<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1995
REGISTRATION STATEMENT NO. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
STAPLES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 04-2896127
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
100 PENNSYLVANIA AVENUE
P.O. BOX 9328
FRAMINGHAM, MASSACHUSETTS 01701-9328
(508) 370-8500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
PETER M. SCHWARZENBACH, ESQ.
Secretary
STAPLES, INC.
100 PENNSYLVANIA AVENUE
P.O. BOX 9328
FRAMINGHAM, MASSACHUSETTS 01701-9328
(508) 370-8500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
<TABLE>
<S> <C>
Patrick J. Rondeau, Esq. Gordon H. Hayes, Jr., Esq.
Hale and Dorr Testa, Hurwitz & Thibeault
60 State Street 53 State Street
Boston, Massachusetts 02109 Boston, Massachusetts 02109
(617) 526-6000 (617) 248-7000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration Statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
==============================================================================================================
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.0006 par value...... 5,750,000 shares $29.75 $171,062,500 $58,988
==============================================================================================================
<FN>
(1) Estimated solely for purposes of calculating the registration fee pursuant to
Rule 457(c) and based upon prices on the Nasdaq National Market on June 14, 1995.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
================================================================================
<PAGE> 2
5,750,000 SHARES
STAPLES
COMMON STOCK
------------------------
This Prospectus covers the issuance and sale of 5,750,000 shares of Common
Stock of Staples, Inc. (the "Company") issuable to holders of the Company's
outstanding 5% Convertible Subordinated Debentures due 1999 (the "Debentures")
upon conversion of the Debentures or issuable to Alex. Brown & Sons Incorporated
(the "Purchaser") under the standby arrangements described herein, and the
resale to the public by the Purchaser of any such shares of Common Stock. As of
June 19, 1995, Debentures in an aggregate principal amount of $115,000,000 were
outstanding.
The Company has called for redemption on July 10, 1995 (the "Redemption
Date") all of the outstanding Debentures, at a redemption price of $1,035.71
plus accrued interest of $9.72 from May 1, 1995 to the Redemption Date, for a
total of $1,045.43, for each $1,000 principal amount of Debentures (the
"Redemption Price"). Prior to 5:00 p.m., Boston, Massachusetts time (the "Close
of Business"), on June 30, 1995 (the "Expiration Date"), holders of Debentures
may convert their Debentures into shares of Common Stock at a conversion price
of $20.00 aggregate principal amount of Debentures per share of Common Stock.
Any Debentures not surrendered for conversion by the Close of Business on the
Expiration Date will be redeemed on the Redemption Date. Holders of Debentures
who elect to convert their Debentures into Common Stock will not be entitled to
receive accrued interest on their Debentures from May 1, 1995 (the most recent
interest payment date). The Company's Common Stock is traded on the Nasdaq
National Market under the symbol SPLS. On June 16, 1995, the last reported sale
price of the Common Stock on the Nasdaq National Market, as reported by Nasdaq,
was $29.94 per share. See "Price Range of Common Stock and Dividend Policy."
Holders of Debentures are urged to obtain current information as to the market
prices of the Common Stock.
The Company has entered into a standby purchase agreement with the Purchaser
pursuant to which the Purchaser has agreed, subject to certain conditions, to
purchase from the Company such number of shares of Common Stock as would have
been issuable upon the conversion of any Debentures which have not been duly
surrendered for conversion by the Close of Business on the Expiration Date. The
purchase price for such shares of Common Stock will be an amount equal to the
aggregate Redemption Price of such Debentures. The Purchaser has agreed to remit
to the Company 50% of the excess of the aggregate proceeds received upon the
resale by the Purchaser of such shares of Common Stock (net of selling
concessions, certain costs of funds and certain other costs) over the aggregate
purchase price paid by the Purchaser for such shares. Pursuant to the terms of
the standby agreement, the Company has agreed to pay to the Purchaser (i)
$240,000, (ii) the Purchaser's out-of-pocket expenses incurred in connection
herewith (not to exceed $25,000), (iii) $.50 per share for each share of Common
Stock in excess of 287,500 shares but less than or equal to 2,875,000 shares
purchased by the Purchaser pursuant to the Standby Agreement and (iv) $.65 per
share for each share of Common Stock in excess of 2,875,000 shares purchased by
the Purchaser pursuant to the standby agreement. The Purchaser may acquire
Debentures in the open market or otherwise prior to the Close of Business on the
Expiration Date. The Purchaser has agreed to convert into Common Stock all
Debentures owned by it or so acquired. See "Standby and Other Arrangements."
Prior to or after the Redemption Date, the Purchaser intends to offer shares
of Common Stock, including shares of Common Stock acquired pursuant to the
standby arrangements or upon the conversion of Debentures, directly to the
public at prices set from time to time by the Purchaser. The Purchaser intends
that such prices will not be increased more than once in any calendar day and
will not exceed the highest price at which a dealer not participating in such
distribution is then offering shares of Common Stock to other dealers, plus the
amount of any concession to dealers. In effecting such transactions, the
Purchaser may realize profits or losses independent of the compensation
described under "Standby and Other Arrangements." The Purchaser may also make
sales to dealers at prices which represent concessions, in amounts to be
determined from time to time by the Purchaser, from the prices at which such
shares of Common Stock are then being offered to the public. Any shares of
Common Stock so offered are subject to prior sale, when, as and if delivered to
and accepted by the Purchaser, and subject to the Purchaser's right to reject
orders in whole or in part.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
ALEX. BROWN & SONS
INCORPORATED
The date of this Prospectus is June 20, 1995.
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE PURCHASER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK,
THE DEBENTURES OR BOTH AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission pursuant to the informational
requirements of the Exchange Act may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located at 7
World Trade Center, Suite 1300, New York, New York 10048, and at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such materials also may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Common Stock of the Company is traded on the Nasdaq National Market.
Reports and other information concerning the Company may be inspected at the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of Common Stock offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, as certain items are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Company and the shares of Common Stock offered hereby, reference is made
to such Registration Statement and the exhibits and schedules thereto, which may
be inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of which may be obtained from the
Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K, as amended by Amendment
No. 1 on Form 10-K/A, for the fiscal year ended January 28, 1995;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
April 29, 1995; and
(3) The Company's Registration Statement on Form 8-A dated April 7,
1989 registering the Common Stock under Section 12(g) of the Exchange Act.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the Common Stock registered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified
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<PAGE> 4
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to the Secretary of the Company, 100 Pennsylvania Avenue, P.O. Box
9328, Framingham, Massachusetts 01701-9328; telephone (508) 370-8500.
Except as otherwise noted, all information in this Prospectus reflects the
three-for-two splits of the Company's Common Stock effected in the form of 50%
stock dividends in December 1993 and October 1994.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
3
<PAGE> 5
THE COMPANY
Staples pioneered the office supplies superstore concept in 1986 and is a
leading office supplies retailer with over 370 stores in North America. These
retail superstores serve small businesses and home office customers by offering
one-stop shopping for their office products needs and by carrying a wide
selection of products at prices substantially below those customarily available
from traditional sources. Through recent acquisitions of contract stationers and
increased focus on Staples Direct, the Company's mail order delivery business,
Staples has expanded its customer base to include medium- and large-size
businesses. As a result, the Company is now positioned to serve the needs of
customers in all end-user segments of the office products market.
Staples has experienced substantial growth since its inception in 1986. The
Company's growth strategy is focused on three principal business areas:
North American Superstores. The Company will seek to grow its core
business through new store expansion and through comparable store sales growth.
Staples operates three retail formats in North America: Staples -- The Office
Superstore, Staples Express Superstore and The Business Depot Superstore. During
fiscal 1995, the Company plans to open approximately 87 stores, and Staples
expects to end fiscal 1995 with approximately 437 stores, including 64 stores in
Canada and 16 Staples Express Superstores.
Contract and Commercial. In 1994, the Company established Staples Contract
and Commercial, the Company's delivery business unit, which utilizes three
different sales approaches to deliver office products to small, medium and large
companies. Staples Direct, the Company's mail order business, primarily targets
companies with less than 20 office workers. Staples Business Advantage, which is
comprised of several regional contract stationers, targets medium to large
companies, typically with 20 to 100 office workers. Staples National Advantage,
the Company's national contract stationer, targets large companies (greater than
100 office workers) with multiple locations around the United States. The
Company is expanding its contract and commercial business both through internal
growth and additional acquisitions of regional contract stationers.
International. The Company believes that foreign markets may provide
additional growth opportunities for the latter part of the 1990s. Staples has
approached foreign markets through joint ventures in order to take advantage of
local operating expertise and reduce the risk associated with entering these new
markets. Staples has joint ventures in the United Kingdom and Germany. By the
end of fiscal 1995, the Company expects that its United Kingdom joint venture
will be operating 30 stores and that its German joint venture will be operating
15 stores.
The Company's executive offices are located at 100 Pennsylvania Avenue,
P.O. Box 9328, Framingham, Massachusetts 01701-9328 (telephone: (508) 370-8500).
The Company was organized in November 1985. As used in this Prospectus, the
terms the "Company" and "Staples" refer to Staples, Inc., a Delaware
corporation, and its subsidiaries.
USE OF PROCEEDS
The net proceeds, if any, received by the Company from the sale of Common
Stock to the Purchaser pursuant to the standby arrangements described herein
will be used to pay the Redemption Price for the Debentures not surrendered for
conversion. Any other amounts received by the Company from the Purchaser
pursuant to the profit-sharing arrangement described herein will be used for
general corporate purposes. The amount of the proceeds to be received by the
Company from the Purchaser is not determinable at this time, because neither the
number of shares, if any, that will be sold to the Purchaser nor the amount of
profit that the Purchaser will realize upon resale of such shares can be
determined at this time. The Company will not receive any cash proceeds from the
issuance of Common Stock upon conversion of Debentures.
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<PAGE> 6
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol SPLS. The following table sets forth for the periods indicated the
high and low sale prices per share of the Common Stock on the Nasdaq National
Market, as reported by Nasdaq.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ended January 29, 1994
First Quarter.................................................. $17.00 $11.33
Second Quarter................................................. 15.44 10.39
Third Quarter.................................................. 17.44 11.67
Fourth Quarter................................................. 18.50 13.67
Fiscal Year Ended January 28, 1995
First Quarter.................................................. 21.17 16.17
Second Quarter................................................. 20.33 16.08
Third Quarter.................................................. 24.00 15.83
Fourth Quarter................................................. 25.25 19.75
Fiscal Year Ending January 27, 1996
First Quarter.................................................. 29.00 22.88
Second Quarter (through June 16, 1995)......................... 30.50 22.88
</TABLE>
The closing sale price of the Common Stock on the Nasdaq National Market on
June 16, 1995, as reported by Nasdaq, was $29.94 per share.
The Company has never paid cash dividends on its Common Stock. The Company
presently intends to retain earnings for use in the operation and expansion of
its business and therefore does not anticipate paying any cash dividends in the
foreseeable future. In addition, the Company's revolving credit agreement
restricts the payment of dividends. See "Description of Capital Stock -- Common
Stock."
REDEMPTION OF THE DEBENTURES
The Company has called for redemption, on the Redemption Date (July 10,
1995), all of the outstanding Debentures. In accordance with the terms of the
Indenture dated as of November 2, 1992 between the Company and The First
National Bank of Boston, as Trustee (the "Trustee"), holders of Debentures will
be entitled to receive a Redemption Price of $1,045.43 for each $1,000 principal
amount of Debentures (representing $1,035.71 in principal and redemption premium
plus $9.72 in accrued interest from May 1, 1995). Payment of the Redemption
Price will be made by the Trustee on and after the Redemption Date upon receipt
of the Debentures. From and after the Redemption Date, interest will cease to
accrue on the Debentures (unless the Company shall default in the payment of the
Redemption Price) and holders of Debentures will not have any rights under the
Debentures other than the right to receive the Redemption Price upon surrender
of the Debentures for redemption. All Debentures outstanding on the Redemption
Date will be deemed to be redeemed by the Company, whether or not they have been
surrendered for redemption. Holders of Debentures are referred to the Notice of
Redemption issued by the Company for information concerning how and where the
Debentures are to be surrendered for payment of the Redemption Price.
The following alternatives to redemption are available to holders of
Debentures:
1. Conversion. Prior to the Close of Business on the Expiration Date (June
30, 1995), holders of Debentures may convert their Debentures into shares of
Common Stock at a conversion price of $20.00 aggregate principal amount of
Debentures per share of Common Stock. Holders of Debentures who elect to convert
their Debentures into Common Stock will not be entitled to receive accrued
interest on their Debentures from May 1, 1995 (the most recent interest payment
date).
5
<PAGE> 7
Debentures not surrendered for conversion prior to 5:00 p.m., Boston,
Massachusetts time, on June 30, 1995 will be redeemed as described above.
Holders of Debentures are referred to the Notice of Redemption issued by the
Company for information concerning how and where the Debentures are to be
surrendered for conversion.
On June 16, 1995, the last reported sale price of the Common Stock on the
Nasdaq National Market, as reported by Nasdaq, was $29.94 per share. Based on
this price, the market value of the Common Stock issuable upon conversion of
each $1,000 principal amount of Debentures is $1,496.88. The Redemption Price
for each $1,000 principal amount of Debenture is $1,045.43. SO LONG AS THE
MARKET PRICE OF THE COMMON STOCK IS $20.91 PER SHARE OR GREATER, HOLDERS WHO
CONVERT THEIR DEBENTURES WILL RECEIVE COMMON STOCK WITH A MARKET VALUE AT SUCH
TIME GREATER THAN THE REDEMPTION PRICE.
2. Sale. Holders of Debentures may sell their Debentures in the open
market at prevailing prices. Holders of Debentures who wish to sell their
Debentures should consult with their own financial advisors regarding the
opportunities for and consequences of such a sale.
Holders of Debentures are urged to consult with their own tax advisors
concerning the tax consequences of a redemption, conversion or sale of
Debentures.
6
<PAGE> 8
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 200,000,000 shares of
Common Stock, $.0006 par value per share, and 5,000,000 shares of Preferred
Stock, $.01 par value per share.
COMMON STOCK
As of May 31, 1995, there were 63,481,425 outstanding shares of Common
Stock held by approximately 5,500 holders of record. The holders of Common Stock
are entitled to one vote for each share on all matters submitted to a vote of
stockholders and do not have cumulative voting rights. Accordingly, holders of a
majority of the Common Stock entitled to vote in any election of Directors may
elect all of the Directors standing for election. The holders of Common Stock
are entitled to share ratably in all assets of the Company which are legally
available for distribution, after payment of all debts and other liabilities and
subject to the prior rights of any holders of Preferred Stock then outstanding.
The holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares are, and the shares issuable upon
conversion of the Debentures or to the Purchaser pursuant to the standby
arrangements will be, when issued, fully paid and nonassessable. The rights,
preferences and privileges of holders of Common Stock are subject to the rights
of the holders of shares of any series of Preferred Stock which the Company may
issue in the future. In addition, the rights of holders of Common Stock to
receive dividends are limited by the Company's revolving credit agreement, which
provides that the Company may not pay any dividends in any fiscal year in excess
of 25% of the consolidated net income of the Company for such fiscal year.
PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series and
the Board of Directors, without further approval of the stockholders, is
authorized to fix the dividend rights and terms, conversion rights, voting
rights, redemption rights and terms, liquidation preferences, sinking funds and
any other rights, preferences, privileges and restrictions applicable to each
such series of Preferred Stock. The purpose of authorizing the Board of
Directors to determine such rights and preferences is to eliminate delays
associated with a stockholder vote on specific issuances. The issuance of
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of holders of Common Stock and, under certain
circumstances, make it more difficult for a third party to gain control of the
Company.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware (the "Delaware Law"), an anti-takeover law. In
general, the statute prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date on which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
A "business combination" includes, among others, mergers, asset sales and other
transactions resulting in a financial benefit to the stockholder. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years, did own) 15% or more of the corporation's voting stock.
The Company's Certificate of Incorporation requires that holders of
two-thirds of the Company's issued and outstanding stock entitled to vote
thereon approve any merger, consolidation, dissolution or sale of all or
substantially all of the assets of the Company.
The Company has included in its Certificate of Incorporation and By-laws
provisions to (i) eliminate the personal liability of its Directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by Section 102(b)(7) of the Delaware Law and
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<PAGE> 9
(ii) indemnify its Directors and officers to the fullest extent permitted by
Section 145 of the Delaware Law, including under circumstances in which
indemnification is otherwise discretionary. The Company believes that these
provisions are necessary to attract and retain qualified persons as Directors
and officers.
TRANSFER AGENT
The transfer agent for the Common Stock is The First National Bank of
Boston.
STANDBY AND OTHER ARRANGEMENTS
The Company has entered into a standby purchase agreement (the "Standby
Agreement") with the Purchaser pursuant to which the Purchaser has agreed,
subject to certain conditions, to purchase from the Company such number of
shares of Common Stock as would have been issuable upon conversion of any
Debentures which have not been duly surrendered for conversion by the Close of
Business on the Expiration Date for a purchase price equal to the aggregate
Redemption Price of such Debentures. The Purchaser has agreed to remit to the
Company 50% of the excess of the aggregate proceeds received upon the resale by
the Purchaser of such shares of Common Stock (net of selling concessions,
certain costs of funds and certain other costs) over the aggregate purchase
price paid by the Purchaser for such shares.
The Purchaser may acquire Debentures in the open market or otherwise prior
to the Close of Business on the Expiration Date. The Purchaser has agreed to
convert into Common Stock all Debentures owned by it or so acquired.
The Company has been advised by the Purchaser that it proposes to offer any
shares of Common Stock purchased from the Company pursuant to the Standby
Agreement or acquired upon conversion of Debentures for resale as set forth on
the cover page of this Prospectus. The Purchaser may also make sales of such
shares to certain securities dealers at prices which may represent concessions
from the prices at which shares are then being offered to the public, and such
dealers may reallow a concession to certain other brokers and dealers. The
amount of such concessions and reallowances will be determined from time to time
by the Purchaser.
Pursuant to the terms of the Standby Agreement and in consideration of the
Purchaser's obligations thereunder, the Company has agreed to pay to the
Purchaser (i) $240,000, (ii) the Purchaser's out-of-pocket expenses incurred in
connection herewith (not to exceed $25,000), (iii) $.50 per share for each share
of Common Stock in excess of 287,500 shares but less than or equal to 2,875,000
shares purchased by the Purchaser pursuant to the Standby Agreement and (iv)
$.65 per share for each share of Common Stock in excess of 2,875,000 shares
purchased by the Purchaser pursuant to the Standby Agreement. Notwithstanding
the foregoing, under no circumstances shall the aggregate underwriters'
compensation payable under the Standby Agreement exceed the maximum amount
permitted to be paid under the rules and interpretations of the National
Association of Securities Dealers, Inc.
Pursuant to the Standby Agreement, the Company has agreed that it will not,
without the written consent of the Purchaser, sell, contract to sell or
otherwise dispose of any shares of Common Stock or rights to acquire such
shares, or register the public offering, sale or other distribution of any
shares of Common Stock held by third parties, with certain exceptions, for a
period of 90 days commencing on June 20, 1995. Such restriction on the Company
will terminate if the Purchaser purchases less than 575,000 shares of Common
Stock pursuant to the Standby Agreement and will terminate in any event on and
after the Purchaser's completion of the distribution of any shares of Common
Stock that may be purchased under the Standby Agreement.
The Company has agreed to indemnify the Purchaser against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Purchaser may be required to make in respect thereof.
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<PAGE> 10
The Purchaser may assist the Company in providing information regarding
conversions of Debentures but will not receive any compensation by the Company
for any such assistance.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Hale and Dorr, Boston, Massachusetts. Certain legal
matters in connection with this offering will be passed upon for the Purchaser
by Testa, Hurwitz & Thibeault.
EXPERTS
The consolidated financial statements of Staples, Inc. at January 28, 1995
and January 29, 1994, and for each of the three years in the period ended
January 28, 1995, incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended January 28, 1995, as amended by Amendment No. 1 on
Form 10-K/A, have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference.
The balance sheet of National Office Supply Company, Inc. as of June 30,
1992, and the related statements of earnings and retained earnings and cash
flows for the year then ended, incorporated by reference in Staples' Annual
Report on Form 10-K for the year ended January 28, 1995, as amended by Amendment
No. 1 on Form 10-K/A, have been audited by KPMG Peat Marwick LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference.
The financial statements referred to above are incorporated by reference in
reliance upon such reports given upon authority of such firms as experts in
accounting and auditing.
9
<PAGE> 11
===============================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE PURCHASER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
<TABLE>
------------------------
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
Available Information............... 2
Incorporation of Certain Documents
by Reference...................... 2
The Company......................... 4
Use of Proceeds..................... 4
Price Range of Common Stock and
Dividend Policy................... 5
Redemption of the Debentures........ 5
Description of Capital Stock........ 7
Standby and Other Arrangements...... 8
Legal Matters....................... 9
Experts............................. 9
</TABLE>
===============================================================================
===============================================================================
5,750,000 SHARES
STAPLES
COMMON STOCK
-------------------
PROSPECTUS
-------------------
ALEX. BROWN & SONS
INCORPORATED
June 20, 1995
===============================================================================
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
NATURE OF EXPENSE
<TABLE>
<S> <C>
SEC Registration Fee..................................................... $ 58,988
Legal Fees and Expenses.................................................. 30,000*
Blue Sky Fees and Expenses............................................... 10,000*
Accounting Fees and Expenses............................................. 35,000*
Standby Underwriting Fees and Expenses................................... 265,000*
Miscellaneous............................................................ 51,012*
--------
TOTAL $450,000*
=========
</TABLE>
- ---------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation has the power to indemnify a director, officer,
employee or agent of the corporation and certain other persons serving at the
request of the corporation in related capacities against amounts paid and
expenses incurred in connection with an action or proceeding to which he is or
is threatened to be made a party by reason of such position, if such person
shall have acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, in any criminal
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful, provided that, in the case of actions brought by or in the right of
the corporation, no indemnification shall be made with respect to any matter as
to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that
indemnification is proper under the circumstances. The Company's Certificate of
Incorporation provides that the Company shall indemnify its directors and
officers to the fullest extent permitted by the Delaware General Corporation
Law.
The Company's Certificate of Incorporation also provides that no director
shall be liable to the Company or its stockholders for monetary damages for
breach of his fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law or (iv) for any transaction in which the
director derived an improper personal benefit.
The By-laws of the Company contain provisions to the effect that each
director, officer and employee of the Company shall be indemnified by the
Company against liabilities and expenses in connection with any legal
proceedings to which he may be made a party or with which he may become involved
or threatened by reason of having been an officer, director or employee of the
Company or of any other organization at the request of the Company. The
provisions include indemnification with respect to matters covered by a
settlement. Any such indemnification shall be made only if the Board determines
by a majority vote of a quorum consisting of disinterested directors (or, if
such quorum is not obtainable, or if the Board of Directors directs, by
independent legal counsel) or by stockholders, that indemnification is proper in
the circumstances because the person seeking indemnification has met the
applicable standards of conduct. It must be determined that the director,
officer or employee acted in good faith with the reasonable belief that his
action was in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, that he had no reasonable cause to
believe his conduct was unlawful.
II-1
<PAGE> 13
The Company has a Directors and officers liability policy that insures the
Company's officers and directors against certain liabilities.
The Standby Agreement filed as Exhibit 1.1 to this Registration Statement
provides for indemnification and contribution by the Purchaser with respect to
certain liabilities of Directors, officers and other controlling persons of the
Company.
<TABLE>
ITEM 16. EXHIBITS.
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <C> <S>
1.1 -- Form of Standby Agreement
4.1 -- Restated Certificate of Incorporation of the Company, as amended*
4.2 -- Amended and Restated By-laws of the Company**
5.1 -- Opinion of Hale and Dorr
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of KPMG Peat Marwick LLP
23.3 -- Consent of Hale and Dorr
24.1 -- Power of Attorney
<FN>
- ---------------
* Incorporated by reference from Exhibit 4.1 to Registration Statement on Form
S-3 (File No. 33-82360).
** Incorporated by reference from Exhibit 3.1 of the Quarterly Report on Form
10-Q for the quarterly period ended July 31, 1993.
</TABLE>
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-2
<PAGE> 14
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Corporation pursuant to the indemnification provisions described herein, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Framingham, Commonwealth of Massachusetts on the 19th
day of June, 1995.
STAPLES, INC.
By: /s/ THOMAS G. STEMBERG
------------------------------------
Thomas G. Stemberg
Chairman of the Board of
Directors and Chief
Executive Officer
SIGNATURES AND POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints John B.
Wilson, Peter M. Schwarzenbach and Patrick J. Rondeau, and each of them, his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution in each of them, for him and in his name, place and stead,
and in any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement on Form S-3 of Staples,
Inc. and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 19th day of June, 1995.
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ THOMAS G. STEMBERG Chairman of the Board of Directors and Chief
- ------------------------------------------ Executive Officer (Principal Executive Officer)
Thomas G. Stemberg
/s/ JOHN B. WILSON Executive Vice President -- Finance and
- ------------------------------------------ Strategy and Chief Financial Officer (Principal
John B. Wilson financial officer)
/s/ JAMES FLAVIN Senior Vice President -- Finance (Principal
- ------------------------------------------ accounting officer)
James Flavin
/s/ MARY ELIZABETH BURTON Director
- ------------------------------------------
Mary Elizabeth Burton
</TABLE>
II-4
<PAGE> 16
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ -----------------------------------------------
<C> <S>
/s/ W. LAWRENCE HEISEY Director
- ------------------------------------------
W. Lawrence Heisey
/s/ LEO KAHN Director
- ------------------------------------------
Leo Kahn
/s/ DAVID G. LUBRANO Director
- ------------------------------------------
David G. Lubrano
/s/ ROWLAND T. MORIARTY Director
- ------------------------------------------
Rowland T. Moriarty
/s/ ROBERT C. NAKASONE Director
- ------------------------------------------
Robert C. Nakasone
/s/ W. MITT ROMNEY Director
- ------------------------------------------
W. Mitt Romney
/s/ MARTIN TRUST Director
- ------------------------------------------
Martin Trust
/s/ PAUL F. WALSH Director
- ------------------------------------------
Paul F. Walsh
/s/ STEPHEN T. WESTERFIELD Director
- ------------------------------------------
Stephen T. Westerfield
</TABLE>
II-5
<PAGE> 17
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of Staples, Inc. and
subsidiaries for the registration of 5,750,000 shares of its common stock and to
the incorporation by reference therein of our report dated February 28, 1995,
with respect to the consolidated financial statements of Staples, Inc. and
subsidiaries included in its Annual Report on Form 10-K for the year ended
January 28, 1995, as amended by Form 10-K/A, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Boston, Massachusetts
June 19, 1995
II-6
<PAGE> 18
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
NATIONAL OFFICE SUPPLY COMPANY, INC.:
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement of Form S-3 and related prospectus of Staples, Inc. and
subsidiaries dated June 20, 1995 and to the incorporation by reference therein
of our report dated August 31, 1992, except as to the last paragraph of Note 3,
which is as of September 25, 1992, relating to the balance sheet of National
Office Supply Company, Inc. as of June 30, 1992 and the related statements of
earnings and retained earnings and cash flows for the year then ended (not
presented separately herein) with respect to the consolidated financial
statements of Staples, Inc. and subsidiaries included in its Annual Report on
Form 10-K for the year ended January 28, 1995, as amended by Form 10-K/A.
KPMG PEAT MARWICK LLP
Short Hills, New Jersey
June 19, 1995
II-7
<PAGE> 19
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <C> <S> <C>
1.1 -- Form of Standby Agreement...............................................
4.1 -- Restated Certificate of Incorporation of the Company, as amended........ *
4.2 -- Amended and Restated By-laws of the Company............................. **
5.1 -- Opinion of Hale and Dorr................................................
23.1 -- Consent of Ernst & Young LLP (appears on page II-6).....................
23.2 -- Consent of KPMG Peat Marwick LLP (appears on page II-7).................
23.4 -- Consent of Hale and Dorr (included in Exhibit 5.1)......................
24.1 -- Power of Attorney (appears on pages II-4 and II-5 ).....................
<FN>
- ---------------
* Incorporated by reference from Exhibit 4.1 to Registration Statement on Form
S-3 (File No. 33-82360).
** Incorporated by reference from Exhibit 3.1 of the Quarterly Report on Form
10-Q for the quarterly period ended July 31, 1993.
</TABLE>
<PAGE> 1
5% Convertible Subordinated Debentures
due 1999
STAPLES, INC.
STANDBY AGREEMENT
-----------------
June 20, 1995
Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, MD 21202
Dear Sirs/Mesdames:
Staples, Inc., a Delaware corporation (the "Company"),
proposes to call for redemption on July 10, 1995 (the
"Redemption Date"), all its outstanding 5% Convertible
Subordinated Debentures due 1999 (the "Securities") at
103.571% of the principal amount thereof plus accrued
interest from May 1, 1995 to the Redemption Date (the
"Redemption Price"). The Securities are convertible into
shares of the Company's Common Stock, $0.0006 par value per
share (the "Common Stock"), at any time prior to the close
of business on June 30, 1995 (the "Expiration Date"). The
Company desires to make arrangements pursuant to which you
(the "Purchaser") will purchase from the Company, on the
terms and subject to the conditions set forth herein, such
number of shares of Common Stock, if any (the "Conversion
Shares"), that would have been issuable upon conversion of
the Securities that have not been surrendered for
conversion on or prior to the Expiration Date.
The Company confirms as follows its agreements with the
Purchaser.
1. AGREEMENT TO SELL AND PURCHASE.
On the basis of the representations, warranties and
agreements of the Company herein contained and subject to
all the terms and conditions of this Agreement, the Company
agrees to sell to the Purchaser, and the Purchaser agrees
to purchase from the Company, the Conversion Shares at a
price per share of $20.9086 (the "Price Per Share").
2. DELIVERY AND PAYMENT. (a) Delivery of the Conversion
Shares shall be made to the Purchaser against payment of
the purchase price by certified or official bank check
payable in New York Clearing House (next-day) funds to the
order of the Trustee (as defined below), at the offices of
Alex. Brown & Sons Incorporated, 135 East Baltimore Street,
Baltimore, Maryland. Such payment shall be made at 10:00
a.m., Eastern time, on the second business day prior to
the Redemption Date (such date is
<PAGE> 2
-2-
hereinafter referred to as the "Closing Date"). The Company shall
advise the Purchaser in writing no later than 7:00 p.m., New York
City time, on the fifth business day prior to the Redemption Date
of the number of shares of Common Stock comprising the Conversion
Shares.
At the Closing Date, the Company shall deliver to the
Purchaser a certificate registered in the name of the Purchaser
representing all of the Conversion Shares. At 10:00 a.m., Eastern
time, on the second business day immediately following the Closing
Date, or at such other time on such other date as may be
agreed on by the Company and the Purchaser (the "Exchange Date"),
the Company will deliver to the Purchaser, in exchange for the
certificate referred to in the preceding sentence, certificates
evidencing the Conversion Shares that are in definitive form and
registered in such names and in such denominations as the
Purchaser shall request at least 36 hours prior to the Exchange
Date by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the
Conversion Shares, the Company agrees to make such certificates
available for inspection at least 18 hours prior to the Exchange
Date.
The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Conversion Shares by the
Company to the Purchaser shall be borne by the Company. The
Company will pay and save the Purchaser and any subsequent holder
of the Conversion Shares harmless from any and all liabilities
with respect to or resulting from any failure or delay in paying
Federal and state stamp and other transfer taxes, if any, which
may be payable or determined to be payable in connection with the
original issuance or sale to the Purchaser of the Conversion
Shares.
(b) It is understood that the Purchaser intends to resell the
Conversion Shares at prices prevailing in the open market. The
Purchaser agrees to remit to the Company 50% of the Profit (as
defined below) received on the resale of the Conversion Shares.
As used herein, "Profit" means the excess of the aggregate
proceeds received by the Purchaser on the resale of the Conversion
Shares over the aggregate purchase price paid by the Purchaser to
the Company therefor after deduction from such proceeds of sale
of the cost of funds to carry Conversion Shares at the Purchaser's
then current cost of funds, per annum, any selling concessions,
transfer taxes and other direct out-of-pocket selling expenses.
Upon completion of the sale of the Conversion Shares, the
Purchaser shall furnish to the Company a statement setting forth
the aggregate proceeds received on the sale thereof and the
applicable selling concessions, cost of carry, transfer taxes and
other direct out-of-pocket selling expenses. For purposes of the
foregoing determination, any Conversion Shares not sold by the
Purchaser prior to 5:00 p.m., Eastern time, on the 20th business
day after the Closing Date shall be deemed to have been sold on
such 20th business day for an amount equal to the last sale price
of the Common Stock on such day as reported by the National
Association of Securities Dealer Automated Quotation System on
such day. Nothing contained herein shall limit the right of the
Purchaser, in its sole discretion, to determine the price or
prices at which, or (subject to Section 4(q)) the time or times
when, any Conversion Shares shall be sold, whether or not prior to
the Redemption Date and whether or not for long or short account.
<PAGE> 3
-3-
(c) Until the Expiration Date, the Purchaser may (but shall
be under no obligation to ) purchase Securities, in the open
market or otherwise, in such amounts and at such prices as the
Purchaser may deem advisable. All Securities so purchased will be
converted by the Purchaser into Common Stock. It is understood
that, for the purpose of stabilizing the price of the Common Stock
or otherwise, the Purchaser may make purchases and sales of Common
Stock, in the open market or otherwise, for long or short account,
on such terms as it may deem advisable and it may overallot in
arranging sales.
(d) As compensation for the commitment of the Purchaser
hereunder, the Company will pay on the Closing Date to the
Purchaser the sum of (i) $240,000, (ii) an amount equal to
the product of (A) $.50 and (B) the aggregate number of
Conversion Shares purchased by the Purchaser in excess of
287,500 but less than or equal to 2,875,000 and (iii) an
amount equal to the product of (A) $.65 and (B) the
aggregate number of Conversion Shares purchased by the
Purchaser in excess of 2,875,000. Such compensation shall
not be payable if the Purchaser terminates its commitment
hereunder pursuant to Section 7 or if the Purchaser
determines not to purchase the Conversion Shares on the
Closing Date as a result of a failure to be satisfied of
the condition set forth in Section 5(c).
(e) Notwithstanding anything to the contrary in this
Agreement, under no circumstances shall the aggregate
underwriters' compensation payable under this Agreement
exceed the maximum amount permitted to be paid under the
rules and interpretations of the National Association of
Securities Dealers, Inc.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents, warrants and covenants to the
Purchaser that:
(a) The Company meets the requirements for use of
Form S-3 and a registration statement on Form S-3 relating
to the issuance of Common Stock upon conversion of the
Securities or to the Purchaser hereunder and the resale of
the Conversion Shares acquired by the Purchaser
contemplated hereby, including such amendments to such
registration statement as may have been required to the
date of this Agreement, has been prepared by the Company
under the provisions of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations")
of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the
Commission. Copies of such registration statement have
been delivered to the Purchaser. A final prospectus will
be filed by the Company with the Commission if required by,
and in accordance with, Rule 424(b) of the Rules and
Regulations. The term "Registration Statement" means the
registration statement as amended at the time it becomes
effective (the "Effective Date"), including financial
statements and all exhibits. The term "Prospectus" means
the prospectus as first filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations or, if no such
filing is required, the form of final prospectus included
in the
<PAGE> 4
-4-
Registration Statement at the Effective Date. Any reference
herein to the Registration Statement, any preliminary prospectus
or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the Effective
Date or the date of such preliminary prospectus or the Prospectus,
as the case may be. Any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after
the Effective Date, or the date of the Prospectus, as the case may
be, and deemed to be incorporated therein by reference.
(b) On the Effective Date, the date the Prospectus is
first filed with the Commission pursuant to Rule 424(b) (if
required), at all times subsequent to and including the
Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment
or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus
(as amended or as supplemented if the Company shall have
filed with the Commission any amendment or supplement
thereto), including the financial statements included or
incorporated by reference in the Prospectus, did or will
comply in all material respects with the Act, the Exchange
Act, the rules and regulations thereunder (the "Exchange
Act Rules and Regulations") and the Rules and Regulations
and will contain all statements required to be stated
therein in accordance with the Act, the Exchange Act, the
Exchange Act Rules and Regulations and the Rules and
Regulations. None of the Registration Statement, as of the
Effective Date, any post-effective amendment to the
Registration Statement, as of its effective date, or the
Prospectus or any such amendment or supplement thereto, as
of the date hereof, did or will contain an untrue statement
of the material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements therein not misleading. At the Effective
Date, at the date any amendment or supplement to the
Prospectus is filed with the Commission and at the Closing
Date, the Prospectus did not or will not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading. The foregoing representations and warranties
in this Section 3(b) do not apply to any statements or
omissions made in reliance on and in conformity with
information relating to the Purchaser furnished in writing
to the Company by the Purchaser specifically for inclusion
in the Registration Statement or Prospectus or any
amendment or supplement thereto. For all purposes of this
Agreement, the statements with respect to the public
offering of the Conversion Shares set forth under the
caption "Standby and Other Arrangements" in the Prospectus
constitute the only information relating to the Purchaser
furnished in writing to the Company by the Purchaser
specifically for inclusion in the Registration Statement.
The Company has not distributed any offering material in
connection with the offering or sale of the Conversion
Shares other than the Registration Statement, the
Prospectus or any other materials, if any, permitted by the
Act.
<PAGE> 5
-5-
(c) The documents which are incorporated by reference in
the preliminary prospectus and the Prospectus or from which
information is so incorporated by reference, when they
become effective or were filed with the Commission, as the
case may be, complied in all material respects with the
requirements of the Act or the Exchange Act, the Exchange
Act Rules and Regulations, and the Rules and Regulations,
as applicable; and any documents so filed and incorporated
by reference subsequent to the Effective Date shall, when
they are filed with the Commission, conform in all material
respects with the requirements of the Act and the Exchange
Act, the Exchange Act Rules and Regulations and the Rules
and Regulations, as applicable. None of such documents
incorporated by reference contained an 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.
(d) The only subsidiaries (as defined in the Rules and
Regulations) of the Company are the subsidiaries listed on
Exhibit A hereto (the "Subsidiaries"). The Company and
each of its Subsidiaries is, and at the Closing Date will
be, a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of
incorporation. The Company and each of its Subsidiaries
has, and at the Closing Date will have, full power and
authority to conduct all the activities conducted by it, to
own or lease all the assets owned or leased by it and to
conduct its business as described in the Registration
Statement and the Prospectus. The Company and each of its
Subsidiaries is, and (except for any Subsidiaries which may
be merged into the Company prior to such date) at the
Closing Date will be, duly licensed or qualified to do
business and in good standing as a foreign corporation in
all jurisdictions in which it owns or leases properties or
otherwise maintains an office for the transaction of
business, or in which the failure to be so licensed or
qualified or in good standing could subject it to a
material liability or disability. All of the outstanding
shares of capital stock of the Subsidiaries have been duly
authorized and validly issued and are fully paid and
non-assessable and are owned by the Company or another
Subsidiary free and clear of all liens, encumbrances and
claims whatsoever. Except for (i) the stock of the
Subsidiaries, (ii) as disclosed in the Registration
Statement, (iii) the stock of Macauley's Business
Resources, Inc. ("MBRI") (which is expected to be purchased
by the Company prior to the Closing Date), and (iv) a
minority interest in certain industry buying groups (none
of which is material, individually or in the aggregate, to
the Company), the Company does not own, and at the Closing
Date will not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of
any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity.
Complete and correct copies of the certificate of
incorporation and of the by-laws of the Company and each of
its Subsidiaries and all amendments thereto have been
delivered (in the case of the Company) or made available
(in the case of the Subsidiaries) to the Purchaser, and
(except pursuant to the upstream mergers referred to in
this paragraph) no changes therein will be made subsequent
to the date hereof and prior to the Closing Date.
(e) The outstanding shares of Common Stock have been,
the shares of Common Stock to be issued upon the conversion
of the Securities upon issuance will be,
<PAGE> 6
- 6-
and the Conversion Shares upon issuance and payment of the
purchase price therefor in accordance with the terms of this
Agreement will be, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar
right. The description of the Common Stock in the Registration
Statement and the Prospectus is, and at the Closing Date
will be, complete and accurate in all material respects. Except
as set forth in the Prospectus, the Company does not have
outstanding, and at the Closing Date will not have outstanding,
any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Common
Stock, any shares of capital stock of any Subsidiary or any such
warrants, convertible securities or obligations, except for (i)
options granted and Common Stock issued (which shall be in the
ordinary course of business consistent with past practice)
pursuant to the Company's employee and/or director stock plans
described in the Prospectus since the date as of which such
information is set forth in the Prospectus, (ii) pursuant to the
acquisition agreement with the stockholders of MBRI and (iii)
pursuant to the Merger Agreement among the Company, MICO Business
Products, Inc. and a subsidiary of the Company dated May 11, 1995
(the "MICO Agreement").
(f) The principal amount of the Securities (but not any
interest accrued thereon) is convertible into Common Stock
until the Expiration Date at a conversion price of $20.00
per share. At the close of business on the business day
immediately preceding the date hereof, there was
$115,000,000; aggregate principal amount of Securities
outstanding. On the Redemption Date, the Securities shall
have been duly called for redemption at the Redemption
Price in accordance with the terms of the Indenture, dated
November 2, 1992 (the "Indenture"), between the Company and
The First National Bank of Boston, as trustee (the
"Trustee"). A copy of the form of notice of redemption
of the Securities (the "Notice of Redemption") has been
delivered to the Purchaser. The amount of accrued and
unpaid interest on the Securities as of the Redemption Date
is $9.72 per $1,000.00 principal amount.
(g) The financial statements and schedules included or
incorporated by reference in the Registration Statement or
the Prospectus present fairly the consolidated financial
condition of the Company as of the respective dates thereof
and the consolidated results of operations and cash flows
of the Company for the respective periods covered thereby,
all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the
entire period involved, except as otherwise disclosed in
the Prospectus. No other financial statements or schedules
of the Company are required by the Act, the Exchange Act or
the Rules and Regulations to be included in the
Registration Statement or the Prospectus. Ernst & Young
LLP, and KPMG Peat Marwick (the "Accountants"), who have reported
on such financial statements and schedules, are independent
accountants with respect to the Company as required by the Act and
the Rules and Regulations. The statements included in the
Registration Statement with respect to the Accountants
pursuant to Rule 509 of Regulation S-K of the Rules and
Regulations are true and correct in all material respects.
<PAGE> 7
-7-
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus and prior to the Closing Date, except as set
forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and will not have
been any change in the capitalization of the Company
(except for the grant or exercise of options or the
issuance of Common Stock, in each case pursuant to employee
and/or director stock plans described in the Prospectus or
the conversion of the Securities and for stock issued in
connection with the MBRI acquisition or pursuant to the
MICO Agreement), or any material change in the business,
properties, business prospects, condition (financial or
otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, arising for any reason
whatsoever, (ii) neither the Company nor any of its
Subsidiaries has incurred nor will it incur any liabilities
or obligations, direct or contingent, that are material to
the Company and its Subsidiaries, taken as a whole, nor has
it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the
transactions referred to herein and (iii) the Company has
not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital
stock.
(i) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms
are defined in the Investment Company Act of 1940, as
amended.
(j) Except as set forth in the Registration Statement
and the Prospectus, there are no actions, suits or
proceedings pending or threatened against or affecting the
Company or any of its Subsidiaries or any of their
respective officers in their capacity as such, before or by
any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic
or foreign, wherein an unfavorable ruling, decision or
finding might reasonably materially and adversely affect
the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole.
(k) The Company and each of its Subsidiaries has, and at
the Closing Date will have, (i) all governmental licenses,
permits, consents, orders, approvals and other
authorizations required to carry on its business as
contemplated in the Prospectus, except for any of the
foregoing the failure to have of which could not have a
material adverse effect on the Company and its
Subsidiaries, taken as a whole, (ii) complied in all
material respects with all laws, regulations and orders
applicable to it or its business and (iii) performed in all
material respects all its obligations required to be
performed by it, and is not, and at the Closing Date will
not be, in default in any material respect, under any
indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement, lease,
contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or
by which its property is bound or affected. To the best
knowledge of the Company and each of its Subsidiaries, no
other party under any contract or other agreement to which
it is a party that is material to the Company and its
Subsidiaries, taken as a whole, is in default in any
material respect thereunder. Neither the Company nor any
of its Subsidiaries is, nor at the Closing Date
<PAGE> 8
-8-
will any of them be, in violation of any provision of its
certificate of incorporation or by-laws. The Company has not been
advised, and has no reason to believe, that either it or any of
its Subsidiaries is not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in
which it is conducting business, including, without limitation,
all applicable local, state and federal environmental laws and
regulations, except where failure to be so in compliance would not
materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole.
(l) No consent, approval, authorization or order of, or
any filing or declaration with, any court or governmental
agency or body is required in connection with the
authorization, issuance, transfer, sale or delivery of the
Conversion Shares by the Company or the shares of Common
Stock to be issued upon the conversion of the Securities,
in connection with the execution, delivery and performance
of this Agreement by the Company or in connection with the
taking by the Company of any action contemplated hereby,
except such as have been obtained under the Act or the
Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the by-laws and rules
of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and
distribution by the Purchaser of the Conversion Shares.
(m) The Company has full corporate power and authority
to enter into this Agreement. Each of this Agreement, the
Indenture and the Securities has been duly authorized,
executed and delivered by the Company and constitutes a
valid and binding agreement or obligation of the Company
and is enforceable against the Company in accordance with
the terms hereof and thereof. The Company has full
corporate power and authority to call the Securities for
redemption, to convert and redeem the Securities and to
issue the Conversion Shares and the shares of Common Stock
to be issued upon the conversion of the Securities, all as
described in the Prospectus, and all such actions have been
duly authorized by the Company. Neither the call of the
Securities for redemption, the conversion of the
Securities, the redemption of the Securities, the
performance of this Agreement nor the consummation of the
transactions contemplated hereby will result in the
creation or imposition of any lien, charge or encumbrance
upon any of the assets of the Company or any of its
Subsidiaries pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any
other party a right to terminate any of its obligations
under, or result in the acceleration of any obligation
under, the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries, any contract or other
agreement to which the Company or any of its Subsidiaries
or any of its properties is bound or affected, or violate
or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other
governmental agency or body applicable to the business or
properties of the Company or any of its Subsidiaries.
(n) The Company and each of its Subsidiaries has good
and marketable title to all properties and assets described
in the Prospectus as owned by it, free and clear of all
liens, charges, encumbrances or restrictions, except such
as are described in the
<PAGE> 9
-9-
Prospectus or are not material to the business of the Company
and its Subsidiaries, taken as a whole. The Company or one of its
Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such
exceptions as are not material and do not materially interfere
with the use made and proposed to be made of such properties by
the Company or such Subsidiaries.
(o) There is no document or contract of a character
required by the Act or the Rules and Regulations to be
described in the Registration Statement or the Prospectus
or to be filed as an exhibit to the Registration Statement
which is not described or filed as required. Except as set
forth in the Prospectus, all such contracts to which the
Company or any Subsidiary is a party have been duly
authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the
Company or such Subsidiary and are enforceable against the
Company or such Subsidiary in accordance with the terms
thereof (except as such enforceability may be limited by
bankruptcy or insolvency law, general principles of equity,
limitations on the enforceability of indemnification
agreements or agreements not to compete, and other similar
legal limitations applicable to contracting parties
generally).
(p) No statement, representation, warranty or covenant
made by the Company in this Agreement or made in any
certificate or document required by this Agreement to be
delivered to the Purchaser was or will be, when made,
inaccurate, untrue or incorrect in any material respect.
The Company has not distributed and will not distribute
prior to the Redemption Date any offering material in
connection with the offering and sale of the Conversion
Shares other than the Prospectus, the Registration
Statement and the other materials permitted by the Act.
(q) Neither the Company nor, to the best of the
Company's knowledge, any of its directors, officers or
controlling persons has taken, directly or indirectly, any
action intended, or which might reasonably be expected, to
cause or result, under the Act or otherwise, in, or which
has constituted, stabilization or manipulation of the price
of any security of the Company to facilitate the conversion
of the Securities or the sale or resale of the Conversion
Shares.
(r) No holder of securities of the Company has rights to
the registration of any securities of the Company because
of the filing of the Registration Statement.
(s) The Conversion Shares and the shares of Common Stock
to be issued upon conversion of the Securities are eligible
for quotation on the National Association of Securities
Dealers Automated Quotation System.
(t) Neither the Company nor any of its Subsidiaries is
involved in any material labor dispute nor, to the
knowledge of the Company, is any such dispute threatened.
<PAGE> 10
-10-
(u) The name "Staples" is a trademark of the Company
which has been duly registered with the U.S. Patent and
Trademark Office; the Company has the right to use such
trademark in connection with its business as currently and
as proposed to be conducted in the United States and the
Company has not received any notice that its current and
proposed use (in the U.S. or abroad) of such trademark
infringes any rights of any other party except as set forth
in the Prospectus. Except as disclosed in or specifically
contemplated by the Prospectus, the Company and its
Subsidiaries have sufficient trademarks, trade names,
patent rights, mask works, copyrights, licenses, approvals
and governmental authorizations to conduct their businesses
as now conducted; except for any possible expiration of the
Company's rights to use the trademark "Staples" or any
derivation thereof, the expiration of any trademarks, trade
names, patent rights, mask works, copyrights, licenses,
approvals or governmental authorizations would not have a
material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of
the Company and its Subsidiaries, taken as a whole; and the
Company has no knowledge of any material infringement by it
or its Subsidiaries of trademark, trade name rights, patent
rights, mask works, copyrights, licenses, trade secret or
other similar rights of others, and, other than the
litigation in Canada regarding the Business Depot which has
been disclosed to the Purchaser, there is no claim being
made against the Company or its Subsidiaries regarding
trademark, trade name, patent, mask work, copyright,
license, trade secret or other infringement which may be
reasonably foreseen to have a material adverse effect on
the condition (financial or otherwise), business, results
of operations or prospects of the Company and its
Subsidiaries, taken as a whole.
(v) The Company has complied, and until the completion
of the distribution of the Conversion Shares, will comply
with all of the provisions of (including, without
limitation, filing all forms required by) Section 517.075
of the Florida Securities and Investor Protection Act and
regulation 3E-900.001 issued thereunder with respect to the
offering and sale of the Conversion Shares. The Company
has timely and properly filed with the Commission all
reports and other documents required to have been filed
with the Commission.
(w) The Company has not incurred any liability for a
fee, commission, or other compensation on account of the
employment of a broker or finder in connection with the
transactions contemplated by this Agreement other than as
contemplated hereby.
(x) The Company and its Subsidiaries have filed all
necessary federal, state and foreign income and franchise
tax returns and have paid all taxes shown as due thereon;
and the Company has no knowledge of any tax deficiency
which has been or may be reasonably foreseen to be asserted
or threatened against the Company or its Subsidiaries which
could materially and adversely affect the business, results
of operations or properties of the Company and its
Subsidiaries, taken as a whole.
(y) Each of the Company and its Subsidiaries maintains
insurance of the types and in the amounts generally deemed
adequate for its business, including, but not limited to,
insurance covering real and personal property owned or
leased by the Company
<PAGE> 11
-11-
and its Subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
(z) Neither the Company nor any of its Subsidiaries has
at any time during the last five years (i) made any
unlawful contribution to any candidate for foreign office,
or failed to disclose fully any contribution in violation
of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged
with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United
States or any jurisdiction thereof.
4. AGREEMENTS OF THE COMPANY. The Company agrees with
the Purchaser as follows:
(a) The Company will not, either prior to the Effective
Date or thereafter during such period as the Prospectus is
required by law to be delivered in connection with sales of
the Conversion Shares by the Purchaser or a dealer, file
any amendment or supplement to the Registration Statement
or the Prospectus, unless a copy thereof shall first have
been submitted to the Purchaser within a reasonable period
of time prior to the filing thereof and the Purchaser shall
not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective, and will notify
the Purchaser promptly, and will confirm such advice in
writing, (1) when the Registration Statement has become
effective and when any post-effective amendment thereto
becomes effective, (2) of any request by the Commission for
amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (3) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the
threat thereof, (4) of the happening of any event during
the period mentioned in the second sentence of Section 4(e)
that in the judgment of the Company makes any statement
made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make
the statements therein, in light of the circumstances under
which they are made, not misleading and (5) of receipt by
the Company or any representative or attorney of the
Company of any other communication from the Commission
relating to the Company, the Registration Statement, any
preliminary prospectus or the Prospectus. If at any time
the Commission shall issue any order suspending the
effectiveness of the Registration Statement, the Company
will make every reasonable effort to obtain the withdrawal
of such order at the earliest possible moment.
(c) The Company will furnish to the Purchaser without
charge, two signed copies of the Registration Statement and
of any post-effective amendment thereto, including
financial statements and schedules, and all exhibits
thereto (including any document filed under the Exchange
Act and deemed to be incorporated by reference into the
Prospectus).
<PAGE> 12
-12-
(d) The Company will comply with the undertakings
contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to
time, the Company will deliver to the Purchaser, without
charge, as many copies of the Prospectus or any amendment
or supplement thereto as the Purchaser may reasonably
request. The Company consents to the use of the Prospectus
or any amendment or supplement thereto by the Purchaser and
by all dealers to whom the Conversion Shares may be sold,
both in connection with the offering or sale of the
Conversion Shares and for any period of time thereafter
during which the Prospectus is required by law to be
delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the
Company or counsel to the Purchaser should be set forth in
the Prospectus in order to make any statement therein, in
the light of the circumstances under which it was made, not
misleading, or if it is necessary to supplement or amend
the Prospectus to comply with the law, the Company will
forthwith prepare and duly file with the Commission an
appropriate supplement or amendment thereto, and will
deliver to the Purchaser, without charge, such number of
copies thereof as the Purchaser may reasonably request.
(f) Prior to any public offering of the Conversion
Shares by the Purchaser, the Company will cooperate with
the Purchaser and counsel to the Purchaser in connection
with the registration or qualification of the Conversion
Shares and the shares of Common Stock to be issued upon the
conversion of the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the
Purchaser may request; provided, that in no event shall the
Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take
any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the
Effective Date, the Company will furnish to the Purchaser
copies of such financial statements and other periodic and
special reports as the Company may from time to time
distribute generally to the holders of any class of its
capital stock, and will furnish to the Purchaser a copy of
each annual or other report it shall be required to file
with the Commission.
(h) The Company will make generally available to holders
of its securities as soon as may be practicable but in no
event later than the last day of the fifteenth full
calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not
be audited but shall be in reasonable detail) for a period
of 12 months commencing after the Effective Date, and
satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated,
the Company will pay, or reimburse if paid by the
Purchaser, all costs and expenses incident to the
performance of the obligations of the Company and (subject
to the limitations set forth in clause 12 below) the
Purchaser under this Agreement, including but not limited
to costs and expenses of or relating to (1) the
preparation, printing and filing of the Registration
Statement and
<PAGE> 13
-13-
exhibits to it, the Prospectus and any amendment or supplement to
the Registration Statement or the Prospectus, (2) the preparation,
printing, filing and mailing of the Notice of Redemption,
(3) the preparation and delivery of certificates representing the
Conversion Shares and the shares of Common Stock to be issued upon
the conversion of the Securities, (4) the printing of this
Agreement and any Dealer Agreements, if any, (5) furnishing
(including costs of shipping and mailing) such copies of the
Registration Statement, the Prospectus and all amendments and
supplements thereto, as may be requested for use in connection
with the offering and sale of the Conversion Shares by the
Purchaser or by dealers to whom Conversion Shares may be sold, (6)
the quotation of the Conversion Shares and the shares of Common
Stock to be issued upon the conversion of the Securities on the
National Association of Securities Dealers Automated Quotation
System, (7) any filings required to be made by the Purchaser with
the NASD, and the fees, disbursements and other charges of counsel
for the Purchaser in connection therewith, (8) the registration or
qualification of the Conversion Shares and the shares of Common
Stock to be issued upon the conversion of the Securities for offer
and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 4(f), including the
fees, disbursements and other charges of counsel to the Purchaser
in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda, (9) fees,
disbursements and other charges of counsel to the Company, (10)
the transfer agent for the Common Stock, (11) the fees and
expenses (including the fees, disbursement and other charges of
counsel) incurred by the Trustee in connection with the redemption
and conversion of the Securities and (12) the Purchaser's
out-of-pocket expenses in connection herewith, including without
limitation the fees, disbursements and other charges of its
counsel (to the extent not subject to reimbursement as
contemplated above), in an aggregate amount not to exceed $25,000.
(j) If this Agreement shall be terminated by the Company
pursuant to any of the provisions hereof or if for any
reason the Company shall be unable to perform its
obligations hereunder, the Company will reimburse the
Purchaser for all reasonable fees, disbursements and other
charges of counsel to the Purchaser, in an aggregate amount
not to exceed $25,000.
(k) The Company will not at any time, directly or
indirectly, take any action intended, or which might
reasonably be expected, to cause or result in, or which
will constitute, stabilization of the price of the
Securities or the shares of Common Stock to facilitate the
conversion of the Securities or the sale or resale of any
of the Conversion Shares.
(l) The Company will apply the net proceeds from the
sale to the Purchaser of the Conversion Shares in the
manner set forth in the Prospectus under "Use of Proceeds."
(m) The Company will not for a period of 90 days after
the Effective Date, without the prior written consent of
the Purchaser, sell, contract to sell or otherwise dispose
of any shares of Common Stock or rights to acquire such
shares, or register under the Act the public offering, sale
or other distribution of any shares of Common Stock held
<PAGE> 14
-14-
by third parties, except (i) pursuant to employee or director
stock option plans or in connection with other employee incentive
compensation arrangements, (ii) the Conversion Shares, (iii) for
the transactions contemplated by the Registration Statement, (iv)
for the MBRI acquisition, (v) for shares issuable in connection
with any stock split or stock dividend, (vi) pursuant to
the MICO Agreement, (vii) pursuant to a resale registration
statement pertaining to 1,958,688 shares of Common Stock for
Judith Stern and David Goldner, and (viii) so long as such
issuance does not involve a public offering during such period, as
consideration for the acquisition of businesses, properties or
assets; provided, that the restrictions set forth in this Section
4(m) shall terminate following the Closing Date if the Purchaser
shall have purchased less than 575,000 shares of Common Stock
hereunder and in any event will terminate on and after the giving
of notice by the Purchaser pursuant to Section 4(q) that the
distribution of Conversion Shares has been completed.
(n) The Company will mail or cause to be mailed to the
registered holders of the Securities not later than the close of
business on June 20, 1995, the Notice of Redemption, together with
a letter of transmittal, the mailing of which and the redemption
of the Securities thereby shall conform to the requirements of the
Indenture.
(o) The Company will direct the Trustee to advise the
Purchaser on each business day prior to the Redemption Date
of the number of Securities surrendered for conversion or
redemption on the preceding business day.
(p) The Company shall take no action the effect of which
would be to require an adjustment of the conversion price
of the Securities from the conversion price set forth in
Section 3(f).
(q) Prior to such time as the Purchaser shall have
advised the Company that the offering and sale of the
Conversion Shares by the Purchaser contemplated by this
Agreement shall have been completed, the Company shall not
withdraw or apply for the withdrawal of the Registration
Statement and the Company shall timely file all documents,
and any amendments of previously filed documents, required
to be filed by it pursuant to the Act and the Exchange Act
as are necessary to maintain the effectiveness of the
Registration Statement; provided, however, that the
Purchaser shall (i) complete the distribution of the
Conversion Shares contemplated by this Agreement as soon as
commercially reasonable, in Purchaser's reasonable
judgment, (ii) notify the Company of the completion of such
distribution promptly following such completion and
(iii) notify the Company from time to time, upon the
reasonable request of the Company, of how many Conversion
Shares have not yet been distributed by the Purchaser.
(r) After the Redemption Date the Company will promptly
file a post-effective amendment to the Registration
Statement and take such other steps as may be necessary to
remove from registration all shares of Common Stock that
have not been issued upon conversion of Securities or have
not been purchased by the Purchaser pursuant to this
Agreement.
<PAGE> 15
-15-
5. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASER.
The obligations of the Purchaser hereunder are subject
to the following conditions:
(a) Notification that the Registration Statement has
become effective shall be received by the Purchaser not
later than 5:00 p.m., Eastern time, on the date of this
Agreement or at such later date and time as shall be
consented to in writing by the Purchaser and all filings
required by Rule 424 of the Rules and Regulations shall
have been made.
(b) (i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no
proceedings for that purpose shall be pending or threatened
by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the
qualification or registration of the Conversion Shares or
the shares of Common Stock to be issued upon the conversion
of the Securities under the securities or Blue Sky laws of
any jurisdiction shall be in effect and no proceeding for
such purpose shall be pending before or threatened or
contemplated by the Commission or the authorities of any
such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or
any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such
authorities and (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus
shall have been filed unless a copy thereof was first
submitted to the Purchaser and the Purchaser did not object
thereto in good faith, and the Purchaser shall have
received certificates, dated the Closing Date and signed by
the Chief Executive Officer or the Chairman of the Board of
Directors of the Company and the Chief Financial Officer of
the Company (who may, as to proceedings threatened, rely
upon the best of their information and belief), to the
effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus,
(i) there shall not have been a material adverse change in
the general affairs, business, business prospectus,
properties, management, condition (financial or otherwise)
or results of operations of the Company and its
Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, in each
case other than as set forth in or contemplated by the
Registration Statement and the Prospectus and (ii) the
Company and its Subsidiaries (taken as a whole) shall not
have sustained any material loss or interference with their
business or properties from fire, explosion, flood or other
casualty, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other
governmental action, order or decree, which is not set
forth in the Registration Statement and the Prospectus, if
in the judgment of the Purchaser any such development makes
it impracticable or inadvisable to proceed with the
transactions contemplated hereby on the terms and in the
manner contemplated by the Prospectus.
(d) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus,
there shall have been no litigation or other
<PAGE> 16
-16-
proceeding instituted against the Company or any of its
Subsidiaries or any of their respective officers or directors in
their capacities as such, before or by any Federal, state or
local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, that might
reasonably materially and adversely affect the business,
properties, business prospects, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries,
taken as a whole.
(e) Each of the representations and warranties of the
Company contained herein shall be true and correct in all
material respects at the Closing Date, as if made at the
Closing Date, and all covenants and agreements herein
contained to be performed on the part of the Company and
all conditions herein contained to be fulfilled or complied
with by the Company at or prior to the Closing Date shall
have been duly performed, fulfilled or complied with.
(f) The Purchaser shall have received opinions, dated
the Effective Date and the Closing Date and satisfactory in
form and substance to counsel for the Purchaser, from Hale
and Dorr, counsel to the Company, Davies, Ward & Beck,
counsel to a Canadian Subsidiary of the Company, and
Peter M. Schwarzenbach, Esq., General Counsel of the
Company, to the effect set forth in Exhibits B, C and D,
respectively.
(g) The Purchaser shall have received opinions, dated
the Effective Date and the Closing Date, from Testa,
Hurwitz & Thibeault, counsel to the Purchaser, with respect
to the Registration Statement, the Prospectus and this
Agreement, which opinions shall be satisfactory in all
respects to the Purchaser.
(h) Concurrently with the execution and delivery of this
Agreement, the Accountants shall have furnished to the
Purchaser a letter, dated the date of its delivery,
addressed to the Purchaser and in form and substance
satisfactory to the Purchaser confirming that they are
independent accountants with respect to the Company as
required by the Act and the Rules and Regulations and with
respect to the financial and other statistical and
numerical information contained in the Registration
Statement or incorporated by reference therein. At the
Closing Date the Accountants shall have furnished to the
Purchaser a letter, dated the date of its delivery, which
shall confirm, on the basis of a review in accordance with
the procedures set forth in the letter from the
Accountants, that nothing has come to their attention
during the period from the date of the letter referred to
in the prior sentence to a date (specified in the letter)
not more than two days prior to the Closing Date which
would require any change in their letter dated the date
hereof if it were required to be dated and delivered at the
Closing Date.
(i) At the Closing Date there shall be furnished to the
Purchaser an accurate certificate, dated the Closing Date,
signed by each of the Chief Executive Officer and the Chief
Financial Officer of the Company, in form and substance
satisfactory to the Purchaser, to the effect that:
(i) Each signer of such certificate has
carefully examined the Registration Statement and
the Prospectus (including any
<PAGE> 17
-17-
documents filed under the Exchange Act and deemed to
be incorporated by reference into the Prospectus) and (A) as
of the date of such certificate, to the best of his
knowledge, such documents are true and correct in all
material respects and do not omit to state a material fact
required to be stated therein or necessary in order to make
the statements therein not untrue or misleading and
(B) since the Effective Date, no event has occurred as a
result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein not untrue
or misleading in any material respect and there has been no
document required to be filed under the Exchange Act and the
Exchange Act Rules and Regulations that upon such filing
would be deemed to be incorporated by reference into the
Prospectus that has not been so filed.
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally
made, and are, at the time such certificate is delivered,
true and correct in all material respects.
(iii) Each of the covenants required herein to be
performed by the Company on or prior to the date of such
certificate has been duly, timely and fully performed and
each condition herein required to be complied with by the
Company on or prior to the date of such certificate has been
duly, timely and fully complied with.
(j) The Conversion Shares and the shares of Common Stock
to be issued upon the conversion of the Securities shall be
qualified for sale in such states as the Purchaser may
reasonably request, and each such qualification shall be in
effect and not subject to any stop order or other
proceeding on the Closing Date.
(k) Prior to the Closing Date, the Conversion Shares and
the shares of Common Stock to be issued upon the conversion
of the Securities will have been qualified for quotation on
the National Association of Securities Dealers' Automated
Quotation System.
(l) The Company shall have furnished to the Purchaser
such certificates, in addition to those specifically
mentioned herein, as the Purchaser may have reasonably
requested as to the accuracy and completeness at the
Closing Date of any statement in the Registration Statement
or the Prospectus or any documents filed under the Exchange
Act and deemed to be incorporated by reference into the
Prospectus, as to the accuracy at the Closing Date of the
representations and warranties of the Company herein, as to
the performance by the Company of its obligations
hereunder, or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of
the Purchaser.
<PAGE> 18
-18-
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Purchaser and each person, if any, who controls the Purchaser
within the meaning of the Act against any losses, claims, damages,
liabilities or expenses, joint or several, to which the Purchaser
or such controlling person may become subject, under the Act, the
Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement
of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them
not misleading, or arise out of or are based upon in whole or in
part any inaccuracy in the representations and warranties of the
Company contained herein or any failure of the Company to perform
its obligations hereunder or under law; and will reimburse the
Purchaser and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by the Purchaser
or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the
Company will not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by the Purchaser
expressly for the inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus. In addition to its
other obligations under this subparagraph (a), the Company agrees
that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of
or based upon any statement or omission, or any alleged statement
or omission, or any inaccuracy in the representations and
warranties of the Company herein or failure of the Company to
perform its obligations hereunder, all as described in this
subparagraph (a), it will reimburse the Purchaser on a quarterly
basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the
Purchaser for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Purchaser shall
promptly return it to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or
other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America NT&SA,
San Francisco, California (the "Prime Rate"). Any such interim
reimbursement payments which are not made to the Purchaser within
30 days of a request for reimbursement, shall bear interest at the
Prime
<PAGE> 19
-19-
Rate from the date of such request. This indemnity agreement will
be in addition to any liability which the Company may
otherwise have. The Company will not, without the prior written
consent of the Purchaser, settle or compromise or consent to the
entry of any judgment in any pending or threatened action or claim
or related cause of action or portion of such cause of action in
respect of which indemnification may be sought hereunder (whether
or not the Purchaser is a party to such action or claim), unless
such settlement, compromise or consent includes an unconditional
release of the Purchaser and any person who controls the Purchaser
from all liability arising out of such action or claim (or related
cause of action or portion thereof).
(b) The Purchaser will indemnify and hold harmless the
Company, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of the Act,
against any losses, claims, damages, liabilities or
expenses to which the Company, or any such director,
officer, or controlling person may become subject, under
the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such
settlement is effected with the written consent of the
Purchaser), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any
untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made
in the Registration Statement, any preliminary prospectus,
the Prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with information furnished
in writing to the Company by the Purchaser expressly for
the use in the Registration Statement, any preliminary
prospectus or the Prospectus; and will reimburse the
Company, or any such director, officer, or controlling
person for any legal and other expense reasonably incurred
by the Company, or any such director, officer, or
controlling person in connection with investigating,
defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action. In addition
to its other obligations under this subparagraph (b), the
Purchaser agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement
or omission, or any alleged statement or omission,
described in this subparagraph (b) which relates to such
information furnished to the Company by the Purchaser, it
will reimburse the Company (and, to the extent applicable,
each officer, director or controlling person) on a
quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the
Purchaser's obligation to reimburse the Company (and, to
the extent applicable, each officer, director or
controlling person) for such expenses and the possibility
that such payments might later be held to have been
improper by a court of competent jurisdiction. To the
extent that any such
<PAGE> 20
-20-
interim reimbursement payment is so held to have been improper,
the Company (and, to the extent applicable, each officer, director
or controlling person) shall promptly return it to the Purchaser
together with interest, compounded daily, determined on the
basis of the Prime Rate. Any such interim reimbursement payments
which are not made to the Company within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date
of such request. This indemnity agreement will be in addition to
any liability which the Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof
is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party for contribution
or otherwise than under the indemnity agreement contained
in this Section or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action
is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from
an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may
wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably
concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other
indemnified parties which are different from or additional
to those available to the indemnifying party, the
indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt
of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such
action and approval by the indemnified party of counsel,
the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in
accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one
separate counsel, approved by the Purchaser in the case of
paragraph (a), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this
Section 6 is required by its terms but is for any reason
held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party under subparagraphs (a), (b)
or (c) in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each
applicable
<PAGE> 21
-21-
indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of any losses, claims,
damages, liabilities or expenses referred to herein (including
any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any
contribution received by the Company and the Purchaser from
persons other than the Company and the Purchaser, such as persons
who control the Company within the meaning of the Act, officers of
the Company who signed the Registration Statement and directors of
the Company who also may be liable for contribution) (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the offering of the
Conversion Shares or (ii) if the allocation provided by clause (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 (i) above but also the relative fault of the Company and
the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Purchaser on the other shall be deemed to be in the same
proportion as the total net proceeds from the sale of the
Conversion Shares (before deducting expenses) received by the
Company bear to the total compensation (after deducting therefrom
losses, if any, incurred in reselling Conversion Shares) received
by the Purchaser hereunder. The relative fault of the Company and
the Purchaser 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 or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by
the Company or the Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include,
subject to the limitations set forth in subparagraph (c) of this
Section 6, any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any
action or claim. The provisions set forth in subparagraph (c) of
this Section 6 with respect to notice of commencement of any
action shall apply if a claim for contribution is to be made under
this subparagraph (d); provided, however, that no additional
notice shall be required with respect to any action for which
notice has been given under subparagraph (c) for purposes of
indemnification. The Company and the Purchaser agree that it
would not be just and equitable if contribution pursuant to this
Section 6 were determined solely by pro rata allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to in this Section.
Notwithstanding the provisions of this Section 6, the Purchaser
shall not be required to contribute any amount in excess of the
amount of compensation (after deducting therefrom losses, if any,
incurred in reselling the Conversion Shares) received by it. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
<PAGE> 22
-22-
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set
forth in subparagraphs 6(a) and 6(b) hereof, including the
amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by
arbitration conducted under the provisions of the
Constitution and Rules of the Board of Governors of the New
York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration
must be commenced by service of a written demand for
arbitration or written notice of intention to arbitrate,
therein electing the arbitration tribunal. In the event
the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or
notice, then the party responding to said demand or notice
is authorized to do so. Such an arbitration would be
limited to the operation of the interim reimbursement
provisions contained in subparagraphs 6(a) and 6(b) hereof
and would not resolve the ultimate propriety or
enforceability of the obligation to reimburse expenses
which is created by the provisions of such
subparagraphs 6(a) and 6(b) hereof.
7. TERMINATION.
The obligations of the Purchaser under this Agreement may
be terminated at any time or on prior to the Closing Date,
by notice to the Company from the Purchaser, without
liability on the part of the Purchaser to the Company, if,
prior to delivery and payment for the Conversion Shares,
(i) trading in any of the equity securities of the Company
shall have been suspended by the Commission, by an exchange
that lists the Common Stock or by the National Association
of Securities Dealers Automated Quotation Market System,
(ii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq
National Market System shall have been suspended or limited
or minimum or maximum prices shall have been generally
established on such exchange, or additional material
governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in
securities generally by such exchange or by order of the
Commission or any court or other governmental authority,
(iii) a general banking moratorium shall have been declared
by either Federal or New York State authorities or (iv) any
material adverse change in the financial or securities
markets in the United States or in political, financial or
economic conditions in the United States or any outbreak or
material escalation of hostilities or declaration of the
United States of a national emergency or war or other
calamity or crisis shall have occurred, the effect of any
of which is such as to make it, in the sole judgment of the
Purchaser, impracticable or inadvisable to proceed with the
transactions contemplated hereby on the terms and in the
manner contemplated by the Prospectus.
8. SURRENDER OF SECURITIES.
The Purchaser agrees that any Securities beneficially
owned by it on the Expiration Date (in addition to any
Securities purchased as contemplated in Section 2(c)) will
be surrendered for conversion into Common Stock.
<PAGE> 23
-23-
9. SOLICITING CONVERSIONS.
The Purchaser may (but shall be under no obligation to)
assist the Company in soliciting conversions of Securities
into Common Stock by the holders thereof but shall not be
entitled to compensation by the Company for any such
assistance.
10. MISCELLANEOUS.
Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise
specified, shall be mailed or delivered (a) if to the
Company, at the office of the Company, 100 Pennsylvania
Avenue, P.O. Box 9328, Framingham, Massachusetts
01701-9328, Attention: Chairman, or (b) if to the
Purchaser, at the offices of the Purchaser, 135 East
Baltimore Street, Baltimore, Maryland, Attention:
Corporate Finance Department. Any such notice shall be
effective only upon receipt. Any notice under Section 7
may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
This Agreement has been and is made solely for the
benefit of the Purchaser and the Company and of the
controlling persons, directors and officers referred to in
Section 6, and their respective successors and assigns, and
no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and
assigns" as used in this Agreement shall not include a
purchaser, as such purchaser, of Conversion Shares from the
Purchaser.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND.
This Agreement may be signed in two or more counterparts
with the same effect as if the signatures thereto and
hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
The Company and the Purchaser each hereby irrevocably
waive any right they may have to a trial by jury in respect
of any claim based upon or arising out of this Agreement or
the transactions contemplated hereby.
[SIGNATURE PAGE TO FOLLOW]
<PAGE> 24
Please confirm that the foregoing correctly sets forth the
Standby Agreement between the Company and the Purchaser.
Very truly yours,
STAPLES, INC.
By:_________________________
Title:
Confirmed as of the date first
above mentioned:
ALEX. BROWN & SONS INCORPORATED
By: __________________________________
Title:
<PAGE> 25
EXHIBIT A
Subsidiaries of
Staples, Inc.
as of
June 20, 1995
-------------
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
Staples Security Corporation Massachusetts
Staples the Office Superstore, Inc. Delaware
Staples International, Inc. Delaware
Staples Properties, Inc. California
521 Connecticut Boulevard Corp. Connecticut
Staples NRO. Ltd. Ontario
Staples NRO(2) Limited Ontario
Staples NRO(3) Limited Ontario
National Office Supply Company, Inc. New Jersey
Spectrum Office Products Inc. New York
Total Global Sourcing, Inc. Delaware
The Business Depot, Ltd. Ontario
D.A. MacIsaac, Inc. Delaware
<PAGE> 26
EXHIBIT B
OPINION OF HALE AND DORR
------------------------
1. Each of the Company and the Domestic Subsidiaries has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation,
is duly qualified to do business as a foreign corporation and is
in good standing in all other jurisdictions where the ownership or
leasing of properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, and has full corporate
power and authority to own its properties and conduct its business
as described in the Registration Statement.
2. All of the outstanding shares of Common Stock have been,
the shares of Common Stock to be issued upon the conversion of the
Debentures upon issuance will be, and the shares of Common Stock
issued and sold to you pursuant to the Standby Agreement (the
"Conversion Shares") upon issuance and when paid for by you in
accordance with the terms of the Standby Agreement will be, duly
and validly issued, fully paid and nonassessable, not issued in
violation of or subject to any statutory preemptive rights or, to
our knowledge, other rights to subscribe for or purchase any
securities and conform to the description thereof contained in the
Prospectus; without limiting the foregoing, there are no
statutory preemptive or, to our knowledge, other rights to
subscribe for or purchase any of the shares of Common Stock to be
issued upon conversion of the Debentures or pursuant to the
Standby Agreement.
3. All of the issued and outstanding shares of common stock
of the Domestic Subsidiaries have been duly and validly authorized
and issued, are fully paid and nonassessable and are owned of
record and, to our knowledge, beneficially by the Company free and
clear of all liens, encumbrances, equities, claims, security
interests, voting trusts or other defects of title whatsoever.
4. Except as disclosed in or specifically contemplated by
the Prospectus or the Standby Agreement, to our knowledge, there
are no (i) outstanding options, warrants or other rights calling
for the issuance of, and (ii) no commitments, plans or
arrangements to issue, any shares of capital stock of the Company
<PAGE> 27
or any security convertible into or exchangeable for capital stock
of the Company.
5. The Registration Statement has become effective under
the Act, and, to our knowledge, no (i) stop order suspending the
effectiveness of the Registration Statement or preventing the use
of the Prospectus has been issued and (ii) no proceedings for that
purpose have been instituted or are pending or contemplated by the
Commission. The Registration Statement and the Prospectus
(excluding any documents incorporated by reference into the
Registration Statement or the Prospectus) comply as to form in all
material respects with the requirements of the Securities Act and
the Rules and Regulations. To our knowledge, (i) there are no
franchises, leases, contracts, agreements or documents of a
character required to be disclosed in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration
Statement which are not disclosed or filed, as required, and (ii)
there are no legal or governmental actions, suits or proceedings
pending or threatened against the Company which are required to be
described in the Prospectus which are not described as required.
The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder.
6. The Company has corporate power and authority to enter
into the Standby Agreement and to call the Debentures for
redemption, to convert and redeem the Debentures and to issue the
Conversion Shares and the shares of Common Stock to be issued upon
the conversion of the Debentures, all as described in the
Prospectus, and all such actions have been duly authorized by the
Company; the Standby Agreement has been duly and validly
authorized by all necessary corporate action by the Company and
has been duly and validly executed and delivered by and on behalf
of the Company; and no approval, authorization, order, consent,
registration, filing, qualification, license or permit of or with
any court, regulatory, administrative or other governmental body
is required for the execution and delivery of the Standby
Agreement by the Company or the call of the Debentures for
redemption, the conversion of the Debentures or the redemption of
the Debentures, except such as have been obtained and are in full
force and effect under the Securities Act.
7. The call of the Debentures for redemption, the issuance
by the Company of shares of Common Stock upon conversion of the
Debentures, the redemption of the Debentures, or the execution and
delivery by the Company of, and the performance by the Company of
<PAGE> 28
its agreements contained in, the Standby Agreement will not, to
our knowledge, conflict with, result in the breach of, or con-
stitute, either by itself or upon notice or the passage of time or
both, a default under any agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument
known to us to which the Company or any of the Domestic Subsid-
iaries is a party or by which the Company or any of the Domestic
Subsidiaries or any of its or their property may be bound which is
material to the Company and its Domestic Subsidiaries, taken as a
whole, or violate any of the provisions of the Certificate of
Incorporation or Bylaws, or other organizational documents, of the
Company or any of the Domestic Subsidiaries or, so far as is known
to us, violate any statute, judgment, decree, order, rule or
regulation of any court or governmental body having jurisdiction
over the Company or any of the Domestic Subsidiaries or any of its
or their property.
8. The Debentures are convertible in accordance with their
terms and pursuant to the Indenture in the manner and upon the
terms described in the Prospectus.
9. To our knowledge, no holders of securities of the
Company have rights which have not been waived to the registration
of shares of Common Stock or other securities, because of the
filing of the Registration Statement by the Company or the
offering contemplated by the Standby Agreement.
10. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
<PAGE> 29
EXHIBIT C
OPINION OF DAVIES, WARD & BECK
------------------------------
1. Business Depot is a corporation existing under the Business
Corporations Act (Ontario).
2. Business Depot is registered to carry on business in all jurisdictions
in which the conduct of its business requires such registration or in which the
failure to register would have a material adverse effect upon the business of
Business Depot.
3. Business Depot has the corporate power to own or lease its properties
and to operate its business in Canada.
4. We have not been engaged to provide legal advice to or consulted by
Business Depot with respect to any action, suit or proceeding before or by any
court or government agency or body or arbitration panel to which Business Depot
is a party and which, if decided against Business Depot, would have a material
adverse effect on Business Depot with the exception of certain litigation
between Business Depot, Office Depot Inc. and other parties, details of which
we understand have been provided to you. With the exception of the foregoing
litigation involving Business Depot and Office Depot Inc., based solely on the
memory of the lawyers at our firm usually engaged in the performance of work
for Business Depot respecting matters discussed with representatives of
Business Depot, without specific inquiry and without reviewing documents held
in the files maintained by our firm, such lawyers are not aware of any action,
suit or proceeding which, if decided against Business Depot, would have a
material adverse effect on Business Depot.
<PAGE> 30
5. Based exclusively upon the facts disclosed in our review of the minute
books and corporate records of Business Depot and the Certificate of Fact we
are of the opinion that:
(i) The authorized capital stock of Business Depot consists of (i)
2,250,000 shares of Preferred Stock of which 1,033,448 shares have
been designated as Series A Preferred Stock and 894,000 shares have
been designated as Series B Preferred Stock, (ii) 668,233 shares of
Class C Preferred Stock, (iii) 20,000,000 shares of Special Stock,
issuable in series of which 1,500,000 has been designated as shares
of Series I Stock; and (iv) 3,000,000 shares of Common Stock
(subject to adjustment in the manner provided for in subsection
35(8) of the OBCA upon the conversion of any Preferred Stock into
Common Stock).
(ii) On the date hereof 1,033,448 shares of Series A Preferred Stock,
894,000 shares of Series B Preferred Stock, 1,300,000 shares of
Series I Stock and 194,235 shares of Common Stock are outstanding
and all such shares (collectively the "Shares") are validly issued,
fully paid and non-assessable and there are no shares of Class C
Preferred Stock outstanding. With the exception of 1,300,000 shares
of Series I Stock which are registered in the name of Staples NRO
Limited, Staples is the holder of record of all the shares and the
holder of record of all outstanding warrants, options and other
rights (contingent or otherwise) to purchase or otherwise acquire
equity securities of Business Depot.
6. Based exclusively on the facts disclosed in our review of the minute
books and corporate records of Business Depot and on the memory of the lawyers
at our firm usually engaged in the performance of work for Business Depot
respecting matters discussed with representatives of Business Depot, without
specific inquiry and without reviewing other documents held in the files
maintained by our firm, such lawyers are not aware that any person other than
Staples has any warrants, options or other rights to purchase or otherwise
acquire any equity securities of Business Depot or that the Shares are
encumbered by any liens, security interests, pledges or other encumbrances,
claims or equities other than the lien in favour of Business Depot established
by section 9.5 of By-Law No. 1 of Business Depot.
<PAGE> 31
EXHIBIT D
OPINION OF PETER M. SCHWARZENBACH, ESQ.
---------------------------------------
1. Neither the Company nor any of its subsidiaries is in violation
of its certificate of incorporation or bylaws, or other organizational
documents, or, to the best of my knowledge, in breach of or in default under
any provision of any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to me to which the Company
or any such subsidiary is a party or by which it or any of its properties may
be bound or affected, except where such breach or default would not materially
adversely affect the Company and its subsidiaries taken as a whole; and, to the
best of my knowledge, the Company and its subsidiaries are in compliance with
all laws, rules, regulations, judgments, decrees, orders, and statutes of any
court or jurisdiction to which they are subject, except where noncompliance
would not materially adversely affect the Company and its subsidiaries taken as
a whole.
2. Each of the Company and its subsidiaries is duly qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions where the ownership or leasing of properties or the conduct of
its business requires such qualification, except for jurisdictions in which the
failure to so qualify would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
3. Other than the litigation described on the attached list, there
is no litigation to which the Company or its subsidiaries is a party which if
adversely decided would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
4. The execution and performance of the Standby Agreement and
the consummation of the transactions contemplated therein will not violate any
of the provisions of the certificate of incorporation or bylaws, or other
organizational documents, of any of the Company's subsidiaries.
<PAGE> 1
Exhibit 5.1
-----------
HALE AND DORR
COUNSELLORS AT LAW
60 STATE STREET, BOSTON, MASSACHUSETTS 02109
617-526-6000 * FAX 617-526-5000
June 19, 1995
Staples, Inc.
100 Pennsylvania Avenue
Framingham, Massachusetts 01701-9328
Gentlemen:
This opinion is furnished to you in connection with a Registration
Statement on Form S-3 (the "Registration Statement"), filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, for the registration of 5,750,000 shares of Common Stock, $.0006 par
value per share (the "Shares"), of Staples, Inc., a Delaware corporation (the
"Company"). The Shares are to be issued and sold by the Company upon the
conversion of the Company's outstanding 5% Convertible Subordinated Debentures
due 1999 (the "Debentures") and pursuant to a Standby Agreement
to be entered into by and between the Company and Alex. Brown & Sons
Incorporated (the "Standby Agreement").
We have acted as counsel for the Company in connection with the issue
and sale by the Company of the Shares. We have examined signed copies of the
Registration Statement and all exhibits thereto, including the Standby
Agreement. We have also examined and relied upon the original or copies of
minutes of meetings of the stockholders and Board of Directors of the Company,
stock record books of the Company, a copy of the By-Laws, as amended, of the
Company, and a copy of the Certificate of Incorporation, as amended, of the
Company.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies, and the authenticity of the
originals of such latter documents.
WASHINGTON, DC BOSTON, MA MANCHESTER, NH
- --------------------------------------------------------------------------------
HALE AND DORR IS A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
<PAGE> 2
Staples, Inc.
June 19, 1995
Page - 2 -
We assume that the appropriate action will be taken, prior to the offer
and sale of the Shares, to register and qualify the Shares for sale under all
applicable state securities or "blue sky" laws.
Based upon the foregoing, we are of the opinion that (i) the Shares
have been duly authorized, and (ii) when the Shares are issued and sold upon
conversion of the Debentures or pursuant to the Standby Agreement, the Shares
will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as part of the
Registration Statement and to the use of our name therein and in the related
Prospectus under the capiton "Legal Matters".
Very truly yours,
/s/ Hale and Dorr
HALE AND DORR
