Exhibit 10.1


 


SECOND AMENDED AND RESTATED SEVERANCE
BENEFITS AGREEMENT


 


March 7,
2006


 


Ronald L.
Sargent


c/o Staples, Inc.


500 Staples
Drive


Framingham, MA
01702


 


Dear Mr. Sargent:


 


You are
employed by Staples, Inc. and/or one of its subsidiaries (“Staples”) and
entered into a Severance Benefits Agreement with Staples on April 5, 2002
that was amended and restated by an Amended and Restated Severance Benefits
Agreement with Staples on December 13, 2005 (the “Prior Agreements”). This
letter agreement (this “Agreement”) amends and restates the Prior Agreements in
their entirety. Staples agrees to provide you with the severance benefits set
forth in this Agreement if your employment is terminated under the
circumstances described below:


 


1.                                       Term
Of Agreement. The term of this Agreement shall begin on the date it is
signed and shall continue in full force and effect until such time as you or
Staples has delivered to the other 90-days advance written notice of your or
its election to terminate this Agreement. This Agreement is not a contract to
employ you for a definite time period, it being acknowledged that your
employment is “at will” and that either you or Staples may terminate the
employment relationship at any time.


 


2.                                       Notice
Of Termination And Other Matters. Any termination of your employment,
whether by you or Staples, will be communicated by written notice (“Notice of
Termination”) to the other party. The Notice of Termination will specify the
provisions of this Agreement, if any, upon which termination is based and its
effective date, which in no case will be more than 180 days after the Notice of
Termination. All notices and communications provided for in this Agreement will
be in writing and will be effective when delivered or mailed by U.S. registered
or certified mail, return receipt requested, postage prepaid, addressed to the
Chairman of the Compensation Committee of the Board of Directors of Staples,
500 Staples Drive, Framingham, MA 01702, and to you at the address shown above
or to such other address as either Staples or you may have furnished to
the other in writing.


 


3.                                       Compensation
Upon Termination. Staples will provide you with the severance benefits
listed below in the event of a Qualified Termination. A “Qualified Termination”
means your employment is terminated for any reason other than because (i) you
die or become Disabled, (ii) Staples terminates you for “Cause,” or (iii) you
resign without “Good Reason.”


 


(a)                                  Staples
will pay you 24 months severance pay, in equal monthly installments. Your
monthly severance payments will equal the sum of (i) your monthly base
salary rate in effect immediately prior to the Qualified Termination (or any
higher rate in effect within the 90 days prior to the Notice of Termination)
plus (ii) one-twelfth of an amount equal to the average annual bonus paid
to (or accrued for) you by Staples during the three full fiscal years preceding
such Qualified Termination. Annual salary rates will be prorated where
applicable and annual bonus averages will be computed on years available if
less than three years. Any partial year bonus you have earned will be
annualized.


 

















 


(b)                                 Staples
will provide you with 24 months of life, dental, accident and group health
insurance benefits substantially similar to those available to similarly
situated officers (but not disability insurance); provided, however, that
Staples will not provide any such benefit for any portion of this period that
you receive an equivalent benefit from another party.


 


(c)                                  The
vesting schedule of any outstanding options to purchase shares of Staples’
Common Stock, shares of restricted Staples’ Common Stock and/or other
equity-based awards will not be accelerated in the event of a Qualified
Termination, unless specifically provided to the contrary in the respective
option, restricted stock or other equity agreements, except that in the event
Staples terminates your employment without Cause, all outstanding options to
purchase shares of Staples’ Common Stock granted to you will become exercisable
in full upon such termination and any vesting restrictions applicable to
outstanding restricted stock awards issued to you will lapse upon such
termination.


 


(d)                                 Staples
will provide you with 12 additional months of the benefits set forth in
paragraphs (a) and (b) above if such Qualified Termination is within
two years after a Change in Control.


 


(e)                                  Gross-Up Payment.


 


(i)                                     Section280G.
In the event that you become entitled to payments and/or benefits provided by
this Agreement as a result of a Change in Control (collectively the “Company
Payments”), and such Company Payments will be subject to the tax (the “Excise
Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), Staples shall pay to you at the time specified in
paragraph (iv) below an additional amount (the “Section 280G Gross-up
Payment” or a “Gross-up Payment”) such that the net amount retained by you,
after deduction of any Excise Tax on the Company Payments and any U.S. federal,
state, and local income or payroll tax upon the Section 280G Gross-up
Payment provided, but before deduction for any U.S. federal, state, and local
income or payroll tax on the Company Payments, shall be equal to the Company
Payments. For purposes of determining whether any of the Company Payments and Section 280G
Gross-up Payments (collectively the “Total Payments”) will be subject to the
Excise Tax and the amount of such Excise Tax, (i) the Total Payments shall
be treated as “parachute payments” within the meaning of Section 280G(b)(2) of
the Code, and all “parachute payments” in excess of the “base amount” (as
defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that Staples
determines, after consultation with its tax advisors to the extent it deems
necessary, that such Total Payments (in whole or in part) either do not
constitute “parachute payments,” represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the
Code in excess of the “base amount” or are otherwise not subject to the Excise
Tax, and (ii) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by Staples in accordance with the principles of Section 280G
of the Code and the Treasury Regulations thereunder.


 


(ii)                                  Section 409A.
In the event that, notwithstanding the provisions of Section 3(f) below,
any payments and/or benefits provided by this Agreement constitute nonqualified
deferred compensation under Section 409A of the Code (collectively, the “Deferred
Payments”) and you become subject to the tax and interest imposed under Section 409A
(the “409A Liability”), Staples shall pay to you at the time specified in
paragraph (iv) below, an additional amount (the “Section 409A
Gross-Up Payment” or “Gross-Up Payment”) such that net amount retained by you
after deduction of any 409A Liability and any U.S. federal, state and local
income or payroll tax upon the Section 409A Gross-Up Payment, but before
deduction for any U.S. federal, state and local income or payment tax on the
Deferred Payments, shall be equal to the Deferred Payments.


 


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(iii)                               Adjustment
of Gross-Up Payment. For
purposes of determining the amount of any Gross-up Payment, you shall be deemed
to pay U.S. federal income taxes at the highest marginal rate of U.S. federal
income taxation in the calendar year in which the Gross-up Payment is to be
made and state and local income taxes at the highest marginal rate of taxation
in the state and locality in which you reside for the calendar year in which
the Company Payments or Deferred Payments are to be made, net of the maximum
reduction in U.S. federal income taxes which could be obtained from deduction
of such state and local taxes if paid in such year. In the event that the
Excise Tax or the 409A Liability is subsequently determined by Staples to be
less than the amount taken into account hereunder at the time a Gross-up
Payment is made, you shall repay to Staples, at the time that the amount of
such reduction in Excise Tax or the 409A Liability is determined, the portion
of the prior Gross-up Payment attributable to such reduction (plus the portion
of a Gross-up Payment attributable to the Excise Tax or the 409A Liability and
U.S. federal, state and local income tax imposed on the portion of a Gross-up
Payment being repaid by you if such repayment results in a reduction in the
Excise Tax or the 409A Liability or a U.S. federal, state and local income tax
deduction). Notwithstanding the foregoing, in the event any portion of a
Gross-up Payment to be refunded to Staples has been paid to any U.S. federal,
state and local tax authority, repayment thereof (and related amounts) shall
not be required until actual refund or credit of such portion has been made to
you, and such repayment shall include all interest received or credited to you
by such tax authority for the period it held such portion. Staples shall
determine the course of action to be pursued (and the method of allocating the
expense thereof) if your claim for refund or credit is denied.


 


In the event
that the Excise Tax or 409A Liability is later determined by Staples or the
Internal Revenue Service to exceed the amount taken into account hereunder at
the time a Gross-up Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time of a Gross-up
Payment), Staples shall make an additional Gross-up Payment in respect of such
excess (plus any interest or penalties payable with respect to such excess) at
the time that the amount of such excess is finally determined.


 


(iv)                              Payment
Date. Any Gross-up Payment or
portion thereof provided for in this Section 3(e) shall be paid not
later than the thirtieth (30th) day preceding the due date for your tax return
(the “Return Due Date”) on which you are required to report the Excise Tax or
the 409A Liability, as the case may be; provided, however, that if the
amount of such Gross-up Payment or portion thereof cannot be finally determined
on or before such day, Staples shall pay to you on such day an estimate, as
determined in good faith by Staples, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code), subject to further
payments pursuant to this Section 3(e) as soon as the amount thereof
can reasonably be determined, but in no event later than the ninetieth (90th)
day after the Return Due Date. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, you shall
pay to Staples the amount that is equal to such excess amount no later than the
fifth (5th) day after you receive (A) notice of such determination or (B) Staples’
request for payment, whichever occurs first.


 


(v)                                 IRS
Controversy. You shall notify
Staples in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by Staples of a Gross-up Payment. Such
notification shall be given as soon as practicable but no later than ten (10) business
days after you are informed in writing of such claim and shall apprise Staples
of the nature of such claim and the date on which such claim is requested to be
paid. You shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which you give such notice to Staples (or such
shorter period ending on the date that any


 


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payment of taxes with respect
to such claim is due). If Staples notifies you in writing prior to the
expiration of such period that it desires to contest such claim, you shall:


 


A)                                  give Staples any
information reasonably requested by Staples relating to such claim;


 


B)                                    take such action in
connection with contesting such claim as Staples shall reasonably request in
writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney selected by Staples
and reasonably satisfactory to you;


 


C)                                    cooperate with
Staples in good faith in order to effectively contest such claim; and


 


D)                                   permit Staples to
control any proceedings relating to such claim as provided below; provided,
however, that Staples shall bear and pay directly all costs and expenses (including,
but not limited to, additional interest and penalties and related legal,
consulting or other similar fees) incurred in connection with such contest and
shall indemnify and hold you harmless, on an after-tax basis, for any Excise
Tax or other tax (including interest and penalties with respect thereto)
imposed with respect to the payment of such costs and expenses.


 


Staples shall
control all proceedings taken in connection with such claim and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct you to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner,
and you agree to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as Staples shall determine; provided, however, that if
Staples directs you to pay such claim and sue for a refund, Staples shall
indemnify and hold you harmless, on an after-tax basis, from any Excise Tax or
other tax (including interest or penalties with respect thereto) imposed with
respect to any advance made by Staples to you or with respect to any imputed
income with respect to any such advance; and provided, further, that if you are
required to extend the statute of limitations to enable Staples to contest such
claim, you may limit this extension solely to such claim. Staples’ control
of the contest shall be limited to issues with respect to which a Gross-up
Payment would be payable hereunder and you shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority. In addition, no position may be
taken nor any final resolution be agreed to by Staples without your consent if
such position or resolution could reasonably be expected to adversely affect
you (including any other tax position unrelated to the matters covered hereby).


 


In the event
that you receive a refund of the Excise Tax previously paid, you shall repay to
Staples, within five (5) business days following the receipt of such
refund of the Excise Tax previously paid, the amount of such refund plus any
interest received by you from the Internal Revenue Service on the refund, and
an amount equal to the reduction in your U.S. federal, state and local income
tax assuming that the repayment is deductible, using the assumptions set forth
in Section 3(e)(ii). If, after you receive an amount advanced by Staples
in connection with an Excise Tax claim, a determination is made that you shall
not be entitled to any refund with respect to such claim and Staples does not
notify you in writing of its intent to contest the denial of such refund prior
to the expiration of thirty (30) days after such determination, such advance
shall be forgiven and shall not be required to be repaid.


 


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(vi)                              Copies
of Communications. Staples and
you shall promptly deliver to each other copies of any written communications,
and summaries of any verbal communications, with any taxing authority regarding
the Excise Tax, the 409A Liability and other taxes covered by this Section 3.


 


(f)                                    You
and Staples intend that this Agreement and any deferral of compensation
pursuant to its terms comply with the requirements of Section 409A of the
Code so that any payments hereunder are not subject to the taxes and interest
imposed by such section. Accordingly, you and Staples agree that:


 


(i)                                     notwithstanding
anything to the contrary in this Agreement, to the extent that you would
otherwise be entitled under this Agreement to any payment (including any
payment under Section 3(h) below) during the six months beginning on
the date of your Qualified Termination that constitutes nonqualified deferred
compensation under Section 409A of the Code, such payment will be paid to
you within ten (10) business days following the earlier of your death or
the date that is six months after the date of your Qualified Termination; and


 


(ii)                                  notwithstanding
anything to the contrary in this Agreement, to the extent that you would
otherwise be entitled under this Agreement to any benefit (other than a
payment) during the six months beginning on the date of your Qualified
Termination that constitutes nonqualified deferred compensation under Section 409A
of the Code, (i) such benefit will be delayed until the date that is six
months after the date of your Qualified Termination and the applicable period
for such benefit will be reduced by six months (ii) Staples will pay to
you within ten (10) business days following the date that is six months
after the date of your Qualified Termination a lump sum cash payment equal to
the lowest cost that you would incur on an after-tax basis to obtain such
benefit for yourself (including family or dependent coverage, if applicable) on
an individual basis during such six month period.


 


(g)                                 You
and Staples further agree to make such revisions to this Agreement as may be
required to conform the provisions of this Agreement to the requirements
of Section 409A and any regulations or other Internal Revenue Service
guidance issued thereunder.


 


(h)                                 If
Staples determines that during any portion of the applicable period following
your Qualified Termination you are precluded from participating in a plan
providing any benefit that you would otherwise be entitled under this
Agreement, Staples will pay to you within thirty (30) days following such
determination a lump sum cash payment equal to the lowest cost that you would
incur on an after-tax basis to obtain such benefit for yourself (including
family or dependent coverage, if applicable) on an individual basis for such
portion of the applicable period; provided, however, that Staples will not pay
you the amount of any damages, costs or expenses resulting from the absence of
such benefit other than the cost of maintaining such benefit.


 


(i)                                     You
will not be entitled to any of the compensation or benefits set forth in this Section 3
if Staples determines, within 60 days after your termination, that your conduct
prior to your termination would have warranted a discharge for “Cause,” or if,
after your termination, you have violated the terms of any non-competition or
confidentiality provision contained in any employment, consulting, advisory,
non-disclosure, non-competition or other similar agreement between you and
Staples.


 


(j)                                     The
provisions of this Agreement shall be effective for Qualified Terminations
occurring after the date of this Agreement, provided, however, that this
Agreement shall be effective for a Qualified Termination as a result of a
resignation only if (x) such Qualified Termination occurs after the earlier of (i) the


 


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date that is at least 12 months
after the date of this Agreement or (ii) the first date upon which this
Agreement may be effective with respect to such a Qualified Termination
without causing severance payments or benefits hereunder to constitute Deferred
Payments subject to a 409A Liability, and (y) you remain continually employed
by Staples prior to such date.


 


4.                                       Definitions.
For the purposes of this Agreement, the terms listed below are defined as
follows:


 


(a)                                  Change
In Control. A “Change in Control” will be deemed to have occurred only if
any of the following events occur:


 


(i)                                     any
“person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), (other than
Staples, any trustee or other fiduciary holding securities under an employee
benefit plan of Staples, or any corporation owned directly or indirectly by the
stockholders of Staples in substantially the same proportion as their ownership
of stock of Staples) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Staples
representing 30% or more of the combined voting power of Staples’ then
outstanding securities;


 


(ii)                                  individuals
who constitute the Board (as of the date hereof, the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to the date hereof whose election, or
nomination for election by Staples’ stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of Staples, as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act) will be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or


 


(iii)                               the
stockholders of Staples approve a merger or consolidation of Staples with any
other corporation, other than (A) a merger or consolidation which would
result in the voting securities of Staples outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 75% of the
combined voting power of the voting securities of Staples or such surviving
entity outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a recapitalization of Staples (or
similar transaction) in which no “person” (as hereinabove defined) acquires
more than 50% of the combined voting power of Staples’ then outstanding securities;
or


 


(iv)                              the
stockholders of Staples approve a plan of complete liquidation of Staples or an
agreement for the sale or disposition by Staples of all or substantially all of
Staples’ assets.


 


(b)                                 Disabled.
You are “disabled” for the purposes of this Agreement, if you have been absent
from the full-time performance of your duties with Staples for six (6) consecutive
months because of incapacity due to physical or mental illness, and, within
thirty (30) days after being sent a written Notice of Termination, you fail to
resume performance of your essential job duties, with or without reasonable
accommodation.


 


(c)                                  Cause.
A termination for “Cause” by Staples will occur whenever:


 


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(i)                                     you
willfully fail to substantially perform your duties with Staples (other
than any failure resulting from incapacity due to physical or mental illness);
provided, however, that Staples has given you a written demand for substantial
performance, which specifically identifies the areas in which your performance
is substandard, and you have not cured such failure within 30 days after
delivery of the demand. No act or failure to act on your part will be
deemed “willful” unless you acted or failed to act without a good faith or reasonable
belief that your conduct was in Staples’ best interest.


 


(ii)                                  you
breach any of the terms of the Proprietary and Confidential Information
Agreement or Non-Competition Agreement (or other similar agreement) between you
and Staples, or


 


(iii)                               you
violate the Code of Ethics or attempt to secure any improper personal profit in
connection with the business of Staples, or


 


(iv)                              you
fail to devote your full working time to the affairs of Staples except as may be
authorized in writing by the Board of Directors of Staples, or


 


(v)                                 you
engage in business other than the business of Staples except as may be
authorized in writing by the Board of Directors of Staples, or


 


(vi)                              you
engage in misconduct which is demonstrably and materially injurious to Staples;


 


provided that
in each case Staples has given you written notice of its intent to terminate
your employment under this Section 5(c) and an opportunity to
present, in person, to the Board of Directors of Staples, any objections you may have
to such termination.


 


(d)                                 Good
Reason. A termination by you for “Good Reason” will occur whenever any of
the following circumstances have taken place, without your written consent
within 90 days prior to your Notice of Termination:


 


(i)                                     your
position, duties, responsibilities, power, title or office was significantly
diminished (a change in your reporting relationship, standing alone, shall not
be deemed significant);


 


(ii)                                  your
annual base salary was reduced;


 


(iii)                               you
were not allowed to participate in a cash bonus program in a manner
substantially consistent with past practice in light of Staples’ financial
performance and attainment of your specified goals, your participation in any
other material compensation plan (other than any stock option or stock award
program which programs are within the full discretion of the Compensation
Committee) was substantially reduced, both in terms of the amount of benefits
provided and the level of participation relative to other participants; unless
such circumstances are fully corrected prior to the Date of Termination
specified in your Notice of Termination;


 


(iv)                              you
were not provided with paid vacation or other benefits substantially similar to
those enjoyed by you under any of Staples’ life insurance, medical, health and
accident, or disability plans in which you were participating, or Staples took
any action which would directly or indirectly materially reduce any of such
benefits or the number of your paid vacation days; unless such circumstances
are fully corrected prior to the Date of Termination specified in your Notice
of Termination;


 


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(v)                                 in
the event of a Change in Control, Staples or any person in control of Staples
requires you to perform your principal duties in a new location outside a
radius of 50 miles from your business location at the time of the Change in
Control; or


 


(vi)                              Staples
fails to obtain a satisfactory agreement from any successor to assume and agree
to perform this Agreement, as contemplated in Section 5.


 


Notwithstanding
the foregoing, any general reduction of salary or reduction (or elimination) of
other compensation, bonus and/or benefits for its officers which are
substantially comparable for all such officers (but not occurring within 24
months after a Change of Control) will not be considered “Good Reason.”


 


5.                                       Successors;
Binding Agreement. Staples will require any successor (whether direct,
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of its business or assets expressly to assume and agree to
perform this Agreement to the same extent that Staples would be required
to perform it if no such succession had taken place. Any failure to obtain
an assumption of this Agreement prior to the effectiveness of any succession
will be a breach of this Agreement and will entitle you to compensation in the
same amount and on the same terms as you would be entitled hereunder. As used
in this Agreement, “Staples” means Staples as defined above and any successor
to its business or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. This Agreement will inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless otherwise
provided herein, will be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or if there is no such designee, to
your estate.


 


6.                                       Arbitration.
The parties agree that any legal disputes (including but not limited to claims
arising under federal or state statute, contract, tort, or public policy) that may occur
between you and Staples, and that arise out of, or are related in any way to,
your employment with or termination of employment from Staples or the
termination of this Agreement, and which disputes cannot be resolved
informally, will be resolved exclusively though final and binding arbitration.
The parties will be precluded from raising in any other forum, including, but
not limited to, any federal or state court of law, or equity, any claim which
could be raised in arbitration; provided, however that nothing in this
Agreement precludes you from filing a charge or from participating in an
administrative investigation of a charge before an appropriate government
agency or Staples from initiating an arbitration over a matter covered by this
Agreement.


 


Each party may demand
arbitration, no later than three hundred (300) days after the date on which the
claim arose, by submitting to the other party a written demand which states: (i) the
claim asserted, (ii) the facts alleged, (iii) the applicable statute
or principal of law (e.g., breach of contract) upon which the demand is based,
and (iv) the remedy sought. Any response to such demand must be made, in
writing, within twenty (20) days after receiving the demand, and will
specifically admit or deny each factual allegation.


 


The
arbitration will be conducted in accordance with the Rules for Employment
Arbitration of the American Arbitration Association (AAA) and any arbitration
will take place in Framingham, Massachusetts. Each party will bear its own
costs and attorney’s fees. The arbitrator will have the power to award any
types of legal or equitable relief that would be available in a court of
competent jurisdiction, including, but not limited to, the costs of
arbitration, attorney’s fees, emotional distress damages, and punitive damages
for causes of action when such damages are available under law. Any relief or
recovery to which you are entitled from any 


 


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claims arising out of your employment, termination, or any claim of
unlawful discrimination will be limited to that awarded by the arbitrator.


 


7.                                       Waiver
Of Jury Trial. If any claim arising out of your employment or termination
is found not to be subject to final and binding arbitration, the parties agree
to waive any right to a jury trial if such claim is filed in court.


 


8.                                       Miscellaneous.


 


(a)                                  The
invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
which will remain in full force and effect.


 


(b)                                 The
validity, interpretation, construction and performance of this Agreement will
be governed by the laws of the Commonwealth of Massachusetts.


 


(c)                                  No
waiver by you or Staples at any time of any breach of, or compliance with, any
provision of this Agreement to be performed by Staples or you, respectively,
will be deemed a waiver of that or any other provision at any subsequent time.


 


(d)                                 You
must execute a legally enforceable separation agreement and general release in
a form acceptable to Staples prior to the receipt of any payments or
benefits set forth above. Any payments made to you will be paid net of any
applicable withholding required under federal, state or local law.


 


(e)                                  This
Agreement is the exclusive agreement with respect to the severance benefits
payable to you in the event of a termination of your employment. All prior
negotiations and agreements, including without limitation the Prior Agreements,
are hereby merged into this Agreement.


 


(continued on next page)


 


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If this
Agreement sets forth our agreement, kindly sign and return to Staples the
enclosed copy of this Agreement.


 


	
  Sincerely,

  
	
   

  
	
  STAPLES, INC.

  
	
   

  
	
  By:

  
	
   

  
	
  /s/ Richard
  J. Currie

  	
   

  
	
  Chairman of the Compensation

  
	
  Committee of the Board of Directors

  



 


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I have been
advised of my right to consult with counsel regarding this Agreement and have
decided to sign below knowingly, voluntarily, and free from duress or coercion.


 


Agreed to this
10th day of March, 2006


 


 


	
  /s/ Ronald
  L. Sargent

  	
   

  
	
  Ronald L. Sargent

  



 


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