EXHIBIT 10.31
SEVERANCE BENEFITS AGREEMENT
[Mr/Ms Name]
[Address]
[City, State ZIP]
Dear [Name]:
You are or are about to become employed by Staples, Inc. and/or one of its
subsidiaries ("Staples"). Staples agrees to provide you with the severance
benefits set forth in this letter agreement (the "Agreement") if your employment
is terminated under the circumstances described below:
1. TERM OF AGREEMENT. The term of this Agreement shall begin on the date
it is signed and shall continue in full force and effect until such time as you
or Staples has delivered to the other 90-days advance written notice of your or
its election to terminate this Agreement . This Agreement is not a contract to
employ you for a definite time period, it being acknowledged that your
employment is "at will" and that either you or Staples may terminate the
employment relationship at any time.
2. NOTICE OF TERMINATION AND OTHER MATTERS. Any termination of your
employment, whether by you or Staples, will be communicated by written notice
("Notice of Termination") to the other party. The Notice of Termination will
specify the provisions of this Agreement, if any, upon which termination is
based and its effective date, which in no case will be more than 180 days after
the Notice of Termination. All notices and communications provided for in this
Agreement will be in writing and will be effective when delivered or mailed by
U.S. registered or certified mail, return receipt requested, postage prepaid,
addressed to the Chairman of Staples, 000 Xxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000,
and to you at the address shown above or to such other address as either Staples
or you may have furnished to the other in writing.
3. COMPENSATION UPON TERMINATION. Staples will provide you with the
severance benefits listed below in the event of a Qualified Termination. A
"Qualified Termination" means your employment is terminated for any reason other
than because (i) you die or become Disabled, (ii) Staples terminates you for
"Cause," or (iii) you resign without "Good Reason."
(a) Staples will pay you [6 months = certain executive officers; 12 months
= other executive officers; 18 months = CEO/COO] severance pay, in equal monthly
installments. Your monthly severance payments will equal the sum of (i) your
monthly base salary rate in effect immediately prior to the Qualified
Termination (or any higher rate in effect within the 90 days prior to the Notice
of Termination) plus (ii) one-twelfth of an amount equal to the average annual
bonus paid to (or accrued for) you by Staples during the three full fiscal years
preceding such Qualified Termination. Annual salary rates will be prorated where
applicable and annual bonus averages will be computed on years available if less
than three years. Any partial year bonus you have earned will be
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annualized. Staples will reduce the amount of any monthly payments set forth
above by 50% of any cash compensation earned by or accrued for you as a result
of services you render for a third party during the month immediately preceding
the date of such payment unless the Qualified Termination occurs within 24
months after a Change of Control.
(b) Staples will provide you with [6 months = certain executive officers;
12 months = other executive officers; 18 months = CEO/COO] of life, dental,
accident and group health insurance benefits substantially similar to those
available to similarly situated officers (but not disability insurance);
provided, however, that Staples will not provide any such benefit for any
portion of this period that you receive an equivalent benefit from another
party.
(c) The vesting schedule of any outstanding options to purchase shares of
Staples' Common Stock will not be accelerated in the event of a Qualified
Termination, unless specifically provided to the contrary in the respective
option agreements.
(d) Staples will provide you with 6 additional months of the benefits set
forth in paragraphs (a) and (b) above if such Qualified Termination is within
two years after a Change in Control.
You will not be entitled to any of the compensation or benefits set forth above
if Staples determines, within 60 days after your termination, that your conduct
prior to your termination would have warranted a discharge for "Cause," or if,
after your termination, you have violated the terms of any non-competition or
confidentiality provision contained in any employment, consulting, advisory,
non-disclosure, non-competition or other similar agreement between you and
Staples.
4. DEFINITIONS. For the purposes of this Agreement, the terms listed
below are defined as follows:
(a) CHANGE IN CONTROL. A "Change in Control" will be deemed to have
occurred only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (other than
Staples, any trustee or other fiduciary holding securities under an employee
benefit plan of Staples, or any corporation owned directly or indirectly by the
stockholders of Staples in substantially the same proportion as their ownership
of stock of Staples) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of Staples
representing 30% or more of the combined voting power of Staples' then
outstanding securities;
(ii) individuals who constitute the Board (as of the date hereof, the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to the date
hereof whose election, or
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nomination for election by Staples' stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of Staples, as such terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act) will be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or
(iii) the stockholders of Staples approve a merger or consolidation of
Staples with any other corporation, other than (A) a merger or consolidation
which would result in the voting securities of Staples outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 75% of
the combined voting power of the voting securities of Staples or such surviving
entity outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a recapitalization of Staples (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 50% of the combined voting power of Staples' then outstanding securities;
or
(iv) the stockholders of Staples approve a plan of complete liquidation of
Staples or an agreement for the sale or disposition by Staples of all or
substantially all of Staples' assets.
(b) DISABLED. You are "disabled" for the purposes of this Agreement, if you
have been absent from the full-time performance of your duties with Staples for
six (6) consecutive months because of incapacity due to physical or mental
illness, and, within thirty (30) days after being sent a written Notice of
Termination, you fail to resume performance of your essential job duties, with
or without reasonable accommodation.
(c) CAUSE. A termination for "Cause" by Staples will occur whenever:
(i) you willfully fail to substantially perform your duties with Staples
(other than any failure resulting from incapacity due to physical or mental
illness); provided, however, that Staples has given you a written demand for
substantial performance, which specifically identifies the areas in which your
performance is substandard, and you have not cured such failure within 30 days
after delivery of the demand. No act or failure to act on your part will be
deemed "willful" unless you acted or failed to act without a good faith or
reasonable belief that your conduct was in Staples' best interest.
(ii) you breach any of the terms of the Proprietary and Confidential
Information Agreement or Non-Competition Agreement (or other similar agreement)
between you and Staples, or
(iii) you violate the Code of Ethics or attempt to secure any improper
personal profit in connection with the business of Staples, or
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(iv) you fail to devote your full working time to the affairs of Staples
except as may be authorized in writing by Staples' CEO or other authorized
Company official, or
(v) you engage in business other than the business of Staples except as may
be authorized in writing by Staples' CEO or other authorized Company official,
or
(vi) you engage in misconduct which is demonstrably and materially
injurious to Staples;
provided that in each case Staples has given you written notice of its intent to
terminate your employment under this Section 5(c) and an opportunity to present,
in person, to the Executive Vice President of Human Resources or any other
authorized Company official, any objections you may have to such termination.
(d) GOOD REASON. A termination by you for "Good Reason" will occur whenever
any of the following circumstances have taken place, without your written
consent within 90 days prior to your Notice of Termination:
(i) your position, duties, responsibilities, power, title or office was
significantly diminished;
(ii) your annual base salary was reduced;
(iii) you were not allowed to participate in a cash bonus program in a
manner substantially consistent with past practice in light of Staples'
financial performance and attainment of your specified goals, your participation
in any other material compensation plan (other than any stock option or stock
award program which programs are within the full discretion of the Compensation
Committee) was substantially reduced, both in terms of the amount of benefits
provided and the level of participation relative to other participants; unless
such circumstances are fully corrected prior to the Date of Termination
specified in your Notice of Termination;
(iv) you were not provided with paid vacation or other benefits
substantially similar to those enjoyed by you under any of Staples' life
insurance, medical, health and accident, or disability plans in which you were
participating, or Staples took any action which would directly or indirectly
materially reduce any of such benefits or the number of your paid vacation days;
unless such circumstances are fully corrected prior to the Date of Termination
specified in your Notice of Termination;
(v) in the event of a Change in Control, Staples or any person in control
of Staples requires you to perform your principal duties in a new location
outside a radius of 50 miles from your business location at the time of the
Change in Control; or
(vi) Staples fails to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in Section 6.
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Notwithstanding the foregoing, any general reduction of salary or reduction (or
elimination) of other compensation, bonus and/or benefits for its officers which
are substantially comparable for all such officers (BUT NOT OCCURRING WITHIN 24
MONTHS AFTER A CHANGE OF CONTROL) will not be considered "Good Reason."
5. SUCCESSORS; BINDING AGREEMENT. Staples will require any successor
(whether direct, indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of its business or assets expressly to assume and agree
to perform this Agreement to the same extent that Staples would be required to
perform it if no such succession had taken place. Any failure to obtain an
assumption of this Agreement prior to the effectiveness of any succession will
be a breach of this Agreement and will entitle you to compensation in the same
amount and on the same terms as you would be entitled hereunder. As used in this
Agreement, "Staples" means Staples as defined above and any successor to its
business or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. This Agreement will inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless otherwise
provided herein, will be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or if there is no such designee, to your
estate.
6. ARBITRATION. The parties agree that any legal disputes (including but
not limited to claims arising under federal or state statute, contract, tort, or
public policy) that may occur between you and Staples, and that arise out of, or
are related in any way to, your employment with or termination of employment
from Staples or the termination of this Agreement, and which disputes cannot be
resolved informally, will be resolved exclusively though final and binding
arbitration. The parties will be precluded from raising in any other forum,
including, but not limited to, any federal or state court of law, or equity, any
claim which could be raised in arbitration; provided, however that nothing in
this Agreement precludes you from filing a charge or from participating in an
administrative investigation of a charge before an appropriate government agency
or Staples from initiating an arbitration over a matter covered by this
Agreement.
Each party may demand arbitration, no later than three hundred (300) days after
the date on which the claim arose, by submitting to the other party a written
demand which states: (i) the claim asserted, (ii) the facts alleged, (iii) the
applicable statute or principal of law (e.g., breach of contract) upon which the
demand is based, and (iv) the remedy sought. Any response to such demand must be
made, in writing, within twenty (20) days after receiving the demand, and will
specifically admit or deny each factual allegation.
The arbitration will be conducted in accordance with the Rules for Employment
Arbitration of the American Arbitration Association (AAA) and any arbitration
will take place in Westborough, Massachusetts. Each party will bear its own
costs and attorney's fees. The arbitrator will have the power to award any types
of legal or
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equitable relief that would be available in a court of competent jurisdiction,
including, but not limited to, the costs of arbitration, attorney's fees,
emotional distress damages, and punitive damages for causes of action when such
damages are available under law. Any relief or recovery to which you are
entitled from any claims arising out of your employment, termination, or any
claim of unlawful discrimination will be limited to that awarded by the
arbitrator.
7. WAIVER OF JURY TRIAL. If any claim arising out of your employment or
termination is found not to be subject to final and binding arbitration, the
parties agree to waive any right to a jury trial if such claim is filed in
court.
8. MISCELLANEOUS.
(a) The invalidity or unenforceability of any provision of this Agreement
will not affect the validity or enforceability of any other provision of this
Agreement, which will remain in full force and effect.
(b) The validity, interpretation, construction and performance of this
Agreement will be governed by the laws of the Commonwealth of Massachusetts.
(c) No waiver by you at any time of any breach of, or compliance with, any
provision of this Agreement to be performed by Staples will be deemed a waiver
of that or any other provision at any subsequent time.
(d) You must execute a legally enforceable separation agreement and
general release in a form acceptable to Staples prior to the receipt of any
payments or benefits set forth above. Any payments made to you will be paid net
of any applicable withholding required under federal, state or local law.
(e) This Agreement is the exclusive agreement with respect to the
severance benefits payable to you in the event of a termination of your
employment. All prior negotiations and agreements are hereby merged into this
Agreement.
If this letter sets forth our agreement, kindly sign and return to Staples
the enclosed copy of this letter.
Sincerely,
STAPLES, INC.
By:
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Executive Vice President,
Human Resources
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I have been advised of my right to consult with counsel regarding this
Agreement. I understand that I can revoke my acceptance at any time within 7
days of signing this Agreement, but such revocation must be signed in writing. I
understand that if I revoke my acceptance or choose not to sign this Agreement,
I will be ineligible for any future stock option grants. I have had at least 21
days to consider this Agreement and have decided to sign knowingly, voluntarily,
and free from duress or coercion.
Agreed to this _____ day of ______________, 2005
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(Associate Signature)
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