EXHIBIT 10.2


 


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 (defined below) of the Common Stock on the date selected by
the Board (the “Grant Date”).  The Grant
Date shall not be earlier than the date upon which the Board selected the date
of grant.  “Fair Market Value” shall be
the closing market price of the Common Stock on the Grant Date or, if the stock
exchange on which the Common Stock is traded is closed on such day, the closing
market price on the immediately preceding day on which the market was open.


 


(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.