Staples 2004 Annual Report Download - page 28

laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee
benefit or other matters.
Termination or Amendment
No award may be made under the Restated Plan after the completion of ten years from the date on which the
Restated Plan is approved by our stockholders, but awards previously granted may extend beyond that date. The
Board of Directors may at any time amend, suspend or terminate the Restated Plan, except that no award designated
as subject to Section 162(m) of the Code by the Board of Directors after the date of such amendment shall become
exercisable, realizable or vested (to the extent such amendment was required to grant such award) unless and until
such amendment shall have been approved by our stockholders. In addition, without the approval of our stockholders,
no amendment may (i) increase the number of shares authorized under the Restated Plan, (ii) materially increase the
benefits provided under the Restated Plan, (iii) materially expand the class of participants eligible to participate in the
Restated Plan, (iv) expand the types of awards provided under the Restated Plan or (v) make any other changes which
require stockholder approval under the rules of the NASDAQ National Market. No award may be made that is
conditioned on the approval of our stockholders of any amendment to the Restated Plan.
If the Restated Plan is approved by stockholders, it will become effective on the date of such approval. If
stockholders do not approve the Restated Plan, the Restated Plan will not go into effect.
Federal Income Tax Consequences
The following generally summarizes the United States federal income tax consequences that generally will arise with
respect to awards granted under the Restated Plan. This summary is based on the tax laws in effect as of the date of this
proxy statement. This summary assumes that all awards granted under the Restated Plan are exempt from, or comply with,
the rules under Section 409A of the Internal Revenue Code related to nonqualified deferred compensation. The Restated
Plan provides that no award will provide for deferral of compensation that does not comply with Section 409A of the Code,
unless the Board, at the time of grant, specifically provides that the award is not intended to comply with Section 409A.
Changes to these laws could alter the tax consequences described below.
Incentive Stock Options. A participant will not have income upon the grant of an incentive stock option. Also,
except as described below, a participant will not have income upon exercise of an incentive stock option if the
participant has been employed by Staples or 50% or more-owned corporate subsidiary at all times beginning with the
option grant date and ending three months before the date the participant exercises the option. If the participant has
not been so employed during that time, then the participant will be taxed as described below under ‘‘Nonstatutory
Stock Options.’’ The exercise of an incentive stock option may subject the participant to the alternative minimum tax.
A participant will have income upon the sale of the stock acquired under an incentive stock option at a profit (if
sales proceeds exceed the exercise price). The type of income will depend on when the participant sells the stock. If a
participant sells the stock more than two years after the option was granted and more than one year after the option
was exercised, then all of the profit will be long-term capital gain. If a participant sells the stock prior to satisfying
these waiting periods, then the participant will have engaged in a disqualifying disposition and a portion of the profit
will be ordinary income and a portion may be capital gain. This capital gain will be long-term if the participant has
held the stock for more than one year and otherwise will be short-term. If a participant sells the stock at a loss (sales
proceeds are less than the exercise price), then the loss will be a capital loss. This capital loss will be long-term if the
participant held the stock for more than one year and otherwise will be short-term.
Nonstatutory Stock Options. A participant will not have income upon the grant of a nonstatutory stock option. A
participant will have compensation income upon the exercise of a nonstatutory stock option equal to the value of the
stock on the day the participant exercised the option less the exercise price. Upon sale of the stock, the participant will
have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the
option was exercised. This capital gain or loss will be long-term if the participant has held the stock for more than one
year and otherwise will be short-term.
Restricted Stock. A participant will not have income upon the grant of restricted stock unless an election under
Section 83(b) of the Code is made within 30 days of the date of grant. If a timely 83(b) election is made, then a
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