Exhibit 10.11
STAPLES, INC.
XXXXXXX.XXX COMMON STOCK
PURCHASE AGREEMENT
Dated as of November 9, 1999
STAPLES, INC.
XXXXXXX.XXX COMMON STOCK PURCHASE AGREEMENT
This Agreement dated as of November 9, 1999 is entered into by and
between Staples, Inc., a Delaware corporation (the "Company"), General Atlantic
Partners 59, L.P., a Delaware limited partnership ("GAP LP"), GAP Coinvestment
Partners II, L.P., a Delaware limited partnership ("GAPCO II") and, together
with GAP LP, the "General Atlantic Entities") and the other investors listed on
SCHEDULE I hereto (each (including the GAP Entities), a "Purchaser and
collectively the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SHARES.
1.1 AUTHORIZATION. The Company has duly authorized (subject to
the stockholder approval referenced in Section 5.3) the sale and issuance,
pursuant to the terms of this Agreement, of 12,138,462 shares of its Xxxxxxx.xxx
Common Stock, $0.0006 par value per share (the "Xxxxxxx.xxx Stock"), having the
rights, restrictions, privileges and preferences set forth in the Certificate of
Amendment attached hereto as EXHIBIT A (the "Certificate of Amendment"). The
Company has adopted (subject to the stockholder approval referenced in Section
5.3) and before the Closing (as defined in Section 2) will have filed the
Certificate of Amendment with the Secretary of State of the State of Delaware.
1.2 SALE OF SHARES. Subject to the terms and conditions of
this Agreement, at the Closing the Company will sell and issue to each
Purchaser, and each Purchaser will purchase, the number of shares of Xxxxxxx.xxx
Stock set forth next to such Purchaser's name on SCHEDULE I hereto for the
purchase price of $1.625 per share (the "Purchase Price"). The shares of
Xxxxxxx.xxx Stock sold under this Agreement are referred to as the "Shares." The
Company's agreement with each of the Purchasers is a separate agreement, and the
sale of Shares to each Purchaser is a separate sale.
2. THE CLOSING.
(a) Subject to the satisfaction or waiver of the conditions
set forth in Sections 5 and 6, the closing (the "Closing") of the sale and
purchase of the Shares under this Agreement shall take place at the offices of
Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 3:00 p.m. on
Tuesday, November 9, 1999, or at such other time, date and place as are mutually
agreeable to the Company and the Purchasers. At the Closing, the Company shall
deliver to each of the Purchasers a certificate for the number of Shares being
purchased by such Purchaser, registered in the name of such Purchaser, against
payment to the Company of the Purchase Price, by wire transfer or other method
acceptable to the Company. The date of the Closing is hereinafter referred to as
the "Closing Date." If the Closing does not occur on or before November 19, 1999
(the "Termination Date"), this Agreement shall automatically terminate,
unless the Termination Date is extended by the written consent of the Company
and the Purchasers.
(b) The Company may sell, at any time prior to 60 days after
the Closing, in one or more closings (each, a "Subsequent Closing"), up to
500,000 additional Shares at the Purchase Price, to such purchasers (each, an
"Additional Purchaser") as may be approved by the Board of Directors of the
Company. At each Subsequent Closing, (i) the Company and each Additional
Purchaser shall execute and deliver a counterpart signature page hereto,
whereupon such Additional Purchaser shall become a "Purchaser" hereunder and the
Shares purchased by such Additional Purchaser shall be deemed to be "Shares" for
purposes of this Agreement, and (ii) the Company shall cause SCHEDULE I hereto
be amended to reflect the purchases made by the Additional Purchasers at each
Subsequent Closing. At each Subsequent Closing, the Company shall deliver to
each Additional Purchaser a certificate for the number of Shares being purchased
at the Subsequent Closing by such Additional Purchaser, registered in the name
of such Additional Purchaser, against payment to the Company of the Purchase
Price in the manner specified above.
3. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and
warrants to the Purchasers that the statements contained in this Section 3 are
true, complete and correct.
3.1 ORGANIZATION AND STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to conduct its
business as presently conducted and as proposed to be conducted by it and to
enter into and perform this Agreement and to carry out the transactions
contemplated by this Agreement. The Company is duly qualified to do business as
a foreign corporation and is in good standing in every jurisdiction in which the
failure so to qualify would have a material adverse effect on the business,
prospects, assets or condition (financial or otherwise) of the Company (a
"Company Material Adverse Effect").
3.2 CAPITALIZATION. The authorized capital stock of the
Company (immediately prior to the Closing and after giving effect to the filing
of the Certificate of Amendment) consists of (i) 2,100,000,000 shares of common
stock, $0.0006 par value per share (the "Common Stock"), of which 1,500,000,000
shares are designated as Staples Retail and Delivery Common Stock and
600,000,000 shares are designated as Xxxxxxx.xxx Common Stock and (ii) 5,000,000
shares of preferred stock, $0.01 par value per share (the "Preferred Stock"). As
of October 31, 1999, (a) 459,529,480 shares of Staples Retail and Delivery
Common Stock were issued and outstanding and (b) an aggregate of 59,631,363
shares of Common Stock (regardless of series) were reserved for future issuance
under the 1992 Equity Incentive Plan, 1990 Director Stock Option Plan, 1998
Employee Stock Purchase Plan and 0000 Xxxxxx Xxxxxxx Company Share Option Scheme
of the Company. Immediately prior to the Closing, no shares of Xxxxxxx.xxx Stock
or Preferred Stock were issued or outstanding. The Company has designated
200,000,000 shares of Xxxxxxx.xxx Stock as the Number of Shares Issuable with
Respect to Staples Retail and Delivery's Retained Interest in Xxxxxxx.xxx (as
defined in the Certificate of Amendment). All of the issued and outstanding
shares of Staples Retail and Delivery Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
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3.3 ISSUANCE OF SHARES. The issuance, sale and delivery of the
Shares in accordance with this Agreement, have been duly authorized by the Board
of Directors of the Company and will be, on or prior to the Closing, duly
authorized by the stockholders of the Company, and all such Shares have been, or
will be on or prior to the Closing, duly reserved for issuance. The Shares when
so issued, sold and delivered against payment therefor in accordance with the
provisions of this Agreement, will be duly and validly issued, fully paid and
nonassessable and will have been issued in compliance with the registration and
qualification requirements of all applicable federal and state securities laws.
3.4 AUTHORITY FOR AGREEMENT; NO CONFLICT. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action (subject to the stockholder
approval referenced in Section 5.3). This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms, subject as to enforcement of
remedies to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting generally the enforcement of creditors' rights and
subject to a court's discretionary authority with respect to the granting of a
decree ordering specific performance or other equitable remedies. The execution
of and performance of the transactions contemplated by this Agreement by the
Company will not (a) conflict with or violate any provision of the Certificate
of Incorporation or By-laws of the Company, (b) require on the part of the
Company any filing with, or any permit, authorization, consent or approval of,
any court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (other than the filing of a Form
D with the Securities and Exchange Commission), (c) conflict with, result in a
breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the Company is a party or by which the Company is bound or to which its assets
are subject, other than any of the foregoing events listed in this clause (c)
which do not and will not, individually or in the aggregate, have a Company
Material Adverse Effect, (d) result in the imposition of any Security Interest
upon any assets of the Company or (e) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
properties or assets. For purposes of this Agreement, "Security Interest" means
any mortgage, pledge, security interest, encumbrance, charge, or other lien
(whether arising by contract or by operation of law).
3.5 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission ("SEC")
since January 30, 1997 (collectively, the "Company Reports"). Except as
disclosed in any amendment to any Company Report filed with the SEC, as of the
respective dates on which they were filed, (i) the Company Reports complied in
all material respects with the requirements of the Securities Act of 1933, as
amended (together with the rules and regulations promulgated thereunder, the
"Securities Act"), and the Securities Exchange Act of 1934, as amended ( the
"Exchange Act"), as the case may be,
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and (ii) none of the Company Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) Except as disclosed in any amendment to any Company Report
filed with the SEC, each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Company Reports was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated ("GAAP") (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q and Regulation S-X of the SEC), and each presented fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments that
would not, individually or in the aggregate, be reasonably expected to have a
Company Material Adverse Effect).
3.6 ABSENCE OF MATERIAL ADVERSE CHANGE. Since January 30,
1999, there has occurred no event or development (other than any event or
development disclosed in a Company Report) which has had, or could reasonably be
expected to have in the future, a Company Material Adverse Effect.
3.7 ADVISORY BOARD. The Company agrees that within 45 days
following the Closing Date, it will establish a Business Advisory Board to
provide advice and guidance to the management and Board of Directors of the
Company with respect to Xxxxxxx.xxx (as defined in the Certificate of
Amendment). The Business Advisory Board's members will be appointed by the Board
of Directors or the Chairman of the Company and will serve as consultants to
Xxxxxxx.xxx with respect to its business and not as a governing body. The
Company agrees that Xxxxxxx X. Xxxxx and Xxxx XxXxxxxx shall be members of the
Business Advisory Board for so long as the GAP Entities, together with their
Affiliates (as defined below), hold at least 2,307,692 shares of Xxxxxxx.xxx
Stock (as equitably adjusted to give effect to any stock split, reverse stock
split or similar recapitalization event affecting the Xxxxxxx.xxx Stock). The
Company agrees that two persons designated by Highland Capital Partners IV
Limited Partnership and Highland Entrepeneurs' IV Limited Partnership (the
"Highland Entities") shall be members of the Business Advisory Board for so long
as the Highland Entities, together with their Affiliates, hold at least
2,307,692 shares of Xxxxxxx.xxx Stock (as equitably adjusted to give effect to
any stock split, reverse stock split or similar recapitalization event affecting
the Xxxxxxx.xxx Stock). For purposes of this Agreement (other than Section 8.1
hereof), "Affiliate" shall mean any person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act . The
following shall be deemed to be Affiliates of GAP LP: (a) General Atlantic
Partners, LLC, a Delaware limited liability company ("GAP LLC"), the members of
GAP LLC and the limited partners of GAP LP; (b) any Affiliate of the limited
partners of GAP LP; and (c) any limited liability company or partnership a
majority of whose members or partners, as the case may be, are members, former
members, consultants or key employees of GAP LLC. GAP LP and GAPCO II shall be
deemed to be Affiliates of one another. The following shall be deemed to be
Affiliates of Summit Accelerator Partners, LLC:
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(a) Summit Accelerator Fund L.P.; (b) Summit Accelerator Founders Fund, L.P.;
and (c) Summit (SAF) Investors IV, L.P.
4. REPRESENTATIONS OF THE PURCHASERS. Each of the Purchaser severally
represents and warrants to the Company as follows:
4.1 INVESTMENT. Such Purchaser is acquiring the Shares for
his, her or its own account for investment and not with a view to, or for sale
in connection with, any distribution thereof, nor with any present intention of
distributing or selling the same, except for possible sales to Affiliates of
such Purchaser; and, except as contemplated by this Agreement such Purchaser has
no present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof. Such Purchaser
is an "accredited investor" as defined in Rule 501(a) under the Securities Act
or 1933, as amended (the "Securities Act").
4.2 AUTHORITY. Such Purchaser has full power and authority to
enter into and to perform this Agreement in accordance with its terms. No
Purchaser which is not a natural person has been organized, reorganized or
recapitalized specifically for the purpose of investing in the Company.
4.3 EXPERIENCE. Such Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement, and has made
detailed inquiry concerning the Company, its business and its personnel; the
officers of the Company have made available to such Purchaser any and all
written information which he, she or it has requested and have answered to such
Purchaser's satisfaction all inquiries made by such Purchaser; and such
Purchaser has sufficient knowledge and experience in finance and business that
it is capable of evaluating the risks and merits of its investment in the
Company and such Purchaser is able financially to bear the risks thereof.
4.4 XXXX-XXXXX-XXXXXX MATTERS. The Shares to be acquired by
such Purchaser will be acquired and held "solely for the purpose of investment",
as defined by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules promulgated thereunder. Such Purchaser has no intention
of participating in the formulation, determination or direction of the basic
business decisions of the Company or its subsidiaries, including as a director
or officer of the Company or its subsidiaries. Such Purchaser is not presently a
competitor of the Company or its subsidiaries, and as a result of this
transaction will hold less than 10% of the outstanding voting securities of the
Company.
5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligation of
each of the Purchasers to purchase the Shares at the Closing is subject to the
fulfillment, or the waiver by such Purchaser, of each of the following
conditions on or before the Closing:
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in Section 3 shall be true on and as of
the Closing Date with the same effect as though such representation and warranty
had been made on and as of that date.
5.2 CERTIFICATES AND DOCUMENTS. The Company shall have
delivered to the Purchasers:
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(a) The Certificate of Incorporation of the Company, as
amended and in effect as of the Closing Date (including the Certificate of
Amendment), certified by the Secretary of State of the State of Delaware;
(b) A certificate, as of the most recent practicable date, as
to the corporate good standing of the Company issued by the Secretary of State
of the State of Delaware;
(c) A certificate of the Secretary or Assistant Secretary of
the Company as of the Closing Date certifying that:
(i) the By-laws of the Company are true and complete and
in full force and effect;
(ii) the resolutions of the Board of Directors and
stockholders of the Company, authorizing and approving all matters in connection
with this Agreement and the transactions contemplated hereby, are true and
complete and in full force and effect; and
(iii) the Certificate of Amendment has been filed with the
Delaware Secretary of State and representing that the Certificate of Amendment
constitutes the only amendment to the Certificate of Incorporation since the
date on which it was certified pursuant to Section 5.2(a).
(d) If the Closing Date is after the date of this Agreement, a
certificate of the Chief Executive Officer or Chief Financial Officer of the
Company as to the continued truth and accuracy of the representations and
warranties contained in Section 3 on and as of the Closing Date.
5.3 STOCKHOLDER APPROVAL. The Certificate of Amendment shall
have been approved by the affirmative vote of the holders of a majority of the
outstanding shares of Staples Common Stock.
6. CONDITION TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company under Section 1.2 of this Agreement are subject to fulfillment, or the
waiver, of the following conditions on or before the Closing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchasers contained in Section 4 shall be
true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of that date. Each
Purchaser agrees to notify the Company in writing prior to the Closing if any of
the representations and warranties of such Purchaser contained in Section 4
shall no longer be true on and as of the Closing Date with the same effect as
though such representation and warranty had been made on and as of that date.
6.2 STOCKHOLDER APPROVAL. The Certificate of Amendment shall
have been approved by the affirmative vote of the holders of a majority of the
outstanding shares of Staples Common Stock.
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7. TRANSFER RESTRICTIONS.
7.1 SECURITIES RESTRICTIONS. Each Purchaser acknowledges that
the Shares have not been registered under the Securities Act and shall not be
sold or transferred unless either (i) they first shall have been registered
under the Securities Act, or (ii) the Company first shall have been furnished
with an opinion of legal counsel to such Purchaser, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Securities Act.
7.2 LEGEND. Each Purchaser acknowledges that, until such time
as the Shares become eligible for resale pursuant to Rule 144(k) under the
Securities Act, each certificate representing the Shares shall bear a legend
substantially in the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be offered, sold or otherwise transferred, pledged or
hypothecated unless and until such shares are registered under
such Act or an opinion of counsel satisfactory to the Company
is obtained to the effect that such registration is not
required."
7.3 NO RIGHTS TO TRANSFER. No Purchaser shall sell, assign,
pledge or otherwise transfer (collectively, "transfer") any of the Shares or any
right or interest therein, whether voluntarily, by gift or otherwise on or prior
to December 31, 2000, except to an Affiliate of such Purchaser who agrees in a
writing addressed to the Company to be bound by the terms of this Agreement (a
"Permitted Transferee").
7.4 RIGHT OF FIRST OFFER. After December 31, 2000, no
Purchaser may transfer the Shares, except to a Permitted Transferee, other than
in accordance with the following requirements:
(a) OFFERING NOTICE. If any Purchaser (a "Selling Purchaser")
wishes to transfer all or any portion of its Shares to any person (a "Third
Party Purchaser"), such Selling Purchaser shall offer such Shares first to the
Company, by sending written notice (an "Offering Notice") to the Company, which
shall state (i) the number of Shares proposed to be transferred (the "Offered
Securities"); (ii) the proposed purchase price per Share for the Offered
Securities (the "Offer Price"); and (iii) the terms and conditions of such sale.
Upon delivery of the Offering Notice, such offer shall be irrevocable unless and
until the rights of first offer provided for herein shall have been waived or
shall have expired. The Company shall promptly deliver a copy of the Offering
Notice to each of the Venture Purchasers (as designated on SCHEDULE I hereto).
(b) COMPANY OPTION; EXERCISE. For a period of 15 days after
the giving of the Offering Notice pursuant to Section 7.4(a) (the "Company
Option Period"), the Company shall have the right (the "Company Option") but not
the obligation to purchase any or all of the Offered Securities at a purchase
price equal to the Offer Price and upon the terms and conditions set forth in
the Offering Notice. The right of the Company to purchase any or all of the
Offered Securities under this Section 7.4(b) shall be exercisable by delivering
written notice of the exercise thereof, prior to the expiration of the 15-day
period referred to above, to the Selling Purchaser, with a copy to the Venture
Purchasers, which notice shall state the number of Offered
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Securities proposed to be purchased by the Company. The failure of the Company
to respond within such 15-day period shall be deemed to be a waiver of the
Company Option, PROVIDED that the Company may waive its rights under this
Section 7.4(b) prior to the expiration of such 15-day period by giving written
notice to the Selling Purchaser, with a copy to the Venture Purchasers.
(c) RIGHTHOLDER OPTION; EXERCISE.
(i) If the Company does not elect to purchase all of
the Offered Securities pursuant to Section 7.4(b), then for a period of 10 days
after the earlier to occur of (a) the expiration of the Company Option Period
pursuant to Section 7.4(b) and (b) the date upon which the Selling Purchaser
shall have received written notice from the Company of its exercise the Company
Option pursuant to Section 7.4(b) (or its desire to exercise such option for
only a portion of the Offered Securities) or its waiver thereof (the
"Rightholder Option Period"), each of the Venture Purchasers, other than the
Selling Purchaser (for the purpose of Section 7.4, each, a "Rightholder" and
collectively, the "Rightholders") shall have the right to purchase all, but not
less than all, of the remaining Offered Securities at a purchase price equal to
the Offer Price and upon the terms and conditions set forth in the Offering
Notice. Each such Rightholder shall have the right to purchase that percentage
of the Offered Securities determined by dividing (i) the total number of shares
of Xxxxxxx.xxx Stock then owned by such Rightholder by (ii) the total number of
shares of Xxxxxxx.xxx Stock then owned by all such Rightholders. If any
Rightholder fails to fully subscribe for the number of Offered Securities it is
entitled to purchase, then the other participating Rightholders shall have the
right to purchase the remaining Offered Securities not so subscribed for (for
the purposes of this Section 7.4(c), the "Excess Offered Securities"). If the
Company and/or the Rightholders do not purchase all of the Offered Securities
pursuant to Section 7.4(b) and/or Section 7.4(c), then the Selling Purchaser may
sell the Offered Securities to a Third Party Purchaser in accordance with
Section 7.4(e).
(ii) The right of each Rightholder to purchase the
remaining Offered Securities under subsection (i)
above shall be exercisable by delivering written notice of the exercise thereof,
prior to the expiration of the Rightholder Option Period, to the Selling
Purchaser with a copy to the Company and the other Rightholders. Each such
notice shall state (a) the number of shares of Xxxxxxx.xxx Stock held by such
Rightholder and (b) the number of Offered Securities that such Rightholder is
willing to purchase pursuant to this Section 7.4(c). The failure of a
Rightholder to respond within the Rightholder Option Period to the Selling
Purchaser shall be deemed to be a waiver of such Rightholder's rights under
subsection (i) above, PROVIDED that each Rightholder may waive its rights under
subsection (i) above prior to the expiration of the Rightholder Option Period by
giving written notice to the Selling Purchaser, with a copy to the Company. The
right of a Rightholder to purchase the Excess Offered Securities under
subsection (i) above shall be exercisable by delivering written notice of the
exercise thereof, within five days following the expiration of the Rightholder
Option Period, to the Selling Purchaser with a copy to the Company and the other
Rightholders, stating the number of Excess Offered Securities that such
Rightholder is willing to purchase pursuant to this Section 7.4(c); provided
that if two or more Rightholders choose to exercise such right with respect to
the Excess Offered Securities for a total number of Excess Offered Securities
greater than the aggregate number of Excess Offered Securities, the Excess
Offered Securities shall be allocated
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among such exercising Rightholders pro rata based on the number of shares of
Xxxxxxx.xxx Stock owned by each.
(d) CLOSING. The closing of the purchases of Offered
Securities subscribed for by the Company under Section 7.4(b) and/or the
Rightholders under Section 7.4(c) shall be held at the executive office of the
Company at 11:00 a.m., local time, on the 60th day after the giving of the
Offering Notice pursuant to Section 7.4(a) or at such other time and place as
the parties to the transaction may agree. At such closing, the Selling Purchaser
shall deliver certificates representing the Offered Securities, duly endorsed
for transfer and accompanied by all requisite transfer taxes, if any. The
Company and/or each Rightholder, as the case may be, purchasing Offered
Securities shall deliver at the closing payment in full in immediately available
funds for the Offered Securities purchased by it. At such closing, all of the
parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate.
(e) SALE TO A THIRD PARTY PURCHASER. Unless the Company and/or
the Rightholders elect to purchase all, but not less than all, of the Offered
Securities under Sections 7.4(b) and 7.4(c), the Selling Purchaser may sell all,
but not less than all, the Offered Securities to a Third Party Purchaser on the
terms and conditions set forth in the Offering Notice; PROVIDED, HOWEVER, that
such sale is bona fide and made pursuant to a contract entered into within 60
days after the earlier to occur of (i) the waiver by the Company and all of the
Rightholders of their options to purchase the Offered Securities and (ii) the
expiration of the Rightholder Option Period (the "Contract Date"); and PROVIDED
FURTHER, that such sale shall not be consummated unless and until prior to the
purchase by such Third Party Purchaser of any of such Offered Securities, such
Third Party Purchaser shall become a party to this Agreement and shall agree to
be bound by the terms and conditions hereof. If a contract for such sale is not
executed by the Contract Date or such sale is not consummated within 30 days
after the Contract Date for any reason, then the restrictions provided for
herein shall again become effective, and no transfer of such Offered Securities
may be made thereafter by the Selling Purchaser without again offering the same
to the Company and the Rightholders in accordance with this Section 7.4.
(f) EXEMPT TRANSACTIONS. The following transactions
shall be exempt from the provisions of this Section 7.4
(1) in the case of any Purchaser that is not a
natural person, the transfer of any or all of the Shares pursuant to and in
accordance with the terms of any merger, consolidation, reclassification of
shares or capital reorganization of such Purchaser, or pursuant to a sale of
substantially all of the stock or assets of such Purchaser, provided, however,
that in any such case, the transferee shall receive and hold such Shares subject
to the provisions of this Section 7 and there shall be no further transfer of
such stock except in accordance with this Section 7; and
(2) any transfer pursuant to an effective
registration statement filed by the Company with the
Securities and Exchange Commission.
(g) NON-COMPLYING TRANSFERS. Any sale or transfer, or
purported sale or transfer, of Shares shall be null and void unless the terms,
conditions and provisions of this Section 7 are strictly observed and followed.
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(h) TERMINATION. The terms of this Section 7.4 shall terminate
upon (i) the closing of the first public offering of shares of Xxxxxxx.xxx Stock
which is effected pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission under the Securities Act of
1933, as amended (other than an offering registered on Form X-0, Xxxx X-0 or any
successor forms) (an "IPO") , (ii) the sale of all or substantially all of the
assets or business of the Company, whether by merger, sale of assets or
otherwise (except a merger or consolidation in which the holders of capital
stock of the Company immediately prior to such merger or consolidation continue
to hold immediately following such merger or consolidation at least 75% by
voting power of the capital stock of the surviving corporation in approximately
the same relative proportions) or (iii) at such time as all of the outstanding
shares of Xxxxxxx.xxx Stock are exchanged for shares of Staples Retail and
Delivery Common Stock, or all of the outstanding shares of Staples Retail and
Delivery Common Stock are exchanged for shares of Xxxxxxx.xxx Stock, pursuant to
the terms of the Certificate of Incorporation of the Company, as amended by the
Certificate of Amendment.
(i) LEGEND. The certificates representing the Shares shall
bear a legend that indicates that the Shares are subject to a right of first
refusal in favor of the Company as set forth in this Section 7.4 (in addition
to, or in combination with, any legend required by applicable federal and state
securities laws).
8. RESTRICTIONS. In order to induce the Company to issue and sell the
Shares to the Purchasers, each of the Purchasers agrees as follows:
8.1 NON-COMPETITION AND NON-SOLICITATION.
(a) Until the first anniversary of the date upon which a
Purchaser owns less than 25% of the Shares purchased hereunder by such Purchaser
(the "Restricted Period"), such Purchaser will not, and will cause its
Affiliates (excluding its Portfolio Companies) not to, directly or indirectly,
engage in (whether as owner, partner, director, employee, consultant, investor,
lender or otherwise, except as the holder of not more than 5% of the outstanding
stock of a publicly-held company), or invest in, any business or enterprise,
similar to and in competition with the Company's business as currently
conducted, that is engaged primarily in the sale of a broad array of office
product offerings offered directly to small business customers, provided that
(i) any Purchaser or its Affiliate may invest in a business or enterprise that
is engaged in selling products exclusively in a single category of office
products, (ii) the foregoing shall in no way restrict any Purchaser or its
Affiliates from purchasing the securities of any company in connection with such
Purchaser's or Affiliate's investment advisory and asset management business,
(iii) the foregoing shall not prevent any Purchaser or its Affiliates from
remaining a stockholder or a director of or continuing to hold its investment
(but not to make any new investment) in any Portfolio Company that, on or after
the time of such Purchaser's or Affiliate's initial investment, began engaging
in the activity prohibited by this Section 8.1 and (iv) the foregoing shall in
no way restrict any Purchaser or its Affiliates from investing in less than 5%
of the outstanding stock of a publicly-held company.
(b) During its Restricted Period, each Purchaser will not, and
will cause its Affiliates (excluding Portfolio Companies) not to, directly or
indirectly, either alone or in association with others (i) solicit any employee
of the Company to leave the employ of the
11
Company or (ii) solicit for employment, hire or engage as an independent
contractor (on its own behalf or on the behalf of any other party) any person
who was employed by the Company at any time during the Restricted Period, except
for any person whose employment or other affiliation with the Company has been
terminated for at least three months and except that the foregoing shall not
prohibit general solicitations to the public.
(c) For purposes of this Section 8.1, (i) the term "Affiliate"
shall include the sponsor and/or general partner of a Purchaser, and all
entities or persons controlled by, in control of or in common control with, the
sponsor and/or general partner (in the case of Essex Private Placement Fund II
Limited Partnership ("Essex"), other than Affiliated Managers Group, Inc. and
those of its affiliates that are not also affiliates controlled by Essex
Investment Management Company, LLC or its members who are individuals),
including without limitation any affiliated partnerships or funds, but excluding
any Portfolio Company and (ii) the term "Portfolio Company" shall include all
companies in which a Purchaser or any other Affiliate partnership or fund is a
stockholder.
(d) Notwithstanding the foregoing, the following companies and
individuals and employees, officers and directors thereof are excluded from the
non-competition and non-solicitation provisions of this Section 8.1:
Xxxxxxxxx-Summit Management, L.L.C., Xxxxxxxxx-Summit Partners, L.L. C., Summit
Retained Earnings, L.P., Mt. Everest Fund, L.P., Mt Everest QP Fund, L.P., Mt.
Everest Fund Limited and Xxxxxxxx X. Xxxxxxxxx (including any family member of
Xxxxxxxx X. Xxxxxxxxx and any trust set up for the benefit of Xxxxxxxx X.
Xxxxxxxxx and any such family member). In addition, an indirect investment
through a hedge fund, registered investment company or other investment fund
will be deemed not to violate the non-competition and non-solicitation
provisions of this Section 8.1.
(e) CONFIDENTIALITY. Each Purchaser agrees that it will keep
confidential and will not disclose, divulge or use for any purpose other than to
monitor its investment in the Company any confidential, proprietary or secret
information which such Purchaser may obtain from the Company pursuant to
information disclosed to such Purchaser by virtue of its position as an investor
in the Company ("Confidential Information"), unless such Confidential
Information is known, or until such Confidential Information becomes known, to
the public (other than as a result of a breach of this Section 8.2 by such
Purchaser); PROVIDED, however, that a Purchaser may disclose Confidential
Information (i) to its employees, members, attorneys, accountants, consultants,
and other professionals to the extent reasonably necessary to obtain their
services in connection with monitoring its investment in the Company, (ii) to
any Affiliate or stockholder of such Purchaser (but not to a Portfolio Company)
of such Purchaser, provided that such Affiliate or stockholder agrees in writing
to be bound by the provisions of this Section 8.2, (iii) to a partner, including
a limited partner, of such Purchaser pursuant to such Purchaser's periodic
review and reporting obligations to its partners, provided that such partner
agrees in writing to be bound by the provisions of this Section 8.2 or (iv) as
may otherwise be required by law, regulation or legal process, provided that the
Purchaser takes reasonable steps to minimize the extent of any such required
disclosure. In addition, each Purchaser may disclose (including on its World
Wide Web site) the name of the Company, the name of its Chief Executive Officer,
the amount of such Purchaser's investment in the Company and a brief description
of the business of the Company.
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9. FUTURE ISSUANCE OF SHARES; PREEMPTIVE RIGHTS.
9.1 OFFERING NOTICE. Except for Exempt Issuances (as defined
below), if the Company wishes at any time to issue to any person any Xxxxxxx.xxx
Stock or any other securities convertible into or exchangeable for Xxxxxxx.xxx
Stock (collectively, "New Securities") to any person (the "Subject Purchaser"),
then the Company shall offer such New Securities first to each of the Venture
Purchasers (each, a "Preemptive Rightholder" and collectively, the "Preemptive
Rightholders") by sending written notice (the "New Issuance Notice") to the
Preemptive Rightholders, which New Issuance Notice shall state (a) the number of
New Securities proposed to be issued and (b) the proposed purchase price per
share of the New Securities (the "Proposed Price"). Upon delivery of the New
Issuance Notice, such offer shall be irrevocable unless and until the rights
provided for in Section 9.2 shall have been waived or shall have expired. For
purposes of this Agreement, "Exempt Issuances" shall mean (i) the sale of shares
of Xxxxxxx.xxx Stock under this Agreement; (ii) the issuance of shares of
Xxxxxxx.xxx Stock as a stock dividend to holders of Common Stock or pursuant to
any subdivision or combination of shares of Common Stock; (iii) the issuance of
shares of Xxxxxxx.xxx Stock in exchange for outstanding shares of Staples Retail
and Delivery Common Stock in accordance with the terms of the Certificate of
Incorporation of the Company; (iv) the issuance of shares of Xxxxxxx.xxx Stock,
or the grant of options or other rights therefor, to officers, directors,
consultants and employees of the Company or a subsidiary pursuant to any plan or
agreement approved by the Board of Directors of the Company; (v) the issuance of
shares of Xxxxxxx.xxx Stock solely in consideration for the acquisition (whether
by merger or otherwise) by the Company or a subsidiary of all or substantially
all of the stock or assets of any other entity, approved by the Board of
Directors of the Company; (vi) the sale of shares of Xxxxxxx.xxx Stock in an
IPO; or (vii) the sale of up to 1,500,000 shares of Xxxxxxx.xxx Stock to
directors of the Company within 60 days after the Closing Date at a price not
less than $1.625 per share.
9.2 PREEMPTIVE RIGHTS; EXERCISE.
(i) For a period of 20 days after the giving of the
New Issuance Notice pursuant to Section 9.1, each of the Preemptive Rightholders
shall have the right to purchase its Proportionate Percentage (as hereinafter
defined) of the New Securities at a purchase price equal to the Proposed Price
and upon the terms and conditions set forth in the New Issuance Notice. Each
such Preemptive Rightholder shall have the right to purchase that percentage of
the New Securities determined by dividing (a) the total number of shares of
Xxxxxxx.xxx Stock then owned by such Preemptive Rightholder exercising its
rights under this Section 9.2 by (b) the total number of shares of Xxxxxxx.xxx
Stock then outstanding, including any shares of Xxxxxxx.xxx Stock subject to
outstanding options, warrants or other rights to purchase (the "Proportionate
Percentage"). If any Preemptive Rightholder does not fully subscribe for the
number of New Securities that it is entitled to purchase pursuant to the
preceding sentence, then the Preemptive Rightholders which elected to purchase
New Securities shall have the right to purchase the remaining New Securities not
so subscribed for (for the purposes of this Section 9.2(i), the "Excess New
Securities").
(ii) The right of each Preemptive Rightholder to
purchase the New Securities under subsection (i) above
shall be exercisable by delivering written notice of the exercise thereof, prior
to the expiration of the 20-day period referred to in subsection (i) above,
13
to the Company, which notice shall state the number of New Securities that such
Preemptive Rightholder elects to purchase pursuant to Section 9.2(i) (including,
if applicable, such number of Excess New Securities that such Preemptive
Rightholder elects to purchase, to the extent any are available). The failure of
a Preemptive Rightholder to respond within such 20-day period shall be deemed to
be a waiver of such Preemptive Rightholder's rights under Section 9.2(i),
PROVIDED that each Preemptive Rightholder may waive its rights under Section
9.2(i) prior to the expiration of such 20-day period by giving written notice to
the Company.
9.3 CLOSING. The closing of the purchase of New Securities
subscribed for by the Preemptive Rightholders under Section 9.2 shall be held at
the executive office of the Company at 10:00 a.m., local time, on (a) the 45th
day after the giving of the New Issuance Notice pursuant to Section 9.1, if the
Preemptive Rightholders elect to purchase all of the New Securities under
Section 9.2, (b) the date of the closing of the sale to the Subject Purchaser
made pursuant to Section 9.4 if the Preemptive Rightholders elect to purchase
some, but not all, of the New Securities under Section 9.2 or (c) at such other
time and place as the parties to the transaction may agree. At such closing, the
Company shall deliver certificates representing the New Securities, and such New
Securities shall be issued free and clear of all liens and encumbrances and the
Company shall so represent and warrant, and further represent and warrant that
such New Securities shall be, upon issuance thereof to the Preemptive
Rightholders and after payment therefor, duly authorized, validly issued, fully
paid and non-assessable. Each Preemptive Rightholder purchasing the New
Securities shall deliver at the closing payment in full in immediately available
funds for the New Securities purchased by it. At such closing, all of the
parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate.
9.4 SALE TO SUBJECT PURCHASER. The Company may sell to the
Subject Purchaser all of the New Securities not purchased by the Preemptive
Rightholders pursuant to Section 9.2 on terms and conditions that are no more
favorable to the Subject Purchaser than those set forth in the New Issuance
Notice; PROVIDED, HOWEVER, that such sale is bona fide and made pursuant to a
contract entered into within three months following the earlier to occur of (i)
the waiver by the Preemptive Rightholders of their option to purchase New
Securities pursuant to Section 9.2, and (ii) the expiration of the 20-day period
referred to in Section 9.2. If such sale is not consummated within such three
month period for any reason, then the restrictions provided for herein shall
again become effective, and no issuance and sale of New Securities may be made
thereafter by the Company without again offering the same in accordance with
this Section 9. The closing of any issuance and purchase pursuant to this
Section 9.4 shall be held at a time and place as the Company and the Subject
Purchaser may agree, subject to the consent of the participating Preemptive
Rightholders, which consent shall not be unreasonably withheld or delayed.
9.5 TERMINATION. The terms of this Section 9 shall terminate
upon (i) the closing of the IPO, (ii) the sale of all or substantially all of
the assets or business of the Company, whether by merger, sale of assets or
otherwise (except a merger or consolidation in which the holders of capital
stock of the Company immediately prior to such merger or consolidation continue
to hold immediately following such merger or consolidation at least 60% by
voting power of the capital stock of the surviving corporation in approximately
the same relative proportions) or (iii) at such time as all of the outstanding
shares of Xxxxxxx.xxx Stock are
14
exchanged for shares of Staples Retail and Delivery Common Stock, or all of the
outstanding shares of Staples Retail and Delivery Common Stock are exchanged for
shares of Xxxxxxx.xxx Stock, pursuant to the terms of the Certificate of
Incorporation of the Company.
10. REGISTRATION RIGHTS.
10.1 REQUEST FOR REGISTRATION At any time after 180 days
following the effectiveness of the IPO, the General Atlantic Entities (the
"INITIATING HOLDERS") may request in a written notice (which notice shall state
the number of Registrable Securities (as defined below) to be so registered)
that the Company file a registration statement under the Securities Act (or a
similar document pursuant to any other statute then in effect corresponding to
the Securities Act) covering the registration of any or all Registrable
Securities held by such Initiating Holders; PROVIDED, HOWEVER, that the
Initiating Holders may not so request more than once in any 12-month period and
more than three times in the aggregate. The Company shall notify in writing all
other Purchasers of such request within 10 days following receipt of any notice
under this Section 10.1. The Company shall file with the SEC, within 30 days
following the receipt by the Company of the notice under this Section 10.1, a
registration statement covering the resale to the public by the Initiating
Holders and the other Purchasers of all Registrable Securities requested by
them, within 15 days after the Company has delivered the notice referred to in
the preceding sentence, to be included in such registration. The Company shall
use its reasonable best efforts to cause the such registration statement to be
declared effective by the SEC as soon as practicable, and to cause such
registration statement to remain effective until the date nine months after its
effective date or such earlier time as all of the Registrable Securities covered
by such registration statement have been sold pursuant thereto. "Registrable
Securities" shall mean the Shares purchased by the Purchasers under this
Agreement and any and all additional shares of Xxxxxxx.xxx Stock purchased by
the Purchasers pursuant to Sections 7.4 or 9 of this Agreement.
10.2 INCIDENTAL REGISTRATION.
(a) Whenever the Company proposes to file a registration
statement registering shares of Xxxxxxx.xxx Stock under the Securities Act
(other than pursuant to Section 10.1 or a registration statement on Form X-0,
Xxxx X-0 or any successor forms) at any time and from time to time, it will,
prior to such filing, give written notice to all Purchasers of its intention to
do so. Upon the written request of a Purchaser or Purchasers given within 20
days after the Company provides such notice (which request shall state the
intended method of disposition of such Registrable Securities), the Company
shall use its best efforts to cause all Registrable Securities which the Company
has been requested by such Purchaser or Purchasers to register to be registered
under the Securities Act to the extent necessary to permit their sale or other
disposition in accordance with the intended methods of distribution specified in
the request of such Purchaser or Purchasers; provided that the Company shall
have the right to postpone or withdraw any registration effected pursuant to
this Section 10.2(a) without obligation to any Purchaser.
(b) If the registration for which the Company gives notice
pursuant to Section 10.2 (a) is a registered public offering involving an
underwriting, the Company shall so advise the Purchasers as a part of the
written notice given pursuant to Section 10.2(a). In such event,
15
the right of any Purchaser to include its Registrable Securities in such
registration shall be conditioned upon such Purchaser's participation in such
underwriting on the terms set forth herein. All Purchasers proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for the underwriting by the Company. Notwithstanding any other
provision of this Agreement, if the managing underwriter determines that the
inclusion of all Registrable Securities requested to be registered would
materially adversely affect the offering, the Company may limit the number of
Registrable Securities to be included in the registration and underwriting. The
Company shall so advise all holders of Registrable Securities requesting
registration, and the number of Registrable Securities that are entitled to be
included in the registration and underwriting by any Purchaser shall be
allocated among all Purchasers in proportion, as nearly as practicable, to the
respective number of shares of Xxxxxxx.xxx Stock which they held at the time the
Company gives the notice specified in Section 10.2(a). If any Purchaser
disapproves of the terms of any such underwriting, such Purchaser may elect to
withdraw therefrom, within 15 days following receipt of a copy of the proposed
underwriting agreement and related documents, by written notice to the Company,
and any Registrable Securities or other securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
10.3 REGISTRATION PROCEDURES.
(a) If and whenever the Company is required by Section 10.1 to
file a registration, or elects to file a registration statement in which
Registrable Securities are included pursuant to Section 10.2, the Company shall:
(i) as expeditiously as practicable prepare
and file with the SEC any amendments and supplements to the registration
statement and the prospectus included in the registration statement as may be
necessary to comply with the provisions of the Securities Act (including the
anti-fraud provisions thereof);
(ii) as expeditiously as possible furnish to each
Purchaser whose Registrable Securities are included
in such registration statement (each, a "Selling Stockholder") such reasonable
numbers of copies of the prospectus, including any preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Selling Stockholder may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities included in the
registration statement that are owned by such Selling Stockholder;
(iii) as expeditiously as possible use its best
efforts to register or qualify the Registrable
Securities included in the registration statement under the securities or Blue
Sky laws of such states as the Selling Stockholders shall reasonably request,
and do any and all other acts and things that may be necessary or desirable to
enable the Selling Stockholders to consummate the public sale or other
disposition in such states of such Registrable Securities that are included in
the registration statement; provided, however, that the Company shall not be
required in connection with this paragraph (ii) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction;
16
(iv) as expeditiously as possible, cause all
Registrable Securities included in the registration statement to be listed on
each securities exchange or automated quotation system on which Xxxxxxx.xxx
Stock then listed;
(v) promptly provide a transfer agent and registrar
for all Registrable Securities included in the registration statement not later
than the effective date of such registration statement;
(vi) promptly make available for inspection by the
Selling Stockholder, any managing underwriter
participating in any disposition pursuant to such registration statement, and
any attorney or accountant retained by any such underwriter or selected by the
Selling Stockholder, all financial and other records and pertinent corporate
documents reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(vii) as expeditiously as possible, notify each
Selling Stockholder, promptly after it shall receive
notice thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed; and
(viii) as expeditiously as possible following the
effectiveness of such registration statement, notify
each Selling Stockholder of any request by the SEC for the amending or
supplementing of such registration statement or prospectus.
(b) If the Company has delivered a prospectus to the Selling
Stockholders and after having done so the prospectus is amended to comply with
the requirements of the Securities Act, the Company shall promptly notify the
Selling Stockholders and, if requested, the Selling Stockholders shall
immediately cease making offers of Registrable Securities pursuant to such
prospectus and return all prospectuses to the Company. The Company shall
promptly provide the Selling Stockholders with revised prospectuses and,
following receipt of the revised prospectuses, the Selling Stockholders shall be
free to resume making offers of the Registrable Securities pursuant to such
revised prospectus.
(c) In the event that, in the judgment of the Company, it is
advisable to suspend use of a prospectus included in a registration statement
filed under this Section 10 due to pending material developments or other events
that have not yet been publicly disclosed and as to which the Company reasonably
believes public disclosure would be detrimental to the Company, the Company
shall notify all Selling Stockholders to such effect, and, upon receipt of such
notice, each such Selling Stockholder shall immediately discontinue any sales of
Registrable Securities pursuant to such registration statement until such
Selling Stockholder has received copies of a supplemented or amended prospectus
or until such Selling Stockholder is advised in writing by the Company that the
then current prospectus may be used and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such prospectus. Notwithstanding anything to the contrary herein, the Company
shall not exercise its rights under this Section 10.3(c) to suspend sales of
Registrable Securities pursuant to any prospectus more than two times (and in
each case, for a period not in excess of 60 days) in any 365-day period.
17
10.4 ALLOCATION OF EXPENSES. The Company will pay all
Registration Expenses for all registrations under this Section 10. For purposes
of this Section 10.4, the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Section 10, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and expenses of counsel for the Company, the reasonable fees and
expenses of one counsel for the Selling Stockholders, state Blue Sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration, but excluding underwriting discounts and selling commissions.
10.5 INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless each Selling Stockholder, each underwriter of such
Registrable Securities, and each other person, if any, who controls such Selling
Stockholder or underwriter within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Selling Stockholder, underwriter or controlling person
may become subject under the Securities Act, the Exchange Act, state securities
or Blue Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement under which such Registrable Securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the registration statement, or any amendment or
supplement to such registration statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse such Selling Stockholder, underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
such Selling Stockholder, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such registration statement,
preliminary prospectus or prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such Selling Stockholder, underwriter or controlling
person specifically for use in the preparation thereof.
(b) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, each Selling
Stockholder, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such Registrable Securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the registration
statement, or any
18
amendment or supplement to the registration statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
the statement or omission was made in reliance upon and in conformity with
information relating to such Selling Stockholder furnished in writing to the
Company by or on behalf of such Selling Stockholder specifically for use in
connection with the preparation of such registration statement, prospectus,
amendment or supplement; provided, however, that the obligations of a Selling
Stockholder hereunder shall be limited to an amount equal to the net cash
proceeds to such Selling Stockholder of Registrable Securities sold in
connection with such registration.
(c) Each party entitled to indemnification under this Section
10.5 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 10.5 except to the
extent that the Indemnifying Party is adversely affected by such failure. The
Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such expense if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding; provided further that in no event shall the
Indemnifying Party be required to pay the expenses of more than one law firm per
jurisdiction as counsel for the Indemnified Party. The Indemnifying Party also
shall be responsible for the expenses of such defense if the Indemnifying Party
does not elect to assume such defense. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party (such consent not to be unreasonably withheld), consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or settle such claim or
litigation without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 10.5 is
due in accordance with its terms but for any reason is held to be unavailable to
an Indemnified Party in respect to any losses, claims, damages and liabilities
referred to herein, then the Indemnifying Party shall, in lieu of indemnifying
such Indemnified Party, contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities to
which such party may be subject in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Selling Stockholder on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Selling Stockholders
shall be determined by reference to, among other things, whether the untrue or
19
alleged untrue statement of material fact related to information supplied by the
Company or the Selling Stockholders and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Selling Stockholders agree that it would not be
just and equitable if contribution pursuant to this Section 10.5 were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph of Section 10.5, (i) in no case shall any one
Selling Stockholder be liable or responsible for any amount in excess of the net
cash proceeds received by such Selling Stockholder from the offering of
Registrable Securities and (ii) the Company shall be liable and responsible for
any amount in excess of such proceeds; provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 10.5, notify such
party or parties from whom contribution may be sought, but the omission so to
notify such party or parties from whom contribution may be sought shall not
relieve such party from any other obligation it or they may have thereunder or
otherwise under this Section 10.5. No party shall be liable for contribution
with respect to any action, suit, proceeding or claim settled without its prior
written consent, which consent shall not be unreasonably withheld.
10.6 INFORMATION BY HOLDER. Each holder of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such holder and the distribution proposed by such holder
as the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
10.7 "STAND-OFF" AGREEMENT; CONFIDENTIALITY OF NOTICES. Each
Purchaser, if requested by the Company and the managing underwriter of an
underwritten public offering by the Company of Xxxxxxx.xxx Stock, shall not sell
or otherwise transfer or dispose of any Registrable Securities or other
securities of the Company held by such Purchaser (except pursuant to such
offering) (i) for a period of 180 days (in the case of the IPO) and 90 days (in
the case of any subsequent offering) following the effective date of the
registration statement or such shorter period as may be requested by the
managing underwriter; provided that, in the case of any offering other than the
IPO, this restriction shall not apply to any Purchaser that owns (together with
its Affiliates), at the time of the filing of the registration statement for
such offering, less than 1% of the then outstanding shares of Xxxxxxx.xxx Stock.
The Company may impose stop-transfer instructions with respect to the
Registrable Securities or other securities subject to the foregoing restriction
until the end of such restricted period. Any Purchaser receiving any written
notice from the Company regarding the Company's plans to file a registration
statement shall treat such notice confidentially and shall not disclose such
information to any person other than as necessary to exercise its rights under
this Section 10.
10.8 TERMINATION. All of the Company's obligations to register
the Registrable Securities held by any particular Purchaser under this Agreement
shall terminate upon the earlier of (a) three years after the IPO or (b) at such
time as such Registrable Securities may be sold by such Purchaser pursuant to
Rule 144(k) under the Securities Act and such Registrable Securities
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(together with any other shares of Xxxxxxx.xxx Stock held by Affiliates of such
Purchaser) represent less than 1% of the then outstanding shares of Xxxxxxx.xxx
Stock.
11. MISCELLANEOUS.
11.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement, and any rights and obligations of a Purchaser
hereunder, may be assigned by such Purchaser to any person or entity to which
Shares are transferred by such Purchaser in accordance with the terms of this
Agreement, provided that such transferee agrees in writing with the Company to
be bound by the terms of this Agreement.
11.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
agreements, representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the closing of the transactions
contemplated hereby.
11.3 EXPENSES. Except as provided in Section 10, the Company
and each Purchaser shall each pay their respective costs and expenses in
connection with the preparation of this Agreement and the closing of the
transactions contemplated hereby.
11.4 BROKERS. Each of the Company and the Purchasers,
severally and not jointly, (i) represents and warrants to the other that it has
not retained a finder or broker in connection with the transactions contemplated
by this Agreement, other than Wit Capital Corporation, which has been retained
by the Company, and (ii) will indemnify and save the other party harmless from
and against any and all claims, liabilities or obligations with respect to
brokerage or finders' fees or commissions, or consulting fees in connection with
the transactions contemplated by this Agreement asserted by any person on the
basis of any statement or representation alleged to have been made by such
indemnifying party.
11.5 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
11.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts (without reference to the conflicts of law provisions thereof).
11.7 NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at 000 Xxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx
00000, Attention: Xxxx X. XxxXxxxxxx or at such other address or addresses as
may have been furnished in writing by the Company to the Purchaser; or
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If to a Purchaser, at such Purchaser's address set forth below such
Purchaser's name on SCHEDULE I hereto, or at such other address or addresses as
may have been furnished to the Company in writing by such Purchaser.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section 11.7.
11.8 COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
11.9 AMENDMENTS AND WAIVERS. Except as otherwise expressly set
forth in this Agreement, any term of this Agreement may be amended or terminated
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the holders of at least 65% of the Shares.
Notwithstanding the foregoing, this Agreement may be amended with the consent of
the holders of less than all of the Shares only in a manner which applies to all
such holders in the same fashion, and if any amendment or waiver adversely
affects any particular Purchaser in a manner different than the other
Purchasers, such Purchaser's written consent to such amendment or waiver shall
be required. Any amendment, termination or waiver effected in accordance with
this Section 11.9 shall be binding upon each holder of any Shares even if they
do not execute such consent, each future holder of all such securities and the
Company. No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.
11.10 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original, and all of which shall constitute one and the same document. This
Agreement may be executed by facsimile signatures.
11.11 SECTION HEADINGS. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit, or
restrict the contractual obligations of the parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Executed as of the date first written above.
COMPANY:
STAPLES, INC.
By:_______________________________
PURCHASERS:
GENERAL ATLANTIC PARTNERS 59, L.P.
By: General Atlantic Partners, LLC,
its general partner
By:_______________________________
Name:_____________________________
Title:____________________________
GAP COINVESTMENT PARTNERS II, L.P.
By:_______________________________
Name:_____________________________
Title:____________________________
HIGHLAND CAPITAL PARTNERS IV LIMITED
PARTNERSHIP
By:_______________________________
Name:_____________________________
Title:____________________________
HIGHLAND ENTREPENEURS' IV LIMITED
PARTNERSHIP
By:_______________________________
Name:_____________________________
Title:____________________________
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GREYLOCK IX LIMITED PARTNERSHIP
By:_______________________________
Name:_____________________________
Title:____________________________
ESSEX PRIVATE PLACEMENT FUND II
LIMITED PARTNERSHIP
By:_______________________________
Name:_____________________________
Title:____________________________
SUMMIT ACCELERATOR PARTNERS LLC
(SAP LLC)
By:_______________________________
Name:_____________________________
Title:____________________________
PH INVESTMENTS, LLC
By:_______________________________
Name:_____________________________
Title:____________________________
-----------------------------------
Xxxxxxxx X. Xxxxx
-----------------------------------
Xxxx Xxxxxxx
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