Exhibit 10.3


 


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).


 


4.                                                    Available for Awards


 


(a)                                  Number
of Shares. Subject to adjustment under Section 9, Awards
may be made under the Plan for up to 97,430,000 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”.


 


(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.


 


(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 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 33 1/3 % 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 66 2/3 % 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 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.


 


(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 following measures: sales, earnings per share, return
on net assets, return on equity, adjusted operating profit, free cash flow,
total shareholder return, net income 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.


 


(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.