Exhibit 10.4

AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

 

1.              Purpose

 

The purpose of this Amended and Restated 2004 Stock Incentive Plan (the “Plan”)
of Staples, Inc., a Delaware corporation (the “Company”), is to advance the
interests of the Company’s stockholders by enhancing the Company’s ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company’s stockholders.
Except where the context otherwise requires, the term “Company” shall include
any of the Company’s present or future parent or subsidiary corporations as
defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the “Code”), and any other
business venture (including, without limitation, joint venture or limited
liability company) in which the Company has a controlling interest, as
determined by the Board of Directors of the Company (the “Board”).

 

2.              Eligibility

 

All of the Company’s employees, officers, directors, consultants, advisors, and
other service providers (including persons who have entered into an agreement
with the Company under which they will be employed by the Company in the future)
are eligible to be granted options, restricted stock, restricted stock units,
stock appreciation rights or other stock-based awards (each, an “Award”) under
the Plan. Each person who has been granted an Award under the Plan shall be
deemed a “Participant”.

 

3.              Administration and Delegation

 

(a)          Administration by Board of Directors. The Plan will be administered
by the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board’s sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.

 

(b)         Appointment of Committees. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a “Committee”). Unless otherwise
determined by the Board, if a Committee is authorized to grant Awards to a
Covered Employee (as defined in Section 162(m) of the Code), such Committee
shall be comprised solely of two or more “outside directors” within the meaning
of Section 162(m) of the Code. All references in the Plan to the “Board” shall
mean the Board or a Committee of the Board or the officers referred to in
Section 3(c) to the extent that the Board’s powers or authority under the Plan
have been delegated to such Committee or officers.

 

(c)          Delegation to Officers. To the extent permitted by applicable law,
the Board may delegate to one or more officers of the Company the power to grant
Awards to employees or officers of the Company or any of its present or future
subsidiary corporations and to exercise such other powers under the Plan as the
Board may determine, provided that the Board shall fix the terms of the Awards
to be granted by such officers (including the exercise price of such Awards,
which may include a formula by which the exercise price will be determined) and
the maximum number of shares subject to Awards that the officers may grant;
provided further, however, that no officer shall be authorized to grant Awards
to himself or herself or to any “executive officer” of the Company (as defined
by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1
under the Exchange Act).

 

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4.              Available for Awards

 

(a)          Number of Shares. Subject to adjustment under Section 9, Awards may
be made under the Plan for up to 77,430,000 shares of common stock, $.0006 par
value per share, of the Company (the “Common Stock”). For purposes of counting
the number of shares available for the grant of Awards under the Plan,
(i) shares of Common Stock covered by independent SARs shall be counted against
the number of shares available for the grant of Awards under the Plan; (ii) if
any Award (A) expires or is terminated, surrendered or canceled without having
been fully exercised or is forfeited in whole or in part (including as the
result of shares of Common Stock subject to such Award being repurchased by the
Company at the original issuance price pursuant to a contractual repurchase
right) or (B) results in any Common Stock not being issued because the Award
(other than a SAR) is settled for cash, the unused Common Stock covered by such
Award (other than a SAR) shall again be available for the grant of Awards under
the Plan; provided, however, in the case of Incentive Stock Options (as
hereinafter defined), the foregoing shall be subject to any limitations under
the Code; and (iii) shares of Common Stock tendered to the Company by a
Participant to (A) purchase shares of Common Stock upon the exercise of an Award
or (B) satisfy tax withholding obligations (including shares retained from the
Award creating the tax obligation) shall not be added back to the number of
shares available for the future grant of Awards under the Plan.

 

In addition, if any option or restricted stock award granted under the 1992 Plan
expires, is terminated, surrendered or canceled without having been fully
exercised, is forfeited in whole or in part (including as the result of shares
of Common Stock subject to such restricted stock award being repurchased by the
Company at the original issuance price pursuant to a contractual repurchase
right), then in each such case the unused Common Stock covered by such option or
restricted stock award shall be available for the grant of Awards under the
Plan, subject, however, in the case of Incentive Stock Options, to any
limitations under the Code; and further provided that shares of Common Stock
tendered to the Company to (A) purchase shares of Common Stock upon the exercise
of any such option or (B) satisfy tax withholding obligations (including shares
retained from the option or restricted stock award creating the tax obligation)
shall not be added back to the number of shares available for the future grant
of Awards under the Plan and that the aggregate number of shares of Common Stock
available for grant of Awards pursuant to this sentence shall not exceed
51,000,000. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

 

(b)         Sub-limits. Subject to adjustment under Section 9, the following
sub-limits on the number of shares of Common Stock subject to Awards shall
apply:

 

(1)          Section 162(m) Per-Participant Limit. The maximum number of shares
of Common Stock with respect to which Awards may be granted to any Participant
under the Plan in any calendar year shall be 3,450,000. The per-Participant
limit described in this Section 4(b)(1) shall be construed and applied
consistently with Section 162(m) of the Code (“Section 162(m)”).

 

(2)          Limit on Awards other than Options and SARs. The maximum number of
shares with respect to which Awards other than Options and SARs may be granted
shall be one-half of the total number of shares of Common Stock covered by the
Plan (including any shares that may become available under this Plan pursuant to
Section 4(a)(2) hereof).

 

(3)          Limits on Awards to Directors. The maximum number of shares with
respect to which Awards may be granted during the term of the Plan to directors
who are not employees of the Company shall be 2,000,000 and the maximum number
of shares of Common stock with respect to which Awards may be granted in any
calendar year to any director who is not an employee of the Company shall be
150,000.

 

5.              Stock Options

 

(a)          General. The Board may grant options to purchase Common Stock
(each, an “Option”) and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a “Nonstatutory Stock
Option”.

 

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(b)         Incentive Stock Options. An Option that the Board intends to be an
“incentive stock option” as defined in Section 422 of the Code (an “Incentive
Stock Option”) shall only be granted to employees of Staples, Inc., any of
Staples, Inc.’s present or future parent or subsidiary corporations as defined
in Sections 424(e) or (f) of the Code, and any other entities the employees of
which are eligible to receive Incentive Stock Options under the Code, and shall
be subject to and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no liability to a Participant,
or any other party, if an Option (or any part thereof) that is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

 

(c)          Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement;
provided, however, that the exercise price shall be not less than 100% of the
fair market value (the “Fair Market Value”) of the Common Stock, as determined
by the Board, at the time the Option is granted.

 

(d)         No Reload Rights. Options granted under this Plan shall not contain
any provision entitling the optionee to the automatic grant of additional
Options in connection with any exercise of the original Option.

 

(e)          No Repricing. Unless such action is approved by the Company’s
stockholders: (i) no outstanding Option granted under the Plan may be amended to
provide an exercise price per share that is lower than the then-current exercise
price per share of such outstanding Option (other than adjustments pursuant to
Section 9), and (ii) the Board may not cancel any outstanding Option and grant
in substitution therefor new Options under the Plan covering the same or a
different number of shares of Common Stock and having an exercise price per
share lower than the then-current exercise price per share of the cancelled
Option.

 

(f)            Duration of Options. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement provided, however, that no Option will be granted
for a term in excess of 10 years.

 

(g)         Exercise of Option. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Company,
together with payment in full as specified in Section 5(h) for the number of
shares for which the Option is exercised. Shares of Common Stock subject to the
Option will be delivered by the Company following exercise either as soon as
practicable or, to the extent permitted by the Company in its sole discretion,
on a deferred basis in compliance with Section 409A of the Code (with the
Company’s obligation to be evidenced by an instrument providing for future
delivery of the deferred shares at the time or times specified by the Board).

 

(h)         Payment Upon Exercise. Common Stock purchased upon the exercise of
an Option granted under the Plan shall be paid for as follows:

 

(1)          in cash or by check, payable to the order of the Company;

 

(2)          except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price and any required tax withholding or
(ii) delivery by the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to promptly pay to the
Company the exercise price and any required tax withholding;

 

(3)          if provided for in the option agreement or approved by the Company,
in its sole discretion, by delivery (either by actual delivery or attestation)
of shares of Common Stock owned by the Participant valued at their Fair Market
Value, provided (i) such method of payment is then permitted under applicable
law, (ii) such Common Stock, if acquired directly from the Company was owned by
the Participant for such minimum period of time, if any, as may be established
by the Board in its discretion, and (iii) such Common Stock is not subject to
any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

 

(4)          if provided for in the option agreement or approved by the Company,
in its sole discretion, by payment of such other lawful consideration as the
Board may determine, but in no event may such consideration include delivery of
a promissory note of the Participant to the Company; or

 

(5)          by any combination of the above permitted forms of payment.

 

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(i)             Substitute Options. In connection with a merger or consolidation
of an entity with the Company or the acquisition by the Company of property or
stock of an entity, the Board may grant Options in substitution for any options
or other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted pursuant to this Section 5(i) on such
terms as the Board deems appropriate in the circumstances, notwithstanding any
limitations on Options contained in the other sections of this Section 5 or in
Section 2, so long as (a) the excess of the aggregate fair market value of the
shares subject to each substituted option immediately after the issuance of such
substituted option over the aggregate exercise price of such option does not
exceed the excess of the aggregate fair market value of all shares subject to
the original option immediately before the issuance of such substituted option
over the aggregate exercise price of the original option and (b) the ratio of
the option exercise price to the fair market value of the stock for the
substitute option is not greater than the ratio of the option exercise price to
the fair market value of the original option immediately before such
substitution.

 

(j)             Amendment of Options. Subject to the provisions of
Section 10(f), the Board may amend an Option to convert it into a Stock
Appreciation Right.

 

6.              Stock Appreciation Rights

 

(a)          Nature of Stock Appreciation Rights. A Stock Appreciation Right, or
SAR, is an Award entitling the holder on exercise to receive an amount in cash
or Common Stock or a combination thereof (such form to be determined by the
Board) determined solely by reference to appreciation, from and after the date
of grant, in the fair market value of a share of Common Stock. The date as of
which such appreciation or other measure is determined shall be the exercise
date unless another date is specified by the Board.

 

(b)         Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted in tandem with, or independently of, Options granted under the Plan.

 

(1)          Rules Applicable to Tandem Awards. When Stock Appreciation Rights
are granted in tandem with Options, (a) the Stock Appreciation Right will be
exercisable only at such time or times, and to the extent, that the related
Option is exercisable (except to the extent designated by the Board in
connection with an Acquisition Event or a Change in Control Event) and will be
exercisable in accordance with the procedure required for exercise of the
related Option; (b) the Stock Appreciation Right will terminate and no longer be
exercisable upon the termination or exercise of the related Option, except to
the extent designated by the Board in connection with an Acquisition Event or a
Change in Control Event and except that a Stock Appreciation Right granted with
respect to less than the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related Option has been
exercised or has terminated exceeds the number of shares not covered by the
Stock Appreciation Right; (c) the Option will terminate and no longer be
exercisable upon the exercise of the related Stock Appreciation Right; and
(d) the Stock Appreciation Right will be transferable only with the related
Option.

 

(2)          Exercise of Independent Stock Appreciation Rights. A Stock
Appreciation Right not granted in tandem with an Option will become exercisable
at such time or times, and on such conditions, as the Board may specify. The
Board may at any time accelerate the time at which all or any part of the Right
may be exercised.

 

(c)          Exercise of Stock Appreciation Rights. Stock Appreciation Rights
may be exercised by delivery to the Company of a written notice of exercise
signed by the proper person or by any other form of notice (including electronic
notice) approved by the Company.

 

7.              Restricted Stock; Restricted Stock Units

 

(a)          Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock (“Restricted Stock”), subject to the right of the Company
to repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award. Instead
of granting

 

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Awards for Restricted Stock, the Board may grant Awards entitling the recipient
to receive shares of Common Stock to be delivered in the future (“Restricted
Stock Units”) subject to such terms and conditions on the delivery of the shares
of Common Stock as the Board shall determine (each Award for Restricted Stock or
Restricted Stock Units, a “Restricted Stock Award”).

 

(b)         Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any.

 

(c)          Limitations on Vesting. Restricted Stock Awards that vest based on
the passage of time alone shall be zero percent vested prior to the first
anniversary of the date of grant, no more than 331/3% vested after the said
first anniversary of the date of grant and before the second anniversary of the
date of grant, and no more than 662/3% vested after the second anniversary of
the date of grant and before the third anniversary of the date of grant.
Restricted Stock Awards that vest based on performance alone shall not vest
earlier than the first anniversary of the date of grant. Restricted Stock Awards
that vest upon the passage of time and provide for accelerated vesting based on
performance shall not vest earlier than the first anniversary of the date of
grant. Notwithstanding the preceding provisions of this Section 7(c)(1), the
Board may grant Restricted Stock Awards that are not subject to any limitations
on vesting with respect to up to 5% of the total number of shares of Common
Stock covered by the Plan (excluding any shares that may become available under
this Plan pursuant to Section
4(a)(2) hereof).

 

Notwithstanding any other provision of this Plan, the Board may, in its
discretion, either at the time a Restricted Stock Award is made or at any time
thereafter, waive its right to repurchase shares of Common Stock (or waive the
forfeiture thereof) or remove or modify any part or all of the restrictions
applicable to the Restricted Stock Award, provided that the Board may only
exercise such rights in extraordinary circumstances which shall include, without
limitation, death or disability of the Participant; estate planning needs of the
Participant; a merger, consolidation, sale, reorganization, recapitalization, or
change in control of the Company; or any other nonrecurring significant event
affecting the Company, a Participant or the Plan.

 

8.              Other Stock-Based Awards

 

Other Awards of shares of Common Stock and other Awards that are valued in whole
or in part by reference to, or are otherwise based on, shares of Common Stock or
other property, including without limitation rights to purchase shares of Common
Stock (“Other Stock Unit Awards”), may be granted hereunder to Participants.
Such Other Stock Unit Awards shall also be available as a form of payment in the
settlement of other Awards granted under the Plan or as payment in lieu of
compensation to which a Participant is otherwise entitled. Other Stock Unit
Awards may be paid in shares of Common Stock or cash, as the Board shall
determine. Subject to the provisions of the Plan, the Board shall determine the
conditions of each Other Stock Unit Awards, including any purchase price
applicable thereto; provided, however, that the limitations on vesting and
exceptions thereto contained in Section 7(c)(1) of the Plan shall also apply to
all Other Stock Unit Awards.

 

9.              Adjustments for Changes in Common Stock and Certain Other Events

 

(a)          Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than an ordinary
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the sub-limits set forth in Section 4(b), (iii) the number and class of
securities and exercise price per share subject to each outstanding Option,
(iv) the repurchase price per share subject to each outstanding Restricted Stock
Award and (v) the terms of each other outstanding stock-based Award shall be
adjusted by the Company in the same proportion (or substituted Awards may be
made, if applicable). If this Section 9(a) applies and Section 9(c) also applies
to any event, Section 9(c) shall be applicable to such event, and this
Section 9(a) shall not be applicable.

 

(b)         Liquidation or Dissolution. In the event of a proposed liquidation
or dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before

 

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such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award granted under the Plan at the time of
the grant.

 

(c)          Reorganization Events.

 

(1)          Definition. A “Reorganization Event” shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
all of the outstanding shares of Common Stock are converted into or exchanged
for the right to receive cash, securities or other property or (b) any exchange
of all of the Common Stock for cash, securities or other property pursuant to a
share exchange transaction.

 

(2)          Consequences of a Reorganization Event on Awards. In connection
with a Reorganization Event, the Board shall take any one or more of the
following actions as to all or any outstanding Awards on such terms as the Board
determines: (i) provide that Awards shall be assumed, or substantially
equivalent Awards shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to a
Participant, provide that the Participant’s unexercised Options or other
unexercised Awards shall become exercisable in full and will terminate
immediately prior to the consummation of such Reorganization Event unless
exercised by the Participant within a specified period following the date of
such notice, (iii) in the event of a Reorganization Event under the terms of
which holders of Common Stock will receive upon consummation thereof a cash
payment for each share surrendered in the Reorganization Event (the “Acquisition
Price”), make or provide for a cash payment to a Participant equal to (A) the
Acquisition Price times the number of shares of Common Stock subject to the
Participant’s Options or other Awards (to the extent the exercise price does not
exceed the Acquisition Price) minus (B) the aggregate exercise price of all such
outstanding Options or other Awards, in exchange for the termination of such
Options or other Awards, (iv) provide that outstanding Awards shall become
exercisable or realizable, or restrictions applicable to a Restricted Stock
Award or other Award shall lapse, in whole or in part, prior to or upon such
Reorganization Event, (v) provide that, in connection with a liquidation or
dissolution of the Company, Awards shall convert into the right to receive
liquidation proceeds (if applicable, net of the exercise price thereof) and
(vi) any combination of the foregoing. To the extent all or any portion of an
Award becomes exercisable solely as a result of clause (ii) above, the Board may
provide that upon exercise of such Award the Participant shall receive shares
subject to a right of repurchase by the Company or its successor at the Award
exercise price; such repurchase right (A) shall lapse at the same rate as the
Award would have become exercisable under its terms and (B) shall not apply to
any shares subject to the Award that were exercisable under its terms without
regard to clause (ii) above.

 

10.       General Provisions Applicable to Awards

 

(a)          Transferability of Awards. Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution or, other than in the case of an Incentive Stock
Option, pursuant to a qualified domestic relations order, and, during the life
of the Participant, shall be exercisable only by the Participant; provided,
however, that the Board may permit or provide in an Award for the gratuitous
transfer of the Award by the Participant to or for the benefit of any immediate
family member, family trust or family partnership established solely for the
benefit of the Participant and/or an immediate family member thereof if, with
respect to such proposed transferee, the Company would be eligible to use a
Form S-8 for the registration of the sale of the Common Stock subject to such
Award under the Securities Act of 1933, as amended; provided, further, that the
Company shall not be required to recognize any such transfer until such time as
the Participant and such permitted transferee shall, as a condition to such
transfer, deliver to the Company a written instrument in form and substance
satisfactory to the Company confirming that such transferee shall be bound by
all of the terms and conditions of the Award. References to a Participant, to
the extent relevant in the context, shall include references to authorized
transferees.

 

(b)         Documentation. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

 

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(c)          Board Discretion. Except as otherwise provided by the Plan, each
Award may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.

 

(d)         Termination of Status. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant’s legal
representative, conservator or guardian may exercise rights under the Award.

 

(e)          Withholding. The Company may require each Participant to pay to the
Company, or make provision satisfactory to the Company for payment of, an amount
sufficient to pay any taxes, social security contributions, or other similar
amounts required by law to be withheld in connection with an Award to such
Participant. If provided for in an Award or approved by the Company, in its sole
discretion, a Participant may satisfy such tax obligations in whole or in part
by delivery of shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value; provided,
however, that except as otherwise provided by the Board, the total tax
withholding where stock is being used to satisfy such tax obligations cannot
exceed the Company’s minimum statutory withholding obligations (based on minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, that are applicable to such supplemental taxable income). Shares
surrendered to satisfy tax withholding requirements cannot be subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements. The
Company may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to a Participant.

 

(f)            Amendment of Award. Except as prohibited by Section 5(e), the
Board may amend, modify or terminate any outstanding Award, including but not
limited to, substituting therefor another Award of the same or a different type,
changing the date of exercise or realization, converting an Incentive Stock
Option to a Nonstatutory Stock Option and converting an Option into a SAR,
provided that, in each such case, the Participant’s consent to such action shall
be required unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.

 

(g)         Conditions on Delivery of Stock. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company’s counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws,
rules or regulations.

 

(h)         Acceleration. The Board may at any time provide that any Award shall
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be; provided, however, that this sentence shall apply to a Restricted
Stock Award only to the extent consistent with Sections 7(c)(2) and 10(j).

 

(i)             Deferral. The Board may provide in an Award or in an amendment
to an Award that the Participant may elect to defer the delivery of shares of
Common Stock that would otherwise be delivered pursuant to such Award. The Board
may establish such conditions on the Participant’s election as it deems
appropriate, including provisions to obtain compliance with Section 409A of the
Code.

 

(j)             Performance Conditions. Notwithstanding any other provision of
the Plan, if the Committee determines at the time a Restricted Stock Award or an
Other Stock Unit Award is granted to a Participant who is then an officer, that
such Participant is, or is likely to be as of the end of the tax year in which
the Company would claim a tax deduction in connection with such Award, a Covered
Employee (as defined in Section 162(m) of the Code), then the Committee may
provide that this Section 10(j) is applicable to such Award.

 

If a Restricted Stock Award or an Other Stock Unit Award is subject to this
Section 10(j), then the lapsing of restrictions thereon and the distribution of
Shares pursuant thereto, as applicable, shall be subject to the achievement of
one or more objective performance goals established by the Committee, which
shall be based on one or more of the

 

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following measures: sales, earnings per share, return on net assets, return on
equity, and customer service levels. The Committee may determine that special
one-time or extraordinary gains and/or losses and/or other one-time or
extraordinary events should or should not be included or considered in the
calculation of such measures. In addition, customer service target levels will
be based on predetermined tests of customer service levels such as scores on
blind test (“mystery”) shopping, customer comment card statistics, customer
relations statistics (e.g., number of customer complaints), and delivery
response levels. The Committee believes that disclosure of further detail
concerning the performance criteria may be confidential commercial or business
information, the disclosure of which would adversely affect the Company. Such
performance goals may vary by Participant and may be different for different
Awards. Such performance goals shall be set by the Committee within the time
period prescribed by, and shall otherwise comply with the requirements of,
Section 162(m) of the Code, or any successor provision thereto, and the
regulations thereunder.

 

The Committee shall have the power to impose such other restrictions on Awards
subject to this Section 10(j) as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for “performance-based compensation”
within the meaning of Section 162(m)(4)(C) of the Code, or any successor
provision thereto.

 

11.       Miscellaneous

 

(a)          No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

 

(b)         No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant shall have any rights as a stockholder with
respect to any shares of Common Stock to be distributed with respect to an Award
until becoming the record holder of such shares. Notwithstanding the foregoing,
in the event the Company effects a split of the Common Stock by means of a stock
dividend and the exercise price of and the number of shares subject to such
Option are adjusted as of the date of the distribution of the dividend (rather
than as of the record date for such dividend), then an optionee who exercises an
Option between the record date and the distribution date for such stock dividend
shall be entitled to receive, on the distribution date, the stock dividend with
respect to the shares of Common Stock acquired upon such Option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.

 

(c)          Effective Date and Term of Plan. The Plan shall become effective on
the date on which it is approved by stockholders of the Company and shall remain
in full force and effect until terminated by the Board. No Awards shall be
granted under the Plan after the completion of ten years from the date on which
the Plan is adopted or was approved by the Company’s stockholders, whichever is
earlier, but Awards previously granted may extend beyond that date.

 

(d)         Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that no amendment requiring
the approval of the Company’s stockholders under any applicable tax requirement,
including without limitation Sections 162(m) and 422 of the Code, shall become
effective until such approval of the Company’s stockholders is obtained and
provided further that without approval of the Company’s stockholders, no
amendment may (i) increase the number of shares authorized under the Plan (other
than pursuant to Section 9), (ii) materially increase the benefits provided
under the Plan, (iii) materially expand the class of participants eligible to
participate in the Plan, (iv) expand the types of Awards provided under the Plan
or (v) make any other changes which require stockholder approval under the
rules of the Nasdaq National Market, Inc. No Award shall be made that is
conditioned on the approval of the Company’s stockholders of any amendment to
the Plan.

 

(e)          Provisions for Foreign Participants. The Board may modify the terms
and conditions of Awards granted to Participants who are foreign nationals or
employed outside the United States, establish subplans under the Plan, or adopt
such modifications or procedures as the Board may determine to be necessary or
advisable to recognize differences in laws, rules, regulations or customs of
such foreign jurisdictions with respect to tax, securities, currency, employee
benefit, accounting or other matters.

 

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(f)            Compliance With Code Section 409A. No Award shall provide for
deferral of compensation that does not comply with Section 409A of the Code,
unless the Board, at the time of grant, specifically provides that the Award is
not intended to comply with Section 409A of the Code.

 

(g)         Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

 

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