Document:

Exhibit
10.1

 

STAPLES, INC.

 

2004 STOCK
INCENTIVE PLAN

 

1.                                       Purpose

 

The purpose of this 2004
Stock Incentive Plan (the “Plan”) of Staples, Inc., a Delaware corporation (the
“Company”), is to advance the interests of the Company’s stockholders by
enhancing the Company’s ability to attract, retain and motivate persons who
make (or are expected to make) important contributions to the Company by
providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company’s stockholders.  Except where the context otherwise requires, the term “Company”
shall include any of the Company’s present or future parent or subsidiary corporations
as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986,
as amended, and any regulations promulgated thereunder (the “Code”), and any
other business venture (including, without limitation, joint venture or limited
liability company) in which the Company has a controlling interest, as
determined by the Board of Directors of the Company (the “Board”).

 

The Plan is designed to
replace the Company’s Amended and Restated 1992 Equity Incentive Plan (the
“1992 Plan”), the Company’s Amended and Restated 1990 Director Stock Option
Plan (the “1990 Plan”) and the Company’s 1997 United Kingdom Company Share
Option Plan (the “UK Plan”).  Upon the
approval of the Plan by the Company’s stockholders, no further awards may be
made under the 1990 Plan, the 1992 Plan or the UK Plan.

 

2.                                       Eligibility

 

All of the Company’s
employees, officers, directors, consultants, advisors, and other service
providers (including persons who have entered into an agreement with the
Company under which they will be employed by the Company in the future) are eligible
to be granted options, restricted stock, restricted stock units, stock
appreciation rights or other stock-based awards (each, an “Award”) under the
Plan.  Each person who has been granted
an Award under the Plan shall be deemed a “Participant”.

 

3.                                       Administration
and Delegation

 

(a)                                  Administration
by Board of Directors.  The Plan
will be administered by the Board.  The
Board shall have authority to grant Awards and to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable.  The Board may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it shall deem expedient to carry the
Plan into effect and it shall be the sole and final judge of such
expediency.  All decisions by the Board
shall be made in the Board’s sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award.  No director or person acting pursuant to the
authority delegated by the Board shall be liable for any action or
determination relating to or under the Plan made in good faith.

 

 

(b)                                 Appointment
of Committees.  To
the extent permitted by applicable law, the Board may delegate any or all of
its powers under the Plan to one or more committees or subcommittees of the
Board (a “Committee”).  All references
in the Plan to the “Board” shall mean the Board or a Committee of the Board or
the officers referred to in Section 3(c) to the extent that the Board’s
powers or authority under the Plan have been delegated to such Committee or
officers.

 

(c)                                  Delegation
to Officers.  To the extent
permitted by applicable law, the Board may delegate to one or more officers of
the Company the power to grant Awards to employees or officers of the Company
or any of its present or future subsidiary corporations and to exercise such
other powers under the Plan as the Board may determine, provided that the Board
shall fix the terms of the Awards to be granted by such officers (including the
exercise price of such Awards, which may include a formula by which the
exercise price will be determined) and the maximum number of shares subject to
Awards that the officers may grant; provided further, however, that no officer
shall be authorized to grant Awards to himself or herself.

 

4.                                       Stock
Available for Awards

 

(a)                                  Number
of Shares.

 

(1)                                  Subject
to adjustment under Section 9, Awards may be made under the Plan for up to
23,000,000 shares of common stock, $.0006 par value per share, of the Company
(the “Common Stock”).  If any Award
expires, is terminated, surrendered or canceled without having been fully
exercised, is forfeited in whole or in part (including as the result of shares
of Common Stock subject to such Award being repurchased by the Company at the
original issuance price pursuant to a contractual repurchase right), or results
in any Common Stock not being issued (including without limitation, when an
Award is settled for cash), then in each such case the unused Common Stock
covered by such Award shall again be available for the grant of Awards under
the Plan.  Further, shares of Common
Stock tendered to the Company by a Participant to exercise an Award (either by
actual delivery or by attestation) shall be added to the number of shares of
Common Stock available for the grant of Awards under the Plan.  However, in the case of Incentive Stock
Options (as hereinafter defined), the foregoing provisions shall be subject to
any limitations under the Code.

 

(2)                                  In
addition, if any option or restricted stock award granted under the 1992 Plan
expires, is terminated, surrendered or canceled without having been fully
exercised, is forfeited in whole or in part (including as the result of shares
of Common Stock subject to such restricted stock award being repurchased by the
Company at the original issuance price pursuant to a contractual repurchase
right), or results in any Common Stock not being issued because (i) the option
or restricted stock award is settled for cash or (ii) shares are used to
satisfy the exercise price or a tax withholding obligation, then in each such
case the unused Common Stock covered by such option or restricted stock award
shall be available for the grant of Awards under the Plan, subject, however, in
the case of Incentive Stock Options, to any limitations under the Code and
further provided that the aggregate number of shares of Common Stock available
for grant of Awards pursuant to this sentence shall not exceed 45,000,000.  Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.

 

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(b)                                 Sub-limits.  Subject to adjustment under Section 9,
the following sub-limits on the number of shares of Common Stock subject to
Awards shall apply:

 

(1)                                  Section 162(m)
Per-Participant Limit.  The maximum
number of shares of Common Stock with respect to which Awards may be granted to
any Participant under the Plan in any calendar year shall be  2,300,000.  The per-Participant limit described in this
Section 4(b)(1) shall be construed and applied consistently with
Section 162(m) of the Code (“Section 162(m)”).

 

(2)                                  Limit
on Awards other than Options and SARs. 
The maximum number of shares with respect to which Awards other than
Options and SARs may be granted shall be one-half of the total number of shares
of Common Stock covered by the Plan (including any shares that may become
available under this Plan pursuant to Section 4(a)(2) hereof).

 

(3)                                  Limits
on Awards to Directors.  The maximum
number of shares with respect to which Awards may be granted during the term of
the Plan to directors who are not employees of the Company shall be 1,150,000
and the maximum number of shares of Common stock with respect to which Awards
may be granted in any calendar year to any director who is not an employee of
the Company shall be 100,000.

 

5.                                       Stock
Options

 

(a)                                  General.  The Board may grant options to purchase
Common Stock (each, an “Option”) and determine the number of shares of Common
Stock to be covered by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each Option, including
conditions relating to applicable federal or state securities laws, as it
considers necessary or advisable.  An
Option which is not intended to be an Incentive Stock Option (as hereinafter
defined) shall be designated a “Nonstatutory Stock Option”.

 

(b)                                 Incentive
Stock Options.  An Option that the
Board intends to be an “incentive stock option” as defined in Section 422
of the Code (an “Incentive Stock Option”) shall only be granted to employees of
Staples, Inc., any of Staples, Inc.’s present or future parent or subsidiary
corporations as defined in Sections 424(e) or (f) of the Code, and any other
entities the employees of which are eligible to receive Incentive Stock Options
under the Code, and shall be subject to and shall be construed consistently
with the requirements of Section 422 of the Code.  The Company shall have no liability to a Participant,
or any other party, if an Option (or any part thereof) that is intended to be
an Incentive Stock Option is not an Incentive Stock Option.

 

(c)                                  Exercise
Price.  The Board shall establish
the exercise price at the time each Option is granted and specify it in the
applicable option agreement; provided, however, that the exercise price shall
be not less than 100% of the fair market value (the “Fair Market Value”) of the
Common Stock, as determined by the Board, at the time the Option is granted.

 

(d)                                 No
Reload Rights.  Options granted
under this Plan shall not contain any provision entitling the optionee to the
automatic grant of additional Options in connection with any exercise of the
original Option.

 

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(e)                                  No
Repricing.  Unless such action is
approved by the Company’s stockholders: (i) no outstanding Option granted under
the Plan may be amended to provide an exercise price per share that is lower
than the then-current exercise price per share of such outstanding Option
(other than adjustments pursuant to Section 9), and (ii) the Board may not
cancel any outstanding Option and grant in substitution therefor new Options
under the Plan covering the same or a different number of shares of Common Stock
and having an exercise price per share lower than the then-current exercise
price per share of the cancelled Option.

 

(f)                                    Duration
of Options.  Each Option shall be
exercisable at such times and subject to such terms and conditions as the Board
may specify in the applicable option agreement provided, however, that no
Option will be granted for a term in excess of 10 years.

 

(g)                                 Exercise
of Option.  Options may be exercised
by delivery to the Company of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice) approved by
the Company, together with payment in full as specified in Section 5(h)
for the number of shares for which the Option is exercised. Shares of Common
Stock subject to the Option will be delivered by the Company following exercise
either as soon as practicable or, to the extent permitted by the Company in its
sole discretion, on a deferred basis (with the Company’s obligation to be
evidenced by an instrument providing for future delivery of the deferred shares
at the time or times specified by the Board).

 

(h)                                 Payment
Upon Exercise.  Common Stock
purchased upon the exercise of an Option granted under the Plan shall be paid
for as follows:

 

(1)                                  in
cash or by check, payable to the order of the Company;

 

(2)                                  except
as the Board may, in its sole discretion, otherwise provide in an option
agreement, by (i) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay the
exercise price and any required tax withholding or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to promptly pay to the Company the
exercise price and any required tax withholding;

 

(3)                                  if
provided for in the option agreement or approved by the Company, in its sole
discretion, by delivery (either by actual delivery or attestation) of shares of
Common Stock owned by the Participant valued at their Fair Market Value, provided
(i) such method of payment is then permitted under applicable law, (ii) such
Common Stock, if acquired directly from the Company was owned by the
Participant for such minimum period of time, if any, as may be established by
the Board in its discretion, and (iii) such Common Stock is not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements;

 

(4)                                  if
provided for in the option agreement or approved by the Company, in its sole
discretion,  by payment of such other
lawful consideration as the Board may determine, but in no event may such
consideration include delivery of a promissory note of the Participant to the
Company; or

 

(5)                                  by
any combination of the above permitted forms of payment.

 

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(i)                                     Substitute
Options.  In connection with a
merger or consolidation of an entity with the Company or the acquisition by the
Company of property or stock of an entity, the Board may grant Options in
substitution for any options or other stock or stock-based awards granted by
such entity or an affiliate thereof. 
Substitute Options may be granted pursuant to this Section 5(i) on
such terms as the Board deems appropriate in the circumstances, notwithstanding
any limitations on Options contained in the other sections of this
Section 5 or in Section 2.

 

(j)                                     Amendment
of Options.  Subject to the
provisions of Section 10(f), the Board may amend an Option to convert it
into a Stock Appreciation Right.

 

6.                                       Stock
Appreciation Rights

 

(a)                                  Nature
of Stock Appreciation Rights. A Stock Appreciation Right, or SAR, is an
Award entitling the holder on exercise to receive an amount in cash or Common
Stock or a combination thereof (such form to be determined by the Board)
determined in whole or in part by reference to appreciation, from and after the
date of grant, in the fair market value of a share of Common Stock. SARs may be
based solely on appreciation in the fair market value of Common Stock or on a
comparison of such appreciation with some other measure of market growth such
as (but not limited to) appreciation in a recognized market index. The date as
of which such appreciation or other measure is determined shall be the exercise
date unless another date is specified by the Board.

 

(b)                                 Grant
of Stock Appreciation Rights. Stock Appreciation Rights may be granted in
tandem with, or independently of, Options granted under the Plan.

 

(1)                                  Rules
Applicable to Tandem Awards. When Stock Appreciation Rights are granted in
tandem with Options, (a) the Stock Appreciation Right will be exercisable only
at such time or times, and to the extent, that the related Option is
exercisable (except to the extent designated by the Board in connection with an
Acquisition Event or a Change in Control Event) and will be exercisable in
accordance with the procedure required for exercise of the related Option; (b)
the Stock Appreciation Right will terminate and no longer be exercisable upon
the termination or exercise of the related Option, except to the extent
designated by the Board in connection with an Acquisition Event or a Change in
Control Event and except that a Stock Appreciation Right granted with respect
to less than the full number of shares covered by an Option will not be reduced
until the number of shares as to which the related Option has been exercised or
has terminated exceeds the number of shares not covered by the Stock
Appreciation Right; (c) the Option will terminate and no longer be exercisable
upon the exercise of the related Stock Appreciation Right; and (d) the Stock
Appreciation Right will be transferable only with the related Option.

 

(2)                                  Exercise
of Independent Stock Appreciation Rights. A Stock Appreciation Right not
granted in tandem with an Option will become exercisable at such time or times,
and on such conditions, as the Board may specify. The Board may at any time
accelerate the time at which all or any part of the Right may be exercised.

 

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(c)                                  Exercise
of Stock Appreciation Rights.  Stock
Appreciation Rights may be exercised by delivery to the Company of a written
notice of exercise signed by the proper person or by any other form of notice
(including electronic notice) approved by the Company.

 

7.                                       Restricted
Stock; Restricted Stock Units

 

(a)                                  Grants.  The Board may grant Awards entitling
recipients to acquire shares of Common Stock (“Restricted Stock”), subject to
the right of the Company to repurchase all or part of such shares at their
issue price or other stated or formula price (or to require forfeiture of such
shares if issued at no cost) from the recipient in the event that conditions
specified by the Board in the applicable Award are not satisfied prior to the
end of the applicable restriction period or periods established by the Board
for such Award.  Instead of granting
Awards for Restricted Stock, the Board may grant Awards entitling the recipient
to receive shares of Common Stock to be delivered in the future (“Restricted
Stock Units”) subject to such terms and conditions on the delivery of the
shares of Common Stock as the Board shall determine (each Award for Restricted
Stock or Restricted Stock Units, a “Restricted Stock Award”). The Board may
also permit an exchange of unvested shares of Common Stock that have already
been delivered to a Participant for an instrument evidencing the right to
future delivery of Common Stock at such time or times, and on such conditions,
as the Board shall specify.

 

(b)                                 Terms
and Conditions.  The Board shall
determine the terms and conditions of any such Restricted Stock Award,
including the conditions for repurchase (or forfeiture) and the issue price, if
any.

 

(c)                                  Limitations
on Vesting.

 

(1)                                  Restricted
Stock Awards that vest based on the passage of time alone shall be zero percent
vested prior to the first anniversary of the date of grant, no more than
33-1/3% vested after the said first anniversary of the date of grant and before
the second anniversary of the date of grant, and no more than 66-2/3% vested
after the second anniversary of the date of grant and before the third
anniversary of the date of grant. 
Restricted Stock Awards that vest based on performance alone shall not
vest earlier than the first anniversary of the date of grant.  Restricted Stock Awards that vest upon the
passage of time and provide for accelerated vesting based on performance shall
not vest earlier than the first anniversary of the date of grant.  Notwithstanding the preceding provisions of
this Section 7(c)(1), the Board may grant Restricted Stock Awards that are
not subject to any limitations on vesting with respect to up to 5% of the total
number of shares of Common Stock covered by the Plan (excluding any shares that
may become available under this Plan pursuant to Section 4(a)(2) hereof).

 

(2)                                  Notwithstanding
any other provision of this Plan, the Board may, in its discretion, either at
the time a Restricted Stock Award is made or at any time thereafter, waive its
right to repurchase shares of Common Stock (or waive the forfeiture thereof) or
remove or modify any part or all of the restrictions applicable to the
Restricted Stock Award, provided that the Board may only exercise such rights
in extraordinary circumstances which shall include, without limitation, death
or disability of the Participant; estate planning needs of the Participant; a
merger, consolidation, sale, reorganization, recapitalization, or change in
control of the

 

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Company; or any other nonrecurring significant event
affecting the Company, a Participant or the Plan.

 

8.                                       Other
Stock-Based Awards

 

Other Awards of shares of Common Stock and other Awards that are valued
in whole or in part by reference to, or are otherwise based on, shares of
Common Stock or other property, including without limitation rights to purchase
shares of Common Stock (“Other Stock Unit Awards”), may be granted hereunder to
Participants.  Such Other Stock Unit
Awards shall also be available as a form of payment in the settlement of other
Awards granted under the Plan or as payment in lieu of compensation to which a
Participant is otherwise entitled. 
Other Stock Unit Awards may be paid in shares of Common Stock or cash,
as the Board shall determine.  Subject
to the provisions of the Plan, the Board shall determine the conditions of each
Other Stock Unit Awards, including any purchase price applicable thereto.  

 

9.                                       Adjustments
for Changes in Common Stock and Certain Other Events

 

(a)                                  Changes
in Capitalization.  In the event of
any stock split, reverse stock split, stock dividend, recapitalization,
combination of shares, reclassification of shares, spin-off or other similar
change in capitalization or event, or any distribution to holders of Common
Stock other than an ordinary cash dividend, (i) the number and class of
securities available under this Plan, (ii) the sub-limits set forth in
Section 4(b), (iii) the number and class of securities and exercise price
per share subject to each outstanding Option, (iv) the repurchase price per
share subject to each outstanding Restricted Stock Award and (v) the terms of
each other outstanding stock-based Award shall be appropriately adjusted by the
Company (or substituted Awards may be made, if applicable) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate.  If this
Section 9(a) applies and Section 9(c) also applies to any event,
Section 9(c) shall be applicable to such event, and this Section 9(a)
shall not be applicable.

 

(b)                                 Liquidation
or Dissolution.  In the event of a
proposed liquidation or dissolution of the Company, the Board shall upon
written notice to the Participants provide that all then unexercised Options
will (i) become exercisable in full as of a specified time at least 10 business
days prior to the effective date of such liquidation or dissolution and (ii)
terminate effective upon such liquidation or dissolution, except to the extent
exercised before such effective date. 
The Board may specify the effect of a liquidation or dissolution on any
Restricted Stock Award granted under the Plan at the time of the grant.

 

(c)                                  Reorganization
Events.

 

(1)                                  Definition.  A “Reorganization Event” shall mean:  (a) any merger or consolidation of the
Company with or into another entity as a result of which all of the outstanding
shares of Common Stock are converted into or exchanged for the right to receive
cash, securities or other property or (b) any exchange of all of the Common
Stock for cash, securities or other property pursuant to a share exchange
transaction.

 

(2)                                  Consequences
of a Reorganization Event on Awards. 
In connection with a Reorganization Event, the Board shall take any one
or more of the following actions as to all or

 

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any outstanding Awards on such terms as the Board
determines:  (i) provide that Awards
shall be assumed, or substantially equivalent Awards shall be substituted, by
the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon
written notice to a Participant, provide that the Participant’s unexercised
Options or other unexercised Awards shall become exercisable in full and will
terminate immediately prior to the consummation of such Reorganization Event
unless exercised by the Participant within a specified period following the
date of such notice, (iii) in the event of a Reorganization Event under the
terms of which holders of Common Stock will receive upon consummation thereof a
cash payment for each share surrendered in the Reorganization Event (the
“Acquisition Price”), make or provide for a cash payment to a Participant equal
to (A) the Acquisition Price times the number of shares of Common Stock subject
to the Participant’s Options or other Awards (to the extent the exercise price
does not exceed the Acquisition Price) minus (B) the aggregate exercise price
of all such outstanding Options or other Awards, in exchange for the
termination of such Options or other Awards, (iv) provide that outstanding
Awards shall become exercisable or realizable, or restrictions applicable to a
Restricted Stock Award or other Award shall lapse, in whole or in part, prior
to or upon such Reorganization Event, (v) provide that, in connection with a
liquidation or dissolution of the Company, Awards shall convert into the right
to receive liquidation proceeds (if applicable, net of the exercise price
thereof) and (vi) any combination of the foregoing.  To the extent all or any portion of an Award becomes exercisable
solely as a result of clause (ii) above, the Board may provide that upon
exercise of such Award the Participant shall receive shares subject to a right
of repurchase by the Company or its successor at the Award exercise price; such
repurchase right (A) shall lapse at the same rate as the Award would have
become exercisable under its terms and (B) shall not apply to any shares
subject to the Award that were exercisable under its terms without regard to
clause (ii) above.

 

10.                                 General
Provisions Applicable to Awards

 

(a)                                  Transferability
of Awards.  Except as the Board may
otherwise determine or may provide in an Award, Awards shall not be sold,
assigned, transferred, pledged or otherwise encumbered by the person to whom
they are granted, either voluntarily or by operation of law, except by will or
the laws of descent and distribution, and, during the life of the Participant,
shall be exercisable only by the Participant. 
References to a Participant, to the extent relevant in the context,
shall include references to authorized transferees.

 

(b)                                 Documentation.  Each Award shall be evidenced in such form
(written, electronic or otherwise) as the Board shall determine.  Each Award may contain terms and conditions
in addition to those set forth in the Plan.

 

(c)                                  Board
Discretion.  Except as otherwise
provided by the Plan, each Award may be made alone or in addition or in
relation to any other Award.  The terms
of each Award need not be identical, and the Board need not treat Participants
uniformly.

 

(d)                                 Termination
of Status.  The Board shall
determine the effect on an Award of the disability, death, retirement,
authorized leave of absence or other change in the employment or other status
of a Participant and the extent to which, and the period during which, the
Participant, the Participant’s legal representative, conservator or guardian
may exercise rights under the Award.

 

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(e)                                  Withholding.  The Company may require each Participant to
pay to the Company, or make provision satisfactory to the Company for payment
of, an amount sufficient to pay any taxes, social security contributions, or
other similar amounts required by law to be withheld in connection with an
Award to such Participant.  If provided
for in an Award or approved by the Company, in its sole discretion, a Participant
may satisfy such tax obligations in whole or in part by delivery of shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value; provided, however, that except
as otherwise provided by the Board, the total tax withholding where stock is
being used to satisfy such tax obligations cannot exceed the Company’s minimum
statutory withholding obligations (based on minimum statutory withholding rates
for federal and state tax purposes, including payroll taxes, that are applicable
to such supplemental taxable income). 
Shares surrendered to satisfy tax withholding requirements cannot be
subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.  The Company may, to the
extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to a Participant.

 

(f)                                    Amendment
of Award.  Except as prohibited by
Section 5(e), the Board may amend, modify or terminate any outstanding
Award, including but not limited to, substituting therefor another Award of the
same or a different type, changing the date of exercise or realization,
converting an Incentive Stock Option to a Nonstatutory Stock Option and
converting an Option into a SAR, provided that, in each such case, the Participant’s
consent to such action shall be required unless the Board determines that the
action, taking into account any related action, would not materially and
adversely affect the Participant.

 

(g)                                 Conditions
on Delivery of Stock.  The Company
will not be obligated to deliver any shares of Common Stock pursuant to the
Plan or to remove restrictions from shares previously delivered under the Plan
until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company’s counsel,
all other legal matters in connection with the issuance and delivery of such
shares have been satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations, and (iii) the
Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements
of any applicable laws, rules or regulations.

 

(h)                                 Acceleration.  The Board may at any time provide that any
Award shall become immediately exercisable in full or in part, free of some or
all restrictions or conditions, or otherwise realizable in full or in part, as
the case may be; provided, however, that this sentence shall apply to a
Restricted Stock Award only to the extent consistent with Sections 7(c)(2) and
10(j).

 

(i)                                     Deferral.  The Board may provide in an Award or in an
amendment to an Award that the Participant may elect to defer the delivery of
shares of Common Stock that would otherwise be delivered pursuant to such
Award.  The Board may establish such
conditions on the Participant’s election as it deems appropriate.

 

(j)                                     Performance
Conditions.

 

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(1)                                  Notwithstanding
any other provision of the Plan, if the Committee determines at the time a
Restricted Stock Award or an Other Stock-Based Award is granted to a
Participant who is then an officer, that such Participant is, or is likely to
be as of the end of the tax year in which the Company would claim a tax
deduction in connection with such Award, a Covered Employee (as defined in
Section 162(m) of the Code), then the Committee may provide that this
Section 10(j) is applicable to such Award.

 

(2)                                  If
a Restricted Stock Award or an Other Stock-Based Award is subject to this
Section 10(j), then the lapsing of restrictions thereon and the
distribution of Shares pursuant thereto, as applicable, shall be subject to the
achievement of one or more objective performance goals established by the Committee,
which shall be based on one or more of the following measures: sales, earnings
per share, return on net assets, return on equity, and customer service
levels.  The Committee may determine
that special one-time or extraordinary gains and/or losses or other one-time or
extraordinary events should or should not be included or considered in the
calculation of such measures.  In
addition, customer service target levels will be based on predetermined tests
of customer service levels such as scores on blind test (“mystery”) shopping,
customer comment card statistics, customer relations statistics (e.g., number
of customer complaints), and delivery response levels.  The Committee believes that disclosure of
further detail concerning the performance criteria may be confidential
commercial or business information, the disclosure of which would adversely
affect the Company.  Such performance
goals may vary by Participant and may be different for different Awards.  Such performance goals shall be set by the
Committee within the time period prescribed by, and shall otherwise comply with
the requirements of, Section 162(m) of the Code, or any successor
provision thereto, and the regulations thereunder.

 

(3)                                  The
Committee shall have the power to impose such other restrictions on Awards
subject to this Section 10(j) as it may deem necessary or appropriate to
ensure that such Awards satisfy all requirements for “performance-based
compensation” within the meaning of Section 162(m)(4)(C) of the Code, or
any successor provision thereto.

 

11.                                 Miscellaneous

 

(a)                                  No
Right To Employment or Other Status. 
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided
in the applicable Award.

 

(b)                                 No
Rights As Stockholder.  Subject to
the provisions of the applicable Award, no Participant shall have any rights as
a stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.  Notwithstanding the foregoing, in the event
the Company effects a split of the Common Stock by means of a stock dividend
and the exercise price of and the number of shares subject to such Option are
adjusted as of the date of the distribution of the dividend (rather than as of
the record date for such dividend), then an optionee who exercises an Option
between the record date and the distribution date for such stock dividend shall
be entitled to receive, on the distribution date,

 

10

 

the stock dividend with respect to the shares of Common Stock acquired
upon such Option exercise, notwithstanding the fact that such shares were not
outstanding as of the close of business on the record date for such stock
dividend.

 

(c)                                  Effective
Date and Term of Plan.  The Plan
shall become effective on the date on which it is approved by stockholders of
the Company and shall remain in full force and effect until terminated by the
Board.  No Awards shall be granted under
the Plan after the completion of ten years from the date on which the Plan is
adopted or was approved by the Company’s stockholders, whichever is earlier,
but Awards previously granted may extend beyond that date.

 

(d)                                 Amendment
of Plan.  The Board may amend,
suspend or terminate the Plan or any portion thereof at any time, provided that
no amendment requiring the approval of the Company’s stockholders under any
applicable tax requirement, including without limitation Sections 162(m) and 422
of the Code, shall become effective until such approval of the Company’s
stockholders is obtained and provided further that without approval of the
Company’s stockholders, no amendment may (i) increase the number of shares
authorized under the Plan (other than pursuant to Section 9),
(ii) materially increase the benefits provided under the Plan,
(iii) materially expand the class of participants eligible to participate
in the Plan, (iv) expand the types of Awards provided under the Plan or (v)
make any other changes which require stockholder approval under the rules of
the Nasdaq National Market, Inc.  No
Award shall be made that is conditioned on the approval of the Company’s
stockholders of any amendment to the Plan.

 

(e)                                  Provisions
for Foreign Participants.  The Board
may modify the terms and conditions of Awards granted to Participants who are
foreign nationals or employed outside the United States, establish subplans
under the Plan, or adopt such modifications or procedures as the Board may
determine to be necessary or advisable to recognize differences in laws, rules,
regulations or customs of such foreign jurisdictions with respect to tax,
securities, currency, employee benefit, accounting or other matters.

 

(f)                                    Governing
Law.  The provisions of the Plan and
all Awards made hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware, without regard to any applicable
conflicts of law.

 

Adopted by the
Board, subject to stockholder approval, on March 2, 2004; approved by the
stockholders on June 17, 2004; and amended by the Board on
September 8, 2004.

 

11Exhibit
10.2

 

	
  Stock Option Grant

  	
  Staples,
  Inc.

  
	
   

  	
  Employer ID:
  04-2896127

  
	
   

  	
  500 Staples
  Drive

  
	
   

  	
  Framingham, MA
  01702

  

 

	
   

  	
   

  	
  ACCOUNT ID:

  	
   

  	
  «AccountID»

  
	
  «FirstName» «MiddleName» «LastName»

  	
   

  	
  LOCATION:

  	
   

  	
  «ExtraField2»

  
	
  «Address1»

  	
   

  	
   

  	
   

  	
   

  
	
  «Address2»

  	
   

  	
   

  	
   

  	
   

  
	
  «Address3»

  	
   

  	
   

  	
   

  	
   

  
	
  «City», «State» «Zip»

  	
   

  	
   

  	
   

  	
   

  
	
  «Country»

  	
   

  	
   

  	
   

  	
   

  

 

You have been
granted an option to purchase Staples, Inc. Common Stock as follows:

 

	
  Type of Option:

  	
  Non-Qualified Stock Option

  
	
  Grant No.:

  	
  «GrantNumber»

  
	
  Stock Option
  Plan:

  	
  2004

  
	
  Date of Grant:

  	
  «GrantDate»

  
	
  Total Number of
  Option Shares:

  	
  «SharesGranted»

  
	
  Option Price per
  Share:

  	
  US$«OptionPrice»

  
	
  Total Exercise
  Price of Option Shares:

  	
  US$«TotalOptionPrice»

  

 

	
  Vesting Date

  	
   

  	
  Number of Shares

  Vesting on Vesting Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

By your acceptance
of this Stock Option Grant, you agree that this option is granted under and
governed by the terms and conditions of Staples, Inc.’s 2004 Stock Incentive Plan (as amended from time to
time) and by the terms and conditions of Staples, Inc.’s Non-Qualified Stock Option Agreement ( NQS42004),
which is attached hereto.

 

You understand and
agree that this Stock Option Grant is being awarded to you in exchange for your
execution of a Non-Compete and Non-Solicitation Agreement in a form approved by
Staples.

 

	
  Staples, Inc.

  
	
   

  
	
   

  
	
  Ronald L.
  Sargent

  
	
  President and
  Chief Executive Officer

  

 

Attachment:
Staples, Inc. Non-Qualified Stock Option Agreement

 

 

STAPLES,
INC. NON-QUALIFIED STOCK OPTION AGREEMENT

 

1.              Grant
of Option. Staples, Inc., a Delaware corporation (“Staples”), hereby
grants to the Optionee named in the accompanying Stock Option Grant (the
“Option Grant”) the option, pursuant to Staples’ 2004 Stock Incentive Plan
noted in the Option Grant (the “Plan”), to purchase an aggregate of the Total
Number of Option Shares of Common Stock of Staples stated in the Option Grant
at a price per share equal to the Option Price per Share stated in the Option
Grant, purchasable as set forth in and subject to the terms and conditions of
this Option Agreement and the Plan. Except where the context otherwise
requires, the term “Staples” shall include the 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.              Non-Qualified
Stock Option. This option is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.

 

3.              Exercise
of Option and Provisions for Termination.

 

(a)  Vesting Schedule.  Except as otherwise provided in this
Agreement, this option may be exercised up to and including the tenth
anniversary of the Date of Grant stated in the Option Grant (hereinafter the
“Expiration Date”).  This option shall
become exercisable (or “vest”) in installments for the number of shares set
forth in the table in the Option Grant commencing on each of the respective
Vesting Dates noted (each a “Vesting Date”). 
The right of exercise shall be cumulative so that if the option is not
exercised to the maximum extent permissible during any exercise period, it
shall be exercisable, in whole or in part, with respect to all shares not so
purchased at any time prior to the Expiration Date or the earlier termination
of this option.  This option may not be
exercised at any time after the Expiration Date.

 

(b)  Exercise Procedure.  Subject to the conditions set forth in this
Agreement, this option shall be exercised by the Optionee’s delivery of written
notice of exercise to the Secretary of Staples, specifying the Date of Grant of
this Option Agreement, the number of shares to be purchased and the purchase
price to be paid therefor, and accompanied by payment in full in accordance
with Section 4.  Such exercise shall
be effective upon receipt by the Secretary of Staples of such written notice
together with the required payment.  The
Optionee may purchase less than the number of shares covered hereby, provided
that no partial exercise of this option may be for any fractional share.

 

(c)  Continuous Relationship with
Staples Required.  Except as otherwise provided in this
Section 3, this option may not be exercised unless the Optionee, at the
time he or she exercises this option, is, and has been at all times since the
Date of Grant of this option, an employee or director of, or a consultant,
advisor or service provider to, Staples (an “Eligible Optionee”).

 

(d)  Termination of Relationship
with Staples.  If
the Optionee ceases to be an Eligible Optionee for any reason, then, except as
provided in this paragraph (d) and in paragraphs (e) and (f) below, the right
to exercise this option shall terminate six (6) months after such cessation
(but in no event after the Expiration Date), provided that this option shall be
exercisable only to the extent that the Optionee was entitled to exercise this
option on the date of such cessation. 
Notwithstanding the foregoing sentence or the vesting schedule set
forth in Section 3(a) above, if the Optionee terminates employment 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 Board of Directors of Staples)
completed by the Optionee plus the Optionee’s age is greater than or equal to
65, this option shall be exercisable for the Total Number of Option Shares for
a period of three (3) years after the date of the Optionee’s termination (but
in no event after the Expiration Date). 
In addition, if the Optionee is an employee on an approved leave of
absence, then this option shall not terminate as a result of such leave of
absence unless and until the Optionee’s employment relationship is ultimately
terminated.  If the Optionee ceases to be
an Eligible Optionee under circumstances where paragraph (f) below does not
apply,  and the Optionee becomes an
Eligible Optionee within six (6) months after he or she ceased to be an
Eligible Optionee, then this option shall not terminate and shall be
reinstated.

 

(e)  Exercise Period Upon Death
or Disability.  If
the Optionee dies or becomes disabled (within the meaning of
Section 22(e)(3) of the Code) prior to the Expiration Date while he or she
is an Eligible Optionee, or if the Optionee dies within six (6) months after
the Optionee ceases to be an Eligible Optionee (other than as the result of a
termination of such relationship by Staples for “cause” as specified in
paragraph (f) below), this option (i) shall be exercisable, within the period
of 12 months following the date of death or disability of the Optionee  (but in no event after the Expiration Date),
by the Optionee or by the person to whom this option is transferred by will or
the laws of descent and distribution, and (ii) notwithstanding the vesting
schedule set forth in Section 3(a) above, shall be exercisable for
100% of the Total Number of Option Shares. 
Except as otherwise indicated by the context, the term “Optionee,” as
used in this option, shall be deemed to include the estate of the Optionee or
any person who acquires the right to exercise this option by bequest or
inheritance or otherwise by reason of the death of the Optionee.

 

(f)  Termination for Cause.  If (a) the Optionee’s relationship with
Staples is terminated by Staples for “cause” (as defined below), or (b) if the
Optionee retires or resigns and Staples determines within six months thereafter
that the Optionee’s conduct prior to his or her retirement or resignation
warranted a discharge for “cause,” or (c) Staples determines that the
Optionee’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 Optionee and Staples, then (x) the right to
exercise this option with respect to any shares not previously exercised shall
terminate immediately, and (y) without limiting any other remedy available to
Staples, Staples shall be entitled to repurchase from the Optionee at the
Exercise Price the shares of Common Stock previously purchased

 

1

 

by the Optionee
hereunder, or, if the Optionee at such time no longer owns such shares, Staples
shall be entitled to recover from the Optionee the gross profit earned by the
Optionee upon the purchase and disposition (whether by sale, gift, donation or
otherwise) of such shares.

 

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

 

(i) willful failure by the Optionee to
substantially perform his or her duties with Staples (other than any failure
resulting from incapacity due to physical or mental illness).  No act or failure to act on the Optionee’s
part will be deemed “willful” unless the Optionee acted or failed to act
without a good faith or reasonable belief that his or her conduct was in
Staples’ best interest; or

 

(ii) breach by the Optionee of any provision of
any employment, consulting, advisory, proprietary information, non-disclosure,
non-competition, non-solicitation or other similar agreement between the
Optionee 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 Optionee of the Code of
Ethics or an attempt by the Optionee to secure any improper personal profit in
connection with the business of Staples; or

 

(iv) failure by the Optionee to devote his or her
full working time to the affairs of Staples except as may be authorized in
writing by Staples’ CEO or other authorized Company official; or

 

(v) the Optionee’s engagement in business other
than the business of Staples except as may be authorized in writing by Staples’
CEO or other authorized Company official; or

 

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

 

4.              Payment
of Purchase Price.

 

(a)  Method of Payment.  Payment of the purchase price for shares
purchased upon exercise of this option shall be made (i) by delivery to Staples
of cash or a check to the order of Staples in an amount equal to the purchase
price of such shares, (ii) subject to the consent of Staples, by delivery to
Staples of shares of Common Stock of Staples then owned by the Optionee having
a fair market value equal in amount to the purchase price of such shares, (iii)
by any other means which the Board of Directors determines are consistent with
the purpose of the Plan and with applicable laws and regulations (including,
without limitation, the provisions of Rule 16b-3 under the Securities Exchange
Act of 1934 and Regulation T promulgated by the Federal Reserve Board), or (iv)
by any combination of such methods of payment. Notwithstanding the prior
sentence, under no circumstance may payment for shares be made by a promissory
note.

 

(b)  Valuation of Shares or Other
Non-Cash Consideration Tendered in Payment of Purchase Price.  For the purposes hereof, the fair market
value of any share of Staples’ Common Stock or other non-cash consideration
which may be delivered to Staples in exercise of this option shall be
determined in good faith by the Board of Directors of Staples.

 

(c)  Delivery of Shares Tendered
in Payment of Purchase Price.  If the Optionee exercises this option by delivery
of shares of Common Stock of Staples, the certificate or certificates
representing the shares of Common Stock of Staples to be delivered shall be
duly executed in blank by the Optionee or shall be accompanied by a stock power
duly executed in blank suitable for purposes of transferring such shares to
Staples, and the Common Stock delivered may not be subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirement and must have been
held for at least six months if such Common Stock was previously issued to the
Optionee through a Staples compensation plan. 
Fractional shares of Common Stock of Staples will not be accepted in
payment of the purchase price of shares acquired upon exercise of this option.

 

5.              Delivery
of Shares; Compliance With Securities Laws, Etc.

 

(a)  General.  Staples shall, upon payment of the option
price for the number of shares purchased and paid for, make prompt delivery of
such shares to the Optionee, provided that if any law or regulation requires
Staples to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action.

 

(b)  Listing, Qualification, Etc.  This option shall be subject to the
requirement that if, at any time, counsel to Staples shall determine that the
listing, registration or qualification of the shares subject hereto upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. 
Nothing herein shall be deemed to require Staples to apply for, effect
or obtain such listing, registration, qualification or disclosure, or to satisfy
such other condition.

 

2

 

6.              Transferability
of Option.  This option is
personal and no rights granted hereunder may be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise) nor shall
any such rights be subject to execution, attachment or similar process, except
that this option 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 this option must agree to be governed by all of the
terms and conditions of this Agreement. 
Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option or of such rights contrary to the provisions hereof, or
upon the levy of any attachment or similar process upon this option or such
rights, this option and such rights shall, at the election of Staples, become
null and void.

 

7.              No
Special Employment or Similar Rights. 
Nothing contained in the Plan or this option shall be construed or
deemed by any person under any circumstances to bind Staples to continue the
employment or other relationship of the Optionee with Staples for the period
within which this option may be exercised.

 

8.              Rights
as a Shareholder.  The Optionee
shall have no rights as a shareholder with respect to any shares which may be
purchased by exercise of this option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
unless and until a certificate representing such shares is duly issued and
delivered to the Optionee.  No adjustment
shall be made for dividends or other rights for which the record date is prior
to the date such stock certificate is issued.

 

9.              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 Optionee shall, with respect to this option or any
unexercised portion hereof, 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 9 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 pursuant to this option on account
of any such adjustments.

 

10.       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, prior to the
Expiration Date or termination of this option, the Optionee shall, with respect
to this option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 9 of the
Plan.

 

11.       Exercisability
and 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 approve a merger
or consolidation of Staples with any other corporation, 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.

 

3

 

(ii) “Surviving Corporation” shall mean (x) in the case of a Change in
Control pursuant to clause (A) or clause (B) of Section 11(a)(i), Staples;
(y) in the case of a Change in Control pursuant to clause (C) of
Section 11(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 11(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 3(a), if a Change in Control of Staples occurs, this option shall
become exercisable for additional shares of Common Stock as follows:

 

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

 

(A) is offered employment with the Surviving
Corporation (or is 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 Optionee’s principal place of employment of more
than 30 miles, or

 

(B) accepts (or elects to continue) employment with
the Surviving Corporation (regardless of position, compensation or location),

 

then (x) effective
immediately prior to the Change in Control, the vesting schedule of this
option stated in Section 3(a) above shall accelerate such that an
additional 25% of the Total Number of Option Shares shall become immediately
exerciseable, and (y) on each Vesting Date which had not yet occurred as of the
date of the Change in Control, this option shall become exercisable for such
number of additional shares of Common Stock as is determined by dividing the
balance of the Total Number of Option Shares remaining unvested following the
acceleration of vesting referred to in clause (x) above, by the number of
Vesting Dates which had not occurred as of the date of the Change in Control.

 

(ii)  If, upon the Change in
Control,

 

(A) the Optionee is either offered employment in
accordance with clause (A) of Section 11(b)(i) or accepts employment in
accordance with clause (B) of Section 11(b)(i), and

 

(B) within one year following the date of the Change
in Control, the Optionee either (1) is discharged without cause (as defined in
Section 3(f)) or (2) resigns 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
30 miles,

 

then the vesting
of this option shall be accelerated such that this option shall become
exercisable in full effective upon the date of such discharge or resignation
(and this option shall remain exercisable following such discharge or
resignation for such period, if any, as is provided in Section 3).

 

(iii) If the Optionee is not offered employment in accordance with
clause (A) of Section 11(b)(i) and does not accept employment in
accordance with clause (B) of Section 11(b)(i), then the vesting of this
option shall be accelerated such that this option shall become exercisable in
full effective immediately prior to the Change in Control.

 

12.       Withholding
Taxes.  Staples’ obligation to
deliver shares upon the exercise of this option shall be subject to the
Optionee’s satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.

 

13.       Miscellaneous.

 

(a)  Except as provided herein,
this option may not be amended or otherwise modified unless evidenced in writing
and signed by Staples and the Optionee unless the Board of Directors of Staples
determines that the amendment or modification, taking into account any related
action, would not materially and adversely affect the Optionee.  However, in no event may this Option be
converted into a stock appreciation right. 
This Option Agreement may be executed in multiple counterparts, each of
which shall represent the same option agreement.

 

(b)  All notices under this
option shall be mailed or delivered by hand to Staples at its main office,
Attn: Secretary, and to the Optionee 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 option shall be
governed by and construed in accordance with the laws of the State of Delaware.

 

4

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