Exhibit 10.3

 

AMENDED AND RESTATED SEVERANCE BENEFITS AGREEMENT

 

Mr. Michael Miles

c/o Staples, Inc.

500 Staples Drive

Framingham, MA 01702

 

Dear Mr. Miles:

 

You are employed by Staples, Inc. and/or one of its subsidiaries (“Staples”) and
entered into a Severance Benefits Agreement with Staples on September 22, 2003
(the “Prior Agreement”). This letter agreement (this “Agreement”) amends and
restates the Prior Agreement in its entirety. Staples agrees to provide you with
the severance benefits set forth in this 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. 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 without “Good
Reason.”

 

(a)  Staples will pay you 18 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 (or accrued for) 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 earned will be annualized.

 

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(b) Staples will provide you with 18 months of life, dental, accident and group
health insurance benefits substantially similar to those available to similarly
situated officers (but not disability insurance); provided, however, that
Staples will not provide any such benefit for any portion of this period that
you receive an equivalent benefit from another party.

 

(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) 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.

 

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 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, 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

 

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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.

 

(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.

 

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(d) Good Reason. A termination by you for “Good Reason” will occur whenever any
of the following circumstances have taken place, without your written consent
within 90 days prior to your Notice of Termination:

 

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

 

(ii) your annual base salary was reduced;

 

(iii) you were 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) was substantially reduced, both in terms of the amount of benefits
provided and the level of participation relative to other participants; unless
such circumstances are fully corrected prior to the Date of Termination
specified in your Notice of Termination;

 

(iv) you were not provided with paid vacation or other benefits substantially
similar to those enjoyed by you under any of Staples’ life insurance, medical,
health and accident, 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; unless such
circumstances are fully corrected prior to the Date of Termination specified in
your Notice of Termination;

 

(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 of 50 miles from your business location 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 (but not occurring within 24
months after a Change of Control) will not be considered “Good Reason.”

 

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,

 

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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 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.

 

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(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.

 

(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, including
without limitation the Prior Agreement, are hereby merged into this Agreement.

 

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

 

 

 

Sincerely,

 

 

 

STAPLES, INC.

 

 

 

 

 

By:

  /s/ Susan S. Hoyt

 

 

 

Executive Vice President,

 

 

Human Resources

 

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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 13th day of March, 2006

 

 

/s/ Michael A. Miles

 

(Associate Signature)

 

 

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