Document:

EX-10.17 Separation Agreement (3.31.13)

Exhibit 10.17
    

Electronic Arts Inc.
209 Redwood Shores Parkway
Redwood City, CA 94065

March 22, 2013

John S. Riccitiello

		
	Re: 
	Separation Agreement

Dear John:

This letter confirms the agreement (this “Agreement”) between you and Electronic Arts Inc. (the “Company”) concerning the terms of your separation and offers you the separation compensation we discussed in exchange for a release of claims.
1.Separation Date:  Friday, March 29, 2013 will be your last day of employment with the Company (the “Separation Date”).  You hereby resign, effective as of the close of business on that date, your positions as an officer and a director of the Company, as an officer and a director of each subsidiary of the Company where you serve as such, and as a trustee or fiduciary of each Company benefit plan where you serve as such.
2.Acknowledgment of Payment of Wages:  By your signature below, you acknowledge that on the Separation Date, the Company will provide you with a final paycheck for all wages, salary, reimbursable expenses, accrued vacation and any similar payments due you from the Company as of the Separation Date.   You will also remain eligible to receive any payments to which you may be entitled pursuant to the Company's Deferred Compensation Plan, as amended, and/or the Company's 401(k) plan, pursuant to the terms of such plans.  By signing below, you acknowledge that the Company does not owe you any other amounts except as expressly set forth herein.
3.Separation Compensation:  In exchange for your agreement to the waiver of claims set forth in paragraph 8 below and compliance with all of the terms of this Agreement, including but not limited to paragraphs 4, 5, 6, 7, 8, 9 and 11, the Company agrees to:
(a)pay you two hundred percent (200%) of your current base salary, less applicable state and federal payroll deductions, in equal installments for a period of twenty‐four (24) months after the Separation Date in accordance with the Company's standard payroll practices, commencing within fourteen (14) days following the Effective Date (as defined in paragraph 19 below);
(b)pay you a lump-sum payment of $28,839.60, which may be used for continued health benefits for you and your dependents under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, with such lump sum payment payable within ten (10) days following the Effective Date; and

(c)with respect to your outstanding equity grants:
(i)continue the vesting of all time‐based stock options previously granted to you by the Company until November 30, 2013 as if you remained employed by the Company through such date (each of your stock options and the vesting thereof provided by this subparagraph (i) are set forth on Exhibit A hereto).  On or after the Effective Date, each of your vested stock options, including such options that vest pursuant to this subparagraph (c), may be exercised at any time until the later of (A) February 28, 2014 or (B) the date provided in the applicable stock option agreement,  but in no event later than ten (10) years following the date on which each such stock option was granted; to the extent that a stock option is intended to qualify as an incentive stock option pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) it will cease to do so to the extent required by law; and 
(ii)all time‐based restricted stock units (“RSU”) that would vest in accordance with their terms on or before June 19, 2014 had you remained employed by the Company will continue to vest as though you remained employed by the Company through such date (each of your time‐based RSUs and the vesting thereof provided by this subparagraph (ii) are set forth on Exhibit A hereto).  All performance‐based RSUs that are based on the Company's Total Shareholder Return (“TSR”) relative to the performance of each of the companies in the NASDAQ‐100 Index (or other performance criteria) at the end of applicable performance periods that end on or before June 19, 2014 as set forth in the relevant RSU grant agreements will vest as of the applicable vesting dates set forth in the relevant RSU grant agreements, solely to the extent that the performance periods end on or before June 19, 2014 and the applicable TSR performance metrics for such RSUs for such performance periods are satisfied (each of your performance‐based RSUs and the potential vesting thereof provided by this subparagraph (ii) are set forth on Exhibit A hereto).  Such RSUs will be settled within thirty (30) days following the date upon which the above requirements are satisfied date.  Any such performance‐based RSUs for which the applicable TSR performance metrics are not satisfied shall be forfeited to the Company.  The Company will not exercise any power of negative discretion under any RSU agreement to reduce the number of RSUs that otherwise would vest in accordance with the preceding except to the extent that it exercises its power of negative discretion with respect to all executive officers with performance-based RSUs with substantially similar performance metrics. 
The remaining unvested time‐based and remaining performance‐based equity grants will expire on the Separation Date and any such unvested equity grants will cease vesting and be immediately forfeited to the Company.  You will remain bound by the Company's 2000 Equity Incentive Plan and the applicable equity agreements evidencing your equity awards, except to the extent that they are modified by this Agreement.  The stock option exercise methods provided pursuant to your stock options agreements and the Company's 2000 Equity Incentive Plan prior to this Agreement will continue to be available to you to the extent permitted by the terms thereof. 
By signing below, you acknowledge that you are receiving the separation compensation outlined in this paragraph 3 in consideration for waiving your rights to claims referred to in this Agreement and that you would not otherwise be entitled to the separation compensation.    You also acknowledge that if you violate any of the terms of this Agreement, any future payments under paragraph 3 of this Agreement will terminate, any then‐unvested stock options and 

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restricted stock units will terminate and any extended exercisability of stock options will terminate.
4.Return of Company Property:  You hereby warrant to the Company that you have returned to the Company all property or data of the Company of any type whatsoever that has been in your possession or control.  Notwithstanding the preceding, you may retain your Company‐issued cell phone and personal computers so long you provide the phone and computers for inspection by the Company's IT department.  The department will remove from the devices any Company confidential and proprietary information and return the devices to you as promptly as possible on the Separation Date.  The Company and you will cooperate to have your cell phone number transferred to your personal account.
5.Confidential Information / Non‐Solicitation of Employees:  You hereby acknowledge that you are and will continue to be bound by, and will perform all of your obligations under, the attached New Hire/Proprietary Information Agreement dated February 21, 2007 and any other confidentiality agreements between you and the Company.  By signing below, and without limiting the foregoing, you expressly acknowledge and confirm your obligations under section 4 of the New Hire/Proprietary Information Agreement and your fiduciary duties as an officer and director of the Company as they relate to confidentiality to the extent that they continue in application following the Separation Date.  You further confirm that you have delivered or will promptly deliver, but in no event later than the fifth (5th) day following the Separation Date, to the Company all documents and data of any nature containing or pertaining to Confidential Information (as defined in the foregoing agreement(s)) and that you have not taken with you any such documents or data or any reproduction thereof.  Failure to comply with the provisions of this paragraph shall be a material breach of this Agreement.  
6.Nondisparagement:  You agree that during the two (2) year period immediately following the Separation Date, you will not disparage the Company or its products, services, directors, officers, employees, successors or assigns in any written or oral statement.  The Company agrees that during the two (2) year period immediately following the Separation Date, its executive officers, each member of the Company's Board of Directors and any official public statement by the Company will not disparage you, your character, or your performance or reputation in any written or oral statement.  Nothing in this paragraph shall prohibit either party from providing truthful information in response to a subpoena or other legal process.  Failure to comply with the provisions of this paragraph shall be a material breach of this Agreement.  Nothing in this paragraph is intended to constitute a violation of California Business and Professions Code section 16600.
7.Consulting Services:  In addition to the other conditions set forth in this Agreement, your receipt of the separation compensation outlined in paragraph 3 is also conditioned upon you providing up to eighteen (18) hours per month of consulting services at a rate of $500 per hour to the Company as may be reasonably requested by the Chairman of the Board of Directors or the Company's Chief Executive Officer for the period commencing on the Separation Date and ending December 31, 2013 (the “Consulting Period”) and complying with the requirements of the final sentence of this paragraph 7.  The Company and you agree that any services to be provided by you under the preceding sentence will be provided in or near Redwood City, California, and at mutually agreeable times that are conducive to your engaging in other full-time employment following the Separation Date (subject to the following sentence).  

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During the Consulting Period, you agree that you will not, as an employee, agent, consultant, advisor, independent contractor, general partner, officer, director, stockholder, investor, lender or guarantor of any corporation, partnership or other entity, or in any other capacity directly or indirectly participate or engage in, or render any services to any business engaged in, the design, development, manufacture, operation, production, marketing, sale or servicing of any product, or the provision of any service, that competes with the business of the Company (hereafter referred to as the “Business”) for or on behalf of companies to be mutually agreed (the “Identified Companies”). 
Notwithstanding the foregoing, you may (i) own, directly or indirectly, solely as an investment, up to one percent (1%) of any class of “publicly traded securities” of the Identified Companies or (ii) own a passive equity interest not to exceed five percent (5%) in a private debt or equity investment fund that holds investments in any such entity but in which you do not have the ability to control or exercise any managerial influence.  For the avoidance of doubt, nothing in this Agreement prohibits you from owning any other investment in any other entity.
Further notwithstanding the foregoing, you agree that the extended vesting of your stock options and RSUs and the extended exercisability of your stock options set forth in paragraph 3(c) above control the vesting and exercisability of such equity awards and your consulting services during the Consulting Period do not modify or further extend such vesting or exercisability terms.
8.Release of Claims:  The payments and promises set forth in this Agreement are in full satisfaction of all accrued salary, vacation pay, bonus pay, profit sharing, stock options, equity, termination benefits or other compensation to which you may be entitled by virtue of your employment with the Company.  In consideration for the payments and other promises and undertakings contained in this Agreement to which you would not otherwise be entitled, and except as otherwise set forth in this Agreement, you hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and its and their respective officers, directors, agents, servants, employees, attorneys, shareholders, successors, assigns and affiliates (collectively, the “Releasees”), of and from any and all claims, liabilities, demands, charges, causes of action, costs, expenses, attorney's fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, which you assert or could assert against the Company at common law or under any statute, rule, regulation, order or law, whether federal, state or local, on any ground whatsoever, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date you sign this Agreement, including but not limited to:  all such claims and demands directly or indirectly arising out of or in any way connected with your employment with the Company or the termination of that employment; claims or demands related to salary, bonuses, commissions, vacation or other time off pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; any and all causes of action, including but not limited to actions for breach of contract, express or implied, breach of the covenant of good faith and fair dealing, express or implied, wrongful termination in violation of public policy, all other claims for wrongful termination and constructive discharge, and all other tort claims, including, but not limited to, intentional or negligent infliction of emotional distress, invasion of privacy, negligence, negligent investigation, negligent hiring, supervision or retention, assault and battery, false imprisonment, defamation, intentional or negligent misrepresentation, fraud, and any and all claims arising under any federal, state or local law or statute, including, but not limited to, the 

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California Fair Employment and Housing Act; Business and Professions Code 17200; Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Fair Labor Standards Act; the Employee Retirement and Income Security Act; the Americans with Disabilities Act, 42 U.S.C. § 1981; the Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the Older Workers Benefit Protection Act; the Family and Medical Leave Act; the California Family Rights Act; the California Labor Code; the California Civil Code; the California Constitution; and any and all other laws and regulations relating to employment termination, employment discrimination, harassment or retaliation, claims for wages, hours, benefits, compensation, and any and all claims for attorneys' fees and costs, to the fullest extent permitted by law and by the respective governmental enforcement agencies for the above‐listed laws.  To the fullest extent permitted by law, at no time subsequent to the execution of this Agreement will you pursue, or cause or knowingly permit the prosecution, in any state, federal or foreign court, or before any local, state, federal or foreign administrative agency, or any other tribunal, of any charge, claim or action of any kind, nature and character whatsoever, known or unknown, which you may now have, have ever had, or may in the future have against Releasees, which is based in whole or in part on any matter released by this Agreement.  
This Agreement does not waive rights or claims under federal or state law that you cannot, as a matter of law, waive by private agreement, such as a right of indemnification under Labor Code Section 2802, or as otherwise set forth in this paragraph 8, or your rights to indemnification under the Company's Bylaws or Certificate of Incorporation.  This Agreement also does not waive (i) rights or claims that you have under Indemnity Agreement with the Company as described in paragraph 14, (ii) the payments and benefits described in this Agreement or (iii) benefits that you have accrued, and to which you have become vested or entitled, under the terms of the Company's employee benefit plans in which you were participating as of the date of this Agreement.  For the avoidance of doubt, the foregoing clause (iii) is not intended to create any new rights or entitlements.  Additionally, nothing in this Agreement precludes you from filing a charge or complaint with or participating in any investigation or proceeding before the Equal Employment Opportunity Commission.  However, while you may file a charge and participate in any proceeding conducted by the Equal Opportunity Commission, by signing this Agreement, you waive your right to bring a lawsuit against the Company and waive your right to any individual monetary recovery in any action or lawsuit initiated by the Equal Employment Opportunity Commission.
9.Release of Unknown Claims:  You and the Company acknowledge that you have read and understand Section 1542 of the California Civil Code, which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  You hereby knowingly, intentionally, and expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to your release of any unknown or unsuspected claims you may have against the Company or the Releasees.
10.Legal and Equitable Remedies:  You agree that both you and the Releasees have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief without prejudice to any other rights or remedies either you or the Releasees may have at law or in equity for breach of this Agreement.

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11.Confidentiality:  You and the Company understand and agree that this Agreement will need to be filed with the Securities and Exchange Commission and that its confidentiality cannot be protected.  Until the Agreement is publicly filed or described by the Company, the contents, terms and conditions of this Agreement must be kept confidential by you and may not be disclosed except to your spouse, accountant, or attorneys or pursuant to subpoena or court order and except to the extent disclosed by the Company publicly pursuant to applicable laws and regulations.  You and the Company (on behalf of itself, its executive officers and directors) agree that if any such party is asked for information concerning this Agreement, that party will state only that you and the Company reached an amicable resolution of any disagreements concerning your separation from the Company and direct them to review the Company's public filings related thereto.  Any breach of this confidentiality provision shall be deemed a material breach of this Agreement.  
12.No Admission of Liability:  This Agreement is not and shall not be construed or contended by the parties to be an admission or evidence of any wrongdoing or liability on the part of the parties, their representatives, heirs, executors, attorneys, agents, partners, officers, shareholders, directors, employees, subsidiaries, affiliates, divisions, successors or assigns. This Agreement shall be afforded the maximum protection allowable under California Evidence Code Section 1152 and/or any other state or Federal provisions of similar effect.
13.Cooperation:  You agree to make yourself reasonably available to the Company for interview, deposition, and/or as a witness at trial, and/or, at the election of the Company, to provide a sworn statement, for any legal matters or disputes involving the Company about which you may have knowledge of any relevant facts, provided that you will need to make yourself available only at mutually agreeable times, you will be compensated by the Company at a rate of $500 per hour for such services, and you will be reimbursed for any expenses incurred in accordance with the Company's standard policies for executive officers.  Importantly, nothing in this Agreement shall be construed in any way to limit or otherwise influence the scope or nature of your testimony in such proceedings or to discourage you in any way from providing testimony that is honest and truthful.  
14.Indemnification:  The Company shall continue to indemnify you and maintain D & O coverage in accordance with your Indemnity Agreement with the Company (the “Indemnity Agreement”) and as may be required by its certificate of incorporation or bylaws.
15.Entire Agreement:  Except as set forth in paragraph 14, this Agreement constitutes the entire Agreement between you and the Company with respect to the subject matter hereof and supersedes all prior negotiations and agreements, including, but not limited to, the Company's Key Employee Continuity Plan and any agreements thereunder, the Company's Severance Plan and any agreements thereunder, in each case whether written or oral, relating to such subject matter other than your Indemnification Agreement with the Company, the New Hire/Proprietary Information Agreement and confidentiality agreement(s) referred to in paragraph 5 above and the equity award agreements referred to in paragraph 3, where such equity awards are modified only to the extent necessary to give effect to the terms of this Agreement. You acknowledge that neither the Company nor its agents or attorneys have made any promise, representation or warranty whatsoever, either express or implied, written or oral, that is not contained in this Agreement for the purpose of inducing you to execute the 

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Agreement, and you acknowledge that you have executed this Agreement in reliance only upon such promises, representations and warranties as are contained herein.
16.Modification:  It is expressly agreed that this Agreement may not be altered, amended, modified, or otherwise changed in any respect except by another written agreement that specifically refers to this Agreement, executed by authorized representatives of each of the parties to this Agreement.
17.Section 409A:  To the extent applicable, this Agreement is intended to comply with Section 409A of the Internal Revenue Code, and it shall be interpreted in a manner that complies with such section to the fullest extent possible.  To the extent (a) any payments or benefits to which you become entitled under this Agreement, or under any other agreement or Company plan, in connection with your termination of employment with the Company constitute deferred compensation subject to Section 409A and (b) you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payments shall not be made or commence until the earliest of (i) the expiration of the six (6)‐month period measured from the date of your “separation from service” (as such term is at the time defined in Treasury Regulations under Section 409A) from the Company; or (ii) the date of your death following such separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you, including (without limitation) the additional twenty percent (20%) tax for which you would otherwise be liable under Section 409A(a)(1)(b) in the absence of such deferral.  Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to you or your beneficiary in one lump sum (without interest).  Any termination of your employment is intended to constitute a “separation from service” and will be determined consistent with the rules relating to a “separation from service” as such term is defined in Treasury Regulation Section 1.409A‐1.  It is intended that each installment of the payments provided hereunder constitute a separate “payment” for purposes of Treasury Regulation Section 1.409A‐2(b)(2)(i).  The Company and you agree that the Company shall, with your written consent, have the power to adjust the timing or other details relating to the payments described in this Agreement if the Company determines that such adjustments are necessary in order to comply with or become exempt from the requirements of Section 409A, provided that no such adjustment will result in any material diminution of any economic benefit to be provided to you under this Agreement.  Except as specifically permitted by Section 409A, the benefits and reimbursements provided to you under this Agreement during any calendar year shall not affect the benefits and reimbursements to be provided to you under the relevant section of this Agreement in any other calendar year, and the right to such benefits, perquisites and reimbursements cannot be liquidated or exchanged for any other benefit and shall be provided in accordance with Treas. Reg. Section 1.409A‐3(i)(1)(iv) or any successor thereto.  Further, in the case of reimbursement payments, such payments shall be made to you on or before the last day of the calendar year following the calendar year in which the underlying fee, cost or expense is incurred.
18.Withholding:  Any payment made to you under this Agreement will be less all deductions and withholding for federal, state and local taxes as required by law. 

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19.Review of Separation Agreement:  You understand that pursuant to the Age Discrimination in Employment Act (“ADEA”) and the Older Workers' Benefit Protection Act (“OWBPA”) you may take up to twenty‐one (21) days to consider this Agreement and, by signing below, affirm that you were advised to consult with an attorney prior to signing this Agreement. You also understand you may revoke this Agreement within seven (7) days of signing this document.  This Agreement will not be effective until the date upon which the revocation period has expired, which will be the eighth day after this Agreement has been executed by you (the “Effective Date”).
20.Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of California.
21.Attorney Fees: The Company will pay up to $20,000 for your reasonable attorney fees and costs in connection with the negotiation of this Agreement.  
22.Voluntary Execution of Agreement:  You acknowledge and agree that you are executing this Agreement, including its incorporated release, voluntarily and without any undue duress or undue influence on the part of, or on behalf of, the Company, with the full intent of releasing all claims.  You acknowledge that: (a) you have read this Agreement; (b) you have been represented in the preparation, negotiation and execution of this Agreement by legal counsel of your own choice, or you have voluntarily declined to seek such counsel; (c) you understand the terms and consequences of this Agreement and of the releases it contains and (d) you are fully aware of the legal and binding effect of this Agreement.
[signature page follows]

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Upon acceptance of this Agreement, within the timeframe specified above, please sign below and return the executed original to me.  Upon your signature below, this will become our binding agreement with respect to your separation from the Company and its terms merging and superseding in their entirety all other or prior agreements and communications, whether written or oral, by you and the Company as to the specific subjects of this Separation Agreement.
Sincerely,
Electronic Arts Inc.
By: /s/ Lawrence F. Probst III   
         Lawrence F. Probst III
       Chairman

                                
                                

I UNDERSTAND AND AGREE TO THE TERMS CONTAINED IN THIS AGREEMENT AND INTEND, BY MY SIGNATURE BELOW, TO BE LEGALLY BOUND BY THOSE TERMS.  I AM SIGNING THIS AGREEMENT AND ITS INCORPORATED RELEASE KNOWINGLY, WILLINGLY AND VOLUNTARILY IN EXCHANGE FOR THE SEVERANCE BENEFITS DESCRIBED ABOVE:

Signature:  /s/ John S. Riccitiello                 Date:     March 25, 2013        
                  John S. Riccitiello

Exhibit A
Equity Award Schedule
Outstanding Stock Options
	
						
	Date of Grant
	Number of Shares Originally Granted
	Exercise Price
	Vesting Schedule
	Number of Additional Option Shares that will vest between the Separation Date and November 30, 2013
	Number of unvested Option Shares that will terminate and forfeit as of November 30, 2013

	9/16/09
	139,000
	$18.85
	24% after 12 months and 2% monthly thereafter
	22,240
	0

Time‐Based Restricted Stock Units
	
					
	Date of Grant
	Number of RSUs Originally Granted
	Vesting Schedule
	Number of RSUs that will vest between the Separation Date and June 19, 2014
	Number of unvested RSUs that will terminate and forfeit between the Separation Date and June 19, 2014

	5/18/10
	200,000
	One-third (1/3) of the RSUs vest on each of the first, second and third anniversaries of the date of grant.
	66,667
	0

	6/16/11
	125,000
	One-third (1/3) of the RSUs vest eleven (11) months from the date of grant, one-third (1/3) twenty-three (23) months from date of grant and one-third (1/3) thirty-five (35) months from date of grant.
	83,333
	0

	6/18/12
	125,000
	One-third (1/3) of the RSUs vest eleven (11) months from the date of grant, one-third (1/3) twenty-three (23) months from date of grant and one-third (1/3) thirty-five (35) months from date of grant.
	83,333
	41,667

	
					
	Date of Grant
	Number of RSUs Originally Granted
	Vesting Schedule
	Number of RSUs that will vest between the Separation Date and June 19, 2014
	Number of unvested RSUs that will terminate and forfeit between the Separation Date and June 19, 2014

	6/18/12
	125,000
	One-third (1/3) of the RSUs vest eleven (11) months from the date of grant, one-third (1/3) twenty-three (23) months from date of grant and one-third (1/3) thirty-five (35) months from date of grant.
	83,333
	41,667

A-2

TSR Performance‐Based Restricted Stock Units
	
					
	Date of Grant
	Number of RSUs Originally Granted
	Vesting Schedule
	Number of RSUs that will vest between the Separation Date and June 19, 2014 solely to the extent the applicable TSR performance metrics are met for the applicable performance periods ending on or before June 19, 2014
	Number of unvested RSUs that will terminate and forfeit between the Separation Date and June 19, 2014

	6/16/11
	250,000
	Vests based on TSR relative to the performance of companies in the NASDAQ-100 Index over 1, 2 and 3 years
	Metrics hit at Target: 83,333
Metrics hit at Maximum: 166,667
*These numbers are estimates provided for example only; exact numbers cannot be calculated until the end of the applicable performance periods.
	Two remaining performance periods will conclude prior to June 19, 2014. Unearned shares, if any, will cancel following the completion of each applicable performance period.

	6/18/12
	250,000
	Vests based on TSR relative to the performance of companies in the NASDAQ-100 Index over 1, 2 and 3 years
	Metrics hit at Target: 83,333
Metrics hit at Maximum: 166,667
*These numbers are estimates provided for example only; exact numbers cannot be calculated until the end of the applicable performance periods.
	83,333
Two performance periods will conclude prior to June 19, 2014. Unearned shares, if any, will cancel following the completion of each applicable performance period.  

	10/16/12
	600,000
	Vests based on TSR relative to the performance of companies in the NASDAQ-100 Index over 3 years
	0; Performance period will not conclude prior to June 19, 2014
	600,000

    

A-3

Non-GAAP Net Income Performance‐Based Restricted Stock Units
	
					
	Date of Grant
	Number of RSUs Originally Granted
	Vesting Schedule
	Target Number of RSUs that will vest between the Separation Date and June 19, 2014 solely to the extent the applicable net income performance metrics are met for the applicable performance periods ending on or before June 19, 2014
	Number of unvested RSUs that will terminate and forfeit between the Separation Date and June 19, 2014

	5/16/08
	200,000
	Vests based on trailing average four-quarter non-GAAP net income
	0; The Company and Mr. Riccitiello acknowledge that the performance metrics will not be achieved and no RSUs will be earned
	200,000 shares will have terminated and forfeited as of June 30, 2013, the end of the performance period

A-4SPLS EX 10.1 050413

Exhibit 10.1
        
Staples, Inc.
Second Amended and Restated
Long Term Cash Incentive Plan

(Effective March 6, 2012; Second Amendment and Restatement Effective March 28, 2013)
		
	I.
	Summary and Purpose

Staples, Inc. (“Staples”) has developed this Second Amended and Restated Long Term Cash Incentive Plan (this “Plan”), to provide opportunities for Participants (as defined in Section III. below) to earn financial rewards for their role in ensuring that Staples meets its long-term performance targets.  This Plan aims to align the interests of the Participants with those of Staples' stockholders.  Awards are based on actual results measured against pre-established company financial objectives and other long-term performance goals.
This Plan is intended to provide for long-term cash incentive awards based upon a performance cycle for a specified year or number of years (a “Performance Cycle”) under which performance goals will be established for such Performance Cycle in its entirety or separately for each fiscal year (a “Plan Year”) included within such Performance Cycle.  
The performance goals for each Participant will be established in accordance with Section IV within the first 90 days of the Performance Cycle (or within the first 90 days of each Plan Year in the Performance Cycle if each Plan Year within the Performance Cycle will have separate performance goals).  Once established, the performance goals shall remain fixed for the balance of the Performance Cycle (or Plan Year, as applicable).
A target award (as defined in Section IV.C. below, a “Target Award”) will also be established for each Participant in accordance with Section IV within the first 90 days of each Performance Cycle.  Once established, the Target Award shall remain fixed for the balance of the Performance Cycle.  
At the end of the Performance Cycle, the Compensation Committee of the Board of Directors of Staples (the “Committee”) will determine the amount of the payment to be made to a Participant with respect to the Performance Cycle, and (subject to the other provisions of this Plan) pay the total amount so determined to the Participant.  Where each Plan Year in such Performance Cycle has separate performance goals, at the end of the Performance Cycle, the Committee will determine the amount of the payment to be made to a Participant with respect to each Plan Year in the Performance Cycle, and (subject to the other provisions of this Plan) pay the total amount so determined to the Participant.  
A Participant may be granted more than one award under this Plan, and may be granted awards that have overlapping Performance Cycles or Plan Years.  
		
	II.
	Term of Plan

This Plan, subject to stockholder approval, shall apply beginning with the fiscal year commencing January 30, 2012 and will terminate at the end of the fiscal year beginning January 30, 2016, unless further extended by subsequent stockholder approval.

		
	III.
	 Eligibility

Subject to the determination by the Committee that the applicable performance goals and all other requirements of this Plan are met, the following guidelines will be used to determine an individual's eligibility for participation in this Plan and eligibility for payment of an award.
Any associate of Staples or of any entity that Staples directly or indirectly controls (each, an “Affiliate”) will be eligible to participate in this Plan.  Each associate who has been granted an award under this Plan shall be deemed a “Participant” in this Plan.  
Notwithstanding the establishment of a Target Award for a Participant and notwithstanding the provisions of this Section III. which provide for prorated awards in certain circumstances, with the exception of awards payable under the special rules applicable to Participants who die and certain Participants affected by a Change in Control, awards granted to Participants are intended to be payable solely on account of the attainment of one or more pre-established objective performance goals as described in Sections IV. and V.  Accordingly, except as provided for Participants who die or who are affected by a Change in Control as described herein, no award or part thereof will be paid unless the applicable performance goals were pre-established by the Committee in accordance with Section IV.B., the Committee determines that the applicable performance goals for the Performance Cycle, or the Plan Years within the Performance Cycle, were achieved, and the Committee authorizes the payment of the award as described in Section V.  In all events, payment will be made at the time and in the manner described in Section V.
A.Termination of Employment (Excluding Retirement, Death, Permanent Disability and Change in Control)
A Participant whose employment with Staples and each of its Affiliates terminates prior to the end of a Performance Cycle, other than as a result of retirement (as defined in Section III.B. below), death, permanent disability, or Change in Control (as defined in Section III.D. below), will be eligible for an award under this Plan for that Performance Cycle as follows:
(i)If a Participant voluntarily terminates employment with Staples and each of its Affiliates before the end of the Performance Cycle but after the establishment of the Target Award and the performance goals for the Participant for the Performance Cycle, then the Participant will not be eligible to receive payment of an award under this Plan. 
(ii)If a Participant's employment with Staples and each of its Affiliates is terminated by Staples or an Affiliate without Cause (as defined in Section III.D.(iii) below) before the end of the Performance Cycle but after the establishment of the Target Award and the performance goals for the Participant for the Performance Cycle, then the Participant will be eligible for a prorated award calculated by multiplying the Participant's approved award by a fraction, the numerator of which will be the number of days from the start of the Performance Cycle through the date in which the Participant's employment was terminated and the denominator of which will be the total number of days in the Performance Cycle; provided however, if the Plan Years within the Performance Cycle have separate performance goals, then the Participant will be eligible for an award for any Plan Years ended before the Plan Year in which the Participant's employment was terminated and in addition, if the Participant is terminated after the establishment of the Target Award for the Participant for the Performance Cycle and the performance goals for the Participant for the Plan Year of termination, the Participant will be eligible for a prorated award for the Plan Year in which the Participant's employment is terminated calculated by multiplying the Participant's approved award for that Plan Year by a fraction, the numerator of which will be the number of days from the beginning of the Plan Year through the date of the Participant's termination and the denominator of which will be the total number of days in that Plan Year.

(iii)If a Participant's employment with Staples and each of its Affiliates is terminated by Staples or an Affiliate for Cause before the end of the Performance Cycle, then the Participant will not be eligible to receive payment of an award under this Plan.
(iv)A Participant whose termination occurs before the establishment of the Target Award for the Participant for a Performance Cycle and the performance goals for the Participant for that Performance Cycle (or Plan Year, as applicable) will not receive an award for that Performance Cycle (or Plan Year, as applicable).
B.Retirement, Death or Permanent Disability 
(i)Retirement:  If a Participant terminates his or her employment with Staples and each of its Affiliates before the end of the Performance Cycle and after attaining age 55, and if at the time of such termination of employment the sum of the years of service (as determined by the Committee) completed by the Participant plus the Participant's age is greater than or equal to 65, and if the Participant's retirement occurs after the establishment of the Target Award and the performance goals for the Participant for the Performance Cycle, then the Participant will be eligible for a prorated award calculated by multiplying the Participant's approved award by a fraction, the numerator of which will be the number of days the Participant was employed by Staples or an Affiliate during the Performance Cycle and the denominator of which will be the total number of days in such Performance Cycle; provided however, if the Plan Years within the Performance Cycle have separate performance goals, then the Participant will be eligible for an award for any Plan Years ended before the Plan Year in which the Participant retires and in addition, if the Participant's retirement occurs after the establishment of the Target Award for the Participant for the Performance Cycle and the performance goals for the Participant for the Plan Year of retirement, the Participant will be eligible for a prorated award for the Plan Year in which the Participant retires calculated by multiplying the Participant's approved award for such Plan Year by a fraction, the numerator of which will be the number of days from the beginning of the Plan Year through the date of the Participant's retirement and the denominator of which will be the total number of days in that Plan Year.  A Participant whose retirement occurs before the establishment of the Target Award for a Performance Cycle and the performance goals for the Performance Cycle (or Plan Year, as applicable) will not receive an award for that Performance Cycle (or Plan Year, as applicable).
(ii)Death:  If a Participant's employment with Staples and each of its Affiliates is terminated due to death before the end of the Performance Cycle but after the establishment of the Target Award and the performance goals for the Participant for the Performance Cycle, then without regard to the amount that would have been earned by the Participant under the award based upon achievement of the performance goals, 100% of the Participant's Target Award for such Performance Cycle will be paid to the Participant's beneficiary (as defined in Section VIII.J. below).  A Participant whose death occurs before the establishment of the Target Award for a Performance Cycle and the performance goals for the Performance Cycle (or Plan Year, as applicable) will not receive an award for that Performance Cycle (or Plan Year, as applicable).
(iii)Permanent Disability:  If a Participant's employment with Staples and each of its Affiliates is terminated due to permanent disability before the end of the Performance Cycle but after the establishment of the Target Award and the performance goals for the Participant for the Performance Cycle, then the Participant will be eligible for a prorated award calculated by multiplying the Participant's approved award by a fraction, the numerator of which will be the number of days the Participant was employed by Staples or an Affiliate during the applicable Performance Cycle and the denominator of which will be the total number of days in such Performance Cycle; provided however, if the Plan Years within the Performance Cycle have separate performance goals, then the Participant will be eligible for an award for any Plan Years ended before the Plan Year in which the Participant is terminated and in addition, if the Participant's termination occurs after the establishment of the Target Award for the Participant for the Performance Cycle 

and the performance goals for the Participant for the Plan Year of termination, the Participant will be eligible for a prorated award for the Plan Year in which the Participant is terminated calculated by multiplying the Participant's approved award for such Plan Year by a fraction, the numerator of which will be the number of days from the beginning of the Plan Year through the date of the Participant's termination and the denominator of which will be the total number of days in that Plan Year.  A Participant whose termination occurs before the establishment of the Target Award for a Performance Cycle and the performance goals for the Performance Cycle (or Plan Year, as applicable) will not receive an award for that Performance Cycle (or Plan Year, as applicable).
C.Change in Control
If (i) a Change in Control of Staples occurs while a Participant is employed by Staples or an Affiliate and prior to the determination by the Committee whether a payment of an award has been earned under this Plan and (ii) within one year following the closing of the Change in Control the employment of the Participant is terminated by the Company without Cause (as defined in Section III.D.iii hereof) or the Participant terminates employment with the Company for Good Reason (as defined below), then the greater of (X) 100% of the Participant's Target Award for the Performance Cycle or (Y) the amount determined to have been earned by the Participant under the award based upon achievement of the performance goals will be paid to the Participant.  Any such amount shall be paid (A) within 10 days following the date of termination of employment of the Participant, provided that the Change in Control qualifies as a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i) or (b) on the payment date originally specified in the applicable award agreement at the time of grant if the Change in Control does not so qualify. For purposes of this Agreement, “Good Reason” shall mean (i) a material diminution in the duties, authority and responsibilities of the Participant, (ii) a material reduction in the Participant's base compensation or (iii) the relocation of the Participant's principal place of employment by more than an additional 50 miles from his or her primary residence as of the closing of the Change in Control.  In order to terminated on account of Good Reason, (i) the Participant must provide notice to the Company within 60 days of the event triggering Good Reason, (ii) the Company must have 30 days following the receipt of such notice to cure such event and (iii) the Participant must actually terminate employment with the Company within six months following the date of the notice.
D.Definitions  
For purposes of this Plan, the following terms shall have the following meanings:
(i)A “Change in Control” shall be deemed to have occurred if (A) any “person”, as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (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 (other than pursuant to a merger or consolidation described in part (1) or (2) of clause (C) below); (B) individuals who, as of the date hereof, constitute the Board of Directors of Staples (as of the date hereof, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors, 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) shall be, for purposes of this Plan, considered as though such person were a member of the Incumbent Board; (C) the stockholders of Staples approve a merger or consolidation of Staples with any other corporation, and such merger or consolidation is consummated other than (1) 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 (2) a merger or consolidation effected to implement a recapitalization of Staples (or similar transaction) in which no “person” (as defined above) acquires more than 30% of the combined voting power of Staples' then outstanding securities; or (D) the stockholders of Staples approve an agreement for the sale or disposition by Staples of all or substantially all of Staples' assets, and such sale or disposition is consummated.
(ii)“Surviving Corporation” shall mean (x) in the case of a Change in Control pursuant to clause (A) or clause (B) of the above definition of Change in Control, Staples; (y) in the case of Change in Control pursuant to clause (C) of the above definition of Change in Control, the surviving or resulting corporation in such merger or consolidation; and (z) in the case of a Change in Control pursuant to Clause (D) of the above definition of Change in Control, the entity acquiring the majority of the assets being sold or disposed of by Staples.
(iii)“Cause,” as determined by Staples or the Surviving Corporation (which determination shall be conclusive), shall mean:
(A)Willful failure by the Participant to substantially perform his or her duties with Staples or the Surviving Corporation (other than any failure resulting from incapacity due to physical or mental illness); provided, however, that Staples or the Surviving Corporation has given the Participant a written demand for substantial performance, which specifically identifies the areas in which the Participant's performance is substandard, and the Participant has not cured such failure within 30 days after delivery of the demand.  No act or failure to act on the Participant's part will be deemed “willful” unless the Participant acted or failed to act without a good faith or reasonable belief that his or her conduct was in Staples' or the Surviving Corporation's best interest; or
(B)Breach by the Participant of any provision of any employment, consulting, advisory, proprietary information, non-disclosure, non-competition, non-solicitation or other similar agreement between the Participant and Staples or the Surviving Corporation, including, without limitation, the Proprietary and Confidential Information Agreement and/or the Non-Compete and Non-Solicitation Agreement; or
(C)Violation by the Participant of the Code of Ethics; or
(D)The Participant's engagement in intentional deceitful act(s) that results in (1) an improper personal benefit, or (2) injury to Staples or the Surviving Corporation; or
(E)The Participant's engagement in fraud or willful misconduct (not acting in good faith or with reasonable belief that conduct was in the best interests of Staples or the Surviving Corporation) that significantly contributes to Staples or the Surviving Corporation preparing a material financial restatement, other than a restatement of financial statements that became materially inaccurate because of revisions to generally accepted accounting principles; or
(F)Failure by the Participant to devote his or her full working time to the affairs of Staples or the Surviving Corporation except as may be authorized in writing by Staples' or the Surviving Corporation's CEO or other authorized official of Staples or the Surviving Corporation; or
(G)The Participant's engagement in business other than the business of Staples or the Surviving Corporation except as may be authorized in writing by Staples' or the Surviving Corporation's CEO or other authorized official of Staples or the Surviving Corporation; or
(H)The Participant's engagement in misconduct, which is demonstrably and materially injurious to Staples or the Surviving Corporation.

For purposes of the definition of Cause contained in Section III.D.(iii) and Section VI. regarding forfeiture and recovery for Misconduct (as defined therein), any reference therein to Staples (other than with respect to defining the Board of Directors) shall also include any entity that Staples directly or indirectly controls.
E.Employment Requirement
Except as set forth in Section III.A., Section III.B. or Section III.C., a Participant must be employed by Staples or the relevant Affiliate as of the last day of the Performance Cycle in order to be eligible for payment of an award for that Performance Cycle.  If the employment of a Participant terminates during a Performance Cycle for any reason other than as specified in Section III.A., Section III.B. or Section III.C, no award will be paid to the Participant for that Performance Cycle.
		
	IV.
	Performance Goals

A.General
Each award made under this Plan shall be subject to performance conditions.  It is intended that awards made to Participants who are, or who are designated by the Committee as potentially being at the end of a Performance Cycle, a “covered employee” for purposes of Internal Revenue Code (“Code”) Section 162(m) will in form and in operation comply with all applicable requirements of Code Section 162(m), but the Committee reserves the right to make awards to covered employees that in form or operation do not comply with Code Section 162(m).  Any award made to an associate who is or is designated as a covered employee and that is intended by the Committee to be tax-deductible for purposes of Code Section 162(m) shall be subject to stockholder approval of this Plan, including the business criteria set forth in Section IV.B. upon which performance goals may be established by the Committee.  The requirements of Code Section 162(m) may (but are not required to) be applied by the Committee in whole or in part to Participants who are not covered employees under Code Section 162(m), or the Committee may apply other performance goals or other conditions to awards made to Participants who are not covered employees in a manner consistent with the purposes of this Plan.
B.Rules Applicable to Covered Employees
Within 90 days after the beginning of a Performance Cycle, or each Plan Year contained within a Performance Cycle if separate performance goals are set for each such Plan Year, the Committee will establish in writing one or more objective performance goals applicable to awards for that Performance Cycle, or Plan Year if separate performance goals are set for each Plan Year in the Performance Cycle, at a time when the outcome of those goals is substantially uncertain.  The performance goals for each Performance Cycle or Plan Year will be based on one or more of the following business criteria:  sales, earnings per share, return on net assets, return on equity, adjusted operating profit, free cash flow, total shareholder return, net income, operating income, and customer service levels.  Compensation payable to covered employees is intended to be payable solely on account of attainment of one or more of such performance goals.  The performance goals may apply to an entire Performance Cycle or may be different for each Plan Year contained within a Performance Cycle and may vary among Participants.  Performance goals may be expressed (when applicable) in terms of attaining a specified level of the particular business criteria, or the attainment of a percentage increase or decrease of the business criteria.  Performance goals may be applied to the performance of Staples as a whole, or to the performance of an Affiliate, division, or business unit of Staples, or an individual associate, or may be applied to the performance of Staples, an Affiliate, division, business unit, or individual associate relative to a market index, a group of other companies, or a combination thereof.  In addition, customer service target levels will be based on pre-determined tests of customer service levels, including without limitation scores on blind test (“mystery”) shopping, customer comment card statistics, customer relations statistics (e.g., number of customer complaints), delivery response levels or customer satisfaction 

surveys conducted by a third party.  The Committee may determine that special one-time or extraordinary gains, losses and/or events, including without limitation as a result of certain acquisitions or divestitures and changes in accounting principles, should or should not be included in determining whether such performance objectives have been met.
If more than one performance goal is established for a Performance Cycle or a Plan Year within a Performance Cycle, the Committee shall also set the relative weighting of the performance goals for such Performance Cycle or for each such Plan Year.  The performance goals and relative weighting of performance goals may vary from Performance Cycle to Performance Cycle, from Plan Year to Plan Year and among Participants.  For each performance goal of a Performance Cycle or a Plan Year there must be a minimum level of performance that is required to be achieved such that if the threshold is not attained, no portion of the award will be credited to the Participant with respect to that goal for that Performance Cycle or Plan Year.  The maximum amount payable to a Participant with respect to any award is $7 million for each Plan Year within a Performance Cycle.
The communication of an award need not be made within the first 90 days of the Performance Cycle or Plan Year as long as the Committee has taken the actions described in this Section IV and the other applicable requirements of Code Section 162(m) are satisfied.
C.Target Awards
For each Participant for whom an award is made, the Committee will establish a Target Award during the first 90 days of the Performance Cycle relating to that award.  Once established, the Target Award shall remain fixed for the balance of that Performance Cycle.  Target Awards may be expressed as a fixed dollar amount or a percentage (including multiples) of the base salary of a Participant determined at the time that the Target Award is established.  The percentages or dollar amounts will be determined by the Committee based on the Participant's position and responsibilities and may vary among Participants.  If separate performance goals are set for each Plan Year within a Performance Cycle, then the Target Award for each Plan Year will be the Target Award for the Performance Cycle multiplied by a fraction, the numerator of which is one and the denominator of which is the number of Plan Years in that Performance Cycle.IVV
V.          Payment Calculations and Committee Certification
At the end of the Performance Cycle, the Committee shall determine the amount, if any, to be paid to each Participant based on the extent that the performance goals established for the Participant for the Performance Cycle, or each Plan Year within the Performance Cycle, were achieved and shall authorize payment by Staples to the Participant.  To determine the amount of payment for a Performance Cycle for which separate performance goals were set for each Plan Year within that Performance Cycle, the Committee will add the amounts it determines to pay in relation to the performance goals achieved for each Plan Year and (subject to the other provisions of this Plan, including Section III.A., Section III.B., Section VI., and Section VII.) pay that sum.  In measuring the achievement of performance goals for any Performance Cycle or Plan Year and calculating any payment at the end of the applicable Performance Cycle, unless otherwise determined by the Committee and set forth in the award agreement, awards will be linearly interpolated between the percentages set forth in the award agreement based upon actual results as determined by the Committee.  Payments shall be made in cash, including by check or electronic deposit, in accordance with this Section V.
Prior to the occurrence of a Change in Control (as defined in Section III.D. above), the Committee may exercise its discretion in a uniform and non-discriminatory manner for similarly situated Participants to reduce or increase any award otherwise payable under this Plan in accordance with objective or subjective factors if necessary or appropriate to conform the amount payable under an award to an amount consistent 

with the purposes of this Plan and the intended economic benefits of participation in this Plan; provided, however, that in the case of any award intended by the Committee at the time of grant of such award to be tax-deductible for purposes of Code Section 162(m), the Committee may reduce (but not increase) any such award.  The exercise of negative or positive discretion with respect to one Participant shall not be permitted to result in an increase or decrease in the amount payable to another Participant.
The Committee shall certify the achievement of the performance goals in writing prior to making any payment of an award that was granted to an associate designated as a covered employee for purposes of Code Section 162(m).
Subject to the rules regarding forfeiture and repayment for Misconduct described in Section VI., the Dodd-Frank Clawback described in Section VII., and the rules regarding deferral of payment and amendment and termination of this Plan described in Section VIII., payment of any earned award will be made in a lump sum within 90 days of the earlier of the Participant's death or the end of the Performance Cycle established for such award; provided, however, in the event that it is not administratively feasible to make payment at that time, distribution may be made at a later date within the same calendar year that includes the last day of the Performance Cycle (or the Participant's death, as the case may be) as determined in the discretion of the Committee.
VI.    Forfeiture and Recovery for Misconduct
A.Right of Recovery
Notwithstanding any other provision of this Plan to the contrary, if the Board of Directors of Staples (or its authorized designee, the “Board”) determines during the Recovery Period (as defined in this Section VI.A. below) that a Participant has engaged in any of the conduct set forth in clauses (B) through (E) of Section III.D.(iii), which determination shall be conclusive (“Misconduct”), the Board, subject to the limitations set forth in this Section VI., may in its sole discretion (1) terminate such Participant's participation in this Plan, or with respect to any award under this Plan, and treat any outstanding award as forfeited, (2) require forfeiture, in whole or in part, of payment of any award that has been previously approved by the Committee for payment under this Plan which remains in whole or in part unpaid, and/or (3) demand that the Participant pay to Staples in cash the amount described in Section VI.B.; provided, however, that in the event the Board determines during the Recovery Period that the Participant engaged in Misconduct as described in clause (E) of Section III.D.(iii) (“Restatement Misconduct”), the Board shall in all circumstances, in addition to any other recovery action taken, require forfeiture and demand repayment pursuant hereto.
“Recovery Period” means (1) if the Misconduct relates to Restatement Misconduct, or the Misconduct consists of acts or omissions relating to Staples' financial matters that in the discretion of the Board are reasonably unlikely to be discovered prior to the end of the fiscal year in which the Misconduct occurred and the completion of the outside audit of Staples' annual financial statements, the period during which the Participant is employed by Staples and the period ending 18 months after the Participant's last day of employment; (2) if the Misconduct relates to the breach of any agreement between the Participant and Staples, the term of the agreement and the period ending six months following the expiration of the agreement, and (3) in all other cases, the period during which the Participant is employed by Staples and the period ending six months after the Participant's last day of employment.  If during the Recovery Period the Board gives written notice to the Participant of potential Misconduct, the Recovery Period shall be extended for such reasonable time as the Board may specify is appropriate for it to make a final determination of Misconduct and seek enforcement of any of its remedies described above.  Staples' rights pursuant to this Section VI. shall terminate on the effective date of a Change in Control and no Recovery Period shall extend beyond 

that date except with respect to any Participant for which the Board prior to such Change in Control gave written notice to such Participant of potential Misconduct.
For purposes of administratively enforcing its rights under this Section VI.A., during any period for which potential Misconduct has been identified by Staples, the Board may (1) suspend such Participant's participation in this Plan, or with respect to any award under this Plan, or (2) to the extent permitted by Code Section 409A, temporarily withhold, in whole or in part, payment of any award that has been previously approved by the Board for payment under this Plan which remains in whole or in part unpaid.
B.Amount of Recovery
With respect to Misconduct described in Sections III.D.(iii)(B) (breach of agreement) and Section III.D.(iii)(C) (violation of Code of Ethics), and in addition to its right to effect a termination of participation and a forfeiture of outstanding awards under this Plan, the Board may recover from the Participant the amount of any payments made to the Participant under this Plan during the last 12 months of employment with Staples.
With respect to Misconduct described in Section III.D.(iii)(D) (intentional deceitful acts), and in addition to its right to effect a termination of participation and a forfeiture of outstanding awards under this Plan, the Board may recover from the Participant the greater of (A) the amount paid to the Participant with respect to any award made under this Plan with a Performance Cycle that includes any period during which the Misconduct occurred, or with a Performance Cycle which was directly impacted by the Misconduct, or (B) the amount determined by the Board in its sole discretion to represent the financial impact of the Misconduct upon Staples; provided, however, that such recovery amount shall be reduced by the value of any forfeited outstanding awards under this Plan (value to be determined by the Target Award for such awards) and any amounts recovered from the Participant under Staples' cash bonus plans and other short term or long term incentive plans as a result of such Misconduct.
With respect to Restatement Misconduct, and in addition to its right to effect a termination of participation and a forfeiture of outstanding awards under this Plan, the Board shall seek to recover the entire amount paid to the Participant with respect to any award made under this Plan with a Performance Cycle that includes any portion of a fiscal year that is the subject of an accounting restatement relating to the Misconduct (the “Restated Fiscal Year”).  In the Board's discretion, it may also seek to recover the entire amount paid to the Participant with respect to any other award made under this Plan with a Performance Cycle that includes any portion of the fiscal year following the Restated Fiscal Year.
The term “recover” or “recovered” shall include, but shall not be limited to, any right of set-off, reduction, recoupment, off-set, forfeiture, or other attempt by Staples to withhold or claim payment of an award or any proceeds thereof.  Staples' right of forfeiture and recovery of awards shall not limit any other right or remedy available to Staples for a Participant's Misconduct, whether in law or equity, including but not limited to injunctive relief, terminating the Participant's employment with Staples, or taking other legal action against the Participant.
The amount that may be recovered under this Section VI. shall be determined on a gross basis without reduction for taxes paid or payable by a Participant.
VII.    Dodd-Frank Clawback
Notwithstanding any other provision of this Plan to the contrary, in order to comply with Section 10D of the Securities Exchange Act of 1934, as amended, and any regulations promulgated, or national securities exchange listing conditions adopted, with respect thereto (collectively, the “Clawback Requirements”), if 

the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirements under the securities laws, then the Participant shall return to the Company, or forfeit if not yet paid, the amount of any award received under this Plan during the three-year period preceding the date on which the Company is required to prepare the accounting restatement, based on the erroneous data, in excess of what would have been paid to the Participant under the accounting restatement as determined by the Committee in accordance with the Clawback Requirements and any policy adopted by the Committee pursuant to the Clawback Requirements.
VIII.    General
A.Plan Administration
This Plan will be administered by the Committee.  The Committee will have complete discretionary authority and control with respect to the administration of this Plan, including the authority to determine the term of a Performance Cycle and whether performance goals will be set for the Performance Cycle or each Plan Year in the Performance Cycle; the authority to determine Target Awards, select business criteria and establish performance goals; to adopt rules or regulations regarding the treatment of awards in the event a Participant's leave of absence during a Performance Cycle or a Participant's hiring, promotion or transfer during a Performance Cycle; to adopt and repeal other rules and regulations relating to this Plan; and to make decisions and interpretations regarding the provisions of this Plan, including determining to what extent, if any, specific items are to be considered in the relevant business criteria or performance goals for any particular business, the satisfaction of performance goals and the payment of awards under this Plan.  The Committee may correct any defect, supply any omission, or reconcile any inconsistency in this Plan or any award in the manner and to the extent it shall deem expedient to carry this Plan into effect, and it shall be the sole and final judge of such expediency.  All decisions by the Committee shall be made in the Committee's sole discretion, and shall be final and binding on all persons having or claiming any interest in this Plan or in any award.  The Committee may delegate ministerial duties under this Plan to one or more administrators who may be associates of Staples or an Affiliate.  Except for the administration of awards granted to covered employees, the Committee may delegate non-ministerial duties to any officer of Staples or an Affiliate.  No director or associate acting pursuant to the authority delegated by the Committee shall be liable for any action or determination relating to or under this Plan made in good faith.
B.Employment at Will
This Plan does not create an express or implied contract of employment between Staples or any Affiliate and a Participant.  Staples (and where applicable, the Affiliates) and the Participants each retain the right to terminate the employment relationship at any time and for any reason.
C.Amendment and Termination of Plan
Staples reserves the right, in its sole discretion, at any time prior to actual payment of awards to amend, terminate or discontinue this Plan in whole or in part.
This Plan may be amended or terminated by either the Board of Directors of Staples or the Committee, provided that (1) subject to Section VIII.F. (regarding Code Section 409A compliance), no amendment or termination of this Plan after the end of a Performance Cycle may adversely affect the rights of Participants with respect to their awards for that Performance Cycle, and (2) no amendment which would require stockholder approval under Code Section 162(m) may be effected without such stockholder approval.  For avoidance of doubt, neither the application of Section VI. regarding forfeiture and repayment for Misconduct, the application of Section VII. regarding the Dodd-Frank Clawback, nor the exercise of negative discretion as described in Section V. shall be deemed to be an amendment of this Plan.

Notwithstanding the foregoing provisions of this Section VIII.C., any termination of this Plan that provides for an acceleration of the time or form of payment of an award must comply with the terms and conditions regarding plan terminations and liquidations as set forth in Code Section 409A and Treasury Regulation Section 1.409A-3(j)(ix), which are incorporated by reference as if fully set forth in this Section VIII.C.
D.Rights are Non-Assignable
All awards and any payments due hereunder are non-assignable and non-transferable. Neither a Participant nor any beneficiary or other person shall have any right to assign the right to receive payments hereunder, in whole or in part, which, whether voluntarily or involuntarily.
E.Withholding
All required deductions, including without limitation with respect to federal, state or local taxes, will be withheld from the awards prior to distribution.
F.Code Section 409A Compliance
Awards under this Plan are intended to comply with Code Section 409A, and all awards shall be interpreted and administered in accordance with Code Section 409A and Treasury Regulations and other guidance issued thereunder.  Generally, this Plan is intended to comply with Code Section 409A on the basis that payment distributions are to be made upon the earlier of a Participant's death or at a specified time (or pursuant to a fixed schedule) stated in this Plan or in the relevant award at the date of deferral of compensation, without regard to other distribution events described in Code Section 409A(a)(2)(A) and without application of the six month delay for specified employees described in Code Section 409A(a)(2)(B).  Notwithstanding such intention, to the extent required by Code Section 409A, any reference to “permanent disability” shall be interpreted to mean “disability” as defined for purposes of Code Section 409A.  Similarly, any reference to “termination of employment,” “discharge,” “resignation,” or “retirement” shall not be sufficient to constitute a payment event for purposes of Code Section 409A unless such event also constitutes a “separation from service” as defined by Code Section 409A.
If a Participant is a “specified employee” as defined in Code Section 409A (and as applied according to procedures of Staples and its Affiliates) as of the Participant's separation from service, to the extent any payment under this Plan constitutes deferred compensation (after taking into account any applicable exemptions from Code Section 409A) that is payable upon a separation from service, then, to the extent required by Code Section 409A, no payments due under this Plan may be made until the earlier of:  (1) the first day of the seventh month following the Participant's separation from service, or (2) the Participant's date of death; provided, however, that any payments delayed during this six-month period shall be paid in the aggregate in a lump sum, with interest from the scheduled payment date to the date of actual payment at an annual rate equal to the prime rate as set forth in the Eastern edition of The Wall Street Journal on the business day immediately preceding Participant's date of separation from service, on the first day of the seventh month following the Participant's separation from service.
Notwithstanding any provision of this Plan or any award to the contrary, in the event that the Committee determines that any award may not or does not comply with Code Section 409A, the Board of Directors of Staples or the Committee may adopt such amendments to this Plan and the affected award (without Participant consent) or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to comply with the requirements of Code Section 409A.  If this Plan or an award fails to meet the requirements of Code Section 409A, neither Staples nor any of its Affiliates shall have any liability for any tax, penalty 

or interest imposed on a Participant by Code Section 409A, and the Participant shall have no recourse against Staples or any of its Affiliates for payment of any such tax, penalty, or interest imposed by Code Section 409A.
G.Deferral of Payment of Awards
At the time of grant of an award (or at such earlier or later time as the Committee determines appropriate in light of the provisions of Code Section 409A), the Committee may permit a Participant who is otherwise eligible to participate in a non-qualified deferred compensation plan sponsored by Staples or an Affiliate to defer all or a part of any payment that might otherwise be payable with respect to an award under this Plan under the terms and conditions of such non-qualified deferred compensation plan.
In addition to any deferral of payment required for payment of awards to any specified employee under Code Section 409A, if the payment of any award in any year could, in the Committee's opinion, when considered with a Participant's other compensation, result in Staples' inability to deduct any portion of such award payment because the Participant is or is expected to be a covered employee for purposes of Code Section 162(m), then to the extent permitted under Code Section 409A, the Committee in its sole discretion may defer the payment date applicable to an award to the first calendar year in which such payment would not be nondeductible by reason of Code Section 162(m).  Any such deferral shall not be deemed to be an amendment of this Plan for purposes of Section VIII.C.
H.Unfunded Plan
It is intended that this Plan be an “unfunded” plan for federal tax purposes and that it not constitute an “employee benefit pension plan” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  To the extent that this Plan is subject to ERISA, this Plan shall be administered as an unfunded employee pension plan benefiting a select group of management or highly compensated employees under the provisions of ERISA.
I.Beneficiary
A Participant may file with the Committee a written designation of death beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation.  If no death beneficiary is designated or the designated beneficiary fails to survive the Participant, the executor or administrator of the Participant's estate shall be deemed to be the Participant's death beneficiary.  If the Participant lives in a community property state and the consent of the Participant's spouse or domestic partner is required by the laws of such state to designate a beneficiary, then any beneficiary designation by such a Participant must have the consent of the Participant's spouse or domestic partner, as applicable.
J.Notice
All notices under this Plan or with respect to any award made hereunder shall be in writing and mailed or delivered by hand to Staples at its main office, Attention: Secretary, and to the Participant at his or her last known address on the employment records of Staples or at such other address as may be designated in writing by either of the parties to one another.
K.Severability
If any provision of this Plan is held to be invalid or unenforceable, the other provisions of this Plan shall not be affected but shall be applied as if the invalid or unenforceable provision had not been included in this Plan.

L.Governing Law
The provisions of this Plan and all awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law.
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Approved by the Board of Directors on March 6, 2012, subject to stockholder approval.
Approved by Stockholders on June 4, 2012.
Second Amendment and Restatement approved by the Board of Directors on March 28, 2013.

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