EXHIBIT 1.1
11,107,473 SHARES
STAPLES, INC.
COMMON STOCK, PAR VALUE $.0006 PER SHARE
UNDERWRITING AGREEMENT
July , 1999
July __, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇▇▇▇▇▇ Sachs International
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
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 11,107,473 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.
It is understood that, subject to the conditions hereinafter stated,
8,885,978 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 2,221,495 Firm Shares (the "INTERNATIONAL SHARES") will be sold to the
several International Underwriters named in Schedule III hereto (the
"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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and
▇▇▇▇▇▇▇, Sachs & Co. shall act as representatives (the "U.S. REPRESENTATIVES")
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of the several U.S. Underwriters, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
and ▇▇▇▇▇▇▇ Sachs International 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 1,666,121 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 no 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.
(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
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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 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.
(i) 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).
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(j) 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.
(k) 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.
(l) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(m) 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.
(n) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
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.
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(o) 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 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 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.
(c) Each 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 to sell, transfer and deliver the Shares to
be sold by such Selling Shareholder; and, on the Closing Date, 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.
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(d) The Power of Attorney 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 or Illinois, 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.
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
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Additional Shares, and the U.S. Underwriters shall have a one-time right to
purchase, severally and not jointly, up to 1,666,121 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and ▇▇▇▇▇▇▇, Sachs &
Co. 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 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, (D) bona fide gifts so long as the
donees agree to terms substantially similar to the foregoing or (E) the issuance
of shares of Common Stock under the
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Company's 401(k) plan and deferred compensation plan. In addition, each Selling
Shareholder, agrees that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated and ▇▇▇▇▇▇▇, Sachs & Co. 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 ______________, 1999, or at such other time on the same or such other
date, not later than ___________, 1999, 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 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 _________________,
1999, 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
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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. In lieu of certificates, the Registrar and Transfer
Agent for the Common Stock may make book-entry notations to effect the transfer
on its books and records of the Firm Shares or Additional Shares, as the case
may be, from the Selling Shareholders to the Underwriters.
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, 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
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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.
(c) The Underwriters shall have received on the Closing Date an opinion
of ▇▇▇▇ and ▇▇▇▇ 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) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) 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, 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,
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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;
(vi) 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;
(vii) 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;
(viii) the Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended; and
(ix) 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 for financial
statements and schedules and other financial and
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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 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Senior Vice President, General Counsel and Secretary of
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.
(e) The Underwriters shall have received on the Closing Date an opinion
of ▇▇▇▇, Gerber & ▇▇▇▇▇▇▇▇▇, on behalf of all Selling Shareholders dated
the Closing Date, to the effect that:
13
(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 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 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, 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 is the sole registered
owner of the Shares to be sold by such Selling Shareholder and has the
legal right and power, and all authorization and approval required by
law, to enter into this Agreement and the Power of Attorney and to
sell, transfer and deliver the Shares to be sold by such Selling
Shareholder;
(iv) the Power of Attorney 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
(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 the
State of Illinois (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
14
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 ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 6(c)(iv),
6(c)(ix) (but only as to the statements in the Prospectus under
"Underwriters") and 6(c)(ix)(B) above.
With respect to Section 6(c)(ix) above, ▇▇▇▇ and ▇▇▇▇ LLP and ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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, ▇▇▇▇, Gerber &
▇▇▇▇▇▇▇▇▇ 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 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
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) ▇▇▇▇,
Gerber & ▇▇▇▇▇▇▇▇▇ shall state in its opinion that it is justified in
relying on each such other opinion.
The opinion of ▇▇▇▇ and ▇▇▇▇ LLP described in Section 6 above and the
opinion of ▇▇▇▇, Gerber & ▇▇▇▇▇▇▇▇▇ described in Section 6 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.
15
(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 each of the 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 and, in the case of clause (a), the Selling Shareholders as follows:
(a) To furnish to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, without charge,
one 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 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
16
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.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earnings statement covering the twelve-
month period ending _____________, 2000 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
8. Expenses. Unless either (x) this Agreement is 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
17
conditions of this Agreement, or (y) for any reason the Company or any Selling
Shareholder shall fail to perform its obligations under this Agreement and as a
result the offering is not consummated, the Underwriters agree to pay or cause
to be paid all expenses incident to the performance of the Company's 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 there with, 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
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 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, travel and lodging expenses of
the representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and (ix)
all other 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 also understood that except as provided in
Section 9 entitled "Indemnity and Contribution" and the last paragraph of
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, (▇) 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 and the fees, disbursements and expenses of their counsel.
18
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.
(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
19
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 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.
20
(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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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 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. 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
21
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 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
22
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 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
23
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, (ii) 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 through 10, 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 II or Schedule III 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 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
24
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.
25
Very truly yours,
STAPLES, INC.
By:
-------------------------------
Name:
Title:
26
The Selling Shareholders named Schedule I
hereto, acting severally
By:
-------------------------------
By:
-------------------------------
27
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
Acting severally on behalf of themselves and the
several U.S. Underwriters named in Schedule
II hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By:
-------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
International Limited
▇▇▇▇▇▇▇ Sachs International
Acting severally on behalf of themselves
and the several International
Underwriters named in Schedule
III hereto
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
By:
-------------------------------
Name:
Title:
28
SCHEDULE I
SELLING SHAREHOLDERS
PART A
NUMBER OF FIRM SHARES
SELLING SHAREHOLDER TO BE SOLD
▇▇▇▇ ▇▇▇▇▇▇, as trustee of the ▇▇▇▇ ▇▇▇▇▇▇ Trust
dated January 18, 1984............................. 2,497,169
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as trustee of the ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ Trust dated January 21, 1983................ 2,365,574
The Northern Trust Company, as trustee of the
▇▇▇▇ ▇▇▇▇▇▇ Family Trust #4 dated July 31, 1991
F/B/O ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.......................... 865,045
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #4 dated July 31,
1991 F/B/O ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇....................... 660,556
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #4 dated July 31,
1991 F/B/O ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇...................... 627,528
The Northern Trust Company, as trustee of the
▇▇▇▇ ▇▇▇▇▇▇ Family Trust #2 dated May 31, 1983
F/B/O ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (Trust 2A)............... 397,562
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #2 dated May 31,
1983 F/B/O ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ (Trust 2A1).......... 389,688
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #2 dated May 31,
1983 F/B/O ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (Trust 2A1)........... 389,687
The Northern Trust Company, as trustee of the
▇▇▇▇ ▇▇▇▇▇▇ Family Trust #1 dated May 31, 1983
F/B/O ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.......................... 346,102
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #2 dated May 31,
1983 F/B/O ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ (Trust 2A)........... 319,111
NUMBER OF FIRM SHARES
SELLING SHAREHOLDER TO BE SOLD
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #4 dated July 31,
1991 F/B/O ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇................... 308,980
The Northern Trust Company, as trustee of the
▇▇▇▇ ▇▇▇▇▇▇ Family Trust #2 dated May 31, 1983
F/B/O ▇▇▇▇▇▇ ▇. Ring (Trust 2A).................... 289,134
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #1 dated May 31,
1983 F/B/O ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇...................... 286,520
The Northern Trust Company, as trustee of the
▇▇▇▇ ▇▇▇▇▇▇ Family Trust #2 dated May 31, 1983
F/B/O ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (Trust 2A1).............. 207,896
The Northern Trust Company, as trustee of the
▇▇▇▇ ▇▇▇▇▇▇ Family Trust #2 dated May 31, 1983
F/B/O ▇▇▇▇▇▇ ▇. Ring (Trust 2A1)................... 207,896
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #2 dated May 31,
1983 F/B/O ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (Trust 2A)............ 157,455
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #1 dated May 31,
1983 F/B/O ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇....................... 123,147
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #2 dated May 31,
1983 F/B/O ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Trust 2A)........ 110,188
New Visions Foundation............................. 100,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇................................ 96,778
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇.................................. 96,778
▇▇▇▇▇▇ ▇. Ring..................................... 96,778
The Northern Trust Company, as trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Trust #1 dated May 31,
1983 F/B/O ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇................... 95,446
2
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇................................. 72,455
Total........................................... 11,107,473
==========
3
PART B
SELLING SHAREHOLDER NUMBER OF
ADDITIONAL
SHARES
TO BE SOLD
▇▇▇▇ ▇▇▇▇▇▇, as trustee of the ▇▇▇▇ ▇▇▇▇▇▇ Trust
dated January 18, 1984............................. 855,605
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as trustee of the ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ Trust dated January 21, 1983................ 810,516
Total......................................... 1,666,121
=========
4
SCHEDULE II
U.S. UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
---------------------------------------- -----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.......
▇▇▇▇▇▇▇, Sachs & Co. ...................
-----------------------
Total U.S. Firm Shares: ...........
=======================
SCHEDULE III
INTERNATIONAL UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
---------------------------------------- -----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited.....
▇▇▇▇▇▇▇ Sachs International...................
-----------------------
Total U.S. Firm Shares: ...........
=======================
33
EXHIBIT A
[FORM OF LOCK-UP LETTER]
___________ __, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇▇▇▇▇▇ Sachs International
c/o Morgan ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
England
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇
▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and MSIL (the "UNDERWRITERS"), of 11,107,473 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. 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 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) transactions relating to shares of Common Stock or other securities
acquired in open market transactions after the completion of the Public
Offering, (b) bona fide gifts so long as the donees agree to terms substantially
similar to the foregoing [or] (c) the sale, after August 19, 1999, of up to
500,000 shares of Common Stock in the aggregate by the officers of the Company
as a group, provided that the undersigned shall not make any sales under this
clause (c) without the Company's prior consent.]/1/ In addition, the
undersigned agrees that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. 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)
/1/ To be included only in Lock-Up Letters of all officers other than the
Chief Executive Officer, the Chief Financial Officer and the Chief Operating
Officer of the Company.
2