Exhibit 10.31
Form of
Severance Benefits
Agreement
[Mr/Ms Name]
[Address]
[City, State ZIP]
Dear [Name]:
You are or are about to become
employed by Staples, Inc. and/or one of its subsidiaries
(“Staples”). Staples agrees to provide you with
the severance benefits set forth in this letter agreement (the
“Agreement”) if your employment is terminated under the
circumstances described below:
1.
Term of Agreement . The term of this Agreement shall begin
on the date it is signed and shall continue in full force and
effect until such time as you or Staples has delivered to the other
90-days advance written notice of your or its election to terminate
this Agreement . This Agreement is not a contract to employ
you for a definite time period, it being acknowledged that your
employment is “at will” and that either you or Staples
may terminate the employment relationship at any time.
2.
Notice of Termination and other Matters . Any
termination of your employment, whether by you or Staples, will be
communicated by written notice (“Notice of
Termination”) to the other party. The Notice of Termination
will specify the provisions of this Agreement, if any, upon which
termination is based and its effective date, which in no case will
be more than 180 days after the Notice of Termination.
All notices and communications provided for in this Agreement will
be in writing and will be effective when delivered or mailed by
U.S. registered or certified mail, return receipt requested,
postage prepaid, addressed to the Chairman of Staples, 500 Staples
Drive, Framingham, MA 01702, and to you at the address shown above
or to such other address as either Staples or you may have
furnished to the other in writing.
3.
Compensation Upon Termination . In addition to any earned but unpaid base
salary, and any accrued but unused vacation, Staples will provide
you with the severance benefits listed below in the event of a
Qualified Termination. A “Qualified Termination”
means your employment is terminated for any reason other than
because (i) you die or become Disabled,
(ii) Staples terminates you for “Cause,” or
(iii) you resign or retire without “Good
Reason.”
(a) Staples will pay you 12
months severance pay, in equal monthly installments. Your
monthly severance payments will equal the sum of (i) your
monthly base salary rate in effect immediately prior to the
Qualified Termination (or any higher rate in effect within the 90
days prior to the Notice of Termination) plus (ii) one-twelfth
of an amount equal to the average annual bonus paid to you by
Staples during the three full fiscal years preceding such Qualified
Termination. Annual salary rates will be prorated where
applicable and annual bonus averages will be computed on years
available if less than three years. Any partial year bonus
you have
been paid will be annualized. In the event
your Qualified Termination occurs within your first year of
employment prior to being paid a bonus, the bonus related portion
of your severance payment shall equal one twelfth of an amount
equal to your target bonus amount for the fiscal year during which
your Qualified Termination occurs.
(b) Staples will provide you
with 12 months of coverage (the “Severance Period”)
under the medical, dental, vision, health care flexible spending
account, basic life, and long-term care plans, if any, in which you
are presently enrolled at the time of your termination on terms
substantially similar to those available to similarly situated
associates, and you will be required to pay the same portion of the
premium that you pay while you are employed. However, if you
first become covered during the Severance Period under a group
medical, dental, vision or health care flexible spending account
through another employer (including, for example, a spouse’s
employer) that does not contain any exclusion or limitation
regarding pre-existing conditions, then Staples’ obligation
under the Consolidated Omnibus Budget Reconciliation Act (COBRA)
with respect to the relevant plan(s) shall cease and
Staples’ coverage will terminate upon you receiving such
coverage. Should you obtain basic life or long-term care
coverage through another employer during the Severance Period, then
Staples’ premium payment obligations for the relevant
plan(s) will terminate upon you receiving such coverage.
These months of coverage shall count toward your period of coverage
under the COBRA; however, basic life and long-term care insurance
are not benefits that are eligible for continued coverage under
COBRA.
(c) The vesting schedule of
any outstanding options to purchase shares of Staples’ Common
Stock, shares of restricted Staples’ Common Stock and/or any
other equity-based awards will not be accelerated in the event of a
Qualified Termination, unless specifically provided to the contrary
in the respective option, restricted stock or other equity
agreements.
(d) Subject to the limitations
in Section 3(b), Staples will provide you with 6 additional
months of the benefits set forth in paragraphs (a) and
(b) above if such Qualified Termination is within two years
after a Change in Control.
(e) You and Staples intend
that this Agreement comply with the requirements of
Section 409A of the Internal Revenue Code
(“Section 409A”) so that any payments and benefits
provided by the Agreement do not subject you to penalty taxes and
interest imposed for noncompliance with Section 409A.
Accordingly, the following rules shall apply with respect to
the payments and benefits, to be provided to you under this
Agreement:
(i) Each installment of the
payments and benefits provided under this Agreement shall be
treated as a “separate payment” for purposes of
Section 409A. Neither Staples nor you shall have the
right to accelerate or defer the delivery of any such payments or
benefits except to the extent specifically permitted or required by
Section 409A;
(ii) The provision of the
benefits described in Section 3(b) shall be treated as
exempt “reimbursements and certain other separation
payments” within the meaning of Treasury Regulation
Section 1.409A-1(b)(9)(v), and any reimbursement or payment
with respect to such benefits shall be made not later than
December 31 of the second calendar year following the calendar
year in which you are terminated;
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(iii) If, as of the date of
your “separation from service” from Staples, you are
not a “specified employee” (each within the meaning of
Section 409A which generally defines a “specified
employee” as an employee who is among Staples’ 50 most
highly compensated officers), then each installment of the payments
and benefits shall be made on the dates and terms set forth in this
Agreement; and
(iv) If, as of the date of
your “separation from service” from Staples, you are a
“specified employee,” then:
(A) Each installment of the
payments and benefits due under this Agreement that, in accordance
with the dates and terms set forth herein, will in all
circumstances, regardless of when the separation from service
occurs, be paid within the Short-Term Deferral Period (as
hereinafter defined) shall be treated as a short-term deferral
within the meaning of Treasury Regulation
Section 1.409A-1(b)(4) to the maximum extent permissible
under Section 409A. For purposes of this Agreement, the
“Short-Term Deferral Period” means the period ending on
the later of the 15th day of the third month following the end of
your tax year in which your separation from service occurs and the
15th day of the third month following the end of Staples’ tax
year in which your separation from service occurs; and
(B) Each installment of the
payments and benefits due under this Agreement that is not paid
within the Short-Term Deferral Period and that would, absent this
subsection, be paid within the six-month period following your
“separation from service” from Staples shall not be
paid until the date that is six months and one day after such
separation from service (or, if earlier, your date of death), with
any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on
the date that is six months and one day following your separation
from service and any subsequent installments, if any, being paid in
accordance with the dates and terms set forth herein; provided,
however, that the preceding provisions of this sentence shall not
apply to any installment of payments and benefits if and to the
maximum extent that such installment is deemed to be paid under a
“separation pay plan” (within the meaning of
Section 409A) that does not provide for a deferral of
compensation by reason of the application of Treasury
Regulation Section 1.409A-1(b)(9)(iii) (relating to
separation pay upon an involuntary separation from service).
Any such delayed payments shall bear interest from the date of your
separation from service to the date of payment at an annual rate
equal to the prime rate as set forth in the Eastern edition of The
Wall Street Journal on the date of your separation from
service.
(v) You and Staples further
agree to make such revisions to this Agreement as may be
required
