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EXHIBIT 10.8
EXECUTIVE EMPLOYMENT AGREEMENT
(For Executive Officers Who Also Have a Change of Control Employment Agreement)
THIS AGREEMENT is made as of January 1, 1998 between Office
Depot, Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxx
("Executive").
In consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT.
(a) The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "EMPLOYMENT TERM").
(b) The parties hereto have entered into an Employment
Agreement dated as of September 1996 by and between the Company and the
Executive (the "CHANGE OF CONTROL EMPLOYMENT AGREEMENT") which, by its terms,
takes effect during the "EMPLOYMENT PERIOD" as defined in such agreement. During
any such Employment Period under the Change of Control Employment Agreement, the
terms and provisions of the Change of Control Employment Agreement shall control
to the extent such terms and provisions are in conflict with the terms and
provisions of this Agreement. In addition, during such Employment Period, the
Employment Term hereunder shall be tolled and upon expiration of the Employment
Period under the Change of Control Employment Agreement the Employment Term
hereunder shall recommence.
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as
Chairman of the Company's Board of Directors (the "Board") and shall have the
normal duties, responsibilities and authority attendant to such position,
subject to the power of the Board to expand or limit such duties,
responsibilities and authority. The Executive shall also serve as the Chief
Executive Officer of the Company until such time as his replacement is elected
by the Board.
(b) Executive shall report to the Board, and Executive shall
devote Executive's best efforts and Executive's full business time and attention
(except for permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company and its
Subsidiaries; PROVIDED Executive shall, with the prior written approval of
the Board, be allowed to serve as (i) a director or officer of any non-profit
organization including trade, civic, educational or charitable organizations, or
(ii) a director of any corporation which is not competing
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with the Company or any of its Subsidiaries in the office product and office
supply industry so long as such duties do not materially interfere with the
performance of Executive's duties or responsibilities under this Agreement.
Executive shall perform Executive's duties and responsibilities under this
Agreement to the best of Executive's abilities in a diligent, trustworthy,
businesslike and efficient manner.
(c) Executive shall be based at or in the vicinity of the
Company's headquarters ~ may be required to travel as necessary to perform
Executive's duties and responsibilities under this Agreement.
(d) For purposes of this Agreement, "SUBSIDIARIES" shall mean
any corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one of more Subsidiaries.
3. BASE SALARY AND BENEFITS.
(a) Initially, Executive's base salary shall be $1,000,000
per annum (the "BASE SALARY"), which salary shall be payable in regular
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding. Executive's Base Salary shall be
reviewed at least annually by the Compensation Committee of the Board and shall,
in their discretion, be subject to adjustment, but not reduction, based on among
other things, market practice and performance and the applicability of Section
162(m) of the Internal Revenue Code. In addition, during the Employment Term,
Executive shall be entitled to participate in certain of the Company's long term
incentive programs established currently or in the future by the Company for
which officers of the Company then at Executive's level are generally eligible
(including, but not limited to, stock option, restricted stock, performance
unit/share plans or long-term cash plans). Assuming approval of the requisite
amendments to the Company's Long-Term Equity Incentive Plan at the Company's
1998 Annual Meeting, at the next following Board meeting the Board shall grant
to Executive an option to purchase 1,000,000 shares of common stock at a
purchase price equal to the market price on the date of grant. Executive will
also be entitled to receive an additional grant of options for 1,000,000 shares
on January 4, 1999, with an option price equal to the greater of the market
price on such date of grant or 125% of the purchase price of the initial tranche
of options described above. Each option grant will have a ten year term and will
vest in a single tranche on the fourth anniversary of its date of grant.
Beginning in the year 2000, Executive will be entitled to receive annual grants
of stock options at the discretion of the Board or the Compensation Committee;
provided, however, that Executive shall be entitled to receive grants of options
each year for at least 165,000 shares.
(b) In addition to the Base Salary, Executive shall be
entitled to participate in the Company's Management Incentive Plan (the "BONUS
PLAN") as administered by the Board or the Compensation Committee. For 1998, the
"minimum," "target" and "maximum" bonus payment
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levels shall be 50%, 70% and 100% of salary, respectively. These payment levels
will be increased by 5, 8.5 and 10 percentage points, respectively, each year
during the Employment Term beginning in 1999 (e.g. in 1999, the payment levels
will be 55%, 78.5% and 110%, respectively). These levels may be adjusted by the
Board if the Section 162(m) limits are changed and the Board chooses to increase
Executive's salary; in which case the bonus levels may be decreased
proportionally. If the Board or the Compensation Committee modifies such Bonus
Plan during the Employment Term, Executive shall continue to participate at a
level no lower than the highest level established for any officer of the Company
then at Executive's level. At the discretion of the Board or the Compensation
Committee, Executive may be offered from time to time the opportunity to
participate in other bonus plans of the Company in lieu of the Bonus Plan and,
if Executive chooses to participate in such plan or plans, the provisions of
this paragraph 3(b) shall be tolled during the period of such participation.
(c) Executive shall also be entitled to a deferred matching
bonus equal to the amount actually earned by Executive each year under the Bonus
Plan (the "DEFERRED BONUS") provided, however, that such Deferred Bonus shall
only be paid if, and shall be contingent upon, the Company meeting its earnings
per share target for such year under the Bonus Plan. Deferred Bonus earned with
respect to 1998 and 1999 will vest in a single tranche on December 31, 2000 and
Deferred Bonuses earned with respect to subsequent years will each vest in a
single tranche on the fourth December 31 following the year in which such
Deferred Bonus is earned (e.g. the Deferred Bonus earned with respect to 2000
will vest 100% on December 31, 2004).
(d) Executive shall be entitled to paid vacation in
accordance with the Company's general payroll practices for officers of the
Company then at Executive's level.
(e) The Company shall reimburse Executive for all reasonable
expenses incurred by Executive in the course of performing Executive's duties
under this Agreement which are consistent with the Company's policies in effect
from time to time with respect to travel, entertainment and other business
expenses, subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(f) Executive will be entitled to all benefits as are, from
time to time, maintained for officers of the Company then at Executive's level,
including without limitation: medical, prescription, dental, disability,
employee life, group life, split-dollar life, accidental death and travel
accident insurance plans (collectively, "INSURANCE BENEFITS"), profit sharing
and retirement benefits.
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4. TERM.
(a) The term of Executive's employment hereunder shall end on
the fifth anniversary of the date of this Agreement; PROVIDED that (i) such term
shall be automatically extended for successive one year periods in the event
that written notice of the termination of this' Agreement is not given by one
party hereto to the other party at least six months prior to the end of such
term (the term of Executive's employment hereunder, as it may be extended, is
herein referred to as the "Employment Term"); PROVIDED FURTHER that (ii) the
Employment Term shall terminate prior to such date (A) upon Executive's death or
permanent disability or incapacity (as determined by the Board in its good faith
judgment), (B) upon the mutual agreement of the Company and Executive, (C) by
the Company's termination of Executive's employment hereunder for Cause (as
defined below) or without Cause or (D) by Executive's termination of employment
for Good Reason (as defined below) or without Good Reason.
(b) If Executive's employment hereunder is terminated by the
Company without Cause or is terminated by the Executive for Good Reason,
Executive (and Executive's family with respect to clause (iii) below) shall be
entitled to receive (i) Executive's Base Salary through the second anniversary
of such termination and Executive's Pro Rata Bonus (as defined in paragraph (h)
below), if and only if Executive has not breached the provisions of paragraphs
5,6 and 7 hereof, (ii) vested and earned (in accordance with the Company's
applicable plan or program) but unpaid amounts under incentive plans, deferred
compensation plans, and other employer programs of the Company in which
Executive is then participating (other than the Pro Rata Bonus), and (iii)
Insurance Benefits through the second anniversary of such termination pursuant
to the Company's insurance programs, as in effect from time to time, to the
extent Executive participated immediately prior to the date of such termination.
The amounts payable pursuant to paragraph 4(b)(i) and (ii) shall be payable, at
the Company's discretion, in one lump sum payment within 30 days following
termination of the Employment Term or in any other manner consistent with the
Company's normal payment policies.
(c) If Executive's employment hereunder is terminated by the
Company for Cause or by the Executive without Good Reason, Executive shall be
entitled to receive (i) Executive's Base Salary through the date of such
termination and (ii) vested and earned (in accordance with the Company's
applicable plan or program) but unpaid amounts under incentive plans, health and
welfare plans, deferred compensation plans, and other employer programs of the
Company which Executive participates; provided, however, that Executive shall
not be entitled to payment of a Pro Rata Bonus.
(d) At the expiration of the Employment Term or if
Executive's employment hereunder is terminated upon Executive's death or
permanent disability or incapacity (as determined by the Board in its good faith
judgment), Executive (and Executive's family with respect to clause (iv) below),
or Executive's estate if applicable, shall be entitled to receive (i)
Executive's Base Salary through the date of such termination, (ii) Executive's
Pro Rata Bonus (as defined in paragraph 4(h) below), (iii) vested and earned (in
accordance with the Company's applicable plan or program) but
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unpaid amounts under incentive plans, health and welfare plans, deferred
compensation plans, and other employer programs of the Company in which
Executive participates, and (iv) health insurance benefits (which shall
terminate upon Executive's death). Amounts payable pursuant to paragraphs
4(d)(i), (ii) and (iii) shall be payable, at the Company's discretion, in one
lump sum payment within 30 days following expiration or termination of the
Employment Term or in any other manner consistent with the Company's normal
payment policies.
(e) Except as otherwise provided herein, fringe benefits and
bonuses (if any) which accrue or become payable after the expiration or
termination of the Employment Term shall cease upon such termination.
(f) For purposes of this Agreement, "CAUSE" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board which specifically identifies the manner in
which the Board believes that the Executive has not substantially
performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
(g) For purposes of this Agreement, "GOOD REASON" shall mean:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties
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or responsibilities as contemplated by paragraph 2 of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any
of the provisions of paragraph 3 of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be
based at any location other than as provided in paragraph 2(c) hereof;
or
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement.
(h) For purposes of this Agreement, "PRO RATA BONUS" shall
mean the sum OF(i) the pro rata portion (calculated as if the "target" amount
under such plan has been reached) under any current annual incentive plan from
the beginning of the year of termination through the date of termination and
(ii) if and to the extent Executive is vested, the pro rata portion (calculated
as if the "target" amount under such plan has been reached) under any long-term
incentive plan or performance plan from the beginning of the period of
determination through the date of termination.
(i) Notwithstanding any other provisions of this Agreement,
any health insurance benefits that Executive becomes entitled to receive as a
result of any subsequent employment after the expiration or termination of the
Employment Term shall serve as primary coverage for Executive and Executive's
family.
5. CONFIDENTIAL INFORMATION. Executive acknowledges that the
information, observations and data obtained by Executive while employed by the
Company and its Subsidiaries concerning the business or affairs of the Company
or any other Subsidiary ("CONFIDENTIAL INFORMATION") are the property of the
Company or such Subsidiary. Therefore, Executive agrees that Executive shall not
disclose to any unauthorized person or use for Executive's own purposes any
Confidential Information without the prior written consent of the Board, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions. Executive shall deliver to the Company at the termination of the
Employment Term, or at any other time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) in any form or medium relating to the
Confidential Information, Work Product (as defined below) or the business of the
Company or any Subsidiary that Executive may then possess or have under
Executive's control.
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6. INVENTIONS AND PATENTS. Executive acknowledges that
all inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether or
not patentable) that relate to the Company's or any of its Subsidiaries' actual
or anticipated business, research and development or existing or future products
or services and that are conceived, developed or made by Executive while
employed by the Company and its Subsidiaries ("WORK PRODUCT") belong to the
Company or such Subsidiary. Executive shall promptly disclose such Work Product
to the Board and perform all actions reasonably requested by the Board (whether
during or after the Employment Term) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
7. NON-COMPETE. NON-SOLICITATION.
(a) In further consideration of the compensation to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with the Company Executive shall become familiar with the
Company's trade secrets and with other Confidential Information concerning the
Company and its Subsidiaries and that Executive's services shall be of special,
unique and extraordinary value to the Company and its Subsidiaries. Therefore,
Executive agrees that, during the Employment Term and for one year thereafter
(the "NONCOMPETE PERIOD"), Executive shall not directly or indirectly own any
interest in, manage, control, participate in, consult with, render services for,
or in any manner engage in any business competing with the businesses of the
Company or its Subsidiaries, as such businesses exist or are in process on the
date of the termination of Executive's employment, within any geographical area
in which the Company or its Subsidiaries engage or plan to engage in such
businesses. Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a corporation which
is publicly traded, so long as Executive has no active participation in the
business of such corporation.
(b) During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the Company
or such Subsidiary, or in any way interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) hire any person who was
an employee of the Company or any Subsidiary at any time during the Employment
Term or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any Subsidiary
to cease doing business with the Company or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee,
licensor, franchisee, or business relation and the Company or any Subsidiary
(including, without limitation, making any negative statements or communications
about the Company or its Subsidiaries).
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(c) If, at the time of enforcement of this paragraph 7, a
court shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this paragraph 7 are reasonable.
(d) In the event of the breach or a threatened breach by
Executive of any of the provisions of this paragraph 7, the Company, in addition
and supplementary to other rights and remedies existing in its favor, may apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security). In
addition, in the event of an alleged breach or violation by Executive of this
paragraph 7, the Noncompete Period shall be tolled until such breach or
violation has been duly cured.
8. EXECUTIVE'S REPRESENTATIONS. Executive hereby
represents and warrants to the Company that (i) the execution, delivery and
performance of this Agreement by Executive do not and shall not conflict with,
breach, violate or cause a default under any contract, agreement, instrument,
order, judgment or decree to which Executive is a party or by which Executive is
bound, (ii) Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any other person or
entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms. Executive hereby acknowledges and
represents that Executive has had an opportunity to consult with independent
legal counsel regarding Executive's rights and obligations under this Agreement
and that Executive fully understands the terms and conditions contained herein.
9. SURVIVAL. Paragraphs 5, 6 and 7 and paragraphs 9
through 16 shall survive and continue in full force in accordance with their
terms notwithstanding any termination of the Employment Term.
10. NOTICES. Any notice provided for in this Agreement
shall be in writing and shall be either personally delivered, or mailed by first
class mail, return receipt requested, to the recipient at the address below
indicated:
NOTICES TO EXECUTIVE:
Name: Xxxxx X. Xxxxxx
Address: 000 Xxxx Xxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
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Office Depot, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
and
Office Depot, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
Attention: Executive Vice President - Human Resources
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
11. SEVERABILITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
12. COMPLETE AGREEMENT. This Agreement and those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way (provided, however that during the "Employment Period," as defined in
the Change of Control Employment Agreement, the terms and provision of the
Change of Control Employment Agreement shall be effective and shall control to
the extent there is any conflict between such agreement and this Agreement).
13. NO STRICT CONSTRUCTION. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any party.
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14. COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement is intended to
bind and inure to the benefit of and be enforceable by Executive, the Company
and their respective heirs, successors and assigns, except that Executive may
not assign Executive's rights or delegate Executive's obligations hereunder
without the prior written consent of the Company.
16. CHOICE OF LAW. All issues and questions concerning
the construction, validity, enforcement and interpretation of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of Florida, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
17. AMENDMENT AND WAIVER. The provisions of this Agreement
may be amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
OFFICE DEPOT, INC.
By: /s/ W. Xxxxx Xxxxxxx
-----------------------------------
Name: W. Xxxxx Xxxxxxx
Its: Chairman, Compensation Committee
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
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