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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended SEPTEMBER 26, 1998
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to _______
Commission file number: 1-10948
OFFICE DEPOT
(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-2663954
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2200 Old Germantown Road
Delray Beach, Florida 33445
(Address of principal executive offices) (Zip Code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
The Registrant had 245,741,094 shares of common stock outstanding as of
November 6, 1998.
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This Form 10-Q/A is being filed solely for the purpose of including certain
exhibits which were inadvertently omitted from the Form 10-Q of Office Depot,
Inc. filed on November 10, 1998.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
EXHIBIT NO. ITEM
10.1 Employment Agreement, dated as of January 1, 1998,
between Office Depot, Inc. and David I. Fuente,
executed July 1998.
10.2 Employment Agreement, dated as of May 17, 1998,
between Office Depot, Inc. and M. Bruce Nelson,
executed August 1998.
2
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Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
OFFICE DEPOT, INC.
Date: December 7, 1998 /s/ Barry J. Goldstein
--------------------------------
Executive Vice-President-Finance
and Chief Financial Officer
Date: December 7, 1998 /s/ Charles E. Brown
--------------------------------
Senior Vice-President-Finance
and Controller
(Principal Accounting Officer)
3
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
10.1 Employment Agreement, dated as of January 1, 1998,
between Office Depot, Inc. and David I. Fuente,
executed July 1998.
10.2 Employment Agreement, dated as of May 17, 1998,
between Office Depot, Inc. and M. Bruce Nelson,
executed August 1998.
4
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Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
(For Executive Officers Who Also Have a Change of Control Employment Agreement)
THIS AGREEMENT is made as of January 1, 1998 between Office Depot,
Inc., a Delaware corporation (the "COMPANY"), and David I. Fuente
("EXECUTIVE").
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT.
(a) The Company shall employ Executive, and Executive hereby accepts
employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the date hereof and ending as provided in
paragraph 4 hereof (the "EMPLOYMENT TERM").
(b) The parties hereto have entered into an Employment Agreement dated
as of September 1996 by and between the Company and the Executive (the "CHANGE
OF CONTROL EMPLOYMENT AGREEMENT") which, by its terms, takes effect during the
"EMPLOYMENT PERIOD" as defined in such agreement. During any such Employment
Period under the Change of Control Employment Agreement, the terms and
provisions of the Change of Control Employment Agreement shall control to the
extent such terms and provisions are in conflict with the terms and provisions
of this Agreement. In addition, during such Employment Period, the Employment
Term hereunder shall be tolled and upon expiration of the Employment Period
under the Change of Control Employment Agreement the Employment Term hereunder
shall recommence.
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as Chairman of
the Company's Board of Directors (the "BOARD") and shall have the normal
duties, responsibilities and authority attendant to such position, subject to
the power of the Board to expand or limit such duties, responsibilities and
authority. The Executive shall also serve as the Chief Executive Officer of the
Company until such time as his replacement is elected by the Board.
(b) Executive shall report to the Board, and Executive shall devote
Executive's best efforts and Executive's full business time and attention
(except for permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company and its
Subsidiaries; PROVIDED THAT Executive shall, with the prior written approval of
the Board, be allowed to serve as (i) a director or officer of any non-profit
organization including trade, civic, educational or charitable organizations,
or (ii) a director of any corporation which is not competing 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
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duties and responsibilities under this Agreement to the best of Executive's
abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) Executive shall be based at or in the vicinity of the Company's
headquarters BUT may be required to travel as necessary to perform Executive's
duties and responsibilities under this Agreement.
(d) For purposes of this Agreement, "SUBSIDIARIES" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one of more Subsidiaries.
3. BASE SALARY AND BENEFITS.
(a) Initially, Executive's base salary shall be $1,000,000 per annum
(the "BASE SALARY"), which salary shall be payable in regular installments in
accordance with the Company's general payroll practices and shall be subject to
customary withholding. Executive's Base Salary shall be reviewed at least
annually by the Compensation Committee of the Board and shall, in their
discretion, be subject to adjustment, but not reduction, based on among other
things, market practice and performance and the applicability of Section 162(m)
of the Internal Revenue Code. In addition, during the Employment Term,
Executive shall be entitled to participate in certain of the Company's long
term incentive programs established currently or in the future by the Company
for which officers of the Company then at Executive's level are generally
eligible (including, but not limited to, stock option, restricted stock,
performance unit/share plans or long-term cash plans). Assuming approval of the
requisite amendments to the Company's Long-Term Equity Incentive Plan at the
Company's 1998 Annual Meeting, at the next following Board meeting the Board
shall grant to Executive an option to purchase 1,000,000 shares of common stock
at a purchase price equal to the market price on the date of grant. Executive
will also be entitled to receive an additional grant of options for 1,000,000
shares on January 4, 1999, with an option price equal to the greater of the
market price on such date of grant or 125% of the purchase price of the initial
tranche of options described above. Each option grant will have a ten year term
and will vest in a single tranche on the fourth anniversary of its date of
grant. Beginning in the year 2000, Executive will be entitled to receive annual
grants of stock options at the discretion of the Board or the Compensation
Committee; provided, however, that Executive shall be entitled to receive
grants of options each year for at least 165,000 shares.
(b) In addition to the Base Salary, Executive shall be entitled to
participate in the Company's Management Incentive Plan (the "BONUS PLAN") as
administered by the Board or the Compensation Committee. For 1998, the
"minimum," "target" and "maximum" bonus payment levels shall be 50%, 70% and
100% of salary, respectively. These payment levels will
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be increased by 5, 8.5 and 10 percentage points, respectively, each year during
the Employment Term beginning in 1999 (e.g. in 1999, the payment levels will be
55%, 78.5% and 110%, respectively). These levels may be adjusted by the Board
if the Section 162(m) limits are changed and the Board chooses to increase
Executive's salary; in which case the bonus levels may be decreased
proportionally. If the Board or the Compensation Committee modifies such Bonus
Plan during the Employment Term, Executive shall continue to participate at a
level no lower than the highest level established for any officer of the
Company then at Executive's level. At the discretion of the Board or the
Compensation Committee, Executive may be offered from time to time the
opportunity to participate in other bonus plans of the Company in lieu of the
Bonus Plan and, if Executive chooses to participate in such plan or plans, the
provisions of this paragraph 3(b) shall be tolled during the period of such
participation.
(c) Executive shall also be entitled to a deferred matching bonus
equal to the amount actually earned by Executive each year under the Bonus Plan
(the "DEFERRED BONUS"); provided, however, that such Deferred Bonus shall only
be paid if, and shall be contingent upon, the Company meeting its earnings per
share target for such year under the Bonus Plan. Deferred Bonus earned with
respect to 1998 and 1999 will vest in a single tranche on December 31, 2000 and
Deferred Bonuses earned with respect to subsequent years will each vest in a
single tranche on the fourth December 31 following the year in which such
Deferred Bonus is earned (e.g. the Deferred Bonus earned with respect to 2000
will vest 100% on December 31, 2004).
(d) Executive shall be entitled to paid vacation in accordance with
the Company's general payroll practices for officers of the Company then at
Executive's level.
(e) The Company shall reimburse Executive for all reasonable expenses
incurred by Executive in the course of performing Executive's duties under this
Agreement which are consistent with the Company's policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to reporting and
documentation of such expenses.
(f) Executive will be entitled to all benefits as are, from time to
time, maintained for officers of the Company then at Executive's level,
including without limitation: medical, prescription, dental, disability,
employee life, group life, split-dollar life, accidental death and travel
accident insurance plans (collectively, "INSURANCE BENEFITS"), profit sharing
and retirement benefits.
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4. TERM.
(a) The term of Executive's employment hereunder shall end on the
fifth anniversary of the date of this Agreement; PROVIDED THAT (i) such term
shall be automatically extended for successive one year periods in the event
that written notice of the termination of this Agreement is not given by one
party hereto to the other party at least six months prior to the end of such
term (the term of Executive's employment hereunder, as it may be extended, is
herein referred to as the "Employment Term"); PROVIDED FURTHER that (ii) the
Employment Term shall terminate prior to such date (A) upon Executive's death
or permanent disability or incapacity (as determined by the Board in its good
faith judgment), (B) upon the mutual agreement of the Company and Executive,
(C) by the Company's termination of Executive's employment hereunder for Cause
(as defined below) or without Cause or (D) by Executive's termination of
employment for Good Reason (as defined below) or without Good Reason.
(b) If Executive's employment hereunder is terminated by the Company
without Cause or is terminated by the Executive for Good Reason, Executive (and
Executive's family with respect to clause (iii) below) shall be entitled to
receive (i) Executive's Base Salary through the second anniversary of such
termination and Executive's Pro Rata Bonus (as defined in paragraph (h) below),
if and only if Executive has not breached the provisions of paragraphs 5, 6 and
7 hereof, (ii) vested and earned (in accordance with the Company's applicable
plan or program) but unpaid amounts under incentive plans, deferred
compensation plans, and other employer programs of the Company in which
Executive is then participating (other than the Pro Rata Bonus), and (iii)
Insurance Benefits through the second anniversary of such termination pursuant
to the Company's insurance programs, as in effect from time to time, to the
extent Executive participated immediately prior to the date of such
termination. The amounts payable pursuant to paragraph 4(b)(i) and (ii) shall
be payable, at the Company's discretion, in one lump sum payment within 30 days
following termination of the Employment Term or in any other manner consistent
with the Company's normal payment policies.
(c) If Executive's employment hereunder is terminated by the Company
for Cause or by the Executive without Good Reason, Executive shall be entitled
to receive (i) Executive's Base Salary through the date of such termination and
(ii) vested and earned (in accordance with the Company's applicable plan or
program) but unpaid amounts under incentive plans, health and welfare plans,
deferred compensation plans, and other employer programs of the Company which
Executive participates; provided, however, that Executive shall not be entitled
to payment of a Pro Rata Bonus.
(d) At the expiration of the Employment Term or if Executive's
employment hereunder is terminated upon Executive's death or permanent
disability or incapacity (as
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determined by the Board in its good faith judgment), Executive (and Executive's
family with respect to clause (iv) below), or Executive's estate if applicable,
shall be entitled to receive (i) Executive's Base Salary through the date of
such termination, (ii) Executive's Pro Rata Bonus (as defined in paragraph 4(h)
below), (iii) vested and earned (in accordance with the Company's applicable
plan or program) but unpaid amounts under incentive plans, health and welfare
plans, deferred compensation plans, and other employer programs of the Company
in which Executive participates, and (iv) health insurance benefits (which
shall terminate upon Executive's death). Amounts payable pursuant to paragraphs
4(d)(i), (ii) and (iii) shall be payable, at the Company's discretion, in one
lump sum payment within 30 days following expiration or termination of the
Employment Term or in any other manner consistent with the Company's normal
payment policies.
(e) Except as otherwise provided herein, fringe benefits and bonuses
(if any) which accrue or become payable after the expiration or termination of
the Employment Term shall cease upon such termination.
(f) For purposes of this Agreement, "CAUSE" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board which specifically identifies the manner in
which the Board believes that the Executive has not substantially
performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted
to be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after
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reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(g) For purposes of this Agreement, "GOOD REASON" shall mean:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by paragraph 2 of this Agreement, or
any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any
of the provisions of paragraph 3 of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be
based at any location other than as provided in paragraph 2(c) hereof;
or
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement.
(h) For purposes of this Agreement, "PRO RATA BONUS" shall mean the
sum of (i) the pro rata portion (calculated as if the "target" amount under
such plan has been reached) under any current annual incentive plan from the
beginning of the year of termination through the date of termination and (ii)
if and to the extent Executive is vested, the pro rata portion (calculated as
if the "target" amount under such plan has been reached) under any long-term
incentive plan or performance plan from the beginning of the period of
determination through the date of termination.
(i) Notwithstanding any other provisions of this Agreement, any health
insurance benefits that Executive becomes entitled to receive as a result of
any subsequent employment after the expiration or termination of the Employment
Term shall serve as primary coverage for Executive and Executive's family.
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5. CONFIDENTIAL INFORMATION. Executive acknowledges that the information,
observations and data obtained by Executive while employed by the Company and
its Subsidiaries concerning the business or affairs of the Company or any other
Subsidiary ("CONFIDENTIAL INFORMATION") are the property of the Company or such
Subsidiary. Therefore, Executive agrees that Executive shall not disclose to
any unauthorized person or use for Executive's own purposes any Confidential
Information without the prior written consent of the Board, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Executive's acts or omissions.
Executive shall deliver to the Company at the termination of the Employment
Term, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) in any form or medium relating to the
Confidential Information, Work Product (as defined below) or the business of
the Company or any Subsidiary that Executive may then possess or have under
Executive's control.
6. INVENTIONS AND PATENTS. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable) that
relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and that are conceived, developed or made by Executive while employed by the
Company and its Subsidiaries ("WORK PRODUCT") belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Term) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
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7. NON-COMPETE, NON-SOLICITATION.
(a) In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that in the course of Executive's
employment with the Company Executive shall become familiar with the Company's
trade secrets and with other Confidential Information concerning the Company
and its Subsidiaries and that Executive's services shall be of special, unique
and extraordinary value to the Company and its Subsidiaries. Therefore,
Executive agrees that, during the Employment Term and for one year thereafter
(the "NONCOMPETE PERIOD"), Executive shall not directly or indirectly own any
interest in, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the businesses of
the Company or its Subsidiaries, as such businesses exist or are in process on
the date of the termination of Executive's employment, within any geographical
area in which the Company or its Subsidiaries engage or plan to engage in such
businesses. Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a corporation
which is publicly traded, so long as Executive has no active participation in
the business of such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Term or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, or in
any way interfere with the relationship between any such customer, supplier,
licensee, licensor, franchisee, or business relation and the Company or any
Subsidiary (including, without limitation, making any negative statements or
communications about the Company or its Subsidiaries).
(c) If, at the time of enforcement of this paragraph 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law. Executive agrees that the restrictions
contained in this paragraph 7 are reasonable.
(d) In the event of the breach or a threatened breach by Executive of
any of the provisions of this paragraph 7, the Company, in addition and
supplementary to other rights
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and remedies existing in its favor, may apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violations of the provisions hereof
(without posting a bond or other security). In addition, in the event of an
alleged breach or violation by Executive of this paragraph 7, the Noncompete
Period shall be tolled until such breach or violation has been duly cured.
8. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and warrants to the
Company that (i) the execution, delivery and performance of this Agreement by
Executive do not and shall not conflict with, breach, violate or cause a default
under any contract, agreement, instrument, order, judgment or decree to which
Executive is a party or by which Executive is bound, (ii) Executive is not a
party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that Executive has had
an opportunity to consult with independent legal counsel regarding Executive's
rights and obligations under this Agreement and that Executive fully understands
the terms and conditions contained herein.
9. SURVIVAL. Paragraphs 5, 6 and 7 and paragraphs 9 through 16 shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Term.
10. NOTICES. Any notice provided for in this Agreement shall be in writing and
shall be either personally delivered, or mailed by first class mail, return
receipt requested, to the recipient at the address below indicated:
NOTICES TO EXECUTIVE:
Name: David I. Fuente
Address: 701 Tern Point Circle
Boca Raton, FL 33431
NOTICES TO THE COMPANY:
Office Depot, Inc.
2200 Germantown Road
Delray Beach, Florida 33445
Attention: Chief Financial Officer
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and
Office Depot, Inc.
2200 Germantown Road
Delray Beach, Florida 33445
Attention: Executive Vice President - Human Resources
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered or mailed.
11. SEVERABILITY. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. COMPLETE AGREEMENT. This Agreement and those documents expressly referred to
herein and other documents of even date herewith embody the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way
(provided, however that during the "Employment Period," as defined in the Change
of Control Employment Agreement, the terms and provision of the Change of
Control Employment Agreement shall be effective and shall control to the extent
there is any conflict between such agreement and this Agreement).
13. NO STRICT CONSTRUCTION. The language used in this Agreement shall be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any party.
14. COUNTERPARTS. This Agreement may be executed in separate counterparts, each
of which is deemed to be an original and all of which taken together constitute
one and the same agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
Executive's rights or delegate Executive's obligations hereunder without the
prior written consent of the Company.
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16. CHOICE OF LAW. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Florida, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Florida or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Florida.
17. AMENDMENT AND WAIVER. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Company and Executive, and no
course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
OFFICE DEPOT, INC.
By: /s/ W. Scott Hedrick
----------------------------------
Name: W. Scott Hedrick
Its: Chairman, Compensation Committee
EXECUTIVE
/s/ David I. Fuente
--------------------------------------
Name: David I. Fuente
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Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of May 17, 1998 between Office
Depot, Inc., a Delaware corporation (the "COMPANY"), and Bruce Nelson
("EXECUTIVE").
In consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Term").:
2. POSITION AND DUTIES
(a) During the Employment Period, Executive shall serve as a
CEO and President of Viking Products, Inc. and shall have the normal duties,
responsibilities and authority of an Executive Officer of the Company, subject
to the power of the Company's chief executive officer ("CEO") to expand or
limit such duties, responsibilities and authority.
(b) Executive shall devote Executive's best efforts and
Executive's full business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business
and affairs of the Company and its Subsidiaries; PROVIDED THAT Executive shall,
with the prior approval of the CEO, be allowed to serve as (i) a director or
officer of any non-profit organization including trade, civic, educational or
charitable organizations, or (ii) a director of any corporation which is not
competing 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) 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) Initially, Executive's base salary shall be $600,000 per
annum (the "BASE SALARY"), which salary shall be payable in regular
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding. Executive's Base Salary shall be
reviewed at least annually by the CEO and shall be subject to adjustment as the
CEO shall determine based on among other things, market practice and
performance. In addition,
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2
during the Employment Term, Executive shall be entitled to participate in
certain of the Company's long term incentive programs established currently or
in the future by the Company for which officers of the Company then at
Executive's level are generally eligible (including, but not limited to, stock
option, restricted stock, performance unit/share plans or long-term cash
plans).
(b) In addition to the Base Salary, Executive shall be
entitled to participate in the Company's Management Incentive Plan (the "Bonus
Plan") as administered by the Compensation Committee. 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 established for any officer of the Company
then at Executive's level.
(c) 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.
(d) 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.
(e) Executive will be entitled to all 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 and
short-term and long-term disability insurance, supplemental health and life
insurance, profit sharing and retirement benefits.
4. TERM
(a) The Employment Term shall end on the second anniversary
of the Merger (as defined in the Agreement and Plan of Merger among Office
Depot, Inc., VK Acquisition Corp. and Viking Office Products Inc. dated May
17,1998; PROVIDED THAT (i) the Employment Term shall be extended for one year
in the event that written notice of the termination of this Agreement is not
given by one party hereof to the other at least six months prior to the end of
the Employment Term; PROVIDED FURTHER that (ii) the Employment Term shall
terminate prior to such date (A) upon Executive's death or permanent disability
or incapacity (as determined by the Board in its good faith judgment), (B) upon
the mutual agreement of the Company and Executive, (C) by the Company's
termination of 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.
(b) If the Employment Term is terminated by the Company
without Cause or is terminated by the Executive for Good Reason, Executive (and
Executive's family with respect to clause (iii) below) shall be entitled to
receive (i) Executive's Base Salary through the second anniversary of such
termination and Executive's Pro Rata Bonus, if and only if Executive has not
breached the provisions of paragraph 5, 6 and 7 hereof, (ii) vested and earned
(in accordance with
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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 (other than the
Pro Rata Bonus) and (iii) life insurance and medical insurance through the
second anniversary of such termination pursuant to the Company's insurance
programs to the extent Executive participated immediately prior to the date of
such termination; PROVIDED THAT the insurance Executive or Executive's family
is entitled to pursuant to this clause (iii) shall be reduced by the amount of
any such insurance Executive or Executive's family is entitled to receive as a
result of any other employment. The amounts payable pursuant to paragraph
4(b)(i) and (ii) shall be payable, at the Company's discretion, in one lump sum
payment within 30 days following termination of the Employment Term or in any
other manner consistent with the Company's normal payment policies.
(c) If the Employment Term is terminated by the Company for
Cause or by the Executive without Good Reason, Executive shall be entitled to
receive (i) Executive's Base Salary through the date of such termination and
(ii) vested and earned (in accordance with the Company's applicable plan or
program) but unpaid amounts under incentive plans, health and welfare plans,
deferred compensation plans, and other employer programs of the Company which
Executive participates; provided, however, Executive shall not be entitled to
payment of a Pro Rata Bonus.
(d) 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. The amount payable pursuant to this
paragraph 4(d) 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.
(e) 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.
(f) For purposes of the Agreement, Agreement, "CAUSE" shall
mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board or the CEO which specifically identifies the
manner in which the Board or the CEO believes that the Executive has
not substantially performed the Executive's Duties, or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
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For purposes of this provision, no act of failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive's action or omission was in the
best interest of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the CEO 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 interest of
the Company.
(g) For purposes of this Agreement, "GOOD REASON" shall mean
a material breach by the Company of a material provision of this Agreement
which has not been cured by the Company within thirty (30) days after written
notice of noncompliance has been given by Executive to the Company.
(h) 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, the pro rata portion (calculated
as if the "target" amount under such plan has been reached) under any long-term
incentive plan or performance plan from the beginning of the period of
determination through the date of termination.
5. CONFIDENTIAL INFORMATION. Executive acknowledges that the
information, observations and data obtained by Executive while employed by the
Company and its Subsidiaries concerning the business or affairs of the Company
or any other Subsidiary ("CONFIDENTIAL INFORMATION") are the property of the
Company or such Subsidiary. Therefore, Executive agrees that Executive shall
not disclose to any unauthorized person or use for Executive's own purposes any
Confidential Information without the prior written consent of the Board or the
CEO, 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) or the business of the Company or any Subsidiary that Executive
may then possess or have under Executive's control.
6. INVENTIONS AND PATENTS. 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 or such Subsidiary. Executive shall promptly disclose such Work Product
to the Board or the CEO and perform all actions reasonably requested by the
Board or the CEO (whether during or after the Employment
<PAGE> 5
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Term) to establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments).
7. NON-COMPETE, NON-SOLICITATION.
(a) In further consideration of the compensation to be paid
to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with the Company Executive shall become familiar with
the Company's trade secrets and with other Confidential Information concerning
the Company and its Subsidiaries and that Executive's services shall be of
special, unique and extraordinary value to the Company and its Subsidiaries.
Therefore, Executive agrees that, during the Employment Term and for one year
thereafter (the "NONCOMPETE PERIOD"), Executive shall not directly or
indirectly own any interest in, manage, control, participate in, consult with,
render services for, or in any manner engage in any business competing with the
businesses of the Company or its Subsidiaries, as such businesses exist or are
in process on the date of the termination of Executive's employment, within any
geographical area in which the Company or its Subsidiaries engage or plan to
engage in such businesses. Nothing herein shall prohibit Executive from being a
passive owner of not more than 2% of the outstanding stock of any class of a
corporation which is publicly traded, so long as Executive has no active
participation in the business of such corporation.
(b) During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the
Company or such Subsidiary, or in any way interfere with the relationship
between the Company or any Subsidiary and any employee thereof, (ii) hire any
person who was an employee of the Company or any Subsidiary at any time during
the Employment Term or (iii) induce or attempt to induce any customer,
supplier, licensee, licensor, franchisee or other business relation of the
Company or any Subsidiary to cease doing business with the Company or such
Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any
Subsidiary (including, without limitation, making any negative statements or
communications about the Company or its Subsidiaries).
(c) If, at the time of enforcement of this paragraph 7, a
court shall hold that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained in this paragraph 7 are
reasonable.
(d) In the event of the breach or a threatened breach by
Executive of any of the provisions of this paragraph 7, the Company, in
addition and supplementary to other rights and remedies existing in its favor,
may apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent
any violations for the provisions hereof (without posting a bond or other
security). In addition, in the event of any alleged breach or violation by
Executive of this paragraph 7, the Noncompete Period shall be tolled until such
breach or violation has been duly cured.
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8. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents
and warrants to the Company that (i) the execution, delivery and performance of
this Agreement by Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment
or decree to which Executive is a party or by which Executive is bound, (ii)
Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other person or entity and
(iii) upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the valid and binding obligation of Executive, enforceable
in accordance with its terms. Executive hereby acknowledges and represents that
Executive has had an opportunity to consult with independent legal counsel
regarding Executive's rights and obligations under this Agreement and that
Executive fully understands the terms and conditions contained herein.
9. SURVIVAL. Paragraphs 5, 6 and 7 and paragraphs 9 through
16 shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Term.
10. NOTICES. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed by first
class mail, return receipt requested, to the recipient at the address below
indicated:
NOTICE TO EXECUTIVE:
Name: Bruce Nelson
Address: 67 Marguerite
Rancho Palos Verdes, CA 90274
NOTICE TO THE COMPANY:
Office Depot, Inc.
2200 Germantown Road
Delray Beach, Florida 33445
Attention: Chief Financial Officer
and
Office Depot, Inc.
2200 Germantown Road
Delray Beach, Florida 33445
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.
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11. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not 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.
12. COMPLETE AGREEMENT. This Agreement and those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.
13. NO STRICT CONSTRUCTION. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be
applied against any party.
14. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement is intended to
bind and inure to the benefit of and be enforceable by Executive, the Company
and their respective heirs, successors and assigns, except that Executive may
not assign Executive's rights or delegate Executive's obligations hereunder
without the prior written consent of the Company.
16. CHOICE OF LAW. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of Florida, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
17. AMENDMENT AND WAIVER. The provisions of this Agreement
may be amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
OFFICE DEPOT, INC.
By: /s/ Thomas Kroeger
-----------------------------------
Name: Thomas Kroeger
Its: Executive Vice President -
Human Resources
EXECUTIVE
/s/ Bruce Nelson
-----------------------------------
Name: Bruce Nelson
