Severance Agreement - OfficeMax Inc., Edward L. Cornell, Jeffrey L. Rutherford, Ross H. Pollock and Douglas J. Schwinn
[Executive]
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made as of the ____ day of
_________, 199___, between [FirstName] [LastName], an individual ("Executive"),
and OfficeMax, Inc., an Ohio corporation (the "Company").
RECITALS:
A. The Company and Executive desire to enter into this Agreement to
establish certain severance and change in control arrangements between the
Company and Executive on the terms and conditions set forth in this Agreement.
B. The Company and Executive are entering into this Agreement as an
additional benefit to be provided to Executive as part of the enhancements made
to Executive's overall compensation package in connection with Executive's
annual performance review.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises, the covenants and
promises made herein to be kept and performed, and the benefits to be derived by
Executive under this Agreement, the parties agree as follows:
1. SEVERANCE PAYMENTS.
(a) Subject to the terms and conditions set forth below, if
Executive's employment with the Company is terminated by the Company
(other than for "Cause" or "Disability" (each as described below)), or
if Executive terminates his employment with the Company for Good Reason
and if, in either case, such termination occurs within twenty-four (24)
months of the date of a "Change in Control" (as described below), then
the Company shall pay to Executive the following:
(i) Executive's monthly base salary through the end of
the month during which termination occurred, plus all
other unpaid amounts, if any, to which Executive is
entitled as of the date of termination; and
(ii) Commencing in the month following the month in which
termination occurs, twelve (12) monthly severance
payments in an amount equal to Executive's monthly
base salary as of the date of termination (such
monthly payments to be made on or about the 15th day
of each month); provided, however, if, following
termination of Executive's employment with the
Company, Executive violates and provision of Section
2 of this Agreement, then the Company's obligation to
make severance payments to Executive will terminate.
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[Executive]
(b) If Executive's employment with the Company is terminated
because of Executive's retirement or death or is terminated by the
Company for Cause or Disability, or if the Executive terminates his
employment for other than Good Reason, then Executive shall not be
entitled to, and the Company shall not be required to make, any
severance payments.
(c) Termination by the Company for "Cause" means termination by
the Company based on any of the following acts or omissions by
Executive, whether directly or indirectly:
(i) a violation of any policy of the Company that causes
material injury to the Company;
(ii) an act of fraud, embezzlement, theft or any other
material violation of law which interferes with
Executive's ability to perform Executive's duties
and responsibilities;
(iii) wrongful damage to material assets of the Company;
(iv) wrongful disclosure of confidential information of
the Company;
(v) wrongful engagement in any competitive activity
which would constitute a breach of the duty of
loyalty;
(vi) failure or refusal to perform, or gross negligence
in the performance of, Executive's duties and
responsibilities; or
(vii) making unauthorized comments to the media regarding
the Company.
(d) Termination by the Company for "Disability" means
termination by the Company based on the inability of Executive to
perform his duties and responsibilities as a result of the Executive's
illness (either physical or mental) or other incapacity for a total of
one hundred twenty (120) days during any twelve (12) month period.
(e)Termination by Executive for "Good Reason" means termination
by Executive based on the occurrence of any of the following
circumstances without Executive's express written consent:
(i) a reduction in either Executive's annual rate of
base salary or level of participation in any bonus
or incentive plan for which he is eligible (other
than as part of a salary reduction or changes in
bonus or incentive plans generally imposed on all
executive officers of the Company);
(ii) an elimination or reduction of Executive's
participation in any benefit plan generally
available to executive officers of the Company,
unless the Company
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[Executive]
continues to offer Executive benefits substantially
similar to those made available by such plan;
provided, however, that a change to a plan in which
executive officers of the Company generally
participate, including termination of any such plan,
if it does not result in a proportionately greater
reduction in the rights of or benefits to Executive
as compared with the other executive officers of the
Company or is required by law or a technical change,
will not be deemed to be Good Reason;
(iii) failure of any successor (whether direct or indirect,
by purchase of stock or assets, merger, consolidation
or otherwise) to the Company to assume the Company's
obligations under this Agreement or failure by the
Company to remain liable to Executive under this
Agreement after an assignment by the Company of this
Agreement; or
(iv) a transfer of Executive's principal business office
to a location outside of the area where the function
for which Executive is responsible is performed.
Executive's right to terminate his employment pursuant to this
paragraph (e) will not be affected by Executive's incapacity due to
physical or mental illness. Executive's continued employment will not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason; provided, however, that
Executive will be deemed to have waived his rights pursuant to
circumstances constituting Good Reason if he has not provided to the
Company a written notice of termination to the Company within ninety
(90) days following his knowledge of the circumstances constituting
Good Reason.
(f) For purposes of this Agreement, "Change in Control" means
the occurrence of any of the following:
(i) the Board of Directors or shareholders of the
Company approve a consolidation or merger that
results in the shareholders of the Company
immediately prior to the transaction giving rise to
the consolidation or merger owning less than 50% of
the total combined voting power of all classes of
stock entitled to vote of the surviving entity
immediately after the consummation of the
transaction giving rise to the merger or
consolidation;
(ii) the Board of Directors or shareholders of the
Company approve the sale of substantially all of the
assets of the Company or the liquidation or
dissolution of the Company;
(iii) any person or other entity (other than the Company
or a subsidiary or any Company Executive benefit
plan (including any trustee of any such plan acting
in its capacity as trustee)) purchases any shares of
capital stock of the Company (or securities
convertible to capital stock) pursuant to a tender
or exchange offer without the prior consent of the
Board of Directors, or becomes the beneficial owner
of securities of the Company representing thirty
percent (30%) or more of the voting power of the
Company's
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[Executive]
outstanding securities;
(iv) during any two-year period, individuals who are at
the beginning of such a period constitute the entire
Board of Directors cease to constitute a majority of
the Board of Directors, unless the election or the
nomination for election of each new director is
approved by at least two-thirds of the directors
then still in office who were directors at the
beginning of that period; or
(v) the individual serving as the Chief Executive
Officer of the Company on the date of this Agreement
ceases to serve (other than as a result of death or
disability) as the Chief Executive Officer, Co-Chief
Executive Officer, Chairman or Co-Chairman of the
Company or any surviving entity.
(g) The severance payments provided under this Agreement shall
constitute the exclusive payments due to Executive from, and the
exclusive obligation of, the Company if Executive's employment with the
Company is terminated, except for any benefits which may be payable to
Executive in normal course under any Executive benefit plan of the
Company which provides benefits after the termination of employment.
(h) The obligation of the Company to make the severance
payments under this Agreement is conditioned on the execution and
delivery by Executive to the Company of a release, in form and
substance satisfactory to the Company, of any and all claims Executive
may have arising out of Executive's employment relationship with the
Company under federal, state or local law (other than any claim for
benefits which may be due to Executive in normal course under any
Executive benefit plan of the Company which provides benefits after
termination of employment).
(i) All payments to Executive shall be subject to withholding
on account of federal, state and local taxes as required by law.
2. COVENANT NOT TO COMPETE AND CONFIDENTIALITY.
(a) Executive acknowledges that as a management employee,
Executive will be involved on a high level, in the development,
implementation and management of the Company's business strategies and
plans and that by virtue of Executive's unique and sensitive position
and special background, employment of Executive by a competitor of the
Company represents a serious competitive danger to the Company, and the
use of Executive's talent and knowledge and information about the
Company's business, strategies and plans can and would constitute a
valuable competitive advantage over the Company. In view of the
foregoing, Executive agrees that beginning on the date of termination
of Executive's employment with the Company and continuing for a period
of twelve (12) months following the month during which termination
occurred, Executive will not, directly or indirectly, do, or cause to
be done, any of the following:
(i) Own, manage, control or participate in the
ownership, management or control of, or be employed
or engaged by or otherwise affiliated with, any
other
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[Executive]
person, corporation, firm, or other business
entity (such as Staples or Office Depot) that
competes with the business of the Company or any of
its subsidiaries or affiliates as such businesses
are conducted at anytime and anywhere during
Executive's employment with the Company (the
"Business"); provided, however, that the ownership
of not more than one percent (1%) of the equity of
any publicly-traded business entity will not be
deemed a violation of this covenant;
(ii) Employ, assist in employing, or otherwise associate
in business with any present, former or future
associate, employee, officer or agent of the Company
or any of its subsidiaries or affiliates in a
business that competes with the Business; or
(iii) Induce any person who is an associate, employee,
officer or agent of the Company or any of its
subsidiaries to terminate said relationship
(b) Executive agrees that from and after the date of this
Agreement, he will not disclose, divulge, discuss, disseminate, copy or
otherwise use or cause to be used any of the confidential, proprietary
or trade secret information (including, but not limited to, customer
lists, pricing lists or information, purchasing information, service
distribution methods, formulae, marketing research or other trade
secrets) of the Company or any of its subsidiaries or affiliates,
except in connection with his duties and responsibilities as an
executive of the Company.
(c) Executive expressly agrees and understands that the remedy
at law for any breach by him of this Section 2 will be inadequate and
that the damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it is acknowledged
that on adequate proof of his violation of any legally enforceable
provision of this Section 2, the Company will be entitled to immediate
injunctive relief and may obtain a temporary order restraining any
threatened or further breach. Nothing in this Section 2 will be deemed
to limit the Company's remedies at law or in equity for any breach by
Executive of any of the provisions of this Section 2.
(d) If Executive violates any legally enforceable provision of
this Section 2 as to which there is a specific time period during which
Executive is prohibited from taking certain actions or from engaging in
certain activities, as set forth in such provision, then, in such
event, such violation will toll the running of such time period from
the date of such violation until such violation ceases.
(e) If Executive violates any provision of this Section 2,
then the obligation of the Company to make the severance payments to
Executive will terminate and Executive will not be entitled to any
further severance payments.
(F) EXECUTIVE HAS CAREFULLY CONSIDERED THE NATURE AND EXTENT
OF THE RESTRICTIONS ON HIM AND THE RIGHTS AND REMEDIES CONFERRED ON THE
COMPANY UNDER THIS SECTION 2 AND HEREBY ACKNOWLEDGES AND AGREES THAT
THE SAME ARE REASONABLE IN TIME
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[Executive]
AND TERRITORY, ARE DESIGNED TO ELIMINATE COMPETITION WHICH OTHERWISE
WOULD BE UNFAIR TO THE COMPANY AND ITS SUBSIDIARIES, DO NOT STIFLE HIS
INHERENT SKILL AND EXPERIENCE, WOULD NOT OPERATE AS A BAR TO HIS SOLE
MEANS OF SUPPORT, ARE FULLY REQUIRED TO PROTECT THE LEGITIMATE
INTERESTS OF THE COMPANY AND ITS SUBSIDIARIES AND DO NOT CONFER A
BENEFIT ON THE COMPANY DISPROPORTIONATE TO THE DETRIMENT TO HIM.
3. EMPLOYMENT AT WILL. Executive understands and agrees that this
Agreement does not constitute a contract of employment for a fixed term.
Executive acknowledges that he is free to resign from employment, and the
Company is free to terminate his employment, at any time for any reason.
4. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association then
pertaining in the City of Cleveland, Ohio, and judgment upon the award rendered
by the arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. The arbitrator or arbitrators shall be deemed to possess the powers to
issue mandatory orders and restraining orders in connection with such
arbitration; provided, however, that nothing in this Section 4 shall be
construed so as to deny the Company the right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach by
Executive of any of his covenants contained in Section 2 above.
5. NOTICE. Notices, demands and all other communications provided for
in this Agreement shall be in writing and will be deemed to have been duly given
when delivered, if delivered personally, or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, and when received if
delivered otherwise, and if mailed to the Company, shall be addressed to its
principal place of business, attention: General Counsel, and if mailed to
Executive, shall be addressed to Executive at his home address last shown on the
records of the Company, or to such other address as any party may have furnished
to the other in writing, except that notices of change of address will be
effective only on receipt.
6. SEVERABLE PROVISIONS. The provisions of this Agreement are severable
and if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provision to the extent enforceable in any jurisdiction shall,
nevertheless, be binding and enforceable.
7. GENERAL PROVISIONS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the parties hereto. No waiver by either party to this
Agreement at any time of any breach by the other party of, or compliance with,
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. The validity, interpretation,
construction and performance of this Agreement will be governed by the laws of
the State of Ohio without regard to its conflicts of law principles.
8. NUMBER; GENDER. Whenever the context so requires, the singular
pronoun shall include the plural and the plural shall include the singular, and
the gender of any pronoun shall
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[Executive]
include the other genders.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument.
10. HEADINGS. The headings of paragraphs are included solely for
convenience of reference only and are not part of this Agreement and will not be
used in construing it.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties in respect of the subject matter contained in this Agreement and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, Executive or representative of any party; and any prior agreement of
the parties in respect of the subject matter contained in this Agreement is
terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this Severance Agreement
as of the date first above written.
OFFICEMAX, INC.
By:
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Michael Feuer
Chairman and Chief Executive Officer
"EXECUTIVE"
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[FirstName] [LastName]
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