Staples Inc. 1997 UK Savings Related Share Option Scheme Rules

Summary

This agreement sets out the rules for the Staples Inc. 1997 UK Savings Related Share Option Scheme, which allows eligible UK employees and directors of Staples Inc. and its UK subsidiaries to apply for options to purchase company shares. Employees can participate by entering into approved savings contracts, with the option to buy shares at a set price after a savings period. The Board determines eligibility, contribution limits, and other key terms. The scheme is subject to UK tax laws and Inland Revenue approval, and participation is voluntary and subject to specific conditions and deadlines.

EX-10.5 6 a2104492zex-10_5.txt EXHIBIT 10.5 Exhibit 10.5 RULES OF THE STAPLES INC 1997 UK SAVINGS RELATED SHARE OPTION SCHEME 1. DEFINITIONS (a) In these Rules the following words and expressions shall unless a different meaning is deemed necessary have the following meanings: "Act" the Income and Corporation Taxes Act 1988. "Announcement Date" the date on which the Company announces its quarterly, half yearly or final results. "Approval Date" means the date on which the Scheme was formally approved by the Inland Revenue. "Board" the board of directors for the time being of the Company or the directors present at a duly convened meeting of the directors of the Company at which a quorum is present or a committee appointed by the board of directors. "Bonus" means any sum payable by way of terminal bonus under the relevant Savings Contract. "Company" Staples Inc, a company incorporated in Delaware, USA. "Compensation the executive compensation committee of the Committee" Board. "Control" control within the meaning of Section 840 of the Act (and "Controlled" shall be construed accordingly). "Date of Grant" the date on which an Option is granted under Rule 3 of these Rules. "Eligible Employee" means any person who at the relevant Invitation Date is a director or employee of a Participating Company chargeable to tax in respect of his office or employment under Case 1 of Schedule E of the 1 Act, is not at the relevant Date of Grant ineligible to participate in the Scheme by virtue of the provisions of paragraph 8 of Schedule 9 of the Act; and (i) has been a director or employee of a Group Company for a continuous period of 90 days on the Invitation Date; or (ii) is designated by the Board as an Eligible Employee. "Exchange Rate" the rate of exchange of pounds sterling against the US dollar on the day or days used to determine the Exercise Price "Exercise Price" the US dollar price at which the Board determines that Shares may be acquired in respect of each Option being not less than the greater of: (i) 85 per cent (or such lower percentage as may be permitted under paragraph 25 of Schedule 9 to the Act) of the market value of a Share on any day determined in accordance with the provisions of the Taxation of Chargeable Gains Act 1992 and agreed, on or before that day for the purposes of the Scheme with the Inland Revenue Shares Valuation Division; or (ii) in respect of Options giving a right to subscribe for Shares, the nominal value of a Share. "Group" the Company and any Subsidiaries and the term Group Company shall mean any such company. "Invitation Date" the date on which the Board invites Eligible Employees to apply for the grant of an Option. "Maturity Date" the date on which the terminal bonus is payable under the relevant Savings Contract or such other date as may be provided for in the Act from time to time. 2 "Maximum Monthly the maximum monthly savings limit determined Contribution" by the Board from time to time being not more than the greater of (pound)250 or the amount permitted from time to time under paragraph 24 of Schedule 9 to the Act. "Minimum Monthly (pound)5.00 or such other minimum monthly Contribution" savings limit, if any, determined by the Board from time to time and permitted under paragraph 24 of Schedule 9 to the Act. "Option" a right to acquire Shares to be granted pursuant to the Scheme or which has been so granted and is still subsisting. "Participant" any person who has been granted and still holds a subsisting Option under the Scheme. References to a Participant shall include, where the context so admits or requires, his personal representatives. "Participating means the Company and any other Group Company Company" incorporated in the UK, provided such company has been notified to the Inland Revenue as being a Participating Company. "Rules" these rules as amended from time to time in accordance with the provisions of these rules. "Savings Contract" means a savings contract made between an Eligible Employee and an approved savings authority (within the meaning of Section 326 of the Act). "Scheme" the Staples Inc 1997 UK Savings Related Share Option Scheme operating in accordance with these Rules. "Shares" shares of common stock of the Company that comply with paragraphs 10-14 of Schedule 9 to the Act. "Specified Age" age 65. "Subsidiary" in relation to the Company, a subsidiary as defined in Section 736 of the Companies Act 1985. 3 (b) Words or expressions defined in the Act and in the Great Britain Companies Acts 1985 and 1989 shall bear the same meanings in these Rules and where there is a conflict the definitions in the Act shall take precedence. (c) Where the context so admits or requires words importing the singular shall include the plural and vice versa and words importing the masculine shall include the feminine and neuter genders. (d) Any reference to a statute or a statutory provision shall be construed as if it referred also to that statute or provision as the same may from time to time be consolidated, replaced, amended or re-enacted and to any related statutory instrument or other subordinate legislation in force from time to time. 2. APPLICATION FOR OPTIONS (a) The Board may, in their absolute discretion, invite applications for Options from all Eligible Employees at such time or times as they consider appropriate. The type or types of Savings Contract offered at each invitation shall be at the discretion of the Board. (b) The Board shall determine and specify in any invitation to apply for Options; (i) the Invitation Date; (ii) either the Exercise Price or the date on which the Exercise Price will be fixed; (iii) the maximum aggregate number of Shares over which Options may be granted, if any; (iv) the Minimum Monthly Contribution and Maximum Monthly Contribution that may be made under the Savings Contracts; (v) the method of calculating the amount of the Bonus; (vi) the Maturity Date(s) of the Savings Contract(s) being offered to the Eligible Employee; and (vii) the closing date for receipt by the Company of applications for Options being a date not less than 14 days and not more than 21 days after the Invitation Date or, if later, after the date upon which Eligible Employees receive notification of the Exercise Price. (c) Invitations shall be given by means of notices on notice boards of Participating Companies, circulars, letters or such other method as the Board may determine. 4 (d) Each Eligible Employee may, before the closing date stated in the invitation, apply for an Option. Each application shall be in writing in such form as the Board may from time to time prescribe and shall: (i) state the monthly amount which such Eligible Employee wishes to save under the Savings Contract(s) for which he is applying; (ii) state the duration of the Savings Contracts which the Eligible Employee wishes to save under, if a choice has been given in the invitation issued pursuant to Rule 2(b); (iii) state the Eligible Employee's agreement to the terms of such Savings Contract; and (iv) authorise the Board to complete and/or amend such application on behalf of the Eligible Employee in such manner as the Board may determine having regard to the requirements of Rule 2(e), Rule 3(b) and Rule 4. (e) Subject to reduction in accordance with the Rules of the Scheme, the number of Shares over which an Option is applied for under this Rule shall be deemed to be such whole number of Shares (rounding down as necessary) which would be purchased with the sum of money equal to the amount that would be repayable under the relevant Savings Contract (including the Bonus) on the Maturity Date when converted to US dollars using the Exchange Rate. 3. GRANT OF OPTIONS (a) Options will be granted by the Board in accordance with Rule 2: (i) within thirty days of determining the Exercise Price; or (ii) within forty two days of determining the Exercise Price if the number of applications results in the Board exercising the powers of scaling down under Rule 3(b), provided that the person is still an Eligible Employee at the Date of Grant. (b) In the event that following any invitation pursuant to Rule 2 the Board receives valid applications which would result in the grant of Options over a greater number of Shares than permitted under Rule 4 or than specified by the Board in accordance with Rule 2(b)(iii) then the Board shall scale down pro rata the monthly contribution proposed by each Eligible Employee in excess of the Minimum Monthly Contribution. In the event that this results in insufficient Shares to cover the Minimum Monthly Contribution of applicants, Options based on the Minimum Monthly Contribution shall be granted to those applicants who are selected by lot. 5 (c) Option certificates will be issued to each Participant as soon as practicable after the Date of Grant and will specify the Date of Grant, the maximum number of Shares over which the Option may be exercised, the Exercise Price and the Maturity Date. (d) No Option shall be capable of transfer or assignment and if a Participant shall do or suffer any act or thing whereby he parts with or is deprived of the legal and/or beneficial ownership of an Option, that Option shall lapse. (e) The Board may determine that any Option granted under the Scheme shall be subject to additional and/or modified terms and conditions relating to the grant and terms of exercise as may be necessary to comply with or take account of any securities, exchange control or taxation laws, regulations or practice of any territory which may have application to the relevant Eligible Employee, Participant or Participating Company, provided that no such terms or conditions shall take effect until approved by the Inland Revenue. (f) In exercising their discretion under Rule 3(e) the Board may: (i) require a Participant to make such declarations or take such other action (if any) as may be required for the purpose of any securities, taxes or other laws of any territory which may be applicable to him at the Date of Grant or on exercise; and (ii) adopt any supplemental rules or procedures governing the grant or exercise of an Option as may be required for the purpose of any securities, tax or other laws of any territory which may be applicable to an Eligible Employee or Participant, provided that such rules or procedures may not be adopted to the extent that they require the approval of the Company in general meeting in accordance with Rule 11(d)(i), unless such approval has been obtained. (g) No Option shall be granted before the Approval Date. 4. LIMITATION ON THE ISSUE OF SHARES (a) The aggregate number of Shares that may be available for use under the Scheme is 500,000 subject to any adjustments, recapitalizations or other changes in the Company's capital structure or its business or any merger or consolidation of the Company. 6 (b) No Option shall be granted to an Eligible Employee if the contribution payable by such Eligible Employee in any month under the Savings Contract to be entered into by him in connection with the Option for which he has applied: (i) is less than the Minimum Monthly Contribution; or (ii) when added to the contribution or contributions payable by the Eligible Employee in such month under any other Savings Contract in respect of this Scheme or any other Inland Revenue approved savings related share option scheme is greater than the Maximum Monthly Contribution, as specified by the Board from time to time under Rule 2(b)(iv). 5. EXERCISE OF OPTIONS (a) Subject to Rule 8 and paragraph (b) below Options may only be exercised by a Participant within six months following the Maturity Date of the relevant Savings Contract or, if earlier, within six months of the Participant: (i) ceasing to hold an office or employment with a Participating Company by reason of injury, illness, disability, redundancy or retirement at the Specified Age or any other age at which he is bound to retire in accordance with his contract of employment; or (ii) attaining the Specified Age while continuing to hold an office or employment with a Participating Company; or (iii) ceasing to hold an office or employment with a Participating Company Group by reason only that: a) his office or employment is in a company of which the Company ceases to have Control; or b) his office or employment relates to a business or part of a business which is transferred to a person who is neither an associated company of the Company nor a company of which the Company has Control; or (iv) any of the circumstances specified in Rule 8 applying; or (v) ceasing to hold an office or employment with a Participating Company or in any associated company of the Company, for any reason (except misconduct) at least three years after the Date of Grant of the Option. (b) If a Participant dies prior to the Maturity Date of the relevant Savings Contract his Option may be exercised within the period of 12 months after the date of his death or if he dies within 6 months after the Maturity Date of the Savings Contract, his 7 Option may be exercised within the period of 12 months after the Maturity Date of the Savings Contract. (c) Subject to Rule 5 (b) no Option shall be exercisable more than six months after a Bonus is paid under the relevant Savings Contract. (d) Save as provided in Rule 5(a)(i), (iii), (iv) and (v) and Rule 5 (b) an Option shall be exercised by a Participant only if at the date of exercise he is either a director or employee of a Participating Company or, provided the date of exercise takes place within 6 months following the Maturity Date, an employee or office holder of the Company or an associated company (as defined in section 187 (2) of the Act) or company of which the Company has control, provided that, for these purposes, no Participant shall be regarded as ceasing to hold an office or employment by virtue of which he is eligible to participate in the Scheme until he ceases to hold an office or employment in the Company or an associated company (as defined in section 187 (2) of the Act) or company of which the Company has control. (e) Subject to Rule 5(f) below an Option shall be exercisable once only in whole or in part during the periods referred to in Rule 5(a) and (b) above by the Participant delivering to the Company Secretary or otherwise as the Board may notify in writing written notice in such form as the Board may from time to time determine specifying the amount or percentage of the amount repayable under the Savings Contract that is to be applied in the acquisition of Shares together with the appropriate remittance. Subject to Rule 8(c) the date of receipt by the Company Secretary or otherwise as the Board may notify in writing of such notice together with such remittance shall be the date upon which the Option is deemed to be exercised. (f) Upon exercise of an Option with the remittance as referred to in paragraph (e) above the Option shall be deemed to be exercised in respect of the largest whole number of Shares that may be acquired with the amount of the remittance and the Option to the extent not so deemed to be exercised shall immediately lapse. The balance of any remittance not applied in the acquisition of Shares shall be returned to the Participant. (g) The Participant shall pay all expenses and taxes which arise or result from the exercise of an Option or transfer of Shares, provided that the Company in its absolute discretion may meet any taxes or expenses which it deems necessary or appropriate. (h) Shares acquired on exercise of an Option under the Scheme shall be paid for with monies not exceeding the amount of repayment (including any Bonus or interest) made under the related Savings Contract. For this purpose repayment under the Savings Contract shall exclude the repayment of any monthly contributions, the due date for payment of which falls more than one month after the date on which repayment was made. 8 (i) No Option may be exercised by a Participant who is excluded by paragraph 8 of Schedule 9 of the Act. 6. LAPSE AND SURRENDER OF OPTIONS (a) An Option shall immediately lapse and cease to be exercisable:- (i) subject to Rule 5(b), six months after the Maturity Date of the Savings Contract; (ii) as provided in Rule 3(d); (iii) upon the Participant ceasing to hold an office or employment within the Group in any circumstances other than those described in Rule 5(a)(i), (iii), (iv) and (v); (iv) upon the expiration of any of the periods referred to in Rule 5(a) and (b) (except that referred to in Rule 5(a)(ii)) and in the event of more than one period applying to an Option it shall be upon the expiry of the earlier (except as provided for in Rule 5(b)); (v) as provided in Rule 5(f); (vi) as provided in Rule 8; (vii) upon the Participant: a) giving notice to the nominated savings body, or where relevant, the Company, for repayment or that he intends to stop paying contributions under the related Savings Contract; or b) failing to pay a monthly contribution under the related Savings Contract on or before the due date on seven occasions, in each case before the earliest date on which the Option becomes exercisable under Rule 5(a); (viii) upon the Participant being adjudicated bankrupt; or (ix) the date on which a resolution is passed or order is made by the Court for the compulsory winding up of the Company. 9 (b) It shall be a condition of the Scheme that a Participant shall not be entitled to any compensation in the event of cessation, lapse or alteration of any rights or rights in prospect under the Scheme or under any Option granted under the Scheme subject always to Rule 11(d)(ii) below. No provisions of the Scheme form part of any contract of employment between the Company or any Participating Company and a Participant. (c) Nothing in this Scheme or in any instrument executed pursuant hereto shall confer upon any person any right to continue in the employ of the Company or any Group Company or shall affect the right of the Company or any Group Company to terminate the employment of any person without liability at any time with or without cause, or shall impose upon the Company or any Group Company, the Board or their respective agents and employees any liability for any forfeiture or termination of Options which may result if that person's employment is so terminated. 7. ADJUSTMENTS (a) In the event of a variation of the issued share capital of the Company by way of a capitalisation or rights issue, sub-division, consolidation or reduction or otherwise then: (i) the Exercise Price; and (ii) the number of Shares subject to an Option; shall be adjusted in such manner and with effect from such date, as the Board may determine to be appropriate and as the auditors of the Company shall confirm in writing to be, in their opinion, fair and reasonable subject to prior Inland Revenue approval. (b) Notice of any such adjustments shall be given to Participants by the Board who may call in Option certificates for endorsement or replacement. 10 8. CHANGE IN CONTROL, RECONSTRUCTION AND WINDING UP OF THE COMPANY (a) If, in consequence of any general offer made to the holders of Shares or otherwise, as specified in paragraph 15(1)(a) of Schedule 9 to the Act, any person obtains Control of the Company, then the Board shall as soon as practicable thereafter notify every Participant accordingly and each Participant shall be entitled at any time within the period of six months after such Control has been obtained but not later than six months following the Maturity Date to exercise his Option. To the extent that it has not been so exercised, any Option shall upon the expiry of such period lapse provided that if during such period any person becomes entitled or bound to acquire Shares in the Company under Sections 428 and 430F of the Companies Act 1985 and gives notice to any holders of Shares that he intends to exercise such rights the Board shall as soon as practicable thereafter notify each Participant accordingly. All Options may be exercised at any time when such person remains so entitled or bound and if not so exercised shall then lapse. For the purpose of this paragraph Control shall include the obtaining of Control by a person and others acting in concert with him. (b) If under Section 425 of the Companies Act 1985 the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other companies any Option held by a Participant may be exercised within six months of the Court sanctioning the compromise or arrangement and if not so exercised shall lapse. (c) If a resolution is passed for the voluntary winding-up of the Company, Options granted under the Scheme may be exercised until the expiry of six months following the passing of the resolution. Subject to the above, all Options shall lapse upon the commencement of the winding-up of the Company. (d) Where the person mentioned in Rule 8(a) or Rule 8(b) is a company within the meaning of Section 832 of the Act ("the Acquiring Company"), any Participant may, by agreement with the Acquiring Company and notwithstanding anything to the contrary in this Scheme, release, within the appropriate period, (as defined in paragraph 15(2) of Schedule 9 to the Act), his rights under this Scheme (the "old rights") in consideration of the grant to him of rights (the "new rights") which, within the meaning of paragraph 15(3) of Schedule 9 to the Act, are equivalent to the old rights but relate to shares in a different company (whether the Acquiring Company or some other company falling within paragraph (b) or (c) of paragraph 10 of Schedule 9 to the Act) and references in Rules 5, 7, 8, 9, 10 and 12 to the term "Company" shall be construed accordingly with effect from the date of release and references to "Shares " and "the Board" shall, in relation to the new rights, be considered as references to shares in the Acquiring Company or that other company and to the board of such company as the case may be. 11 9. ALLOTMENT, TRANSFER AND LISTING (a) Subject to receipt of the appropriate remittance and to paragraph (b) below, any Shares to be issued pursuant to the exercise of an Option will be allotted and issued, and any Shares to be transferred shall be transferred to the relevant Participant or a nominee nominated by a Participant not later than 30 days after the date of exercise of the Option. Such Shares shall rank pari passu in all respects with other shares of the same class save that newly issued Shares shall not rank for dividend or other distribution payable by reference to a record date that is before the date of allotment. (b) Any allotment and issue or transfer of Shares under the Scheme shall be subject to such consents (if any) of HM Treasury or other authorities (whether of the United Kingdom or elsewhere) as may from time to time be required and it shall be the responsibility of the Participant to obtain such consents. (c) The Company will apply to the NASDAQ National Market or such other exchange on which the Shares are listed for Shares subscribed to be admitted to official listing on the exchange or equivalent on or as soon as practicable after allotment. 10. AVAILABILITY OF SHARES (a) The Company shall keep available for issue sufficient authorised and unissued Shares to satisfy all subsisting rights to subscribe for Shares granted pursuant to the Scheme, taking account of any other obligations of the Company to allot and issue unissued Shares. (b) The Company shall ensure that there are available for transfer sufficient existing Shares to satisfy all subsisting rights to acquire Shares granted pursuant to the Scheme, taking account of any other obligations of the Company to arrange for the transfer of shares. 11. ADMINISTRATION, AMENDMENTS AND TERMINATION (a) The Scheme shall be administered by the Board in accordance with the Rules. Any question or dispute concerning the interpretation of the Rules shall be determined by the Board in its sole discretion and its decision on such matter shall be final and binding upon both the Company and the Participant. The Board may delegate such of its rights and obligations under these Rules to the Compensation Committee, or otherwise as it considers appropriate. (b) The Company shall bear the costs of establishing and administering the Scheme and may pass these costs on to Participating Companies as it considers appropriate. 12 (c) The Company shall maintain or cause to be maintained all necessary accounts and records relating to the Scheme. (d) The Board shall be entitled to amend the Rules provided that no amendment:- (i) will prejudice the subsisting rights of any Participant, except with the prior consent of such Participant; and (ii) shall take effect without the prior approval of the Inland Revenue pursuant to Part 1 of Schedule 9 to the Act. (e) No Options shall be granted under the Scheme later than the tenth anniversary of the date on which the Scheme is adopted by the Company. Prior to this date the Board may determine to grant no further Options and may from time to time modify or at any time suspend or terminate the Scheme (but without prejudice to Options already granted). 12. NOTICES (a) Notices or documents required to be given by the Company to an Eligible Employee or Participant shall be properly given if delivered to him at his normal place of work or sent to him by first class post at his last known address and any notice or document required to be given to the Company shall be properly given if delivered or sent by air mail to the registered office from time to time or by first class post if directed to be sent to an address in the United Kingdom. (b) Participation in the Scheme shall not entitle a Participant to receive copies of any notice or other document sent by the Company to its shareholders. 13. GOVERNING LAW The operation of the Scheme shall be governed by and construed in accordance with English Law. 13