Exhibit 10.17
AGREEMENT
BETWEEN OFFICE DEPOT, INC.
AND
M. ▇▇▇▇▇ ▇▇▇▇▇▇
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
THIS AGREEMENT is made and entered into as of the 29th day of December 2001 (the
"Effective Date"), by and between Office Depot, Inc., a Delaware corporation
(the COMPANY"), and M. ▇▇▇▇▇ ▇▇▇▇▇▇ ("EXECUTIVE").
RECITALS
A. The Company and Executive have been parties to a certain Employment
Agreement, dated June 6, 2000, and effective as of January 1, 2000,
which originally employed Executive as President of Office Depot
International, and which replaced certain other agreements pertaining
to Executive's employment, non-competition, change-in-control, and
certain other matters (collectively the "Former Agreements"), including
certain agreements between the Company's predecessor company, Viking
Office Products, Inc. ("Viking") and Executive, to which the Company
succeeded at the time of the Company's merger with Viking;
B. The Company named Executive as its Chief Executive Officer ("CEO") on
July 16, 2001 and reached certain understandings with him regarding the
terms and conditions of his employment in such position, which are
incorporated by reference herein;
C. The Company and Executive also are parties to an agreement pertaining
to the co-ownership of certain residential real estate in Palm Beach
County, Florida (the "Real Estate Co- Ownership Agreement");
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D. Subsequent to the date of the Employment Agreement and the Real Estate
Co-Ownership Agreement, Executive has been elected to the additional
position and office of Chairman of the Board of the Company, effective
as of December 29, 2001 (the "Chairman Effective Date"), and the
Company and Executive desire to amend and restate the Employment
Agreement as set forth herein so that the terms and provisions of this
Amended and Restated Employment Agreement set forth the complete
statement of the relationships between the parties in Executive's
positions as Chairman and CEO, including the terms of the Real Estate
Co-Ownership Agreement;
E. The parties enter into this Agreement in consideration of the various
promises, undertakings and understandings between them, as set forth
below.
Now therefore, in consideration of the foregoing recitals, which are
incorporated by reference herein, and 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
The Company shall continue to employ Executive, and Executive hereby accepts
such continued employment with the Company, for the positions and duties, and
upon the further terms and conditions set forth in this Agreement, for the
period beginning on the Effective Date and ending as provided in section 4
hereof (the "Employment Term").
2. POSITIONS AND DUTIES (a) OFFICES AND DUTIES. Executive shall serve as
Chairman and Chief Executive Officer ("CEO") of the Company, reporting directly
to the Board of Directors. In these positions, he shall have all the normal
duties, responsibilities and authority of the Chairman and CEO of the Company,
subject to the power of the Company's Board to expand or limit such duties,
responsibilities and authority; provided, however, that any such expanded or
limited duties, responsibilities and authority must be consistent with the
normal duties, responsibilities and authority of a person holding the position
of Chairman and CEO of a major publicly held company.
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(b) DEDICATION TO DUTIES; OTHER ACTIVITIES. Executive shall devote his
best efforts and 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 THAT Executive shall,
with the prior 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 for-profit corporation which
is not competing 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) SUBSIDIARIES. 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 or more Subsidiaries.
3. BASE SALARY AND BENEFITS
(a) BASE SALARY; ADJUSTMENTS. During the Employment Term, Executive shall
receive a base salary of One Million Dollars ($1,000,000) per annum (the "BASE
SALARY"), which Base Salary is 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 and shall be subject to increase (any such increased
amount shall become the "Base Salary" for all purposes hereunder), but not
reduction, as the Compensation Committee and the Board shall determine, based on
among other things, market practice and performance of the Company.
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(b) INCENTIVE AND OTHER PLANS. In addition to the Base Salary, during the
Employment Term, Executive shall be entitled to participate in the Company's
long term and other incentive programs established currently or in the future by
the Company, for which the most senior executive officers of the Company are
generally eligible (including, but not limited to, stock option, restricted
stock, performance unit/share plans, mid-term or long-term cash plans or other
mid-term or long-term incentive plans).
(c) ANNUAL BONUS PLANS. Executive shall be entitled to participate in the
Company's Bonus Plan for its most senior executives (the "Bonus Plan") as
administered by the Compensation Committee of the Board. If the Compensation
Committee (or the Company's Board of Directors (the "Board")) 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. Throughout the Term, the "minimum," "target" and "maximum" bonus
payment levels for Executive shall be not less than 70%, 100% and 200% of
salary, respectively. These bonus levels may be increased but may not be
decreased by action of the Compensation Committee and/or the Board of the
Company. However, these levels also may be adjusted by the Compensation
Committee or the Board if the Section 162(m) limits are changed and the
Compensation Committee or the Board chooses to increase Executive's Base Salary;
in which case the bonus levels may be decreased to reflect proportionally such
increased Base Salary. 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. 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 addition to, or in lieu of, the Bonus Plan.
(d) DEFERRED BONUS PLANS. If the Company adopts at any time during the Term, any
deferred bonus plan for the senior executives of the Company, then Executive
shall be entitled to a deferred matching bonus (the "DEFERRED BONUS") in
accordance with the terms and provisions of any applicable deferred bonus plan
adopted by the Compensation Committee and/or the Board.
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(e) VACATIONS. 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, but in no event less than four (4) weeks per year.
(f) EXPENSE REIMBURSEMENTS. 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.
(g) OTHER BENEFITS. Executive will be entitled to all other benefits currently
or in the future maintained for officers of the Company then at Executive's
level, including without limitation: medical and dental insurance, life
insurance (including split-dollar insurance) and short-term and long-term
disability insurance, supplemental health and life insurance, profit sharing and
retirement benefits.
(h) CONTINUATION OF HEALTH INSURANCE. With respect to health insurance benefits,
Executive and his eligible dependents shall be entitled to the continuation of
at least the same level of health insurance coverage Executive and his eligible
dependents are receiving on the Effective Date of the Agreement during the
Employment Term. From the end of the Employment Term until Executive becomes
eligible for the federal Medicare program, or any successor to such program
(herein collectively "Medicare"), the Company shall provide a comparable plan of
health insurance to Executive, at no cost or contribution by Executive;
provided, however, that such comparable plan shall provide continuous coverage
of all conditions covered under the health insurance plan by which Executive and
his eligible dependents are covered on the Effective Date. From the date on
which Executive becomes eligible for Medicare and ending at the end of
Executive's natural life, the Company shall reimburse Executive and his spouse
for the cost of any policy of Medigap insurance purchased by them, supplementing
coverage provided by Medicare. In the event Executive should die prior to the
death of the person who is his spouse on the Effective Date of this Agreement,
then such spouse shall continue to receive the health benefits to be provided
hereunder to Executive and his spouse until she becomes eligible for
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Medicare and thereafter she shall receive reimbursement for any Medigap
insurance purchased by her from and after such date, during the balance of her
natural life.
(i) SPECIAL OPTION GRANT. In further consideration of Executive's accepting the
additional duties and responsibilities of Chairman of the Board of Directors and
as an incentive for his remaining as Chairman and CEO of the Company throughout
the Employment Term, and as an incentive to increase shareholder value of the
Company, Executive has been (or shall be, as the case may be) awarded by action
of the Compensation Committee of the Board special ten-year stock option grants
upon the following terms:
(a) Grant Date of December 20, 2001, option to acquire up to Seven
Hundred Fifty Thousand (750,000) shares of Company stock
Exercise price: $ 21.606 per share (125% of fair market value
of $17.285 on date of grant) Vesting: 100% on December 31,
2004
(b) Grant Date of January 2, 2002, option to acquire up to Two
Hundred Fifty Thousand (250,000) shares of Company stock
Exercise price: $22.344 per share (125% of fair market value
of $17.875 on date of grant) Vesting: 100% on December 31,
2004.
4. TERM; RENEWALS. Subject to earlier termination pursuant to section 5 below,
the Employment Term shall end on December 31, 2004 , and shall continue
automatically thereafter from year to year on an "evergreen" basis, unless and
until either the Company or Executive shall provide written notice to the other,
not less than six (6) months prior to the end of the then-current Term that this
Agreement shall not be continued.
5. TERMINATION DUE TO DEATH, DISABILITY, INCAPACITY. The Employment Term also
shall terminate prior to the date set forth in section 4 above:
(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;
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(c) by the Company's termination of this Agreement for Cause (as defined below)
or without Cause; or
(d) by Executive's termination of this Agreement for Good Reason (as defined
below) or without Good Reason.
6. TERMINATION OF THE EMPLOYMENT WITHOUT CAUSE; FOR GOOD REASON. If the
Employment Term is terminated by the Company without Cause or is terminated by
Executive for Good Reason, Executive (and Executive's family with respect to
clause (iii) below) shall be entitled to receive the following:
(i) An amount equal to the sum of (A) Executive's Base Salary
which would be payable through the second anniversary of such
termination and (B) Executive's Pro Rata Bonus, if and only if
Executive has not breached the provisions of sections 13, 14
and 15 hereof,
(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 in which Executive
participates (other than the Pro Rata Bonus);
(iii) insurance benefits as set forth in Section 3(h) above;
(iv) All grants and awards, including stock options and restricted
stock shall continue to vest through the second anniversary of
such termination; provided, however, that the stock option
grant referred to in Section 3(i) above shall vest in its
entirety on the effective date of termination without Cause or
termination for Good reason. All stock options (other than the
premium-priced stock options referred to in Section 3(i)
above) shall remain exercisable through and including
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the ninetieth (90th) day following the second anniversary of
such termination (but not later than the expiration of the
original term of the option). The premium-priced stock options
referred to in Section 3(i) above, AND any other stock options
granted to Executive subsequent to the Effective Date of this
Agreement, shall remain exercisable through the three (3) year
anniversary of the date of termination of Executive's
employment under this Agreement, but not later than the end of
the original ten-year term of such stock option(s), if the
Employment Term ends for any reason OTHER THAN termination by
the Company for "Cause" as defined below, or resignation by
the Executive WITHOUT "Good Reason" as defined below. In the
event of a termination by the Company for "Cause" or by
Executive without "Good Reason," then Executive's stock
options, and the continued exercisability thereof shall be
governed by the terms of such stock options and the Long Term
Equity Incentive Plan of the Company, or any replacement for
such Plan. Any long-term incentive plan amount that has been
earned but that is not yet fully vested, shall become fully
vested not later than the second anniversary of such
termination without Cause or termination for Good Reason; and
(v) The amount payable pursuant to section 6(i) shall be payable
as follows: (a) $100,000 in the form of salary continuation of
$50,000 per annum and (b) the balance in one lump sum payment
within 30 days following termination of the Employment Term,
and the amounts payable pursuant to section 6 (ii) and 6(iii)
above, shall be paid or provided in accordance with the
particular plan or program.
7. TERMINATION FOR CAUSE; WITHOUT GOOD REASON. If the Employment Term is
terminated by the Company for Cause or by Executive without Good Reason,
Executive shall be entitled to receive only the following: (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,
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Executive shall not be entitled to payment of any Pro Rata Bonus. In such event,
Executive and Executive's spouse shall not receive the continued health
insurance benefits provided pursuant to Section 3(h) above.
8. CONSEQUENCES OF TERMINATION FOR DEATH, DISABILITY OR INCAPACITY. If the
Employment Term is terminated upon Executive's death or permanent disability or
incapacity (as determined by the Board in its good faith judgment), Executive,
or Executive's estate if applicable, shall be entitled to receive the sum of (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
(including the benefits of Section 3(h) above) and the benefits to which
Executive would be entitled pursuant to Sections 6(i) through 6(iv) above. The
amount payable pursuant to this Section 8 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.
9. EFFECT OF TERMINATION ON FRINGE BENEFITS. Except as otherwise provided
herein, fringe benefits and bonuses hereunder (if any) which accrue or become
payable after the termination of the Employment Term shall cease upon such
termination.
10. CERTAIN DEFINITIONS.
(a) For purposes of the Agreement, Agreement, "CAUSE" shall mean:
(i) the willful and continued failure of Executive to perform
substantially 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 Executive by the Board which specifically
identifies the manner in which the Board believes that Executive has
not substantially performed Executive's Duties, or
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(ii) the willful engaging by Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this Subsection 10(a) , no act or failure to act, on
the part of Executive, shall be considered "willful" unless it is done,
or omitted to be done, by Executive in bad faith or without reasonable
belief that Executive's action or omission was in the best interest 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 Executive in good faith and in the best
interest of the Company. The cessation of employment of Executive shall
not be deemed to be for Cause unless and until there shall have been
delivered to 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 Executive and
Executive is given an opportunity, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the
Board, Executive is guilty of the conduct described in subparagraph
(i)or (ii) above, and specifying the particulars thereof in detail.
(b) For purposes of this Agreement, "GOOD REASON" shall mean (i) the
assignment to Executive of any duties inconsistent with his positions, (ii) a
failure to maintain Executive in the positions set forth in Section 2(a) above,
or (iii) a material breach by the Company of a material provision of this
Agreement, in any case which has not been cured by the Company within thirty
(30) days after written notice of such action, breach or noncompliance has been
given by Executive to the Company or (ii) the delivery by the Company of a
notice of non-continuation pursuant to section 4 of this Agreement or
non-continuation of the Change in Control Agreement attached hereto as Schedule
3, pursuant to section 1(b) thereof.
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(c) For purposes of the 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 under any long-term incentive plan that
provides for such pro-rata vesting, the pro rata portion (calculated as if the
"target" amount under such plan has been reached) under any such long-term
incentive plan or performance plan from the beginning of the period of
determination through the date of termination.
(d) For purposes of this Agreement, the term "DATE OF TERMINATION"
shall mean thirty (30) days following written notice by one party to the other,
as notices are prescribed to be provided in the Agreement, of a termination of
Executive's Employment under the Agreement, and specifying the reason(s)
therefor; provided, however that if Executive's employment is terminated by
reason of death or disability, the Date of Termination shall be the date of
death of Executive or the date on which Executive is determined to be disabled.
11. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY; GROSS-UP PROVISIONS. (a)
Anything in this Agreement to the contrary notwithstanding and except as set
forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement,
any schedule to this Agreement, or otherwise, but determined without regard to
any additional payments required under this Section 11) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the
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Payments. Notwithstanding the foregoing provisions of this Section 11, if it
shall be determined that Executive is entitled to a Gross-Up Payment, but that
Executive, after taking into account the Payments and the Gross-Up Payment,
would not receive a net after-tax benefit of at least $50,000 (taking into
account both income taxes and any Excise Tax) as compared to the net after-tax
proceeds to Executive resulting from an elimination of the Gross-Up Payment and
a reduction of the Payments, in the aggregate, to an amount (the "Reduced
Amount") such that the receipt of Payments would not give rise to any Excise
Tax, then no Gross-Up Payment shall be made to Executive and the Payments, in
the aggregate, shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 11(c), all determinations
required to be made under this Section 11, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Deloitte &
Touche or such other certified public accounting firm as may be designated by
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and Executive within 15 business days of the
receipt of notice from Executive that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting a
change in control or "CIC" as defined in Schedule 3 to this Agreement ,
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 11(b), shall be paid by the Company to
Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 11(c) and Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
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determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive shall not
pay such claim prior to the expiration of the 30-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:
(i ) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii ) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv ) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax
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(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 11, the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and ▇▇▇ for a refund or to contest the claim in any permissible manner,
and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs Executive to pay such claim and ▇▇▇ for a refund, the Company
shall advance the amount of such payment to Executive, on an interest-free basis
and shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 11(c) above, Executive becomes entitled to receive
any refund with respect to such claim, Executive shall (subject to the Company's
complying with the requirements of Section 11(c) above) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by Executive of
an amount advanced by the Company pursuant to Section 11(c) , a determination is
made that Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and
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shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
12. NOTICE OF TERMINATION; HOW GIVEN. Any termination by the Company for Cause
or by Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 18 of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined in Section 10(d) above) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
Executive or the Company, respectively, hereunder or preclude Executive or the
Company, respectively, from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
13. 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.
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 termination of the Employment Term, or
at any other time the Company may request, all memoranda, notes, plans, record,
reports, computer tapes, printouts and software and other documents and data
(and copies therein) in any form or medium relating to the Confidential
Information, Work Product (as defined below) of the business of the Company or
any Subsidiary that Executive may then possess or have under Executive's
control.
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14. WORK PRODUCT. Executive acknowledges that all inventions, innovations,
improvements, development, 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. 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).
15. NON-COMPETE, NON-SOLICITATION. Executive and the Company each acknowledge
that they have entered into, and are parties to the "NON-COMPETITION,
NON-SOLICITATION AND NO-HIRE AGREEMENT," attached hereto as SCHEDULE 2 and
incorporated by reference herein.
16. 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 (other than as
specifically referenced in this Agreement), 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.
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17. SURVIVAL. Sections 5, 6 and 7 and sections 9 through 24 shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Term.
18. 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:
Notice to Executive:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notice to the Company:
Office Depot, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
and
Office Depot, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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.
19. MISCELLANEOUS PROVISIONS.
(a) 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
18
respect under any applicable law or rule in any jurisdiction,
such invalidity, illegality or unenforceability shall not
effect 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.
(b) COMPLETE AGREEMENT. This Agreement and those agreements and
documents expressly referred to herein and the Schedules
attached to this Agreement 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. Documents and/or
agreements incorporated by reference herein are hereby deemed
to be made a part hereof.
(c) NO STRICT CONSTRUCTION; NO WAIVER. 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.
Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure
to assert any right Executive or the Company may have
hereunder, including, without limitations the right of
Executive to terminate employment for Good Reason pursuant to
this Agreement or any Schedule to this Agreement, shall not be
deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(d) 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.
(e) 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
19
Company. This Agreement is personal to Executive and without
the prior written consent of the Company shall not be
assignable by Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Executive's legal
representatives. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and
assigns. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such
succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(f) 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.
(g) 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.
20. NO SET-OFF OR MITIGATION. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to
20
Executive under any of the provisions of this Agreement, and such amounts shall
not be reduced whether or not Executive obtains other employment.
21. PAYMENT OF CERTAIN EXPENSES. If, and to the extent, Executive is successful
in any action against the Company to enforce any of his rights under this
Agreement, the Company shall reimburse Executive for his reasonable attorneys'
fees and expenses incurred in pursuing such action.
22. ARBITRATION. Except as to any controversy or claim which Executive elects by
written notice to the Company, to have adjudicated by a court of competent
jurisdiction, any dispute or controversy between the Company and Executive
arising out of or relating to this Agreement or the breach of this Agreement
shall be settled by arbitration administered by the American Arbitration
Association ("AAA") in accordance with its Commercial Arbitration Rules then in
effect, and judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. Any arbitration shall be held before a
single arbitrator who shall be selected by the mutual agreement of the Company
and Executive, unless the parties are unable to agree to an arbitrator, in which
case the arbitrator will be selected under the procedures of the AAA. The
arbitrator shall have the authority to award any remedy or relief that a court
of competent jurisdiction could order or grant, including, without limitation,
the issuance of an injunction. However, either party may, without inconsistency
with this arbitration provision, apply to any court otherwise having
jurisdiction over such dispute or controversy and seek interim provisional,
injunctive or other equitable relief until the arbitration award is rendered or
the controversy is otherwise resolved. Except as necessary in court proceedings
to enforce this arbitration provision or an award rendered hereunder, or to
obtain interim relief, or as may otherwise be required by law, neither a party
nor an arbitrator may disclose the existence, content or results of any
arbitration hereunder without the prior written consent of the Company and
Executive. The Company and Executive acknowledge that this Agreement evidences a
transaction involving interstate commerce. Notwithstanding any choice of law
provision included in this Agreement, the United States Federal Arbitration Act
shall govern the interpretation and enforcement of this arbitration provision.
The arbitration proceeding shall be conducted in Palm Beach County, Florida or
such other location to which the parties may agree. The Company shall pay the
costs of any arbitrator appointed hereunder.
21
23. WITHHOLDING. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
24. SCHEDULES. The Schedules attached hereto are incorporated by reference
herein and made a part hereof. The following Schedules are attached:
(a) Retention Agreement;
(b) Agreement of Non-Competition, Non-Solicitation, and No-Hire;
(c) Change in Control Agreement; and
(d) Real Estate Co-Ownership Agreement
* * * *
SIGNATURES CONTAINED ON FOLLOWING PAGE
22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the 29th day of December, 2001.
OFFICE DEPOT, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chairman, Compensation Committee
of the Board of Directors
EXECUTIVE
/s/ M. ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: M. ▇▇▇▇▇ ▇▇▇▇▇▇
23
SCHEDULE 1
RETENTION AGREEMENT
This Retention Agreement ("Agreement") was entered into by Executive and the
Company originally on June 7, 2000, and is amended and restated herein effective
as of December 29, 2001 as a matter of convenience to the parties.
A. Under the terms of the Employment Agreement dated December 29, 2001, by
and between the Executive and the Company (as defined in such
Employment Agreement) (herein the "Employment Agreement"), to which
this Agreement is attached as SCHEDULE 1, the Company is employing
Executive as the Company's Chairman and Chief Executive Officer. In
addition to the provisions thereof, the Company wishes to enter into
this Agreement to provide further assurance that Executive will remain
with the Company and provide to it his experience and expertise in the
areas of domestic catalog marketing and in international business.
B. The terms of this Agreement are provided for the purpose of further
inducing Executive to remain with the Company, and Executive is ready
and willing to enter into this Agreement.
Now therefore, in consideration of the foregoing Recitals, which are
incorporated by this reference and other good and valuable consideration, the
parties hereby agree as follows:
1. RETENTION PAYMENTS TO EXECUTIVE. The Company has made and/or hereby agrees to
make the following payments to Executive:
On June 7, 2000, to ensure the retention of Executive through at least
the end of December 2002, the sum of Three Million, Eight Hundred
Thousand Dollars ($3,800,000) was deposited into a deferred
compensation account with ▇▇▇▇▇▇▇ ▇▇▇▇▇ for the benefit of Executive,
to be invested as directed by Executive in accordance with the terms
and conditions of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ deferred compensation agreement
with the Company. This amount (the "Deferred Payment"), together with
any and all income and appreciation on the
24
Deferred Payment while in the deferred compensation account and
unvested, shall vest 100% on December 31, 2002, provided that Executive
remains an employee of the Company through and including December 31,
2002. It is further agreed, however, that the Deferred Payment shall
also vest 100% upon the occurrence of any of the following events PRIOR
to December 31, 2002 :
(i) There is a change in control of the Company, as set
forth in the Change in Control Agreement attached to
the Employment Agreement as SCHEDULE 3.
(ii) Executive dies, becomes disabled or incapacitated as
set forth in the Employment Agreement.
(iii) Executive's employment is terminated by the Company
without Cause or is terminated by Executive for Good
Reason, as defined and set forth in the Employment
Agreement.
The vested Deferred Payment, together with any income and appreciation,
shall be payable to Executive (or Executive's beneficiaries) in
accordance with the provisions of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ deferred
compensation agreement with the Company and Executive, and Executive's
(or such beneficiaries') election thereunder.
2. GRANT OF STOCK OPTIONS. As consideration for the cancellation of the Prior
Agreements, the Company granted to Executive on June 6, 2000, an option to
acquire stock in the Company (which option is evidenced by a separate option
agreement) as follows:
a) A ten-year option (the "Retention Option") to acquire up to
400,000 shares of the Company's stock. Such Retention Option
provides, among other provisions, that it shall remain
exercisable through and including 90 days following the second
anniversary of any termination of Executive by the Company
without Cause, or any termination by Executive with Good
Reason, as such terms are defined in the Employment Agreement.
25
b) The Retention Option shall vest in full (100%) on December 31,
2002; provided that Executive remains continuously employed by
the Company on such date.
c) The Retention Option shall have an early vesting provision,
which provides that the Retention Option shall vest in full
(100%) upon the occurrence of any of the events set forth in
Section 1 (i) through (iii) above and, in the case of Section
1(i) above, shall have an exercise period through the balance
of the full ten-year term of the Retention Option.
3. INCORPORATION FROM EMPLOYMENT AGREEMENT. The following provisions from the
Employment Agreement are incorporated herein by reference: 11 through 23.
In testimony whereof, this Retention Agreement is separately signed by the
parties, originally effective on the 7th day of June, 2000 and amended and
restated effective as of the 29th day of December, 2001.
Executive Office Depot, Inc.
/s/ M. ▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------- --------------------------------------
M. ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman, Compensation
Committee
26
SCHEDULE 2
AGREEMENT OF NON-COMPETITION, NON-SOLICITATION AND NO-HIRE
This Agreement of Non-Competition, Non-Solicitation and No-Hire (this
"Noncompete Agreement") made and entered into originally on the 7th day of June,
2000, is amended and restated as of the 29th day of December 2001 as a matter of
convenience to the parties, by and between Office Depot, Inc., a Delaware
corporation (the "Company") and M. ▇▇▇▇▇ ▇▇▇▇▇▇ (the "Executive").
RECITALS
A. The Company and Executive are on this date entering into an Employment
Agreement, which this Agreement is attached as Schedule 2 (the
"Employment Agreement"); and
B. Executive acknowledges that he is being employed as a very senior
executive officer of the Company and as such is fully familiar with the
most sensitive, confidential and proprietary information of the Company
("Confidential Information"); and
C. Executive has been requested by the Company to enter into this
Noncompete Agreement as a condition to the Company's being willing to
enter into the other Agreements being entered into contemporaneously
herewith; and
D. The parties are willing to abide by the terms and provisions of this
Noncompete Agreement;
AGREEMENT
NOW THEREFORE, in consideration of the foregoing recitals, which are
incorporated by reference and made a part hereof, the payment to Executive
referred to in Section 1 below, and other good and valuable consideration, the
parties hereby agree as follows:
1. PAYMENT TO EXECUTIVE; AGREEMENT OF NON-COMPETITION. For and in
consideration of the payment by the Company to Executive in one lump
sum, in cash, on June 7, 2000, the date hereof of the sum of One
Million Five Hundred Thousand Dollars ($1,500,000), receipt and
sufficiency of which are hereby acknowledged, 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
27
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, and in consideration of the
payment(s) being made to Executive hereunder, Executive agrees that,
during the Employment Term (as defined in the Employment Agreement) and
for a period of one year thereafter, unless Executive is named CEO of
the Company, in which event, the Non-Compete Period is for three years
after leaving the Company instead of one year,. (in either such event,
as used herein, 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 with the Company, within any
geographical area in which the Company or its Subsidiaries engage in
such businesses on the date of termination of Executive's employment
with the Company. 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.
2. NON-SOLICITATION; NO-HIRE; NON-INTERFERENCE. 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 the time of termination
of 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 or business
relation and the Company or any Subsidiary (including, without
limitation, making any negative statements or communications about the
Company or its Subsidiaries).
28
3. REFORMATION OF THIS AGREEMENT. If, at the time of enforcement of this
Noncompete Agreement, any court shall hold that the duration, scope or
geographical restrictions stated herein are unreasonable under the
circumstances then existing, the parties agree that it is their mutual
desire and intent that the Company shall be afforded the maximum
duration, scope or area reasonable under such circumstances, and each
of them hereby requests such court to reform this Agreement so that the
maximum duration, scope and geographical restrictions available under
applicable law at the time of enforcement of this Agreement shall be
substituted by such court for the stated duration, scope or
geographical area stated herein and that the court shall be allowed to
revise the restrictions contained in this Noncompete Agreement to such
provisions as are deemed reasonable by the court at the time such
enforcement is requested.
4. INJUNCTIVE RELIEF. In the event of the breach or any threatened breach
by Executive of any of the provisions of this Noncompete Agreement, the
Company, in addition and supplementary to any and all 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 this Noncompete Agreement or to
prevent any violations or threatened violations of the provisions
hereof (without being required to post any bond or other security to
secure such relief). In addition, in the event of any alleged breach or
violation by Executive of this Noncompete Agreement, the Noncompete
Period shall be tolled until such breach or violation has been duly
cured and thereafter the Noncompete Period shall be extended for an
additional period of time equivalent to the time during which Executive
was in breach of this Noncompete Agreement.
5. INCORPORATION OF TERMS BY REFERENCE. The provisions of the following
number sections of the Employment Agreement are incorporated by
reference as if set forth at length herein and shall be deemed to
constitute a part hereof notwithstanding the earlier termination of
such Employment Agreement: sections 11 through 23 of the Employment
Agreement are incorporated by this reference.
29
IN TESTIMONY WHEREOF, the parties have signed this NONCOMPETE AGREEMENT
originally dated as of the 7th day of June, 2000, amended and restated as of the
29th day of December, 2001.
Executive Office Depot, Inc.
/s/ M. ▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------- --------------------------------------
M. ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman, Compensation
Committee
30
SCHEDULE 3
CHANGE IN CONTROL AGREEMENT
This Change in Control ("CIC") Agreement was originally entered into by
Executive and the Company on June 7, 2000, and is amended and restated herein as
of December 29, 2001, as a matter of convenience for the parties.
a. The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its shareholders to
assure that the Company will have the continued dedication of
Executive, notwithstanding the possibility, threat or occurrence of a
Change in Control (as defined below) of the Company.
b. The Board believes it is imperative to diminish the inevitable
distraction of Executive by virtue of the personal uncertainties and
risks created by a pending or threatened Change in Control and to
encourage Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change in
Control, and to provide Executive with compensation and benefits
arrangements upon a Change in Control which ensure that the
compensation and benefits expectations of Executive will be satisfied
and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this CIC Agreement, supplemental to the Employment
Agreement dated as of December 29, 2001 between Executive and the Company, to
which this SCHEDULE 3 is attached (such Agreement, together with the Schedules
thereto, herein referred to as the "Employment Agreement").
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall mean the first
date during the CIC Period (as defined in Section 1(b)) on which a CIC (as
defined in Section 1(c)) occurs. Anything in this Agreement to the contrary
notwithstanding, if a CIC occurs and if
31
Executive's employment with the Company is terminated prior to the date on which
the CIC occurs, and if it is reasonably demonstrated by Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a CIC or (ii) otherwise arose in
connection with or anticipation of a CIC, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior to the date
of such termination of employment.
(b) The "CIC Period" shall mean the period commencing on the date
hereof and ending on the third anniversary of the date hereof; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), unless previously
terminated, the CIC Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to Executive that the CIC Period shall not be
so extended.
(c) A "Change in Control" or "CIC" shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the
then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then-outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a CIC:
(i) any acquisition directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2; OR
32
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; OR
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then-outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the
corporation resulting from such Business Combination, or the combined
voting power of the then-outstanding voting securities of such
corporation except to the extent that such
33
ownership existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; OR
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(d) "Employment" shall mean the employment of Executive pursuant to the
Employment Agreement to which this Schedule 3 is attached.
Other terms shall have the meanings ascribed to them in various sections of this
CIC Agreement or otherwise shall have the meanings ascribed to them in the
Employment Agreement.
2. TERMINATION OF EMPLOYMENT. In addition to the other termination
provisions contained in Sections 5 through 11 of the Employment Agreement,
Executive's employment shall be subject to the following provisions, immediately
following the Effective Date of a CIC:
(a) GOOD REASON. Executive's employment may be terminated by
Executive for Good Reason. For purposes of this Agreement, following a CIC,
"Good Reason" shall not have the meaning ascribed to it in Section 10(b) of the
Employment Agreement, but instead shall mean:
(i) the assignment to Executive of any duties
inconsistent in any respect with Executive's Position(s) (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 2 of the Employment
Agreement, or any other action by the Company which results in a
diminution in such Position(s), authority, duties or responsibilities,
excluding for this
34
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 Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 3 of the Employment 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 Executive;
(iii) the Company's requiring Executive to be based
at any office or location other than in Delray Beach, Florida or in
Torrance, California or the Company's requiring Executive to travel on
Company business to a substantially greater extent than required
immediately prior to the Effective Date;
(iv) any purported termination by the Company of
Executive's employment otherwise than as expressly permitted by the
Employment Agreement; or
(v) any failure by the Company to comply with and
satisfy any other material provision of the Employment Agreement.
(b) For purposes of this Section, any good faith determination
of "Good Reason" made by Executive shall be conclusive and irrefutable
by the Company. Anything in this Agreement to the contrary
notwithstanding, a termination by Executive for any reason during the
thirty (30) day period immediately preceding the first anniversary of
the Effective Date of a CIC shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
3. OBLIGATIONS OF THE COMPANY UPON TERMINATION. The Company shall have the
following obligations to Executive upon a termination of Executive's employment
following a CIC:
(a) If the termination is for death, disability or incapacity,
then for purposes of this CIC Agreement, the Company shall pay to
Executive or his estate, in a lump
35
sum not more than 30 days after the Date of Termination, the sums due
under Section 3(c) hereof, as if Executive had notified the Company of
his election to terminate the Agreement for Good Reason and not the
sums due under Section 5 of the Employment Agreement.
(b) If the termination is for Cause, then the rights and
obligations of the parties shall be governed by the provisions of
Section 7 of the Employment Agreement.
(c) If the termination is by the Company without Cause or by
Executive for Good Reason:
(i) the Company shall pay to Executive in a lump sum
in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) Executive's annual Base
Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (i) the
annual Bonus most recently paid to Executive pursuant to
Section 3(c) of the Employment Agreement and (ii) the Bonus
paid or payable pursuant to such Section 3(c), including any
bonus or portion thereof which has been earned but deferred
(and annualized for any fiscal year consisting of less than
twelve full months or during which Executive was employed for
less than twelve full months), for the most recently completed
fiscal year during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual Bonus") and
(y) a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination,
and the denominator of which is 365 and (3) any compensation
previously deferred by Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in
each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the "Accrued Obligations"); and
36
B. the amount equal to the product of (a)
three (3) and (b) the sum of (x) Executive's annual Base
Salary and (y) the Highest Annual Bonus.
(ii) for three (3) years after Executive's Date of
Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy,
the Company shall continue benefits to Executive and/or
Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs,
practices and policies described in Section 3(f) of the
Employment Agreement if Executive's employment had not been
terminated or, if more favorable to Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and
their families, provided, however, that if Executive becomes
re-employed with another employer and is eligible to receive
medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.
Notwithstanding the foregoing, the Company shall continue to
make all scheduled premium payments under any split-dollar
life insurance policy in effect on the Date of Termination on
behalf of Executive for so long as such payments are scheduled
(without giving effect to Executive's termination). For
purposes of determining eligibility (but not the time of
commencement of benefits) of Executive for retiree benefits
pursuant to such plans, practices, programs and policies,
Executive shall be considered to have remained employed until
three years after the Date of Termination and to have retired
on the last day of such period;
(iii) the Company shall, at its sole expense as
incurred, provide Executive with out placement services the
scope and provider of which shall be selected by Executive in
his sole discretion; and
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to Executive any other
amounts or benefits required to
37
be paid or provided or which Executive is eligible to receive
under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such
other amounts and benefits shall be hereinafter referred to as
the "Other Benefits").
C. Following termination for any reason, Executive's obligation to "buy
out" Viking's interest in Executive's Florida residential real estate (as
defined in the Real Estate Co-Ownership attached as SCHEDULE 4 to the Employment
Agreement) or to sell any other property as a result of a "put" by the Company,
may be deferred by Executive or his successor(s) for a period of up to two years
following such termination of employment.
4. FULL SETTLEMENT. (a) The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against Executive or others.
In no event shall Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Executive under any
of the provisions of this Agreement and such amounts shall not be reduced
whether or not Executive obtains other employment. Anything in the Employment
Agreement to the contrary notwithstanding, the Company agrees to pay as
incurred, to the fullest extent permitted by law, all legal fees and expenses
which Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company, Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
In Testimony whereof, this CIC Agreement is signed by the parties, originally
dated as of the 7th day of June, 2000, and amended and restated as of the 29th
day of December, 2001.
Executive Office Depot, Inc.
/s/ M. ▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- --------------------------------------
M. ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman, Compensation
Committee
38
SCHEDULE 4
REAL ESTATE CO-OWNERSHIP AGREEMENT
THIS REAL ESTATE CO-OWNERSHIP AGREEMENT, made and entered into this 29th day of
December, 2001 by and between Office Depot, Inc., a Delaware corporation
("Company") and M. ▇▇▇▇▇ ▇▇▇▇▇▇, a resident of Boca Raton, Florida, and Chief
Executive Officer of Company ("Executive").
RECITALS
a. Company and Executive (and Executive's Spouse, defined below) are
co-owners of the residential property located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Property").
b. The Parties desire herein to confirm their understandings with respect
to the co-ownership of the Property and to clarify their respective
rights and obligations with respect to the Property and it set forth
their understandings in this Real Estate Co-Ownership Agreement.
Now therefore, in consideration of the Recitals, incorporated by
reference herein, and other good and valuable consideration, the
parties agree as follows:
1. BACKGROUND. At the request of the Company, Executive relocated to Florida to
serve as Chief Executive Officer of the Company and purchased the Property as
his new principal residence in the State of Florida, jointly with his wife
▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Executive's Spouse"), together with the Company's investment in
the Property as set forth below.
39
2. PRINCIPAL TERMS OF INVESTMENT. The parties acknowledge that they have
co-invested in the Property as follows:
(a) Office Depot -- $1,850,000 28%
(b) Executive (jointly with
Executive's Spouse) $1,749,724 72%
(c) Mortgage Loan $3,000,000
(Included as part of
Executive's Interest)
(d) Total Investments $6,599,724
The parties own the Property as tenants-in-common (Executive and Executive's
Spouse, jointly, as one party, and the Company, as the other tenant-in-common),
with each party having an undivided percentage interest in the Property, in the
percentages set forth above.
3. CONSENT TO MORTGAGE: The Company has agreed that Executive may borrow the sum
referred to above as the Loan and that the Property may be encumbered in full by
the lien of a first mortgage on the Property in favor of the lender ("Lender")
to the Executive. The Company hereby agrees to and has executed such
documentation as the Lender has required to subject its undivided 28% interest
in the Property to the lien of a mortgage in favor of Lender.
Executive is fully responsible for the payment of all debt service on the Loan,
and the Company is not, and shall not be an obligor or guarantor on the Loan.
Executive's percentage of ownership in the Property is subject to the principal
amount of the Loan. No payment of principal on the Loan shall serve to increase
Executive's percentage interest in the Property or to reduce the Company's
percentage interest therein. In the event of a sale of the Property, repayment
of any outstanding principal balance of the Loan shall be charged against
Executive's percentage of ownership interest in the proceeds of the sale of the
Property.
4. EXPENSES. All debt service payments, repairs, taxes and other costs and
expenses of every kind and nature incurred in connection with the Property and
Executive's residency therein, shall be the sole responsibility of Executive,
but the Company shall
40
have the right, at any time upon thirty (30) days' prior written notice to
Executive, in order to protect its interest in the Property, to step in and pay
any such taxes, liens, repairs or other expenses and to charge the cost of the
same against Executive and to encumber Executive's 72% ownership interest in the
Property in the amount of such repairs.
5. RESTRICTIONS ON SALE AND ENCUMBRANCE. Neither the Company nor Executive shall
have any right to sell or encumber its or his interest in the Property without
the prior written approval of the other, except (a) in connection with a sale of
the entire Property as provided in Section 7 below and (b) except for the
Company's consent to the encumbrance of a first mortgage lien on the Property to
secure the Executive Loan referred to above. The Loan may not be modified,
amended, extended or increased in amount without the prior written consent of
the Company.
6. RISK OF LOSS; INSURANCE. The parties shall share risk of loss of the Property
in proportion to their respective percentages of ownership in the Property.
Executive shall keep the Property insured against all risks, including without
limitation fire and windstorm, for the benefit of all the parties, including a
standard mortgagee's clause, under a policy of insurance that covers 100% of the
value thereof, naming the Company and Lender, as additional insureds, as their
respective interests may appear.
7. SALE OF THE PROPERTY; PURCHASE BY EXECUTIVE; COMPANY RIGHTS. Whenever
Executive desires to sell the Property, he shall be entitled to do so, subject
to the provisions of this Section 7. Similarly, if Executive desires to purchase
the Company's percentage interest in the Property, he shall have the right to do
so subject to the provisions of this Section 7.
(a) SALE -- In the event Executive desires at any time to sell the
Property, the Company shall receive at closing net proceeds (after commissions,
transfer taxes and other costs of sale, but before payment of the Loan) from the
sale of the Property which are equal at least to $1,850,000, the amount of its
investment in the Property, or 28% of the net proceeds, whichever amount is
greater. While Executive has the right to specify
41
that the Property shall be sold, each party shall be required to agree upon the
sales price and terms of sale (if sold for terms other than cash). The
Executive's share of the net proceeds shall be reduced by any amount required to
pay off the Loan.
(b) PURCHASE - In the event Executive desires at any time to purchase
the Company's interest in the Property, he may do so by providing written notice
to the Company, proposing the price at which he desires to purchase the
Company's interest therein. The Company shall have the right to accept such
proposed price, or to require that an appraisal of the Property be made,
following which the parties shall endeavor in good faith to negotiate a price
consistent with the appraisal. In the event they are unable to do so, they agree
to submit the matter to binding arbitration in accordance with Section 10 below.
In no event shall the Company's interest in the Property be purchased for less
than $1,850,000, the amount of its original investment in the Property,
regardless of the appraisal or the result of any arbitration.
(c) PUT BY THE COMPANY - In the event that Executive's employment by
the Company shall terminate or Executive shall abandon the Property or fail to
occupy it as his principal residence for a period of 180 days or longer, the
Company shall have the right, at its option, by written notice to Executive, to
require him to purchase the Company's interest in the Property for cash at the
price proposed by the Company. Executive shall have the right either to accept
such proposed selling price or to require that an appraisal be made, following
which the parties shall endeavor in good faith to negotiate a price consistent
with the appraisal. In the event they are unable to do so, they agree to submit
the matter to binding arbitration in accordance with Section 10 below.
In the event Executive is unable or unwilling to purchase the Company's interest
in the Property, the Company shall have the right to require that the Property
be sold and the net proceeds divided between the parties in accordance with
their respective percentage interests in the Property.
42
Anything to the contrary herein notwithstanding, in the event Executive's
employment was terminated by the Company without Cause or by the Executive for
Good Reason (each as such terms are defined in the Employment Agreement to which
this Agreement is attached as SCHEDULE 4 (the "Employment Agreement")), or due
to Executive's death or disability, or for any reason after a Change in Control
(as such term is defined in the Change in Control Agreement attached to the
Employment Agreement as SCHEDULE 3), then Executive's (or Executive's
successors') obligation to purchase the Company's interest in the Property, or
to sell the Property as a result of a "put" by the Company under this Section
7(c) shall be extended at the option of Executive (or Executive's successor) for
a period of up to two (2) years.
8. 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:
Notice to Executive:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notice to the Company:
Office Depot, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
and
Office Depot, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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.
43
9. MISCELLANEOUS PROVISIONS.
The provisions of Section 19 of the Employment Agreement are incorporated by
this reference herein, as if set forth verbatim.
10. ARBITRATION. The arbitration provisions of Section 22 of the Employment
Agreement are incorporated by this reference herein, as if set forth verbatim.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
originally dated as of November 27, 2000, and amended and restated as of the
29th day of December, 2001.
Executive OFFICE DEPOT, Inc.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------- --------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chairman, Compensation
Committee