Document:

Exhibit 4.1

 

FORM OF NOTE

 

THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE
THEREOF.  THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME
OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

UNLESS
THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.

 

STAPLES,
INC.

 

7.750%
Senior Notes Due April 1, 2011

 

CUSIP NO. 855030AK8

 

	
  No.

  	
  $

  

 

Staples, Inc., a
corporation organized under the laws of the state of Delaware (herein called
the “Company”, which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum of
                                            
Dollars (which principal amount may from time to time be increased or decreased
to such other principal amounts by adjustments made on the records of the
Trustee hereinafter referred to in accordance with the Indenture) on April 1,
2011, and, subject to adjustment as hereinafter provided, to pay interest
thereon from March 27, 2009 or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semi-annually on April 1
and October 1 in each year commencing October 1, 2009 at the rate of
7.750% per annum, until the principal hereof is paid or made available for
payment, and to the extent that the payment of such interest shall be legally
enforceable at the interest rate then in effect on any overdue principal and on
any overdue installment of interest until paid.

 

 

The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the March 15
or September 15 (regardless of whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.  If any Interest Payment Date falls on a day
that is not a Business Day, it shall be postponed to the following Business
Day.  Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders
of Securities not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.  Payment of
the principal of and interest on this Security will be made at the office or
agency of the Trustee or any Paying Agent maintained for that purpose in the
City of New York, New York, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however,
that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

 

Interest
Rate Adjustment

 

The interest rate payable on
this series of Securities will be subject to adjustments from time to time if
Moody’s Investors Service, Inc. (“Moody’s”) (or, if applicable, any
Substitute Rating Agency (as defined below)) or Standard & Poor’s
Ratings Services, a division of The McGraw Hill Companies, Inc. (“S&P”)
(or, if applicable, any Substitute Rating Agency) downgrades (or subsequently
upgrades) the rating assigned to this series of Securities, as set forth below.

 

If the rating with respect to
this series of Securities from Moody’s or any Substitute Rating Agency thereof
is decreased to a rating set forth in the immediately following table, the
interest rate on this series of Securities will increase from the interest rate
payable on this series of Securities set forth on the face of this Security by
the percentage points set forth below opposite that rating.

 

	
  Moody’s Rating *

  	
   

  	
  Percentage

  Points

  	
   

  
	
  Ba1

  	
   

  	
  0.25

  	
   

  
	
  Ba2

  	
   

  	
  0.50

  	
   

  
	
  Ba3

  	
   

  	
  0.75

  	
   

  
	
  B1 or below

  	
   

  	
  1.00

  	
   

  

 

 

*  Including the equivalent
rating of any Substitute Rating Agency.

 

If the rating with respect to
this series of Securities from S&P or any Substitute Rating Agency thereof
is decreased to a rating set forth in the immediately following table, the
interest rate on this series of Securities will increase from the interest rate
payable on this series of Securities on the date set forth on the face of this
Security by the percentage points set forth below opposite that rating.

 

	
  S&P Rating *

  	
   

  	
  Percentage

  Points

  	
   

  
	
  BB+

  	
   

  	
  0.25

  	
   

  
	
  BB

  	
   

  	
  0.50

  	
   

  
	
  BB-

  	
   

  	
  0.75

  	
   

  
	
  B+ or below

  	
   

  	
  1.00

  	
   

  

 

*  Including the equivalent
rating of any Substitute Rating Agency.

 

If at any time the interest
rate on this series of Securities has been adjusted upward as a result of a
decrease in a rating by an Interest Rate Rating Agency and that Interest Rate
Rating Agency subsequently increases its rating on this series of Securities to
any of the ratings set forth in the tables above, the per annum interest rate
on this series of Securities will be decreased such that the per annum interest
rate equals the interest rate set forth on the face of this Security plus the
percentage points set forth opposite the ratings in effect immediately
following the increase in the tables above; provided,
however, that if Moody’s or any Substitute Rating Agency
subsequently increases its rating on this series of Securities to “Baa3” (or
its equivalent if with respect to any Substitute Rating Agency) or higher and
S&P or any Substitute Rating Agency subsequently increases its rating on
this series of Securities to “BBB-” (or its equivalent if with respect to any
Substitute Rating Agency) or higher, the per annum interest rate on this series
of Securities will be decreased to the interest rate set forth on the face of
this Security.

 

No adjustment in the interest
rate on this series of Securities shall be made solely as a result of an
Interest Rate Rating Agency ceasing to provide a rating. If at any time less
than two Interest Rate Rating Agencies provide a rating on this series of
Securities, the Company will use commercially reasonable efforts to obtain a
rating on this series of Securities from another “nationally recognized
statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under
the Exchange Act, to the extent one exists, and if another nationally
recognized statistical rating organization rates this series of Securities
(such organization, as certified by a resolution of the Company’s board of
directors, a “Substitute Rating Agency”), for purposes of determining any
increase or decrease in the per annum interest rate on this series of
Securities pursuant to the tables above, (1) such Substitute Rating Agency
will be substituted for the last Interest Rate Rating Agency to provide a
rating on this series of Securities but which has since ceased to provide such
rating, (2) the relative ratings scale used by such Substitute Rating 

 

 

Agency to
assign ratings to senior unsecured debt will be determined in good faith by an
independent investment banking institution of national standing appointed by
the Company and, for purposes of determining the applicable ratings included in
the table above with respect to such Substitute Rating Agency, such ratings
shall be deemed to be the equivalent ratings used by Moody’s and S&P in
such tables, and (3) the per annum interest rate on this series of
Securities will increase or decrease, as the case may be, such that the
interest rate equals the interest rate set forth on the face of this Security
plus the appropriate percentage, if any, set forth opposite the rating from
such Substitute Rating Agency in the applicable table above (taking into
account the provisions of clause (2) above) (plus any applicable
percentage points resulting from a decreased rating by the other Interest Rate
Rating Agency).  For so long as (a) only
one Interest Rate Rating Agency provides a rating on this series of Securities,
any increase or decrease in the interest rate on this series of Securities
necessitated by a reduction or increase in the rating by that Interest Rate
Rating Agency shall be twice the applicable percentage set forth in the
applicable table above and (b) no Interest Rate Rating Agency provides a
rating on this series of Securities, the interest rate on this series of
Securities will increase to, or remain at, as the case may be, 2.00% above the
interest rate set forth on the face of this Security. If Moody’s or S&P
ceases to rate this series of Securities or make a rating of this series of
Securities publicly available for reasons within the Company’s control, the
Company will not be entitled to obtain a rating from a Substitute Rating Agency
and the increase or decrease in the per annum interest rate on this series of
Securities shall be determined in the manner described above as if either only
one or no Interest Rate Rating Agency provides a rating on this series of
Securities, as the case may be.

 

Each adjustment required by any
decrease or increase in a rating set forth above, whether occasioned by the
action of Moody’s, S&P or any Substitute Rating Agency, shall be made
independent of (and in addition to) any and all other adjustments. In no event
shall (1) the per annum interest rate on this series of Securities be
reduced below the interest rate as set forth on the face of this Security or (2) the
per annum interest rate on this series of Securities exceed 2.00% above the
interest rate set forth on the face of this Security.

 

Any interest rate increase or
decrease described above will take effect on the next business day after the
rating change has occurred.  The Company
shall promptly advise the Trustee of each change in interest rate, change in
rating or the appointment and identity of any Substitute Rating Agency by
Company Notice.  The Trustee shall not be
responsible for determining the interest rate that may be in effect from time
to time.

 

The interest rates on this
series of Securities will permanently cease to be subject to any adjustment
described above (notwithstanding any subsequent decrease in the ratings by any
Interest Rate Rating Agency) if this series of Securities becomes rated “A3”
(or its equivalent) or higher by Moody’s (or any Substitute Rating Agency) and “A-”
(or its equivalent) or higher by S&P (or any Substitute Rating Agency), or
one of those ratings if this series of Securities are rated by only one
Interest Rate Rating Agency, in each case with a stable or positive outlook.

 

 

Reference is hereby made to the
further provisions of this Security set forth on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.

 

Unless the certificate of
authentication hereon has been executed by the Trustee referred to on the
reverse hereof by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.

 

IN WITNESS
WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.

 

Dated: 
March 27, 2009

 

	
   

  	
   

  	
  STAPLES,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

Dated: March 27,
2009

 

 

This is one of the Securities
of the series designated herein referred to in the Indenture.

 

 

	
   

  	
  HSBC Bank
  USA,

  
	
   

  	
  National
  Association, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  

 

 

[Reverse of Note]

 

This Security is one of a duly
authorized issue of Securities of the Company designated as its 7.750% Senior
Notes due 2011 (herein called the “Securities”), limited initially (except as
otherwise provided in the Indenture referred to below) in aggregate principal
amount to $500,000,000, issued and to be issued under an Indenture, dated as of
January 15, 2009 (herein called the “Indenture”, which term shall have the
meaning assigned to it in such instrument), among the Company, the Subsidiary
Guarantors named therein, and HSBC Bank USA, National Association, as Trustee
(herein called the “Trustee”, which term includes any successor trustee under
the Indenture).  The Company may, without
the consent of the Holders, create and issue additional Securities (the “Additional
Securities”) ranking equally with the Securities and otherwise similar in all
respects so that the Additional Securities shall be consolidated and form a
single series with the Securities.  The
Company may not issue Additional Securities if an Event of Default shall occur
and be continuing with respect to the Securities.  Reference is hereby made to the Indenture,
all Supplemental Indentures thereto and all Officers’ Certificates setting
forth the terms of Securities of this series pursuant to Section 301 for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Subsidiary Guarantors, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered.

 

In the event of a deposit or
withdrawal of an interest in this Security (including upon an exchange,
transfer, redemption or repurchase of this Security in part only) effected in
accordance with the Applicable Procedures, the Security Registrar, upon receipt
of notice of such event from the Depositary’s custodian for this Security,
shall make an adjustment on its records to reflect an increase or decrease of
the Outstanding principal amount of this Security resulting from such deposit
or withdrawal, as the case may be.

 

The Securities of this series
are redeemable in whole or in part, at the option of the Company at any time or
from time to time, on not less than 30 or more than 60 days’ prior notice
mailed to the Holders of the Securities of this series, at a Redemption Price
equal to the greater of the following amounts:

 

·                  100% of the
principal amount of the Securities of this series being redeemed on the
Redemption Date; and

 

·                  the sum of the
present values of the remaining scheduled payments of principal and interest on
this series of Securities being redeemed on that Redemption Date (not including
any portion of such payments representing interest accrued to the Redemption
Date) discounted to the Redemption Date on a semiannual basis at the Adjusted
Treasury Rate plus 50 basis points, as determined by the Reference Treasury
Dealer,

 

plus, in each case, accrued and unpaid interest thereon to the
Redemption Date.

 

 

For purposes of the foregoing provisions regarding the Company’s
optional redemption right, the following definitions are applicable:

 

“Adjusted Treasury Rate” means, with
respect to any redemption date applicable to this series of Securities, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.

 

“Comparable Treasury Issue” means, with
respect to this series of Securities, the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity comparable to
the remaining term of those Securities of this series that are to be redeemed
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of this series of
Securities.

 

“Comparable Treasury Price” means, with
respect to any redemption date applicable to this series of Securities, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Quotations, or (B) if
the Independent Investment Banker obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations, or (C) if only one Reference Treasury Dealer Quotation is
received, such Reference Treasury Dealer Quotation.

 

“Independent Investment Banker” means an
independent investment banker of national standing appointed by the Company.

 

“Reference Treasury Dealer” means (A) Barclays
Capital Inc., Banc of America Securities LLC and HSBC Securities (USA) Inc. and
their respective successors; provided however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a “Primary Treasury Dealer”), we shall substitute therefor another Primary
Treasury Dealer and (B) any other Primary Treasury Dealer selected by us.

 

“Reference Treasury Dealer Quotation”
means, with respect to each Reference Treasury Dealer and any redemption date
for this series of Securities, the average, as determined by the Independent
Investment Banker, of the bid and asked prices for the Comparable Treasury
Issue for this series of Securities (expressed in each case as a percentage of
its principal amount) quoted in writing to the Independent Investment Banker by
such Reference Treasury Dealer at 5:00 p.m. (New York City time) on the
third business day preceding such redemption date.

 

Once notice of redemption is mailed, the Securities called for
redemption will become due and payable on the Redemption Date and at the
applicable redemption price, plus accrued and unpaid interest to the Redemption
Date.  Unless the Company defaults in payment
of the redemption price, on and after the Redemption Date interest will cease
to accrue on the Securities or portions thereof called for redemption.

 

 

The redemption price will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.  If
fewer than all of the Securities of this series are being redeemed, the Trustee
will select the Securities to be redeemed pro rata, by lot or by any other
method the Trustee in its sole discretion deems fair and appropriate, in
denominations of $2,000 principal amount and integral multiples of $1,000 in
excess thereof.  Upon surrender of any
Security of this series redeemed in part, the Holder of the Security will
receive a new Security equal in principal amount to the unredeemed portion of
the surrendered Security.

 

If a Change of Control Triggering Event (as defined below) occurs,
unless the Company has exercised its right to satisfy and discharge or to
defease this series of Securities prior to maturity as described below, Holders
of this series of Securities will have the right to require the Company to
repurchase all or any part (equal to $2,000 or an integral multiple of $1,000
in excess thereof) of their Securities pursuant to the offer described below (a
“Change of Control Offer”).  In the Change of Control Offer, the Company
will be required to offer payment in cash equal to 101% of the aggregate
principal amount of Securities repurchased plus accrued and unpaid interest, if
any, on the Securities repurchased, to the date of purchase (a “Change of Control Payment”).  Within 30 days following any Change of
Control Triggering Event, the Company will be required to mail a notice to
Holders of this series of Securities describing the transaction or transactions
that constitute the Change of Control Triggering Event and offering to
repurchase the Securities on the date specified in the notice, which date will
be no earlier than 30 days and no later than 60 days from the date such notice
is mailed (a “Change of Control Payment
Date”), pursuant to the procedures required by the Indenture and
described in such notice.  The Company
must comply with the requirements of Rule 14e-1 under the Exchange Act, and
any other securities laws and regulations thereunder to the extent those laws
and regulations are applicable in connection with any repurchase of this series
of Securities as a result of a Change of Control Triggering Event.  To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control provisions
of this series of Securities, the Company will be required to comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Change of Control provisions of this series
of Securities by virtue of such conflicts and compliance with law.

 

On the Change of Control Payment Date, the
Company will be required, to the extent lawful, to:

 

·                  accept for
payment all Securities of this series properly tendered pursuant to the Change
of Control Offer;

 

·                  deposit with the
paying agent an amount equal to the Change of Control Payment in respect of all
Securities of this series or portions of Securities of this series properly
tendered; and

 

·                  deliver or cause
to be delivered to the Trustee the Securities of this series properly accepted
together with an Officers’ Certificate stating the 

 

 

aggregate principal amount of this series of
Securities or portions of this series of Securities being purchased.

 

The Company
will not be required to make a Change of Control Offer upon the occurrence of a
Change of Control Triggering Event if a third party makes such an offer in the
manner, at the times and otherwise in compliance with the requirements for an
offer made by the Company and the third party purchases all Securities of this
series properly tendered and not withdrawn under its offer.  In addition, the Company will not repurchase
any Securities of this series if there has occurred and is continuing on the
Change of Control Payment Date an Event of Default under the Indenture, other
than a default in the payment of the Change of Control Payment upon a Change of
Control Triggering Event.

 

For purposes
of the foregoing provisions of a repurchase at the option of holders upon a
Change of Control Triggering Event, the following definitions are applicable:

 

“Below
Investment Grade Rating Event” means that the rating of this series
of Securities is lowered by at least two of the three Rating Agencies (as
defined below), and such series of Securities is rated below an Investment
Grade Rating by at least two of the Rating Agencies, on any date during the
period commencing 60 days prior to the date of the public notice of an
arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of the Change of
Control (which 60-day period shall be extended so long as the rating of this
series of Securities is under publicly announced consideration for possible
downgrade by any of the Rating Agencies).

 

“Change of
Control” means the occurrence of any of the following:  (1) any event (including, without
limitation, any merger or consolidation), the result of which is that any Person
becomes the beneficial owner, directly or indirectly, of more than 50% of the
then outstanding voting stock of the Company, measured by voting power; (2) the
direct or indirect sale, lease, transfer, conveyance or other disposition
(other than (i) by way of merger or consolidation or (ii) to the
Company or one or more direct or indirect Wholly Owned Subsidiaries of the
Company), in one transaction or a series of related transactions, of all or
substantially all of the properties or assets of the Company and its
subsidiaries taken as a whole to one or more Persons; (3) the Company
consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding voting stock of the
Company or such other Person is converted into or exchanged for cash,
securities or other property, other than any such transaction where the shares
of the Company’s voting stock outstanding immediately prior to such transaction
constitute, or are converted into or exchanged for, a majority of the voting
stock, measured by voting power, of the resulting or surviving Person (or of
any direct or indirect parent company of the resulting or surviving Person)
immediately after giving effect to such transaction; (4) the first day on
which a majority of the members of the Company’s Board of Directors are not
Continuing Directors; or (5) the adoption of a plan providing for 

 

 

the liquidation or dissolution of the Company.  Notwithstanding the foregoing, a
transaction  described in clause (1) above
will not be deemed to involve a Change of Control if (1) the Company
becomes a direct or indirect wholly-owned subsidiary of a holding company
(which shall include a parent company) and (2)(A) the direct or indirect
holders of the voting stock of such holding company immediately following that
transaction are substantially the same as, and hold in substantially the same
proportions as, the holders of the Company’s voting stock immediately prior to
that transaction or (B) immediately following that transaction no Person
(other than a holding company satisfying the requirements of this sentence) is
the beneficial owner, directly or indirectly of more than 50% of the then
outstanding voting stock, measured by voting power, of such holding
company.  Following any such transaction,
references in this definition to the Company shall be deemed to refer to such
holding company.  For purposes of this
definition, “voting stock” of any specified Person as of any date means capital
stock of such Person that is at the same time entitled to vote generally in the
election of the board of directors (or comparable governing body) of such
Person.

 

“Change of
Control Triggering Event” means the occurrence of both a Change of
Control and a Below Investment Grade Rating Event.

 

“Continuing
Director” means, as of any date of determination, any member of the
Board of Directors of the Company who (1) was a member of such Board of
Directors on the Issue Date of this series of Securities; or (2) was
nominated for election or elected to such Board of Directors with the approval
of a majority of the Continuing Directors, whether or not directors on the
Issue Date of this series of Securities, who were members of such Board of
Directors at the time of such nomination or election.

 

“Fitch”
means Fitch Ratings.

 

“Investment
Grade Rating” means a rating equal to or higher than BBB-(or the
equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the
equivalent) by S&P.

 

“Moody’s”
means Moody’s Investors Services, Inc.

 

“Rating
Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if
any of Fitch, Moody’s or S&P ceases to rate this series of Securities or
fails to make a rating of this series of Securities publicly available for
reasons outside of the Company’s control, a “nationally recognized statistical
rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under
the Exchange Act selected by the Company (as certified by a Board Resolution of
the Company’s Board of Directors) as a replacement agency for Fitch, Moody’s or
S&P, or all of them, as the case may be.

 

“S&P”
means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc.

 

 

The Indenture contains provisions, which will apply to the Securities
of this series, for legal defeasance and covenant defeasance, in each case,
upon compliance with certain conditions set forth in the Indenture.

 

If an Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.

 

As provided in the Indenture and subject to certain limitations therein
set forth, the obligations of the Company under the Indenture and this Security
are guaranteed pursuant to Subsidiary Guarantees endorsed hereon as provided in
the Indenture.  Each Holder, by holding
this Security, agrees to all of the terms and provisions of said Subsidiary
Guarantees.  The Indenture provides that
a Subsidiary Guarantor shall be released from its Subsidiary Guarantee upon
compliance with certain conditions.

 

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Subsidiary Guarantors and the rights of the Holders of the
Securities of any series under the Indenture at any time by the Company and the
Subsidiary Guarantors and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities of that or those
series of Securities affected at the time Outstanding.  The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Securities of any series at the time Outstanding, on behalf of the Holders of
all the Securities of such series, to waive compliance by the Company or the
Subsidiary Guarantors with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security of such series issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

 

No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.

 

As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Trustee, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.

 

The Securities are issuable only in registered form without coupons in
denominations of $2,000 and integral multiples of $1,000 in excess
thereof.  No service 

 

 

charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

 

Prior to due presentment of this Security for registration of transfer,
the Company, the Subsidiary Guarantors, the Trustee and any agent of the
Company, the Subsidiary Guarantors or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all purposes, whether
or not this Security be overdue, and neither the Company, the Subsidiary
Guarantors or the Trustee nor any such agent shall be affected by notice to the
contrary.

 

Upon execution of the certificate of authentication hereon by the
Trustee, this Security shall be entitled to the benefits under the Indenture.

 

All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

 

THE INDENTURE, THIS SECURITY AND THE SUBSIDIARY GUARANTEE ENDORSED
HEREON SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

SUBSIDIARY GUARANTEE

 

For value received, each of the Subsidiary Guarantors named below
hereby jointly and severally fully and unconditionally guarantees to the Holder
of the Security upon which this Subsidiary Guarantee is endorsed, and to the
Trustee on behalf of such Holder, pursuant to the Indenture and to the Trustee
and its successors and assigns, regardless of the validity and enforceability
of the Indenture, the Securities or the obligations of the Company under the
Indenture or the Securities, that:

 

(i)            the
principal of and interest on the Securities will be promptly paid in full when
due, whether at maturity, by acceleration or otherwise, and interest on the
overdue principal of and interest on the Securities, to the extent lawful, and
all other payment obligations of the Company to the Holders or the Trustee
thereunder, under the Indenture will be promptly paid in full, all in
accordance with the terms thereof, of the Indenture; and

 

(ii)           in
case of any extension of time for payment or renewal of any Securities, that
the same will be promptly paid in full when due in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise.

 

Notwithstanding the foregoing, in the event that this Subsidiary Guarantee
would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of each
Subsidiary Guarantor under the Indenture and its Subsidiary Guarantee shall be
reduced to the maximum amount permissible under such fraudulent conveyance or
similar law.

 

If the Company shall default in the due and punctual payment of any
obligation under the Indenture guaranteed by the Subsidiary Guarantors,
including under the Securities of this series, without the necessity of action
by the Trustee or any Holder of Securities, the Subsidiary Guarantor will
promptly and fully make such payments in the same manner as required to have
been made by the Company.

 

To the extent permitted by law, the obligations of each Subsidiary
Guarantor hereunder shall be continuing, absolute and unconditional, and shall
not be impaired, modified, released or limited by any occurrence or condition
whatsoever, including, without limitation, (i) any compromise, settlement,
release, waiver, renewal, extension, indulgence or modification of, or any
change in, any of the obligations and liabilities (A) of the Company
contained in any Securities guaranteed by the Subsidiary Guarantors, including
the Securities to which this Subsidiary Guarantee is affixed, or the Indenture
or (B) of any other Subsidiary Guarantor, (ii) any impairment,
modification, release or limitation of the liability of the Company or of any
other Subsidiary Guarantor in bankruptcy, or any remedy for the enforcement
thereof, resulting from the operation of any present or future provision of any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar laws or from the decision of any court, (iii) the assertion or
exercise by the Company, any other Subsidiary Guarantor, or the Trustee of any
rights or remedies under any Securities guaranteed by the Subsidiary
Guarantors, including the 

 

 

Securities to which this Subsidiary Guarantee
is affixed, or the Indenture or their delay in or failure to assert or exercise
any such rights or remedies, (iv) the voluntary or involuntary
liquidation, dissolution, sale or other disposition of all or substantially all
of the assets, marshaling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar proceeding
affecting, the Company or any other Subsidiary Guarantor or any of their
assets, or the disaffirmance of the Indenture or the Securities in any such
proceeding, (v) the release or discharge of the Company or any other
Subsidiary Guarantor from the performance or observance of any agreement,
covenant, term or condition contained in any of such instruments by operation
of law, (vi) the unenforceability of any Securities guaranteed by the
Subsidiary Guarantors, including the Securities to which this Subsidiary
Guarantee is affixed, or the Indenture or (vii) any other circumstance
which might otherwise constitute a legal or equitable discharge of a surety or
guarantor.

 

Each Subsidiary Guarantor hereby (i) waives diligence,
presentment, demand for payment, filing of claims with a court in the event of
the merger or bankruptcy of the Company, any right to require a proceeding
first against the Company or to realize on any collateral, protest, notice and
all demands whatsoever with respect to the payment obligations of the Company
under the Indenture, (ii) agrees that its obligations hereunder constitute
a guarantee of payment and not of collection and are not in any way conditional
or contingent upon any attempt to collect from or enforce against the Company
or upon any other condition or contingency, (iii) acknowledges that any
agreement, instrument or document evidencing the obligations of the Company
under the Indenture may be transferred and that the benefit of its obligations
hereunder shall extend to each holder of any agreement, instrument or document
evidencing such obligations without notice to them and (iv) covenants
that, except as provided in Article Eight and Section 1203 of the
Indenture with respect to the release of Subsidiary Guarantors, its Subsidiary
Guarantee will not be discharged except by complete performance of the payment
obligations under each series of Securities guaranteed by the Subsidiary
Guarantors, including the Securities to which this Subsidiary Guarantee is
affixed, and the Indenture.

 

Each Subsidiary Guarantor further agrees that if at any time all or any
part of any payment therefore applied by any person to any payment obligation
in respect of any series of Securities guaranteed by the Subsidiary Guarantors
including the Securities to which this Subsidiary Guarantee is affixed, is, or
must be, rescinded or returned for any reason whatsoever, including, without
limitation, the insolvency, bankruptcy or reorganization of the Company or any
other Subsidiary Guarantor, such obligation shall for the purposes of the
Subsidiary Guarantee, to the extent that such payment is or must be rescinded
or returned, be deemed to have continued in existence notwithstanding such
application, and the Subsidiary Guarantee shall continue to be effective or be
reinstated, as the case may be, as to such payment obligation as though such
application had not been made.

 

Each Subsidiary Guarantor shall, to the extent of any payment made by
it pursuant to the Indenture, be subrogated to all rights of the Trustee and
the Holders of

 

 

Securities guaranteed by the Subsidiary
Guarantors, including the Securities to which this Subsidiary Guarantee is
affixed, as to all payments and damages payable by the Company with respect to
which payments have been made by such Subsidiary Guarantor, but, so long as any
payment obligation remains outstanding, such right of subrogation on the part of
such Subsidiary Guarantor shall be subject to the payment in full or discharge
of all such payment obligations.

 

Each of the Subsidiary Guarantors shall have the right to seek
contribution from any other non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders or the Trustee
under the Subsidiary Guarantees made pursuant to the Indenture.

 

The Subsidiary Guarantors or any particular Subsidiary Guarantor shall
be released from this Subsidiary Guarantee upon the terms and subject to
certain conditions provided in the Indenture.

 

Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any transfer, conveyance, sale or other disposition
of the properties and assets of the Company substantially as an entirety in
accordance with Section 801 of the Indenture, each Subsidiary Guarantor
agrees to reaffirm its duties under this Subsidiary Guarantee, and in the event
of any such merger, sale, transfer, consolidation, conveyance or other
disposition by any Subsidiary Guarantor, except as provided in the Indenture,
each remaining Subsidiary Guarantor or the surviving entity, as the case may
be, agrees to reaffirm the duties and covenants of such Subsidiary Guarantor
under this Subsidiary Guarantee.

 

By delivery of a Supplemental Indenture to the Trustee in accordance
with the terms of the Indenture, each Person that becomes a Subsidiary
Guarantor after the date of the Indenture will be deemed to have executed and
delivered this Subsidiary Guarantee for the benefit of the Holder of the
Security upon which this Subsidiary Guarantee is endorsed with the same effect
as if such Subsidiary Guarantor was named below and has executed and delivered
this Subsidiary Guarantee.

 

All terms used in this Subsidiary Guarantee which are defined in the
Indenture referred to in the Security upon which this Subsidiary Guarantee is
endorsed shall have the meanings assigned to them in such Indenture.

 

This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Security upon which this
Subsidiary Guarantee is endorsed shall have been executed by the Trustee under
the Indenture by manual signature.

 

Reference is made to the Indenture for further provisions with respect
to this Subsidiary Guarantee.

 

THIS SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

 

IN WITNESS WHEREOF, each of the Subsidiary
Guarantors has caused this Subsidiary Guarantee to be duly executed.

 

 

	
   

  	
  STAPLES THE OFFICE SUPERSTORE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STAPLES THE OFFICE SUPERSTORE EAST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STAPLES CONTRACT & COMMERCIAL,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STAPLES THE OFFICE SUPERSTORE, LIMITED
  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  BY STAPLES INC., ITS GENERAL PARTNER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit 10.2

 

2009 STOCK OPTION PLAN

OF

IRIS BIOTECHNOLOGIES INC.

 

1.                                      PURPOSES OF THE
PLAN

 

The purposes of
the 2009 Stock Option Plan (the “Plan”) of
Iris BioTechnologies Inc., a California corporation (the “Company”),
are to:

 

(a)                                  Encourage
selected employees, directors and consultants to improve operations and
increase profits of the Company;

 

(b)                                 Encourage
selected employees, directors and consultants to accept or continue employment
or association with the Company or its Affiliates; and

 

(c)                                  Increase
the interest of selected employees, directors and consultants in the Company’s
welfare through participation in the growth in value of the common stock of the
Company (the “Common Stock”).

 

Options granted
under this Plan (“Options”) may be “incentive
stock options” (“ISOs”) intended to satisfy
the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”), or “nonqualified
options” (“NQOs”).

 

2.                                      ELIGIBLE PERSONS

 

Every person who
at the date of grant of an Option is an employee of the Company or of any
Affiliate (as defined below) of the Company is eligible to receive NQOs or ISOs
under this Plan.  Every person who at the
date of grant is a consultant to, or nonemployee director of, the Company or
any Affiliate (as defined below) of the Company is eligible to receive NQOs
under this Plan.  The term “Affiliate” as used in the Plan means
a parent or subsidiary corporation as defined in the applicable provisions
(currently Sections 424(e) and (f), respectively) of the Code.  The term “employee”
includes an officer or director who is an employee of the Company.  The term “consultant”
includes persons employed by, or otherwise affiliated with, a consultant.

 

3.                                      STOCK SUBJECT TO
THIS PLAN

 

Subject to the
provisions of Section 6.1.1 of the Plan, the total number of shares of
stock which may be issued under options granted pursuant to this Plan and the
total number of shares provided for issuance under this Plan shall be 2,184,108
shares of Common Stock and shall at no time exceed the applicable percentage as
calculated in accordance with Section 260.140.45 of Chapter 3 of Title 10
of the California Code of Regulations. 
The shares covered by the portion of any grant under the Plan, which
expires unexercised shall become available again for grants under the Plan.

 

 

4.                                      ADMINISTRATION

 

4.1                                 General.  This Plan shall be administered by the Board
of Directors of the Company (the “Board”) or,
either in its entirety or only insofar as required pursuant to Section 4(b) hereof,
by a committee (the “Committee”)
of at least two Board members to which administration of the Plan, or of part
of the Plan, is delegated (in either case, the “Administrator”).

 

4.2                                 Public Company.  From and after such time as the
Company registers a class of equity securities under Section 12 of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), it is intended that this Plan shall be administered in
accordance with the disinterested administration requirements of Rule 16b-3
promulgated by the Securities and Exchange Commission (“Rule 16b-3”),
or any successor rule thereto.

 

4.3                                 Authority of Administrator.  Subject to the other provisions of this Plan,
the Administrator shall have the authority, in its discretion: (i) to
grant Options; (ii) to determine the fair market value of the Common Stock
subject to Options; (iii) to determine the exercise price of Options
granted; (iv) to determine the persons (each an “Optionee”)
to whom, and the time or times at which, Options shall be granted, and the
number of shares subject to each Option; (v) to interpret this Plan; (vi) to
prescribe, amend, and rescind rules and regulations relating to this Plan;
(vii) to determine the terms and provisions of each Option granted (which
need not be identical), including but not limited to, the time or times at
which Options shall be exercisable; (viii) with the consent of the
Optionee, to modify or amend any Option; (ix) to defer (with the consent
of the Optionee) the exercise date of any Option; (x) to authorize any
person to execute on behalf of the Company any instrument evidencing the grant
of an Option; and (xi) to make all other determinations deemed necessary or
advisable for the administration of this Plan. 
The Administrator may delegate nondiscretionary administrative duties to
such employees of the Company as it deems proper.

 

4.4                                 Interpretation by Administrator.  All questions of interpretation,
implementation, and application of this Plan shall be determined by the
Administrator.  Such determinations shall
be final and binding on all persons.

 

4.5                                 Rule 16b-3.  With respect to
persons subject to Section 16 of the Exchange Act, if any, transactions
under this Plan are intended to comply with the applicable conditions of Rule 16b-3,
or any successor rule thereto.  To
the extent any provision of this Plan or action by the Administrator fails to
so comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator. Notwithstanding the above, it shall be
the responsibility of such persons, not of the Company or the Administrator, to
comply with the requirements of Section 16 of the Exchange Act; and
neither the Company nor the Administrator shall be liable if this Plan or any
transaction under this Plan fails to comply with the applicable conditions of Rule 16b-3
or any successor rule thereto, or if any such person incurs any liability
under Section 16 of the Exchange Act.

 

2

 

5.                                      GRANTING OF
OPTIONS; OPTION AGREEMENT

 

5.1                                 Termination of Plan.  No options shall be granted under this Plan
after ten years from the date of adoption of this Plan by the Board.

 

5.2                                 Stock Option Agreement.  Each Option shall be
evidenced by a written stock option agreement (the “Option
Agreement”), in form satisfactory to the Company, executed by
the Company and the person to whom such Option is granted; provided, however,
that the failure by the Company, the Optionee, or both, to execute the Option
Agreement shall not invalidate the granting of an Option, although the exercise
of each option shall be subject to Section 6.1.3.

 

5.3                                 Type of Option.  The Option Agreement shall specify whether
each Option it evidences is an NQO or an ISO.

 

5.4                                 Early Approval of Grants.  Subject to Section 6.3.3
with respect to ISOs, the Administrator may approve the grant of Options under
this Plan to persons who are expected to become employees, directors or
consultants of the Company, but are not employees, directors or consultants at
the date of approval.

 

6.                                      TERMS AND
CONDITIONS OF OPTIONS

 

Each Option
granted under this Plan shall be subject to the terms and conditions set forth
in Section 6.1.  NQOs shall be also
subject to the terms and conditions set forth in Section 6.2, but not
those set forth in Section 6.3. 
ISOs shall also be subject to the terms and conditions set forth in Section 6.3,
but not those set forth in Section 6.2.

 

6.1                                 Terms and Conditions to Which All Options Are
Subject.  Options granted
under this Plan shall be subject to the following terms and conditions:

 

6.1.1                        Changes in Capital Structure.  Subject to Section 6.1.2, if the stock
of the Company is changed by reason of a stock split, reverse stock split,
stock dividend, or recapitalization, combination or reclassification,
appropriate adjustments shall be made by the Board in (a) the number and
class of shares of stock subject to this Plan and each Option outstanding under
this Plan, and (b) the exercise price of each outstanding Option;
provided, however, that the Company shall not be required to issue fractional
shares as a result of any such adjustments. 
Each such adjustment shall be subject to approval by the Board in its
absolute discretion.

 

6.1.2                        Corporate Transactions.

 

(a)                                  Dissolution or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee at
least 30 days prior to such proposed action. 
To the extent not previously exercised, all Options will terminate
immediately prior to the consummation of such proposed action.

 

3

 

(b)                                 Merger or Asset Sale.  In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company:

 

(i)                                     Options.  Each Option shall be assumed or an equivalent
option substituted by the successor corporation (including as a “successor” any
purchaser of substantially all of the assets of the Company) or a parent or
subsidiary of the successor corporation. 
In the event that the successor corporation refuses to assume or
substitute for the Option, the Optionee shall have the right to exercise the
Option as to all of the shares of Common Stock covered by the Option, including
Shares as to which it would not otherwise be exercisable.  If an Option is exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of 15 days from the date of such notice, and the
Option shall terminate upon the expiration of such period.  For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale of assets,
the option confers the right to purchase or receive, for each share of Common
Stock subject to the Option immediately prior to the merger or sale of assets,
the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares); provided, however, that if
such consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its parent entity, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option, for each
Share of Common Stock subject to the Option, to be solely common stock of the
successor corporation or its parent entity equal in fair market value to the
per share consideration received by holders of Common Stock in the merger or
sale of assets.

 

6.1.3                        Time of Option Exercise.  Subject to Section 5 and Section 6.3.4,
Options granted under this Plan shall be exercisable (a) immediately as of
the effective date of the Option Agreement granting the Option, or (b) in
accordance with a schedule related to the date of the grant of the Option, the
date of first employment, or such other date as may be set by the Administrator
(in any case, the “Vesting Base Date”) and
specified in the Option Agreement relating to such Option; provided, however,
that with respect to Options granted to employees who are not officers,
directors or consultants, the right to exercise an Option must vest at the rate
of at least 20% per year over five years from the date the Option was
granted.  Options granted to officers,
directors or consultants may become fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Board of the Administrator in accordance with this
Plan.  In any case, no Option shall be exercisable
until a written Option Agreement in form satisfactory to the Company is
executed by the Company and the Optionee.

 

6.1.4                        Option Grant Date.  Except in the case of advance approvals
described in Section 5.4, the date of grant of an Option under this Plan
shall be the date as of which the Administrator approves the grant.

 

4

 

6.1.5                        Nonassignability of Option Rights.  Except as otherwise determined by the
Administrator and expressly set forth in the Option Agreement, no Option
granted under this Plan shall be assignable or otherwise transferable by the
Optionee except by will or by the laws of descent and distribution.  During the life of the Optionee, except as
otherwise determined by the Administrator and expressly set forth in the Option
Agreement, an Option shall be exercisable only by the Optionee.

 

6.1.6                        Payment.  Except as provided below, payment in full, in
cash, shall be made for all stock purchased at the time written notice of
exercise of an Option is given to the Company, and proceeds of any payment
shall constitute general funds of the Company. 
At the time an Option is granted or exercised, the Administrator, in the
exercise of its absolute discretion after considering any tax or accounting consequences,
may authorize any one or more of the following additional methods of payment:

 

(a)                                  Acceptance
of the Optionee’s full recourse promissory note for all or part of the Option
price, payable on such terms and bearing such interest rate as determined by
the Administrator (but in no event less than the minimum interest rate
specified under the Code at which no additional interest would be imputed and
in no event more than the maximum interest rate allowed under applicable usury
laws), which promissory note may be either secured or unsecured in such manner
as the Administrator shall approve (including, without limitation, by a
security interest in the shares of the Company); and

 

(b)                                 Delivery
by the Optionee of Common Stock already owned by the Optionee for all or part
of the Option price, provided the value (determined as set forth in Section 6.1.11)
of such Common Stock is equal on the date of exercise to the Option price, or
such portion thereof as the Optionee is authorized to pay by delivery of such
stock; provided, however, that if an Optionee has exercised any portion of any
Option granted by the Company by delivery of Common Stock, the Optionee may
not, within six months following such exercise, exercise any Option granted
under this Plan by delivery of Common Stock without the consent of the
Administrator.

 

6.1.7                        Termination of Employment.

 

(a)                                  If,
for any reason other than death, disability or “cause” (as defined below), an
Optionee ceases to be employed by the Company or any of its Affiliates (such
event being called a “Termination”),
Options held at the date of Termination (to the extent then exercisable) may be
exercised in whole or in part at any time within three months of the date of
such Termination, or such other period of not less than 30 days after the date
of such Termination as is specified in the Option Agreement (but in no event
after the Expiration Date); provided, that if such exercise of the
Option would result in liability for the Optionee under Section 16(b) of
the Exchange Act, then such 90-day period automatically shall be extended until
the tenth day following the last date upon which Optionee has any liability
under Section 16(b) (but in no event after the Expiration Date).

 

(b)                                 If
an Optionee dies while employed by the Company or an Affiliate or within the
period that the Option remains exercisable after Termination, Options then 

 

5

 

held (to the
extent then exercisable) may be exercised, in whole or in part, by the
Optionee, by the Optionee’s personal representative, or by the person to whom
the Option is transferred by devise or the laws of descent and distribution, at
any time within 12 months after the death of the Optionee, or such other period
of not less than six months from the date of Termination as is specified in the
Option Agreement (but in no event after the Expiration Date).

 

(c)                                  If
an Optionee ceases to be employed by the Company as a result of his or her
disability, the Optionee may, but only within six months after the date of
Termination (and in no event after the Expiration Date), exercise the Option to
the extent otherwise entitled to exercise it at the date of Termination;
provided, however, that if such disability is not a “disability” as such term
is defined in Section 22(e)(3) of the Code, in the case of an ISO
such ISO shall automatically convert to an NQO on the day three months and one
day following such Termination.  To the
extent that the Optionee was not entitled to exercise the Option at the date of
Termination or if the Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

 

(d)                                 If
an Optionee is terminated for “cause” all Options then held by such Optionee
shall terminate and no longer be exercisable as of the date of Termination.

 

(e)                                  For
purposes of this Section 6.1.7, “employment”
includes service as an employee, a director or as a consultant.

 

(f)                                    For
purposes of this Section 6.1.7, an Optionee’s employment shall not be
deemed to terminate by reason of sick leave, military leave or other leave of
absence approved by the Administrator, if the period of any such leave does not
exceed three months or, if longer, if the Optionee’s right to reemployment by the
Company or any Affiliate is guaranteed either contractually or by statute.

 

(g)                                 For
purposes of this Section 6.1.7, “cause”
shall mean Termination (i) by reason of Optionee’s commission of a felony,
misdemeanor or other illegal conduct involving dishonesty, fraud or other
matters of moral turpitude, (ii) by reason of Optionee’s dishonesty
towards, fraud upon, or deliberate injury or attempted injury to the Company or
any of its Affiliates, or (iii) by reason of Optionee’s willfully engaging
in misconduct which is materially and demonstrably injurious to the Company or
any of its Affiliates.

 

6.1.8                        Withholding and Employment Taxes.  At the time of exercise of an Option or at
such other time as the amount of such obligations becomes determinable (the “Tax Date”), the Optionee shall remit
to the Company in cash all applicable federal and state withholding and
employment taxes.  If authorized by the
Administrator in its absolute discretion, after considering any tax or accounting
consequences, an Optionee may elect to (i) deliver a full recourse
promissory note on such terms as the Administrator deems appropriate, (ii) tender
to the Company previously owned shares of Stock or other securities of the
Company, or (iii) have shares of Common Stock which are acquired upon
exercise of the Option withheld by the 

 

6

 

Company to pay some or
all of the amount of tax that is required by law to be withheld by the Company
as a result of the exercise of such Option, subject to the following
limitations:

 

(a)                                  Any
election pursuant to clause (iii) above by an Optionee subject to Section 16
of the Exchange Act shall either (x) be made at least six months before
the Tax Date and shall be irrevocable; or (y) shall be made in (or made
earlier to take effect in) any ten-day period beginning on the third business
day following the date of release for publication of the Company’s quarterly or
annual summary statements of earnings and shall be subject to approval by the
Administrator, which approval may be given at any time after such election has
been made.  In addition, in the case of
(y), the Option shall be held at least six months prior to the Tax Date.

 

(b)                                 Any
election pursuant to clause (ii) above, where the Optionee is tendering Common
Stock issued pursuant to the exercise of an Option, shall require that such
shares be held at least six months prior to the Tax Date.

 

Any of the foregoing limitations may be waived (or additional
limitations may be imposed) by the Administrator, in its absolute discretion,
if the Administrator determines that such foregoing limitations are not
required (or that such additional limitations are required) in order that the
transaction shall be exempt from Section 16(b) of the Exchange Act
pursuant to Rule 16b-3, or any successor rule thereto.  In addition, any of the foregoing limitations
may be waived by the Administrator, in its sole discretion, if the
Administrator determines that Rule 16b-3, or any successor rule thereto,
is not applicable to the exercise of the Option by the Optionee or for any
other reason.

 

Any securities tendered or withheld in accordance with this Section 6.1.9
shall be valued by the Company as of the Tax Date.

 

6.1.9                        Other Provisions.  Each Option granted under this Plan may contain
such other terms, provisions, and conditions not inconsistent with this Plan as
may be determined by the Administrator, and each ISO granted under this Plan
shall include such provisions and conditions as are necessary to qualify the
Option as an “incentive stock option” within the meaning of Section 422 of
the Code.  If Options provide for a right
of first refusal in favor of the Company with respect to stock acquired by
employees, directors or consultants, such Options shall provide that the right
of first refusal shall terminate upon the earlier of (i) the closing of
the Company’s initial registered public offering to the public generally, or (ii) the
date ten years after the grant date as set forth in Section 6.1.4.

 

6.1.10                  Determination of Value.  For purposes of the Plan, the value of Common
Stock or other securities of the Company shall be determined as follows:

 

(a)                                  If
the stock of the Company is listed on any established stock exchange or a
national market system, including without limitation the National Market System
of the National Association of Securities Dealers, Inc. Automated
Quotation System, its fair market value shall be the closing sales price for
such stock or the closing bid if no sales were reported, as quoted on such
system or exchange (or the largest such exchange) for the date the 

 

7

 

value is to be
determined (or if there are no sales for such date, then for the last preceding
business day on which there were sales), as reported in the Wall Street Journal or similar publication.

 

(b)                                 If
the stock of the Company is regularly quoted by a recognized securities dealer
but selling prices are not reported, its fair market value shall be the mean
between the high bid and low asked prices for the stock on the date the value
is to be determined (or if there are no quoted prices for the date of grant,
then for the last preceding business day on which there were quoted prices).

 

(c)                                  In
the absence of an established market for the stock, the fair market value
thereof shall be determined in good faith by the Administrator, by
consideration of such factors as the Administrator in its discretion deems
appropriate among the recent issue price of other securities of the Company,
the Company’s net worth, prospective earning power, dividend-paying capacity,
and other relevant factors, including the goodwill of the Company, the economic
outlook in the Company’s industry, the Company’s position in the industry and
its management, and the values of stock of other corporations in the same or a
similar line of business.

 

6.1.11                  Option Term.  Subject to Section 6.3.5, no Option
shall be exercisable more than ten years after the date of grant, or such
lesser period of time as is set forth in the Option Agreement (the end of the
maximum exercise period stated in the stock option agreement is referred to in
this Plan as the “Expiration Date”).

 

6.1.12                  Exercise Price.  The exercise price of any Option granted to
any person who owns, directly or by attribution under the Code (currently Section 424(d)),
stock possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or of any Affiliate (a “Ten Percent Shareholder”) shall in
no event be less than 110% of the fair market value (determined in accordance
with Section 6.1.11) of the stock covered by the Option at the time the
Option is granted.

 

6.2                                 Exercise Price of NQOs.  Except as set forth in Section 6.1.13,
the exercise price of any NQO granted under this Plan shall be not less than
85% of the fair market value (determined in accordance with Section 6.1.11)
of the stock subject to the Option on the date of grant.

 

6.3                                 Terms and Conditions to Which Only ISOs Are Subject.
Options granted under this Plan which are designated as ISOs shall be subject
to the following terms and conditions:

 

6.3.1                        Exercise Price.  Except as set forth in Section 6.1.13,
the exercise price of an ISO shall be determined in accordance with the
applicable provisions of the Code and shall in no event be less than the fair
market value (determined in accordance with Section 6.1.11) of the stock
covered by the Option at the time the Option is granted.

 

8

 

6.3.2                        Disqualifying Dispositions.  If stock acquired by exercise of an ISO
granted pursuant to this Plan is disposed of in a “disqualifying disposition”
within the meaning of Section 422 of the Code, the holder of the stock
immediately before the disposition shall promptly notify the Company in writing
of the date and terms of the disposition and shall provide such other
information regarding the Option as the Company may reasonably require.

 

6.3.3                        Grant Date.  If an ISO is granted in anticipation of
employment as provided in Section 5.4, the Option shall be deemed granted,
without further approval, on the date the grantee assumes the employment
relationship forming the basis for such grant, and, in addition, satisfies all
requirements of this Plan for Options granted on that date.

 

6.3.4                        Vesting.  Notwithstanding any other provision of this
Plan, ISOs granted under all incentive stock option plans of the Company and
its subsidiaries may not “vest” for more than $100,000 in fair market value of
stock (measured on the grant dates(s)) in any calendar year.  For purposes of the preceding sentence, an
option “vests” when it first becomes exercisable.  If, by their terms, such ISOs taken together
would vest to a greater extent in a calendar year, and unless otherwise
provided by the Administrator, the vesting limitation described above shall be
applied by deferring the exercisability of those ISOs or portions of ISOs which
have the highest per share exercise prices; but in no event shall more than
$100,000 in fair market value of stock (measured on the grant date(s)) vest in
any calendar year.  The ISOs or portions
of ISOs whose exercisability is so deferred shall become exercisable on the
first day of the first subsequent calendar year during which they may be
exercised, as determined by applying these same principles and all other
provisions of this Plan including those relating to the expiration and
termination of ISOs.  In no event,
however, will the operation of this Section 6.3.4 cause an ISO to vest
before its terms or, having vested, cease to be vested.

 

7.                                      MANNER OF
EXERCISE

 

7.1                                 Written Notice; Payment.  An Optionee wishing to exercise an Option
shall give written notice to the Company at its principal executive office, to
the attention of the officer of the Company designated by the Administrator,
accompanied by payment of the exercise price as provided in Section 6.1.6.  The date the Company receives written notice
of an exercise hereunder accompanied by payment of the exercise price will be
considered as the date such Option was exercised.

 

7.2                                 Delivery of Stock.  Promptly after receipt of written notice of
exercise of an Option, the Company shall, without stock issue or transfer taxes
to the Optionee or other person entitled to exercise the Option, deliver to the
Optionee or such other person a certificate or certificates for the requisite
number of shares of stock.  An Optionee
or permitted transferee of an Optionee shall not have any privileges as a
shareholder with respect to any shares of stock covered by the Option until the
date of issuance (as evidenced by the appropriate entry on the books of the
Company or a duly authorized transfer agent) of such shares.

 

9

 

8.                                      EMPLOYMENT OR
CONSULTING RELATIONSHIP

 

Nothing in this
Plan or any Option granted thereunder shall interfere with or limit in any way
the right of the Company or of any of its Affiliates to terminate any Optionee’s
employment or consulting at any time, nor confer upon any Optionee any right to
continue in the employ of, or consult with, the Company or any of its
Affiliates, nor interfere in any way with provisions in the Company’s charter
documents or applicable law relating to the election, appointment, terms of
office, and removal of members of the Board.

 

9.                                      FINANCIAL
INFORMATION

 

The Company shall
provide to each Optionee during the period such Optionee holds an outstanding
Option, and to each holder of Common Stock acquired upon exercise of Options
granted under the Plan for so long as such person is a holder of such Common
Stock, annual financial statements of the Company as prepared either by the
Company or independent certified public accountants of the Company.  Such financial statements shall include, at a
minimum, a balance sheet and an income statement, and shall be delivered as
soon as practicable following the end of the Company’s fiscal year.  The provisions of this Section 9 shall
not apply with respect to Optionees who are key employees of the Company whose
duties in connection with the Company assures them access to information equivalent
to the information provided in the financial statements.

 

10.                               CONDITIONS UPON ISSUANCE
OF SHARES

 

Shares of Common
Stock shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended (the “Securities
Act”).

 

11.                               NONEXCLUSIVITY OF THE
PLAN

 

The adoption of
the Plan shall not be construed as creating any limitations on the power of the
Company to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options other than under
the Plan.

 

12.                               MARKET STANDOFF

 

Each Optionee, if
so requested by the Company or any representative of the underwriters in
connection with any registration of the offering of any securities of the
Company under the Securities Act shall not sell or otherwise transfer any
shares of Common Stock acquired upon exercise of Options during the 180-day
period following the effective date of a registration statement of the company
filed under the Securities Act; provided, however, that such restriction shall
apply only to the first two registration statements of the Company to become
effective under the  Securities Act which
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act.  The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restriction
until the end of such 180-day period.

 

10

 

13.                               AMENDMENTS TO PLAN

 

The Board may at
any time amend, alter, suspend or discontinue this Plan.  Without the consent of an Optionee, no
amendment, alteration, suspension or discontinuance may adversely affect
outstanding Options except to conform this Plan and ISOs granted under this
Plan to the requirements of federal or other tax laws relating to incentive
stock options.  No amendment, alteration,
suspension or discontinuance shall require shareholder approval unless (a) shareholder
approval is required to preserve incentive stock option treatment for federal
income tax purposes, or (b) the Board otherwise concludes that shareholder
approval is advisable.

 

14.                               EFFECTIVE DATE OF PLAN

 

This Plan shall
become effective upon adoption by the Board provided, however, that no Option
shall be exercisable unless and until written consent of the shareholders of
the Company, or approval of shareholders of the Company voting at a validly
called shareholders’ meeting, is obtained within 12 months after adoption by
the Board.  If such shareholder approval
is not obtained within such time, Options granted hereunder shall terminate and
be of no force and effect from and after expiration of such 12-month
period.  Options may be granted and
exercised under this Plan only after there has been compliance with all
applicable federal and state securities laws.

 

	
  Plan adopted by the Board of Directors on:

  	
  February 27, 2009

  
	
  Plan approved by Shareholders on:

  	
  February 27, 2009

  

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]