Exhibit 10.9
Dated:
--------------------
STAPLES, INC.
SEVERANCE BENEFITS AGREEMENT
Mr. Xxxx Xxxxxxx
00 Xxxxxx Xxxx
Xxxxx, XX 00000
Dear Xxxx:
1. OFFICER RELATIONSHIP. You are currently, or are about to become, an
officer of Staples, Inc. and/or one of its subsidiaries ("Staples"). In order to
induce you to remain or enter into its employ, Staples agrees that you shall
receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with Staples is terminated under the
circumstances described below.
2. TERM OF THE AGREEMENT. The term of this Agreement (the "Term") shall
commence as of the date hereof and shall continue in effect until the later of
May 31, 2000 or 24 months after any Change of Control that may occur prior to
May 31, 2000. Notwithstanding the termination of your employment, any
obligations hereunder which by their terms continue (such as severance benefits)
shall survive such termination. This Agreement does not constitute a contract of
employment or impose on Staples any obligation to retain you as an employee, it
being acknowledged that your employment is "at will" and that both you and
Staples may terminate your employment at any time. Any termination of your
employment by Staples or by you during the Term shall be communicated by written
notice of termination ("Notice of Termination") to the other party hereto in
accordance with Section 7, which Notice of Termination shall specify the
provisions of this Agreement, if any, upon which such termination is based. The
"Date of Termination" shall mean the effective date of such termination as
specified in the Notice of Termination (provided that no such Notice of
Termination shall specify an effective date more than 180 days after the date of
such Notice of Termination).
3. CHANGE IN EMPLOYMENT STATUS. You shall be entitled to the benefits
provided in Section 4 if the following event (a "Qualified Termination") occurs:
your employment with Staples terminates for any reason, unless such termination
is (i) because of your death or Disability, (ii) by Staples for Cause, or (iii)
by you other than for Good Reason. In addition, in order to be entitled to the
benefits provided in Section 4 for a "Qualified Termination," a settlement
agreement and general release must be executed on your last day of employment or
on another day mutually agreed to by you and Staples, Inc. In the event that
you exercise any right to rescind the settlement agreement and general release
which you execute, all benefits under this agreement will cease.
4. COMPENSATION UPON TERMINATION.
(a) In the event of a Qualified Termination, Staples will (i) pay to
you for a period of 12 months after the Date of Termination, in equal monthly
installments, severance payments at an annual rate equal to the sum of (i) your
annual base salary rate in effect immediately prior to the Qualified Termination
(or such higher rate as may have been in effect within the 90 days prior to the
Notice of Termination) plus (ii) an annualized 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 shall be
prorated where applicable and annual bonus averages shall be computed on years
available if less than three years. At the election of Staples, monthly
installments may be accelerated into one or more lump-sum payments.
(b) In the event of a Qualified Termination, for a 12-month period
after the Date of Termination, Staples shall provide you with life, dental,
accident and group health insurance benefits substantially similar to those
available to similarly situated officers (but not disability insurance).
Notwithstanding the foregoing, Staples shall not provide any such benefit if an
equivalent benefit is actually received by you during such period following your
termination from another party. Staples shall be the sole determiner of what is
an equivalent benefit and whether or not an employee receives an equivalent
benefit from another party.
(c) Notwithstanding a Qualified Termination, the vesting schedule of
your then outstanding options to purchase Common Stock of Staples or any
Performance Accelerated Restricted Stock ("PARS") shall not be accelerated
unless specifically provided to the contrary in the respective option or PARS
agreements.
(d) If such Qualified Termination is within two years after a Change in
Control, you shall be entitled to the benefits provided in paragraphs (a) and
(b) above for an additional 6 months beyond the time period specified in such
paragraphs.
(e) In addition, if such Qualified Termination occurs within one year
after a Change of Control, you shall be entitled to an additional amount, if
any, by which the total (before taxes) received by you as a result of all
severance payments payable by the Company under the Severance Benefits Agreement
plus any gain receivable upon the exercise of options and/or sale of PARS
(valued as of the date of the Change of Control) is less than $2,000,000.
(f) The amount of any monthly payments to be made to you under Section
4(a) shall be reduced by 50% of any cash compensation earned by or accrued for
you as a result of services rendered by you for a third party during the month
immediately preceding the date of such payment; provided, however, that (i) this
paragraph (e) shall not apply in the event of a Qualified Termination occurring
within 24 months after a Change of Control, and (ii) nothing in this Agreement
shall obligate you
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to seek to mitigate the amount of any payments provided for in this Agreement by
seeking alternative employment or otherwise.
(g) The benefits payable under this Section 4 shall be conditioned on
none of the following events occurring: (i) a determination by the CEO and COO
of Staples within 60 days after your voluntary resignation that your conduct
prior to your resignation would have warranted a discharge for "Cause" as
specified in Section 5(c), or (ii) the CEO and COO of Staples determines that
your conduct after termination of employment fails to comply with 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.
5. CERTAIN DEFINITIONS.
As used herein, the following terms shall have the following respective
meanings:
(a) CHANGE IN CONTROL. A "Change in Control" shall occur or 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, as of the date hereof, 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 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) shall 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
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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) DISABILITY. If, as a result of incapacity due to physical or mental
illness, you shall have been absent from the full-time performance of your
duties with Staples for six (6) consecutive months and, within thirty (30) days
after written Notice of Termination is given to you, you shall not have returned
to the full-time performance of your duties, your employment may be terminated
for "Disability."
(c) CAUSE. Termination by Staples of your employment for "Cause" shall
mean termination
(i) upon your willful and continued failure to substantially
perform your duties with Staples (other than any such failure resulting
from your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice of
Termination by you for Good Reason as defined below), provided that a
written demand for substantial performance has been delivered to you by
Staples specifically identifying the manner in which Staples believes
that you have not substantially performed your duties and you have not
cured such failure within 30 days after such demand, or
(ii) any breach by you of 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) a violation by you of the Staples Business Conduct &
Ethics Policy or any attempt by you to secure any improper personal
profit in connection with the business of Staples, or
(iv) failure by you to devote your full working time to the
affairs of Staples (other than in connection with outside director
positions existing as of this date or as authorized by the CEO and COO
of Staples), or
(v) the engaging by you in business other than the business of
Staples (other than in connection with outside director positions
existing as of this date or as authorized by the CEO and COO of
Staples), or
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(vi) by reason of your willful engaging in misconduct which is
demonstrably and materially injurious to Staples;
provided that in each case you shall have been given written notice by the CEO
and COO of Staples of Staples' intent to terminate your employment under this
Section 5(c) and an opportunity to present to the CEO and COO of Staples, in
person, any objections you may have to such termination. For purposes of this
section 5(c), no act or failure to act on your part shall be deemed "willful"
unless done or omitted to be done by you not in good faith and without
reasonable belief that your action or omission was in the best interest of
Staples;
The provisions of clauses (iv) and (v) above shall not be construed to
prevent you from investing or trading in non-conflicting investments for your
own account, including real estate, stocks, bonds, securities or other forms of
investment, other than more than 1% of securities issued by entities in
competition with Staples.
(d) GOOD REASON. For purposes of this Agreement, "Good Reason" shall
mean, without your written consent, the occurrence of any of the following
circumstances within the 90 days immediately prior to your giving Staples a
Notice of Termination:
(i) any significant diminution in your position, duties,
responsibilities, power, title or office;
(ii) any reduction in your annual base salary from time to
time;
(iii) any failure by Staples to allow your participation 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, or the substantial reduction of 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) on a significantly less
favorable basis, both in terms of the amount of benefits provided and
the level of your participation relative to other participants; unless
such circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof;
(iv) the failure by Staples to continue to provide you with
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, the taking of any action by
Staples which would directly or indirectly materially reduce any of
such benefits, or the reduction in the number of paid vacation days to
which you are entitled; unless such circumstances are fully corrected
prior to the Date of Termination specified in the Notice of Termination
given in respect thereof;
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(v) in the event of a Change in Control, any requirement by
Staples or of any person in control of Staples that the location at
which you perform your principal duties for Staples be changed to a new
location outside a radius of 50 miles from your business location at
the time of the Change in Control; or
(vi) the failure of Staples to obtain a satisfactory agreement
from any successor to assume and agree to perform the Agreement, as
contemplated in Section 6(a).
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) shall not be considered "Good Reason."
6. SUCCESSORS; BINDING AGREEMENT.
(a) Staples will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of Staples 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. Failure of Staples to obtain an assumption of
this Agreement prior to the effectiveness of any succession shall be a breach of
this Agreement and shall entitle you to compensation from Staples in the same
amount and on the same terms as you would be entitled hereunder. As used in this
Agreement, "Staples" shall mean 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.
(b) This Agreement shall 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, shall 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.
7. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Chairman of Staples, at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxxx, 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 in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
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8. ARBITRATION OF CONTROVERSIES
(a) WHEN ARBITRATION IS REQUIRED. Staples and you agree that any claim
or controversy arising out of your employment or cessation of employment,
including, but not limited to, any federal or state statute, contract, tort, or
public policy claim, shall be settled exclusively and finally by arbitration.
Staples and you agree that resort to the arbitration procedures under this
Section 8 shall be the exclusive remedy available to either party to redress
such claims or controversies and that all claims must be brought under one
demand, which could have been brought before an appropriate government
administrative agency or an appropriate court, including, but not limited to,
claims of age discrimination under the Age Discrimination in Employment Act. The
parties further agree that they shall be precluded from raising in any other
forum, including, but not limited to, any federal or state court of law, or
equity, any claim or controversy or cause of action which could be raised in
arbitration under this Agreement, but 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
form initiating an arbitration over a matter covered by this Agreement.
(b) RIGHTS AND PROCEDURES APPLYING TO ARBITRATION. Staples and you
agree that the following rights and procedures shall apply in any arbitration
under this Section 8:
(i) Each party shall have the right to assert any claims or
defenses in the arbitration which could be raised in a court of
competent jurisdiction;
(ii) Each party shall have the right to counsel of his or its
choice;
(iii) The party that raises a claim in arbitration shall bear
the burden of proof with respect to that claim;
(iv)The arbitrator shall have the authority to award such
relief as may be available in a court of law;
(v) Except as otherwise provided in this Section 8, the
arbitration shall be conducted in accordance with the Employment
Arbitration Rules of the American Arbitration Association in effect at
the time a demand for arbitration is made in accordance with Section
8(c) hereof; and
(vi) The arbitration shall be enforceable pursuant to the
Federal Arbitration Act, 9 U.S.C. Sections 1 et. seq.
(c) DEMAND FOR ARBITRATION. Each party shall have the right to demand
arbitration by submitting to the other party a written demand which shall state:
(i) the claim asserted, (ii) the facts alleged to support the claim, (iii) the
applicable statute or principal of law (e.g., breach of contract) upon which
the legal basis for the demand is
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premised, and (iv) the remedy being sought. The party upon whom the demand is
served shall respond to the demand, in writing, within twenty (20) days after
receiving the demand. Such response shall specifically admit or deny each
factual allegation in the demand and set forth any counter claims or cross
claims.
(d) ARBITRATION RULES. The arbitration shall be arbitrated by one
arbitrator in accordance with the Rules for Employment Arbitration of the
American Arbitration Association. You understand that you will be required to
pay the first $120 of costs of commencing an arbitration with the American
Arbitration Association and that the remainder of those costs will be paid by
Staples, subject to a subsequent award by the arbitrator, who shall decide the
issue of costs. The decision or award of the arbitrator shall be final and
binding upon the parties. The arbitrator shall have the power to award any types
of legal or 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 arbitral award may be
entered as a judgment or order in any court of competent jurisdiction. You agree
that any relief or recovery to which you are entitled from any claims arising
out of your employment, cessation of employment, or any claim of unlawful
discrimination shall be limited to that awarded by the arbitrator.
(e) TIME FOR DEMANDING ARBITRATION. A demand for arbitration shall be
served upon the other party in accordance with the notice provisions of Section
8(b) of this Agreement no later than three hundred (300) days after the date on
which the claim asserted in the demand arose. For purposes of the Section 8(d),
the date upon which a claim arises shall be the date of the event, occurrence,
or happening giving rise to the claim. This time period shall not be extended by
virtue of informal attempts to resolve the dispute unless the parties agree
otherwise in writing.
(f) SELECTION OF ARBITRATORS. The parties shall first attempt to agree
upon an arbitrator to hear the dispute. If agreement is not reached within
thirty (30) calendar days after the demand for arbitration is made, the party
seeking arbitration shall, within the fourteen (14) days after the end of such
30-day period, request from the American Arbitration Association Employment
Arbitration Tribunal ("AAA") a list of seven (7) arbitrators experienced in
arbitrating labor and employment law disputes. Immediately upon receipt of the
list of arbitrators from the AAA, the party seeking arbitration shall forward a
copy of the list to the other party. Within fourteen (14) calendar days of
receipt of the list by the party seeking arbitration, the parties shall select
the arbitrator by alternatively striking names from the list until a single name
remains. Under this procedure, the party seeking arbitration shall be the first
to strike a name from the list.
(g) DISCOVERY. Prior to the commencement of the arbitration hearing,
each party may request the other to produce documents and/or information through
interrogatories, requests for admissions, and/or depositions which is relevant,
non-privileged and material to either party's claims or defenses. Any disputes
involving
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discovery shall be resolved prior to the arbitration hearing by the arbitrator
in accordance with the Federal Rules of Civil Procedure. Each party shall have
the right to issue subpoenas in accordance with the Federal Arbitration Act and
the Rules of the AAA.
(h) ARBITRATION HEARING AND DECISION. The arbitration hearing of a
claim shall commence no later than six (6) months after the date the arbitrator
is selected and shall continue on consecutive business days until completed
unless the parties and the arbitrator agree to a different schedule. The hearing
shall be held in Westborough, Massachusetts. Each party shall have the right to
present testimony from its witnesses and to cross-examine witnesses presented by
the other party. The hearing shall be stenographically recorded and each party
shall have the right to submit post-hearing briefs within the time period set
by the arbitrator. The arbitrator shall issue his/her award within sixty (60)
days of close of the hearing or receipt of briefs and shall submit with the
award an opinion which shall include findings of fact and conclusions of law.
(i) RIGHT TO COUNSEL. I have been advised of my right to consult with
counsel regarding this agreement. My agreement to accept arbitration can be
revoked any time within 7 days of my signing this agreement, but such revocation
must be signed in writing and will result in my immediate termination and/or
denial of consideration for employment. I have had at least 21 days to consider
this arbitration agreement and have decided to sign knowingly, voluntarily, and
free from duress or coercion.
9. WAIVER OF JURY TRIAL
In the event any controversy or claim arising out of the Executive's
employment or the termination of the Executive's employment is found by a court
of competent jurisdiction not to be subject to final and binding arbitration,
the Executive and the Employer agree to submit such claim or controversy to the
Court, without use of a jury or advisory jury.
10. MISCELLANEOUS.
(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(b) The validity, interpretation, construction and performance of this
Agreement shall 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 shall be deemed a
waiver of that or any other provision at any subsequent time.
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(d) This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) Staples shall pay to you all legal fees and expenses incurred by
you in seeking to obtain or enforce any right or benefit provided by this
Agreement.
(g) 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 on the subject matter hereof,
kindly sign and return to Staples the enclosed copy of this letter, which will
then constitute our agreement on this subject.
Sincerely,
STAPLES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: President and COO
Agreed to this 9th day of September, 1996
Xxxx X. Xxxxxxx Xx.
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(SIGNATURE)
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