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 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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