Document:

Exhibit 10.6

 

	
  Performance Share Award Agreement

  	
  Staples, Inc.

  
	
   

  	
  Employer ID: 04-2896127

  
	
   

  	
  500 Staples Drive

  
	
   

  	
  Framingham, MA 01702

  

 

	
  Ronald L. Sargent

  	
  EMPLOYEE ID:

  	
  1159961

  
	
  c/o Staples, Inc.

  	
  LOCATION:

  	
     CORP

  
	
  500 Staples Drive

  	
   

  	
   

  
	
  Framingham, MA 01702

  	
   

  	
   

  

 

Staples, Inc. (“Staples”)
hereby agrees to award to the recipient named above (the “Recipient”) the
number of shares of Common Stock of Staples (the “Shares”) set forth below in
accordance with and subject to the terms, conditions, and restrictions of this
Agreement and the Plan (each as defined below). If the conditions described
below are satisfied, such award will be made under the terms of the Amended and
Restated 2004 Stock Incentive Plan, as further amended or restated from time to
time (the “Plan”), on the date set forth below (the “Vesting Date”).

	
  Date of Agreement:

  	
  3/8/07

  
	
  Performance Period:

  	
  FY 2007 — FY
  2011

  
	
  Maximum Number of Shares:

  	
  375,000

  
	
  Vesting Date:

  	
  March 2012 — see
  section 2(b) of PSA2007

  

 

By your acceptance of this Performance Share Award
Agreement, you agree that any Shares will be awarded under and governed by the
terms and conditions of the Plan and by the terms and conditions of the Staples
Performance Share Award Agreement — Terms and Conditions (“PSA2007”), which is
attached hereto (this Performance Share Award Agreement and the PSA2007 are
together referred to as the “Agreement”).

The award is divided equally between a RONA and a Sales
component, with each component consisting of 187,500 Shares.  As more fully described in PSA2007, the
number of Shares awarded on the Vesting Date with respect to the RONA and the
Sales components shall be determined based on the extent to which the respective
FY 2007 — FY 2011 Cumulative RONA Dollars and FY 2007 — FY 2011 Cumulative
Sales performance criteria are achieved; provided, that no Shares shall be
awarded unless the Minimum Performance Condition set forth below is also
achieved.  All awards of Shares require
certification of the Staples Board of Directors that the performance criteria
have been satisfied.

	
  Performance Criteria

  
	
   

  	
   

  	
  RONA Component: 187,500 Shares

  	
   

  	
  Sales Component: 187,500 Shares

  
	
   

  	
   

  	
  FY 2007 - FY 2011 

  Cumulative RONA Dollars*

  	
   

  	
  % Shares Earned

  	
   

  	
  FY 2007 - FY 2011

  Cumulative Sales*

  	
   

  	
  % Shares Earned

  
	
  Stretch:

  	
   

  	
  **

  	
   

  	
  100%

  	
   

  	
  **

  	
   

  	
  100%

  
	
  Most Probable:

  	
   

  	
  **

  	
   

  	
  75%

  	
   

  	
  **

  	
   

  	
  75%

  
	
  Threshold:

  	
   

  	
  **

  	
   

  	
  50%

  	
   

  	
  **

  	
   

  	
  50%

  
	
   

  	
   

  	
  **

  	
   

  	
  0%

  	
   

  	
  **

  	
   

  	
  0%

  

 

	
  Minimum Performance Condition:

  	
  FY 2007—FY2011 Cumulative RONA Dollars* of at least ** and FY2007—FY2011
  Cumulative Sales* of at least **.

  

 

[** Portions of this exhibit have been omitted
pursuant to a confidential treatment request. An unredacted version of this
exhibit has been filed separately with the Securities and Exchange Commission.]

* Cumulative RONA
Dollars and Sales are in millions.  For
purposes of this Agreement, “Cumulative RONA Dollars” means the cumulative
profit generated across the Staples business units in excess of the capital
employed during the Performance Period calculated in a manner consistent with
the method used by Staples for financial planning purposes; provided, that such
term specifically excludes any cash held at the Staples, Inc. level.

	
  Accepted by:

  	
   

  	
  Staples, Inc.

  
	
  /s/ Ronald L. Sargent

  	
   

  	
  By:

  	
  /s/ Susan S. Hoyt

  
	
   

  	
   

  	
  Susan S. Hoyt

  
	
  Ronald L. Sargent

  	
   

  	
  Executive Vice President, Human Resources

  
				

 

Attachment:  Staples, Inc. PSA2007 (RLS)

STAPLES, INC.

PERFORMANCE SHARE AWARD AGREEMENT-TERMS AND CONDITIONS

1.              Award.  If all the conditions set forth in this
Agreement are satisfied, on the Vesting Date an award of Shares will be made
under the Plan to the Recipient named in the accompanying Performance Share
Award Agreement. No Shares will be delivered to the Recipient or transferred
into the Recipient’s name until the Vesting Date (except as provided in Section
8), and the Recipient shall have no rights to any Shares or any rights
associated with such Shares (such as dividend or voting rights) until the
Vesting Date.  Except where the context
otherwise requires, the term “Staples” shall include any parent and all present
and future subsidiaries of Staples as defined in Sections 424(e) and 424(f) of
the Internal Revenue Code of 1986, as amended or replaced from time to time
(the “Code”).  Capitalized terms used but
not defined herein shall have the meaning ascribed to them in the Performance
Share Award Agreement.

2.              Conditions for
the Award.  Except
as provided in Sections 3 and 8, an award of Shares on the Vesting Date shall
be made only if:

(a)           The Recipient is, and has
continuously been, an employee of, or a consultant to, Staples beginning with
the date of this Agreement and continuing through the Vesting Date; and

(b)           The Performance Criteria set forth in
the accompanying Performance Share Award Agreement are satisfied during the
Performance Period.  The Staples Board of
Directors, upon recommendation of the Compensation Committee, must determine
and certify on the date of its first regularly scheduled meeting in FY 2012
(generally in March) whether, and to what extent, the Performance Criteria have
been achieved.  The date on which the
Board of Directors certifies that the Performance Criteria have been satisfied
shall be the “Vesting Date” for purposes of this Agreement.  In making its determination, the Compensation
Committee may adjust the Performance Criteria to take into account accounting
changes, certain acquisitions and divestitures and related charges, other
special one-time or extraordinary gains and/or losses and other one-time or
extraordinary events as permitted under the Plan; provided that the
Compensation Committee may not adjust the Performance Criteria to take into
account foreign currency exchange rate fluctuations, changes in corporate tax
rates or recurring store closures consistent with historic patterns (with
widespread, out of the ordinary store closures not being consistent with
historic patterns).  Awards of Shares will be
interpolated between the percentages set forth in the Performance Share Award
Agreement under the heading “% Shares Earned” based on actual results. If the
Minimum Performance Condition is not achieved during the Performance Period, no
Shares will be issued and this Agreement will be of no force or effect.

3.              Employment Events
Affecting Payment of Award.

(a)           Except as provided in Section 3(b)
and in Section 8, if the Recipient terminates employment with Staples prior to
the Vesting Date, for any reason or no reason, with or without cause, no Shares
will be issued and this Agreement will be of no further force or effect.

(b)           If the Recipient dies or becomes
disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code),
in each case prior to the Vesting Date, then the Recipient or his estate will
nevertheless be awarded on the Vesting Date the number of Shares determined
under Section 2(b) hereof as if the Recipient were still employed on the
Vesting Date.

(c)           If (i) the Recipient’s relationship
with Staples is terminated by Staples for Cause (as defined below) or (ii) if
the Recipient retires or resigns and Staples determines within six months
thereafter that the Recipient’s conduct prior to his retirement or resignation
warranted discharge for Cause, or (iii) Staples determines that the Recipient’s
conduct after termination of the employment relationship fails to comply with
the terms of any non-competition, non-solicitation or confidentiality provision
contained in any employment, consulting, advisory, proprietary information,
non-competition, non-solicitation or other similar agreement between the
Recipient and Staples, then, without limiting any other remedy available to
Staples, the Shares (and any shares issued under Section 5 hereof) shall be
repurchased by Staples at a repurchase price of zero and ownership of all
right, title and interest in and to the such shares shall be forfeited and
revert to Staples as of the date of such determination; or, if the Recipient no
longer owns such shares at such time, Staples shall be entitled to recover from
the Recipient the gross profit earned by the Recipient upon the disposition
(whether by sale, gift, donation or otherwise) of such shares.

4.              Delivery of
Shares.  Staples
shall, within 30 days of the Vesting Date (or, if applicable, the date the
Shares vest under Section 8), effect the issuance of the Shares by delivering
the Shares to a broker designated by the Recipient.

5.              Dividend
Equivalent Rights.  If any Shares are awarded to the Recipient
pursuant to this Agreement, then the Recipient shall also be entitled to
receive a number of shares of Staples’ Common Stock equal to (A) (i) the number
of Shares awarded to the Recipient under Section 2 multiplied by (ii) the
cumulative amount of cash dividends paid by Staples that the Recipient would
have received had he owned the awarded Shares on each dividend record date
during the Performance Period, divided by (B) the closing price of the Common
Stock on the Vesting Date; provided, however, that cash will be paid in lieu of
any fractional shares the Recipient would be entitled to receive under this
Section 5.

6.              No Special
Employment or Similar Rights. 
Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind Staples to continue the
employment or other relationship of the Recipient with Staples for the period
prior to or after the Vesting Date.

7.              Adjustment
Provisions.

 1
 

(a)            Changes in Capitalization.   In the event of any change in capitalization
of Staples, as described in Section 9(a) of the Plan, the Recipient shall, with
respect to the Shares, be entitled to the rights and benefits, and be subject
to the limitations, set forth in Section 9(a) of the Plan.

(b)           Liquidation or Dissolution.  In
the event of a liquidation or dissolution of Staples, this Agreement shall be
of no further force or effect and no Shares shall be awarded hereunder,
provided that if such liquidation or dissolution also constitutes a Change in
Control as defined in Section 8(a) hereof, then the provisions of Section 8 and
not the provisions of this Section 7(b) shall govern.

(c)           Reorganization Event.  In the event of a Reorganization Event as
defined in Section 9(c)(1) of the Plan, the Recipient shall, with respect to
the Shares, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 9(c) of the Plan; provided that if such
Reorganization Event also constitutes a Change in Control as defined in Section
8(a) hereof, then the provisions of Section 8 and not the provisions of this
Section 7(c) shall govern.

(d)           Board Authority to Make Adjustments.  Any adjustments under this Section 7 will be
made by the Board of Directors, whose determination as to what adjustments, if
any, will be made and the extent thereof will be final, binding and
conclusive.  No fractional shares will be
issued with respect to Shares on account of any such adjustments.

8.               Change in Control.

(a)           Definitions.
 For purposes of this Agreement, 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 clause (1) or (2) of subsection (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
Agreement, 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 Section 8(a)(i), Staples; (y) in the case of a
Change in Control pursuant to clause (C) of Section 8(a)(i), 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 Section 8(a)(i), 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 Recipient to substantially perform his or her duties
with Staples (other than any failure resulting from incapacity due to physical
or mental illness); provided, however, that Staples has given the Recipient a
written demand for substantial performance, which specifically identifies the
areas in which the Recipient’s performance is substandard, and the Recipient
has not cured such failure within 30 days after delivery of the demand.  No act or failure to act on the Recipient’s
part will be deemed “willful” unless the Recipient acted or failed to act
without a good faith or reasonable belief that his or her conduct was in
Staples’ best interest; or

(B)
Breach by the Recipient of any provision of any employment, consulting,
advisory, proprietary information, non-disclosure, non-competition,
non-solicitation or other similar agreement between the Recipient and Staples,
including, without limitation, the Proprietary and Confidential Information
Agreement and/or the Non-Compete and Non-Solicitation Agreement; or

(C)
Violation by the Recipient of the Code of Ethics or an attempt by the Recipient
to secure any improper personal profit in connection with the business of
Staples; or

 2
 

(D)
Failure by the Recipient to devote his or her full working time to the affairs
of Staples except as may be authorized by Staples’ Board of Directors; or

(E) The Recipient’s engagement in business other than the business of
Staples except as may be authorized by Staples’ Board of Directors; or

(F) The Recipient’s engagement in misconduct, which is
demonstrably and materially injurious to Staples.

(b) Effect of Change in Control.
Notwithstanding the provisions of Section 2, if a Change in Control of Staples
occurs prior to the Vesting Date and while the Recipient is employed by Staples,
then the greater of (X) a number of Shares determined as if the Most Probable
FY 2007 — FY 2011 Cumulative RONA Dollars and Most Probable FY 2007 — 2011
Cumulative Sales were achieved or (Y) the number of Shares determined to be
issuable under Section 2(b) of this Agreement will be awarded (and the
corresponding shares under Section 5 hereof will be issued) if:

(i) Upon the Change in Control, the Recipient:

(A) Is not offered
employment with the Surviving Corporation (or is not allowed to continue his or
her employment, if the Surviving Corporation is Staples) in a position (1) in
which the title, employment duties and responsibilities, conditions of
employment, and the level of compensation and benefits are at least equivalent
to those in effect during the 90-day period immediately preceding the Change in
Control and (2) that does not involve a relocation of the Recipient’s principal
place of employment of more than an additional 50 miles from the Recipient’s
primary residence at the time of the Change in Control, or

(B) Does not accept (or
continue) employment with the Surviving Corporation (regardless of position,
compensation or location) (other than as a result of retirement);

(ii) Within one year
following the date of the Change in Control, the Recipient either:

(A) Is discharged
without Cause; or

(B) Resigns or
retires because his or her title or employment duties and responsibilities are
diminished, his or her conditions of employment are adversely changed, the
level of his or her compensation and benefits are reduced, or his or her
principal place of employment is relocated by more than an additional 50 miles
from his or her primary residence at the time of the Change in Control; or

(iii) The Recipient
continues to be employed by Staples or the Surviving Corporation on the Vesting
Date.

9.              Withholding Taxes.  Staples’ obligation to deliver the Shares
shall be subject to the Recipient’s satisfaction of all applicable federal,
state and local income and employment tax withholding requirements.  In the sole discretion of Staples’ Board of
Directors, the Recipient may surrender to Staples a number of Shares sufficient
to satisfy the Recipient’s tax withholding obligations.

10.       Deferral.  In
the sole discretion of Staples’ Board of Directors, the Recipient may elect to
defer delivery of the Shares; provided, however, that any such deferral must
comply with the requirements of Section 409A of the Code.

11.       Transferability.  This
Agreement may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of (whether by operation of law or otherwise) (collectively,
a “transfer”) by the Recipient, except that this Agreement may be transferred
by the laws of descent and distribution. 
The Recipient may only transfer Shares that may be issued pursuant to
this Agreement following the Vesting Date.

12.       Miscellaneous.

(a)  Except as provided herein, this Agreement may
not be amended or otherwise modified unless evidenced in writing and signed by
Staples and the Recipient unless the Board of Directors determines that the
amendment or modification, taking into account any related action, would not
materially and adversely affect the Recipient.

(b)  All notices
under this Agreement shall be mailed or delivered by hand to Staples at its
main office, Attn: Secretary, and to the Recipient to 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.

(c)  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware.

 3Exhibit
10.7

	
  Notice of Award of Restricted Stock

  	
  Staples, Inc.

  
	
   

  	
  Employer ID: 04-2896127

  
	
   

  	
  500 Staples Drive

  
	
   

  	
  Framingham, MA 01702

  
	
   

  	
   

  

 

	
  

  	
   

  	
  ACCOUNT ID:

  	
   

  	
  1159961

  
	
  Ronald L. Sargent

  	
   

  	
  LOCATION:

  	
   

  	
  CORP

  
	
  c/o Staples, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
  500 Staples Drive

  	
   

  	
   

  	
   

  	
   

  
	
  Framingham, MA 01702

  	
   

  	
   

  	
   

  	
   

  

 

In consideration of
services rendered to Staples, Inc., you have been awarded restricted shares of
Staples’ Common Stock under Staples, Inc.’s Amended and Restated 2004 Stock
Incentive Plan, as follows:

	
  Stock Option Plan:

  	
   

  	
  2004RS

  
	
  Date of Award:

  	
   

  	
  3/8/07

  
	
  Total Number of Shares:

  	
   

  	
  375,000

  
	
  Fair Market Value per Share:

  	
   

  	
  $26.12

  
	
  Total Value of Shares Granted:

  	
   

  	
  $9,795,000

  

 

	
  Vesting Date

  	
   

  	
  Number of Shares

  Vesting on Vesting Date

  
	
  January 28, 2012

  	
   

  	
  100%

  

 

By your acceptance of
this Restricted Stock Award, you acknowledge that this award is granted under
and governed by the terms and conditions of Staples, Inc.’s Amended and
Restated 2004 Stock Incentive Plan (as further amended or restated from time to
time) and by the terms and conditions of Staples, Inc.’s Restricted Stock Award
Agreement as attached.

 

	
  Accepted by:

  	
  Staples, Inc.

  
	
   

  	
   

  	
   

  
	
  /s/ Ronald L. Sargent

  	
   

  	
  By:

  	
  /s/ Susan S. Hoyt

  
	
   Ronald L.
  Sargent

  	
   

  	
  Susan S. Hoyt

  Executive Vice President, Human Resources

  
				

 

Attachment:  Staples, Inc. Restricted Stock Award
Agreement

STAPLES, INC.

RESTRICTED STOCK AWARD AGREEMENT

1.              Award.  In consideration of services rendered,
Staples, Inc., a Delaware corporation (“Staples”), hereby awards to the
Associate named in the accompanying Notice of Award of Restricted Stock (the
“Notice”), pursuant to Staples’ Amended and Restated 2004 Stock Incentive Plan
(the “Plan”), the Total Number of Shares of Common Stock of Staples stated in
the Notice (the “Shares”) subject to the terms and conditions of this
Restricted Stock Award Agreement and the Plan. 
Except where the context otherwise requires, the term “Staples” shall
include any parent and all present and future subsidiaries of Staples as
defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended or replaced from time to time (the “Code”).

2.              Transferability
of Shares.  Until the Vesting
Date described below, the Shares may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of (whether by operation of law or
otherwise) nor shall the Shares be subject to execution, attachment or similar
process, except that the Shares may be transferred by will or the laws of
descent and distribution or, upon notice to Staples, for estate planning
purposes to entities that are beneficially owned entirely by family
members.  All transferees of the Shares
must agree to be governed by all of the terms and conditions of this
Agreement.  Upon any sale, transfer,
assignment, pledge, hypothecation or other disposition, or any attempt to sell,
assign, transfer, pledge, hypothecate or otherwise dispose, of the Shares
contrary to the provisions hereof, or upon the levy of any execution,
attachment or similar process upon the Shares or such rights, the Shares shall,
at the election of Staples, be deemed repurchased by Staples at a repurchase
price of zero and all rights with respect to the Shares shall be forfeited to
Staples.  In addition, Staples may seek
any other legal or equitable remedies available to it, including rights of
specific performance.  Staples may refuse
to recognize as a shareholder of Staples any purported transferee of or holder
of any rights with respect to the Shares and may retain and/or recover all
dividends payable or paid with respect to such Shares.

3.              Vesting of Shares.  Except as otherwise provided in this
Agreement, the transfer restrictions on the Shares shall lapse, and the Shares
shall be considered to “vest”, on the Vesting Date set forth in the Notice.

4.              Vesting Date.

(a)  Continuous Relationship with Staples Required.  Except as otherwise provided in this Section
4, the Shares shall not vest unless the Associate is, and has been at all times
since the Date of Award set forth in the Notice, an employee of, or a
consultant to, Staples (an “Eligible Associate”).

(b)  Termination of Relationship with Staples.  If the Associate ceases to be an Eligible
Associate for any reason prior to the Vesting Date, then, except as provided in
paragraph (c) below, the Shares shall be deemed repurchased by Staples at a
repurchase price of zero and ownership of all right, title and interest in and
to the Shares shall be forfeited and revert to Staples on the date such
Associate ceases to be an Eligible Associate. 
If the Associate is an employee on an approved leave of absence, then
the Shares shall not be forfeited as a result of such leave of absence unless
and until the Associate’s employment relationship is ultimately terminated.

(c)  Vesting Upon Death, Disability or Termination
without Cause.  If
the Associate dies or becomes disabled (within the meaning of Section 22(e)(3)
of the Code) or the Associate’s relationship with Staples is terminated by
Staples without “cause” (as defined in paragraph (d) below), in each case prior
to the Vesting Date while he or she is an Eligible Associate, then the Shares
shall vest fully.

(d)  Termination for Cause.  If (a) the Associate’s relationship with
Staples is terminated by Staples for “cause” (as defined below), or (b) if the
Associate retires or resigns and Staples determines within six months
thereafter that the Associate’s conduct prior to his or her retirement or
resignation warranted a discharge for “cause,” or (c) Staples determines that
the Associate’s conduct after termination of the employment or consulting
relationship fails to comply with the terms of any non-competition,
non-solicitation or confidentiality provision contained in any employment,
consulting, advisory, proprietary information, non-disclosure, non-competition,
non-solicitation or other similar agreement between the Associate and Staples,
then, without limiting any other remedy available to Staples, the Shares shall
be deemed repurchased by Staples at a repurchase price of zero and ownership of
all right, title and interest in and to the Shares shall be forfeited and
revert to Staples as of the date of such determination; or, if the Associate at
such time no longer owns such Shares, Staples shall be entitled to recover from
the Associate the gross profit earned by the Associate upon the disposition
(whether by sale, gift, donation or otherwise) of such Shares.

“Cause,”
as determined by Staples or the Surviving Corporation (which determination
shall be conclusive), shall mean:

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

 1
 

 

(ii) breach by the Associate of any provision of any employment,
consulting, advisory, proprietary information, non-disclosure, non-competition,
non-solicitation or other similar agreement between the Associate and Staples,
including, without limitation, the Proprietary and Confidential Information
Agreement and/or the Non-Compete and Non-Solicitation Agreement; or

(iii) violation by the Associate of the Code of Ethics or an attempt by
the Associate to secure any improper personal profit in connection with the
business of Staples; or

(iv) failure by the Associate to devote his or her full working time to
the affairs of Staples except as may be authorized by Staples’ Board of
Directors; or

(v) the Associate’s engagement in business other than the business of
Staples except as may be authorized by Staples’ Board of Directors; or

(vi) the Associate’s engagement in misconduct which is demonstrably and
materially injurious to Staples.

(e)  Repurchase/Forfeiture.   Upon
repurchase/forfeiture of the Shares for any reason hereunder, the Associate
shall cease to have any rights or privileges as a stockholder of Staples with
respect to the Shares repurchased/forfeited and such Shares shall again be
available for subsequent option grants or awards under the Plan.

5.              Delivery of
Shares.  Staples
shall, upon the Date of Award, effect issuance of the Shares by registering the
Shares in book entry form with Staples’ transfer agent in the name of the
Associate.  No certificate(s)
representing all or a part of the Shares shall be issued until vesting.

6.              No Special
Employment or Similar Rights. 
Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind Staples to continue the
employment or other relationship of the Associate with Staples for the period
prior to or after vesting.

7.              Rights as a
Shareholder.  Except as otherwise
provided herein, the Associate shall have all rights as a shareholder with
respect to the Shares including, without limita­tion, any rights to receive
dividends or non-cash distributions with respect to the Shares and to vote the
Shares and act in respect of the Shares at any meeting of shareholders.

8.              Adjustment
Provisions.

(a)  General.   In the event of any recapitalization,
reclassification of shares, combination of shares, stock dividend, stock split,
reverse stock split, spin-off or other similar change in capitalization or
event or any distribution to holders of Common Stock other than an ordinary
cash dividend, the Associate shall, with respect to the Shares, be entitled to
the rights and benefits, and be subject to the limitations, set forth in
Section 9(a) of the Plan.

(b)  Board Authority to Make Adjustments.  Any adjustments under this Section 8 will be
made by the Board of Directors, whose determination as to what adjustments, if
any, will be made and the extent thereof will be final, binding and
conclusive.  No fractional shares will be
issued with respect to Shares on account of any such adjustments.

9.              Mergers,
Consolidations, Distributions, Liquidations, Etc.  In the event of a merger or consolidation or
any share exchange transaction in which outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation or
business entity, or in the event of a liquidation of Staples, the Associate
shall, with respect to this Agreement, be entitled to the rights and benefits,
and be subject to the limitations, set forth in Section 9 of the Plan.  

10.         Vesting
Following a Change in Control.

(a)  Definitions.  For purposes of this Agreement, 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 clause (1) or (2) of
subsection (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 Agreement, considered as though such person were a
member of the Incumbent Board; (C) the stockholders of Staples 

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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 Section 10(a)(i), Staples; (y) in the
case of a Change in Control pursuant to clause (C) of Section 10(a)(i), 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 Section 10(a)(i), the
entity acquiring the majority of the assets being sold or disposed of by
Staples.

(b)  Effect of Change in Control.
Notwithstanding the provisions of Section 4(a), if a Change in Control of
Staples occurs, the Shares shall become vested as follows:

(i)  If, upon
the Change in Control, the Associate

                                (A) is not
offered employment with the Surviving Corporation (or is not allowed to
continue his or her employment, if the Surviving Corporation is Staples) in a
position (1) in which the title, employment duties and responsibilities,
conditions of employment, and the level of compensation and benefits are at
least equivalent to those in effect during the 90-day period immediately
preceding the Change in Control and (2) that does not involve a relocation of
the Associate’s principal place of employment of more than an additional 50
miles from his or her primary residence at the time of the Change in Control,
and

                (B) does not accept (or
continue) employment with the Surviving Corporation (regardless of position,
compensation or location) (other than as a result of retirement), or

(ii) If, within one year following the date of the
Change in Control, the Associate either

                                (A) is
discharged without cause (as defined in Section 4(d)) or

                                (B) resigns or
retires because his or her title or employment duties and responsibilities are
diminished, his or her conditions of employment are adversely changed, the
level of his or her compensation and benefits are reduced, or his or her
principal place of employment is relocated by more than an additional 50 miles
from his or her primary residence at the time of the Change in Control, then the
vesting of Shares shall be accelerated such that all of Shares shall vest
effective upon the date of such discharge, resignation or retirement (which
shall be considered a Vesting Date hereunder).

11.       Withholding Taxes.  Staples’ obligation to vest the Shares shall
be subject to the Associate’s satisfaction of all applicable federal, state and
local income and employment tax withholding requirements.  Staples may withhold any amount as it
considers necessary to meet any tax withholding requirement of the
Associate.   These arrangements may
include the sale of any Shares on behalf of an Associate and/or deductions from
salary and/or bonus payments.

12.       Miscellaneous.

(a)  Except as provided herein, this Agreement may
not be amended or otherwise modified unless evidenced in writing and signed by
Staples and the Associate unless the Board of Directors determines that the
amendment or modification, taking into account any related action, would not
materially and adversely affect the Associate.

(b)  All notices
under this Agreement shall be mailed or delivered by hand to Staples at its
main office, Attn: Secretary, and to the Associate to 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.

(c)  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware.

 3

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