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EXHIBIT 10.9
EXECUTIVE PART-TIME EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of September 30, 1999
between Office Depot, Inc., a Delaware corporation (the" COMPANY"), and Xxxxx
Xxxxxxx ("Executive"), with reference to the following facts:
A. Executive has been employed by Viking Office Products, Inc., a
California corporation ("Viking"), as Chairman and Chief
Executive Officer pursuant to an Employment Agreement, dated
as of July 1, 1997 (the "Employment Agreement"). In August
1998, Viking was acquired by the Company, and Viking is now a
wholly-owned subsidiary of the Company.
B. Executive and the Company have agreed to change the status of
Executive from a full-time employee of Viking to a part-time
employee of the Company, to terminate the Employment Agreement
and to replace such Employment Agreement with this Agreement.
C. Executive and the Company desire by this Agreement to set
forth certain understandings between them regarding such
employment relationship.
D. Executive and the Company also desire by this Agreement to set
forth certain additional understandings between them regarding
restrictions on Executive's ability to compete with the
Company for the period described herein.
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. PART-TIME EMPLOYMENT.
Executive's employment as Chairman and Chief Executive Officer of Viking shall
end as of the close of business on September 30, 1999. Effective on and as of
such date and time (the "Effective Date"), Executive's former Employment
Agreement (as amended) with Viking shall terminate and cease, and the Company
shall commence the employment of Executive under the terms of this Agreement.
Executive hereby agrees to the termination of his former Employment Agreement
and accepts such employment with the Company, on a part-time basis, upon the
terms and conditions set forth in this Agreement for the period beginning on
September 30, 1999 and ending as provided in paragraph 4 hereof (the "EMPLOYMENT
TERM"). From and after the Effective Date, Executive shall no longer be an
officer of the Company or of Viking. The change in Executive's status from a
full-time employee of Viking to a part-time employee of the Company as provided
in this Agreement shall not be deemed a termination of Executive's
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employment for purposes of the vesting or exercisability of any stock options
held by Executive that were issued under stock option plans of the Company or
Viking, all of which shall remain in full force and effect in accordance with
their terms.
2. POSITION AND DUTIES.
(a) During the Employment Term, Executive shall serve as a Senior Advisor
to the Company, shall be available to consult with the Company with
respect to all aspects of the business of the former Viking
organization at mutually agreed upon times and otherwise shall provide
such advisory services as are mutually agreed upon by Executive and
the Company. He shall work with the Company's chief executive officer
("CEO"), its chief financial officer or the President of Office Depot
International to expand or limit such duties, responsibilities and
authority.
(b) Executive shall devote reasonable efforts and attention to the
business and affairs of the Company and its Subsidiaries on a
part-time basis as set forth herein, sufficient to provide to the
Company the advisory services contemplated hereby. Executive shall be
free to serve as (i) a director or officer of any non-profit
organization including trade, civic, educational or charitable
organizations, or (ii) a director, owner, employee or consultant of
any other 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 or reflect badly on the Company. 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 of more Subsidiaries,
including, without limitation, Viking.
3. BASE SALARY AND BENEFITS.
(a) Executive's base salary for the performance of his services
hereunder shall be Fifty Thousand Dollars ($50,000) per annum in accordance with
the Company's general payroll practices and shall be subject to customary
withholding.
(b) In consideration of the termination of the Executive's former
Employment Agreement with Viking, he shall receive the termination payment set
forth on ATTACHMENT A to this Agreement.
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(c) In addition to the Base Salary, for the period January 1, 1999 to
September 30, 1999, Executive shall be entitled to a bonus as set forth on
ATTACHMENT A to this Agreement.
(d) The Company shall reimburse Executive for all reasonable and
necessary business expenses incurred by him in the course of performing his
duties under this Agreement, in accordance with the Company's policies in effect
from time to time for peer executives with respect to travel, entertainment and
other business expenses, subject to the Company's reasonable requirements with
respect to reporting and documentation of such expenses. Executive agrees that
he will not receive an automobile or other allowances.
(e) During the Employment Term (and for any additional time specified
on ATTACHMENT B hereto), Executive shall be eligible for those benefits which
are set forth on ATTACHMENT B to this Agreement; provided this Agreement has not
been terminated by Executive without good reason or has not been terminated by
the Company for Cause.
(f) During the Employment Term, Executive shall continue to be treated
as an employee of the Company for purposes of the vesting and exercisability of
his outstanding stock options in accordance with the terms of the applicable
stock option plans and agreements between Executive and the Company or Viking;
PROVIDED HOWEVER, that Executive shall not be eligible for any future stock
option grants. In addition, the indemnification provisions for officers and
directors under the charter documents and bylaws of the Company and Viking, and
the provisions of any written Indemnification Agreement between Executive and
the Company or Viking, shall be extended to Executive (to the maximum extent
permitted by law), during the Employment Term and thereafter, with respect to
any and all matters, events or transactions occurring or effected during
Executive's employment with Viking or during the Employment Term.
4. TERM.
(a) The Employment Term shall end on September 30, 2002; PROVIDED THAT
(i) the Employment Term shall terminate prior to such date (A) upon Executive's
death or permanent disability or incapacity (as determined by the Company's
Board of Directors (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 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, including accrued but unpaid amounts, through September 30, 2002
and (ii) vested and earned (in accordance with the Company's applicable plan or
program) but unpaid amounts under health and welfare plans, deferred
compensation plans, and other employer programs of the Company, if any, in which
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Executive participates. The amounts payable pursuant to paragraph 4(b)(i) and
(ii) shall be payable in one lump sum within 30 days following termination of
the Employment Term.
(c) If the Employment Term is terminated by the Company for Cause or
by 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 health and welfare plans, deferred compensation plans, and other
employer programs of the Company in which Executive participates.
(d) If the Employment Term is terminated upon Executive's death or
permanent disability or incapacity (as determined by the Board or the CEO in
their 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 health and
welfare plans, deferred compensation plans, and other employer programs of the
Company in which Executive participates. The amounts 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 hereunder (if
any) which accrue or become payable after the termination of the Employment Term
shall cease upon such termination unless otherwise specified on ATTACHMENT B to
this Agreement.
(f) For purposes of this Agreement, "CAUSE" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties under this Agreement with the Company
or one of its Subsidiaries or 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 CEO which specifically identifies the manner in which 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 provision, 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 interests of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Company's 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 interests of the Company.
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(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.
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 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 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 which Executive may then possess or have under
Executive's control. The provisions of this paragraph 5 shall survive the
termination of this Agreement for an unlimited period of time.
6. INVENTIONS AND PATENTS; EXECUTIVE'S LIKENESS AND NAME. 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 CEO and perform all actions reasonably
requested by 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). In addition, Executive
acknowledges that the exclusive use of his likeness and name in business or
commerce shall continue to belong exclusively to the Company for the remainder
of Executive's natural life.
7. NON-COMPETE, NON-SOLICITATION.
(a) Executive acknowledges that during the course of Executive's
employment with Viking he has, and in the course of Executive's employment with
the Company he shall, become familiar with the trade secrets of Viking and the
Company and with other Confidential Information concerning Viking, the Company
and its other Subsidiaries and that Executive's services have been and shall
continue to be of special, unique and extraordinary value to Viking, the Company
and its other Subsidiaries. Therefore, in consideration of the payment to
Executive of the sum set forth on Attachment A to this Agreement (the
"Noncompete Payment"), Executive
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agrees that, until the third anniversary of the expiration or earlier
termination of the Employment Term (including any extension or renewal of the
Employment Term) (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 on behalf of or in
concert with any key competitor of the Company, including without limitation the
following companies (or any affiliates of any such companies), each of which are
considered to be key competitors of the Company (collectively, the
"Competitors"): Staples; Boise-Cascade; BT Office Products; Office Max; P.P.R.
and Lyreco or with any other company which engages or decides to engage in
business competitive with the Company, including without limitation such
companies as Wal-Mart, Target Stores or any Internet or other direct mail or
direct marketing company engaged as a significant part of its business in the
sale of business or office products. 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, including any Competitor, so
long as Executive has no active participation in the business of such
corporation. Except as provided in this Agreement, there shall be no
restrictions upon Executive's employment or services.
(b) During the Employment Term and 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 the Noncompete Period or (iii) on behalf of or for the
benefit of any Competitor, 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). The Company agrees to use
its best efforts to cause its executive officers and the executive officers of
Viking not to make any negative statements or communications about Executive.
(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 acknowledges that he has carefully
read and considered the provisions of this paragraph 7 and, having done so,
agrees that the restrictions set forth herein (including but not limited to the
time periods of restriction and the geographical areas of restriction) are fair
and reasonable and are reasonably required to protect the interests of the
Company, its Subsidiaries and its stockholders.
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(d) In the event of the breach or a threatened breach by Executive of
any of the provisions of this paragraph 7, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security). In
addition, in the event of an alleged breach or violation by Executive of this
paragraph 7, the Noncompete Period shall be tolled until such breach or
violation has been duly cured.
(e) The Noncompete Payment shall be subject to income tax, social
security, and similar withholding obligations as required by law. The parties
hereto acknowledge that, except as otherwise agreed to by Executive and the
Company, any taxes that may be due and owing with respect to the Noncompete
Payment shall be the sole responsibility of Executive, and Executive hereby
agrees to indemnify and hold Company harmless if any such taxes are not paid.
The Noncompete Payment shall not be considered compensation for any benefit
calculation or other purpose under any retirement plan or other benefit plan
maintained by the Company or Viking. If the Noncompete Payment is not timely
paid, it will bear interest at the lower often percent per annum and the maximum
rate permitted by Florida law.
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 18 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:
Xxxxx Xxxxxxx
Address: 00 Xxxxxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
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NOTICES TO THE COMPANY:
Office Depot, Inc.
0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
and
Office Depot, Inc.
0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
Attention: Executive Vice President - Human Resources
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
11. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. COMPLETE AGREEMENT. This Agreement and those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
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; FACSIMILE SIGNATURES. 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. This Agreement may
be executed by any party by delivery of a facsimile signature, which signature
shall have the same force and effect as an original signature. Any party which
delivers a facsimile signature shall promptly thereafter deliver an originally
executed signature to the other party(ies); provided, however, that the failure
to deliver an original signature page shall not affect the validity of any
signature delivered by facsimile.
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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.
18. ARBITRATION. Any controversy which may arise between Executive and
the Company with respect to the construction, interpretation or application of
any of the terms, provisions or conditions of this agreement or any monetary
claim arising from or relating to this agreement will be submitted to final and
binding arbitration in West Palm Beach, Florida, in accordance with the rules of
the American Arbitration Association then in effect.
19. INCORPORATION OF ATTACHMENTS BY REFERENCE. The attachments to this
Agreement are incorporated by reference and made a part hereof as if set forth
at length herein.
* * *
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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/ Xxxxxx Xxxxxxx
----------------------
Name: Xxxxxx Xxxxxxx
Its: Executive Vice President,
Human Resources
EXECUTIVE
/s/ Xxxxx Xxxxxxx
-------------------------
Name: Xxxxx Xxxxxxx
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ATTACHMENT A
PAYMENTS DUE TO EXECUTIVE
1. TERMINATION PAYMENT. In consideration of his agreement to terminate his
previous Employment Agreement with Viking and to enter into this Employment
Agreement, Executive shall receive the sum of $750,000.
2. BONUS PAYMENT. For the period of his former employment with Viking, from
January 1, 1999 through and including September 30, 1999, Executive shall
receive his target bonus from his former full time employment with Viking in the
amount of $1,500,000. It is agreed that on and as of September 30, 1999, the
amount of such bonus would otherwise not be determined and that the parties are
agreeing to this amount of bonus for Executive in lieu of calculating such bonus
at the end of the fiscal year of Viking and that such payment is provided
pursuant to this Agreement and not to any performance of the Company. Such
payment shall be made not later than October 15, 1999.
3. Non-Compete Agreement. In consideration of Executive's agreements in
paragraph 7 of this Agreement, he shall receive the sum of $4,000,000, payable
in a lump sum not later than October 15, 1999.
IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT ALL PAYMENTS BEING MADE TO EXECUTIVE
HEREUNDER SHALL BE SUBJECT TO DEDUCTIONS FOR APPLICABLE FEDERAL, STATE AND LOCAL
TAXES, FICA AND MEDICARE PAYMENTS AND ALL OTHER APPLICABLE WITHHOLDING AMOUNTS.
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ATTACHMENT B
BENEFITS TO WHICH EXECUTIVE IS ENTITLED
1. HEALTH INSURANCE. Provided this Agreement has not been terminated by
Executive without Good Reason or by the Company for Cause, Executive
and his eligible dependents shall be entitled to health insurance
coverage comparable to the health insurance Executive and his eligible
dependents have received during the period of his prior employment
with Viking for the Term of this Agreement and ending at the end of
Executive's natural life. In the event this Agreement should be
terminated by the Company without Cause or by the Executive for Good
Reason, such benefits shall continue as provided herein as if such
termination had not occurred. Such health insurance may be under the
terms of the existing policy of insurance provided to Executive or
pursuant to any other insurance plan selected by the Company which
provides comparable coverage and benefits.
2. SPLIT DOLLAR LIFE INSURANCE. PROVIDED THIS AGREEMENT has not been
terminated by Executive without Good Reason or by the Company for
Cause, the Company shall continue the policy of split dollar life
insurance on the life of Executive.
3. RESTRICTED STOCK PLAN. Executive shall continue to participate in the
Restricted Stock Plan in which he currently participates during the
duration of this Agreement.
4. NO OTHER BENEFITS. Executive shall otherwise receive none of the
benefits to which he may formerly have been entitled as an employee of
Viking, including without limitation, automobile allowance, tax and
financial planning, participation in other health and welfare plans,
if any.
IT is expressly UNDERSTOOD THAT ALL benefits payable TO EXECUTIVE WHICH ARE
SUBJECT TO federal, state or local income taxation shall be provided net of any
required withholding FOR SUCH TAXES.
