<PAGE> 1
Exhibit 10.1
AGREEMENT
THIS AGREEMENT is made and entered into, effective as of January 1, 2000,
between Office Depot, Inc., a Delaware corporation (the "COMPANY"), and Bruce
Nelson ("EXECUTIVE").
RECITALS
A. The Company and Executive are parties to certain existing agreements
pertaining to Executive's employment, non-competition, change-in-control
and other matters (collectively the "Former Agreements"), including certain
agreements between the Company's predecessor company, Viking Office
Products, Inc. ("Viking") and Executive, to which the Company succeeded at
the time of the Company's merger with Viking;
B. The Company and Executive desire to supersede and replace the Former
Agreements with this Agreement, so that the terms and provisions of this
Agreement set forth the complete statement of the relationships between the
parties;
C. The parties enter into this Agreement in consideration of the various
promises, undertakings and understandings between them, as set forth below.
Now therefore, in consideration of the foregoing recitals, which are
incorporated by reference herein, and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company shall continue to employ Executive, and Executive hereby accepts
such continued employment with the Company, for the positions and duties, and
upon the further terms and conditions set forth in this Agreement, for the
period beginning on the date hereof and ending as provided in section 4 hereof
(the "Employment Term").:
2. POSITIONS AND DUTIES (a) POSITIONS. During the Employment Term, Executive
shall serve as the President, International of the Company, reporting directly
to the Company's Chief Executive Officer ("CEO"), and he shall have all the
normal duties, responsibilities and authority of the President of the Company's
international operations. Executive also shall serve as CEO and President of
Viking Office Products, Inc., reporting directly to the CEO, and shall have the
1
<PAGE> 2
normal duties, responsibilities and authority of an Executive Officer of the
Company, subject to the power of the Company's CEO to expand or limit such
duties, responsibilities and authority; provided, however, that any such
expanded or limited duties, responsibilities and authority are consistent with
normal duties, responsibilities and authority of an executive officer in such
positions.
(b) DEDICATION TO DUTIES; OTHER ACTIVITIES. Executive shall devote his
best efforts and full business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business
and affairs of the Company and its Subsidiaries; PROVIDED THAT Executive shall,
with the prior approval of the 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) SUBSIDIARIES. For purposes of this Agreement, "SUBSIDIARIES" shall
mean any corporation of which the securities having a majority of the voting
power in electing directors are, at the time of determination, owned by the
Company, directly or through one or more Subsidiaries.
3. BASE SALARY AND BENEFITS
(a) INITIAL BASE SALARY; ADJUSTMENTS. Initially, Executive's base salary shall
be $900,000 per annum (the "BASE SALARY"), which Base 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 the Board of Directors and its
Compensation Committee and shall be subject to adjustment, but not reduction, as
the CEO, the Compensation Committee and the Board shall determine, based on
among other things, market practice and performance.
(b) INCENTIVE & OTHER PLANS. In addition to the Base Salary, during the
Employment Term, Executive shall be entitled to participate in the
Company's long term incentive programs
2
<PAGE> 3
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 or other long-term incentive plans);
provided, however, that Executive shall be entitled to receive total
incentive benefits that are comparable to the incentive benefits provided
to other executive officers at his level in the Company, as determined by
the Compensation Committee of the Board, in its discretion.
(c) BONUS PLAN. In addition to the Base Salary, Executive shall be
entitled to participate in the Company's Designated Executive Incentive Plan
(the "Bonus Plan") as administered by the Compensation Committee of the Board.
If the Compensation Committee (or the Company's Board of Directors (the
"Board")) modifies such Bonus Plan during the Employment Term, Executive shall
continue to participate at a level no lower than the highest established for any
officer of the Company then at Executive's level. In any event, Executive's
opportunity to earn total compensation, consisting of Base Salary and regular
bonus under the Bonus Plan (but not the matching bonus program, which expires
for Executive at the end of the year 2000), shall not be less than such total
compensation opportunity during the year 2000.
(d) VACATIONS. Executive shall be entitled to paid vacation in
accordance with the Company's general payroll practices for officers of the
Company then at Executive's level, but in no event less than four (4) weeks per
year.
(e) EXPENSE REIMBURSEMENTS. The Company shall reimburse Executive for
all reasonable expenses incurred by Executive in the course of performing
Executive's duties under this Agreement which are consistent with the Company's
policies in effect from time to time with respect to travel, entertainment and
other business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(f) OTHER BENEFITS. Executive will be entitled to all other benefits
currently or in the future maintained for officers of the Company then at
Executive's level, including without limitation: medical and dental insurance,
life insurance (including split-dollar insurance) and short-term and long-term
disability insurance, supplemental health and life insurance (collectively
"Insurance Benefits"), profit sharing and retirement benefits.
3
<PAGE> 4
4. TERM; RENEWALS. Subject to earlier termination pursuant to section 5 below,
the Employment Term shall end on December 31, 2004, and shall continue
automatically thereafter from year to year on an "evergreen" basis, unless and
until either the Company or Executive shall provide written notice to the other,
not less than six (6) months prior to the end of the then-current Term that this
Agreement shall not be continued.
5. TERMINATION DUE TO DEATH, DISABILITY, INCAPACITY. The Employment Term
also shall terminate prior to the date set forth in section 4 above:
(a) upon Executive's death or permanent disability or incapacity (as
determined by the Board in its good faith judgment);
(b) upon the mutual agreement of the Company and Executive;
(c) by the Company's termination of this Agreement for Cause (as
defined below) or without Cause; or
(d) by Executive's termination of this Agreement for Good Reason (as
defined below) or without Good Reason.
6. TERMINATION OF THE EMPLOYMENT WITHOUT CAUSE; FOR GOOD REASON. If the
Employment Term is terminated by the Company without Cause or is terminated by
Executive for Good Reason, Executive (and Executive's family with respect to
clause (iii) below) shall be entitled to receive the following:
(i) An amount equal to the sum of (A) Executive's Base Salary
which would be payable through the second anniversary of such
termination and (B) Executive's Pro Rata Bonus, if and only if
Executive has not breached the provisions of section 13, 14
and 15 hereof,
(ii) vested and earned (in accordance with the Company's applicable
plan or program) but unpaid amounts under incentive plans,
health and welfare plans, deferred compensation plans, and
other employer programs of the Company which Executive
participates (other than the Pro Rata Bonus) and
4
<PAGE> 5
(iii) Insurance Benefits 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 to which
Executive or Executive's family is entitled 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.
(iv) All grants and awards, including stock options and restricted
stock shall continue to vest through the second anniversary of
such termination All stock options shall remain exercisable
through and including the ninetieth (90th) day following the
second anniversary of such termination (but not later than the
expiration of the original term of the option). Any long-term
incentive plan amount that has been earned but that is not yet
fully vested, shall become fully vested not later than the
second anniversary of such termination; and
(v) The amount payable pursuant to section 6(i) shall be payable
as follows: (a) $100,000 in the form of salary continuation of
$50,000 per annum and (b) the balance in one lump sum payment
within 30 days following termination of the Employment Term,
and the amounts payable pursuant to section 6 (ii) shall be
paid in accordance with the particular plan or program.
7. TERMINATION FOR CAUSE; WITHOUT GOOD REASON. If the Employment Term is
terminated by the Company for Cause or by Executive without Good Reason,
Executive shall be entitled to receive only the following: (i) Executive's Base
Salary through the date of such termination and (ii) vested and earned (in
accordance with the Company's applicable plan or program) but unpaid amounts
under incentive plans, health and welfare plans, deferred compensation plans,
and other employer programs of the Company which Executive participates;
provided, however, Executive shall not be entitled to payment of any Pro Rata
Bonus.
8. CONSEQUENCES OF TERMINATION FOR DEATH, DISABILITY OR INCAPACITY. If the
Employment Term is terminated upon Executive's death or permanent disability or
incapacity (as determined by the Board in its good faith judgment), Executive,
or Executive's estate if applicable, shall be entitled to receive the sum of (i)
Executive's Base Salary through the date of such termination
5
<PAGE> 6
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 section 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.
9. EFFECT OF TERMINATION ON FRINGE BENEFITS. Except as otherwise provided
herein, fringe benefits and bonuses hereunder (if any) which accrue or become
payable after the termination of the Employment Term shall cease upon such
termination.
10. CERTAIN DEFINITIONS.
(a) For purposes of the Agreement, Agreement, "CAUSE" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due
to physical or mental illness), after a written demand for substantial
performance is delivered to Executive by the Board or the CEO which
specifically identifies the manner in which the Board or the CEO
believes that Executive has not substantially performed Executive's
Duties, or
(ii) the willful engaging by Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this Subsection 10(a), no act or failure to act, on
the part of Executive, shall be considered "willful" unless it is done,
or omitted to be done, by Executive in bad faith or without reasonable
belief that Executive's action or omission was in the best interest of
the Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or 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 Executive in good faith and in the best interest of the
Company. The cessation of employment of Executive shall not be deemed
to be for Cause unless
6
<PAGE> 7
and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three
quarters of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice is
provided to Executive and Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, Executive is guilty of the conduct
described in subparagraph (i)or (ii) above, and specifying the
particulars thereof in detail.
(b) For purposes of this Agreement, "GOOD REASON" shall mean (i) 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 or (ii) the delivery by the Company of a notice of
non-continuation pursuant to section 4 of this Agreement or
non-continuation of the Change in Control Agreement attached hereto as
Schedule 3, pursuant to section 1(b) thereof..
(c) For purposes of the Agreement, "PRO RATA BONUS" shall mean the sum of
(i) the pro rata portion (calculated as if the "target" amount under
such plan has been reached) under any current annual incentive plan
from the beginning of the year of termination through the date of
termination and (ii) if and to the extent Executive is vested under any
long-term incentive plan that provides for such pro-rata vesting, the
pro rata portion (calculated as if the "target" amount under such plan
has been reached) under any such long-term incentive plan or
performance plan from the beginning of the period of determination
through the date of termination.
(d) For purposes of this Agreement, the term "DATE OF TERMINATION"
shall mean thirty (30) days following written notice by one party to
the other, as notices are prescribed to be provided in the Agreement,
of a termination of Executive's Employment under the Agreement, and
specifying the reason(s) therefor; provided, however that if
Executive's employment is terminated by reason of death or disability,
the Date of Termination shall be the date of death of Executive or the
date on which Executive is determined to be disabled.
7
<PAGE> 8
11. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY; GROSS-UP PROVISIONS. (a)
Anything in this Agreement to the contrary notwithstanding and except as set
forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement,
any schedule to this Agreement, or otherwise, but determined without regard to
any additional payments required under this Section 11) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 11, if it shall be determined that Executive is
entitled to a Gross-Up Payment, but that Executive, after taking into account
the Payments and the Gross-Up Payment, would not receive a net after-tax benefit
of at least $50,000 (taking into account both income taxes and any Excise Tax)
as compared to the net after-tax proceeds to Executive resulting from an
elimination of the Gross-Up Payment and a reduction of the Payments, in the
aggregate, to an amount (the "Reduced Amount") such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
Executive and the Payments, in the aggregate, shall be reduced to the Reduced
Amount.
(b) Subject to the provisions of Section 11(c), all
determinations required to be made under this Section 11, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Deloitte & Touche or such other certified public accounting firm as may be
designated by Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and Executive within 15 business
days of the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a change in control or "CIC" as defined in
8
<PAGE> 9
Schedule 3 to this Agreement, Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 11(b), shall be
paid by the Company to Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 11(c) and Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which it gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company,
9
<PAGE> 10
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 11, the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or to contest the claim in any permissible manner,
and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to Executive, on an interest-free basis
and shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced
by the Company pursuant to Section 11(c) above, Executive becomes entitled to
receive any refund with respect
10
<PAGE> 11
to such claim, Executive shall (subject to the Company's complying with the
requirements of Section 11(c) above) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Executive of an amount advanced by
the Company pursuant to Section 11(c), a determination is made that Executive
shall not be entitled to any refund with respect to such claim and the Company
does not notify Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
12. NOTICE OF TERMINATION; HOW GIVEN. Any termination by the Company for Cause
or by Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 18 of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined in Section 10(d)_ 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 Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
Executive or the Company, respectively, hereunder or preclude Executive or the
Company, respectively, from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
13. CONFIDENTIAL INFORMATION. Executive acknowledges that the information,
observations and data obtained by Executive while employed by the Company and
its Subsidiaries concerning the business or affairs of the Company or any other
Subsidiary ("CONFIDENTIAL INFORMATION") are the property of the Company.
Therefore, Executive agrees that Executive shall not disclose to any
unauthorized person or use for Executive's own purposes any Confidential
Information without the prior written consent of the Board 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
11
<PAGE> 12
Company at termination of the Employment Term, or at any other time the Company
may request, all memoranda, notes, plans, record, reports, computer tapes,
printouts and software and other documents and data (and copies therein) in any
form or medium relating to the Confidential Information, Work Product (as
defined below) of the business of the Company or any Subsidiary that Executive
may then possess or have under Executive's control.
14. WORK PRODUCT. Executive acknowledges that all inventions, innovations,
improvements, development, methods, designs, analyses, drawings, reports and all
similar or related information (whether or not patentable) that relate to the
Company's or any of its Subsidiaries' actual or anticipated business, research
and development or existing or future products or services and that are
conceived, developed or made by Executive while employed by the Company and its
Subsidiaries ("WORK PRODUCT") belong to the Company. Executive shall promptly
disclose such Work Product to the Board or the CEO and perform all actions
reasonably requested by the Board or the CEO (whether during or after the
Employment Term) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).
15. NON-COMPETE, NON-SOLICITATION. In consideration of this Agreement, Executive
and the Company are entering into the "NON-COMPETITION, NON-SOLICITATION AND
NO-HIRE AGREEMENT," attached hereto as SCHEDULE 2 and incorporated by reference
herein.
16. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and warrants to the
Company that (i) the execution, delivery and performance of this Agreement by
Executive do not and shall not conflict with, breach, violate or cause a default
under any contract, agreement, instrument, order, judgment or decree to which
Executive is a party or by which Executive is bound, (ii) Executive is not a
party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity 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.
12
<PAGE> 13
17. SURVIVAL. Sections 5, 6 and 7 and sections 9 through 24 shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Term.
18. NOTICES. Any notice provided for in this Agreement shall be in writing and
shall be either personally delivered, or mailed by first class mail, return
receipt requested, to the recipient at the address below indicated:
NOTICE TO EXECUTIVE:
NAME: BRUCE NELSON
ADDRESS: 7905 TRIESTE PLACE
DELRAY BEACH, FL 33446
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.
19. MISCELLANEOUS PROVISIONS.
(a) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or
unenforceable in any 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.
13
<PAGE> 14
(B) COMPLETE AGREEMENT. This Agreement and those documents
expressly referred to herein and the Schedules attached to
this Agreement embody the complete agreement and understanding
among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the
parties, written or oral, which may have related to the
subject matter hereof in any way. Anything in this Agreement
to the contrary notwithstanding, the agreement between
Executive and Viking relating to Viking's ownership interest
in Executive's California residential real estate (the
"Residence Agreement"), a copy of which is attached hereto,
shall remain in full force and effect.
(C) NO STRICT CONSTRUCTION; NO WAIVER. The language used in this
Agreement shall be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party.
Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure
to assert any right Executive or the Company may have
hereunder, including, without limitations the right of
Executive to terminate employment for Good Reason pursuant to
this Agreement or any Schedule to this Agreement, shall not be
deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(D) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and
all of which taken together constitute one and the same
agreement.
(E) SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the
Company and their respective heirs, successors and assigns,
except that Executive may not assign Executive's rights or
delegate Executive's obligations hereunder without the prior
written consent of the Company. This Agreement is personal to
Executive and without the prior written consent of the Company
shall not be assignable by Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Executive's
legal representatives. This Agreement shall inure to the
benefit of and be binding upon the Company and its successors
and assigns. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in
14
<PAGE> 15
the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
(F) CHOICE OF LAW. All issues and questions concerning the
construction, validity, enforcement and interpretation of this
Agreement and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the
State of Florida, without giving effect to any choice of law
or conflict of law rules or provisions (whether of the State
of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the
State of Florida.
(G) AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only with the prior written consent of the
Company and Executive, and no course of conduct or failure or
delay in enforcing the provisions of this Agreement shall
affect the validity, binding effect or enforceability of this
Agreement.
20. NO SET-OFF OR MITIGATION. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not Executive obtains other employment.
21. PAYMENT OF CERTAIN EXPENSES. If, and to the extent, Executive is successful
in any action against the Company to enforce any of his rights under this
Agreement, the Company shall reimburse Executive for his reasonable attorneys'
fees and expenses incurred in pursuing such action.
22. ARBITRATION. Except as to any controversy or claim which Executive elects by
written notice to the Company, to have adjudicated by a court of competent
jurisdiction, any dispute or controversy between the Company and Executive
arising out of or relating to this Agreement or the breach of this Agreement
shall be settled by arbitration administered by the American
15
<PAGE> 16
Arbitration Association ("AAA") in accordance with its Commercial Arbitration
Rules then in effect, and judgment on the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. Any arbitration shall be
held before a single arbitrator who shall be selected by the mutual agreement of
the Company and Executive, unless the parties are unable to agree to an
arbitrator, in which case the arbitrator will be selected under the procedures
of the AAA. The arbitrator shall have the authority to award any remedy or
relief that a court of competent jurisdiction could order or grant, including,
without limitation, the issuance of an injunction. However, either party may,
without inconsistency with this arbitration provision, apply to any court
otherwise having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is
rendered or the controversy is otherwise resolved. Except as necessary in court
proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, or as may otherwise be required by law,
neither a party nor an arbitrator may disclose the existence, content or results
of any arbitration hereunder without the prior written consent of the Company
and Executive. The Company and Executive acknowledge that this Agreement
evidences a transaction involving interstate commerce. Notwithstanding any
choice of law provision included in this Agreement, the United States Federal
Arbitration Act shall govern the interpretation and enforcement of this
arbitration provision. The arbitration proceeding shall be conducted in Palm
Beach County, Florida or such other location to which the parties may agree. The
Company shall pay the costs of any arbitrator appointed hereunder
23. WITHHOLDING. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
24. SCHEDULES. The Schedules attached hereto are incorporated by reference
herein and made a part hereof. The following Schedules are attached:
(1 Retention Agreement
(2 Agreement of Non-Competition, Non-Solicitation, and No-Hire
(3 Change in Control Agreement
* * * *
16
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 7th
day of June, 2000, and effective as of the date first written above.
OFFICE DEPOT, INC.
By
-----------------------------
NAME: THOMAS KROEGER
ITS: EXECUTIVE VICE PRESIDENT
HUMAN RESOURCES
EXECUTIVE
-----------------------------
NAME: BRUCE NELSON
17
<PAGE> 18
SCHEDULE 1
RETENTION AGREEMENT
This Retention Agreement ("Agreement") is entered into by Executive and the
Company, contemporaneously with the Employment Agreement to which this Agreement
is attached as Schedule 1.
A. Under the terms of the Employment Agreement, the Company is employing
Executive. In addition to the provisions thereof, the Company wishes to
enter into this Agreement to provide further assurance that Executive will
remain with the Company and provide to it his experience and expertise in
the areas of domestic catalog marketing and in international business.
B. The terms of this Agreement are provided for the purpose of further
inducing Executive to remain with the Company, and Executive is ready and
willing to enter into this Agreement.
Now therefore, in consideration of the foregoing Recitals, which are
incorporated by this reference and other good and valuable consideration, the
parties hereby agree as follows:
1. RETENTION PAYMENTS TO EXECUTIVE. The Company hereby agrees to make the
following payments to Executive and to grant the stock options referred to
in Section 2 hereof:
Contemporaneously herewith and to ensure the retention of Executive through
at least the end of December 2002, the sum of Three Million, Eight Hundred
Thousand Dollars ($3,800,000) is being deposited into a deferred
compensation account with Merrill Lynch for the benefit of Executive, to be
invested as directed by Executive in accordance with the terms and
conditions of the Merrill Lynch deferred compensation agreement with the
Company. This amount (the "Deferred Payment"), together with any and all
income and appreciation on the Deferred Payment while in the deferred
compensation account and unvested, shall vest 100% on December 31, 2002,
provided that Executive remains an employee of the Company through and
including December 31, 2002. It is further agreed, however, that the
Deferred Payment shall also vest 100% upon the occurrence of any of the
following events PRIOR to December 31, 2002:
18
<PAGE> 19
(i) There is a change in control of the Company, as set forth in
the Change in Control Agreement attached to the Main Agreement
(defined below) as SCHEDULE 3.
(ii) Executive dies, becomes disabled or incapacitated as set forth
in the Agreement to which this Schedule is attached (the "Main
Agreement").
(iii) Executive's employment is terminated by the Company without
Cause or is terminated by Executive for Good Reason, as
defined and set forth in the Main Agreement; provided, however
that for purposes of this Schedule 1 only, and only for the
benefits provided in this Schedule 1, "Good Reason" shall also
be deemed to exist in the event that the Company shall notify
Executive, announce or take any other action, at any time, to
the effect that Executive is not, and will not be, a candidate
to succeed David I. Fuente as the CEO of the Company.
The vested Deferred Payment, together with any income and appreciation,
shall be payable to Executive (or Executive's beneficiaries) in accordance
with the provisions of the Merrill Lynch deferred compensation agreement
with the Company and Executive, and Executive's (or such beneficiaries')
election thereunder.
2. GRANT OF STOCK OPTIONS. As consideration for the cancellation of the Prior
Agreements, the Company has granted to Executive on June 6, 2000, certain
options to acquire stock in the Company (which option shall be evidenced by
the option agreement attached to this Schedule 1) as follows:
a) A ten-year option (the "Retention Option") to acquire up to 400,000
shares of the Company's stock. Such Retention Option shall provide,
among other provisions, that it shall remain exercisable through and
including 90 days following the second anniversary of any termination
of Executive by the Company without Cause, or any termination by
Executive with Good Reason, as such terms are defined in the Main
Agreement and in Section 1(iii) of this Schedule 1.
19
<PAGE> 20
b) The Retention Option shall vest in full (100%) on December 31, 2002;
provided that Executive remains continuously employed by the Company
on such date.
c) The Retention Option shall have an early vesting provision, which
provides that the Retention Option shall vest in full (100%) upon the
occurrence of any of the events set forth in Section 1 (i) through
(iii) above and, in the case of Section 1(i) above, shall have an
exercise period through the balance of the full ten-year term of the
Retention Option.
3. INCORPORATION FROM EMPLOYMENT AGREEMENT. The following provisions from the
Employment Agreement are incorporated herein by reference: 11 through 23.
In testimony whereof, this SCHEDULE 1 is separately signed by the parties this
7th day of June, 2000.
EXECUTIVE OFFICE DEPOT, INC.
By
------------------------------ ------------------------------
M. BRUCE NELSON Name: THOMAS KROEGER
Title: EXECUTIVE VICE PRESIDENT
HUMAN RESOURCES
20
<PAGE> 21
SCHEDULE 2
AGREEMENT OF NON-COMPETITION, NON-SOLICITATION AND NO-HIRE
This Agreement of Non-Competition, Non-Solicitation and No-Hire (this
"Noncompete Agreement") is made and entered into this 7th day of June, 2000 by
and between Office Depot, Inc., a Delaware corporation (the "Company") and M.
Bruce Nelson (the "Executive").
RECITALS
A. The Company and Executive are on this date entering into certain agreements
pertaining to the continued employment of Executive by the Company; and
B. Executive acknowledges that he is being employed as a very senior executive
officer of the Company and as such is fully familiar with the most
sensitive, confidential and proprietary information of the Company
("Confidential Information"); and
C. Executive has been requested by the Company to enter into this Noncompete
Agreement as a condition to the Company's being willing to enter into the
other Agreements being entered into contemporaneously herewith; and
D. The parties are willing to abide by the terms and provisions of this
Noncompete Agreement;
AGREEMENT
NOW THEREFORE, in consideration of the foregoing recitals, which are
incorporated by reference and made a part hereof, the payment to Executive
referred to in Section 1 below, and other good and valuable consideration, the
parties hereby agree as follows:
1. PAYMENT TO EXECUTIVE; AGREEMENT OF NON-COMPETITION. For and in
consideration of the payment to Executive in one lump sum, in cash, on the
date hereof of the sum of One Million Five Hundred Thousand Dollars
($1,500,000), receipt and sufficiency of which are hereby acknowledged,
Executive acknowledges that in the course of Executive's employment with
the Company Executive shall become familiar with the Company's trade
secrets and with other Confidential Information concerning the Company and
its Subsidiaries and that Executive's services shall be of special, unique
and extraordinary value to the Company and its Subsidiaries. Therefore, and
in consideration of the payment(s) being made to Executive hereunder,
Executive agrees that, during the Employment Term and for a period of one
year thereafter, unless
21
<PAGE> 22
Executive is named CEO of the Company, in which event, the Non-Compete
Period is for three years after leaving the Company instead of one year,.
(in either such event, as used herein, the "NONCOMPETE PERIOD"), Executive
shall not directly or indirectly own any interest in, manage, control,
participate in, consult with, render services for, or in any manner engage
in any business competing with the businesses of the Company or its
Subsidiaries, as such businesses exist or are in process on the date of the
termination of Executive's employment with the Company, within any
geographical area in which the Company or its Subsidiaries engage in such
businesses on the date of termination of Executive's employment with the
Company. Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a corporation
which is publicly traded, so long as Executive has no active participation
in the business of such corporation.
2. NON-SOLICITATION; NO-HIRE; NON-INTERFERENCE. During the Noncompete Period,
Executive shall not directly, or indirectly through another entity, (i)
induce or attempt to induce any employee of the Company or any Subsidiary
to leave the employ of the Company or such Subsidiary, or in any way
interfere with the relationship between the Company or any Subsidiary and
any employee thereof, (ii) hire any person who was an employee of the
Company or any Subsidiary at the time of termination of the Employment Term
or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, or
in any way interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company or any Subsidiary
(including, without limitation, making any negative statements or
communications about the Company or its Subsidiaries).
3. REFORMATION OF THIS AGREEMENT. If, at the time of enforcement of this
Noncompete Agreement, any court shall hold that the duration, scope or
geographical restrictions stated herein are unreasonable under the
circumstances then existing, the parties agree that it is their mutual
desire and intent that the Company shall be afforded the maximum duration,
scope or area reasonable under such circumstances, and each of them hereby
requests such court to reform this Agreement so that the maximum duration,
scope and geographical restrictions available under applicable law at the
time of enforcement of this
22
<PAGE> 23
Agreement shall be substituted by such court for the stated duration, scope
or geographical area stated herein and that the court shall be allowed to
revise the restrictions contained in this Noncompete Agreement to such
provisions as are deemed reasonable by the court at the time such
enforcement is requested.
4. INJUNCTIVE RELIEF. In the event of the breach or any threatened breach by
Executive of any of the provisions of this Noncompete Agreement, the
Company, in addition and supplementary to any and all other rights and
remedies existing in its favor, may apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce this Noncompete Agreement or to prevent any
violations or threatened violations of the provisions hereof (without being
required to post any bond or other security to secure such relief). In
addition, in the event of any alleged breach or violation by Executive of
this Noncompete Agreement, the Noncompete Period shall be tolled until such
breach or violation has been duly cured and thereafter the Noncompete
Period shall be extended for an additional period of time equivalent to the
time during which Executive was in breach of this Noncompete Agreement.
5. INCORPORATION OF TERMS BY REFERENCE. The provisions of the following number
sections of the Agreement being entered into contemporaneously herewith
between the Company and Executive (to which this Noncompete Agreement is
attached as a Schedule) are incorporated by reference as if set forth at
length herein and shall be deemed to constitute a part hereof
notwithstanding the earlier termination of such Agreement: sections 11
through 23 of the Agreement are incorporated by this reference.
IN TESTIMONY WHEREOF, the parties have signed this NONCOMPETE AGREEMENT this 7th
day of June, 2000.
EXECUTIVE OFFICE DEPOT, INC.
By
------------------------------ ------------------------------
M. BRUCE NELSON Name: THOMAS KROEGER
Title: EXECUTIVE VICE PRESIDENT
HUMAN RESOURCES
23
<PAGE> 24
SCHEDULE 3
CHANGE IN CONTROL AGREEMENT
This Change in Control ("CIC") Agreement is entered into by Executive and the
Company, contemporaneously with the Employment Agreement to which this CIC
Agreement is attached as SCHEDULE 3.
a. Executive and the Company (as successor by merger to Viking Office
Products, Inc.) are parties to a certain Agreement, originally dated May
12, 1997, as amended on November 13, 1997; and may also be parties to
certain other agreements between Executive and Viking (including a certain
Agreement dated as of April 12, 1995 and a bonus compensation arrangement
dated as of August 25, 1997) (whether one or more, herein collectively
referred to as the "Prior Agreements").
b. Executive and the Company desire to resolve and settle any and all issues
pertaining to the Prior Agreements, which are hereby superseded and
replaced in their entirety by this Agreement, including this SCHEDULE 3,
and to enter into this Agreement.
c. The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its shareholders to assure that
the Company will have the continued dedication of Executive,
notwithstanding the possibility, threat or occurrence of a Change in
Control (as defined below) of the Company.
d. The Board believes it is imperative to diminish the inevitable distraction
of Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change in
24
<PAGE> 25
Control and to encourage Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change in
Control, and to provide Executive with compensation and benefits
arrangements upon a Change in Control which ensure that the compensation
and benefits expectations of Executive will be satisfied and which are
competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this CIC Agreement, supplemental to the Agreement of
Employment to which this SCHEDULE 3 is attached (such Agreement, together with
the Schedules thereto, herein referred to as the "Main Agreement").
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall mean
the first date during the CIC Period (as defined in Section 1(b)) on which a CIC
(as defined in Section 1(c)) occurs. Anything in this Agreement to the contrary
notwithstanding, if a CIC occurs and if Executive's employment with the Company
is terminated prior to the date on which the CIC occurs, and if it is reasonably
demonstrated by Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a
CIC or (ii) otherwise arose in connection with or anticipation of a CIC, then
for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "CIC Period" shall mean the period commencing on the
date hereof and ending on the third anniversary of the date hereof; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), unless previously
terminated, the CIC Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to Executive that the CIC Period shall not be
so extended.
(c) A "Change in Control" or "CIC" shall mean:
25
<PAGE> 26
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not
constitute a CIC: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section
2; OR
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board; OR
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively,
the then-outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business
26
<PAGE> 27
Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such
Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business
Combination; OR
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(d) "Employment" shall mean the employment of Executive pursuant to the Main
Agreement to which this Schedule 3 is attached.
Other terms shall have the meanings ascribed to them in various sections of this
CIC Agreement or otherwise shall have the meanings ascribed to them in the Main
Agreement.
2. TERMINATION OF EMPLOYMENT. In addition to the other
termination provisions contained in Sections 5 through 9 of the Main Agreement
to which this SCHEDULE 3 is attached, Executive's employment shall be subject to
the following provisions, immediately following the Effective Date of a CIC:
27
<PAGE> 28
(a) GOOD REASON. Executive's employment may be terminated by
Executive for Good Reason. For purposes of this Agreement, following a CIC,
"Good Reason" shall not have the meaning ascribed to it in Section 10(b) of the
Main Agreement, but instead shall mean:
(i) the assignment to Executive of any duties
inconsistent in any respect with Executive's Position(s) (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 2 of the Main Agreement,
or any other action by the Company which results in a diminution in
such Position(s), 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 Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 3 of the Main Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by Executive;
(iii) the Company's requiring Executive to be based
at any office or location other than in Delray Beach, Florida or in
Torrance, California or the Company's requiring Executive to travel on
Company business to a substantially greater extent than required
immediately prior to the Effective Date;
(iv) any purported termination by the Company of
Executive's employment otherwise than as expressly permitted by the
Main Agreement; or
(v) any failure by the Company to comply with and
satisfy any other material provision of the Main Agreement.
(b) For purposes of this Section, any good faith determination
of "Good Reason" made by Executive shall be conclusive and irrefutable
by the Company. Anything in this Agreement to the contrary
notwithstanding, a termination by Executive for any reason during the
thirty (30) day period immediately preceding the first anniversary of
the
28
<PAGE> 29
Effective Date of a CIC shall be deemed to be a termination for Good
Reason for all purposes of this Agreement.
3. OBLIGATIONS OF THE COMPANY UPON TERMINATION. The Company shall have the
following obligations to Executive upon a termination of Executive's employment
following a CIC:
(a) If the termination is for death, disability or incapacity,
then for purposes of this CIC Agreement, the Company shall pay
to Executive or his estate, in a lump sum not more than 30
days after the Date of Termination, the sums due under Section
3(c) hereof, as if Executive had notified the Company of his
election to terminate the Agreement for Good Reason and not
the sums due under Section 5 of the Main Agreement.
(b) If the termination is for Cause, then the rights and
obligations of the parties shall be governed by the provisions
of Section 7 of the Main Agreement.
(c) If the termination is by the Company without Cause or by
Executive for Good Reason:
(i) the Company shall pay to Executive in a lump sum
in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) Executive's annual Base
Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I) the
annual Bonus most recently paid to Executive pursuant to
Section 3(c) of the Main Agreement and (II) the Bonus paid or
payable pursuant to such Section 3(c), including any bonus or
portion thereof which has been earned but deferred (and
annualized for any fiscal year consisting of less than twelve
full months or during which Executive was employed for less
than twelve full months), for the most recently completed
fiscal year during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual Bonus") and
(y) a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination,
and the denominator of which is 365 and (3) any compensation
previously deferred by Executive (together with
29
<PAGE> 30
any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (1), (2), and (3)
shall be hereinafter referred to as the "Accrued
Obligations"); and
B. the amount equal to the product of (a)
three (3) and (b) the sum of (x) Executive's annual Base
Salary and (y) the Highest Annual Bonus.
(ii) for three (3) years after Executive's
Date of Termination, or such longer period as may be provided
by the terms of the appropriate plan, program, practice or
policy, the Company shall continue benefits to Executive
and/or Executive's family at least equal to those which would
have been provided to them in accordance with the plans,
programs, practices and policies described in Section 3(f) of
the Main Agreement if Executive's employment had not been
terminated or, if more favorable to Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies and
their families, provided, however, that if Executive becomes
re-employed with another employer and is eligible to receive
medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.
Notwithstanding the foregoing, the Company shall continue to
make all scheduled premium payments under any split-dollar
life insurance policy in effect on the Date of Termination on
behalf of Executive for so long as such payments are scheduled
(without giving effect to Executive's termination). For
purposes of determining eligibility (but not the time of
commencement of benefits) of Executive for retiree benefits
pursuant to such plans, practices, programs and policies,
Executive shall be considered to have remained employed until
three years after the Date of Termination and to have retired
on the last day of such period;
(iii) the Company shall, at its sole expense
as incurred, provide Executive with out placement services the
scope and provider of which shall be selected by Executive in
his sole discretion; and
30
<PAGE> 31
(iv) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to Executive
any other amounts or benefits required to be paid or provided
or which Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other
Benefits").
C. Following termination for any reason, Executive's obligation to "buy
out" Viking's interest in Executive's California residential real estate (as
defined in the Main Agreement and described in Section 19(b) of the Main
Agreement) shall be extended from one year to two years following such
termination of employment.
4. FULL SETTLEMENT. (a) The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against Executive or others.
In no event shall Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Executive under any
of the provisions of this Agreement and such amounts shall not be reduced
whether or not Executive obtains other employment. Anything in the Main
Agreement to the contrary notwithstanding, the Company agrees to pay as
incurred, to the fullest extent permitted by law, all legal fees and expenses
which Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company, Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
5. CANCELLATION OF THE PRIOR AGREEMENTS. The parties agree that upon the
execution and delivery of this Agreement by the parties, all of the Prior
Agreements are hereby canceled and are of no further force or effect. Executive
hereby represents and agrees that he is not entitled to any further payment or
other benefits under the Prior Agreements and that the entire agreement between
himself and the Company is fully set forth in this Agreement, including the
Schedules to this Agreement.
In Testimony whereof, this CIC Agreement is signed by the parties this 7th day
of June, 2000.
EXECUTIVE OFFICE DEPOT, INC.
By
------------------------------ ------------------------------
M. BRUCE NELSON Name: THOMAS KROEGER
Title: EXECUTIVE VICE PRESIDENT
HUMAN RESOURCES
