ODP » Topics » Agreements with Chuck Rubin, our President, North American Retail Division

This excerpt taken from the ODP DEF 14A filed Mar 11, 2009.

Agreements with Chuck Rubin, our President, North American Retail Division

We are a party to an Executive Employment Agreement initially dated March 1, 2004, with Chuck Rubin, who was Executive Vice President Merchandising when the Executive Employment Agreement was initially entered into and who was subsequently named President, North American Retail in early 2006. The Executive Employment Agreement has been amended three times, first on June 15, 2004, second on January 23, 2006, in connection with Mr. Rubin’s promotion to his current position of President, North American Retail, and third effective December 31, 2008, to bring the agreement into documentary compliance with Internal Revenue Code section 409A (“Section 409A”). In addition, the Company entered into a Change of Control Agreement with Mr. Rubin dated March 1, 2004, which agreement was amended and restated effective February 25, 2008, to bring the agreement into documentary compliance with Section 409A.

 

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Executive Employment Agreement with Mr. Rubin

The term of the Executive Employment Agreement runs until July 22, 2009, which period will be automatically extended for successive one-year periods unless either Mr. Rubin or we give at least 6 months prior written notice that the term is not to be extended.

Compensation, Benefits and Perquisites

Under the Executive Employment Agreement, Mr. Rubin is eligible to receive the following:

 

   

a base salary of $625,000 per annum, subject to annual review and upward adjustment by the Compensation Committee;

 

   

an annual bonus through participation in the Company’s annual bonus plan for senior executives or other bonus plans offered to him; and

 

   

certain benefits and perquisites.

Termination

Mr. Rubin’s employment may be terminated by us or by Mr. Rubin at any time, subject to the terms and conditions of the Executive Employment Agreement. The respective rights and obligations of Mr. Rubin and the Company depend upon the party that initiates the termination and the reason for the termination.

The following table summarizes the termination events (each as defined in Mr. Rubin’s Executive Employment Agreement) and the payments Mr. Rubin is eligible to receive upon each event.

 

Termination Event

 

Payment

1.      Termination for “cause” or resignation without “good reason”

 

•     accrued compensation and benefits (including vested and earned but unpaid amounts under incentive plans and other employee programs).

2.      Termination resulting from death or “disability”

 

•     accrued compensation and benefits (including vested and earned but unpaid amounts under incentive plans and other employee programs); and

 

•     a pro rata portion of the target annual bonus.

3.      Termination without cause or Resignation for good reason

 

•     accrued compensation and benefits (including vested and earned but unpaid amounts under incentive plans and other employee programs);

 

•     one point five (1.5) times base salary;

 

•     a pro rata portion of the target annual bonus;

 

•     a payment of 18 times the Company’s monthly COBRA and other welfare plan premiums for the type of coverage in effect for executive on the date of termination; and

 

•     one point five (1.5) times the target bonus.

Mr. Rubin’s severance entitlements are conditional upon his execution of a release of claims against the Company and its affiliates.

 

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Restrictive Covenants

Mr. Rubin’s Executive Employment Agreement subjects him to various restrictive covenants that can limit his post-employment activity. These include an 18-month non-competition period that bars employment or engaging in any business for any competitor. Other restrictions include non-solicitation and non-interference provisions. In addition, non-disclosure provisions protect our confidential information and work product.

Change of Control Agreement with Mr. Rubin

The Change of Control Agreement governs the terms and conditions of Mr. Rubin’s employment for a period of one year starting with the date of the change of control (as defined in the agreement). If we terminate Mr. Rubin’s employment other than for cause, death or disability or if Mr. Rubin resigns for good reason (as such terms are defined in the agreement) following a change of control, Mr. Rubin is eligible to receive:

 

   

certain accrued compensation, obligations and other benefits (as provided in the agreement);

 

   

a pro rata portion of the highest annual bonus (as defined in the agreement);

 

   

two times the sum of annual base salary and highest annual bonus (as defined in the agreement);

 

   

a payment of 24 times the Company’s monthly COBRA premium for the type of coverage in effect for executive on the date of termination; and

 

   

a 24-month executive outplacement services package.

If Mr. Rubin dies or we terminate Mr. Rubin’s employment on account of disability following a change of control, Mr. Rubin is eligible to receive the payments and benefits described in the first three bullets above.

Mr. Rubin is eligible to receive a tax “gross-up” payment if any payments would constitute an excess payment under IRC section 4999. However, if Mr. Rubin would not receive a net after-tax benefit of at least $50,000 (taking into account both income taxes and any excise tax payable on excess payments) as compared to eliminating the gross-up and having a reduction of the change of control payments to the largest amount that would not result in any parachute excise tax, then no gross-up payment would be made and Mr. Rubin’s change of control payments would be so reduced.

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