$400,000,000
U.S. OFFICE PRODUCTS COMPANY
9 3/4% Senior Subordinated Notes due 2008
PLACEMENT AGREEMENT
June 5, 1998
June 5, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
BT Alex. Xxxxx Incorporated
Chase Securities Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
U.S. Office Products Company, a Delaware corporation (the
"Company"), proposes to issue and sell to the several purchasers named in
Schedule I hereto (the "Placement Agents") $400,000,000 aggregate principal
amount of its 9 3/4% Senior Subordinated Notes due 2008 (the "Notes") to be
issued pursuant to the provisions of an Indenture dated as of June 10, 1998 (the
"Indenture") between the Company and State Street Bank and Trust Company, as
Trustee (the "Trustee"). The obligations of the Company under the Notes and the
Indenture will be guaranteed (the "Guarantees") by (i) the Company's existing
Domestic Subsidiaries (as defined in the Indenture) that upon issuance of the
Notes guarantee the Company's borrowings under the Credit Facility (as defined
below) (the "Guarantors") and (ii) any Future Material Domestic Subsidiaries (as
defined in the Indenture) that guarantee such borrowings on a senior
subordinated basis pursuant to the terms of the Indenture.
The offering and sale of the Notes is a part of the financing
for the Strategic Restructuring Plan (as defined in the Final Memorandum (as
defined below)) approved by the Company's Board of Directors. The Strategic
Restructuring Plan contemplates, among other things, that (i) the Company will
purchase 37,037,037 shares of its Common Stock, par value $.001 per share (the
"Common Stock"), including shares issuable upon exercise of options (vested and
unvested) to purchase Common Stock, at $27.00 per share (or, in the case of
shares underlying stock options, $27.00 minus the exercise price per share of
such options) (the "Equity Tender Offer"), (ii) the Company will distribute to
its stockholders the shares of Aztec Technology Partners, Inc., Workflow
Management, Inc., School Speciality, Inc. and Navigant International, Inc. (the
"Distributions"), (iii) an affiliate of Xxxxxxx, Dubilier & Rice will acquire
Common Stock and warrants to purchase Common Stock for $270.0 million (the
"Equity Investment") and (iv) the Company will enter into a senior secured bank
credit facility with terms as described in the Final Memorandum (the "Credit
Facility"). The completion of the Equity Tender Offer, the Distributions, the
Equity Investment and the availability of funds under the Credit Facility are
all conditions to the closing of the sale of the Notes.
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the
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exemption from registration provided by Rule 144A under the Securities Act, in
offshore transactions in reliance on Regulation S under the Securities Act
("Regulation S") and to institutional accredited investors (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that deliver a letter in
the form annexed to the Final Memorandum.
The Placement Agents and their direct and indirect transferees
will be entitled to the benefits of a Registration Rights Agreement dated the
date hereof between the Company and the Placement Agents (the "Registration
Rights Agreement").
In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum (the "Preliminary Memorandum") and
will prepare a final offering memorandum dated the date hereof (the "Final
Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") including
or incorporating by reference a description of the terms of the Notes, the terms
of the offering and a description of the Company. As used herein, the term
"Memorandum" shall include in each case portions of the documents incorporated
by reference therein.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that:
(a) (i) Each document, if any, filed or to be filed pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated by reference in either Memorandum complied or
will comply when so filed in all material respects with the Exchange
Act and the applicable rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder and (ii) the
Preliminary Memorandum does not contain and the Final Memorandum, in
the form used by the Placement Agents to confirm sales and on the
Closing Date (as defined in Section 4), will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements
or omissions in either Memorandum based upon information relating to
any Placement Agent furnished to the Company in writing by such
Placement Agent through you expressly for use therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to own its property
and to conduct its business as described in each Memorandum and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in
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good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in each Memorandum or as currently conducted, as the case may be, and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole; except as set forth in the Final Memorandum, all of
the issued shares of capital stock of each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly by the Company, free and clear of
all liens, encumbrances, equities or claims.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Notes have been duly authorized by the Company and,
when executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Placement Agents in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws affecting creditors' rights
generally and general principles of equity, and will be entitled to the
benefits of the Indenture and the Registration Rights Agreement.
(f) The Guarantees have been duly authorized by the Guarantors
and, upon execution and delivery of the Indenture and when the Notes
are duly executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Placement Agents
in accordance with this Agreement, will be valid and binding
obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws affecting creditors' rights generally and general principles of
equity.
(g) The Indenture has been duly authorized by the Company and
the Guarantors and, when executed and delivered by the Company and the
Guarantors, will be a valid and binding agreement of the Company and
each Guarantor, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent
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transfer, reorganization, moratorium and similar laws affecting
creditors' rights generally and general principles of equity.
(h) The Registration Rights Agreement has been duly authorized
by the Company, executed and delivered by the Company, and is a valid
and binding agreement of the Company, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws affecting
creditors' rights generally and general principles of equity and except
as rights to indemnification and contribution under the Registration
Rights Agreement may be limited under applicable law.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture, the Registration Rights Agreement and the Notes will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, except for such
violations of judgments, orders or decrees as would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole,
and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance
by the Company of its obligations under this Agreement, the Indenture,
the Registration Rights Agreement or the Notes, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Notes and by Federal and
state securities laws with respect to the Company's obligations under
the Registration Rights Agreement, such consents, approvals,
authorizations, orders or filings as have been made or obtained, such
as disclosed in the Preliminary Memorandum or the Final Memorandum and
such as related to the listing of the Notes in Luxembourg.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Final Memorandum.
(k) There are no legal or governmental proceedings pending or,
to the Company's knowledge, threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject other than proceedings
accurately described in all material respects in each Memorandum and
proceedings that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or on the power or
ability of the
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Company to perform its obligations under this Agreement, the Indenture,
the Registration Rights Agreement or the Notes or to consummate the
transactions contemplated by the Final Memorandum.
(l) The Company and its subsidiaries (i) are in compliance in
all material respects with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with
all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(m) Except as set forth in the Final Memorandum, there are no
costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws
or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties)
which would, singly or in the aggregate, have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(n) The Company is not, and after giving effect to the
offering and sale of the Notes and the application of the proceeds
thereof as described in the Final Memorandum, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(o) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of the
Company has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be
integrated with the sale of the Notes in a manner that would require
the registration under the Securities Act of the Securities or (ii)
engaged in any form of general solicitation or general advertising in
connection with the offering of the Notes (as those terms are used in
Regulation D under the Securities Act), or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.
(p) None of the Company, its Affiliates or any person acting
on its or their behalf (other than the Placement Agents, as to which no
representation is made) has
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engaged or will engage in any directed selling efforts (within the
meaning of Regulation S) with respect to the Notes and the Company and
its Affiliates and any person acting on its or their behalf (other than
the Placement Agents, as to which no representation is made) have
complied and will comply with the offering restrictions requirement of
Regulation S.
(q) Assuming the accuracy of the representations of the
Placement Agents contained in Section 7 of this Agreement, and the
compliance of the Placement Agents with the agreements set forth
therein, it is not necessary in connection with the offer, sale and
delivery of the Notes to the Placement Agents in the manner
contemplated by this Agreement to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended.
(r) The Notes satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(s) The Notes conform in all material respects to the
description thereof contained in the Final Memorandum under the heading
"Description of the Notes".
(t) Subsequent to the respective dates as of which information
is given in the Final Memorandum, (i) the Company and its subsidiaries
have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (iii) there has not been any
material change in the capital stock, short-term debt or long-term debt
of the Company and its subsidiaries, except in each case as described
in the Final Memorandum.
(u) No material labor dispute with the employees of the
Company or any of its subsidiaries exists, except as described in the
Final Memorandum, or, to the knowledge of the Company, is imminent.
2. Agreements to Sell and Purchase. The Company hereby agrees
to sell to the several Placement Agents, and each Placement Agent, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Notes set forth in Schedule
I hereto opposite its name at a purchase price of 96.788% of the principal
amount thereof (the "Purchase Price") plus accrued interest, if any, to the
Closing Date.
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The Company hereby agrees that, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Placement Agents,
it will not, during the period beginning on the date hereof and continuing to
and including the Closing Date, offer, sell, contract to sell or otherwise
dispose of any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Notes (other than the sale of the Notes under this
Agreement).
3. Terms of Offering. You have advised the Company that the
Placement Agents will make an offering of the Notes purchased by the Placement
Agents hereunder on the terms to be set forth in the Final Memorandum and in
this Agreement, as soon as practicable after this Agreement is entered into as
in your judgment is advisable.
4. Payment and Delivery. Payment for the Notes shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Notes for the respective accounts of the several
Placement Agents at 10:00 a.m., New York City time, on June 10, 1998, or at such
other time on the same or such other date, not later than June 17, 1998, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date".
Certificates for the Notes shall be in definitive form or
global form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not later than one full business
day prior to the Closing Date. The certificates evidencing the Notes shall be
delivered to you on the Closing Date for the respective accounts of the several
Placement Agents, with any transfer taxes payable in connection with the
transfer of the Notes to the Placement Agents duly paid, against payment of the
Purchase Price therefor plus accrued interest, if any, to the date of payment
and delivery.
5. Conditions to the Placement Agents' Obligations. The
several obligations of the Placement Agents to purchase and pay for the Notes on
the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
8
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Final Memorandum (exclusive
of any amendments or supplements thereto subsequent to the
date of this Agreement) that, in your judgment, is material
and adverse and that makes it, in your judgment, impracticable
to market the Notes on the terms and in the manner
contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in Section 5(a)(i) and
to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and the Company has complied with all of the agreements and satisfied
all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Placement Agents shall have received on the Closing
Date an opinion of Xxxxxx, Xxxxxx & Xxxxxxxxx, special counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit A.
Such opinion shall be rendered to the Placement Agents at the request
of the Company and shall so state therein.
(d) The Placement Agents shall have received on the Closing
Date an opinion of Shearman & Sterling, counsel for the Placement
Agents, dated the Closing Date, in form and substance satisfactory to
you.
(e) The Placement Agents shall have received on the date
hereof a letter, dated the date hereof in form and substance
satisfactory to the Placement Agents, from Price Waterhouse LLP,
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in or incorporated by reference into
the Final Memorandum.
(f) The Placement Agents shall have received on the date
hereof a letter, dated the date hereof, in form and substance
satisfactory to the Placement Agents, from each of KPMG Peat Marwick
LLP (Norfolk, VA), Deloitte & Touche LLP (Seattle, WA), Ernst & Young
LLP (Milwaukee, WI), Xxxx, Xxxxxx & Company LLP (New York, NY), Xxxxx,
Xxxxxxxxxx and Xxxxxx, PLC (Minneapolis, MN) and BDO Xxxxxxx (Atlanta,
GA), independent public accountants, containing statements and
information of the type
9
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Final
Memorandum.
(g) The Indenture and the Registration Rights Agreement shall
have been executed by the parties thereto and shall be in full force
and effect on the Closing Date.
(h) The Credit Facility shall be in full force and effect on
the Closing Date.
(i) The closing of each of the Equity Tender Offer, the
Distributions and the Equity Investment and the initial borrowings
under the Credit Facility shall have occurred or shall occur
concurrently with the closing of the sale of the Notes hereunder.
(j) The Placement Agents shall have received such other
documents and certificates as are reasonably requested by you or your
counsel.
6. Covenants of the Company. In further consideration of the
agreements of the Placement Agents contained in this Agreement, the Company
covenants with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge, prior
to 3:00 p.m. New York City time on the business day next succeeding the
date of this Agreement and during the period mentioned in Section 6(c),
as many copies of the Final Memorandum, any documents incorporated by
reference therein and any supplements and amendments thereto as you may
reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Notes shall have been sold by the
Placement Agents, any event shall occur or condition exist as a result
of which it is necessary to amend or supplement the Final Memorandum in
order to make the statements therein, in the light of the circumstances
when the Final Memorandum is delivered to a purchaser, not misleading,
or if, in the reasonable opinion of counsel for the Placement Agents,
it is necessary to amend or supplement the Final Memorandum to comply
with applicable law, forthwith to prepare and furnish, at its own
expense, to the Placement Agents, either amendments or supplements to
the Final Memorandum so that the statements in the Final Memorandum as
so amended or supplemented will not, in the light of the circumstances
when the Final
10
Memorandum is delivered to a purchaser, be misleading or so that the
Final Memorandum, as amended or supplemented, will comply with
applicable law.
(d) To use its reasonable best efforts to qualify the Notes
for offer and sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request; provided that the
Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the issuance and sale of the Notes and
all other fees or expenses in connection with the preparation of each
Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the delivering of copies
thereof to the Placement Agents, in the quantities herein above
specified, (ii) all costs and expenses related to the transfer and
delivery of the Notes to the Placement Agents, including any transfer
or other taxes payable thereon, (iii) the reasonable cost of printing
or producing any Blue Sky or legal investment memorandum in connection
with the offer and sale of the Notes under state securities laws and
all expenses in connection with the qualification of the Notes for
offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Placement Agents in connection with such
qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) any fees charged by rating agencies for the rating of
the Notes, (v) all document production charges and expenses of counsel
to the Placement Agents (but not including their fees for professional
services) in connection with the preparation of this Agreement, (vi)
the fees and expenses, if any, incurred in connection with the
admission of the Notes for trading in PORTAL and for listing on the
Luxembourg Stock Exchange, (vii) the costs and charges of the Trustee
and any transfer agent, registrar or depositary, (viii) the cost of the
preparation, issuance and delivery of the Notes, (ix) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of
the Notes, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road
show, and (x) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not
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otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 8, and the last paragraph of
Section 10, the Placement Agents will pay all of their costs and
expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Notes by them and any advertising
expenses connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated
with the sale of the Notes in a manner which would require the
registration under the Securities Act of the Notes.
(g) Not to solicit any offer to buy or offer to sell the Notes
by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(h) While any of the Notes remain "restricted securities"
within the meaning of the Securities Act, to make available, upon
request, to any seller of the Notes the information specified in Rule
144A(d)(4) under the Securities Act, unless the Company is then subject
to Section 13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its reasonable best efforts to
permit the Notes to be designated PORTAL securities in accordance with
the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the PORTAL Market.
(j) None of the Company, its Affiliates or any person acting
on its or their behalf (other than the Placement Agents) will engage in
any directed selling efforts (as that term is defined in Regulation S)
with respect to the Notes, and the Company and its Affiliates and each
person acting on its or their behalf (other than the Placement Agents)
will comply with the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing Date, the
Company will not, will not permit any of its subsidiaries to, and will
use its reasonable best efforts to cause its affiliates (as defined in
Rule 144 under the Securities Act) to not, resell any of the Notes
which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them.
(l) To use its reasonable best efforts to obtain as soon as
practicable after the Closing Date and maintain the listing of the
Notes on the Luxembourg Stock Exchange for as long as any of the Notes
are outstanding, and to supply all documents, information
12
and undertakings and publish all advertisements or other material as
may be necessary or advisable for such purpose.
7. Offering of Securities; Restrictions on Transfer. (a) Each
Placement Agent, severally and not jointly, represents and warrants that such
Placement Agent is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Notes by any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act and (ii) it will solicit offers for such Notes only from, and will offer
such Notes only to, persons that it reasonably believes to be (A) in the case of
offers inside the United States, (1) QIBs or (2) other institutional accredited
investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act ("institutional accredited investors") that, prior to their purchase of the
Securities, deliver to such Placement Agent a letter containing the
representations and agreements set forth in Appendix A to the Memorandum and (B)
in the case of offers outside the United States, to persons other than U.S.
persons ("foreign purchasers", which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)) in reliance upon
Regulation S under the Securities Act that, in each case, in purchasing such
Notes are deemed to have represented and agreed as provided in the Final
Memorandum under the caption "Transfer Restrictions".
(b) Each Placement Agent, severally and not jointly,
represents, warrants, and agrees with respect to offers and sales outside the
United States that:
(i) such Placement Agent understands that no action has been
or will be taken in any jurisdiction by the Company that would permit a
public offering of the Notes, or possession or distribution of either
Memorandum or any other offering or publicity material relating to the
Notes, in any country or jurisdiction where action for that purpose is
required;
(ii) such Placement Agent will comply with all applicable laws
and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Notes or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Notes have not been registered under the Securities
Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with
Rule 144A or Regulation S under the Securities Act or pursuant to
another exemption from the registration requirements of the Securities
Act;
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(iv) such Placement Agent has offered the Notes and will offer
and sell the Notes (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or as otherwise permitted in Section 7(a); accordingly,
neither such Placement Agent, its Affiliates nor any persons acting on
its or their behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the
Securities, and any such Placement Agent, its Affiliates and any such
persons have complied and will comply with the offering restrictions
requirement of Regulation S;
(v) such Placement Agent has (A) not offered or sold and, prior
to the date six months after the Closing Date, will not offer or sell
any Notes to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations
1995; (B) complied and will comply with all applicable provisions of
the Financial Services Xxx 0000 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United
Kingdom, and (C) 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 Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 (as amended) or is a person to
whom such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Notes have not
been and will not be registered under the Securities and Exchange Law
of Japan, and represents that it has not offered or sold, and agrees
not to offer or sell, directly or indirectly, any Notes in Japan or for
the account of any resident thereof except pursuant to any exemption
from the registration requirements of the Securities and Exchange Law
of Japan and otherwise in compliance with applicable provisions of
Japanese law; and
(vii) such Placement Agent agrees that, at or prior to
confirmation of sales of the Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering
14
and the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act.
Terms used above have the meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to
them by Regulation S.
8. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless each Placement Agent and each person, if any, who
controls any Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Placement Agent furnished to the Company in writing
by such Placement Agent through you expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any Preliminary
Memorandum shall not inure to the benefit of any Placement Agent from whom the
person asserting any such losses, claims, damages or liabilities purchased
Notes, or any person controlling such Placement Agent, if it is established that
a copy of the Memorandum (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Placement Agent to such person at or prior to the written
confirmation of the sale of the Notes to such person, and if the Memorandum (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 6(a) hereof.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Placement Agent, but only with
reference to information relating to such Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use in
either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"indemnified party") shall promptly notify the person
15
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the reasonable fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Xxxxxx Xxxxxxx &
Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 60
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being enter into and (iii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement effected without its consent if such
indemnifying party (i) reimburses such indemnified party in accordance with such
request to the extent it considers such request to be reasonable and (ii)
provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
16
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Placement Agents on the
other hand from the offering of the Notes or (ii) if the allocation provided by
clause 8(d)(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
8(d)(i) above but also the relative fault of the Company on the one hand and of
the Placement Agents on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Placement Agents on the other hand in
connection with the offering of the Notes shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Notes
(before deducting expenses) received by the Company and the total discounts and
commissions received by the Placement Agents in respect thereof, bear to the
aggregate offering price of the Notes. The relative fault of the Company on the
one hand and of the Placement Agents on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Placement Agents and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Placement Agents'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the respective principal amount of Notes they have purchased
hereunder, and not joint.
(e) The Company and the Placement Agents agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Placement Agents were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in Section 8(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) 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 Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes resold by it in
the initial placement of such Notes were offered to investors exceeds the amount
of any damages that such Placement Agent has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for
17
in this Section 8 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Placement Agent or any person
controlling any Placement Agent or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Securities.
9. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Notes on the terms and in the manner contemplated in the Final
Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Placement
Agents shall fail or refuse to purchase Notes that it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of Notes
which such defaulting Placement Agent or Placement Agents agreed but failed or
refused to purchase is not more than one-tenth of the aggregate principal amount
of Notes to be purchased on such date, the other Placement Agents shall be
obligated severally in the proportions that the principal amount of Notes set
forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Notes set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Notes which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Notes that any Placement Agent
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 10 by an amount in excess of one-ninth of such
18
principal amount of Notes without the written consent of such Placement Agent.
If, on the Closing Date any Placement Agent or Placement Agents shall fail or
refuse to purchase Notes which it or they have agreed to purchase hereunder on
such date and the aggregate principal amount of Notes with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of Notes
to be purchased on such date, and arrangements satisfactory to you and the
Company for the purchase of such Notes are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Placement Agent or of the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Final Memorandum or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Placement
Agent from liability in respect of any default of such Placement Agent under
this Agreement.
If this Agreement shall be terminated by the Placement Agents,
or any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Placement Agents or such
Placement Agents as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the reasonable
fees and disbursements of their counsel) reasonably incurred by such Placement
Agents in connection with this Agreement or the offering contemplated hereunder.
11. Notices. All notices and other communications under this
Agreement shall be in writing and mailed, delivered or sent by facsimile
transmission to: if sent to the Placement Agents, Xxxxxx Xxxxxxx & Co.
Incorporated, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: High Yield New
Issues Group, facsimile number (000) 000-0000 and if sent to the Company, to
0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000 Xxxx, Xxxxxxxxxx, X.X. 00000,
Attention: Xxxx Director, facsimile number (000) 000-0000.
19
12. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
14. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Very truly yours,
U.S. OFFICE PRODUCTS COMPANY
By:
-----------------------------------
Name:
Title:
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
BT ALEX. XXXXX INCORPORATED
CHASE SECURITIES INC.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:
-----------------------------------
Name:
Title:
SCHEDULE I
Principal Amount of Notes
Placement Agent to be Purchased
--------------- -------------------------
Xxxxxx Xxxxxxx & Co. Incorporated $140,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated $140,000,000
BT Alex. Xxxxx Incorporated $ 60,000,000
Chase Securities Inc. $ 60,000,000
------------
Total:......................................... $400,000,000
------------
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A-1
EXHIBIT A
OPINION OF COUNSEL FOR THE COMPANY
