13,898,000 SHARES
STAPLES, INC.
COMMON STOCK, PAR VALUE $.0006 PER SHARE
UNDERWRITING AGREEMENT
July __, 1998
July __, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxx Xxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Sachs International
Xxxxx Xxxxxx Inc.
x/x Xxxxxx Xxxxxxx & Xx. Xxxxxxxxxxxxx Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
Certain shareholders of Staples, Inc., a Delaware corporation (the
"COMPANY"), named in Part A of Schedule I hereto severally propose to sell to
the several Underwriters named in Schedule II and Schedule III hereto (the
"UNDERWRITERS") an aggregate of 13,898,000 shares of the Common Stock, par value
$.0006 per share, of the Company (the "FIRM SHARES"), each such shareholder
selling the amount set forth opposite such shareholder's name in Part A of
Schedule I hereto. Certain of the Firm Shares will be issued upon the exercise
of options (the "OPTIONS") outstanding under the Company's stock-based incentive
compensation plans, which exercise will occur immediately prior to the purchase
of the Firm Shares by the Underwriters.
It is understood that, subject to the conditions hereinafter stated,
11,118,400 Firm Shares (the "U.S. FIRM SHARES") will be sold to the several U.S.
Underwriters named in Schedule II hereto (the "U.S. UNDERWRITERS") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and 2,779,600 Firm Shares (the "INTERNATIONAL SHARES") will be sold to the
several International Underwriters named in Schedule III hereto (the
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"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxxx,
Sachs & Co. and Xxxxx Xxxxxx Inc. shall act as representatives (the "U.S.
REPRESENTATIVES") of the several U.S. Underwriters, and Xxxxxx Xxxxxxx & Co.
International Limited, Xxxxxxx Sachs International and Xxxxx Xxxxxx Inc. shall
act as representatives (the "INTERNATIONAL REPRESENTATIVES") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the Underwriters.
Certain shareholders of the Company named in Part B of Schedule I hereto
severally propose to sell to the several U.S. Underwriters not more than an
additional 2,084,700 shares of the Company's Common Stock, par value $.0006 per
share (the "ADDITIONAL SHARES"), if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shareholders named in
Part A and Part B of Schedule I hereto are collectively referred to as the
"SELLING SHAREHOLDERS." The shares of Common Stock, par value $.0006 per share,
of the Company to be outstanding after giving effect to the sales contemplated
hereby are hereinafter referred to as the "COMMON STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement contains two prospectuses to be used in
connection with the offering and sale of the Shares: the U.S. prospectus, to be
used in connection with the offering and sale of Shares in the United States and
Canada to United States and Canadian Persons, and the international prospectus,
to be used in connection with the offering and sale of Shares outside the United
States and Canada to persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus except for the
outside front cover page. The registration statement as amended at the time it
becomes effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "PROSPECTUS" (including,
in the case of all references to the Registration Statement and the Prospectus,
documents incorporated therein by reference). If the Company has filed an
abbreviated registration statement to register additional shares of Common Stock
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "REGISTRATION STATEMENT"
shall be deemed to include such Rule 462 Registration Statement.
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1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the Company's
knowledge, threatened by the Commission.
(b) (i) Each document filed or to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
incorporated by reference in the Prospectus complied or will comply when so
filed in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (ii) the Registration
Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (iii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
any Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
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(d) Each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X) of the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the issued shares of capital stock of each Significant
Subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and, except for directors' qualifying
shares, are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained
in the Prospectus.
(g) The outstanding shares of Common Stock have been duly
authorized and are validly issued, fully paid and non-assessable.
(h) The shares of Common Stock to be issued upon exercise of the
Options have been duly authorized and, when issued upon exercise of and
full payment of the applicable exercise price for the Options and delivered
in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares will not be
subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale
of the Shares.
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(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(m) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
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required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(p) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
2. Representations and Warranties of the Selling Shareholders. Each of
the Selling Shareholders severally and not jointly represents and warrants to
and agrees with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement and either (i) the Irrevocable Power of Attorney and Custody
Agreement signed by such Selling Shareholder appointing certain individuals
as such Selling Shareholder's attorneys-in-fact to the extent set forth
therein, relating to the transactions contemplated hereby and by the
Registration Statement, and Staples, Inc., as Custodian, relating to the
deposit of the Shares to be sold by such Selling Shareholder (the "POWER OF
ATTORNEY AND CUSTODY AGREEMENT") or (ii) the Irrevocable Power of Attorney
signed by such Selling Shareholder appointing certain individuals as such
Selling Shareholder's attorneys-in-fact to the extent set forth therein (
the "POWER OF ATTORNEY"), will not contravene any provision of applicable
law, or the certificate of incorporation or by-laws of such Selling
Shareholder (if such Selling Shareholder is a corporation), or the
instrument creating and governing such Selling Shareholder (if such Selling
Shareholder is a trust), or any agreement or other instrument binding upon
such Selling Shareholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Shareholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under this
Agreement or the Power of Attorney and Custody Agreement or Power of
Attorney, as applicable, except such as may be required by the Securities
Act or the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares.
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(c) Except for the shares of Common Stock to be issued upon the
exercise of Options, which exercise is expected to occur immediately prior
to the purchase of the Firm Shares by the Underwriters, such Selling
Shareholder has valid title to the Shares to be sold by such Selling
Shareholder and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement and the Power of
Attorney and Custody Agreement or Power of Attorney, as applicable, and to
sell, transfer and deliver the Shares to be sold by such Selling
Shareholder; and, on the Closing Date, after giving effect to the exercise
of the Options, such Selling Shareholder will have valid title to all of
the Shares to be sold by such Selling Shareholder and the legal right and
power, and all authorization and approval required by law, to sell,
transfer and deliver all of the Shares to be sold by such Selling
Shareholder.
(d) The Power of Attorney and Custody Agreement or Power of
Attorney, as applicable, has been duly authorized, executed and delivered
by such Selling Shareholder and is a valid and binding agreement of such
Selling Shareholder.
(e) Upon transfer (as defined below) of the Shares to The
Depository Trust Company, The Depository Trust Company will acquire the
Shares free of all adverse claims (within the meaning of Sections 8-
102(a)(1) and 8-303 of the Uniform Commercial Code as in effect in New
York, Illinois or Massachusetts, as applicable (the "UCC")). "Transfer" of
the Shares to The Depository Trust Company will occur upon the making by
the Company's transfer agent of appropriate entries transferring the Shares
on its books and records to The Depository Trust Company. Each of the
Underwriters shall acquire a "securities entitlement" (within the meaning
of Section 8-102(a)(17) of the UCC) in the Shares to be purchased by it,
free of all adverse claims created by, through or with respect to the
Selling Shareholder, upon the making by The Depository Trust Company of a
book entry that shares of the Company's stock in the amounts set forth
opposite each Underwriter's name on Schedule II or III hereto have been
credited to such Underwriter's security account (within the meaning of
Section 8-501(a) of the UCC) with The Depository Trust Company.
(f) All information with respect to such Selling Shareholder
furnished by or on behalf of such Selling Shareholder for use in the
Registration Statement and Prospectus is, and on the Closing Date will be,
true, correct and complete in all material respects, and does not, and on
the Closing Date will not, contain any untrue statement of a material fact
or omit to state any material fact necessary to make such information not
misleading.
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3. Agreements to Sell and Purchase. Each Selling Shareholder, severally
and not jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Selling Shareholder at U.S. $______ a
share (the "PURCHASE PRICE") the number of Firm Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the number of Firm Shares to be sold by such Selling
Shareholder as the number of Firm Shares set forth in Schedules II and III
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Shareholders
named in Part B of Schedule I severally agree to sell to the U.S. Underwriters
the Additional Shares, and the Underwriters shall have a one-time right to
purchase, severally and not jointly, up to 2,084,700 Additional Shares at the
Purchase Price. If the U.S. Representatives, on behalf of the U.S.
Underwriters, elect to exercise such option, the U.S. Representatives shall so
notify the Selling Shareholders named in Part B of Schedule I in writing not
later than 30 days after the date of this Agreement, which notice shall specify
the number of Additional Shares to be purchased by the U.S. Underwriters and the
date on which such shares are to be purchased. Such date may be the same as the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 5 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each U.S. Underwriter agrees, severally
and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the U.S. Representatives may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased as the number of U.S. Firm Shares set forth in Schedule
II hereto opposite the name of such U.S. Underwriter bears to the total number
of U.S. Firm Shares.
The Company and each Selling Shareholder hereby agree that, without the
prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 90 days after the date of
the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or (ii) enter into any swap
or other
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arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Shares to be sold hereunder, (B) the
issuance by the Company of shares of Common Stock upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof of
which the Underwriters have been advised in writing, issuances pursuant to the
Company's employee stock purchase plan or the issuance by the Company of options
or warrants to employees or directors of the Company pursuant to the Company's
stock-based incentive compensation plans existing on the date hereof which are
not exercisable within such 90 day period, (C) transactions by any person other
than the Company relating to shares of Common Stock or other securities acquired
in open market transactions after the completion of the offering of the Shares
or (D) bona fide gifts so long as the donees agree to terms substantially
similar to the foregoing. In addition, each Selling Shareholder, agrees that,
without the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf
of the Underwriters, it will not, during the period ending 90 days after the
date of the Prospectus, make any demand for, or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
4. Terms of Public Offering. The Selling Shareholders are advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The Selling
Shareholders are further advised by you that the Shares are to be offered to the
public initially at U.S. $___ a share (the "PUBLIC OFFERING PRICE") and to
certain dealers selected by you at a price that represents a concession not in
excess of U.S. $____ a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in excess
of U.S. $___ a share, to any Underwriter or to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Selling Shareholder named in Part A of Schedule I shall be made to such Selling
Shareholder named in Part A of Schedule I in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on July __, 1998, or at such other time on the same or such other date,
not later than _________, 1998, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Selling Shareholders
named in Part B of Schedule I in Federal or other funds immediately
9
available in New York City against delivery of such Additional Shares for the
respective accounts of the several U.S. Underwriters at 10:00 a.m., New York
City time, on the date specified in the notice described in Section 3 or at such
other time on the same or on such other date, in any event not later than
_______, 1998, as shall be designated in writing by the U.S. Representatives.
The time and date of such payment are hereinafter referred to as the "OPTION
CLOSING DATE."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Selling Shareholders to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than 2:00 p.m. (New York City time) on the date
hereof or such later time or date as shall have been consented to by the
Representatives.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that,
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in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 6(a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
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(c) The Underwriters shall have received on the Closing Date an
opinion of Xxxx and Xxxx LLP, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in the Commonwealth of Massachusetts;
(ii) the authorized capital stock of the Company conforms in
all material respects as to legal matters to the description thereof
contained in the Prospectus;
(iii) the outstanding shares of Common Stock have been duly
authorized and are validly issued, fully paid and non-assessable;
(iv) the shares of Common Stock to be issued upon exercise of
and full payment of the applicable exercise price for the Options have
been duly authorized and, when issued upon exercise of the Options and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any preemptive rights;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or
12
the certificate of incorporation or by-laws of the Company or, to such
counsel's knowledge, any agreement or other instrument binding upon
the Company or any of its Significant Subsidiaries that is filed as an
exhibit to or incorporated by reference in the Registration Statement,
or, any judgment, order or decree known to such counsel of any
governmental body, agency or court having jurisdiction over the
Company or any Significant Subsidiary and specifically naming the
Company or such Significant Subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its
obligations under this Agreement, except such as have been obtained or
as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares by the U.S.
Underwriters;
(vii) the statements (A) in the Prospectus under the
captions "Description of Capital Stock," "Certain United States
Federal Tax Consequences for Non-U.S. Holders" and "Underwriters" and
(B) in the Registration Statement in Item 15, in each case insofar as
such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein in
all material respects;
(viii) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
Significant Subsidiaries is a party or to which any of the properties
of the Company or any of its Significant Subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
(ix) the Company is not an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended; and
(x) such counsel (A) is of the opinion that each document, if
any, filed pursuant to the Exchange Act and incorporated by reference
in the Registration Statement and the Prospectus (except
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for financial statements and schedules and other financial and
statistical data included therein as to which such counsel need not
express any opinion) complied when so filed as to form in all material
respects with the Exchange Act and the rules and regulations of the
Commission thereunder and (B) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included therein as
to which such counsel need not express any opinion) comply as to form
in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
Such counsel shall also state that no facts have come to its attention
leading such counsel to believe that (except for financial statements
and schedules and other financial and statistical data as to which
such counsel need not express any belief) the Registration Statement
and the prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that (except for financial statements and schedules and
other financial and statistical data as to which such counsel need not
express any belief) the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx Xxxxxxx, Managing Corporate Counsel for the Company,
dated the Closing Date, to the effect that:
(i) each Significant Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus; and
(ii) all of the issued shares of capital stock of each
Significant Subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and, except
for directors' qualifying shares, are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims.
14
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxx, Gerber & Xxxxxxxxx, on behalf of all Selling Shareholders
other than those who are officers or directors of the Company or persons
related thereto, and of Xxxx and Xxxx LLP, on behalf of the Selling
Shareholders who are officers or directors of the Company or persons
related thereto, each dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;
(ii) the execution and delivery by each Selling Shareholder
of, and the performance by such Selling Shareholder of its obligations
under, this Agreement and either the Power of Attorney and Custody
Agreement or Power of Attorney, as applicable, will not contravene any
provision of applicable law, or the certificate of incorporation or
by-laws of such Selling Shareholder (if such Selling Shareholder is a
corporation), or the instrument creating and governing such Selling
Shareholder (if such Selling Shareholder is a trust), or, any
agreement or other instrument binding upon such Selling Shareholder
and known to such counsel or, any judgment, order or decree known to
such counsel of any governmental body, agency or court having
jurisdiction over such Selling Shareholder and specifically naming
such Selling Shareholder, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Power of Attorney and Custody
Agreement or Power of Attorney, as applicable, except such as have
been obtained or as may be required by the securities or Blue Sky laws
of the various states in connection with offer and sale of the Shares;
(iii) each of the Selling Shareholders has valid title to
the Shares to be sold by such Selling Shareholder and the legal right
and power, and all authorization and approval required by law, to
enter into this Agreement and the Power of Attorney and Custody
Agreement or Power of Attorney, as applicable, and to sell, transfer
and deliver the Shares to be sold by such Selling Shareholder;
(iv) the Power of Attorney and Custody Agreement or Power of
Attorney, as applicable, of each Selling Shareholder has been duly
authorized, executed and delivered by such Selling Shareholder and is
a valid and binding agreement of such Selling Shareholder; and
15
(v) upon transfer (as defined below) of the Shares to The
Depository Trust Company, The Depository Trust Company will acquire
the Shares free of all adverse claims (within the meaning of Sections
8-102(a)(1) and 8-303 of the Uniform Commercial Code as in effect in
New York, Illinois or Massachusetts, as applicable (the "UCC")).
"Transfer" of the Shares to The Depository Trust Company will occur
upon the making by the Company's transfer agent of appropriate entries
transferring the Shares on its books and records to The Depository
Trust Company. Each of the Underwriters shall acquire a "securities
entitlement" (within the meaning of Section 8-102(a)(17) of the UCC)
in the Shares to be purchased by it, free of all adverse claims
created by, through or with respect to the Selling Shareholder, upon
the making by The Depository Trust Company of a book entry that shares
of the Company's stock in the amounts set forth opposite each
Underwriter's name on Schedule II or III hereto have been credited to
such Underwriter's security account (within the meaning of Section 8-
501(a) of the UCC) with The Depository Trust Company.
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 6(c)(v),
6(c)(vii) (but only as to the statements in the Prospectus under
"Underwriters") and 6(c)(x) above.
With respect to Section 6(c)(x) above, Xxxx and Xxxx LLP and
Xxxxx Xxxx & Xxxxxxxx may state that their opinion and belief are
based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto
(other than the documents incorporated therein by reference) and
review and discussion of the contents thereof, but are without
independent check or verification, except as specified. With respect
to Section 6(e) above, Xxxx, Gerber & Xxxxxxxxx and Xxxx and Xxxx LLP
may rely upon an opinion or opinions of counsel for any Selling
Shareholders and, with respect to factual matters and to the extent
such counsel deems appropriate, upon the representations of each
Selling Shareholder contained herein and in the Power of Attorney and
Custody Agreement or Power of Attorney, as applicable, and in other
documents and instruments; provided that (A) each such counsel for the
Selling Shareholders is satisfactory to your counsel, (B) a copy of
each opinion so relied upon is delivered to you and is in form and
substance satisfactory to your counsel, (C) copies of each such Power
of Attorney and
16
Custody Agreement and Power of Attorney and of any such other
documents and instruments shall be delivered to you and shall be in
form and substance satisfactory to your counsel and (D) Xxxx, Gerber &
Xxxxxxxxx and Xxxx and Xxxx LLP shall state in their opinions that
they are justified in relying on each such other opinion.
The opinions of Xxxx and Xxxx LLP described in Sections 6(c) and
6(e) above and the opinion of Xxxx, Gerber & Xxxxxxxxx described in
Section 6(e) above (and any opinions of counsel for any Selling
Shareholder referred to in the immediately preceding paragraph) shall
be rendered to the Underwriters at the request of the Company or one
or more of the Selling Shareholders, as the case may be, and shall so
state therein.
(g) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Underwriters, from Ernst & Young LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date shall
use a "cut-off date" not earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, executive officers
and directors of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and
effect on the Closing Date.
The several obligations of the U.S. Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the U.S. Representatives on the
Option Closing Date of such documents as they may reasonably request with
respect to the good standing of the Company, the due authorization and issuance
of the Additional Shares upon the exercise of the underlying options and other
matters related to the issuance of the Additional Shares.
7. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
17
(a) To furnish to Xxxxxx Xxxxxxx & Co. Incorporated, without
charge, 1 signed copy of the Registration Statement (including exhibits
thereto and documents incorporated therein by reference) and for delivery
to each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto but including documents incorporated therein by
reference) and to furnish to you in New York City, without charge, prior to
10:00 a.m. New York City time on the business day next succeeding the date
of this Agreement and during the period mentioned in Section 7(c) below, as
many copies of the Prospectus, any documents incorporated therein by
reference and any supplements and amendments thereto or to the Registration
Statement as you may reasonably request. The terms "SUPPLEMENT" and
"AMENDMENT" or "AMEND" as used in this Agreement shall include all
documents subsequently filed by the Company with the Commission pursuant to
the Exchange Act that are deemed to be incorporated by reference in the
Prospectus.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
18
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the twelve-
month period ending ________, 1999/1/ that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
8. Expenses. Unless this Agreement is terminated by the Underwriters
pursuant to any of the provisions of Section 10 other than clause (a)(ii), the
Company agrees to pay or cause to be paid all expenses incident to the
performance of its and the Selling Shareholders' obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Company's
counsel and the Company's accountants in connection with the registration and
delivery of the Shares under the Securities Act and all other fees or expenses
in connection with the preparation and filing of the Registration Statement, any
preliminary prospectus, the Prospectus and amendments and supplements to any of
the foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the qualification of the
Shares for offer and sale under state securities laws as provided in Section
7(d) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky memorandum, (iv) all filing fees and the reasonable
fees and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) the cost of printing certificates
representing the Shares, (vi) the costs and charges of any transfer agent,
registrar or depositary, (vii) the costs and expenses of the Custodian, (viii)
the costs and expenses of the Company and any of the Selling Shareholders
relating to investor presentations on any "road show" undertaken in connection
with the marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any of the
Selling Shareholders and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and (ix) all other
-----------------------
/1/ Insert date one year after the end of the Company's fiscal quarter in which
the closing will occur.
19
costs and expenses incident to the performance of the obligations of the Company
and the Selling Shareholders hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as provided in this
Section, Section 9 entitled "Indemnity and Contribution", and the last paragraph
of Xxxxxxx 00 xxxxx, (x) the Underwriters will pay all of their costs and
expenses, including fees and disbursements of their counsel, stock transfer
taxes payable on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make and (b) the Selling
Shareholders will pay any brokerage fees, selling commissions or underwriting
discounts incurred by the Selling Shareholders, the fees, disbursements and
expenses of their counsel and the exercise price of the Options.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Company and any of the Selling Shareholders may otherwise
have for the allocation of such expenses among themselves.
9. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Selling Shareholder, each Underwriter and each person, if
any, who controls any Underwriter or any Selling Shareholder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter or any Selling Shareholder furnished to
the Company in writing by such Underwriter through you or by any such Selling
Shareholder expressly for use therein, provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 7(a) hereof.
20
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with respect to information relating to such
Selling Shareholder furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto, provided,
however, that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased
Shares, or any person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 7(a) hereof,
provided, further, that with respect to any amount due an indemnified person
under this paragraph (b), each Selling Shareholder shall be liable only to the
extent of the net proceeds received by such Selling Shareholder from the sale of
such Selling Shareholder's Shares.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Shareholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the
21
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to such Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Shareholders and all persons, if any, who control
any Selling Shareholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx & Co.
Incorporated. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
22
designated in writing by the Company. In the case of any such separate firm for
the Selling Shareholders and such control persons of any Selling Shareholders,
such firm shall be designated in writing by the persons named as attorneys-in-
fact for the Selling Shareholders under the Power of Attorney and Custody
Agreement or Power of Attorney, as applicable. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a), 9(b)
or 9(c) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and each Selling Shareholder on the one hand and the
Underwriters on the other hand in connection with the offering of the Shares
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Shares (before deducting expenses) received by each
Selling Shareholder and the total underwriting discounts and commissions
received by the Underwriters, in each
23
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Company
or any Selling Shareholder on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by such Selling Shareholder or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) The Company, the Selling Shareholders and the Underwriters agree
that it would not be just or equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 9(e).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this Section 9, no Selling Shareholder shall be required to contribute any
amount in excess of the amount by which the net proceeds received by such
Selling Shareholder from the sale of such Selling Shareholder's Shares exceeds
the amount of any damages that such Selling Shareholder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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. The remedies provided for in this Section 9 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section
9 and the representations, warranties and other statements of the Company and
the Selling Shareholders contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, any Selling Shareholder or any person controlling
24
any Selling Shareholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I or Schedule II bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 11 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you and the Selling Shareholders for the purchase of such Firm Shares are not
made within 36 hours after such default, this Agreement
25
shall terminate without liability on the part of any non-defaulting Underwriter,
the Company or the Selling Shareholders. In any such case either you or the
relevant Selling Shareholders shall have the right to postpone the Closing Date,
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or any Selling
Shareholder to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or any Selling Shareholder shall be
unable to perform its obligations under this Agreement, the Company will
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Underwriters in connection with this Agreement or the offering contemplated
hereunder.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
26
Very truly yours,
STAPLES, INC.
By:
-----------------------------------------
Name:
Title:
The Selling Shareholders named Schedule I hereto other
than those who are officers and directors of the
Company, acting severally
By:
-----------------------------------------
Xxxx Xxxxxx
Attorney-in-Fact
By:
-----------------------------------------
Xxxxxx X. Xxxxxx
Attorney-in-Fact
The Selling Shareholders named in Schedule I hereto who
are officers and directors of the Company, acting
severally
By:
-----------------------------------------
Attorney-in-Fact
27
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxx Xxxxxx Inc.
Acting severally on behalf of themselves and the several U.S. Underwriters named
in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:
------------------------------------------------------------------
Name:
Title:
Xxxxxx Xxxxxxx & Co.
International Limited
Xxxxxxx Sachs International
Xxxxx Xxxxxx Inc.
Acting severally on behalf of themselves
and the several International Underwriters named in Schedule
III hereto
By: Xxxxxx Xxxxxxx & Co. International Limited
By:
------------------------------------------------------------------
Name:
Title:
28
SCHEDULE I
SELLING SHAREHOLDERS
PART A
SELLING SHAREHOLDER Number of Firm Shares To Be
Sold
--------------------------------------------------------------------------------
Xxxx Xxxxxx, as trustee of the Xxxx Xxxxxx Trust
dated January 18, 1984........................... 3,234,514
Xxxxxx X. Xxxxxx, as trustee of the Xxxxxx X.
Xxxxxx Trust dated January 21, 1983.............. 3,064,061
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx Family Trust #2 dated May 31, 1983
F/B/O Xxxxxx X. Xxxxxxxxx (Trust 2A1)............ 898,476
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx Family Trust #2 dated May 31, 1983
F/B/O Xxxxxx X. Ring (Trust 2A1)................. 898,476
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #2 dated May 31,
1983 F/B/O Xxxx Xxxxx Xxxxxx (Trust 2A1)......... 792,772
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #2 dated May 31,
1983 F/B/O Xxxxxx Xxxx Xxxxxx (Trust 2A1)........ 792,771
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx 1991 Term Trust #3 dated July 31,
1991............................................. 951,708
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx 1991 Term Trust #3 dated July
31, 1991......................................... 951,708
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx Family Trust #4 dated July 31, 1991
F/B/O Xxxxxx X. Xxxxxxxxx........................ 266,464
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx Family Trust #4 dated July 31, 1991
F/B/O Xxxxxx X. Ring............................. 266,465
29
SELLING SHAREHOLDER Number of Firm Shares To Be
Sold
--------------------------------------------------------------------------------
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #4 dated July 31,
1991 F/B/O Xxxx Xxxxx Xxxxxx..................... 267,260
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #4 dated July 31,
1991 F/B/O Xxxxxx Xxxx Xxxxxx.................... 267,261
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #2 dated May 31,
1983 F/B/O Xxxxxx Xxxxxxx Xxxxxx (Trust 2A)...... 109,800
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #1 dated May 31,
1983 F/B/O Xxxxxx Xxxxxxx Xxxxxx................. 100,017
BenIda Pennsylvania Corporation................... 1,753
BenIda Georgia Corporation........................ 1,723
BenIda Texas Corporation.......................... 000
XxxXxx Xxxxxxxxxxxxx Corporation.................. 16
Xxx Xxxxxxxx Irrevocable Trust dated May 2, 1991.. 5,000
Xxxxxx X. Xxxxxxxx................................ 183,156
Xxxxxx Trust...................................... 150,000
Xxxxxx X. Xxxxxxxx................................ 86,296
Xxxxxxx X. Xxxxxxxx............................... 20,000
W. Xxxx Xxxxxx.................................... 111,269
Xxxx X. Xxxxx..................................... 88,475
W. Xxxxxxxx Xxxxxx................................ 15,000
Xxxxx X. Xxxxxxxxx................................ 52,500
Xxxx X. Xxxxxxx................................... 27,825
Xxxxxx X. Xxxxxxx................................. 172,252
Xxxxxx X. Xxxxxxxxxxx............................. 73,225
Xxxxxxx X. Xxxxxx................................. 3,975
Xxxxxx X. Xxxxxxx................................. 10,000
30
SELLING SHAREHOLDER Number of Firm Shares To Be
Sold
--------------------------------------------------------------------------------
Xxxxx X. Xxxx..................................... 20,325
Xxxxxxx X. Xxxxxxx................................ 2,385
Xxxxxx X. Xxxxx................................... 397
Xxxxxx X. Xxxxxxxx................................ 10,256
------
Total........................................ 13,898,000
==========
31
PART B
SELLING SHAREHOLDER Number of Additional Shares
To Be Sold
--------------------------------------------------------------------------------
Xxxx Xxxxxx, as trustee of the Xxxx Xxxxxx Trust
dated January 18, 1984........................... 473,973
Xxxxxx X. Xxxxxx, as trustee of the Xxxxxx X.
Xxxxxx Trust dated January 21, 1983.............. 448,993
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx Family Trust #2 dated May 31, 1983
F/B/O Xxxxxx X. Xxxxxxxxx (Trust 2A1)............ 131,659
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx Family Trust #2 dated May 31, 1983
F/B/O Xxxxxx X. Ring (Trust 2A1)................. 131,659
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #2 dated May 31,
1983 F/B/O Xxxx Xxxxx Xxxxxx (Trust 2A1)......... 116,169
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #2 dated May 31,
1983 F/B/O Xxxxxx Xxxx Xxxxxx (Trust 2A1)........ 116,169
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx Family Trust #4 dated July 31, 1991
F/B/O Xxxxxx X. Xxxxxxxxx........................ 108,775
The Northern Trust Company, as trustee of the
Xxxx Xxxxxx Family Trust #4 dated July 31, 1991
F/B/O Xxxxxx X. Ring............................. 108,774
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #4 dated July 31,
1991 F/B/O Xxxx Xxxxx Xxxxxx..................... 85,649
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #4 dated July 31,
1991 F/B/O Xxxxxx Xxxx Xxxxxx.................... 85,648
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #2 dated May 31,
1983 F/B/O Xxxxxx Xxxxxxx Xxxxxx (Trust 2A)...... 17,917
32
SELLING SHAREHOLDER Number of Additional Shares
To Be Sold
--------------------------------------------------------------------------------
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #4dated May 31,
1983 F/B/O Xxxxxx Xxxxxxx Xxxxxx................. 44,659
The Northern Trust Company, as trustee of the
Xxxxxx X. Xxxxxx Family Trust #1 dated May 31,
1983 F/B/O Xxxxxx Xxxxxxx Xxxxxx................. 14,656
Xxxxxx X. Xxxxxxxx................................ 200,000
-------
Total........................................ 2,084,700
=========
33
SCHEDULE II
U.S. UNDERWRITERS
UNDERWRITER Number of Firm Shares To Be
Purchased
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxx & Co. Incorporated.................
Xxxxxxx, Sachs & Co. .............................
Xxxxx Xxxxxx Inc. ................................
[NAMES OF OTHER U.S. UNDERWRITERS]................
Total U.S. Firm Shares:......................
34
SCHEDULE III
INTERNATIONAL UNDERWRITERS
UNDERWRITER Number of Firm Shares To Be
Purchased
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxx & Co. International Limited........
Xxxxxxx Sachs International.......................
Xxxxx Xxxxxx Inc. ................................
[NAMES OF OTHER INTERNATIONAL UNDERWRITERS].......
Total International Firm Shares...................
35
EXHIBIT A
[FORM OF LOCK-UP LETTER]
July __, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxx Xxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxx Sachs International
Xxxxx Xxxxxx Inc.
x/x Xxxxxx Xxxxxxx & Xx. Xxxxxxxxxxxxx Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated ("XXXXXX
XXXXXXX") and Xxxxxx Xxxxxxx & Co. International Limited ("MSIL") propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with
Staples, Inc., a Delaware corporation (the "COMPANY") and certain shareholders
of the Company (the "SELLING SHAREHOLDERS"), providing for the public offering
(the "PUBLIC OFFERING") by the several Underwriters, including Xxxxxx Xxxxxxx
and MSIL (the "UNDERWRITERS"), of 13,898,000 shares (the "SHARES") of the Common
Stock, par value $.0006 per share, of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public
36
Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or (2) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) the sale of any Shares to the
Underwriters pursuant to the Underwriting Agreement, (b) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering or (c) bona fide gifts
so long as the donees agree to terms substantially similar to the foregoing. In
addition, the undersigned agrees that, without the prior written consent of
Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation among the Company, the Selling Shareholders and the Underwriters.
Very truly yours,
----------------------------------
(Name)
----------------------------------
(Address)
37
