Change of Control Agreement – Office Depot, Inc.
Change in Control Agreement
THIS CHANGE IN CONTROL AGREEMENT is made by and between Office Depot, Inc., a
Delaware corporation (the “Company”), and Neil R. Austrian (the “Executive”) and
is dated as of the date signed by the Executive.
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 the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of
the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change in Control and to encourage the
Executive153s full attention and dedication to the Company currently and in the
event of any threatened or pending Change in Control, and to provide the
Executive with compensation and benefits arrangements upon a Change in Control
which ensure that the compensation and benefits expectations of the 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 Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The “Effective Date” shall mean the first
date during a Change in Control Period (as defined in Section 1(b)) on which a
Change in Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change in Control occurs and if the
Executive153s employment with the Company is terminated prior to the date on which
the Change in Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(ii) otherwise arose in connection with or anticipation of a Change in Control,
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 “Change in Control Period” shall mean the period commencing on the
date this Agreement is signed by the Executive or the first day following the
expiration of an Employment Period, and ending on the next December 31 after
such date; provided that, on each such first December 31, 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 Change in Control Period shall be automatically extended for one additional
year, from year to year unless at least 60 days prior to any Renewal Date, the
Company shall give notice to the Executive that the Change in Control Period
shall not be so extended, in which case this Agreement shall terminate on such
next December 31 (the “Expiration Date”).
(c) An “Exempt Person” shall mean any employee benefit plan of the Company or
a subsidiary or a trustee or other administrator or fiduciary holding securities
under an employee benefit plan of the Company or a subsidiary.
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2. For purposes of this Agreement, “CHANGE IN CONTROL” means the occurrence
of one of the following events after the date of this Agreement:
(a) if any “person” or “group” as those terms are used in Sections 12(d) and
13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a
“Person”), other than an Exempt Person, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more (the “CIC percentage”) of the
combined voting power of the Company153s then outstanding securities; provided,
however, that if such Person first obtains the approval of the Board to acquire
the CIC percentage, then no Change in Control shall be deemed to have occurred
unless and until such Person obtains a CIC percentage ownership of the combined
voting power of the Company153s then outstanding securities without having first
obtained the approval of the Board; or
(b) if any Person, other than an Exempt Person, is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing greater than 50% of the
combined voting power of the Company153s then outstanding securities, whether or
not the Board shall have first given its approval to such acquisition; or
(c) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new Directors whose
election by the Board or nomination for election by the Company153s stockholders
was approved by at least two-thirds of the Directors then still in office who
either were Directors at the beginning of the period or whose election was
previously so approved, cease for any reason to constitute a majority thereof;
or
(d) the consummation of a merger or consolidation of the Company with any
other corporation; provided, however, a Change in Control shall not be deemed to
have occurred: (i) if such merger or consolidation would result in all or a
portion of the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) either directly or
indirectly more than 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) if the corporate existence of the Company is
not affected and following the merger or consolidation, the majority of the
Company153s Executive Committee, or if no such body then exists, the majority of
the Chief Executive Officer, Chief Financial Officer and Presidents (or other
heads, regardless of title) of the principal operating units of the Company
retain their positions with the Company (disregarding any such executive whose
employment terminates for reasons other than due to a termination by the Company
without cause or a termination by such executive for good reason) and the
Directors of the Company prior to such merger or consolidation constitute at
least a majority of the Board of the Company or the entity that directly or
indirectly controls the Company after such merger or consolidation; or
(e) the sale or disposition by the Company of all or substantially all the
Company153s assets, other than a sale to an Exempt Person; or
(f) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company.
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Notwithstanding anything herein, for the avoidance of doubt, for purposes of
determining whether any Change in Control occurs after the date of this
Agreement, any sale or transfer by BC Partners Ltd. (“BC Partners”) or their
affiliates of equity interests in the Company (other than a sale occurring
together with one or more other shareholders of the Company acting as a group as
part of a single transaction) shall be disregarded, and any acquisition or
continued holding by BC Partners or their affiliates of equity interests in the
Company shall be disregarded for purposes of Section 2(a).
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for each
period commencing on an Effective Date and ending on the first anniversary of
such date (an “Employment Period”). Such period may be extended in writing by
the mutual agreement of the Company and Executive at any time prior to such
first anniversary. During an Employment Period, this Agreement shall exclusively
govern the terms of the compensation and benefits the Executive shall be
entitled to receive notwithstanding any other agreement or arrangement between
the parties with respect to the subject matter hereof. Notwithstanding the prior
sentence, to the extent the Executive would otherwise be entitled to receive a
retention bonus or similar payment (“Retention Payment”) under another agreement
with the Company if this Agreement did not otherwise control during the
Employment Period, such Retention Payment shall be payable to Executive under
the terms of such other agreement in addition to any benefits payable to
Executive pursuant to this Agreement. Upon expiration of an Employment Period, a
new Change in Control Period shall commence pursuant to Section 1(b); and unless
otherwise provided herein, this Agreement does not terminate and remains subject
to future Change in Control occurrences. In the event that the Expiration Date
occurs prior to the Effective Date for an Employment Period, this Agreement
shall terminate as of the Expiration Date; and the Company shall have no further
obligations to the Executive hereunder.
4. Terms of Employment. (a) Position and Duties. (i) During an
Employment Period, (A) the Executive153s position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive153s services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During an Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive153s
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During an Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive153s responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive153s
responsibilities to the Company.
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(b) Compensation. (i) Base Salary. During an Employment Period,
the Executive shall receive an annual base salary, including any applicable car
allowance (“Annual Base Salary”), which shall be paid in installments in
accordance with the Company153s standard payroll practices for salary, at least
equal to twelve times the highest monthly base salary and car allowance paid or
payable, including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date
occurs. During an Employment Period, the Annual Base Salary shall be reviewed no
more than 12 months after the last salary increase awarded to the Executive
prior to the Effective Date and thereafter at least annually. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term “affiliated companies” shall include any company controlled
by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during an Employment Period, an
annual bonus (the “Annual Bonus”) in cash at least equal to the Executive153s
highest bonus under the Company153s annual bonus plans, or any comparable bonus
under any predecessor or successor plan or plans, for the last three full fiscal
years prior to the Effective Date (annualized in the event that the Executive
was not employed by the Company for the whole of such fiscal year).
Notwithstanding the previous sentence, the Executive shall be awarded the Annual
Bonus only if the Executive is employed by the Company at the end of the
applicable fiscal year ending during an Employment Period. Each such Annual
Bonus shall be paid in the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, no later than the fifteenth day of the third month
of such fiscal year, unless the Executive shall elect to defer the receipt of
such Annual Bonus pursuant to the terms of any deferred compensation arrangement
maintained by the Company that permits such deferral.
(iii) Incentive, Savings and Retirement Plans. During an Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer Executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During an Employment Period, the Executive
and/or the Executive153s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
– 4 –
(v) Expenses. During an Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies. To the extent that any such reimbursement does not qualify
for exclusion from Federal income taxation, the Company will make the
reimbursement only if the Executive incurs the corresponding expense during an
Employment Period and submits the request for reimbursement no later than two
months prior to the last day of the calendar year following the calendar year in
which the expense was incurred so that the Company can make the reimbursement on
or before the last day of the calendar year following the calendar year in which
the expense was incurred; the amount of expenses eligible for such reimbursement
during a calendar year will not affect the amount of expenses eligible for such
reimbursement in another calendar year, and the right to such reimbursement is
not subject to liquidation or exchange for another benefit from the Company.
(vi) Fringe Benefits. During an Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During an Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(viii) Vacation. During an Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The
Executive153s employment shall terminate automatically upon the Executive153s death
or Disability during an Employment Period. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive from the Executive153s duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive153s legal representative.
– 5 –
(b) Cause. The Company may terminate the Executive153s employment during
an Employment Period for Cause. For purposes of this Agreement, “Cause” shall
mean:
(i) the continued failure of the Executive to perform substantially the
Executive153s 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 or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer believes
that the Executive has not substantially performed the Executive153s duties, or
(ii) the engaging by the Executive in illegal conduct or gross misconduct in
violation of the Company153s Code of Ethical Behavior.
Any act, or failure to act, based upon authority given pursuant to a
resolution duty adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company 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 Company153s Board of Directors, finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subsection (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The Executive153s employment may be terminated by the
Executive for Good Reason within the 1 year period following the date of the
initial existence of the event or circumstances constituting Good Reason. For
purposes of this Agreement, “Good Reason” shall mean:
(i) a material diminution in the Executive153s authority, duties or
responsibilities with the Company;
(ii) a material failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement;
(iii) a material change in the office or location at which the Company
requires the Executive to based during an Employment Period or the Company153s
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date; or
(iv) any material failure by the Company to comply with and satisfy Section
13(c) of this Agreement;
provided, however, that the Executive will have Good Reason to terminate
employment only if (i) the Executive provides notice to the Chief Executive
Officer of the Company of the existence of the event or circumstances
constituting Good Reason specified in any of the preceding clauses within 90
days of the initial existence of such event or circumstances, and (ii) the
Company does not remedy such event or circumstances within 30 days following
receipt of such notice.
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(d) Resignation by Executive Without Good Reason or Termination By Company
Without Cause. The Executive153s employment may be terminated by the Executive
without Good Reason or by the Company without Cause during an Employment Period.
(e) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(b) 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
the Executive153s employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) 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 the 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
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive153s or the Company153s rights hereunder.
(f) Date of Termination. “Date of Termination” means (i) if the
Executive153s employment is terminated by the Company for Cause or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive153s
employment is terminated by the Company other than for Cause, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination, (iii) if the Executive153s employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the date on which the definition of “Disability” is first satisfied
with respect to the Executive, and (iv) if the Executive is terminated at the
request of a third party or otherwise in connection with or in anticipation of a
Change in Control as described in the last sentence of Section 1(a), the Date of
Termination shall be the date on which the corresponding Change in Control
occurs.
6. Obligations of the Company upon Termination. (a) Good Reason; By
Company Other Than for Cause. If, during an Employment Period, the Company
shall terminate the Executive153s employment other than for Cause, or the
Executive shall terminate employment for Good Reason within the 1 year period
following the date of the initial existence of the event or circumstances
constituting Good Reason:
(i) the Company shall pay to the Executive the following amounts:
A. the sum of (1) the Executive153s Annual Base Salary through the Date of
Termination to the extent not theretofore paid which shall be paid in accordance
with the Company153s standard payroll practices for salary, (2) in lieu of any
bonus that might otherwise have been payable to the Executive under the
Company153s annual bonus plan(s) for the corresponding bonus period(s) that
contain the Date of Termination, the product of: (x) the Executive153s bonus
calculated at “target” under the Company153s annual bonus plan(s) for the fiscal
year in which the Date of Termination occurs (and annualized for any fiscal year
consisting of less than twelve full months or during which the Executive was
employed for less than twelve full months) (the “Target Annual Bonus”), and (y)
a fraction, the numerator of
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which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 which shall be paid in a lump
sum payment, less applicable taxes and other deductions required by law, on the
first pay period following the sixty (60) day anniversary of the Date of
Termination, and (3) any accrued vacation pay due under the terms of the
Company153s vacation policy to the extent not theretofore paid which shall be paid
at the time specified in the Company153s vacation policy (the sum of the amounts
described in clauses (1), (2), and (3) shall be hereinafter referred to as the
“Accrued Obligations”); and
B. the amount equal to the product of: (1) two, and (2) the sum of: (x) the
Executive153s Annual Base Salary, and (y) the Target Annual Bonus, which shall be
paid in a lump sum payment, less applicable taxes and other deductions required
by law, on the first pay period following the sixty (60) day anniversary of the
Date of Termination;
(ii) the Company shall pay to the Executive the product of: (A) the Company153s
monthly COBRA premium in effect on the Date of Termination under the Company153s
group health plan for the type of coverage in effect under such plan (e.g.,
family coverage) for the Executive on the Date of Termination, and (B) 18, which
shall be paid in a lump sum payment, less applicable taxes and other deductions
required by law, on the first pay period following the sixty (60) day
anniversary of the Date of Termination;
(iii) on the first pay period following the sixty (60) day anniversary of the
Date of Termination, the Company shall purchase a 24 month executive
outplacement services package for the Executive from the provider generally used
by the Company for such purposes on the Date of Termination; and
(iv) to the extent not theretofore paid or provided, the Company shall pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program,
policy, practice, contract or agreement of the Company and its affiliated
companies in accordance with the terms of the applicable plan, program, policy,
practice, contract or agreement, except as expressly provided otherwise by this
Agreement (such other amounts and benefits shall be hereinafter referred to as
the “Other Benefits”).
In the event of the Executive153s termination by the Company other than for
Cause or a termination by the Executive for Good Reason, the Company shall have
no further obligations to the Executive other than as set forth in this Section
6(a).
(b) Death. If the Executive153s employment is terminated by reason of
the Executive153s death during an Employment Period, this Agreement shall
terminate without further obligations to the Executive153s legal representatives
under this Agreement, other than for payment of the amounts set forth in Section
6(a)(i)(A) and the provision of Other Benefits.
(c) Disability. If the Executive153s employment is terminated by reason
of the Executive153s Disability during an Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for the
payment of the amounts set forth in Section 6(a)(i)(A) and the provision of
Other Benefits.
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(d) Cause; Other than for Good Reason. If the Executive153s employment
shall be terminated for Cause during an Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the payment of
the amounts set forth in Section 6(a)(i)(A)(1) and (3) and the provision of
Other Benefits. If the Executive voluntarily terminates employment during an
Employment Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for the
payment of the amounts set forth in Section 6(a)(i)(A)(1) and (3) and the
provision of Other Benefits.
(e) Release of Claims and Covenant Not to Sue. Notwithstanding the
foregoing, any amounts due under this Section 6 by Company are contingent upon
Executive executing a customary release and covenant-not-to-sue agreement
(“Release”) in favor of the Company, its officers, directors, employees, agents,
parent corporation or subsidiaries, affiliates or divisions, its successors,
assigns, beneficiaries, servants, legal representatives, insures and heirs, and
delivering such executed Release to the Company and not revoking such Release
prior to the expiration of any applicable revocation requirements contained
therein (and in any event, no later than sixty (60) days following the Date of
Termination); and provided that such requirements are satisfied, the amounts due
under this Section 6 shall be payable on the first pay period following the
sixty (60) day anniversary of the Date of Termination.
7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive153s continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
14(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as expressly provided otherwise by this Agreement.
Notwithstanding the foregoing, any payments or benefits that the Executive is
entitled to receive under this Agreement shall be in lieu of any severance or
other termination benefits under any other Company plan, agreement or
arrangement. To the extent that the Executive receives other severance or
termination payments from the Company pursuant to another plan or arrangement,
the amounts payable to the Executive under this Agreement shall be reduced by
such amounts in a manner that complies with Section 10 hereunder.
8. Full Settlement. The Company153s 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 the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay or reimburse the Executive, to the fullest extent
permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any contest by the Company, the 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 the 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 each case, provided that, the Executive
prevails on any substantive
– 9 –
issue in such proceeding. To the extent that any such reimbursement does not
qualify for exclusion from Federal income taxation, the Company will make the
reimbursement only if the Executive incurs the corresponding expense during the
term of this Agreement or the period of two years thereafter and submits the
request for reimbursement no later than two months prior to the last day of the
calendar year following the calendar year in which the expense was incurred so
that the Company can make the reimbursement on or before the last day of the
calendar year following the calendar year in which the expense was incurred; the
amount of expenses eligible for such reimbursement during a calendar year will
not affect the amount of expenses eligible for such reimbursement in another
calendar year, and the right to such reimbursement is not subject to liquidation
or exchange for another benefit from the Company. However, in the event the
Executive is a “specified employee” on the Executive153s Date of Termination (as
determined by the Company in accordance with rules established by the Company in
writing in advance of the “specified employee identification date” that relates
to the date of the Executive153s “separation from service”), and to the extent
that any portion of such reimbursements or any other payments due to the
Executive were triggered by the Executive153s “separation from service,” then to
the extent necessary to comply with Section 409A(a)(2)(B)(i) of the Code, such
reimbursements or other payments shall be paid no earlier than the date that is
six months after the date of such “separation from service” (if the Executive
dies after the Executive153s separation from service but before such
reimbursements or payments have been made, such reimbursements or payments will
be paid to the Executive153s estate in a lump sum without regard to any six-month
delay that otherwise applies to specified employees). For purposes of this
Agreement, “specified employee” shall be defined as provided in Section
409A(a)(2)(B)(i) of the Code, “specified employee identification date” shall be
defined as provided in Treasury Regulation §1.409A-1(i), and “separation from
service” shall be defined as provided in Section 409A(a)(2)(A)(i) of the Code.
9. Section 280G. (a) In the event that part or all of the
consideration, compensation or benefits to be paid to Executive under this
Agreement together with the aggregate present value of payments, consideration,
compensation and benefits under all other plans, arrangements and agreements
applicable to Executive, constitute “excess parachute payments” under Section
280G(b) of the Code subject to an excise tax under Section 4999 of the Code
(collectively, the “Parachute Amount”) the amount of excess parachute payments
which would otherwise be payable to Executive or for Executive153s benefit under
this Agreement shall be reduced to the extent necessary so that no amount of the
Parachute Amount is subject to an excise tax under Section 4999 (the “Reduced
Amount”); provided that such amounts shall not be so reduced if, without such
reduction, Executive would be entitled to receive and retain, on a net after tax
basis (including, without limitation, after any excise taxes payable under
Section 4999), an amount of the Parachute Amount which is greater than the
amount, on a net after tax basis, that Executive would be entitled to retain
upon receipt of the Reduced Amount.
(b) If the determination made pursuant to Section 9(a) results in a reduction
of the payments that would otherwise be paid to Executive except for the
application of Section 9(a), such reduction in payments due under this Agreement
shall be first applied to reduce any cash severance payments that Executive
would otherwise be entitled to receive hereunder and shall thereafter be applied
to reduce other payments and benefits in a manner that would not result in
subjecting Executive to additional taxation under Section 409A of the Code.
Within ten days following such determination, but not later than thirty days
following the date of the event under Section 280G(b)(2)(A)(i), the Company
shall pay or distribute to Executive or for Executive153s benefit such amounts as
are then due to Executive under this Agreement and shall promptly pay or
distribute to Executive or for his benefit in the future such amounts as become
due to Executive under this Agreement.
– 10 –
10. Code Section 409A. It is intended, and this Agreement will be so
construed, that any amounts payable under this Agreement and the Company153s and
the Executive153s exercise of authority or discretion hereunder shall either be
exempt from or comply with the provisions of Section 409A of the Code and the
treasury regulations relating thereto so as not to subject the Executive to the
payment of interest and/or any tax penalty that may be imposed under Section
409A of the Code. Executive acknowledges and agrees that the Company has made no
representation to Executive as to the tax treatment of the compensation and
benefits provided pursuant to this Agreement and that Executive is solely
responsible for all taxes due with respect to such compensation and benefits.
11. Non-Competition. (a) Executive acknowledges that in the course of
Executive153s employment with the Company, Executive shall become familiar with
the Company153s trade secrets and with other Confidential Information (as defined
in Section 12) concerning the Company and its subsidiaries and that Executive153s
services shall be of special, unique and extraordinary value to the Company and
its subsidiaries. Therefore, and in consideration of the payments made to
Executive hereunder, Executive agrees as follows:
(i) During an Employment Period and, except as provided below, for a period
of one year following the Date of Termination of Executive153s employment with the
Company (“Restricted Period”), Executive shall not directly, or indirectly
through another entity, enter the employ of, or render any services to, or own
or have any interest in, manage, control, participate in, consult with, or in
any manner engage in any business for any Competitor, as such Competitor153s
business exists or is in process on the Date of Termination of Executive153s
employment with the Company, within any geographical area in which the Company
or any of its subsidiaries engage in such businesses on the Date of Termination
of Executive153s employment with the Company. A “Competitor” shall be defined as
an office products reseller and specifically excludes a business selling office
products and supplies as a minor portion of its business and any business that
otherwise would be a direct competitor if the total annual sales of office
products and supplies for any such business is less than 10% of such business153
total gross sales;
(ii) During the Restricted Period, Executive will not directly or indirectly
through another entity:
(A) 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; or
(B) hire any person who was, at any time during the six-month period prior to
the Executive153s Date of Termination, an employee of the Company or any
subsidiary at any time during an Employment Period; or
(C) 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 abut the Company or its
subsidiaries).
– 11 –
(iii) 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 that is
publicly traded, so long as Executive has no active participation in the
business of such corporation.
(b) It is expressly understood and agreed that although Executive and the
Company consider the restrictions contained in this Section 11 to be reasonable,
if, at the time of enforcement of this 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 Agreement to such
provisions as are deemed reasonable by the court at the time such enforcement is
requested.
Alternatively, if any court of competent jurisdiction finds that any
restriction contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not affect
the enforceability of any of the other restrictions contained herein.
12. Confidentiality; Work Product. (a) 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 subsidiary of the
Company (“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 Executive153s own purposes any Confidential
Information without the prior written consent of the Company, unless and to the
extent that: (i) such disclosure is necessary (in Executive153s reasonable
judgment) for Executive to discharge Executive153s duties set forth in Section
4(a) of this Agreement during an Employment Period, or (ii) the aforementioned
matters become generally known to and available for use by the public other than
as a result of Executive153s acts or omissions. Executive shall deliver to the
Company at the termination of Executive153s employment, or at any other time the
Company may request, all memoranda, notes, plans, records, reports, computer
tapes, disks, printouts and software and other documents and data (and copies
thereof) relating to the Confidential Information, Work Product (as defined
below) or the business of the Company or any subsidiary which Executive may then
possess or have under Executive153s control.
(b) Work Product.
(i) Executive acknowledges that all inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports and all similar or
related information (whether or not patentable) which relate to the Company153s or
any of its subsidiaries153 actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by Executive while employed by the Company and its
subsidiaries (“Work Product”) belong to the Company and/or such subsidiary.
Executive shall promptly disclose such Work Product to the Company and perform
all actions reasonably requested by the Company (whether during or after
employment) to establish and confirm such ownership (including, without
limitation, the execution of assignments, consents, powers of attorney and other
instruments).
– 12 –
(ii) Notwithstanding the obligations set forth in Section 11 and this Section
12, after termination of Executive153s employment with the Company, Executive
shall be free to use Residuals of the Company153s Confidential Information and
Work Product for any purpose, subject only to its obligations with respect to
disclosure set forth herein and any copyrights and patents of the Company. The
term “Residuals” means information in non-tangible form that may be retained in
the unaided memory of Executive derived from the Company153s Confidential
Information and Work Product to which Executive has had access during his or her
employment with the Company. Executive may not retain or use the documents and
other tangible materials containing the Company153s Confidential Information or
Work Product after the termination of his or her employment with the Company.
(c) Cooperation. Executive shall provide Executive153s reasonable
cooperation in connection with any action or proceeding (or any appeal from any
action or proceeding) which relates to events occurring during Executive153s
employment. If occurring after the Date of Termination, the Company shall
advance to Executive all transportation, lodging, meal, and other reasonable
costs incurred by Executive therefore.
(d) The provisions of this Section 12 shall survive the termination of
Executive153s employment for any reason.
13. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive153s
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) 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, unless such
assumption occurs by operation of law. 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.
14. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
– 13 –
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Neil R. Austrian
Office Depot, Inc.
6600 North Military Trail
Boca Raton, Florida 33496
If to the Company:
Office Depot, Inc.
6600 North Military Trail
Boca Raton, Florida 33496
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) 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.
(e) The Executive153s or the Company153s failure to insist upon strict compliance
with any provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without limitations the
right of the Executive to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as may otherwise
be provided under any other written agreement between the Executive and the
Company, the employment of the Executive by the Company is “at will” and,
subject to Section 1(a) hereof, prior to the Effective Date, the Executive153s
employment and/or this Agreement may be terminated by either the Executive or
the Company at any time prior to the Effective Date, in which case the Executive
shall have no further rights under this Agreement. During an Employment Period,
this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof, except as specifically provided otherwise
in Section 3.
* * * * *
– 14 –
IN WITNESS WHEREOF, the Executive has hereunto set the Executive153s hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
|
/s/ Neil R. Austrian |
||
|
Executive: Neil R. Austrian |
||
|
Date: May 23, 2011 |
||
|
OFFICE DEPOT, INC. |
||
|
By: |
/s/ Daisy Vanderlinde |
|
|
Daisy Vanderlinde |
||
|
Its: Executive Vice President:Human Resources |
||
|
Date: May 23, 2011 |
||
– 15 –
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