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As filed with the Securities and Exchange Commission
on November 9, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Staples, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 04-2896127
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Staples Drive, Framingham, Massachusetts 01702
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(Address of principal executive offices) (Zip Code)
STAPLES, INC. AMENDED AND RESTATED 1990 DIRECTOR STOCK OPTION PLAN
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(Full title of the plans)
John J. Mahoney
Executive Vice President, Chief Financial Officer
and Chief Administrative Officer
Staples, Inc.
500 Staples Drive
Framingham, Massachusetts 01702
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(Name and address of agent for service)
(508) 253-5000
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(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Securities to Amount to be Proposed Maximum Proposed Amount of
be Registered Registered Offering Price Per Maximum Registration
Share (1) Aggregate Fee (1)
Offering Price (1)
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<S> <C> <C> <C> <C>
Staples.com 1,000,000 $1.625 $1,625,000 $451.75
Common Stock shares (2)
("Staples.com Stock"),
$0.0006 par value
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee, and,
as there is no public market for the securities being offered, based on
the book value of such securities computed as of November 9, 1999, in
accordance with Rule 457(h) of the Securities Act of 1933, as amended.
(2) The prospectus used in connection with this registration statement also
relates to a series of prior registration statements on Form S-8 covering
an aggregate of 2,392,030 shares of Staples Retail and Delivery Common
Stock, for which an aggregate amount of $8,821.09 in filing fees has been
paid.
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PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I is included in documents sent or given
to participants in the Staples, Inc. Amended and Restated 1990 Director Stock
Option Plan pursuant to Rule 428(b)(1) of the Securities Act of 1933, as amended
(the "Securities Act").
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
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Staples, Inc., a Delaware corporation ("Staples", the "Company" or the
"Registrant"), is subject to the informational and reporting requirements of
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). The following documents, which are on file with the
Commission, are incorporated in this Registration Statement by reference:
(1) The Registrant's latest annual report filed pursuant to Sections
13(a) or 15(d) of the Exchange Act or the latest prospectus filed pursuant
to Rule 424(b) under the Securities Act that contains audited financial
statements for the Registrant's latest fiscal year for which such
statements have been filed.
(2) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the document
referred to in (1) above.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-
effective amendment which indicates that all shares of Staples.com Stock offered
hereby have been sold or which deregisters all shares of Staples.com Stock then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be part hereof from the date of the filing of such documents.
Item 4. Description of Securities.
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General
The Registrant's restated certificate of incorporation, as amended,
authorizes it to issue 2,105,000,000 shares, consisting of 2,100,000,000 shares
of common stock, par
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value $0.0006 per share, and 5,000,000 shares of preferred stock, par value
$0.01 per share. The aggregate number of shares of common stock that may be
issued is 2,100,000,000, comprised of 1,500,000,000 shares of Staples Retail and
Delivery Common Stock ("Staples Stock") and 600,000,000 shares of Staples.com
Common Stock ("Staples.com Stock").
The Registrant's restated certificate of incorporation, as amended, allows
Staples.com Stock to be issued from time to time by the board of directors.
Staples.com Stock is intended to reflect the performance of Staples.com, the
Registrant's electronic commerce business ("Staples.com"). Staples Stock is
intended to reflect the performance of Staples Retail and Delivery ("Staples
RD"), which consists of the Registrant's other businesses and a retained
interest in Staples.com. The Registrant has allocated, for financial reporting
purposes, all of Staples' consolidated assets, liabilities, revenue, expenses
and cash flow between Staples RD and Staples.com. The Registrant will publish
combined financial statements of Staples RD, combined financial statements of
Staples.com, and consolidated financial statements of Staples (covering both
Staples RD and Staples.com).
The full definitions of the terms "Staples RD" and "Staples.com" are set
forth under "-Mandatory Dividend, Redemption or Exchange on Disposition of All
or Substantially All of the Assets of a Business" below.
Before the Registrant first issues shares of, or options for shares of,
Staples.com Stock, the board of directors shall designate the initial Number of
Shares Issuable with Respect to Staples RD' Retained Interest in Staples.com.
See "--Staples RD's Retained Interest in Staples.com" and "--Number of Shares
Issuable with Respect to Staples RD's Retained Interest in Staples.com" for
additional information about Staples RD's Retained Interest in Staples.com and
the Number of Shares Issuable with Respect to Staples RD's Retained Interest in
Staples.com.
The board of directors has the authority to increase or decrease from time
to time the total number of authorized shares comprising either series of common
stock. However, the board of directors cannot increase the number of authorized
shares of a series above a number which, when added to all of the authorized
shares of the other series of common stock, will exceed the total authorized
number of shares of common stock. Likewise, the board of directors cannot
decrease the number of authorized shares of a series below the number of shares
of such series then outstanding.
The board of directors has the authority in its sole discretion to issue
authorized but unissued shares of common stock from time to time for any proper
corporate purpose. The board of directors has the authority to do so as
provided by Delaware
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law or the rules and regulations of any securities exchange on which any series
of outstanding common stock may then be listed.
Dividends
The Registrant currently intends to retain all earnings for use in the
operation and expansion of its business. The Registrant therefore does not
expect to pay any cash dividends on Staples Stock or Staples.com Stock in the
foreseeable future.
Although the Registrant's revolving credit agreement restricts the payment
of cash dividends, it is permitted to pay dividends on:
. Staples Stock out of assets of Staples legally available for the
payment of dividends under Delaware law, but the total amounts paid as
dividends on Staples Stock cannot exceed the Available Dividend Amount
for Staples RD, and
. Staples.com Stock out of the assets of Staples legally available for
the payment of dividends under Delaware law while transferring
corresponding amounts to Staples RD in respect of its Retained
Interest in Staples.com. However, the total amounts paid as dividends
on Staples.com Stock and the corresponding amounts transferred to
Staples RD in respect of its Retained Interest in Staples.com cannot
exceed the Available Dividend Amount for Staples.com.
The "Available Dividend Amount" for Staples RD at any time is the amount
that would then be legally available for the payment of dividends on Staples
RD's common stock under Delaware law if (1) Staples RD and Staples.com were each
a separate Delaware corporation, (2) Staples RD had outstanding (a) a number of
shares of common stock, par value $0.0006 per share, equal to the number of
shares of Staples Stock that are then outstanding and (b) a number of shares of
preferred stock, par value $0.01 per share, equal to the number of shares of
preferred stock of Staples that have been attributed to Staples RD and are then
outstanding, (3) the assumptions about Staples.com set forth in the next
sentence were true and (4) Staples RD owned a number of shares of Staples.com
common stock equal to the Number of Shares Issuable with Respect to Staples RD's
Retained Interest in Staples.com. Similarly, the "Available Dividend Amount"
for Staples.com at any time is the amount that would then be legally available
for the payment of dividends on Staples.com Stock under Delaware law if
Staples.com were a separate Delaware corporation having outstanding (1) a number
of shares of common stock, par value $0.0006 per share, equal to the number of
shares of Staples.com Stock that are then outstanding plus the Number of Shares
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Issuable with Respect to Staples RD's Retained Interest in Staples.com and (2) a
number of shares of preferred stock, par value $.01 per share, equal to the
number of shares of preferred stock of Staples that have been attributed to
Staples.com and are then outstanding.
The amount legally available for the payment of dividends on common stock
of a corporation under Delaware law is generally limited to (1) the total assets
of the corporation less its total liabilities less (2) the aggregate par value
of the outstanding shares of its common stock and preferred stock. However, if
that amount is not greater than zero, the corporation may also pay dividends out
of the net profits for the corporation for the fiscal year in which the dividend
is declared and/or the preceding fiscal year in which the dividend is declared
and/or the preceding fiscal year. As mentioned above, these restrictions will
form the basis for calculating the Available Dividend Amounts for Staples RD and
Staples.com. These restrictions will also form the basis for calculating the
aggregate amount of dividends that Staples as a whole can pay on its common
stock, regardless of series. Thus, net losses of either Business, and any
dividends and distributions on, or repurchases of, either series of common
stock, will reduce the assets legally available for dividends on both series of
common stock.
Subject to the foregoing limitations (and to any other limitations set
forth in any future series of preferred stock or in any agreements binding on
Staples from time to time), the Registrant may pay dividends on both, one or
neither series of common stock in equal or unequal amounts, notwithstanding the
performance of either Business, the amount of assets available for dividends on
either series, the amount of prior dividends paid on either series, the
respective voting rights of each series or any other factor.
At the time of any dividend on the outstanding shares of Staples.com Stock
(including any dividend required as a result of a disposition of All or
Substantially All of the Assets of Staples.com, but excluding any dividend
payable in shares of Staples.com Stock) the Registrant will credit to Staples
RD, and charge against Staples.com, a corresponding amount in respect of Staples
RD's Retained Interest in Staples.com. Specifically, the corresponding amount
will equal (1) the aggregate amount of such dividend multiplied by (2) a
fraction, the numerator of which is the Number of Shares Issuable with Respect
to Staples RD's Retained Interest in Staples.com and the denominator of which is
the number of shares of Staples.com Stock then outstanding.
Mandatory Dividend, Redemption or Exchange on Disposition of All or
Substantially All of the Assets of a Business
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If the Registrant disposes of All or Substantially All of the Assets of a
Business to one or more persons or entities, in one transaction or a series of
related transactions (collectively, a "Disposition"), and the Disposition is not
an Exempt Disposition as defined below, the Registrant would be required, by the
85th Trading Day after the consummation of such Disposition, to choose one of
the following three alternatives:
. declare and pay a dividend to holders of the series of common stock
that relates to that Business (in cash, securities (other than common
stock of Staples) or other property, or a combination thereof), in an
amount having a Fair Value equal to their Proportionate Interest in
the Net Proceeds of such disposition;
. redeem from holders of the series of common stock that relates to that
Business, for cash, securities (other than common stock of Staples) or
other property (or a combination thereof) in an amount having a Fair
Value equal to their Proportionate Interest in the Net Proceeds of
such disposition, all of the outstanding shares of the relevant series
of common stock (or, if such Business continues after such Disposition
to own any material assets other than the proceeds of such
Disposition, a number of shares of such series of common stock having
an aggregate average Market Value, during the 20 consecutive Trading
Day period beginning on the 16th Trading Day immediately following the
date on which the Disposition is consummated, equal to such Fair
Value); or
. issue shares of the series of common stock that does not relate to
that Business in exchange for all of the outstanding shares of the
series of common stock that relates to that Business at a 10% premium
(based on the average Market Value of the relevant series of common
stock as compared to the average Market Value of the other series of
common stock during the 20 consecutive Trading Day period beginning on
the 16th Trading Day immediately following the date on which the
Disposition is consummated).
In connection with any special dividend on, or redemption of, Staples.com
Stock as described above, the Registrant will credit to Staples RD, and charge
against Staples.com, a corresponding amount in respect of Staples RD's Retained
Interest in Staples.com. Specifically, the corresponding amount will equal (1)
the aggregate Fair Value of such dividend or redemption multiplied by (2) a
fraction, the numerator of which is the Number of Shares Issuable with Respect
to Staples RD's Retained Interest in Staples.com and the denominator of which is
the number of shares of Staples.com Stock then outstanding. In addition, in
connection with any redemption of Staples.com
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Stock as described above, the Registrant will decrease the Number of Shares
Issuable with Respect to Staples RD's Retained Interest in Staples.com by the
same proportion as the proportionate decrease in outstanding shares of
Staples.com caused by such redemption.
At any time within one year after completing any dividend or partial
redemption of the sort referred to above, the Registrant will have the right to
issue shares of the series of common stock that does not relate to the Business
in question in exchange for outstanding shares of the series of common stock
that relates to that Business at a 10% premium (based on the average Market
Value of the relevant series of common stock as compared to the average Market
Value of the other series of common stock during the 20 consecutive Trading Day
period ending on the 5th Trading Day immediately preceding the date on which
Staples mails the notice of exchange to holders of the relevant series). In
determining whether to effect any such exchange following such a dividend or
partial redemption, the Registrant would, in addition to other matters, consider
whether the remaining assets of such Business continue to constitute a viable
business, the number of shares of such common stock remaining issued and
outstanding, the per share market price of such common stock and the ongoing
cost of continuing to have a separate series of such common stock outstanding.
The following terms used in this document have the meanings specified in
the Certificate of Incorporation:
"All or Substantially All of the Assets" of either Business means a portion
of such assets that represents at least 80% of then-current Fair Value of the
assets of such Business.
"Exempt Disposition" means any of the following:
. a Disposition in connection with the liquidation, dissolution or
winding-up of Staples and the distribution of assets to stockholders,
. a Disposition to any person or entity controlled by Staples, as
determined by the board of directors in its sole discretion,
. a Disposition by either Business for which Staples receives
consideration primarily consisting of equity securities (including,
without limitation, capital stock of any kind, interest in a general
or limited partnership, interests in a limited liability company or
debt securities convertible into or exchangeable for, or options or
warrants to acquire, any of the
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foregoing, in each case without regard to the voting power or other
management or governance rights associated therewith) of an entity
that is primarily engaged or proposes to engage primarily in one or
more businesses similar or complementary to businesses conducted by
such Business prior to the Disposition, as determined by the board of
directors in its sole discretion,
. a dividend out of Staples.com's assets to holders of Staples.com Stock
and a transfer of a corresponding amount to Staples RD in respect of
its Retained Interest in Staples.com,
. a dividend out of Staples RD's assets to holders of Staples Stock, and
. any other Disposition, if (1) at the time of the Disposition there are
no shares of Staples Stock outstanding, (2) at the time of the
Disposition there are no shares of Staples.com Stock outstanding or
(3) before the 30th Trading Day following the Disposition the
Registrant has mailed a notice stating that it is exercising the right
to exchange outstanding shares of either Staples Stock or Staples.com
Stock for newly issued shares of the other series of common stock as
contemplated under "-Optional Exchange of One Series of Common Stock
for the Other Series" below.
"Fair Value" means (1) in the case of cash, the amount thereof, (2) in the
case of capital stock that has been Publicly Traded for a period of at least 15
months, the Market Value thereof and (3) in the case of other assets or
securities, the fair market value thereof as the board of directors shall
determine in good faith. Any good faith determination by the board of directors
of Fair Value shall be conclusive and binding on all stockholders.
"Market Capitalization" of either series of common stock on any date means
the Market Value of a share of such series on such date multiplied by the number
of shares of such series outstanding on such date. Shares issuable with respect
to Staples RD's Retained Interest in Staples.com are not considered to be
outstanding unless and until they are in fact issued to third parties.
"Market Value" of a share of any class or series of capital stock on any
Trading Day generally means the average of the high and low reported sales price
of a share of such class or series on such Trading Day, subject to certain
exceptions as described in the Registrant's restated certificate of
incorporation, as amended.
"Nasdaq NMS" means the Nasdaq National Market.
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The "Net Proceeds" of a Disposition of any of the assets of a Business
means the positive amount, if any, remaining from the gross proceeds of such
Disposition after any payment of, or reasonable provision (as determined in good
faith by the board of directors, which determination will be conclusive and
binding on all stockholders) for: (1) any taxes payable by Staples in respect of
such Disposition, (2) any taxes payable by Staples in respect of any resulting
dividend or redemption, (3) any transaction costs, including, without
limitation, any legal, investment banking and accounting fees and expenses and
(4) any liabilities (contingent or otherwise) of, attributed to or related to,
such Business, including, without limitation, any liabilities for deferred
taxes, any indemnity or guarantee obligations which are outstanding or incurred
in connection with the Disposition or otherwise, any liabilities for future
purchase price adjustments and any obligations with respect to outstanding
securities (other than common stock) attributed to such Business.
"Proportionate Interest" of holders of Staples.com Stock in the Net
Proceeds of a Staples.com Disposition (or in the outstanding shares of common
stock of any subsidiaries holding Staples.com's assets and liabilities) means
the amount of such Net Proceeds (or the number of such shares) multiplied by the
number of shares of Staples.com Stock outstanding divided by the Total Number of
Notional Staples.com Shares Deemed Outstanding. "Proportionate Interest" of
holders of Staples Stock in the Net Proceeds of a Staples RD Disposition (or in
the outstanding shares of common stock of any subsidiaries holding Staples RD's
assets and liabilities) means the amount of such Net Proceeds (or the number of
such shares).
"Publicly Traded" with respect to any security means a security that is (1)
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (or any successor provision of law), and (2) listed for
trading on the New York Stock Exchange (or any other national securities
exchange registered under Section 7 of the Exchange Act (or any successor
provision of law)) or listed for trading on the Nasdaq NMS (or any successor
market system).
"Staples RD" means (1) all of the businesses, assets and liabilities of
Staples and its subsidiaries, other than the businesses, assets and liabilities
that are part of Staples.com, (2) the rights and obligations of Staples RD under
any inter-Business debt deemed to be owed to or by Staples RD (as such rights
and obligations are defined in accordance with policies established from time to
time by the board of directors) and (3) a proportionate interest in Staples.com
(after giving effect to any options, preferred stock, other securities or debt
issued or incurred by Staples and attributed to Staples.com) equal to the
Retained Interest Percentage; provided that:
(a) Staples may re-allocate assets from one Business to the other
Business in return for other assets or services rendered by that other
Business in
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the ordinary course of business or in accordance with policies established
by the board of directors from time to time, and
(b) if Staples transfers cash, other assets or securities to holders
of shares of Staples.com Stock as a dividend or other distribution on
shares of Staples.com Stock (other than a dividend or distribution payable
in shares of Staples.com Stock), or as payment in a redemption of shares of
Staples.com Stock effected as a result of a Staples.com Disposition, then
the board of directors shall re-allocate from Staples.com to Staples RD
cash or other assets having a Fair Value equal to the aggregate Fair Value
of the cash, other assets or securities so transferred multiplied by a
fraction, the numerator of which shall equal the Number of Shares Issuable
with Respect to Staples RD's Retained Interest in Staples.com on the record
date for such dividend or distribution, or on the date of such redemption,
and the denominator of which shall equal the number of shares of
Staples.com Stock outstanding on such date.
"Staples.com" means (1) the e-commerce business division of Staples,
including all of the businesses, assets and liabilities of Staples and its
subsidiaries that the board of directors has, as of the date on which the
amendment to Staples' restated certificate of incorporation authorizing the
creation of Staples.com Stock becomes effective under Delaware law (the
"Effective Date"), allocated to Staples.com, (2) any assets or liabilities
acquired or incurred by Staples or any of its subsidiaries after the Effective
Date in the ordinary course of business and attributable to Staples.com, (3) any
businesses, assets or liabilities acquired or incurred by Staples or any of its
subsidiaries after the Effective Date that the board of directors has
specifically allocated to Staples.com or that Staples otherwise allocates to
Staples.com in accordance with policies established from time to time by the
board of directors and (4) the rights and obligations of Staples.com under any
inter-Business debt deemed to be owed to or by Staples.com (as such rights and
obligations are defined in accordance with policies established from time to
time by the board of directors); provided that:
(a) Staples may re-allocate assets from one Business to the other
Business in return for other assets or services rendered by that other
Business in the ordinary course of business or in accordance with policies
established by the board of directors from time to time and
(b) if Staples transfers cash, other assets or securities to holders
of shares of Staples.com Stock as a dividend or other distribution on
shares of Staples.com Stock (other than a dividend or distribution payable
in shares of Staples.com Stock), or as payment in a redemption of shares of
Staples.com Stock effected as a result of a Staples.com Disposition, then
the board of
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directors shall re-allocate from Staples.com to Staples RD cash or other
assets having a Fair Value equal to the aggregate Fair Value of the cash,
other assets or securities so transferred multiplied by a fraction, the
numerator of which shall equal the Number of Shares Issuable with Respect
to Staples RD's Retained Interest in Staples.com on the record date for
such dividend or distribution, or on the date of such redemption, and the
denominator of which shall equal the number of shares of Staples.com Stock
outstanding on such date.
"Total Number of Notional Staples.com Shares Deemed Outstanding" means the
number of shares of Staples.com Stock outstanding plus the Number of Shares
Issuable with Respect to Staples RD's Retained Interest in Staples.com.
"Trading Day" means each weekday on which the relevant security (or, if
there are two relevant securities, each relevant security) is traded on the
principal national securities exchange on which it is listed or admitted to
trading or quoted on the Nasdaq NMS or, if such security is not listed or
admitted to trading on a national securities exchange or quoted on the Nasdaq
NMS, traded in the principal over-the-counter market in which it trades.
Optional Exchange of One Series of Common Stock for the Other Series
The Registrant has the right, at any time, to issue shares of Staples Stock
in exchange for outstanding shares of Staples.com Stock at a premium. The
premium will initially be 25% (for exchanges occurring in the first quarter
after the original issuance of Staples.com Stock, or options therefor) and will
decline ratably each quarter over a period of three years to 15%.
The Registrant also has the right, at any time, to issue shares of
Staples.com Stock in exchange for outstanding shares of Staples Stock at a
premium. The premium will initially be 25% (for exchanges occurring in the
first quarter after the original issuance of Staples.com Stock, or options
therefor) and will decline ratably each quarter over a period of three years to
15%.
Notwithstanding the preceding paragraphs, upon the occurrence of a Tax
Event (as defined below), the Registrant will have the right to issue shares of
either series of common stock in exchange for outstanding shares of the other
series of common stock at a 10% premium, regardless of when such a Tax Event
takes place.
The exchange ratio that will result in the specified premium will be
calculated based on the average Market Value of Staples Stock as compared to the
average Market Value of Staples.com Stock during the 20 consecutive Trading Day
period ending on,
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and including, the 5th Trading Day immediately preceding the date on which the
Registrant mails the notice of exchange to holders of the outstanding shares
being exchanged.
In addition, the Registrant has the right, at any time Staples.com Stock
exceeds the 40% of Total Market Capitalization `Threshold (as defined below) but
is below the 60% of Total Market Capitalization Threshold (as defined below), to
issue shares of either series of common stock in exchange for outstanding shares
of the other series of common stock on a value for value basis.
The exchange ratio that will result in a value for value exchange will be
based on the average Market Value of the series of the common stock being
exchanged as compared to the average Market Value of the other series of common
stock during the 20 consecutive Trading Day period ending on, and including, the
5th Trading Day immediately preceding the date on which the Registrant mails the
notice of exchange to holders of the outstanding shares being exchanged.
"Tax Event" means the receipt by Staples of an opinion of a tax advisor
experienced in such matters, who shall not be an officer or employee of Staples
or any of its affiliates, to the effect that, as a result of any amendment to,
or change in, the laws (or any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein (including any
proposed change in such regulations announced by an administrative agency), or
as a result of any official or administrative pronouncement or action or
judicial decision interpreting or applying such laws or regulations, it is more
likely than not that for United States federal income tax purposes (1) Staples,
its subsidiaries or affiliates, or any of its successors or its stockholders is
or, at any time in the future, will be subject to tax upon the issuance of
shares of either Staples Stock or Staples.com Stock or (2) either Staples Stock
or Staples.com Stock is not or, at any time in the future, will not be treated
solely as stock of Staples. For purposes of rendering such opinion, the tax
advisor shall assume that any administrative proposals will be adopted as
proposed. However, in the event a change in law is proposed, the tax advisor
shall render an opinion only in the event of enactment.
Staples.com Stock will exceed the "40% of Total Market Capitalization
Threshold" if the Market Capitalization of the outstanding Staples.com Stock
exceeds 40% of the Total Market Capitalization of both series of common stock
for 30 Trading Days during the 60 consecutive Trading Day period ending on, and
including, the 5th Trading Day immediately preceding the date on which the
Registrant mails the notice of exchange. Staples.com Stock will be below the
"60% of Total Market Capitalization Threshold" if the Market Capitalization of
the outstanding Staples.com Stock is below 60% of the total Market
Capitalization of both series of common stock for 30 Trading
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Days during the 60 consecutive Trading Day period ending on, and including, the
5th Trading Day immediately preceding the date on which the Registrant mails the
notice of exchange. If the Registrant has the right, on the date on which the
Registrant mails a notice of exchange as contemplated above, to issue shares of
either series of common stock in exchange for outstanding shares of the other
series of common stock on a value for value basis as described above, the
Registrant will not lose that right even if Staples.com Stock subsequently falls
below the 40% of Total Market Capitalization Threshold or exceeds the 60% of
Total Market Capitalization Threshold.
Exchange for Stock of a Subsidiary at Staples' Option
At any time at which all of the assets and liabilities of a Business (and
no other assets or liabilities of Staples or any subsidiary thereof) are held
directly or indirectly by one or more wholly owned subsidiaries of Staples (the
"Business Subsidiaries"), the Registrant will have the right to deliver to
holders of the relevant series of common stock their Proportionate Interest in
all of the outstanding shares of the common stock of the Business Subsidiaries
in exchange for all of the outstanding shares of such series of common stock.
. If the series of common stock being exchanged is Staples Stock and the
Number of Shares Issuable with Respect to Staples RD's Retained Interest
in Staples.com is greater than zero, the Registrant will also issue a
number of shares of Staples.com Stock equal to the then current Number of
Shares Issuable with Respect to Staples RD's Retained Interest in
Staples.com and deliver those shares to the holders of Staples Stock or to
one of the Business Subsidiaries, at the Registrant's option.
. If the series of common stock being exchanged is Staples.com Stock and the
Number of Shares Issuable with Respect to Staples RD's Retained Interest
in Staples.com is greater than zero (so that less than all of the shares
of common stock of the Business Subsidiaries are being delivered to the
holders of Staples.com Stock), the Registrant may retain the remaining
shares of common stock of the Business Subsidiaries or distribute those
shares as a dividend on Staples Stock, at the Registrant's option.
General Dividend, Redemption and Exchange Provisions
If the Registrant completes a Disposition of All or Substantially All of
the Assets of a Business (other than an Exempt Disposition), the Registrant
would be required, not more than the 10 Trading Days after the consummation of
such Disposition, to issue a
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press release specifying (1) the Net Proceeds of such Disposition, (2) the
number of shares of the series of common stock related to such Business then
outstanding, (3) the number of shares of such series of common stock issuable
upon conversion, exchange or exercise of any convertible or exchangeable
securities, options or warrants and the conversion, exchange or exercise prices
thereof and (4) if the Business is Staples.com, the Number of Shares Issuable
with Respect to Staples RD's Retained Interest in Staples.com. Not more than 40
Trading Days after such consummation, the Registrant would be required to
announce by press release which of the actions specified in the first paragraph
under "--Mandatory Dividend, Redemption or Exchange on Disposition of All or
Substantially All of The Assets of a Business" the Registrant has determined to
take, and upon making that announcement, that determination would become
irrevocable. In addition, the Registrant would be required, not more than 40
Trading Days after such consummation and not less than 10 Trading Days before
the applicable payment date, redemption date or exchange date, to send a notice
by first-class mail, postage prepaid, to holders of the relevant series of
common stock at their addresses as they appear on the Registrant's transfer
books.
. If the Registrant determines to pay a special dividend, it would be
required to specify in the notice (1) the record date for such dividend,
(2) the payment date of such dividend (which cannot be more than 85
Trading Days after such consummation) and (3) the aggregate amount and
type of property to be paid in such dividend (and the approximate per
share amount thereof).
. If the Registrant determines to undertake a redemption, it would be
required to specify in the notice (1) the date of redemption (which cannot
be more than 85 Trading Days after such consummation), (2) the aggregate
amount and type of property to be paid as a redemption price (and the
approximate per share amount thereof), (3) if less than all shares of the
relevant series of common stock are to be redeemed, the number of shares
to be redeemed and (4) the place or places where certificates for shares
of such series of common stock, properly endorsed or assigned for transfer
(unless the Registrant waives such requirement), should be surrendered in
return for delivery of the cash, securities or other property to be paid
by Staples in such redemption.
. If the Registrant determines to undertake an exchange, it would be
required to specify in the notice (1) the date of exchange (which cannot
be more than 85 Trading Days after such consummation), (2) the number of
shares of the other series of common stock to be issued in exchange for
each outstanding share of such series of common stock and (3) the place
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or places where certificates for shares of such series of common stock,
properly endorsed or assigned for transfer (unless the Registrant waives
such requirement), should be surrendered in return for delivery of the
other series of common stock to be issued by Staples in such exchange.
If the Registrant determines to complete any exchange described under "--
Optional Exchange of One Series of Common Stock for the Other Series" or "--
Exchange for Stock of a Subsidiary at Staples' Option," it would be required,
between 10 to 30 Trading Days before the exchange date, to send a notice by
first-class mail, postage prepaid, to holders of the relevant series of common
stock at their addresses as they appear on the Registrant's transfer books,
specifying (1) the exchange date and the other terms of the exchange and (2) the
place or places where certificates for shares of such series of common stock,
properly endorsed or assigned for transfer (unless the Registrant waives such
requirement), should be surrendered for delivery of the stock to be issued or
delivered by Staples in such exchange.
Neither the failure to mail any required notice to any particular holder
nor any defect therein would affect the sufficiency thereof with respect to any
other holder or the validity of any dividend, redemption or exchange.
If the Registrant is redeeming less than all of the outstanding shares of a
series of common stock as described above, it would redeem such shares pro rata
or by lot or by such other method as the board of directors determines to be
equitable.
No holder of shares of a series of common stock being exchanged or redeemed
will be entitled to receive any cash, securities or other property to be
distributed in such exchange or redemption until such holder surrenders
certificates for such shares, properly endorsed or assigned for transfer, at
such place as the Registrant specifies (unless the Registrant waives such
requirement). As soon as practicable after the Registrant's receipt of
certificates for such shares, the Registrant would deliver to the person for
whose account such shares were so surrendered, or to the nominee or nominees of
such person, the cash, securities or other property to which such person is
entitled, together with any fractional payment referred to below, in each case
without interest. If less than all of the shares of common stock represented by
any one certificate were to be exchanged or redeemed, the Registrant would also
issue and deliver a new certificate for the shares of such common stock not
exchanged or redeemed.
The Registrant would not be required to issue or deliver fractional shares
of any capital stock or any other fractional securities to any holder of common
stock upon any exchange, redemption, dividend or other distribution described
above. If more than
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one share of common stock were held at the same time by the same holder, the
Registrant may aggregate the number of shares of any capital stock that would be
issuable or any other securities that would be distributable to such holder upon
any such exchange, redemption, dividend or other distribution. If there are
fractional shares of any capital stock or any other fractional securities
remaining to be issued or distributed to any holder, the Registrant would, if
such fractional shares or securities were not issued or distributed to such
holder, pay cash in respect of such fractional shares or securities in an amount
equal to the Fair Value thereof, without interest.
From and after the date set for any exchange or redemption, all rights of a
holder of shares of common stock that were exchanged or redeemed would cease
except for the right, upon surrender of the certificates representing such
shares, to receive the cash, securities or other property for which such shares
were exchanged or redeemed, together with any fractional payment as provided
above, in each case without interest (and if such holder was a holder of record
as of the close of business on the record date for a dividend not yet paid, the
right to receive such dividend). A holder of shares of common stock being
exchanged would not be entitled to receive any dividend or other distribution
with respect to shares of the other series of common stock until after the
shares being exchanged are surrendered as contemplated above. Upon such
surrender, the Registrant would pay to the holder the amount of any dividends or
other distributions, without interest, which theretofore became payable with
respect to a record date occurring after the exchange, but which were not paid
by reason of the foregoing, with respect to the number of whole shares of the
other series of common stock represented by the certificate or certificates
issued upon such surrender. From and after the date set for any exchange, the
Registrant would, however, be entitled to treat the certificates for shares of
common stock being exchanged that were not yet surrendered for exchange as
evidencing the ownership of the number of whole shares of the other series of
common stock for which the shares of such common stock should have been
exchanged, notwithstanding the failure to surrender such certificates.
The Registrant would pay any and all documentary, stamp or similar issue or
transfer taxes that might be payable in respect of the issue or delivery of any
shares of capital stock and/or other securities on any exchange or redemption
described herein. The Registrant would not, however, be required to pay any tax
that might be payable in respect of any transfer involved in the issue or
delivery of any shares of capital stock and/or other securities in a name other
than that in which the shares so exchanged or redeemed were registered, and no
such issue or delivery will be made unless and until the person requesting such
issue pays to Staples the amount of any such tax or establishes to the
Registrant's satisfaction that such tax has been paid.
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The Registrant may, subject to applicable law, establish such other rules,
requirements and procedures to facilitate any dividend, redemption or exchange
contemplated as described above as the board of directors may determine to be
appropriate under the circumstances.
Voting Rights
Holders of Staples Stock and Staples.com Stock vote together as one class
on all matters as to which common stockholders generally are entitled to vote,
unless a separate class vote is required by applicable law. On all such matters
for which no separate vote is required, each outstanding share of Staples Stock
entitles the holder to one vote and each outstanding share of Staples.com Stock
entitles the holder to one vote.
When holders of Staples Stock and Staples.com Stock vote together as a
single class, the holders of the series of common stock having a majority of the
votes (initially the holders of Staples Stock) are in a position to control the
outcome of the vote even if the matter involves a conflict of interest between
the holders of Staples Stock and holders of Staples.com Stock.
The Delaware General Corporation Law requires a separate vote of holders of
shares of common stock of any series on any amendment to the certificate of
incorporation if the amendment would increase or decrease the par value of the
shares of such series or alter or change the powers, preferences or special
rights of the shares of such series so as to affect them adversely.
After Staples.com Stock is first issued, the Registrant will set forth
the number of outstanding shares of Staples Stock and Staples.com Stock in the
Registrant's annual and quarterly reports filed pursuant to the Exchange Act,
and disclose in any proxy statement for a stockholder meeting the number of
outstanding shares and per share voting rights of Staples Stock and Staples.com
Stock.
Liquidation
In the event of the Registrant's dissolution, liquidation or winding up
(whether voluntary or involuntary), the holders of Staples Stock and Staples.com
Stock would be entitled to receive the Registrant's assets remaining for
distribution to holders of common stock on a per share basis in proportion to
the liquidation units per share of such series, after payment or provision for
payment of the Registrant's debts and other liabilities and the payment of full
preferential amounts to which holders of any preferred stock are entitled.
Neither a merger nor consolidation of Staples into or with
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any other corporation, nor any sale, transfer or lease of any part of the
Registrant's assets, will, alone, be deemed a liquidation or winding up of
Staples, or cause the dissolution of Staples, for purpose of these liquidation
provisions.
Each share of Staples.com Stock will have one liquidation unit. Each share
of Staples Stock will have a number of liquidation units equal to the quotient
of the average Market Value of a share of Staples Stock over the last 20
consecutive Trading Day period ending 300 days after the Effective Date divided
by the average Market Value of a share of Staples.com Stock over the same
period. If the liquidation, dissolution or winding up occurs prior to such
300th day, the average Market Value will be determined based on the 20
consecutive Trading Day period ending immediately prior to the liquidation,
dissolution or winding up event. In the absence of a public trading market for
the shares of Staples.com Stock, the Registrant's board of directors will
exercise its good faith judgment to determine the market value of a share of
Staples.com Stock for purposes of this formula.
After the number of liquidation units to which each share of Staples Stock
is entitled has been calculated in accordance with this formula, that number
will not be changed without the approval of holders of the series of common
stock adversely affected except as described below. As a result, after the date
of the calculation of the number of liquidation units to which the Staple Stock
is entitled, the liquidation rights of the holders of the respective series of
tracking stock will likely not bear any relationship to the relative market
values or the relative voting rights of the two series at or near the time of
liquidation. The Registrant considers that liquidation is a remote contingency,
and the Registrant's financial advisors believe that, in general, these
liquidation provisions will be immaterial to the value of the Staples.com Stock
and the Staples Stock.
No holder of Staples.com Stock will have any special right to receive
specific assets of the Staples.com Business and no holder of Staples Stock will
have any special right to receive specific assets of the Staples RD Business
upon the Registrant's dissolution, liquidation or winding up.
If the Registrant subdivides or combines the outstanding shares of either
series of common stock or declare a dividend or other distribution of shares of
either series of common stock to holders of that series of common stock, the
number of liquidation units of such series of common stock will be appropriately
adjusted. This adjustment will be made by the Registrant's board of directors,
to avoid any dilution in the relative liquidation rights of any series of common
stock.
Staples RD's Retained Interest in Staples.com
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The number of shares of Staples.com Stock that Staples may issue for the
account of Staples RD in respect of its Retained Interest is referred to as the
"Number of Share's Issuable with Respect to Staples RD's Retained Interest in
Staples.com." At the time that the Registrant first issues shares of, or
options for shares of, Staples.com Stock, the board of directors will designate
the initial Number of Shares Issuable with Respect to Staples RD's Retained
Interest in Staples.com.
In this document, the Registrant calls the percentage interest in
Staples.com intended to be represented at any time by the outstanding shares of
Staples.com Stock the "Outstanding Interest Percentage," and the Registrant
calls the remaining percentage interest in Staples.com intended to be
represented at any time by Staples RD's Retained Interest in Staples.com the
"Retained Interest Percentage." At any time, the Outstanding Interest
Percentage equals the number of shares of Staples.com Stock outstanding divided
by the Total Number of Notional Staples.com Shares Deemed Outstanding (expressed
as a percentage) and the Retained Interest Percentage equals the Number of
Shares Issuable with Respect to Staples RD's Retained Interest in Staples.com
divided by the Total Number of Notional Staples.com Shares Deemed Outstanding
(expressed as a percentage). The sum of the Outstanding Interest Percentage and
the Retained Interest Percentage always equals 100%. The current Retained
Interest Percentage is 100% and the Outstanding Interest Percentage is 0%.
Number of Shares Issuable with Respect to Staples RD's Retained Interest in
Staples.com
The Registrant currently intends to designate 200,000,000 as the initial
Number of Shares Issuable with Respect to Staples RD's Retained Interest in
Staples.com. The Registrant currently plans to grant options for approximately
28,303,304 shares of Staples.com Stock under the 1992 Amended and Restated
Equity Incentive Plan to all Staples employees who currently receive options
under the Plan, shortly following the filing of this registration statement.
Assuming the Registrant does so, it intends to attribute the net proceeds of the
exercise of such options to the equity of Staples.com. The issuance of shares
of Staples.com Stock upon the exercise of those options will have no effect on
the Number of Shares Issuable with Respect to Staples RD's Retained Interest in
Staples.com. Thus, after giving effect to the grant of those options,
. there would be no shares of Staples.com Stock outstanding, but there would
be 28,303,304 shares of Staples.com Stock reserved for issuance upon the
exercise of outstanding options,
. the Number of Shares Issuable with Respect to Staples RD's Retained
Interest in Staples.com would remain 200,000,000,
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. the Total Number of Notional Staples.com Shares Deemed Outstanding would
be 200,000,000, but would increase to 228,303,304 if all such options were
exercised,
. the Outstanding Interest Percentage would be approximately 12.4% if all
such options were exercised, and
. the Retained Interest Percentage would be approximately 87.6% if all such
options were exercised.
The Registrant expects to issue additional shares of Staples.com Stock in one or
more private or public financings within 12 months. The specific terms of the
financings, including whether they are private or public, the amount of
Staples.com Stock the Registrant issues, and the timing of the financings, will
depend upon factors such as stock market conditions and the performance of
Staples.com. The effect of those financings on the Retained Interest Percentage
and the Outstanding Interest Percentage will depend upon the number of shares of
Staples.com Stock sold and whether the Registrant elects to attribute the net
proceeds of such financings to the equity of Staples.com or to Staples RD in
respect of its Retained Interest.
Attribution of Issuances of Staples.com Stock. Whenever the Registrant
decides to issue shares of Staples.com Stock, or options therefor, it would
determine, in its sole discretion, whether to attribute that issuance (and the
proceeds thereof) to Staples RD in respect of its Retained Interest in
Staples.com (in a manner analogous to a secondary offering of common stock of a
subsidiary owned by a corporate parent) or to Staples.com (in a manner analogous
to a primary offering of common stock). If the Registrant issues any shares of
Staples.com Stock and attributes that issuance (and the proceeds thereof) to
Staples RD in respect of its Retained Interest in Staples.com, the Number of
Shares Issuable with Respect to Staples RD's Retained Interest in Staples.com
would be reduced by the number of shares so issued, the number of outstanding
shares of Staples.com Stock would be increased by the same number, the Total
Number of Notional Staples.com Shares Deemed Outstanding would remain unchanged,
the Retained Interest Percentage would be reduced and the Outstanding Interest
Percentage would be correspondingly increased. If the Registrant instead
attributes that issuance (and the proceeds thereof) to Staples.com, the Number
of Shares Issuable with Respect to Staples RD's Retained Interest in Staples.com
would remain unchanged, the number of outstanding shares of Staples.com Stock
and the Total Number of Notional Staples.com Shares Deemed Outstanding would be
increased by the number of shares so issued, the Retained Interest Percentage
would be reduced and the Outstanding Interest Percentage would be
correspondingly increased.
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Issuance of Staples.com Stock as Distributions on Staples Stock. The
Registrant reserves the right to issue shares of Staples.com Stock as a
distribution on Staples Stock, although the Registrant does not currently intend
to do so. If the Registrant did so, it would attribute that distribution to
Staples RD in respect of its Retained Interest in Staples.com. As a result, the
Number of Shares Issuable with Respect to Staples RD's Retained Interest in
Staples.com would be reduced by the number of shares so distributed, the number
of outstanding shares of Staples.com Stock would be increased by the same
number, the Total Number of Notional Staples.com Shares Deemed Outstanding would
remain unchanged, the Retained Interest Percentage would be reduced and the
Outstanding Interest Percentage would be correspondingly increased. If instead
the Registrant issued shares of Staples.com Stock as a distribution on
Staples.com Stock, it would attribute that distribution to Staples.com, in which
case it would proportionately increase the Number of Shares Issuable with
Respect to Staples RD's Retained Interest in Staples.com. As a result, the
Number of Shares Issuable with Respect to Staples RD's Retained Interest in
Staples.com and the Total Number of Notional Staples.com Shares Deemed
Outstanding would each be increased by the same percentage as the number of
outstanding shares of Staples.com Stock is increased and the Retained Interest
Percentage and Outstanding Interest Percentage would remain unchanged.
Dividends on Staples.com Stock. At the time of any dividend on the
outstanding shares of Staples.com Stock (including any dividend required as a
result of a Disposition of All or Substantially All of the Assets of
Staples.com, but excluding any dividend payable in Staples.com Stock), the
Registrant will credit to Staples RD, and charge against Staples.com, a
corresponding amount in respect of Staples RD's Retained Interest in
Staples.com. Specifically, the corresponding amount will equal (I) the
aggregate amount of such dividend multiplied by (2) a fraction, the numerator of
which is the Number of Shares Issuable with Respect to Staples RD's Retained
Interest in Staples.com and the denominator of which is the number of shares of
Staples.com Stock then outstanding.
Repurchase of Staples.com Stock. If the Registrant decides to repurchase
shares of Staples.com Stock, it would determine, in the Registrant's sole
discretion, whether to attributes that repurchase, and the cost thereof, to
Staples RD (in a manner analogous to a purchase of common stock of a subsidiary
by a corporate parent) or to Staples.com (in a manner analogous to an issuer
repurchase). If the Registrant repurchases shares of Staples.com Stock and
attributes that repurchase, and the cost thereof, to Staples RD, the Number of
Shares Issuable with Respect to Staples RD's Retained Interest in Staples.com
would be increased by the number of shares so purchased, the number of
outstanding shares of Staples.com Stock would be decreased by the same number,
the Total Number of Notional Staples.com Shares Deemed Outstanding would remain
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unchanged, the Retained Interest Percentage would be increased and the
Outstanding Interest Percentage would be correspondingly decreased. If the
Registrant instead attributes that repurchase, and the cost thereof, to
Staples.com, the Number of Shares Issuable with Respect to Staples RD's Retained
Interest in Staples.com would remain unchanged, the number of outstanding shares
of Staples.com Stock and the Total Number of Notional Staples.com Shares Deemed
Outstanding would be decreased by the number of shares so repurchased, the
Retained Interest Percentage would be increased and the Outstanding Interest
Percentage would be correspondingly reduced.
Transfers of Cash or Other Property between Staples RD and Staples.com.
The Registrant may, in its sole discretion, determine to transfer cash or other
property of Staples.com to Staples RD in return for a decrease in Staples RD's
Retained Interest in Staples.com (in a manner analogous to a return of capital)
or to transfer cash or other property of Staples RD to Staples.com in return for
an increase in Staples RD's Retained Interest in Staples.com (in a manner
analogous to a capital contribution). If the Registrant determines to transfer
cash or other property of Staples.com to Staples RD in return for a decrease in
Staples RD's Retained Interest in Staples.com, the Number of Shares Issuable
with Respect to Staples RD's Retained Interest in Staples.com and the Total
Number of Notional Staples.com Shares Deemed Outstanding would each be decreased
by an amount equal to the Fair Value of such cash or other property divided by
the Market Value of a share of Staples.com Stock on the day of transfer, the
number of outstanding shares of Staples.com Stock would remain unchanged, the
Retained Interest Percentage would be decreased and the Outstanding Interest
Percentage would be correspondingly increased. If the Registrant instead
determines to transfer cash or other property of Staples RD to Staples.com in
return for an increase in Staples RD's Retained Interest in Staples.com, the
Number of Shares Issuable with Respect to Staples RD's Retained Interest in
Staples.com and the Total Number of Notional Staples.com Shares Deemed
Outstanding would each be increased by an amount equal to the Fair Value of such
cash or other property divided by the Market Value of a share of Staples.com
Stock on the day of transfer, the number of outstanding shares of Staples.com
Stock would remain unchanged, the Retained Interest Percentage would be
increased and the Outstanding Interest Percentage would be correspondingly
decreased.
The Registrant may not attribute issuances of Staples.com Stock to Staples
RD, transfer cash or other property of Staples.com to Staples RD in return for a
decrease in its Retained Interest in Staples.com or take any other action to the
extent that doing so would cause the Number of Shares Issuable with Respect to
Staples RD's Retained Interest in Staples.com to decrease below zero.
Effectiveness of Certain Terms
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The terms described under "-- Dividends," "-- Mandatory Dividend,
Redemption or Exchange on Disposition of All or Substantially All of the Assets
of a Business," "-- Optional Exchange of One Series of Common Stock for the
Other Series," "-- Exchange for Stock of a Subsidiary at Staples' Option,"
"-- General Dividend, Redemption and Exchange Provisions," " Voting Rights" and
"--Liquidation" above apply only when there are shares of both series of common
stock outstanding.
Determinations by the Board of Directors
The Registrant's restated certificate of incorporation, as amended,
provides that, subject to applicable law, any determinations made by the board
of directors in good faith under its certificate of incorporation or in any
certificate of designation filed pursuant thereto is final and binding on all
stockholders of Staples.
The board of directors plans to establish a Business Advisory Board, which
will be comprised of individuals who are not directors, officers or employees of
Staples. The Business Advisory Board's members will be appointed by the board
of directors or its chairman and will serve as consultants to Staples.com with
respect to its business and not as a governing body.
The board of directors also plans to establish a subcommittee comprised of
some of Staples' independent directors to address and resolve, at the request of
Staples' board of directors, any business issues concerning the relationship
between Staples RD and Staples.com.
Preemptive Rights
Holders of Staples Stock and Staples.com Stock do not have any preemptive
rights to subscribe for any additional shares of capital stock or securities
that the Registrant may issue in the future.
Certain Other Provisions of the Registrant's Certificate of Incorporation,
By-laws and Delaware Law
Preferred Stock
The Registrant may issue preferred stock from time to time in one or more
series and the board of directors, without further approval of the Registrant's
stockholders, is authorized to fix the dividend rights and terms, conversion
rights, voting rights, redemption rights, liquidation preferences, sinking funds
and any other rights, preferences, privileges and restrictions applicable to
each series of preferred stock.
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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 the
Registrant's common stock and make it more difficult for a third party to gain
control of Staples. There are no outstanding shares of preferred stock and,
other than the Series A junior participating preferred stock discussed below, no
designated series of preferred stock.
Rights Plan
In February 1994, the Registrant adopted the Staples Rights Plan. Under
the Rights Plan, preferred stock purchase rights were distributed as a dividend,
adjusted for subsequent stock splits, at the rate of 32/243rds of a right for
each share of the Registrant's common stock outstanding. The rights will expire
on February 15, 2004, unless the rights are redeemed or exchanged before that
time. Each right entitles the holder to purchase one one-hundredth of a share
of Series A junior participating preferred stock at an exercise price of $130
per right, subject to adjustment.
The rights will be exercisable only if a person or group has acquired
beneficial ownership of 20% or more of the outstanding shares of the
Registrant's common stock or announces a tender or exchange offer that would
result in such person or group owning 30% or more of the outstanding shares of
the Registrant's common stock. Such percentages may, in the board of directors'
discretion, be lowered, although in no event below 10%. If any person becomes
the beneficial owner of 25% or more of the shares of the Registrant's common
stock, except pursuant to a tender or exchange offer for all shares at a fair
price as determined by the outside members of the board of directors, or if a
20% or more stockholder constitutes or merges into or engages in certain self
dealing transactions with Staples, or if there occurs any reclassification,
merger or other transaction or transactions which increases by more than 1% the
proportionate share of the Registrant's outstanding common stock held by a 20%
or more stockholder, each right not owned by a 20% or more stockholder will
enable its holder to purchase that number of shares of the Registrant's common
stock which equals the exercise price of the right dividend by one-half of the
current market price of the Registrant's common stock at the date of the
occurrence of the event. In addition, if the Registrant is involved in a merger
or other business combination transaction with another person or group in which
the Registrant is not the surviving corporation or in connection with which the
Registrant's common stock is changed or converted, or the Registrant sells or
transfers 50% or more of the Registrant's assets or earning power to another
person, each right that has not previously been exercised will entitle its
holder to purchase that number of shares of common stock of such other person
which equals the exercise price
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of the right divided by one-half of the current market price of such common
stock at the date of the occurrence of the event. The Registrant will generally
be entitled to redeem the rights at $0.02 per right at any time until the tenth
day following public announcement that a 20% stock position has been acquired
and in certain other circumstances.
Because of the nature of the dividend, liquidation and voting rights of the
Series A junior participating preferred stock, the value of the fraction of a
share of Series A junior participating preferred stock purchasable upon exercise
of the 32/243rds of a right associated with each share of common stock should
approximate the value of one share of the Registrant's common stock.
The rights have certain anti-takeover effects. The rights may cause
substantial dilution to a person or group that attempts to acquire us on terms
not approved by the board of directors, except under the terms of an offer
conditioned on a substantial number of rights being acquired. The rights should
not interfere with any merger or other business combination approved by the
board of directors since the rights may be redeemed by us at $0.02 per right
prior to the tenth day after the public announcement by a person or group of the
acquisition of 20% or more of the outstanding shares of the Registrant's common
stock.
The rights attach to the Staples Stock, and all terms of the rights
relating to the Registrant's existing common stock relate to the Staples Stock.
The Registrant may in the future decide to adopt a Rights Plan covering
Staples.com stock.
Delaware Law and Certain Charter Provisions
The Registrant is subject to the provisions of Section 203 of the General
Corporation Law of Delaware, an anti-takeover law. In general, Section 203
prevents an "interested stockholder" of a corporation from engaging in any
"business combination" with the corporation for a period of three years
following the date on which such interested stockholder became an interested
stockholder, unless:
. before the person became an interested stockholder, the board of directors
of the corporation approved either the business combination in question or
the transaction which resulted in the interested stockholder becoming an
interested stockholder;
. upon consummation of the transaction which resulted in the interested
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
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<PAGE>
outstanding at the time the transaction commenced, excluding, for purposes
of determining the number of shares outstanding, shares held by directors
who are also officers and employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer; or
. following the transaction which resulted in the interested stockholder
becoming an interested stockholder, the business combination is approved
by the board of directors of the corporation and authorized at a meeting
of stockholders by the affirmative vote of the holders of at least 66 2/3%
of the outstanding voting stock of the corporation not owned by the
interested stockholder.
A "business combination" includes, mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to certain exceptions, 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 Registrant's restated certificate of incorporation, as amended,
requires that holders of two-thirds of the Registrant's issued and outstanding
stock entitled to vote approve any merger, consolidation, dissolution or sale of
all or substantially all of the Registrant's assets.
The board of directors is divided into three classes of approximately equal
size, one of which is elected each year. The Registrant's restated certificate
of incorporation, as amended, also requires all stockholder action to occur at a
meeting and prohibits stockholder action by written consent. The Registrant's
bylaws provide that special meetings of stockholders may be called only by the
Chairman of the board of directors or the President.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Not applicable.
Item 6. 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
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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 such indemnification is
proper under the circumstances. The Registrant's restated certificate of
incorporation, as amended, provides that the Company shall indemnify its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law.
The Registrant's restated certificate of incorporation, as amended, 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 Registrant's bylaws 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 of
Directors 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 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, he had no reasonable cause to
believe his conduct was unlawful.
The Company has a directors and officers liability policy that insures the
Company's officers and directors against certain liabilities.
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<PAGE>
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
The Exhibit Index immediately preceding the exhibits is incorporated herein
by reference.
Item 9. Undertakings.
------------
1. The Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include, if required, any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the 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 the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
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<PAGE>
provided, however that paragraphs (i) and (ii) do not apply if the
-------- -------
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) 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.
2. The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 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 the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be in the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
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 Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
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 Registrant 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 such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Framingham, Commonwealth of Massachusetts, on
November 9, 1999.
STAPLES, INC.
By: /s/ Thomas G. Stemberg
---------------------------------
Thomas G. Stemberg
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned
officers and directors of Staples, Inc. hereby severally constitute Thomas G.
Stemberg, John J. Mahoney, and Jack A. VanWoerkom, and each of them singly, our
true and lawful attorneys with full power to them, and each of them singly, to
sign for us and in our names in the capacities indicated below, the Registration
Statement filed herewith and any and all amendments to said Registration
Statement, and generally to do all such things in our names and in our
capacities as officers and directors to enable Staples, Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto.
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<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the ninth day of November, 1999.
Signatures Capacity
---------- --------
/s/ Thomas G. Stemberg Chairman of the Board and
- --------------------------
Thomas G. Stemberg Chief Executive Officer
(Principal Executive Officer)
/s/ John J. Mahoney Executive Vice President,
- --------------------------
John J. Mahoney Chief Financial Officer and
Chief Administrative Officer
(Principal Financial Officer)
/s/ Robert K. Mayerson Senior Vice President,
- --------------------------
Robert K. Mayerson Corporate Controller and
Chief Accounting Officer
(Principal Accounting Officer)
/s/ Basil L. Anderson Director
- --------------------------
Basil L. Anderson
/s/ Mary Elizabeth Burton Director
- --------------------------
Mary Elizabeth Burton
/s/ W. Lawrence Heisey Director
- --------------------------
W. Lawrence Heisey
/s/ George J. Mitchell Director
- --------------------------
George J. Mitchell
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<PAGE>
/s/ James L. Moody, Jr. Director
- ----------------------
James L. Moody, Jr.
/s/ Rowland T. Moriarty Director
- ----------------------
Rowland T. Moriarty
/s/ Robert C. Nakasone Director
- ----------------------
/s/ W. Mitt Romney Director
- ----------------------
W. Mitt Romney
/s/ Martin Trust Director
- ----------------------
Martin Trust
/s/ Paul F. Walsh Director
- ----------------------
Paul F. Walsh
/s/ Margaret C. Whitman Director
- ----------------------
Margaret C. Whitman
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<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Exhibit
- ------ -------
5.1 Opinion of Hale and Dorr LLP
23.1 Consent of Hale and Dorr LLP (included in
Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
23.3 Consent of Kupferberg, Goldberg & Neimark, LLC
24.1 Power of Attorney (included in the signature
pages of this Registration Statement)
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<PAGE>
Exhibit 5.1
-----------
HALE AND DORR LLP
60 State Street
Boston, MA 02109
November 9, 1999
Staples, Inc.
500 Staples Drive
Framingham, MA 01702
Re: Staples, Inc. Amended and Restated 1990 Director Stock Option Plan
------------------------------------------------------------------
Ladies and Gentlemen:
We have assisted in the preparation of a Registration Statement on Form S-8
(the "Registration Statement") to be filed with the Securities and Exchange
Commission relating to 957,970 shares of Staples.com Common Stock ("Staples.com
Stock"), $0.0006 par value per share (the "Shares"), of Staples, Inc., a
Delaware corporation (the "Company"), issuable under the Staples, Inc. Amended
and Restated 1990 Director Stock Option Plan (the "Plan").
We have examined the Restated Certificate of Incorporation of the Company
and the Amended and Restated By-Laws of the Company, each as amended to date,
and originals, or copies certified to our satisfaction, of all pertinent records
of the meetings of the directors and stockholders of the Company, the
Registration Statement and such other documents relating to the Company as we
have deemed material for the purposes of this opinion.
In 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.
Based on the foregoing, we are of the opinion that the Company has duly
authorized for issuance the shares of its Staples.com Stock covered by the
Registration Statement to be issued under the Plan, as described in the
Registration Statement, and such shares, when issued in accordance with the
terms of the Plan, will be legally issued, fully paid and nonassessable.
<PAGE>
Staples, Inc.
November 9, 1999
Page 2
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission in connection with the Registration Statement.
Very truly yours,
/s/ HALE AND DORR LLP
-------------------------
HALE AND DORR LLP
<PAGE>
Exhibit 23.2
------------
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 pertaining to the Staples, Inc. Amended and Restated 1990 Director
Stock Option Plan of our report dated March 4, 1999 with respect to the
consolidated financial statements of Staples, Inc. included in its Annual Report
on Form 10-K for the year ended January 30, 1999, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
-------------------------
ERNST & YOUNG LLP
Boston, Massachusetts
November 8, 1999
<PAGE>
Exhibit 23.3
------------
CONSENT OF KUPFERBERG, GOLDBERG & NEIMARK, LLC
INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 pertaining to the Staples, Inc. Amended and Restated 1990 Director
Stock Option Plan of our report dated February 24, 1998 with respect to the
consolidated financial statements of Quill Corporation and Subsidiary as of
December 31, 1997 and for the years ended December 31, 1997 and 1996 included
in its Annual Report on Form 10-K for the year ended January 30, 1999, filed
with the Securities and Exchange Commission.
/s/ Kupferberg, Goldberg & Neimark, LLC
------------------------------------------
KUPFERBERG, GOLDBERG & NEIMARK, LLC
Chicago, Illinois
November 8, 1999
