deferred compensation plan, 401K plan, stock option plan, or
     other plans maintained by the Company in which Executive participates. The
     Company shall continue to provide Executive (if Disabled) and his family,
     for a period of twenty-four (24) months after the date of termination, with
     the same insurance benefits required by Section 6(c) on the date Death or
     Disability Termination occurs. Additionally, notwithstanding the terms of
     the Company's stock option plans, all stock options received by Executive
     shall become fully vested and immediately exercisable upon a Death or
     Disability Termination. Such stock options shall remain exercisable for a
     period of not less than twenty-four (24) months. All of Executive's other
     unvested benefits, including, without limitation, any Company 401K
     contributions or profit sharing contributions, shall immediately vest upon
     a Death or Disability Termination.

9.   DEFINITIONS. In addition to the words and terms elsewhere defined in this
     -----------
Employment Agreement, certain capitalized words and terms used in this
Employment Agreement shall have the meanings given to them by the definitions
and descriptions in this Section 9 unless the context or use indicates another
or different meaning or intent, and such definition shall be equally applicable
to both the singular and plural forms of any of the capitalized words and terms
herein defined. The following words and terms are defined terms under this
Employment Agreement:

                                       6
<PAGE>

     (a)  Cause. For purposes of this Employment Agreement, the term "Cause"
          -----
     shall mean and be limited to:

          (i)   Executive was convicted of a felony or entered a guilty or nolo
          contendere plea to such a crime;

          (ii)  Executive was convicted of any lesser crime committed in
          connection with the performance of his duties hereunder involving
          dishonesty, fraud or moral turpitude; or

          (iii) Executive's gross negligence in, or willful failure to
          substantially perform his material duties in accordance with Section 2
          herein (other than any such failure resulting from Executive's
          Disability, as defined herein) which gross negligence or willful
          failure has a material adverse effect on the Company; provided,
                                                                --------
          however, that such gross negligence or willful failure shall not be
          -------
          considered Cause unless it continues after the Company has made a
          written demand for substantial performance on Executive and Executive
          has failed to correct the acts or omissions complained of after a
          reasonable opportunity (of not less than sixty (60) days) to do so.

     (b)  Disability. For purposes of this Employment Agreement, the term
          ----------
     "Disability" shall mean the inability of Executive to perform Executive's
     essential duties and responsibilities (even with reasonable accommodation)
     under this Employment Agreement for a period of one hundred and eighty
     (180) consecutive days during any twelve (12) month period by reason of
     Executive's mental or physical disability. Both the Company and Executive
     may appoint a qualified physician to determine whether Executive is
     Disabled. If those physicians cannot agree, the physicians shall mutually
     appoint a third qualified physician, whose determination of whether
     Executive has a Disability shall be final.

     (c)  Good Reason. For purposes of this Employment Agreement, the term "Good
          -----------
     Reason" shall mean:

          (i)   the Company materially breaches a term of this Employment
          Agreement (including, without limitation, the failure of the Company
          to pay or provide Executive any of the compensation or benefits to
          which he is entitled under this Employment Agreement), which breach
          was not corrected by the Company within thirty (30) days after
          receiving written notice of such breach from Executive;

          (ii)  the relocation of Executive's principal office, without
          Executive's prior written consent, more than forty (40) miles away
          from the Company's current headquarters in St. Petersburg, Florida.;

          (iii) the Company's reduction of Executive's compensation and/or
          benefits hereunder without Executive's prior written consent;

                                       7
<PAGE>

          (iv)  there has been an adverse or material change in Executive's
          status, position, duties, responsibilities (including reporting
          responsibilities), authority, or titles, which change was not
          withdrawn or rescinded by the Company within thirty (30) days after
          receiving written notice of objection to such change from Executive;

          (v)   the assignment to Executive of any duties or work
          responsibilities, or any instructions, orders, or directives which are
          inconsistent with his status, position, duties, responsibilities
          (including reporting responsibilities), authority, or titles as set
          forth in this Employment Agreement or as required by law.

          (vi)  any removal of Executive from, or the failure to appoint, elect,
          reappoint, or reelect Executive to, the positions of Corporate
          Executive Vice President /President Americas Group Division; and/or

          (vii) the failure of the H.R. Committee to set reasonably attainable
          budgeted target levels and objectives in the Performance Bonus Plan.

     (d)  Restricted Area.  For purposes of this Employment Agreement, the term
          ---------------
     "Restricted Area" shall mean the entire world.

10.  NON-COMPETITION AND CONFIDENTIALITY.
     -----------------------------------

     (a) Non-Competition. During the Term and for a period of twenty-four (24)
         ---------------
     months following the termination of Executive's employment hereunder for
     Good Cause or without Good Reason, Executive shall not, in the Restricted
     Area, directly or indirectly, enter the employ of, or render any services
     to, any person, firm or corporation engaged in any business competitive
     with the businesses engaged in by the Company, any constituent partners of
     the Company or any of their respective parents, subsidiaries or affiliates;
     further, Executive shall not engage in such business, directly or
     indirectly, as an individual, partner, shareholder, director, officer,
     principal, agent, employee, trustee, consultant, or any other relationship
     or capacity; provided, however, that nothing contained in this Section 10
     shall be deemed to prohibit Executive from acquiring, solely as an
     investment, a less than five percent (5%) interest in the equity of any
     publicly traded corporation or limited partnership.

     (b) Non-Solicitation of Employees. During the Term and for a period of
         -----------------------------
     twenty-four (24) months following the termination of Executive's employment
     hereunder for Good Cause or without Good Reason, Executive, except within
     the course of the performance of his duties hereunder, shall not solicit
     for employment any current employee of the Company, any constituent partner
     of the Company, or any of their respective parents, subsidiaries, or
     affiliates, if Executive has had material business contact with such
     individual during the Term.

                                       8
<PAGE>

     (c) Confidentiality. Executive shall not, at any time hereafter, disclose
         ---------------
     to any person, firm or corporation or otherwise use any confidential
     information regarding the customers, suppliers, market arrangements, or
     methods of operations of the Company, any constituent partner of the
     Company or any of their respective parents, subsidiaries, or affiliates or
     any other information of the Company, any constituent partner of the
     Company or any of their respective parents, subsidiaries or affiliates,
     except to the extent necessary to conduct the business of the Company, or
     to comply with law or the valid order of a governmental agency or court of
     competent jurisdiction. Without limiting the generality of the foregoing,
     the Parties acknowledge and agree that all information not otherwise
     generally known to the public relating to each of (i) this Agreement, or
     (ii) the Company, any constituent partner of the Company or any of their
     respective parents, subsidiaries, or affiliates, is confidential and
     proprietary and is not to be disclosed, to any persons or entities or
     otherwise used, except to the extent necessary to conduct the business of
     the Company, or to comply with law or the valid order of a governmental
     agency or court of competent jurisdiction.

     (d) Rights to Innovations. Any invention, improvement, design, development
         ---------------------
     or discovery conceived, developed, invented or made by Executive, alone or
     with others, during his employment hereunder and applicable to the business
     of the Company, its parents, subsidiaries or affiliates shall become the
     sole and exclusive property of the Company. Executive shall (i) disclose
     the same completely and promptly to the Company, (ii) execute all documents
     requested by the Company in order to vest in the Company the entire right,
     title and interest, in and to the same, (iii) execute all documents
     required by the Company for the filing, and prosecuting of such
     applications for patents, copyrights and/or trademarks, which the Company,
     in its sole discretion, may desire to prosecute, and (iv) provide to the
     Company, at the Company's expense, all assistance it may reasonably require
     including, without limitation, the giving of testimony in any suit, action
     or proceeding, in order to obtain, maintain and protect the Company's
     rights therein and thereto.

     (e) Injunctive Relief. Any breach or threatened breach by Executive of any
         -----------------
     provision of this Section 10 shall cause the Company irreparable harm which
     cannot be remedied solely by damages. In the event of a breach or
     threatened breach by Executive of any of the provisions of this Section 10,
     the Company shall be entitled to seek injunctive relief restraining
     Executive. Nothing herein shall be construed as prohibiting the Company
     from pursuing any other remedies available at law or in equity in the event
     of such breach or threatened breach, including the recovery of damages.

11.  SUCCESSORS. This Employment Agreement shall be binding on the Company and
     ----------
any successor to its business or to a majority of its business assets and the
Company shall require any successor in interest (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to expressly assume and agree to
perform this Employment Agreement; provided, however, that no such assumption
                                   --------  -------
shall relieve the Company of its obligations hereunder.

                                       9
<PAGE>

12.  BINDING EFFECT. This Employment Agreement shall inure to the benefit of and
     --------------
be enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

13.  MODIFICATION AND WAIVER. No provision of this Employment Agreement may be
     -----------------------
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing that specifies the specific provision affected, which
writing shall be signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Employment Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

14.  AMENDMENTS. No amendments or variations of the terms and conditions of this
     ----------
Employment Agreement shall be valid unless the same is in a writing that
specifies the term or condition affected, which writing is signed by Executive
and such officer of the Company as may be specifically designated by the Board.

15.  SEVERABILITY. The invalidity or unenforceability of any provision of this
     ------------
Employment Agreement, whether in whole or in part, shall not in any way affect
the validity and/or enforceability of any other provision herein contained. Any
invalid or unenforceable provision shall be deemed severable to the extent of
any such invalidity or unenforceability.

16.  ENTIRE AGREEMENT. This Employment Agreement sets forth the entire
     ----------------
agreement and understanding of the Company and Executive in respect of the terms
and conditions of Executive's employment after the Commencement Date, and
supersedes all prior employment agreements, covenants or representations or
warranties, whether oral or written, made by the parties, or any representative
of the Company, with respect to such terms and conditions of employment;
provided, however, that this Employment Agreement does not supersede or affect
--------  -------
the Change of Control Agreement between Executive and the Company.

17.  NOTICES. All notices, communications and deliveries hereunder shall be made
     -------
in writing signed by or on behalf of the party making the same and shall be
delivered (a) personally; (b) by telecopy transmission with a copy sent by U.S.
mail, first class, postage prepaid; (c) by registered or certified mail (return
receipt requested); or (d) by any national overnight courier service (with
postage and other fees prepaid). All such notices, communications, and delivers
shall be addressed as follows:

                              If to the Company:
                              -----------------

                              Danka Office Imaging Company
                              11201 Danka Circle North
                              St. Petersburg, Florida  33716
                              Attn: General Counsel
                              Telephone No.: (727) 579-2801
                              Telecopy No.:  (727) 579-2880

                                       10
<PAGE>

                              and:
                              ---

                              Danka Business Systems PLC
                              Masters House
                              107 Hammersmith Road
                              London, England w14 OQH
                              Attn: Secretary

                              If to the Executive:
                              -------------------

                              David P. Berg
                              XXXXXXXXXXXXXX
                              XXXXXXXXXXX
                              Telephone No.: (XXX) XXX-XXX

or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing. Any such notice,
communication or delivery shall be deemed given or made (a) on the date of
delivery if delivered in person (by courier service or otherwise), (b) upon
transmission by facsimile if receipt is confirmed by telephone, provided
transmission is made during regular business hours, or if not, the next business
day, or (c) on the fifth (5th) business day after it is mailed by registered or
certified mail.

18.  GOVERNING LAW. This Employment Agreement shall be construed and enforced
     -------------
pursuant to the laws of the State of Florida.

19.  ARBITRATION. Any controversy or claim arising out of or relating to this
     -----------
Employment Agreement or the breach thereof, other than a claim for injunctive
relief, shall be settled by arbitration in accordance with the Employment
Arbitration Rules of the American Arbitration Association (the "Rules") in
effect at the time demand for arbitration is made by any party. This arbitration
shall be conducted before three (3) arbitrators. One arbitrator shall be named
by the Company, a second shall be named by Executive, and the third arbitrator
shall be named by the two arbitrators so chosen. In the event that the third
arbitrator is not agreed upon, he or she shall be named by the American
Arbitration Association. The arbitration shall occur in St. Petersburg, Florida
or such other location as may be mutually agreed to by the Company and
Executive. The award made by all or a majority of the panel of arbitrators shall
be final and binding, and judgment may be entered in any court of law having
competent jurisdiction. The award is subject to confirmation, modification,
correction, or vacation only as explicitly provided in Title 9 of the United
States Code, as amended.

20.  NO MITIGATION OR OFFSET. Executive shall not be required to mitigate the
     -----------------------
amount of any severance or termination payment provided for in this Employment
Agreement by seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Employment Agreement be reduced by any
compensation or income Executive may receive from any source. In addition, no
payments to Executive under this Employment Agreement may

                                       11
<PAGE>

be subject to any offset or setoff due to any claim the Company, or its parents,
affiliates, or subsidiaries, may have against Executive.

21.  ATTORNEYS' FEES. The Company will promptly reimburse Executive for all
     ---------------
attorneys' fees (for counsel selected by Executive) and expenses arising out of
any dispute under or in connection with this Employment Agreement (whether
litigation or arbitration) to the extent Executive is the prevailing party.
Executive shall in no way be responsible or liable for the Company's attorneys'
fees and expenses in any dispute arising under or in connection with this
Employment Agreement, and no award or order relating to this Employment
Agreement shall award the Company its attorneys' fees.

22.  SOURCE OF PAYMENTS. All salary, bonus, severance, and all other payments to
     ------------------
Executive under this Employment Agreement shall be paid to Executive by the
Company through its U.S. payroll system and shall be made in cash in U.S.
dollars. If the Company should fail to make any such payment to Executive when
due, Danka Office Imaging, Danka Holding, and Danka Business Systems shall be
jointly and severally liable to Executive for such payments.

23.  REPRESENTATION. The Company represents and warrants that it and the person
     --------------
executing this Employment Agreement on behalf of the Company are fully
authorized and empowered to enter into this Employment Agreement and that the
performance of its obligations under this Employment Agreement will not violate
any agreement between it and any other person, firm, or organization.

24.  COUNTERPARTS. This Employment Agreement may be executed in more than one
     ------------
(1) counterpart and each counterpart shall be considered an original.

     IN WITNESS WHEREOF, this Employment Agreement has been duly executed by the
Company and Executive as of the date first above written.

                         SIGNATURES ON FOLLOWING PAGE

                                       12
<PAGE>

                              DANKA BUSINESS SYSTEMS PLC

                              [Lang Lowrey]
                              -----------------------------------
                              By: P. Lang Lowrey
                                 --------------------------------
                              Title: Chief Executive Officer
                                    -----------------------------

                              DANKA HOLDING COMPANY

                              [Lang Lowrey]
                              -----------------------------------
                              By: P. Lang Lowrey
                                  -------------------------------
                              Title: Chief Executive Officer
                                    -----------------------------

                              DANKA OFFICE IMAGING COMPANY

                              [Lang Lowrey]
                              -----------------------------------
                              By: P. Lang Lowrey
                                 --------------------------------
                              Title: Chief Executive Officer
                                    -----------------------------

                              EXECUTIVE

                              [David P. Berg]
                              -----------------------------------
                              David P. Berg

                                       13

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