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&lt;p style="MARGIN: 0in 0in 0pt"&gt;&lt;b&gt;&lt;font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;Note E &amp;#151; Equity Based Employee Benefit Plans&lt;/font&gt;&lt;/b&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt"&gt;&lt;font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;&amp;nbsp;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 27.5pt"&gt;&lt;font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;Staples offers its associates share ownership through certain equity based employee benefit plans, including the Amended and Restated 1998 Employee Stock Purchase Plan and the Amended and Restated International Employee Stock Purchase Plan (collectively the &amp;#147;Employee Stock Purchase Plans&amp;#148;), and the Amended and Restated 2004 Stock Incentive Plan.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 27.5pt"&gt;&lt;font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;&amp;nbsp;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 27.5pt"&gt;&lt;font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;Under the Employee Stock Purchase Plans, U.S. and International associates may purchase shares of Staples common stock at 85% of the lower of the market price of the common stock at the beginning or end of an offering period through payroll deductions in an amount not to exceed 10% of an employee&amp;#146;s annual base compensation.&amp;nbsp; Under the Amended and Restated 2004 Stock Incentive Plan, the Company grants restricted stock and restricted stock units (collectively, &amp;#147;Restricted Shares&amp;#148;) and nonqualified stock options to associates.&amp;nbsp; The Restricted Shares are restricted in that they are not transferable (i.e. they may not be exercised or sold) until they vest. The nonqualified stock options cannot be exercised until they vest.&amp;nbsp; Vesting of the Restricted Shares and nonqualified stock options occurs over different periods, depending on the terms of the individual award, but expenses relating to these awards are all recognized on a straight line basis over the applicable vesting period.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 27.5pt"&gt;&lt;font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;&amp;nbsp;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 27.5pt"&gt;&lt;font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;In connection with its equity based employee benefit plans, Staples included $33.8 million and $35.3 million in compensation expense for the first quarter of 2010 and the first quarter of 2009, respectively.&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 27.5pt"&gt;&lt;font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;&amp;nbsp;&lt;/font&gt;&lt;/p&gt;
&lt;p style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 34pt"&gt;&lt;font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2"&gt;As of May&amp;nbsp;1, 2010, Staples had $208.9 million of nonqualified stock options and Restricted Shares to be expensed over the period through March&amp;nbsp;2014.&amp;nbsp; The Company had 42.7 million stock options outstanding, of which 29.4 million were exercisable at May&amp;nbsp;1, 2010.&amp;nbsp; The intrinsic value was $175.1 million for the outstanding nonqualified stock options and $154.0 million for the exercisable nonqualified stock options. The intrinsic value of the nonqualified stock options is the amount by which the market value of the underlying stock exceeds the exercise price of an option.&lt;/font&gt;&lt;/p&gt;&lt;/td&gt;&lt;/tr&gt;&lt;/table&gt;
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&amp;nbsp;
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