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

 

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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 to conform the provisions of the Agreement to the requirements
of Section 409A and any regulations or other Internal Revenue Service guidance
issued thereunder.  Staples shall have no liability for any tax or penalty
imposed on you by Section 409A.

 

You will not be entitled to any of the compensation or benefits set forth in
this Section 3 if Staples determines, within 60 days after your termination,
that your conduct prior to your termination would have warranted a discharge for
“Cause,” or if, after your termination, you have violated the terms of any
non-competition or confidentiality provision contained in any

 

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employment, consulting, advisory, non-disclosure, non-competition or other
similar agreement between you and Staples.

 

4.             Definitions.  For the purposes of this Agreement, the terms
listed below are defined as follows:

 

(a)  Change in Control.  A “Change in Control” will be deemed to have occurred
only if any of the following events occur:

 

(i)  any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), (other than
Staples, any trustee or other fiduciary holding securities under an employee
benefit plan of Staples, or any corporation owned directly or indirectly by the
stockholders of Staples in substantially the same proportion as their ownership
of stock of Staples) is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
Staples representing 30% or more of the combined voting power of Staples’ then
outstanding securities;

 

(ii)  individuals who constitute the Board (as of the date hereof, the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by Staples’ stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of Staples, as such
terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) will be,
for purposes of this Agreement, considered as though such person were a member
of the Incumbent Board; or

 

(iii)  the stockholders of Staples approve a merger or consolidation of Staples
with any other corporation, and such merger or consolidation is consummated,
other than (A) a merger or consolidation which would result in the voting
securities of Staples outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 75% of the combined voting power
of the voting securities of Staples or such surviving entity outstanding
immediately after such merger or consolidation or (B) a merger or consolidation
effected to implement a recapitalization of Staples (or similar transaction) in
which no “person” (as hereinabove defined) acquires more than 50% of the
combined voting power of Staples’ then outstanding securities; or

 

(iv)  the stockholders of Staples approve a plan of complete liquidation of
Staples or an agreement for the sale or disposition by Staples of all or
substantially all of Staples’ assets.

 

(b)  Disabled.  You are “disabled” for the purposes of this Agreement, if you
have been absent from the full-time performance of your duties with Staples for
six (6) consecutive months because of incapacity due to physical or mental
illness, and, within thirty (30) days after being sent a written Notice of
Termination, you fail to resume performance of your essential job duties, with
or without reasonable accommodation.

 

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(c)  Cause.  A termination for “Cause” by Staples will occur whenever:

 

(i)  you willfully fail to substantially perform your duties with Staples (other
than any failure resulting from incapacity due to physical or mental illness);
provided, however, that Staples has given you a written demand for substantial
performance, which specifically identifies the areas in which your performance
is substandard, and you have not cured such failure within 30 days after
delivery of the demand.  No act or failure to act on your part  will be deemed
“willful” unless you acted or failed to act without a good faith or reasonable
belief that your conduct was in Staples’ best interest.

 

(ii)  you breach any of the terms of the Proprietary and Confidential
Information Agreement or Non-Competition Agreement (or other similar agreement)
between you and Staples, or

 

(iii)  you violate the Code of Ethics or attempt to secure any improper personal
profit in connection with the business of Staples, or

 

(iv)  you fail to devote your full working time to the affairs of Staples except
as may be authorized in writing by Staples’ CEO or other authorized Company
official, or

 

(v)  you engage in business other than the business of Staples except as may be
authorized in writing by Staples’ CEO or other authorized Company official, or

 

(vi)  you engage in misconduct which is demonstrably and materially injurious to
Staples;

 

provided that in each case Staples has given you written notice of its intent to
terminate your employment under this Section 5(c) and an opportunity to present,
in person, to the Executive Vice President of Human Resources or any other
authorized Company official, any objections you may have to such termination.

 

(d)  Good Reason.  A termination by you for “Good Reason” will occur whenever
any of the following conditions occur without your written consent, and such
condition results in a material negative change to you in your employment
relationship with Staples:

 

(i)  your position, duties, responsibilities, power, title or office is
significantly diminished (a change in your reporting relationship, standing
alone, shall not be deemed significant);

 

(ii)  your annual base salary is reduced;

 

(iii)  you are not allowed to participate in a cash bonus program in a manner
substantially consistent with past practice in light of Staples’ financial
performance and attainment of your specified goals, your participation in any
other material compensation plan (other than any stock option or stock award
program which programs are within the full discretion of the Compensation
Committee) is substantially reduced, both in terms of the amount of benefits
provided and the level of participation relative to other participants;

 

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(iv)  you are not provided with paid vacation or other benefits substantially
similar to those enjoyed by you under any of Staples’ medical, dental, life
insurance, or disability plans in which you were participating, or Staples took
any action which would directly or indirectly materially reduce any of such
benefits or the number of your paid vacation days;

 

(v)  in the event of a Change in Control, Staples or any person in control of
Staples requires you to perform your principal duties in a new location outside
a radius (measured from your primary residence) that is extended an additional
50 miles further from your primary residence at the time of the Change in
Control; or

 

(vi)  Staples fails to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in Section 5.

 

Notwithstanding the foregoing, any general reduction of salary or reduction (or
elimination) of other compensation, bonus and/or benefits for its officers which
are substantially comparable for all such officers (other than a reduction
occurring within 24 months after a Change of Control) will not be considered
“Good Reason.”

 

In each such case, a termination by you for Good Reason may occur only if
(1) you have given Staples a Notice of Termination (as defined in Section 2)
that specifies the existence of a condition giving rise to Good Reason and
Staples has not cured the condition giving rise to Good Reason within 30 days
after receipt of your Notice of Termination, (2) you provide the Notice of
Termination to Staples within 90 days after the initial occurrence of the
condition giving rise to your Good Reason, and (3) your termination for Good
Reason occurs no later than 180 days after you give Notice of Termination.

 

5.             Successors; Binding Agreement.  Staples will require any
successor (whether direct, indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of its business or assets expressly to
assume and agree to perform this Agreement to the same extent that Staples would
be required to perform it if no such succession had taken place. Any failure to
obtain an assumption of this Agreement prior to the effectiveness of any
succession will be a breach of this Agreement and will entitle you to
compensation in the same amount and on the same terms as you would be entitled
hereunder.  As used in this Agreement, “Staples” means Staples as defined above
and any successor to its business or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.  This
Agreement will inure to the benefit of and be enforceable by your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, will be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or if there
is no such designee, to your estate.

 

6.             Arbitration.  The parties agree that any legal disputes
(including but not limited to claims arising under federal or state statute,
contract, tort, or public policy) that may occur between you and Staples, and
that arise out of, or are related in any way to, your employment with or
termination of employment from Staples or the termination of this Agreement, and
which

 

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disputes cannot be resolved informally, will be resolved exclusively though
final and binding arbitration. The parties will be precluded from raising in any
other forum, including, but not limited to, any federal or state court of law,
or equity, any claim which could be raised in arbitration; provided, however
that nothing in this Agreement precludes you from filing a charge or from
participating in an administrative investigation of a charge before an
appropriate government agency or Staples from initiating an arbitration over a
matter covered by this Agreement.

 

Each party may demand arbitration, no later than three hundred (300) days after
the date on which the claim arose, by submitting to the other party a written
demand which states: (i) the claim asserted, (ii) the facts alleged, (iii) the
applicable statute or principal of law (e.g., breach of contract) upon which the
demand is based, and (iv) the remedy sought.  Any response to such demand must
be made, in writing, within twenty (20) days after receiving the demand, and
will specifically admit or deny each factual allegation.

 

The arbitration will be conducted in accordance with the Rules for Employment
Arbitration of the American Arbitration Association (AAA) and any arbitration
will take place in Framingham, Massachusetts.  Each party will bear its own
costs and attorney’s fees.  The arbitrator will have the power to award any
types of legal or equitable relief that would be available in a court of
competent jurisdiction, including, but not limited to, the costs of arbitration,
attorney’s fees, emotional distress damages, and punitive damages for causes of
action when such damages are available under law. Any relief or recovery to
which you are entitled from any claims arising out of your employment,
termination, or any claim of unlawful discrimination will be limited to that
awarded by the arbitrator.

 

7.             Waiver of Jury Trial.  If any claim arising out of your
employment or termination is found not to be subject to final and binding
arbitration, the parties agree to waive any right to a jury trial if such claim
is filed in court.

 

8.             Miscellaneous.

 

(a)           The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other provision
of this Agreement, which will remain in full force and effect.

 

(b)           The validity, interpretation, construction and performance of this
Agreement will be governed by the laws of the Commonwealth of Massachusetts.

 

(c)           No waiver by you or Staples at any time of any breach of, or
compliance with, any provision of this Agreement to be performed by Staples or
you, respectively, will be deemed a waiver of that or any other provision at any
subsequent time.

 

(d)           You must execute a legally enforceable separation agreement and
general release in a form acceptable to Staples prior to the receipt of any
payments or benefits set forth above.  Any payments made to you will be paid net
of any applicable withholding required under federal, state or local law.

 

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(e)           This Agreement is the exclusive agreement with respect to the
severance benefits payable to you in the event of a termination of your
employment.  All prior negotiations and agreements are hereby merged into this
Agreement.

 

If this Agreement sets forth our agreement, kindly sign and return to Staples
the enclosed copy of this Agreement.

 

 

 

Sincerely,

 

 

 

STAPLES, INC.

 

 

 

 

 

[Executive] Vice President, Human Resources

 

 

I have been advised of my right to consult with counsel regarding this Agreement
and have decided to sign below knowingly, voluntarily, and free from duress or
coercion.

 

 

Agreed to this          day of                                 , 200    

 

 

 

 

 

 

 

(Associate Signature)

 

 

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