SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
OfficeMax, Inc.
(Name of Issuer)
Common Shares, without par value
(Title of Class of Securities)
6722M 10 8
(CUSIP Number)
Nancie W. LaDuke
Kmart Corporation, International Headquarters
3100 West Big Beaver Road
Troy, MI 48084-3163
(810) 643-1792
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 9, 1994
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the
subject of this Schedule 13D and is filing this schedule
because of Rule 13d-1(b)(3) or (4), check the following
box: ( ).
Check the following box if a fee is being paid with the
statement: (X).
(A fee is not required only if the reporting person: (1)
has a previous statement on file reporting beneficial
ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial
ownership of five percent or less of such class.) (See
Rule 13d-7.)
Schedule 13D
CUSIP No. 67622M 10 8
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Kmart Corporation; I.R.S. Identification No. 38-0729500
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ( )
(b) ( )
(3) SEC USE ONLY
(4) SOURCE OF FUNDS
OO
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ( )
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Michigan
(7) SOLE VOTING POWER
12,603,061
(8) SHARED VOTING POWER
None
NUMBER OF
SHARES
BENEFICIALLY (9) SOLE DISPOSITIVE POWER
OWNED BY 12,603,061
EACH REPORTING
PERSON (10) SHARED DISPOSITIVE POWER
WITH None
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,603,061
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES ( )
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
25.2%
(14) TYPE OF REPORTING PERSON
CO
Introductory Statement
This statement is being filed by Kmart
Corporation, a Michigan corporation ("Kmart"), to
report its acquisition of 3,184,774 common shares,
without par value (the "Common Shares"), of OfficeMax,
Inc., an Ohio corporation (the "Company"). The
3,184,774 Common Shares acquired are referred to herein
as the "Additional Kmart Shares."
Prior to the initial public offering of
35,700,000 Common Shares (the "Offering"), Kmart owned
in excess of 90% of the Common Shares outstanding. For
the period since Kmart increased its ownership interest
in the Company to in excess of 90% in November 1991
(the "Kmart Acquisition") until November 9, 1994, the
date of completion of the Offering, Kmart provided all
amounts necessary to fund the Company's working capital
and expansion (to the extent not provided through the
Company's internally generated funds). The Company had
accounted for funding transactions with Kmart since the
Kmart Acquisition as net equity transactions in its
historical financial statements; however, prior to the
Offering, no additional Common Shares had been issued
to Kmart with respect to those fundings. As of
September 30, 1994, Kmart had provided net funding of
$439 million to the Company. The total amount of
funding provided by Kmart to the Company since the
Kmart Acquisition until November 9, 1994 is referred to
herein as the "Funding Amounts."
Kmart acquired the Additional Kmart Shares
pursuant to the terms of the Share Transfer Restriction
and Sale and Purchase Agreements, each dated November
21, 1991, as amended by the Amendments to Share
Transfer Restriction and Sale and Purchase Agreements,
each dated August 30, 1994, by and among the Company,
Kmart and each of Michael Feuer and Robert Hurwitz
(together, the "Shareholders Agreement"). Pursuant to
the Shareholders Agreement, on November 9, 1994, the
Company (i) paid to Kmart all of the net proceeds from
the 23,434,000 Common Shares sold by the Company in the
Offering and (ii) issued to Kmart the Additional Kmart
Shares, in satisfaction of all rights of Kmart in
respect of the Funding Amounts. Notwithstanding the
foregoing sentence, however, the Shareholders Agreement
also provides that if the net additional funding
provided by Kmart between August 20, 1994 and November
9, 1994 exceeds $12.4 million, the excess will be
accounted for as indebtedness to Kmart and will be
subject to the terms of a 180-day cash management
agreement between the Company and Kmart.
Item 1. Security and Issuer.
This statement relates to the Common Shares
of the Company, whose principal executive offices are
located at 3605 Warrensville Center Road, Shaker
Heights, Ohio 44122-5203.
Item 2. Identity and Background.
(a)-(c), (f). This statement is being filed
by Kmart, which is incorporated under the laws of the
State of Michigan. The principal executive offices of
Kmart are located at 3100 West Big Beaver Road, Troy,
Michigan 48084-3163, and its telephone number is (810)
643-1000. Kmart is one of the world's largest mass-
merchandise retailers, with the dominant portion of its
business consisting of the operation of a chain of more
than 2,000 Kmart discount stores. In addition to its
investment in the Company, Kmart owns or has
significant equity interests in the specialty retailers
Borders-Walden, Inc., Builders Square, Inc. and The
Sports Authority, Inc., and also has significant equity
interests in substantially all of the Meldisco
subsidiaries of Melville Corporation, which operate
the footwear departments in Kmart stores. The names of
the directors and executive officers of Kmart and their
respective business addresses, citizenship and present
principal occupations or employment are set forth on
Schedule I hereto, which Schedule is incorporated
herein by reference.
(d)-(e). Neither Kmart, nor to the best of
its knowledge, any of the persons listed in Schedule I
hereto, has during the last five years been convicted
in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or has been a party to a civil
proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation of
such laws.
Item 3. Source and Amount of Funds or Other
Consideration.
As discussed in the Introductory Statement
hereto, which is incorporated herein by reference, the
Company issued to Kmart the Additional Kmart Shares
pursuant to the Shareholders Agreement as partial
satisfaction of all rights of Kmart in respect of the
Funding Amounts.
Item 4. Purpose of Transaction.
As discussed in the Introductory Statement
hereto, which is incorporated herein by reference,
the Company issued to Kmart the Additional
Kmart Shares pursuant to the Shareholders Agreement as
partial satisfaction of all rights of Kmart in respect
of the Funding Amounts. As a result of (i) the
issuance of the Additional Kmart Shares, (ii) the
issuance and sale by the Company of 23,434,000 Common
Shares in the Offering and (iii) the sale by Kmart of
12,266,000 Common Shares in the Offering, Kmart's
ownership interest in the Company has declined to
12,603,061 Common Shares, or approximately 25.2% of the
Common Shares outstanding.
To the knowledge of Kmart, it remains the
single largest shareholder of the Company. As a
result, Kmart may be able to influence significantly
the vote on all matters submitted to a vote of the
Company's shareholders, including the election of
directors and approval of extraordinary corporate
transactions. Currently, three of the four members of
the Board of Directors of the Company (the "Board") are
officers of Kmart. In connection with the Offering,
the Board was increased from four to seven members and
the three vacancies created thereby remain unfilled.
It is anticipated that two of the Kmart officers
serving as directors will resign and that the five
vacancies will be filled by outside directors, one of
whom may be an officer of an affiliate of Kmart.
Kmart holds the above referenced Common
Shares for investment purposes and intends to reduce
its ownership interest in the Company over time,
subject to prevailing market and other conditions.
Kmart and the Company have entered into a Registration
Rights Agreement dated as of November 9, 1994 (the
"Registration Rights Agreement") which grants Kmart
certain rights to have Common Shares owned by Kmart
registered under the Securities Act of 1933, as
amended, in order to permit the public sale of such
Common Shares. However, pursuant to Section 2 of the
Underwriting Agreement dated November 1, 1994 (the
"Underwriting Agreement") among the Company, Kmart and
the U.S. Underwriters named in Schedule I thereto and
the International Managers named in Schedule II thereto
(together, the "Underwriters"), Kmart has agreed,
subject to certain exceptions, not to sell or otherwise
dispose of any Common Shares for the 360-day period
following November 2, 1994 without the prior written
consent of Donaldson, Lufkin & Jenrette Securities
Corporation, one of the managing Underwriters in the
Offering. The Underwriting Agreement and the
Registration Rights Agreement are filed hereto as
Exhibits 1 and 7, respectively, and incorporated herein
by reference. The foregoing description of certain
terms of the Underwriting Agreement and the
Registration Rights Agreement does not purport to be
complete and is qualified in its entirety by reference
to the Underwriting Agreement and the Registration
Rights Agreement.
In addition, Kmart's ownership of Common
Shares is expected to decrease as a result of its
obligation, under the terms of the Intercompany
Agreement referred to in Item 6 below, to deliver to
the Company pursuant to such Intercompany Agreement up
to 67,377 Common Shares upon exercise of options
granted by the Company to certain employees under the
Option Cancellation and Amendment Agreements dated as
of November 15, 1991 between the Company and each of
such employees (the "Option Agreements").
Except as disclosed above, Kmart does not
have any plans or proposals which relate to or would
result in any of the matters described in paragraphs
(a) through (j) of Item 4 of Schedule 13D.
Item 5. Interests in Securities of the Issuer.
(a) Kmart owns beneficially and of
record 12,603,061 Common Shares, representing
approximately 25.2% of the total number of Common
Shares outstanding (based upon the number of Common
Shares to be outstanding upon completion of the
Offering (without giving effect to the number of shares
expected to be purchased by officers of the Company
pursuant to the Company's Management Share Purchase
Plan), as set forth in the Company's Registration
Statement on Form S-1 (No. 33-83528) (the "Registration
Statement"), which was declared effective by the
Securities and Exchange Commission on November 1,
1994). Such shares include 67,377 Common Shares that
are owned by Kmart but are required to be delivered to
the Company, pursuant to the terms of the Intercompany
Agreement referred to below, upon exercise of options
granted by the Company to certain employees under the
Option Agreements. Except as set forth in Schedule II
hereto, which Schedule is incorporated herein by reference,
to the knowledge of Kmart, no executive officer or director
of Kmart beneficially owns any Common Shares.
(b) Kmart has the sole power to vote,
or to direct the vote, and the sole power to dispose
of, or to direct the disposition of, all 12,603,061
Common Shares beneficially owned by it.
(c) In the past sixty days, Kmart has
(i) acquired the Additional Kmart Shares on November 9,
1994, as described in Item 3 above, and (ii) sold
12,266,000 Common Shares, at $19.00 per Common Share,
to the Underwriters in connection with the Offering
pursuant to the terms of the Underwriting Agreement.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of
the Issuer.
Except as provided in the Shareholders
Agreement, Section 2 of the Underwriting Agreement, the
Registration Rights Agreement and the Intercompany
Agreement, neither Kmart nor, to the best of its
knowledge, any of the persons listed on Schedule I
hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any
securities of the Company, including the transfer or
voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls,
guarantees of profits, divisions of profits or loss, or
the giving or withholding of proxies.
In connection with the Offering, the Company
and Kmart entered into the Registration Rights
Agreement which, among other things, provides that,
upon the request of Kmart, the Company will register
under the Securities Act any of the Common Shares held
by Kmart for sale in accordance with Kmart's intended
method of disposition thereof, and will take such other
actions as are necessary to permit the sale thereof in
various jurisdictions, subject to certain restrictions
on, among other things, the frequency of requested
registrations, the amount of shares to be registered
and the duration of such rights. Subject to certain
exceptions, including release from or expiration of a
360-day lockup agreement with the Underwriters, for a
period of seven years following November 9, 1994 (the
date of completion of the Offering), Kmart may demand
registration once in any twelve month period, as long
as such demand covers at least 7.5% of the Company's
issued and outstanding common equity and as long as
Kmart (along with its transferees) owns at least 5% of
the Company's common equity. Pursuant to the
Registration Rights Agreement, Kmart also has the
right, for a period of seven years following November
9, 1994, to include the Common Shares held by it in
certain other registrations of common equity securities
of the Company initiated by the Company on its own
behalf or on behalf of any other shareholders. Kmart
has agreed to pay expenses in connection with a
registration made on its demand, unless the Company
causes shares to be registered for itself or a third
party in such registration, in which case the Company
will pay any incremental expenses. If Kmart exercises
its rights to include shares in a registration of the
Company or a third party, Kmart will pay any
incremental expenses. Upon notice, Kmart may transfer
its rights under the Registration Rights Agreement to
purchasers or transferees of 20% or more of the initial
Common Shares owned by Kmart under certain
circumstances. The Registration Rights Agreement
contains certain indemnification and contribution
provisions (i) by Kmart for the benefit of the Company
and related persons and (ii) by the Company for the
benefit of Kmart and related persons, as well as any
potential underwriter.
Pursuant to Section 2 of the Underwriting
Agreement, Kmart and the Company have agreed, for
periods of 360 and 180 days, respectively, after
November 2, 1994, not to offer, sell, contract to sell
or otherwise dispose of any Common Shares or securities
that are convertible into or exchangeable for Common
Shares, directly or indirectly, without the prior
written consent of Donaldson, Lufkin & Jenrette
Securities Corporation, other than in a private
transaction (with respect to Kmart) or pursuant to
stock-based employee and director benefit plans (with
respect to the Company).
In connection with the Offering, the Company
and Kmart also entered into the Intercompany Agreement
dated as of November 9, 1994 (the "Intercompany
Agreement"). The Intercompany Agreement provides that,
during any period in which Kmart possesses at least 20%
of the voting power of the outstanding capital stock of
the Company or in which Kmart is required to account
for its investment in the Company under the equity
method of accounting, the Company will provide Kmart
with certain financial and other information and will
not change its fiscal year end. In addition, pursuant
to the Intercompany Agreement, Kmart has agreed to
provide to the Company up to 67,377 Common Shares, as
needed from time to time, upon exercise of the options
granted by the Company that are outstanding under the
Option Cancellation and Amendment Agreements, each
dated as of November 15, 1991, between the Company and
certain of its employees, and the Company has agreed to
pay Kmart the exercise price therefor.
In addition to the terms of the Shareholders
Agreement described in the Introductory Statement
hereto, the Shareholders Agreement also provides
Messrs. Feuer and Hurwitz "piggyback" registration
rights with respect to their Common Shares in any
registered public offering of the Company which
includes the registration of shares held by Kmart, on a
pro rata basis to such shares included by Kmart in such
offering. In addition, if Mr. Feuer's employment with
the Company is terminated prior to November 9, 1995 by
the Company other than for "cause" or by Mr. Feuer
other than for "good reason," Kmart has a 30-day option
to purchase all of the Common Shares then held by Mr.
Feuer that are subject to the terms of the Shareholders
Agreement.
A copy of each of the Underwriting Agreement,
the Shareholders Agreement, the Intercompany Agreement
and the Registration Rights Agreement is filed as an
exhibit to this statement and incorporated herein by
reference. The foregoing description of the terms of
the Underwriting Agreement, the Shareholders Agreement,
the Intercompany Agreement and the Registration Rights
Agreement does not purport to be complete and is
qualified in its entirety by reference to the
respective agreements.
Item 7. Material to be filed as Exhibits.
1. Underwriting Agreement dated November 1, 1994
among OfficeMax, Inc., Kmart Corporation, the
U.S. Underwriters named in Schedule I thereto
and the International Managers named in Schedule
II thereto.
2. Share Transfer Restriction and Sale and Purchase
Agreement dated November 21, 1991 by and among
Kmart Corporation, OfficeMax, Inc. and Michael
Feuer (incorporated by reference to Exhibit 10.2
to the Company's Registration Statement on Form S-
1 (No. 33-83528)).
3. Share Transfer Restriction and Sale and Purchase
Agreement dated November 21, 1991 by and among
Kmart Corporation, OfficeMax, Inc. and Robert
Hurwitz (incorporated by reference to Exhibit 10.3
to the Company's Registration Statement on Form S-
1 (No. 33-83528)).
4. Amendment to Share Transfer Restriction and Sale
and Purchase Agreement dated as of August 30,
1994 among OfficeMax, Inc., Kmart Corporation and
Michael Feuer (incorporated by reference to
Exhibit 10.13 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (No. 33-83528)).
5. Amendment to Share Transfer Restriction and Sale
and Purchase Agreement dated as of August 30,
1994 among OfficeMax, Inc., Kmart Corporation and
Robert Hurwitz (incorporated by reference to
Exhibit 10.14 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (No. 33-83528)).
6. Intercompany Agreement dated as of November 9,
1994 between OfficeMax, Inc. and Kmart Corporation.
7. Registration Rights Agreement dated as of November
9, 1994 between OfficeMax, Inc. and Kmart Corporation.
SIGNATURE
After reasonable inquiry and to the best of
my knowledge and belief, I certify that the information
set forth in this statement is true, complete and
correct.
KMART CORPORATION
By:/s/ Nancie W. LaDuke
___________________________
Nancie W. LaDuke
Vice President and
Secretary
Dated: November 21, 1994
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
KMART CORPORATION
The names, business addresses and present principal
occupations of the directors and executive officers of Kmart
are set forth below. If no business address is given, the
director's or officer's business address is 3100 West Big
Beaver Road, Troy, Michigan 48084. The business address of
each of the directors of Kmart is also the business address of
such director's employer, if any. All directors and officers
listed below are citizens of the United States.
Kmart Directors:
Names and Business Address Present Principal Occupation of Employment
Lilyan H. Affinito Former Vice Chairman of the
599 Lexington Avenue, 23rd Fl. Board of Maxxam Group, Inc.
New York, NY 10022
Joseph E. Antonini Chairman of the Board,
President and Chief Executive
Officer of Kmart Corporation
Joseph A. Califano, Jr. Chairman and President, Center on
152 West 57th Street, 12th Fl. Addiction and Substance Abuse,
New York, NY 10019 Columbia University
Willie D. Davis President of All Pro Broadcasting, Inc.
161 North LaBrea Avenue
Inglewood, CA 90301
Enrique C. Falla Executive Vice President and Chief
2030 Dow Center Financial Office of The Dow Chemical
Midland, MI 48674 Company
Joseph P. Flannery Chairman of the Board, President and Chief
70 Great Hill Road Executive Office of Uniroyal Holding, Inc.
Naugatuck, CT 06770
David B. Harper President, David B. Harper Management
Co., Inc.
F. James McDonald Retired President and Chief Operating
Officer of General Motors Corporation
J. Richard Munro Chairman of the Executive Committee of
300 First Stamford Place Time Warner Inc.
Stamford, CT 06902
Donald S. Perkins Retired Chairman of the Board of Jewel
100 North Riverside Plaza Companies, Inc.
Suite 1700
Chicago, IL 60606
Gloria M. Shatto President, Berry College
610 Mount Berry Station
Mount Berry, GA 30149
Joseph R. Thomas Executive Vice President, U.S. Kmart Stores
Kmart Officers:
D.W. Keeble Executive Vice President, Merchandising and
Operations
R.J. Floto Executive Vice President and President,
Super Kmart Centers
G.R. Mrkonic Executive Vice President, Specialty
Retailing
T.F. Murasky Executive Vice President and Chief
Financial Officer
R.S. Miller Executive Vice President, Super Kmart
Centers
A.N. Palizzi Executive Vice President, General Counsel
M.P. Rich Strategic Planning, Finance and
Administration
K.W. Watson Executive Vice President, Marketing and
Product Development
D.M. Carlson Senior Vice President, Corporate
Information Systems
F.M. Comins, Jr. Senior Vice President, Executive and
Organization Resources
P.J. Hueber Senior Vice President, Sales and Operations
A.R. Mauro Senior Vice President, Distribution and
Transportation
M.L. Skiles Senior Vice President, Corporate Facilities
W.D. Underwood Senior Vice President, Vender and Product
Development
T.W. Watkins Senior Vice President, International
Operations
F.K. Browett Vice President, General Merchandise
Manager -- Hardlines
R.L. Buch Vice President, General Merchandise
Manager -- Fashions
J.P. Churilla Vice President and Treasurer
J.E. Ford Vice President, Eastern Region
G.W. Gryson, Jr. Vice President, Midwestern Region
G.K. Habeck Vice President, Advertising
N.W. LaDuke Vice President and Secretary
M.T. Macik Vice President, Human Resources --
U.S. Kmart Stores
D.R. Marsico Vice President, Super Kmart Centers
D.M. Meissner Vice President, Western Region
J.L. Moser Vice President, Quality Assurance,
Corporate Identity, Fashion Services and
Sourcing
T.M. Nielsen Vice President, Human Resources --
International
P.J. Palmer Vice President, Labor Relations and
Assistant General Counsel
W.H. Parker Vice President, Merchandising --
Books and Sundries
V.G. Rago Vice President, Kmart Store Systems
Development
J.D. Scussel Vice President, Systems Development
A.R. Stevenson Vice President, Public Affairs
F.C. Tinsey, III Vice President, Accounting and Finance
J.S. Valenti Vice President, Southern Region
M.G. Wellman Vice President, Marketing
SCHEDULE II
COMMON SHARES BENEFICIALLY OWNED
BY THE DIRECTORS AND EXECUTIVE
OFFICERS OF KMART CORPORATION
The name of each Kmart director and executive
officer who beneficially owns Common Shares and the
number of Common Shares such director or executive
officer beneficially owns are set forth below. To the
knowledge of Kmart, the directors and executive officers
named below have sole voting and investment power with
respect to all shares beneficially owned by them. None
of the directors or executive officers set forth below
owns 1% or more of the Common Shares outstanding.
Names Number of Common Shares Beneficially Owned
Kmart Directors:
Lilyan H. Affinito 1,000
Joseph E. Antonini 10,000
Enrique C. Falla 1,000
Joseph P. Flannery 1,500
F. James McDonald 3,000
Donald S. Perkins 5,000
Gloria M. Shatto 500
Joseph R. Thomas 8,000
Kmart Officers:
G.R. Mrkonic 26,000
T.F. Murasky 6,000
A.N. Palizzi 4,000
M.P. Rich 10,000
K.W. Watson 1,000
F.M. Comins, Jr. 2,600
T.W. Watkins 2,000
J.P. Churilla 2,000
J.E. Ford 200
N.W. LaDuke 500
D.R. Marsico 100
T.M. Nielsen 100
P.J. Palmer 1,000
F.C. Tinsey, III 750
M.G. Wellman 1,000
EXHIBIT INDEX
Exhibit No. Description
1. Underwriting Agreement dated November 1, 1994
among the OfficeMax, Inc., Kmart Corporation,
the U.S. Underwriters named in Schedule I
thereto and the International Managers named
in Schedule II thereto.
2. Share Transfer Restriction and Sale and Purchase
Agreement dated November 21, 1991 by and among
Kmart Corporation, OfficeMax, Inc. and Michael
Feuer (incorporated by reference to Exhibit 10.2
to the Company's Registration Statement on Form S-
1 (No. 33-83528)).
3. Share Transfer Restriction and Sale and Purchase
Agreement dated November 21, 1991 by and among
Kmart Corporation, OfficeMax, Inc. and Robert
Hurwitz (incorporated by reference to Exhibit 10.3
to the Company's Registration Statement on Form S-
1 (No. 33-83528)).
4. Amendment to Share Transfer Restriction and Sale
and Purchase Agreement dated as of August 30,
1994 among OfficeMax, Inc., Kmart Corporation
and Michael Feuer (incorporated by reference
to Exhibit 10.13 to Amendment No. 1 to the
Company's Registration Statement on Form S-1
(No. 33-83528)).
5. Amendment to Share Transfer Restriction and Sale
and Purchase Agreement dated as of August 30,
1994 among OfficeMax, Inc., Kmart Corporation and
Robert Hurwitz (incorporated by reference to
Exhibit 10.14 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (No. 33-83528)).
6. Intercompany Agreement dated as of November 9,
1994 between OfficeMax, Inc. and Kmart Corporation.
7. Registration Rights Agreement dated as of November
9, 1994 between OfficeMax, Inc. and Kmart Corporation.
33,000,000 Shares
OFFICEMAX, INC.
Common Shares
UNDERWRITING AGREEMENT
November 1, 1994
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
WILLIAM BLAIR & COMPANY
DEAN WITTER REYNOLDS INC.
McDONALD & COMPANY SECURITIES, INC.
As representatives of the
several U.S. underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, New York 10005
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
WILLIAM BLAIR & COMPANY
DEAN WITTER INTERNATIONAL LTD.
McDONALD & COMPANY SECURITIES, INC.
As representatives of the
several international
managers named in Schedule
II hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
Jupiter House
Trinton Court
14 Finsbury Square
London EC2A 1BR, England
Dear Sirs and Mesdames:
OfficeMax, Inc., an Ohio corporation (the
"Company"), proposes to issue and sell to the several
Underwriters (as defined below) an aggregate of 23,434,000
of its Common Shares, without par value ("Common Shares"),
and Kmart Corporation, a Michigan corporation (the "Selling
Shareholder"), proposes to sell to the several Underwriters
an aggregate of 9,566,000 Common Shares. The 23,434,000
Common Shares to be issued and sold by the Company are
hereinafter called the Company Shares. The 9,566,000 Common
Shares to be sold by the Selling Shareholder are hereinafter
called the Shareholder Shares. The Company Shares and the
Shareholder Shares are hereinafter called the Firm Shares.
It is understood that, subject to the conditions
hereinafter stated, 18,847,200 Company Shares (the "U.S.
Company Shares") and 7,652,800 Shareholder Shares (the "U.S.
Shareholder Shares," and together with the U.S. Company
Shares, the "U.S. Firm Shares") will be sold to the several
U.S. Underwriters named in Schedule I hereto (the "U.S.
Underwriters") in connection with the offering and sale of
such U.S. Firm Shares in the United States and Canada to
United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. Underwriters and
International Managers of even date herewith), and 4,586,800
Company Shares (the "International Company Shares") and
1,913,200 Shareholder Shares (the "International Shareholder
Shares," and together with the International Company Shares,
the "International Shares") will be sold to the several
International Managers named in Schedule II hereto (the
"International Managers") in connection with the offering
and sale of such International Shares outside the United
States and Canada to persons other than United States and
Canadian Persons. Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated, William
Blair & Company, Dean Witter Reynolds Inc., and McDonald &
Company Securities, Inc. shall act as representatives (the
"U.S. Representatives") of the several U.S. Underwriters,
and Donaldson Lufkin & Jenrette Securities Corporation,
Morgan Stanley & Co. International Limited, William Blair &
Company, Dean Witter International Ltd., and McDonald &
Company Securities, Inc. shall act as representatives (the
"International Representatives") of the several
International Managers. The U.S. Underwriters and the
International Managers are hereinafter collectively referred
to as the Underwriters.
The Selling Shareholder also proposes to sell to
the several U.S. Underwriters not more than an additional
2,700,000 Common Shares (the "Additional Shares"), if
requested by the U.S. Underwriters as provided in Section 2
hereof. The Firm Shares and the Additional Shares are
herein collectively called the Shares. The Company and the
Selling Shareholder are hereinafter collectively referred to
as the Sellers.
1. Registration Statement and Prospectus. The
Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with
the provisions of the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder
(collectively called the "Act"), a registration statement on
Form S-1 (File No. 33-83528) including a prospectus relating
to the Shares, which may be amended. The registration
statement contains two prospectuses to be used in connection
with the offering and sale of the Shares: the U.S.
prospectus, to be used in connection with the offering and
sale of Shares in the United States and Canada to United
States and Canadian Persons, and the international
prospectus, to be used in connection with the offering and
sale of Shares outside the United States and Canada to
persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus
except for the outside front and back cover pages and the
"Underwriting" sections. If the Company has elected not to
rely on Rule 430A under the Act, the Company will prepare
and promptly file an amendment to the registration statement
containing amended prospectuses or, if the Company has
elected to rely on Rule 430A, it will prepare and timely
file prospectuses pursuant to Rule 424(b) under the Act that
disclose the information previously omitted from the
prospectus in reliance on Rule 430A. The registration
statement as amended at the time when it becomes effective,
including information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant
to Rule 430A under the Act, is hereinafter referred to as
the Registration Statement; and the U.S. prospectus and the
international prospectus in the respective forms first used
to confirm sales of Shares are hereinafter referred to as
the Prospectus.
2. Agreements to Sell and Purchase. The Company
hereby agrees to issue and sell the U.S. Company Shares, and
the Selling Shareholder hereby agrees to sell the U.S.
Shareholder Shares, to the several U.S. Underwriters, and
each of the U.S. Underwriters, upon the basis of the
representations and warranties contained in this Agreement,
and subject to its terms and conditions, agrees, severally
and not jointly, to purchase from the Company and the
Selling Shareholder at a price per share of $17.98 (the
"Purchase Price"), the respective number of U.S. Company
Shares and U.S. Shareholder Shares set forth in Schedule I
hereto opposite the name of such U.S. Underwriter.
The Company hereby agrees to issue and sell the
International Company Shares, and the Selling Shareholder
hereby agrees to sell the International Shareholder Shares,
to the International Managers named in Schedule II hereto,
and each of the International Managers, upon the basis of
the representations and warranties contained in this
Agreement, and subject to its terms and conditions, agrees,
severally and not jointly, to purchase from the Company and
the Selling Shareholder at the Purchase Price the respective
number of International Company Shares and International
Shareholder Shares set forth opposite the name of such
International Manager in Schedule II hereto.
On the basis of the representations and warranties
contained in this Agreement, and subject to its terms and
conditions, the Selling Shareholder agrees to sell to the
U.S. Underwriters the Additional Shares and the U.S.
Underwriters shall have the right to purchase, severally and
not jointly, up to 2,700,000 Additional Shares from the
Selling Shareholder at the Purchase Price. Additional
Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the
Firm Shares. The U.S. Underwriters may exercise their right
to purchase Additional Shares in whole or in part from time
to time by giving written notice thereof to the Selling
Shareholder within 30 days after the date of this Agreement.
The U.S. Representatives shall give any such notice on
behalf of the U.S. Underwriters and such notice shall
specify the aggregate number of Additional Shares to be
purchased pursuant to such exercise and the date for payment
and delivery thereof. The date specified in any such notice
shall be a business day (i) no earlier than the Closing Date
(as hereinafter defined), (ii) no later than ten business
days after such notice has been given and (iii) no earlier
than two business days after such notice has been given. If
any Additional Shares are to be purchased, each U.S.
Underwriter, severally and not jointly, agrees to purchase
from the Selling Shareholder the number of Additional Shares
(subject to such adjustments to eliminate fractional shares
as the U.S. Representatives may determine) which bears the
same proportion to the total number of Additional Shares to
be purchased from the Selling Shareholder as the number of
U.S. Shareholder Shares set forth opposite the name of such
Underwriter in Schedule I bears to the total number of U.S.
Shareholder Shares.
The Selling Shareholder hereby agrees not to
offer, sell, contract to sell, grant any option to purchase,
or otherwise dispose of any common shares of the Company or
any securities convertible into or exercisable or
exchangeable for such common shares or in any other manner
transfer all or a portion of the economic consequences
associated with the ownership of any such common shares,
except to the Underwriters pursuant to this Agreement, for a
period of 360 days after the date of the Prospectus without
the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation. Notwithstanding the foregoing,
during that period the Selling Shareholder may (i) sell or
transfer Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares held by it to
any person in a transaction not involving a public offering,
provided that as a condition to that sale or transfer that
purchaser or transferee, as applicable, agrees to be bound
by the limitations described in the first sentence of this
paragraph, and (ii) sell Common Shares to persons exercising
options granted pursuant to the Company's 1988 Share Option
Agreements, as described in the Prospectus under the heading
"Management--Employee and Director Benefit Plans--Stock
Based Plans--1988 Share Option Agreements." The Company
hereby agrees, and the Company shall concurrently with the
execution of this Agreement deliver an agreement executed by
Michael Feuer and Robert Hurwitz pursuant to which each of
them agrees, not to offer, sell, contract to sell, grant any
option to purchase or otherwise dispose of any common shares
of the Company or any securities convertible into or
exercisable or exchangeable for such common shares or in any
other manner transfer all or a portion of the economic
consequences associated with the ownership of any such
common shares, for a period of 180 days after the date of
the Prospectus without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation.
Notwithstanding the foregoing, during such period (i) the
Company may issue, offer, sell, contract to sell or
otherwise dispose of Common Shares or grant share options
pursuant to any of the Company's director compensation or
employee benefit plans that are described in the Prospectus
and in effect as of the Closing Date, (ii) the Company may
issue its Common Shares upon the exercise of an option or
warrant or the conversion of a security outstanding on the
date hereof, and (iii) each of Mr. Feuer and Mr. Hurwitz may
sell or transfer Common Shares or any securities convertible
into or exercisable or exchangeable for Common Shares held
by him to any person in a transaction not involving a public
offering, provided that as a condition to that sale or
transfer that purchaser or transferee, as applicable, agrees
to be bound by the limitations described in the immediately
preceding sentence.
3. Terms of Public Offering. The Sellers are
advised by you that the Underwriters propose (i) to make a
public offering of their respective portions of the Shares
as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii)
initially to offer the Shares upon the terms set forth in
the Prospectus. Any allocation of the Shares described in
the Prospectus as having been reserved for sale to certain
individuals, including employees of the Company and the
Selling Shareholder and members of their families, shall be
made in accordance with timely instructions jointly
delivered by the Company and the Selling Shareholder to
Donaldson, Lufkin & Jenrette Securities Corporation.
Each U.S. Underwriter hereby makes to and with the
Sellers the representations and agreements of such U.S.
Underwriter contained in the fifth paragraph of Section 3 of
the Agreement Between U.S. Underwriters and International
Managers of even date herewith, attached hereto as Annex I
and incorporated herein by reference. Each International
Manager hereby makes to and with the Sellers the
representations and agreements of such International Manager
contained in the seventh, eighth, ninth and tenth paragraphs
of Section 3 of such Agreement, attached hereto as Annex II
and incorporated herein by reference.
4. Delivery and Payment. Delivery to the
Underwriters of and payment for the Firm Shares shall be
made at 10:00 A.M., New York City time, on the fifth
business day (the "Closing Date") following the date of the
initial public offering, at such place as the U.S.
Representatives, the Company and the Selling Shareholder
shall agree. The Closing Date and the location of delivery
of and the form of payment for the Firm Shares may be varied
by agreement between you and the Company.
Delivery to the Underwriters of and payment for
any Additional Shares to be purchased by the Underwriters
shall be made at such place as the U.S. Representatives and
the Selling Shareholder shall agree at 10:00 A.M., New York
City time, on the date specified in the applicable exercise
notice given by you pursuant to Section 2 (an "Option
Closing Date"). Any such Option Closing Date and the
location of delivery of and the form of payment for such
Additional Shares may be varied by agreement between the
U.S. Representatives and the Selling Shareholder.
Certificates for the Shares shall be registered in
such names and issued in such denominations as you shall
request in writing not later than two full business days
prior to the Closing Date or an Option Closing Date, as the
case may be. Such certificates shall be made available to
you for inspection not later than 9:30 A.M., New York City
time, on the business day next preceding the Closing Date or
an Option Closing Date, as the case may be. Certificates in
definitive form evidencing the Shares shall be delivered to
you on the Closing Date or an Option Closing Date, as the
case may be, with any transfer taxes thereon duly paid by
the respective Sellers, for the respective accounts of the
several Underwriters, against payment of the Purchase Price
therefor by certified or official bank checks payable in New
York Clearing House funds to the order of the applicable
Seller.
5. Agreements of the Company. The Company
agrees with you:
(a) If the registration statement has not become
effective prior to the time of execution of this
Agreement, to use its best efforts to cause the
registration statement, and any amendments thereof, to
become effective and, if a filing under Rule 424(b)
under the Act is required, to cause the Prospectus to
be filed, or transmitted for filing, with the
Commission pursuant to Rule 424(b).
(b) To advise you promptly and, if requested by
you, to confirm such advice in writing, (i) when the
Registration Statement has become effective and when
any post-effective amendment to it becomes effective,
(ii) of any request by the Commission for amendments to
the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (iii)
of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, and
(iv) of the happening of any event during the period
referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires
the making of any additions to or changes in the
Registration Statement or the Prospectus in order to
make the statements therein not misleading (in the case
of the Prospectus, in the light of the circumstances
when it is to be delivered to a purchaser). If at any
time the Commission shall issue any stop order
suspending the effectiveness of the Registration
Statement, the Company will make every reasonable
effort to obtain the withdrawal or lifting of such
order at the earliest possible time.
(c) To furnish to you, without charge, six signed
copies of the Registration Statement as first filed
with the Commission and of each amendment to it,
including all exhibits, and to furnish to you and each
Underwriter designated by you such number of conformed
copies of the Registration Statement as so filed and of
each amendment to it, without exhibits, as you may
reasonably request.
(d) Not to file any amendment or supplement to
the Registration Statement, whether before or after the
time when it becomes effective, or to make any
amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which you
shall reasonably object; and to prepare and file with
the Commission, promptly upon your reasonable request,
any amendment to the Registration Statement or
supplement to the Prospectus which may be necessary or
advisable in connection with the distribution of the
Shares by you, and to use its best efforts to cause the
same to become promptly effective.
(e) Promptly after the Registration Statement
becomes effective, and from time to time thereafter for
such period prior to the expiration of nine months
after the date of the Prospectus as in the opinion of
counsel for the Underwriters a prospectus is required
by law to be delivered in connection with sales by an
Underwriter or a dealer, to furnish to each Underwriter
and dealer as many copies of the Prospectus (and of any
amendment or supplement to the Prospectus) as such
Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph
(e) any event shall occur as a result of which, in the
opinion of counsel for the Underwriters it becomes
necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with any
law, forthwith to prepare and file with the Commission
an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as
so amended or supplemented, will not in the light of
the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with
law, and to furnish to each Underwriter and to such
dealers as you shall specify, such number of copies
thereof as such Underwriter or dealers may reasonably
request.
(g) Prior to any public offering of the Shares,
to cooperate with you and counsel for the Underwriters
in connection with the registration or qualification of
the Shares for offer and sale by the several
Underwriters and by dealers under the state securities
or Blue Sky laws of such jurisdictions as you may
request, to continue such qualification in effect so
long as required for distribution of the Shares and to
file such consents to service of process or other
documents as may be necessary in order to effect such
registration or qualification; provided, that the
Company shall not be required to register or qualify as
a foreign corporation or as a dealer in securities
where it is not now so qualified or to file a general
consent to service of process or take any other action
which would subject it to the service of process in
suits or to taxation, other than as to matters and
transactions relating to the offer and sale of the
Shares in each jurisdiction in which the Shares have
been qualified as provided above.
(h) To make generally available to its
shareholders (within the meaning of Section 11(a) of
the Act and Rule 158 thereunder) as soon as reasonably
practicable an earnings statement covering a period of
at least twelve months after the effective date of the
Registration Statement (but in no event commencing
later than 90 days after such date) which shall satisfy
the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(i) During the period of three years after the
date of this Agreement, (i) to mail as soon as
reasonably practicable after the end of each fiscal
year to the record holders of its Common Shares a
financial report of the Company and its subsidiaries on
a consolidated basis, such financial reports to include
a consolidated balance sheet, a consolidated statement
of operations, a consolidated statement of cash flows
and a consolidated statement of shareholders' equity as
of the end of and for such fiscal year, together with
comparable information as of the end of and for the
preceding year, audited by independent certified public
accountants, and (ii) to mail and make generally
available as soon as reasonably practicable after the
end of each quarterly period (except for the last
quarterly period of each fiscal year) to such holders,
a condensed consolidated balance sheet, a condensed
consolidated statement of operations and a condensed
consolidated statement of cash flows as of the end of
and for such period, and for the period from the
beginning of such year to the close of such quarterly
period, together with comparable information for the
corresponding periods of the preceding year.
(j) During the period referred to in paragraph
(i), to furnish to you as soon as available a copy of
each report or other publicly available information of
the Company mailed to the holders of Common Shares or
filed with the Commission and such other publicly
available information concerning the Company and its
subsidiaries as you may reasonably request.
(k) To use its best efforts to have the Common
Shares approved for listing on The New York Stock
Exchange and to consult with Donaldson, Lufkin &
Jenrette Securities Corporation prior to making any
decision to discontinue that listing at any time within
five years after the effective date of the Registration
Statement.
(l) To use its best efforts to do and perform all
things required or necessary to be done and performed
under this Agreement by the Company prior to the
Closing Date or any Option Closing Date, as the case
may be, and to satisfy all conditions precedent to the
delivery of the Shares.
(m) To immediately notify you of any change in
the information referred to in paragraph 7(f) below, at
any time during the period described in paragraph 5(e)
hereof.
6. Representations and Warranties of the
Company. The Company represents and warrants to each
Underwriter that:
(a) No stop order suspending the effectiveness of
the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to
the knowledge of the Company, threatened by the
Commission.
(b) (i) Each part of the Registration Statement,
when such part became effective (or, if the
registration statement is not effective at the time of
execution of this Agreement, when it becomes
effective), did not contain (or will not contain, as
the case may be) and each such part, as hereafter
amended or supplemented, if applicable, will not
contain, any untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement and the
Prospectus comply (or, if the registration statement is
not effective at the time of execution of this
Agreement, when the Registration Statement becomes
effective the Registration Statement will comply) and,
as hereafter amended or supplemented, if applicable,
will comply, in all material respects with the Act and
(iii) the Prospectus does not contain and, as hereafter
amended or supplemented, if applicable, will not
contain, any untrue statement of a material fact or
omit to state a material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading, except that
the representations and warranties set forth in this
paragraph (b) do not apply to statements or omissions
in the Registration Statement or the Prospectus based
upon information relating to any Underwriter furnished
to the Company in writing by or on behalf of such
Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of
the registration statement as originally filed or as
part of any amendment thereto, or filed pursuant to
Rule 424 under the Act, complied when so filed in all
material respects with the Act; and did not contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading, except that the representations and
warranties set forth in this paragraph (c) do not apply
to statements and omissions in any preliminary
prospectus based upon information relating to any
Underwriter furnished to the Company in writing by or
on behalf of any Underwriter through you expressly for
use therein.
(d) The Company and each of its subsidiaries has
been duly incorporated, is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate
power and authority to carry on its business as it is
currently being conducted and to own, lease and operate
its properties, and each is duly qualified and is in
good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of
its business or its ownership or leasing of property
requires such qualification, except where the failure
to be so qualified or to be in good standing would not
have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(e) Except as otherwise set forth in the
Prospectus, all of the outstanding capital stock or
shares of, and any other ownership interests in, each
of the Company's subsidiaries, are owned by the
Company, free and clear of any security interest,
claim, lien, encumbrance or adverse interest of any
nature.
(f) All the outstanding capital shares of the
Company (including the Shares to be sold by the Selling
Shareholder) have been duly authorized and validly
issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights; and the
Shares to be issued and sold by the Company hereunder
have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor
as provided by this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar
rights.
(g) The authorized capital shares of the Company,
including the Common Shares, conform as to legal
matters to the description thereof contained in the
Prospectus.
(h) Neither the Company nor any of its
subsidiaries is in violation of its respective charter,
by-laws or regulations or in default in the performance
of any obligation, agreement or condition contained in
any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of
the Company and its subsidiaries, taken as a whole, to
which the Company or any of its subsidiaries is a party
or by which it or any of its subsidiaries or their
respective property is bound.
(i) The execution, delivery and performance of
this Agreement, compliance by the Company with all the
provisions hereof and the consummation of the
transactions contemplated hereby will not require any
consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other
governmental body (except such as have been obtained or
may be required under the securities or Blue Sky laws
of the various states or the securities laws of foreign
jurisdictions) and will not conflict with or constitute
a breach of any of the terms or provisions of, or a
default under, the charter or by-laws of the Company or
any of its subsidiaries or any agreement, indenture or
other instrument to which it or any of its subsidiaries
is a party or by which it or any of its subsidiaries or
their respective property is bound, or violate or
conflict with any laws, administrative regulations or
rulings or court decrees applicable to the Company, any
of its subsidiaries or their respective property.
(j) Except as otherwise set forth in the
Prospectus, there are no material legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any of their
respective property is the subject, and, to the best of
the Company's knowledge, no such proceedings are
threatened or contemplated. No contract or document of
a character required to be described in the
Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement is not so
described or filed as required.
(k) Neither the Company nor any of its
subsidiaries is in violation of any foreign, federal,
state or local law or regulation applicable to the
Company relating to the protection of human health and
safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants
("Environmental Laws"), nor any federal or state law
applicable to the Company relating to discrimination in
the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor
any provisions of the Employee Retirement Income
Security Act or the rules and regulations promulgated
thereunder applicable to the Company, nor to the
Company's knowledge is there any past violation of any
law or regulation referred to in this subsection, which
in each case might result in any material adverse
change in the business, prospects, financial condition
or results of operation of the Company and its
subsidiaries, taken as a whole.
(l) The Company and each of its subsidiaries has
such material permits, licenses, franchises and
authorizations of governmental or regulatory
authorities ("permits"), including, without limitation,
under any applicable Environmental Laws, as are
necessary to own, lease and operate its respective
properties and to conduct its business; the Company and
each of its subsidiaries has fulfilled and performed
all of its material obligations with respect to such
permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation
or termination thereof or results in any other material
impairment of the rights of the holder of any such
permit; and, except as described in the Prospectus,
such permits contain no restrictions that are
materially burdensome to the Company or any of its
subsidiaries.
(m) [Intentionally omitted.]
(n) Except as otherwise set forth in the
Prospectus or such as are not material to the business,
prospects, financial condition or results of operation
of the Company and its subsidiaries, taken as a whole,
the Company and each of its subsidiaries has good and
marketable title, free and clear of all liens, claims,
encumbrances and restrictions except liens for taxes
not yet due and payable, to all property and assets
described in the Registration Statement as being owned
by it. All real estate leases and other material
leases to which the Company or any of its subsidiaries
is a party are valid and binding and no default has
occurred or is continuing thereunder, which might
result in any material adverse change in the business,
prospects, financial condition or results of operation
of the Company and its subsidiaries taken as a whole,
and the Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which
any of them is a party as lessee with such exceptions
as do not materially interfere with the use made by the
Company or such subsidiary.
(o) The Company and each of its subsidiaries
maintains reasonably adequate insurance for the conduct
of its business and the value of its properties or
otherwise self-insures in a manner consistent with good
industry practice.
(p) Price Waterhouse are independent public
accountants with respect to the Company as required by
the Act.
(q) The consolidated financial statements and
notes thereto, together with related schedules and
notes forming part of the Registration Statement and
the Prospectus (and any amendment or supplement
thereto), present fairly the consolidated financial
position, results of operations and cash flows of the
Company and its subsidiaries on the basis stated in the
Registration Statement at the respective dates or for
the respective periods to which they apply; such
statements and related schedules and notes have been
prepared in accordance with generally accepted
accounting principles consistently applied throughout
the periods involved, except as disclosed therein and
except that the unaudited interim financial statements
are subject to normal fiscal year-end adjustments; and
the other financial and statistical information and
data set forth in the Registration Statement and the
Prospectus (and any amendment or supplement thereto)
is, in all material respects, accurately presented and
prepared on a basis consistent with such financial
statements and the books and records of the Company.
(r) The Company is not an "investment company"
within the meaning of the Investment Company Act of
1940, as amended.
(s) Except as set forth in the Prospectus, no
holder of any security of the Company has any right to
require registration of Common Shares or any other
security of the Company.
(t) The Company has complied with all provisions
of Section 517.075, Florida Statutes (Chapter 92-198,
Laws of Florida).
(u) The Company and each of its subsidiaries
maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with
management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit
preparation of financial statements in conformity with
generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets
is permitted only in accordance with management's
general or specific authorization; and (iv) the
recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
7. Representations and Warranties of the Selling
Shareholder. The Selling Shareholder represents and
warrants to each Underwriter that:
(a) The Selling Shareholder is, and on the
Closing Date (and Option Closing Date, if applicable)
will be, the sole holder of record and beneficial owner
of the Shares to be sold by it pursuant to this
Agreement, free of all restrictions on transfer, liens,
encumbrances, security interests and claims whatsoever
other than as described in the Prospectus or arising
under this Agreement.
(b) Upon delivery of and payment for the Shares
to be sold by the Selling Shareholder pursuant to this
Agreement, the Underwriters will receive all of the
Selling Shareholder's interest in the Shares purchased
from the Selling Shareholder, free of all restrictions
on transfer, liens, encumbrances, security interests
and claims whatsoever.
(c) The Selling Shareholder has, and on the
Closing Date will have, full legal right, power and
authority to enter into this Agreement and to sell,
assign, transfer and deliver such Shares in the manner
provided herein, and this Agreement has been duly
authorized, executed and delivered by the Selling
Shareholder and is a valid and binding agreement of the
Selling Shareholder enforceable in accordance with its
terms, except to the extent that (i) enforcement
thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights
generally and (B) general principles of equity
(regardless of whether enforceability is considered in
a proceeding at law or in equity) and (ii) the rights
to indemnity and contribution hereunder may be limited
by applicable law or public policy relating thereto.
(d) The Selling Shareholder has not taken, and
will not take, directly or indirectly, any action
designed to, or which might reasonably be expected to,
cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the
sale or resale of the Shares pursuant to the
distribution contemplated by this Agreement, and other
than as permitted by the Act, the Selling Shareholder
has not distributed and will not distribute any
prospectus or other offering material in connection
with the offering and sale of the Shares.
(e) The execution, delivery and performance of
this Agreement by the Selling Shareholder, compliance
by the Selling Shareholder with all the provisions
hereof and the consummation of the transactions
contemplated hereby will not require any consent,
approval, authorization or other order of any court,
regulatory body, administrative agency or other
governmental body (except such as have been obtained or
such as may be required under state securities laws or
Blue Sky laws or the securities laws of foreign
jurisdictions) and will not conflict with or constitute
a breach of any of the terms or provisions of, or a
default under, organizational documents of the Selling
Shareholder, or any agreement, indenture or other
instrument to which the Selling Shareholder is a party
or by which the Selling Shareholder or property of such
Selling Shareholder is bound, or violate or conflict
with any laws, administrative regulation or ruling or
court decree applicable to the Selling Shareholder or
property of the Selling Shareholder, except, in each
case, for such conflicts, breaches, defaults or
violations that would not have a material adverse
effect on the Selling Shareholder and that would not
impair the Selling Shareholder's ability to consummate
the transactions contemplated hereby.
(f) The parts of the Registration Statement under
the captions "Relationship With Kmart" and "Principal
and Selling Shareholders" which specifically relate to
the Selling Shareholder, do not, and will not on the
Closing Date (and any Option Closing Date, if
applicable), contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in light of circumstances under which they
were made, not misleading.
8. Indemnification. (a) The Company and the
Selling Shareholder, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading
(in the case of the Prospectus or any preliminary
prospectus, in the light of the circumstances under which
they were made), except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or
omission (i) based upon information relating to any
Underwriters furnished in writing to the Company by or on
behalf of any Underwriter through you expressly for use
therein or (ii) made in any preliminary prospectus if a copy
of the Prospectus (as amended or supplemented, if the
Company shall timely furnish such amendment or supplement
thereto) was not sent or given by or on behalf of the
Underwriters to the person asserting any such loss, claim or
liability, if required by law so to have been sent or given,
at or prior to the written confirmation of the sale of the
Shares as required by the Act, and the Prospectus (as so
amended or supplemented, if applicable) would have corrected
in all material respects such untrue statement or omission.
(b) In case any action shall be brought against
any Underwriter or any person controlling such Underwriter,
based upon any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement
thereto and with respect to which indemnity may be sought
against the Company or the Selling Shareholder, such
Underwriter shall promptly notify the Company and the
Selling Shareholder in writing and the Company and the
Selling Shareholder shall assume the defense thereof,
including the employment of counsel reasonably satisfactory
to such indemnified party and payment of all fees and
expenses. Any Underwriter or any such controlling person
shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless (i) the
employment of such counsel shall have been specifically
authorized in writing by the Company and the Selling
Shareholder, (ii) the Company and the Selling Shareholder
shall have failed to assume the defense and employ counsel
or (iii) the named parties to any such action (including any
impleaded parties) include both such Underwriter or such
controlling person and the Company or the Selling
Shareholder, as the case may be, and such Underwriter or
such controlling person shall have been advised by such
counsel that there may be one or more legal defenses
available to it which are different from or additional to
those available to the Company or the Selling Shareholder,
as the case may be (in which case the Company and the
Selling Shareholder shall not have the right or obligation
to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood,
however, that the Company and the Selling Shareholder shall
not, in connection with any one such action or separate but
substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any
local counsel) for all such Underwriters and controlling
persons, which firm shall be designated in writing by
Donaldson, Lufkin & Jenrette Securities Corporation and be
reasonably acceptable to the Sellers and that all such fees
and expenses shall be reimbursed as they are incurred). A
Seller shall not be liable for any settlement of any such
action effected without the written consent of such Seller
but if settled with the written consent of such Seller, such
Seller agrees to indemnify and hold harmless any Underwriter
and any such controlling person from and against any loss or
liability by reason of such settlement. Notwithstanding the
immediately preceding sentence, if in any action where the
fees and expenses of counsel are at the expense of the
indemnifying party and an indemnified party shall have
requested in a writing delivered by certified mail to the
attention of the officer or department of the indemnifying
party identified in Section 12 hereof that the indemnifying
party reimburse the indemnified party for such fees and
expenses of counsel as incurred, and shall have indicated in
that written request that the indemnifying party may become
liable for a proposed settlement in such action effected
without its written consent if the requested reimbursement
is not made, such indemnifying party agrees that it shall be
liable for any settlement of any action effected without its
written consent if (i) such settlement is entered into more
than 20 business days after the receipt by such indemnifying
party of the aforesaid written request and (ii) prior to the
date of such settlement such indemnifying party shall have
failed to (A) reimburse the indemnified party in accordance
with such request for all items included therein not being
disputed in good faith by the indemnifying party, and (B)
notify the indemnified party with reasonable specificity of
the items included therein that the indemnifying party
disputes in good faith. No indemnifying party shall,
without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of
such proceeding.
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its
directors, its officers who sign the Registration Statement,
any person controlling the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, the
Selling Shareholder, its directors and each person, if any,
controlling the Selling Shareholder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Sellers
to each Underwriter but only with reference to information
relating to such Underwriter furnished in writing by or on
behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus or any
preliminary prospectus. In case any action shall be brought
against the Company, any of its directors, any such officer
or any person controlling the Company, or the Selling
Shareholder, any of its directors or any person controlling
the Selling Shareholder based on the Registration Statement,
the Prospectus or any preliminary prospectus and in respect
of which indemnity may be sought against any Underwriter,
the Underwriter shall have the rights and duties given to
the Sellers (except that if any Seller shall have assumed
the defense thereof such Underwriter shall not be required
to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such
Underwriter), and the Company, its directors, any such
officers and any person controlling the Company and the
Selling Shareholder, its directors and any person
controlling the Selling Shareholder shall have the rights
and duties given to the Underwriter, by Section 8(b) hereof.
(d) If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect
of any losses, claims, damages, liabilities or judgments
referred to therein, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Sellers on the
one hand and the Underwriters on the other hand from the
offering of the 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 Sellers and the Underwriters in
connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments,
as well as any other relevant equitable considerations. The
relative benefits received by the Sellers and the
Underwriters shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting
expenses) received by the Sellers, and the total
underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the
Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Sellers
and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
Company, the Selling Shareholder or the Underwriters and the
parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission.
The Sellers and the Underwriters agree that it
would not be just and equitable if contribution pursuant to
this Section 8(d) were determined by pro rata allocation
(even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which
does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 8(d) are several in
proportion to the respective number of Shares purchased by
each of the Underwriters hereunder and not joint.
9. Conditions of Underwriters' Obligations. The
several obligations of the Underwriters to purchase the Firm
Shares under this Agreement are subject to the satisfaction
of each of the following conditions:
(a) All the representations and warranties of the
Company contained in this Agreement shall be true and
correct on the Closing Date with the same force and
effect as if made on and as of the Closing Date.
(b) The Registration Statement shall have become
effective not later than 10:00 A.M., New York City
time, on the day following the date of this Agreement
or at such later date and time as you may approve in
writing, and at the Closing Date no stop order
suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for
that purpose shall have been commenced or shall be
pending before or, to the knowledge of the Company,
threatened by the Commission.
(c)(i) Since the date of the latest balance sheet
included in the Registration Statement and the
Prospectus, there shall not have been any material
adverse change, or any development involving a
prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the
ordinary course of business, of the Company, (ii) since
the date of the latest balance sheet included in the
Registration Statement and the Prospectus there shall
not have been any material adverse change, or any
development involving a prospective material adverse
change, in the capital shares or in the long-term debt
of the Company from that set forth in the Registration
Statement and Prospectus, (iii) the Company and its
subsidiaries shall have no liability or obligation,
direct or contingent, which is material to the Company
and its subsidiaries, taken as a whole, other than
those reflected in the Registration Statement and the
Prospectus and (iv) on the Closing Date you shall have
received a certificate dated the Closing Date, signed
by Michael Feuer and Edward L. Cornell, in their
capacities as the Chief Executive Officer and Chief
Financial Officer of the Company, confirming the
matters set forth in paragraphs (a), (b), and (c) of
this Section 9.
(d) All the representations and warranties of the
Selling Shareholder contained in this Agreement shall
be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing
Date and you shall have received a certificate to such
effect, dated the Closing Date, from the Selling
Shareholder.
(e) You shall have received on the Closing Date
(x) an opinion (reasonably satisfactory to you and
counsel for the Underwriters), dated the Closing Date,
of Todd M. DuChene, General Counsel for the Company, to
the effect set forth in items (i)-(xviii), below, (y)
an opinion (reasonably satisfactory to you and counsel
for the Underwriters), dated the Closing Date, of
Skadden, Arps, Slate, Meagher & Flom, counsel for the
Company and the Selling Shareholder, to the effect set
forth in items (vi), (viii), (ix), (xi), (xii), and
(xvi)-(xix), below, and (z) an opinion (reasonably
satisfactory to you and counsel for the Underwriters),
dated the Closing Date, of Anthony N. Palizzi, General
Counsel for the Selling Shareholder, to the effect set
forth in items (vi) and (xi) (with respect to matters
relating to the Selling Shareholder), below:
(i) the Company and each of its subsidiaries
has been duly incorporated, is validly existing as
a corporation in good standing under the laws of
its jurisdiction of incorporation and has the
corporate power and authority required to carry on
its business as it is currently being conducted
and to own, lease and operate its properties;
(ii) the Company and each of its
subsidiaries is duly qualified and is in good
standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature
of its business or its ownership or leasing of
property requires such qualification, except where
the failure to be so qualified would not have a
material adverse effect on the Company and its
subsidiaries, taken as a whole;
(iii) except as otherwise set forth in the
Prospectus, all of the outstanding capital stock
or shares of, and other ownership interests in,
each of the Company's subsidiaries, are owned by
the Company, free and clear of any security
interest, claim, lien, encumbrance or adverse
interest of any nature;
(iv) all the outstanding Common Shares
(including the Shares to be sold by the Selling
Shareholder) have been duly authorized and validly
issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights;
(v) the Shares to be issued and sold by the
Company hereunder have been duly authorized, and
when issued and delivered to the Underwriters
against payment therefor as provided by this
Agreement, will have been validly issued and will
be fully paid and non-assessable, and the issuance
of such Shares is not subject to any preemptive or
similar rights;
(vi) this Agreement has been duly
authorized, executed and delivered by the Company
and the Selling Shareholder and is a valid and
binding agreement of the Company and the Selling
Shareholder enforceable in accordance with its
terms (except to the extent that (a) enforcement
thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating
to creditors' rights generally and (2) general
principles of equity (regardless of whether
enforceability is considered in a proceeding at
law or in equity) and (b) the rights to indemnity
and contribution hereunder may be limited by
applicable law or public policy relating thereto;
(vii) the authorized capital shares of the
Company, including the Common Shares, conform as
to legal matters to the description thereof
contained in the Prospectus;
(viii) the Registration Statement has become
effective under the Act and to the knowledge of
such counsel, no stop order suspending its
effectiveness has been issued and no proceedings
for that purpose are pending before or threatened
by the Commission;
(ix) the statements under the captions
"Relationship with Kmart", "Relationship with
Corporate Express" and "Underwriting" in the
Prospectus, insofar as such statements constitute
a summary of documents to which the Company or the
Selling Shareholder is a party, have been reviewed
by such counsel and fairly present the information
called for with respect to such documents in all
material respects; the statements under the
caption "Certain United States Federal Tax
Considerations to Non-U.S. Shareholders" in the
Prospectus, to the extent such statements
constitute matters of law or legal conclusions,
have been reviewed by such counsel and fairly
present the information disclosed therein in all
material respects; and the statements under Items
14 and 15 of Part II of the Registration
Statement, insofar as such statements constitute
matters of law or legal conclusions or a summary
of documents referred to therein, have been
reviewed by such counsel and fairly present the
information called for with respect to such legal
matters and documents in all material respects;
(x) neither the Company nor any of its
subsidiaries is in violation of its respective
charter, by-laws or regulations and, to the best
of such counsel's knowledge after due inquiry,
neither the Company nor any of its subsidiaries is
in default in the performance of any obligation,
agreement or condition contained in any bond,
debenture, note or any other evidence of indebted-
ness or in any other agreement, indenture or
instrument material to the conduct of the business
of the Company and its subsidiaries, taken as a
whole, to which the Company or any of its
subsidiaries is a party or by which it or any of
its subsidiaries or their respective property is
bound;
(xi) (A) the execution, delivery and
performance of this Agreement by the Company and
the Selling Shareholder, compliance by the Company
and the Selling Shareholder with all the
provisions hereof and the consummation of the
transactions contemplated hereby will not result
in any violation or conflict with any of the terms
or provisions of any Applicable Laws or Applicable
Orders (it being understood that for purposes of
such opinion, (i) the term "Applicable Laws" means
those laws, rules and regulations of the State of
New York (for the opinion to be rendered by
Skadden, Arps, Slate, Meagher & Flom), the State
of Ohio (for the opinion to be rendered by Mr.
DuChene), the state of Michigan (for the opinion
to be rendered by Mr. Palizzi), and the United
States of America that, in such counsel's
experience, are normally applicable to trans-
actions of the type contemplated by the
Underwriting Agreement, each as in effect on the
date of such opinion; (ii) the term "Applicable
Orders" means those judgments, orders or decrees
of Governmental Authorities (as such term is
hereinafter defined) by which the Company or any
of its subsidiaries or the Selling Shareholder is
bound, the existence of which is actually known to
such counsel or has been specifically disclosed to
such counsel in writing; and (iii) the term
"Governmental Authorities" means any New York (for
the opinion to be rendered by Skadden, Arps,
Slate, Meagher & Flom), Ohio (for the opinion to
be rendered by Mr. DuChene), Michigan (for the
opinion to be rendered by Mr. Palizzi) or federal
executive, legislative, judicial, administrative
or regulatory body under Applicable Laws); pro-
vided that in rendering such opinion, such counsel
need not express any opinion with respect to (1)
any securities or Blue Sky laws of the various
states or the securities laws of foreign
jurisdictions or (2) the information contained in,
or the accuracy, completeness or correctness of,
the Prospectus or the Registration Statement or
the compliance thereof as to form with the Act and
the rules and regulations promulgated thereunder,
which matters are dealt with separately in items
(ix), (xii) and (xviii); (B) no Governmental
Approval is required for the execution, delivery
and performance of this Agreement by the Company
and the Selling Shareholder, compliance by the
Company and the Selling Shareholder with all the
provisions hereof and the consummation of the
transactions contemplated hereby (it being
understood that for purposes of such opinion, the
term "Governmental Approval" means any consent,
approval, license, authorization or validation of,
or notice to, or filing, recording or registration
with, any Governmental Authority pursuant to
Applicable Laws); provided that in rendering such
opinion, such counsel need not express any opinion
with respect to (1) any securities or Blue Sky
laws of the various states or the securities laws
of foreign jurisdictions or (2) such Governmental
Approvals as have been obtained under the Act, the
Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder; and (C) the
execution, delivery and performance of this
Agreement by the Company and the Selling
Shareholder, compliance by the Company and the
Selling Shareholder with all the provisions hereof
and the consummation of the transactions
contemplated hereby will not conflict with or
constitute a breach of any of the terms or
provisions of, or a default under, the charter,
regulations or by-laws of the Company or any of
its subsidiaries or the organizational documents
of the Selling Shareholder or any agreement,
indenture or other instrument material to the
conduct of the business of the Company and its
subsidiaries, taken as a whole, or to the conduct
of the business of the Selling Shareholder and its
subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries or the Selling
Shareholder is a party or by which the Company or
any of its subsidiaries or the Selling Shareholder
or their respective properties are bound, except,
with respect to the Selling Shareholder, in each
case for such conflicts, breaches, defaults or
violations that would not have a material adverse
effect on the Selling Shareholder and that would
not impair the Selling Shareholder's ability to
consummate the transactions contemplated hereby;
(xii) after due inquiry, such counsel does not
know of any legal or governmental proceeding pending
or threatened to which the Company or any of its
subsidiaries is a party or to which any of their
respective property is subject which is required to
be described in the Registration Statement or the
Prospectus and is not so described, or of any
contract or other document which is required to be
described in the Registration Statement or the
Prospectus or is required to be filed as an exhibit
to the Registration Statement which is not described
or filed as required;
(xiii) to the best of such counsel's
knowledge, after due inquiry, neither the Company
nor any of its subsidiaries is in violation of any
Environmental Laws applicable to the Company, nor
any federal or state law applicable to the Company
relating to discrimination in the hiring,
promotion or pay of employees nor any applicable
federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income
Security Act or the rules and regulations
promulgated thereunder applicable to the Company,
which in each case might result in any material
adverse change in the business, prospects,
financial condition or results of operations of
the Company and its subsidiaries, taken as a
whole;
(xiv) the Company and each of its
subsidiaries has such material permits, licenses,
franchises and authorizations of governmental or
regulatory authorities ("permits"), including,
without limitation, under any Environmental Laws,
as are necessary to own, lease and operate its
respective properties and to conduct its business
in the manner described in the Prospectus; to the
best of such counsel's knowledge, after due
inquiry, the Company and each of its subsidiaries
has fulfilled and performed all of its material
obligations with respect to such permits and no
event has occurred which allows, or after notice
or lapse of time would allow, revocation or
termination thereof or results in any other
material impairment of the rights of the holder of
any such permit, subject in each case to such
qualification as may be set forth in the
Prospectus; and, except as described in the
Prospectus, such permits contain no restrictions
that are materially burdensome to the Company or
any of its subsidiaries;
(xv) to the best of such counsel's
knowledge, all leases to which the Company or any
of its subsidiaries is a party are valid and
binding and no default has occurred or is
continuing thereunder, which might result in any
material adverse change in the business,
prospects, financial condition or results of
operation of the Company and its subsidiaries
taken as a whole, and the Company and its
subsidiaries enjoy peaceful and undisturbed
possession under all such leases to which any of
them is a party as lessee with such exceptions as
will not result in any material adverse change in
the business, prospects, financial condition or
results of operation of the Company and its
subsidiaries taken as a whole.
(xvi) the Company is not an "investment
company" or a company "controlled" by an
"investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(xvii) to the best of such counsel's
knowledge, after due inquiry, no holder of any
security of the Company has any right to require
registration of Common Shares or any other
security of the Company except as set forth in the
Prospectus;
(xviii) (1) the Registration Statement at
the time it became effective and the Prospectus as
of its date and any supplement or amendment
thereto (except for the financial statements,
financial statement schedules and other financial
data included therein or omitted therefrom and the
exhibits to the Registration Statement, as to
which no opinion need be expressed) comply as to
form in all material respects with the
requirements of the Act, and (2) no facts have
come to the attention of such counsel that have
led them to believe that (except for financial
statements, financial statement schedules and
other financial data included therein or omitted
therefrom and the exhibits to the Registration
Statement, as to which no opinion need be
expressed) the Registration Statement or the
prospectus included therein at the time the
Registration Statement became effective contained
any untrue statement of a material fact or omitted
to state a material fact required to be stated
therein or necessary to make the statements
therein not misleading, or that the Prospectus, as
amended or supplemented, if applicable (except for
financial statements, financial statement
schedules and other financial data included
therein or omitted therefrom and the exhibits to
the Registration Statement, as to which no opinion
need be expressed) contains any untrue statement
of a material fact or omits to state a material
fact necessary in order to make the statements
therein, in the light of the circumstances under
which they were made, not misleading;
(xix) based solely on such counsel's
examination of the share records of the Company,
the Selling Shareholder is the sole holder of
record of the Shares to be sold by it pursuant to
this Agreement, and, assuming that each U.S.
Underwriter acquiring any such Shares acquires the
certificates representing those Shares in good
faith and without notice of any adverse claim
(within the meaning of the Uniform Commercial Code
provisions that govern the Selling Shareholder's
sale of Shares to the U.S. Underwriters), upon
delivery of the certificates representing those
Shares to the person designated by the U.S.
Underwriters, registered in the name of the U.S.
Underwriters, endorsed to the U.S. Underwriters or
endorsed in blank, the U.S. Underwriters will
acquire all of the Selling Shareholder's rights in
those Shares free of any adverse claim (within the
meaning of the Uniform Commercial Code provisions
that govern the Selling Shareholder's sale of
those Shares to the U.S. Underwriters).
In giving such opinion with respect to the matters
covered by clause (xviii) such counsel may state that
their opinion and belief are based upon their
participation in the preparation of the Registration
Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the
contents thereof, but are without independent check or
verification except as specified, and may further state
that such counsel does not assume any responsibility
for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or
the Prospectus except as otherwise specifically
referred to in the opinions set forth in items (ix) and
(xii) above. In giving such opinion with respect to
matters governed other than by the federal law of the
United States and the laws of the State of Ohio, Mr.
DuChene may rely on the opinions of other counsel. In
giving such opinion (A) with respect to the matters
covered by clauses (vi) and (xi), Mr. DuChene may limit
his comments to matters relating only to the Company,
and (B) with respect to the matters covered by clause
(ix), Mr. DuChene need not comment on the statements
under the caption "Certain United States Federal Tax
Considerations to Non-U.S. Shareholders." In giving
such opinion with respect to matters governed other
than by the federal law of the United States and the
laws of the State of New York, Skadden, Arps, Slate,
Meagher & Flom may rely on the opinions of other
counsel. In giving such opinion (A) with respect to
the matters covered by clause (vi), Skadden, Arps,
Slate, Meagher & Flom may limit its comments to matters
of enforceability, (B) with respect to the matters
covered by clause (ix), Skadden, Arps, Slate, Meagher &
Flom need not comment on the statements under the
caption "Underwriting" or the statements under Item 14
or Item 15 of Part II of the Registration Statement,
and (C) with respect to the matters covered by clause
(xi), Skadden, Arps, Slate, Meagher & Flom may limit
its comments to the matters covered by clauses (A) and
(B) thereof. Opinions relied upon pursuant to this
paragraph shall be rendered by counsel reasonably
satisfactory to counsel for the Underwriters and shall
also be addressed to the Underwriters. Counsel relying
on any such opinion shall state that they believe that
both you and they are justified in relying on such
opinion.
The opinions of counsel described in paragraph (e)
above shall be rendered to you at the request of the Company
or the Selling Shareholder, as the case may be, and shall so
state therein.
(f) You shall have received on the Closing Date
an opinion, dated the Closing Date, of Baker &
Hostetler, counsel for the Underwriters, as to the
matters referred to in clauses (v), (vi) (but only with
respect to the Company), (vii), (viii), (ix) (but only
with respect to the statements under the caption
"Underwriting") and (xviii) of the foregoing paragraph
(e). In giving such opinion with respect to the
matters covered by clause (xviii) such counsel may
state that their opinion and belief are based upon
their participation in the preparation of the
Registration Statement and Prospectus and any
amendments or supplements thereto and review and
discussion of the contents thereof, but are without
independent check or verification except as specified,
and may further state that such counsel does not assume
any responsibility for the accuracy, completeness or
fairness of the statements contained in the
Registration Statement or the Prospectus except as
otherwise specifically referred to in the opinion set
forth in item (ix) above.
(g) You shall have received a letter on and as of
the Closing Date, in form and substance satisfactory to
you, from Price Waterhouse, independent public
accountants, with respect to the financial statements
and certain financial information contained in the
Registration Statement and the Prospectus and
substantially in the form and substance of the letter
delivered to you by Price Waterhouse on the date of
this Agreement.
(h) The Company shall have delivered to you the
agreements specified in Section 2 hereof.
(i) The Company and the Selling Shareholder shall
not have failed at or prior to the Closing Date to
perform or comply with any of the agreements herein
contained and required to be performed or complied with
by the Company or the Selling Shareholder, as
applicable, at or prior to the Closing Date.
The several obligations of the U.S. Underwriters to purchase
any Additional Shares hereunder are subject to the delivery
to the U.S. Representatives on the applicable Option Closing
Date of such documents as you may reasonably request with
respect to the good standing of the Company, the due
authorization and issuance of such Additional Shares and
other matters related to the issuance of such Additional
Shares.
10. Effective Date of Agreement and Termination.
This Agreement shall become effective upon the later of (i)
the date of execution of this Agreement and (ii) the date on
which notification of the effectiveness of the Registration
Statement has been released by the Commission.
This Agreement may be terminated at any time prior
to the Closing Date by you by written notice to the Sellers
if any of the following has occurred: (i) since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, any adverse
change or development involving a prospective adverse change
in the condition, financial or otherwise, of the Company or
any of its subsidiaries or the earnings, affairs, or
business prospects of the Company or any of its
subsidiaries, whether or not arising in the ordinary course
of business, which would, in your judgment, make it
impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus, (ii) any outbreak or
escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in
the financial markets of the United States or elsewhere
that, in your judgment, is material and adverse and would,
in your judgment, make it impracticable to market the Shares
on the terms and in the manner contemplated in the
Prospectus, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ National Market System
or limitation on prices for securities on any such exchange
or National Market System, (iv) the enactment, publication,
decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect,
the business or operations of the Company or any Subsidiary,
(v) the declaration of a banking moratorium by either
federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which in
your opinion has a material adverse effect on the financial
markets in the United States.
If on the Closing Date or on an Option Closing
Date, as the case may be, any one or more of the
Underwriters shall fail or refuse to purchase the Firm
Shares or Additional Shares, as the case may be, which it or
they have agreed to purchase hereunder on such date and the
aggregate number of Firm Shares or Additional Shares, as the
case may be, which such defaulting Underwriter or
Underwriters, as the case may be, agreed but failed or
refused to purchase is not more than one-tenth of the total
number of Shares to be purchased on such date by all
Underwriters, each non-defaulting Underwriter shall be
obligated severally, in the proportion which the number of
Firm Shares set forth opposite its name in Schedule I or
Schedule II bears to the total number of Firm Shares which
all the non-defaulting Underwriters, as the case may be,
have agreed to purchase, or in such other proportion as you
may specify, to purchase the Firm Shares or Additional
Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but
failed or refused to purchase on such date; provided that in
no event shall the number of Firm Shares or Additional
Shares, as the case may be, which any Underwriter has agreed
to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 10 by an amount in excess of
one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of
such Underwriter. If on the Closing Date or on an Option
Closing Date, as the case may be, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares,
or Additional Shares, as the case may be, and the aggregate
number of Firm Shares or Additional Shares, as the case may
be, with respect to which such default occurs is more than
one-tenth of the aggregate number of Shares to be purchased
on such date by all Underwriters and arrangements
satisfactory to you and the applicable Sellers for purchase
of such Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter and the
applicable Sellers. In any such case which does not result
in termination of this Agreement, either you or the Sellers
shall have the right to postpone the Closing Date or the
applicable Option Closing Date, as the case may be, but in
no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and
the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect
of any default of any such Underwriter under this Agreement.
11. Agreements of the Selling Shareholder. The
Selling Shareholder agrees with you and the Company:
(a) To pay or to cause to be paid all transfer
taxes with respect to the Shares to be sold by the
Selling Shareholder;
(b) To take all reasonable actions in cooperation
with the Company and the Underwriters to cause the
Registration Statement to become effective at the
earliest possible time, to do and perform all things to
be done and performed under this Agreement prior to the
Closing Date and any Option Closing Date and to satisfy
all conditions precedent to the delivery of the Firm
Shares and the Additional Shares pursuant to this
Agreement; and
(c) To pay all costs, expenses, fees and taxes
incident to (i) the preparation, printing, filing and
distribution under the Act of the Registration
Statement (including financial statements and
exhibits), each preliminary prospectus and all
amendments and supplements to any of them prior to or
during the period specified in paragraph (e), (ii) the
printing and delivery of the Prospectus and all
amendments or supplements to it during the period
specified in paragraph (e), (iii) the printing and
delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda and all other
agreements, memoranda, correspondence and other
documents printed and delivered in connection with the
offering of the Shares (including in each case any
disbursements of counsel for the Underwriters relating
to such printing and delivery), (iv) the registration
or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states
(including in each case the reasonable fees and
disbursements of counsel for the Underwriters relating
to such registration or qualification and memoranda
relating thereto), (v) filings with the National
Association of Securities Dealers, Inc. in connection
with the offering of the Shares, (vi) the listing of
the Shares on The New York Stock Exchange, (vii)
furnishing such copies of the Registration Statement,
the Prospectus and all amendments and supplements
thereto as may be reasonably requested for use in
connection with the offering or sale of the Shares by
the Underwriters or by dealers to whom Shares may be
sold and (viii) the performance by the Sellers of their
other obligations under this Agreement.
12. Miscellaneous. Notices given pursuant to any
provision of this Agreement shall be addressed as follows:
(a) if to the Company, to OfficeMax, Inc., 3605 Warrensville
Center Road, Shaker Heights, Ohio 44122, Attention: Todd
M. DuChene, Vice President and General Counsel, (b) if to
the Selling Shareholder, to Kmart Corporation, 3100 West Big
Beaver Road, Troy, Michigan 48084, Attention: General
Counsel, and (c) if to any Underwriter or to you, to you c/o
Donaldson, Lufkin & Jenrette Securities Corporation, 140
Broadway, New York, New York 10005, Attention: Syndicate
Department, or in any case to such other address as the
person to be notified may have requested in writing.
The respective indemnities, contribution
agreements, representations, warranties and other statements
of the Selling Shareholder, the Company, its officers and
directors and of the several Underwriters set forth in or
made pursuant to this Agreement shall remain operative and
in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation,
or statement as to the results thereof, made by or on behalf
of any Underwriter or by or on behalf of the Sellers, the
officers or directors of the Company or any controlling
person of the Sellers, (ii) acceptance of the Shares and
payment for them hereunder and (iii) termination of this
Agreement.
If this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part
of the Sellers to comply with the terms or to fulfill any of
the conditions of this Agreement, the Sellers agree to
reimburse the several Underwriters for all out-of-pocket
expenses (including the fees and disbursements of counsel)
reasonably incurred by them in connection with the
transactions contemplated by this Agreement.
Except as otherwise provided, this Agreement has
been and is made solely for the benefit of and shall be
binding upon the Sellers, the Underwriters, any controlling
persons referred to herein and their respective successors
and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters
merely because of such purchase.
This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
This Agreement may be signed in various
counterparts which together shall constitute one and the
same instrument.
Please confirm that the foregoing correctly sets
forth the agreement among the Company, the Selling
Shareholder and the several Underwriters.
Very truly yours,
OFFICEMAX, INC.
By /s/ Michael Feuer
Title: President
KMART CORPORATION
By /s/ Anthony Palizzi
Title: Executive Vice
President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
WILLIAM BLAIR & COMPANY
DEAN WITTER REYNOLDS INC.
McDONALD & COMPANY SECURITIES, INC.
Acting severally on behalf of
themselves and the several
U.S. Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Duff Anderson
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
WILLIAM BLAIR & COMPANY
DEAN WITTER INTERNATIONAL LTD.
McDONALD & COMPANY SECURITIES, INC.
Acting severally on behalf of
themselves and the several
International Managers
named in Schedule II hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Duff Anderson
SCHEDULE I
Number of U.S. Number of U.S.
Company Shares Shareholder Shares
U.S. Underwriters to be Purchased to be Purchased
Donaldson, Lufkin &
Jenrette Securities
Corporation 1,619,440 1,530,560
Morgan Stanley & Co.
Incorporated 1,619,440 1,530,560
William Blair & Company 1,619,440 1,530,560
Dean Witter Reynolds, Inc. 1,619,440 1,530,560
McDonald & Company
Securities, Inc. 1,619,440 1,530,560
Bear, Stearns & Co. Inc. 250,000 Total 7,652,800
Alex. Brown & Sons Incorporated 250,000
A.G. Edwards & Sons, Inc. 250,000
Goldman, Sachs & Co. 250,000
Hambrecht & Quist Incorporated 250,000
Lazard Freres & Co. 250,000
Lehman Brothers Inc. 250,000
Montgomery Securities 250,000
J. P. Morgan Securities Inc. 250,000
Oppenheimer & Co., Inc. 250,000
PaineWebber Incorporated 250,000
Prudential Securities
Incorporated 250,000
Robertson, Stephens &
Company, L.P. 250,000
Salomon Brothers Inc. 250,000
Smith Barney Inc. 250,000
SBCI Swiss Bank Corporation
Investment Banking 250,000
UBS Securities Inc. 250,000
Wertheim Schroder & Co.
Incorporated 250,000
Sanford C. Bernstein & Co., Inc. 250,000
C.J. Lawrence/Deutsche
Bank Securities Corporation 250,000
Advest, Inc. 125,000
Arnhold and S. Bleichroeder, Inc. 125,000
Robert W. Baird & Co.
Incorporated 125,000
J. C. Bradford & Co. 125,000
The Chicago Corporation 125,000
Cowen & Company 125,000
Crowell, Weedon & Co. 125,000
Dain Bosworth Incorporated 125,000
Equitable Securities Corporation 125,000
First Albany Corporation 125,000
First of Michigan Corporation 125,000
First Southwest Company 125,000
Furman Selz Incorporated 125,000
Gruntal & Co., Incorporated 125,000
Interstate/Johnson Lane
Corporation 125,000
Janney Montgomery Scott Inc. 125,000
Johnston, Lemon & Co.
Incorporated 125,000
Edward D. Jones & Co. 125,000
Number of U.S. Number of U.S.
Company Shares Shareholder Shares
U.S. Underwriters to be Purchased to be Purchased
Josephthal, Lyon & Ross, Inc. 125,000
Kemper Securities, Inc. 125,000
Ladenburg, Thalmann & Co. Inc. 125,000
Legg Mason Wood Walker
Incorporated 125,000
Moran & Associates, Inc.
Securities Brokerage 125,000
Morgan Keegan & Company, Inc. 125,000
Needham & Company, Inc. 125,000
Neuberger & Berman 125,000
The Ohio Company 125,000
Piper Jaffray Inc. 125,000
Principal Financial Securities,
Inc. 125,000
Ragen MacKenzie Incorporated 125,000
Rauscher Pierce Refsnes, Inc. 125,000
Raymond James & Associates, Inc. 125,000
The Robinson-Humphrey Company,
Inc. 125,000
Roney & Co. 125,000
Scott & Stringfellow, Inc. 125,000
Stephens Inc. 125,000
Sutro & Co. Incorporated 125,000
Tucker Anthony Incorporated 125,000
Unterberg Harris 125,000
Wheat, First Securities, Inc. 125,000
Adams, Harkness & Hill, Inc. 62,500
Baron Capital, Inc. 62,500
Brean Murray, Foster Securities
Inc. 62,500
Fahnestock & Co. Inc. 62,500
Luther, Smith and Small 62,500
Mabon Securities Corp. 62,500
Parker/Hunter Incorporated 62,500
Pennsylvania Merchant Group Ltd. 62,500
Pryor, McClendon, Counts & Co.,
Inc. 62,500
The Seidler Companies
Incorporated 62,500
Sturdivant & Co., Inc. 62,500
Williams MacKay Jordan & Co.,
Inc. 62,500
Total 18,847,200
SCHEDULE II
Number of International Number of International
Company Shares Shareholder Shares
International Managers to be Purchased to be Purchased
Donaldson, Lufkin &
Jenrette Securities
Corporation 609,360 382,640
Morgan Stanley & Co.
International 609,360 382,640
William Blair & Company 609,360 382,640
Dean Witter International
Ltd. 609,360 382,640
McDonald & Company
Securities, Inc. 609,360 382,640
Banque Indosuez 110,000 Total 1,913,200
Barclays de Zoete Wedd Limited 110,000
Cazenove & Co. 110,000
Credit Lyonnais Securities 110,000
Deutsche Bank Aktiengesellschaft 110,000
Internationale Nederlanden
Bank N.V. 110,000
James Capel & Co. 110,000
Kleinwort Benson Limited 110,000
Lazard Brothers & Co., Limited 110,000
N M Rothschild & Sons Limited 110,000
Paribas Capital Markets 110,000
Societe Generale 110,000
Sumitomo Finance International
PLC 110,000
UBS Limited 110,000
Total 4,586,800
ANNEX I
Each U.S. Underwriter represents that it has not
offered or sold, and agrees not to offer or sell, any Shares,
directly or indirectly, in Canada in contravention of the
securities laws of Canada or any province or territory thereof
and, without limiting the generality of the foregoing, represents
that any offer of Shares in Canada will be made only pursuant to
an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer is made.
Each U.S. Underwriter further agrees to send to any dealer who
purchases from it any of the Shares a notice stating in substance
that, by purchasing such Shares, such dealer represents and
agrees that it has not offered or sold, and will not offer or
sell, directly or indirectly, any of such Shares in Canada or to,
or for the benefit of, any resident of Canada in contravention of
the securities laws of Canada or any province or territory
thereof and that any offer of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a
prospectus in the province of Canada in which such offer is made,
and that such dealer will deliver to any other dealer to whom it
sells any of such Shares a notice containing substantially the
same statement as is contained in this sentence.
ANNEX II
Each International Manager agrees that it will comply
with all applicable laws and regulations, and make or obtain all
necessary filings, consents or approvals, in each jurisdiction in
which it purchases, offers, sells or delivers Shares (including,
without limitation, any applicable requirements relating to the
delivery of the international prospectus, in preliminary or final
form), in each case at its own expense. In connection with sales
of and offers to sell Shares made by it, such International
Manager will either furnish to each person to whom any such sale
or offer is made a copy of the then current international
prospectus (in preliminary or final form and as then amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto), or inform such person that such
international prospectus, in preliminary or final form, will be
made available upon request. Any offering material in addition
to the international prospectus furnished by any International
Manager to any person in connection with any offers or sales
referred to in the preceding sentence (i) shall be prepared and
so furnished at its sole risk and expense and (ii) shall not
contain any information relating to the Shares or the Company
which is inconsistent in any respect with the information
contained in the international prospectus (as then amended or
supplemented).
Each International Manager further represents that it
has not offered or sold, and agrees not to offer or sell,
directly or indirectly, in Japan or to or for the account of any
resident thereof, any of the Shares acquired in connection with
the distribution contemplated hereby, except for offers or sales
to Japanese International Managers or dealers and except pursuant
to an exemption from the registration requirements of the
Securities and Exchange Law of Japan and otherwise in compliance
with applicable provisions of Japanese law. Each International
Manager further agrees to send to any dealer who purchases from
it any of the Shares a notice stating in substance that, by
purchasing such Shares, such dealer represents and agrees that it
has not offered or sold, and will not offer or sell, any of such
Shares, directly or indirectly, in Japan or to or for the account
of any resident thereof except pursuant to an exemption from the
registration requirements of the Securities and Exchange Law of
Japan and otherwise in compliance with applicable provisions of
Japanese law, and that such dealer will send to any other dealer
to whom it sells any of such Shares a notice containing
substantially the same statement as is contained in this
sentence.
Each International Manager further represents and
agrees that (i) it has not offered or sold and will not offer or
sell any Shares in the United Kingdom by means of any document
(other than to persons whose ordinary business it is to buy or
sell shares or debentures, whether as principal or agent, or
except in circumstances which do not constitute an offer to the
public within the meaning of the Companies Act 1985); (ii) it has
complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it
in relation to the Shares in, from or otherwise involving the
United Kingdom; and (iii) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Shares, other
than any document which consists of or of part of listing
particulars, supplementary listing particulars or any other
document required or permitted to be published by listing rules
under Part IV of the Financial Services Act 1986, to any person
of a kind described in Article 9(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1988, or to
any person to whom the document may otherwise lawfully be issued
or passed on.
Each International Manager agrees to indemnify and hold
harmless the Company, the Selling Shareholder, each Underwriter
and each person controlling the Company, the Selling Shareholder
or any Underwriter from and against any and all losses, claims,
damages and liabilities (including fees and disbursements of
counsel) arising from any breach by it of any of the provisions
of paragraphs six, seven, eight and nine of this Section 3.
CCM2811:35465:93001:RAW-13F.AGT
INTERCOMPANY AGREEMENT
INTERCOMPANY AGREEMENT, dated as of November 9,
1994, by and between KMART CORPORATION, a Michigan
corporation ("Kmart"), and OFFICEMAX, INC., an Ohio
corporation (the "Company").
WHEREAS, Kmart is the owner of in excess of 90%
of the issued and outstanding shares of common stock of
the Company ("Common Stock") as of the date hereof and
Kmart and the Company have determined to have the Company
offer to the public shares of Common Stock in an initial
public offering (the "Public Offering") as described in
the Company's Registration Statement on Form S-1 (File
No. 33-83528), originally filed with the Securities and
Exchange Commission on August 31, 1994 (as amended, the
"Registration Statement");
WHEREAS, following completion of the Public
Offering, Kmart will own less than 50% of the outstanding
shares of Common Stock;
WHEREAS, prior to the Public Offering, Kmart
and the Company have been part of the same consolidated
group for financial reporting and Federal income tax
purposes and Kmart has provided the Company with certain
corporate, general and administrative services incident
to the conduct of its business;
WHEREAS, following completion of the Public
Offering, Kmart will continue to provide certain services
to the Company;
WHEREAS, following completion of the Public
Offering, the Company will continue to provide Kmart with
certain information and take or refrain from taking
certain actions until such time as Kmart no longer
accounts for its investment in the Company under the
equity method of accounting; and
WHEREAS, Kmart and the Company desire to enter
into this Agreement which sets forth the agreements
between Kmart and the Company regarding the foregoing
matters.
NOW, THEREFORE, in consideration of the
premises and the mutual agreements contained herein, and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
FINANCIAL AND OTHER INFORMATION
SECTION 1.1 Equity Accounting Period. The
Company agrees that, during any period in which Kmart
owns at least 20% of the voting power of the capital
stock of the Company then outstanding or 20% of the
capital stock of the Company then outstanding, or in
which Kmart is required to account for its investment in
the Company under the equity method of accounting
(determined in accordance with generally accepted
accounting principles consistently applied):
(a) Maintenance of Books and Records.
The Company shall, and shall cause each of its
consolidated subsidiaries to, maintain a system of
internal accounting controls that shall provide
reasonable assurance that: (1) the Company's and such
subsidiaries' books, records and accounts fairly reflect
transactions and dispositions of assets, and (2) the
specific objectives of accounting control are achieved.
(b) Monthly Financial Information. As
soon as practicable, but in any event within 12 business
days after the end of each month in each fiscal year of
the Company, the Company shall deliver to Kmart its pre-
and after-tax net income for the month and the year to
date period for the Company and its subsidiaries.
(c) Unaudited Quarterly Financial
Statements. As soon as practicable, but in any event
within 35 days after the end of each of the first three
fiscal quarters in each fiscal year of the Company, the
Company shall deliver to Kmart drafts of (i) the
consolidated financial statements of the Company and its
subsidiaries (and notes thereto) for such periods and for
the period from the beginning of the current fiscal year
to the end of such quarter, setting forth in each case in
comparative form for each such fiscal quarter of the
Company the consolidated figures (and notes thereto) for
the corresponding quarter and periods of the previous
fiscal year and all in reasonable detail and prepared in
accordance with Article 10 of Regulation S-X of the
General Rules and Regulations under the Securities Act of
1933, as amended ("Regulation S-X"), and (ii) a
discussion and analysis by management of the Company's
and its subsidiaries' financial condition and results of
operations for such fiscal period, including, without
limitation, an explanation of any material adverse
change, all in reasonable detail and prepared in
accordance with Item 303(b) of Regulation S-K of the
General Rules and Regulations under the Securities Act of
1933, as amended ("Regulation S-K"). The foregoing
requirement may be satisfied by the delivery of a draft
Quarterly Report on Form 10-Q. The information set forth
in (i) and (ii) above is herein referred to as the
"Quarterly Financial Statements." The Company shall
deliver to Kmart all revisions to such drafts as soon as
any such revisions are prepared or made. No later than
two business days prior to the date the Company publicly
files the Quarterly Financial Statements with the
Securities and Exchange Commission (the "SEC") or
otherwise, the Company shall deliver to Kmart the final
form of the Quarterly Financial Statements to be filed
with the SEC. Kmart acknowledges that the Quarterly
Financial Statements may reflect adjustments from the
summary financial statements provided pursuant to Section
1.1(b).
(d) Audited Annual Financial Information.
As soon as is practicable, but in any event within 60
days after the end of each fiscal year of the Company,
the Company shall deliver to Kmart drafts of (i) the
consolidated financial statements of the Company (and
notes thereto) for such year, setting forth in
comparative form the consolidated figures (and notes
thereto) for the previous fiscal year and all in
reasonable detail and prepared in accordance with
Regulation S-X and (ii) a discussion and analysis by
management of the Company's and its subsidiaries'
financial condition and results of operations for such
year, including, without limitation, an explanation of
any material adverse change, all in reasonable detail and
prepared in accordance with Item 303(a) of Regulation
S-K. The foregoing requirement may be satisfied by the
delivery of a draft Annual Report on Form 10-K. The
information set forth in (i) and (ii) above is herein
referred to as the "Annual Financial Statements." The
Company shall deliver to Kmart all revisions to such
drafts as soon as any such revisions are prepared or
made. The Company shall deliver to Kmart, within 80 days
after the end of each fiscal year of the Company, the
final form of the Annual Financial Statements accompanied
by a report thereon by the Company's independent
certified public accountants.
(e) Other Financial Information. The
Company shall provide to Kmart upon request such other
information as Kmart may reasonably need in order to
analyze the business, results of operations and financial
condition of the Company and its subsidiaries. The
Company shall deliver to Kmart all Quarterly and Annual
Financial Statements of each subsidiary of the Company in
which the Company owns a majority of the common equity
therein that is itself required to file financial
statements with the SEC or otherwise make such financial
statements publicly available, with such financial
statements to be provided in the same manner and detail
and on the same time schedule as those consolidated
financial statements of the Company required to be
delivered to Kmart pursuant to this Section 1.1.
(f) Public Information and SEC Reports.
Except as more particularly described in paragraphs (c)
and (d) above, the Company and each of its subsidiaries
that files information with the SEC shall deliver to
Kmart (to the attention of its Corporate Secretary) as
soon as substantially final drafts are prepared all
reports, notices and proxy and information statements to
be sent or made available by the Company or any of its
subsidiaries to their securityholders and all regular,
periodic and other reports filed under Sections 13, 14
and 15 of the Securities Exchange Act of 1934, as amended
(including Reports on Forms 10-K, 10-Q and 8-K and Annual
Reports to Shareholders), and all registration statements
and prospectuses to be filed by the Company or any of its
subsidiaries with the SEC or any securities exchange
pursuant to the listed company manual (or similar
requirements) of such exchange (collectively, the
"Company Public Documents"), and, as soon as practicable,
but in no event later than one business day prior to the
date the same are printed, sent or filed, whichever is
earliest, final copies of all Company Public Documents.
No later than immediately prior to issuance,
the Company shall deliver to Kmart copies of all press
releases and other statements to be made available by the
Company or any of its subsidiaries to the public relating
to information concerning material developments in the
business, properties, results of operations, financial
condition or prospects of the Company or any of its
subsidiaries. No report, registration, information or
proxy statement, prospectus or other document that
refers, or contains information with respect, to Kmart
shall be filed with the SEC or otherwise made public by
the Company or any of its subsidiaries without notice to
and the consent (written or oral) of Kmart with respect
to those portions of such document that contain
information with respect to Kmart, which consent will not
be unreasonably withheld, delayed or conditioned,
provided, however, that the Company need not obtain the
consent of Kmart for descriptions of intercompany
agreements between itself and Kmart to the extent that
such descriptions are substantially identical to the
descriptions contained in the Registration Statement.
(g) Earnings Releases. Kmart agrees
that, unless required by law, rule or regulation or
unless the Company shall have consented thereto, Kmart
shall not release any monthly financial information of
the Company or any of its subsidiaries under any
circumstances and Kmart shall not release to the general
public any quarterly or annual financial information of
the Company or any of its subsidiaries (the "Company
Information") delivered to Kmart pursuant to this Section
1.1 prior to the time that the Company publicly releases
financial information of the Company for the relevant
period. The Company and Kmart shall consult on the
timing of their annual and quarterly earnings releases
and shall give each other an opportunity to review the
information therein relating to the Company and its
subsidiaries and to comment thereon. In the event that
Kmart is required by law to publicly release such Company
Information prior to the public release of the Company's
financial information, Kmart shall give the Company
notice of such release of Company Information as soon as
practicable but in no event later than immediately prior
to such release of Company Information.
(h) Kmart Public Filings. The Company
shall cooperate fully with Kmart to the extent reasonably
requested by Kmart in the preparation of Kmart's public
earnings releases, quarterly reports on Form 10-Q, Annual
Reports to Shareholders, Annual Reports on Form 10-K, any
Current Reports on Form 8-K and any other proxy,
information and registration statements, reports,
notices, prospectuses and any other filings made by Kmart
with the SEC, any national securities exchange or
otherwise made publicly available (collectively, "Kmart
Public Filings"). The Company agrees to provide to Kmart
such information concerning the Company as Kmart
reasonably requests in writing in connection with any
such Kmart Public Filings. Following request by Kmart,
such information concerning the Company shall be provided
by the Company in a timely manner to enable Kmart to
prepare, print and release such Kmart Public Filings on
such date as Kmart shall have determined and notified the
Company thereof. If and to the extent reasonably
requested in advance by Kmart, the Company shall review
all drafts of such Kmart Public Filings prior to any
printing or public release thereof, and certify (through
an appropriate executive officer) that the information
relating to the Company in such Kmart Public Filing is
accurate.
(i) Coordination of Auditors' Opinions.
For so long as each party hereto maintains its fiscal
year end as it exists on the date hereof, the Company
shall use its reasonable efforts to enable its
independent certified public accountants (the "Company's
Auditors") to complete their audit such that they will
date their opinion on the Company's audited annual
financial statements (the "Company Annual Financial
Statements") (i) within 40 days of the end of the
Company's fiscal year or (ii) within five business days
of the date that Kmart's independent certified public
accountants ("Kmart's Auditors") date their opinion on
Kmart's audited annual financial statements (together
with Kmart's Annual Report to Shareholders, the "Kmart
Annual Statements"), whichever is later, and to enable
Kmart to meet its timetable for the printing, filing and
public dissemination of the Kmart Annual Statements.
(j) Cooperation in Preparation of Kmart
Annual Statements. The Company shall provide to Kmart on
a timely basis all information that Kmart reasonably
needs to meet its schedule for the preparation, printing,
filing and public dissemination of the Kmart Annual
Statements. In this respect, the Company shall provide
all required financial information with respect to the
Company and its consolidated subsidiaries to the
Company's Auditors in a sufficient and reasonable time
and in reasonably sufficient detail to permit the
Company's Auditors to take all steps and perform all
review necessary to provide sufficient assistance to
Kmart's Auditors with respect to information to be
included or contained in the Kmart Annual Statements,
such assistance to Kmart's Auditors to be in conformity
with current and past practices.
(k) Access to Personnel and Working
Papers. The Company shall authorize the Company's
Auditors to make available to Kmart's Auditors, at
Kmart's expense, both the personnel who performed or are
performing the annual audit of the Company and work
papers related to the annual audit of the Company, in all
cases within a reasonable time after the Company's
Auditors' opinion date, so that Kmart's Auditors are able
to perform the procedures they consider reasonably
necessary to take responsibility for the work of the
Company's Auditors as it relates to Kmart's Auditors'
report on Kmart's statements, all within sufficient time
to enable Kmart to meet its timetable for the printing,
filing and public dissemination of the Kmart Annual
Statements.
SECTION 1.2 Ten Percent Period. The Company
agrees that, during any period in which Kmart holds at
least 10% but less than 20% of the voting power of the
capital stock of the Company then outstanding, the
Company shall furnish to Kmart as soon as publicly
available, copies of all financial statements, reports,
notices and proxy statements sent by the Company in a
general mailing to all its shareholders, of all reports
on Forms 10-K, 10-Q and 8-K, of all final prospectuses
filed pursuant to Rule 424 under the Securities Act.
SECTION 1.3 Confidentiality. All information
provided by the Company to Kmart and its employees,
agents or representatives (collectively,
"representatives") pursuant to this Article I shall,
except if the purpose for which such information is
furnished pursuant to this Agreement contemplates
disclosure thereof (in which case such information shall
remain confidential until public disclosure thereof), be
kept confidential by Kmart and its representatives, and
Kmart and its representatives shall not disclose any such
information in any manner whatsoever, until such
information is disclosed by the Company or otherwise
becomes generally available to the public through no
breach of this Agreement by Kmart, except (i) as such
disclosure may be required by law, rule or regulation and
(ii) to any person who agrees in writing to keep such
information confidential to the same extent provided
herein.
ARTICLE II
ON-GOING RELATIONS BETWEEN
THE COMPANY AND KMART
SECTION 2.1 Services to be Provided by Kmart.
At the request of the Company, Kmart agrees to continue
to provide the Company with certain management and
administrative services (collectively, the "Services"),
to the same extent as currently provided, in the
following areas: tax, accounting, human resources,
travel, employee benefits, data processing and real
estate. Kmart further agrees to provide facilities and
personnel to carry out the foregoing. Services may be
provided by (i) any subsidiary, affiliate or employee of
Kmart or its subsidiaries or affiliates or (ii) by a
third party at the sole discretion of Kmart. Such
Services shall be provided for a period ending on the
first anniversary of the date of this Agreement, unless
earlier discontinued by written notice from the Company
to Kmart.
SECTION 2.2 Fees for Services. In
consideration of Kmart providing the Services, the
Company agrees to pay to Kmart, after the receipt of
statements setting forth such expenses, (but in no event
more frequently than monthly), an amount in cash equal to
the intercompany charge therefor calculated in a manner
substantially consistent with the parties' past
practices. Any such statement shall be payable net 20
days from the date of such statement. Unpaid statements
shall accumulate interest at the rate provided for in the
Cash Management Agreement between the Company and Kmart
of even date herewith, regardless of whether such
agreement is still in effect. Notwithstanding the
foregoing, in the event the Cash Management Agreement is
still in effect at the time Services would be invoiced,
the fee shall be charged to the Company on its Inter-
Company Account and treated as an Obligation (as such
terms are defined in the Cash Management Agreement).
Such charge shall be made on the 15th of each month and
shall bear interest as provided in the Cash Management
Agreement.
SECTION 2.3 Third Party Relationships. After
the date hereof, to the extent permitted under the
applicable agreement, the Company may, at its election,
continue to purchase merchandise, supplies, equipment,
software and/or services under agreements which Kmart has
with suppliers (the "Third Party Agreements"). As
between Kmart and the Company, the Company shall be
responsible for any purchases made, and its performance
under, any Third Party Agreement.
SECTION 2.4 Indemnification. The Company
shall indemnify and hold harmless Kmart, any subsidiary
or affiliate providing Services and any employee,
director or officer of Kmart or such subsidiaries or
affiliates from and against any and all demands, claims,
actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including,
without limitation, interest, penalties and reasonable
attorneys' fees and expenses (collectively, "losses")
incurred by Kmart or such subsidiary, affiliate,
employee, director or officer in connection with or
arising from (i) this Agreement, (ii) Services provided
by Kmart or such subsidiary, affiliate, employee,
director or officer or a third party hereunder or (iii)
purchases or performance by the Company under any Third
Party Agreement, except to the extent such losses shall
have been finally judicially determined to have resulted
directly from the gross negligence or willful misconduct
of Kmart or its subsidiaries, affiliates, employees,
directors or officers. The Company hereby releases Kmart
and such subsidiaries, affiliates, employees, directors
and officers from and against any losses arising out of
or in connection with this Agreement, except to the
extent such losses shall have been finally judicially
determined to have resulted directly from the gross
negligence or willful misconduct of Kmart or its
subsidiaries, affiliates, employees, directors or
officers.
SECTION 2.5 1988 Options. Kmart agrees to
provide to the Company 67,377 shares of the Company's
Common Stock as needed from time to time upon exercise of
the options outstanding under the Option Cancellation and
Amendment Agreements dated as of November 15, 1991
between the Company and certain of its employees; the
Company agrees to pay the exercise price therefor to
Kmart; and Kmart shall have no further liability with
respect to such options.
ARTICLE III
TAX TREATMENT OF KMART ADVANCES
The parties hereby acknowledge and agree that,
for federal income tax purposes, (i) the amount that has
been advanced by Kmart to the Company prior to the
closing of the Public Offering, up to an aggregate amount
of $550,000,000 (the "Kmart Funding Amounts"), is
intercompany indebtedness of the Company (the
"Intercompany Indebtedness"), (ii) the Intercompany
Indebtedness shall be treated as having been satisfied by
(a) a payment to Kmart of an amount equal to the net
proceeds of the Public Offering (the "Debt Repayment
Amount") and (b) the issuance of 3,184,774 Common Shares
of the Company, subject to adjustment (the "Additional
Shares"), and (iii) to the extent that the sum of (x) the
Debt Repayment Amount and (y) the fair market value of
the Additional Shares (as of the date of issuance) is
less than the Intercompany Indebtedness, such difference
shall be treated as a contribution to the capital of the
Company (the "Capital Contribution"). The parties
further acknowledge and agree that (i) on or prior to the
date on which the Company executes and delivers an
underwriting agreement in connection with the Public
Offering, the Company shall issue a promissory note to
Kmart with a stated principal amount equal to the Debt
Repayment Amount (the "Promissory Note") and (ii) in
accordance with the above acknowledgement and agreement,
the federal income tax accounting with respect to the
Intercompany Indebtedness shall reflect the Promissory
Note, the Additional Shares and the Capital Contribution.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Injunctive Relief. Each of the
Company and Kmart acknowledges and agrees that its
covenants and obligations under Article I hereof are
special, unique and relate to matters of extraordinary
importance to Kmart and the Company, respectively, that
in the event the Company or Kmart fails to perform,
observe or discharge any of its obligations under such
Article I Kmart or the Company, as the case may be, will
be irreparably harmed and that no remedy at law will
provide adequate relief to Kmart or the Company, as the
case may be. The Company and Kmart agree that the other
party hereto shall be entitled to a temporary restraining
order and temporary and permanent injunctive and other
equitable relief in case of any failure by the Company or
Kmart, as the case may be, to perform, observe or
discharge any of its covenants or obligations under
Article I hereof and without the necessity of proving
actual damages. Neither Kmart nor the Company will seek
equitable relief without giving at least one business
day's prior written notice to the other party hereto.
The remedies provided herein shall be cumulative and
shall not preclude assertion by any party hereto of any
other rights or the seeking of any other remedies, either
legal or equitable, against any other party hereto.
SECTION 4.2 GOVERNING LAW. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF MICHIGAN.
SECTION 4.3 No Assignment. Neither this
Agreement nor any right granted hereunder may be assigned
by either party either voluntarily or by operation of law
without the other party's prior written consent, which
may be granted or withheld in such party's sole
discretion, and any attempted assignment without such
consent shall be void and of no effect whatsoever.
SECTION 4.4 Entire Agreement. This Agreement
contains the entire understanding of the parties hereto
with respect to its subject matter. This Agreement
supersedes all prior agreements and understandings
between the parties with respect to the subject matter
hereof.
SECTION 4.5 Amendment. This Agreement may be
amended only by a written instrument duly executed by
each of the parties.
SECTION 4.6 Headings. The article headings
and section headings and subheadings contained in this
Agreement are for reference purposes only and will not
affect in any manner the meaning or interpretation of
this Agreement.
SECTION 4.7 Notices. Unless expressly
provided herein, all notices, claims, certificates,
requests, demands and other communications hereunder
shall be in writing and shall be deemed to be duly given
(i) when personally delivered or (ii) if mailed
registered or certified mail, postage prepaid, return
receipt requested, on the date the return receipt is
executed or the letter refused by the addressee or its
agent or (iii) if sent by overnight carrier which
delivers only upon the signed receipt of the addressee,
on the date the receipt acknowledgment is executed or
refused by the addressee or its agent:
If to the Company, to:
OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
Attention: Todd DuChene
If to Kmart, to:
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
Attention: Anthony N. Palizzi
Facsimile No.: 810-643-1054
with a separate copy to:
Frederic Tinsey at the same address
Facsimile No.: 810-637-8854
or to such other address as the party to whom notice is
to be given may have previously furnished to the other
party in writing in the manner set forth above.
Notwithstanding the foregoing, the Company's
financial information, earnings releases and press
releases to be provided hereunder may be provided by
telecopy or electronic data exchange to Kmart at the
above address, attention: Director of Investor
Relations.
SECTION 4.8 Counterparts. For the convenience
of the parties, this Agreement may be executed in two or
more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one
and the same instrument.
SECTION 4.9 Severability. If any term,
provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement
shall remain in full force and effect to the fullest
extent permitted by law and shall in no way be affected,
impaired or invalidated.
IN WITNESS WHEREOF, Kmart and the Company have
caused this Agreement to be duly executed by their
authorized representative as of the date first above
written.
KMART CORPORATION
By /s/ Thomas F. Murasky
__________________________
Thomas F. Murasky
Executive Vice President
and Chief Financial Officer
OFFICEMAX, INC.
By /s/ Michael Feuer
_____________________________
Michael Feuer
President and Chief
Executive Officer
REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), dated as of November 9, 1994 between KMART
CORPORATION, a Michigan corporation ("Kmart"), and
OFFICEMAX, INC., an Ohio corporation (the "Company").
WHEREAS, Kmart is the owner of in excess of 90%
of the Company's issued and outstanding common shares,
without par value ("Common Stock") at the date hereof,
and Kmart and the Company have determined to offer to the
public (the "Public Offering") up to 23,434,000 shares of
the Common Stock, in a primary and secondary offering.
WHEREAS, following completion of the Public
Offering, Kmart will own less than 50% of the outstanding
shares of Common Stock.
WHEREAS, the parties hereto desire to enter
into this Agreement which sets forth the terms of certain
registration rights applicable to the Registrable
Securities (as defined below).
NOW, THEREFORE, upon the premises and the
mutual promises herein contained, and for good and
valuable consideration, the receipt and adequacy of which
are acknowledged, the parties agree as follows:
1. Certain Definitions. As used in this
Agreement, the following initially capitalized terms
shall have the following meanings:
(a) "Affiliate" means, with respect to
any person, any other person who, directly or indirectly,
is in control of, is controlled by or is under common
control with the former person.
(b) "Holder" means Kmart and any
"transferee" (as such term is defined in Section 11
hereof) which is the record holder of Registrable
Securities.
(c) "Registrable Securities" means the
Common Stock (as presently constituted), any stock or
other securities into which or for which such Common
Stock may hereafter be changed, converted or exchanged,
and any other securities issued to holders of such Common
Stock (or such shares into which or for which such shares
are so changed, converted or exchanged) upon any
reclassification, share combination, share subdivision,
share dividend, merger, consolidation or similar
transactions or events, provided that any such securities
shall cease to be Registrable Securities (i) if a
registration statement with respect to the sale of such
securities shall have become effective under the
Securities Act and such securities shall have been
disposed of in accordance with the plan of distribution
set forth in such registration statement, (ii) such
securities shall have been distributed pursuant to Rule
144, (iii) such securities are held by a Holder other
than Kmart, unless such Holder shall furnish the Company
an opinion of counsel, which opinion shall be reasonably
satisfactory to the Company, to the effect that all of
such securities are not permitted to be distributed by
such Holder in one transaction pursuant to Rule 144, or
(iv) subsequent to the seventh anniversary of the closing
of the Public Offering (subject to the specific
extensions specified herein).
(d) "Registration Expenses" means all
reasonable expenses in connection with any registration
of securities pursuant to this Agreement including,
without limitation, the following: (i) SEC filing fees;
(ii) the fees, disbursements and expenses of the
Company's counsel(s) and accountants in connection with
the registration of the Registrable Securities to be
disposed of under the Securities Act; (iii) all expenses
in connection with the preparation, printing and filing
of the registration statement, any preliminary prospectus
or final prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof
to any Holders, underwriters and dealers and all expenses
incidental to delivery of the Registrable Securities;
(iv) the cost of producing blue sky or legal investment
memoranda; (v) all expenses in connection with the
qualification of the Registrable Securities to be
disposed of for offering and sale under state securities
laws, including the fees and disbursements of counsel for
the underwriters or Holders in connection with such
qualification and in connection with any blue sky and
legal investments surveys; (vi) the filing fees incident
to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of
the sale of the Registrable Securities to be disposed of;
(vii) transfer agents', depositaries' and registrars'
fees and the fees of any other agent appointed in
connection with such offering; (viii) all security
engraving and security printing expenses, (ix) all fees
and expenses payable in connection with the listing of
the Registrable Securities on each securities exchange or
inter-dealer quotation system on which a class of common
equity securities of the Company is then listed, (x) the
salaries (based on a per diem allocation) and expenses
(to the extent not reimbursed by the underwriters) of
officers making road show presentations and holding
meetings with potential investors to facilitate the
distribution and sale of Registrable Securities and other
out-of-pocket expenses of the Company related thereto,
but salaries shall be deemed a Registration Expense if
and only to the extent such roadshow presentations and
meetings are made or held on more than five business days
in the aggregate with respect to any one registration
(and then only if earned or incurred in respect of such
days in excess of five business days), (xi) the pro rated
salaries and expenses of in-house attorneys performing
legal services to the extent such services would
otherwise be performed by outside counsel, (xii) courier,
overnight delivery, word processing and duplication
expenses and (xiii) any one-time payment for directors
and officers insurance directly related to such offering,
provided the insurer provides a separate statement for
such payment.
(e) "Rule 144" means Rule 144 promulgated
under the Securities Act, or any successor rule to
similar effect.
(f) "SEC" means the United States
Securities and Exchange Commission.
(g) "Securities Act" means the Securities
Act of 1933, as amended, or any successor statute.
2. Demand Registration.
(a) At any time prior to the seventh
anniversary of the closing date of the Public Offering,
upon written notice from a Holder in the manner set forth
in Section 12(h) hereof requesting that the Company
effect the registration under the Securities Act of any
or all of the Registrable Securities held by such Holder,
which notice shall specify the intended method or methods
of disposition of such Registrable Securities, the
Company shall use its best efforts to effect, in the
manner set forth in Section 5, the registration under the
Securities Act of such Registrable Securities for
disposition in accordance with the intended method or
methods of disposition stated in such request, provided
that:
(i) if, within 5 business days
of receipt of a registration request pursuant
to this Section 2(a), the Company is advised in
writing (with a copy to the Holder requesting
registration) by the managing underwriter of
the proposed offering described below that, in
such firm's good faith opinion, a registration
at the time and on the terms requested would
materially and adversely affect any immediately
planned offering of securities by the Company
that had been contemplated by the Company prior
to receipt of notice requesting registration
pursuant to this Section 2(a) (a "Transaction
Blackout"), the Company shall not be required
to effect a registration pursuant to this
Section 2(a) until the earliest of (A) the
abandonment of such offering, (B) 90 days after
the completion of such offering, (C) the
termination of any "hold back" period obtained
by the underwriter(s) of such offering from any
person in connection therewith or (D) 210 days
after receipt by the Holder requesting
registration of the managing underwriter's
written opinion referred to above in this
subsection (i));
(ii) if, while a registration
request is pending pursuant to this Section
2(a), the Company has determined in good faith
that (A) the filing of a registration statement
would require the disclosure of material
information that the Company has a bona fide
business purpose for preserving as confidential
or (B) the Company then is unable to comply
with SEC requirements applicable to the
requested registration, the Company shall not
be required to effect a registration pursuant
to this Section 2(a) until the earlier of
(1) the date upon which such material
information is otherwise disclosed to the
public or ceases to be material or the Company
is able to so comply with applicable SEC
requirements, as the case may be, and (2) 45
days after the Company makes such good-faith
determination, provided that the Company shall
not be permitted to delay a requested
registration in reliance on this clause (ii)
more than once in any 24-month period; and
(iii) the Company shall not be
obligated to file a registration statement
relating to a registration request pursuant to
this Section 2: (A) within a period of 12
months after the effective date of any other
registration statement of the Company demanded
pursuant to this Section 2(a); (B) if such
registration request is for a number of
Registrable Securities less than 7.5% of the
issued and outstanding common equity of the
Company or (C) if Holders in the aggregate own
less than 5% of the common equity of the
Company.
(b) Notwithstanding any other provision
of this Agreement to the contrary
(i) a registration requested by
a Holder pursuant to this Section 2 shall not
be deemed to have been effected (and,
therefore, not requested for purposes of
subsection 2(a)), (A) unless the registration
statement filed in connection therewith has
become effective, (B) if after it has become
effective such registration is interfered with
by any stop order, injunction or other order or
requirement of the SEC or other governmental
agency or court for any reason other than a
misrepresentation or an omission by such Holder
and, as a result thereof, not less than 90% of
the Registrable Securities requested to be
registered cannot be completely distributed in
accordance with the plan of distribution set
forth in the related registration statement or
(C) if the conditions to closing specified in
the purchase agreement or underwriting
agreement entered into in connection with such
registration are not satisfied (other than by
reason of some act or omission by such Holder)
or waived by the underwriters;
(ii) a registration requested
by a Holder pursuant to this Section 2 and
later withdrawn at the request of such Holder
shall be deemed to have been effected (and,
therefore, requested for purposes of Section
2(a)), whether withdrawn by the Holder prior to
or after the effectiveness of such requested
registration, except that if such request is
withdrawn by a Holder prior to the filing of a
registration statement with the SEC, such
Holder can require the Company to disregard for
purposes of Section 2(a)(iii) one such
requested registration in any twelve month
period; and
(iii) nothing herein shall
modify Holder's obligation to pay the
Registration Expenses incurred in connection
with any withdrawn registration.
(c) In the event that any registration
pursuant to this Section 2 shall involve, in whole or in
part, an underwritten offering, a Holder shall have the
right to designate an underwriter reasonably satisfactory
to the Company as the lead managing underwriter of such
underwritten offering and the Company shall have the
right to designate one underwriter reasonably
satisfactory to the Holder as a co-manager of such
underwritten offering.
(d) The Company shall have the right to
cause the registration of additional securities for sale
for the account of any person (including the Company) in
any registration of Registrable Securities requested by a
Holder pursuant to Section 2(a); provided that the
Company shall not have the right to cause the
registration of such additional securities (other than
the pro rata portion of the Founders Securities (as
defined herein)) if such Holder is advised in writing
(with a copy to the Company) by the managing underwriter
that, in such firm's good faith opinion, registration of
such additional securities would materially and adversely
affect the offering and sale of the Registrable
Securities then contemplated by such Holder.
3. Piggyback Registration. At any time prior
to the seventh anniversary of the closing of the Public
Offering, if the Company at any time proposes to register
any of its Common Stock or any other of its common equity
securities (collectively, "Other Securities") under the
Securities Act (other than a registration on Form S-4 or
S-8 or any successor form thereto), whether or not for
sale for its own account, in a manner which would permit
registration of Registrable Securities for sale for cash
to the public under the Securities Act, it will each such
time give prompt written notice to each Holder of its
intention to do so at least 10 business days prior to the
anticipated filing date of the registration statement
relating to such registration. Such notice shall offer
each such Holder the opportunity to include in such
registration statement such number of Registrable
Securities as each such Holder may request. Upon the
written request of any such Holder made within 5 business
days after the receipt of the Company's notice (which
request shall specify the number of Registrable
Securities intended to be disposed of and the intended
method of disposition thereof), the Company shall effect,
in the manner set forth in Section 5, in connection with
the registration of the Other Securities, the
registration under the Securities Act of all Registrable
Securities which the Company has been so requested to
register, to the extent required to permit the
disposition (in accordance with such intended methods
thereof) of the Registrable Securities so requested to be
registered, provided that:
(a) if at any time after giving written
notice of its intention to register any securities and
prior to the effective date of such registration, the
Company shall determine for any reason not to register or
to delay registration of such securities, the Company
may, at its election, give written notice of such
determination to the Holder and, thereupon, (A) in the
case of a determination not to register, the Company
shall be relieved of its obligation to register any
Registrable Securities in connection with such
registration and (B) in the case of a determination to
delay such registration, the Company shall be permitted
to delay registration of any Registrable Securities
requested to be included in such registration for the
same period as the delay in registering such other
securities.
(b) (i) if the registration referred to
in the first sentence of this Section 3 is to be an
underwritten primary registration on behalf of the
Company, and the managing underwriter advises the Company
in writing that, in such firm's opinion, such offering
would be materially and adversely affected by the
inclusion therein of the Registrable Securities requested
to be included therein, the Company shall include in such
registration: (1) first, all securities the Company
proposes to sell for its own account ("Company
Securities"), (2) second, up to the full number of
Registrable Securities held by Kmart and requested to be
included in such registration by Kmart ("Kmart
Securities") in excess of the number or dollar amount of
securities the Company proposes to sell which, in the
good-faith opinion of such managing underwriter, can be
so sold without so materially and adversely affecting
such offering, reduced by the pro rata portion of
securities held by Messrs. Feuer or Hurwitz entitled to
be included in such registration pursuant to the Share
Transfer Restriction and Purchase and Sale Agreement by
and between the Company and each of Mr. Feuer and
Mr. Hurwitz (the "Founders Securities") and requested to
be so included, (3) third, up to the full number of
Registrable Securities (other than Kmart Securities and
the Founders Securities) in excess of the number or
dollar amount of Company Securities, Kmart Securities and
Founder Securities, which, in the good faith opinion of
such managing underwriter, can be so sold without
materially and adversely affecting such offering (and, if
less than the full number of such Registrable Securities,
allocated pro rata among the Holders of such Registrable
Securities (other than Kmart Securities) on the basis of
the number of securities requested to be included therein
by each such Holder) and (4) fourth, an amount of other
securities, if any, requested to be included therein in
excess of the number or dollar amount of Company
Securities, Kmart Securities, Founders Securities and
other Registrable Securities which, in the opinion of
such underwriter(s), can be so sold without materially
and adversely affecting such offering (allocated among
the holders of such other securities in such proportions
as such holders and the Company may agree); and (ii) if
the registration referred to in the first sentence of
this Section 3 is to be an underwritten secondary
registration on behalf of holders of securities (other
than Registrable Securities) of the Company (the "Other
Holders"), and the managing underwriter advises the
Company in writing that in their good-faith opinion such
offering would be materially and adversely affected by
the inclusion therein of the Registrable Securities
requested to be included therein, the Company shall
include in such registration the amount of securities
(including Registrable Securities) that such managing
underwriter advises allocated pro rata among the Other
Holders and the Holders on the basis of the number of
securities (including Registrable Securities) requested
to be included therein by each Other Holder and each
Holder;
(c) the Company shall not be required to
effect any registration of Registrable Securities under
this Section 3 incidental to the registration of any of
its securities in connection with mergers, acquisitions,
exchange offers, subscription offers, dividend
reinvestment plans or stock option or other executive or
employee benefit or compensation plans; and
(d) no registration of Registrable
Securities effected under this Section 3 shall relieve
the Company of its obligation to effect a registration of
Registrable Securities pursuant to Section 2 hereof.
4. Expenses. Each Holder, by accepting
Registrable Securities, agrees to pay all Registration
Expenses with respect to an offering pursuant to Section
2 hereof, pro rata based on each Holder's number of
Registrable Securities included in such offering, except
to the extent the Company causes shares to be registered
for itself or another party pursuant to Section 2(d), in
which event the Company or such other party shall pay the
incremental expenses of including such shares in the
offering. The Company agrees to pay all Registration
Expenses with respect to an offering pursuant to Section
3 hereof, except for the incremental expenses of
including a Holder's Registrable Securities in such
offering, which incremental expenses shall be paid by
such Holder. All Registration Expenses to be paid by the
Holder shall be paid within 30 days of the delivery of a
statement, such statements to be delivered not more
frequently than once every 60 days.
5. Registration and Qualification. If and
whenever the Company is required to use its best efforts
to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 2 or 3
hereof, the Company, subject to Section 4 hereof, shall:
(a) prepare and file a registration
statement under the Securities Act relating to the
Registrable Securities to be offered as soon as
practicable, but in no event later than 45 days (60 days
if the applicable registration form is other than Form S-
3) after the date notice is given, and use its best
efforts to cause the same to become effective within 90
days after the date notice is given (120 days if the
applicable registration form is other than Form S-3);
(b) prepare and file with the SEC such
amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective
for 60 days (or, in the case of an underwritten offering,
such shorter time period as the underwriters may
require);
(c) furnish to the Holders and to any
underwriter of such Registrable Securities such number of
conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the
prospectus included in such registration statement
(including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as the Holders
or such underwriter may reasonably request in order to
facilitate the public sale of the Registrable Securities,
and a copy of any and all transmittal letters or other
correspondence to, or received from, the SEC or any other
governmental agency or self-regulatory body or other body
having jurisdiction (including any domestic or foreign
securities exchange) relating to such offering;
(d) use its best efforts to register or
qualify all Registrable Securities covered by such
registration statement under the securities or blue sky
laws of such jurisdictions as the Holders or any
underwriter of such Registrable Securities shall request,
and use its best efforts to obtain all appropriate
registrations, permits and consents required in
connection therewith, and do any and all other acts and
things which may be necessary or advisable to enable the
Holders or any such underwriter to consummate the
disposition in such jurisdictions of its Registrable
Securities covered by such registration statement;
provided that the Company shall not for any such purpose
be required to register or qualify generally to do
business as a foreign corporation in any jurisdiction
wherein it is not so qualified, or to subject itself to
taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) (i) use its best efforts to furnish
an opinion of counsel for the Company addressed to the
underwriters and each Holder of Registrable Securities
included in such registration (each a "Selling Holder")
and dated the date of the closing under the underwriting
agreement (if any) (or if such offering is not
underwritten, dated the effective date of the
registration statement), and (ii) use its best efforts to
furnish a "cold comfort" letter addressed to each Selling
Holder, if permissible under applicable accounting
practices, and signed by the independent public
accountants who have audited the Company's financial
statements included in such registration statement, in
each such case covering substantially the same matters
with respect to such registration statement (and the
prospectus included therein) as are customarily covered
in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public
offerings of securities and such other matters as the
Selling Holders may reasonably request and, in the case
of such accountants' letter, with respect to events
subsequent to the date of such financial statements;
(f) immediately notify the Selling
Holders in writing (i) at any time when a prospectus
relating to a registration pursuant to Section 2 or 3
hereof is required to be delivered under the Securities
Act of the happening of any event as a result of which
the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) of any
request by the SEC or any other regulatory body or other
body having jurisdiction for any amendment of or
supplement to any registration statement or other
document relating to such offering, and in either such
case (i) or (ii) at the request of the Selling Holders,
subject to Section 4 hereof, prepare and furnish to the
Selling Holders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they
are made, not misleading;
(g) use its best efforts to list all such
Registrable Securities covered by such registration on
each securities exchange and inter-dealer quotation
system on which a class of common equity securities of
the Company is then listed, with expenses in connection
therewith (not including any future periodic assessments
or fees for such additional listing) to be paid in
accordance with Section 4 hereof; and
(h) furnish unlegended certificates
representing ownership of the Registrable Securities
being sold in such denominations as shall be requested by
the Selling Holders or the underwriters with expenses
therewith to be paid in accordance with Section 4 hereof.
6. Conversion of Other Securities, etc. If
Kmart offers any options, rights, warrants or other
securities issued by it or any other person that are
offered with, convertible into or exercisable or
exchangeable for any Registrable Securities, the
Registrable Securities underlying such options, rights,
warrants or other securities shall be eligible for
registration pursuant to Section 2 and Section 3 of this
Agreement.
7. Underwriting; Due Diligence.
(a) If requested by the underwriters for
any underwritten offering of Registrable Securities
pursuant to a registration requested under this
Agreement, the Company shall enter into an underwriting
agreement with such underwriters for such offering, such
agreement to contain such representations and warranties
by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with
respect to secondary distributions, including, without
limitation, indemnities and contribution substantially to
the effect and to the extent provided in Section 8 hereof
and the provision of opinions of counsel and accountants'
letters to the effect and to the extent provided in
Section 5(e) hereof. The Selling Holders on whose behalf
the Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting
agreement and the representations and warranties by, and
the other agreements on the part of, the Company to and
for the benefit of such underwriters, shall also be made
to and for the benefit of such Selling Holders. Such
underwriting agreement shall also contain such
representations and warranties by the Selling Holders on
whose behalf the Registrable Securities are to be
distributed as are customarily contained in underwriting
agreements with respect to secondary distributions.
Selling Holders may require that any additional
securities included in an offering proposed by a Holder
be included on the same terms and conditions as the
Registrable Securities that are included therein.
(b) In the event that any registration
pursuant to Section 3 shall involve, in whole or in part,
an underwritten offering, the Company may require the
Registrable Securities requested to be registered
pursuant to Section 3 to be included in such underwriting
on the same terms and conditions as shall be applicable
to the other securities being sold through underwriters
under such registration. If requested by the
underwriters for such underwritten offering, the Selling
Holders on whose behalf the Registrable Securities are to
be distributed shall enter into an underwriting agreement
with such underwriters, such agreement to contain such
representations and warranties by the Selling Holders and
such other terms and provisions as are customarily
contained in underwriting agreements with respect to
secondary distributions, including, without limitation,
indemnities and contribution substantially to the effect
and to the extent provided in Section 8 hereof. Such
underwriting agreement shall also contain such
representations and warranties by the Company and such
other person or entity for whose account securities are
being sold in such offering as are customarily contained
in underwriting agreements with respect to secondary
distributions.
(c) In connection with the preparation
and filing of each registration statement registering
Registrable Securities under the Securities Act, the
Company shall give the Holders of such Registrable
Securities and the underwriters, if any, and their
respective counsel and accountants, such reasonable and
customary access to its books and records and such
opportunities to discuss the business of the Company with
its officers and the independent public accountants who
have certified the Company's financial statements as
shall be necessary, in the opinion of such Holder and
such underwriters or their respective counsel, to conduct
a reasonable investigation within the meaning of the
Securities Act.
8. Indemnification and Contribution.
(a) In the case of each offering of
Registrable Securities made pursuant to this Agreement,
the Company agrees to indemnify and hold harmless each
Holder, its officers and directors, each underwriter of
Registrable Securities so offered and each person, if
any, who controls any of the foregoing persons within the
meaning of the Securities Act, from and against any and
all claims, liabilities, losses, damages, expenses and
judgments, joint or several, to which they or any of them
may become subject, under the Securities Act or
otherwise, including any amount paid in settlement of any
litigation commenced or threatened, and shall promptly
reimburse them, as and when incurred, for any reasonable
legal or other expenses incurred by them in connection
with investigating any claims and defending any actions,
insofar as such losses, claims, damages, liabilities or
actions shall arise out of, or shall be based upon, any
untrue statement or alleged untrue statement of a
material fact contained in the registration statement (or
in any preliminary or final prospectus included therein)
or any amendment thereof or supplement thereto, or in any
document incorporated by reference therein, or any
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however,
that the Company shall not be liable to a particular
Holder in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue
statement, or any omission, if such statement or omission
shall have been made in reliance upon and in conformity
with information relating to such Holder furnished to the
Company in writing by or on behalf of such Holder
specifically for use in the preparation of the
registration statement (or in any preliminary or final
prospectus included therein) or any amendment thereof or
supplement thereto. Such indemnity shall remain in full
force and effect regardless of any investigation made by
or on behalf of a Holder and shall survive the transfer
of such securities. The foregoing indemnity agreement is
in addition to any liability which the Company may
otherwise have to each Holder, its officers and
directors, underwriters of the Registrable Securities or
any controlling person of the foregoing; provided,
further, that, as to any underwriter or any person
controlling any underwriter, this indemnity does not
apply to any loss, liability, claim, damage or expense
arising out of or based upon any untrue statement or
alleged untrue statement or omission or alleged omission
in any preliminary prospectus if a copy of a prospectus
was not sent or given by or on behalf of an underwriter
to such person asserting such loss, claim, damage,
liability or action at or prior to the written
confirmation of the sale of the Registrable Securities as
required by the Securities Act and such untrue statement
or omission had been corrected in such prospectus.
(b) In the case of each offering made
pursuant to this Agreement, each Holder of Registrable
Securities included in such offering, by exercising its
registration rights hereunder, agrees to indemnify and
hold harmless the Company, its officers and directors and
each person, if any, who controls any of the foregoing
within the meaning of the Securities Act (and if
requested by the underwriters, each underwriter who
participates in the offering and each person, if any, who
controls any such underwriter within the meaning of the
Securities Act), from and against any and all claims,
liabilities, losses, damages, expenses and judgments,
joint or several, to which they or any of them may become
subject, under the Securities Act or otherwise, including
any amount paid in settlement of any litigation commenced
or threatened, and shall promptly reimburse them, as and
when incurred, for any legal or other expenses incurred
by them in connection with investigating any claims and
defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out
of, or shall be based upon, any untrue statement or
alleged untrue statement of a material fact contained in
the registration statement (or in any preliminary or
final prospectus included therein) or any amendment
thereof or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading, but in each case only to the
extent that such untrue statement of a material fact is
contained in, or such material fact is omitted from,
information relating to such Holder furnished in writing
to the Company by or on behalf of such Holder
specifically for use in the preparation of such
registration statement (or in any preliminary or final
prospectus included therein). The foregoing indemnity is
in addition to any liability which such Holder may
otherwise have to the Company, or any of its directors,
officers or controlling persons; provided, however, that,
as to any underwriter or any person controlling any
underwriter, this indemnity does not apply to any loss,
liability, claim, damage or expense arising out of or
based upon any untrue statement or alleged untrue
statement or omission or alleged omission in any
preliminary prospectus if a copy of a prospectus was not
sent or given by or on behalf of an underwriter to such
person asserting such loss, claim, damage, liability or
action at or prior to the written confirmation of the
sale of the Registrable Securities as required by the
Securities Act and such untrue statement or omission had
been corrected in such prospectus.
(c) Procedure for Indemnification. Each
party indemnified under paragraph (a) or (b) of this
Section 8 shall, promptly after receipt of notice of any
claim or the commencement of any action against such
indemnified party in respect of which indemnity may be
sought, notify the indemnifying party in writing of the
claim or the commencement thereof; provided that the
failure to notify the indemnifying party shall not
relieve it from any liability which it may have to an
indemnified party on account of the indemnity agreement
contained in paragraph (a) or (b) of this Section 8,
except to the extent the indemnifying party was
prejudiced by such failure, and in no event shall relieve
the indemnifying party from any other liability which it
may have to such indemnified party. If any such claim or
action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate
therein, and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action,
the indemnifying party shall not be liable to the
indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than
reasonable costs of investigation; provided that each
indemnified party, its officers and directors, if any,
and each person, if any, who controls such indemnified
party within the meaning of the Securities Act, shall
have the right to employ separate counsel reasonably
approved by the indemnifying party to represent them if
the named parties to any action (including any impleaded
parties) include both such indemnified party and an
indemnifying party or an affiliate of an indemnifying
party, and such indemnified party shall have been advised
by counsel either (i) that there may be one or more legal
defenses available to such indemnified party that are
different from or additional to those available to such
indemnifying party or such affiliate or (ii) a conflict
may exist between such indemnified party and such
indemnifying party or such affiliate, and in that event
the fees and expenses of one such separate counsel for
all such indemnified parties shall be paid by the
indemnifying party. An indemnified party will not enter
into any settlement agreement which is not approved by
the indemnifying party, such approval not to be
unreasonably withheld. The indemnifying party may not
agree to any settlement of any such claim or action which
provides for any remedy or relief other than monetary
damages for which the indemnifying party shall be
responsible hereunder, without the prior written consent
of the indemnified party, which consent shall not be
unreasonably withheld. In any action hereunder as to
which the indemnifying party has assumed the defense
thereof with counsel reasonably satisfactory to the
indemnified party, the indemnified party shall continue
to be entitled to participate in the defense thereof,
with counsel of its own choice, but, except as set forth
above, the indemnifying party shall not be obligated
hereunder to reimburse the indemnified party for the
costs thereof. In all instances, the indemnified party
shall cooperate fully with the indemnifying party or its
counsel in the defense of each claim or action.
If the indemnification provided for in this
Section 8 shall for any reason be unavailable to an
indemnified party in respect of any loss, claim, damage
or liability, or any action in respect thereof, referred
to herein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be
appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified
party on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative
fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party
on the one hand or the indemnified party on the other,
the intent of the parties and their relative knowledge,
access to information and opportunity to correct or
prevent such statement or omission, but not by reference
to any indemnified party's stock ownership in the
Company. In no event, however, shall a Holder be
required to contribute in excess of the amount of the net
proceeds received by such Holder in connection with the
sale of Registrable Securities in the offering which is
the subject of such loss, claim, damage or liability.
The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action
in respect thereof, referred to above in this paragraph
shall be deemed to include, for purposes of this
paragraph, any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9. Rule 144. The Company shall take such
measures and file such information, documents and reports
as shall be required by the SEC as a condition to the
availability of Rule 144 (or any successor provision).
10. Holdback.
(a) Each Holder agrees by acquisition of
Registrable Securities, if so required by the managing
underwriter, not to sell, make any short sale of, loan,
grant any option for the purchase of, effect any public
sale or distribution of or otherwise dispose of any
securities of the Company, during the 30 days prior to
and the 90 days after any underwritten registration
pursuant to Section 2 or 3 hereof has become effective
(or such shorter period as may be required by the
underwriter), except as part of such underwritten
registration. Notwithstanding the foregoing sentence,
each Holder subject to the foregoing sentence shall be
entitled to sell during the foregoing period securities
in a private sale. The Company may legend and may impose
stop transfer instructions on any certificate evidencing
Registrable Securities relating to the restrictions
provided for in this Section 10.
(b) The Company agrees, if so required by
the managing underwriter, not to sell, make any short
sale of, loan, grant any option for the purchase of
(other than pursuant to employee benefit plans) effect
any public sale or distribution of or otherwise dispose
of its equity securities or securities convertible into
or exchangeable or exercisable for any such securities
during the 30 days prior to and the 90 days after any
underwritten registration pursuant to Section 2 or 3
hereof has become effective, except as part of such
underwritten registration and except pursuant to
registrations on Form S-4, S-8 or any successor or
similar forms thereto.
11. Transfer of Registration Rights.
(a) Kmart may transfer all or any portion
of its rights under this Agreement to any transferee of
the lesser of (i) at least 20% of Kmart's initial
holdings of Registrable Securities and (ii) all of
Kmart's remaining Registrable Securities (each, a
"transferee"). No transfer of registration rights
pursuant to this Section shall be effective unless the
Company has received written notice from Kmart of an
intention to transfer at least 30 days prior to Kmart
entering into a binding agreement to transfer Registrable
Securities (10 business days in the event of an
unsolicited offer). Such notice need not contain
proposed terms or name a proposed transferee. On or
before the time of the transfer, the Company shall
receive a written notice stating the name and address of
any transferee and identifying the amount of Registrable
Securities with respect to which the rights under this
Agreement are being transferred and the nature of the
rights so transferred. In connection with any such
transfer, the term "Kmart" as used in this Agreement
(other than in this Section 11, Section 3(a)(i)(2) and
Section 1(c)(iii)) shall, where appropriate to assign the
rights and obligations of Kmart hereunder to such direct
transferee, be deemed to refer to the transferee holder
of such Registrable Securities. Kmart and such
transferees may exercise the registration rights
hereunder in such proportion and upon the demand of such
Holder as they shall agree among themselves, provided
that in no event shall the Company be required to effect
more than one registration pursuant to Section 2 of this
Agreement in any 12 month period and that each such
registration shall be at the request of not more than one
Holder.
(b) After any such transfer, Kmart shall
retain its rights under this Agreement with respect to
all other Registrable Securities owned by Kmart.
(c) Upon the request of Kmart, the
Company shall execute a Registration Rights Agreement
with such transferee or a proposed transferee
substantially similar to this Agreement, and any demand
registrations granted to such transferee shall limit the
demand registrations to which Kmart is entitled under
Section 2(a) hereof.
12. Miscellaneous.
(a) Injunctions. Each party acknowledges
and agrees that irreparable damage would occur in the
event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or
was otherwise breached. Therefore, each party shall be
entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in
any court having jurisdiction, such remedy being in
addition to any other remedy to which such party may be
entitled at law or in equity.
(b) Severability. If any term or
provision of this Agreement held by a court of competent
jurisdiction to be invalid, void or unenforceable, the
remainder of the terms and provisions set forth herein
shall remain in full force and effect and shall in no way
be affected, impaired or invalidated, and each of the
parties shall use its best efforts to find and employ an
alternative means to achieve the same or substantially
the same result as that contemplated by such term or
provision.
(c) Further Assurances. Subject to the
specific terms of this Agreement, each of the parties
hereto shall make, execute, acknowledge and deliver such
other instruments and documents, and take all such other
actions, as may be reasonably required in order to
effectuate the purposes of this Agreement and to
consummate the transactions contemplated hereby.
(d) Waivers, etc. No failure or delay on
the part of either party (or the intended third-party
beneficiaries referred to herein) in exercising any power
or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other
right or power. No modification or waiver of any
provision of this Agreement nor consent to any departure
therefrom shall in any event be effective unless the same
shall be in writing and signed by an authorized officer
of each of the parties, and then such waiver or consent
shall be effective only in the specific instance and for
the purpose for which given.
(e) Entire Agreement. This Agreement
contains the final and complete understanding of the
parties with respect to its subject matter. This
Agreement supersedes all prior agreements and
understandings between the parties, whether written or
oral, with respect to the subject matter hereof. The
paragraph headings contained in this Agreement are for
reference purposes only, and shall not affect in any
manner the meaning or interpretation of this Agreement.
(f) Counterparts. For the convenience of
the parties, this Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original but all of which together shall be one and the
same instrument.
(g) Amendment. This Agreement may be
amended only by a written instrument duly executed by an
authorized officer of each of the parties.
(h) Notices. Unless expressly provided
herein, all notices, claims, certificates, requests,
demands and other communications hereunder shall be in
writing and shall be deemed to be duly given (i) when
personally delivered or (ii) if mailed registered or
certified mail, postage prepaid, return receipt
requested, on the date the return receipt is executed or
the letter refused by the addressee or its agent or (iii)
if sent by overnight courier which delivers only upon the
signed receipt of the addressee, on the date the receipt
acknowledgment is executed or refused by the addressee or
its agent:
(i) if to Kmart, to
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
Attention: General Counsel
(ii) if to the Company, to
OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
Attention: Todd DuChene
(iii) if to a Holder of Registrable Securities, to
the name and address as the same appear in the
security transfer books of the Company or such
other address as either party (or other
Holders of Registrable Securities) may, from
time to time, designate in a written notice in
a like manner.
(i) GOVERNING LAW. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
(j) Assignment. Except as provided
herein, the parties may not assign their rights under
this Agreement. The Company may not delegate its
obligations under this Agreement.
IN WITNESS WHEREOF, Kmart and the Company have
caused this Agreement to be duly executed by their
authorized representative as of the date first above
written.
KMART CORPORATION
By /s/ Thomas F. Murasky
__________________________
Thomas F. Murasky
Executive Vice President and
Chief Financial Officer
OFFICEMAX, INC.
By /s/ Michael Feuer
____________________________
Michael Feuer
President and Chief
Executive Officer
