-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, edtMcGuKVCL6/U/oJEd7xCPbskzHlejbUoyWLVLfXcAS1m8UJjjDjUyqLf/g7S0K vjP51Bwqm7Ri4LfFZvnmIQ== 0000950172-94-000230.txt : 19941125 0000950172-94-000230.hdr.sgml : 19941125 ACCESSION NUMBER: 0000950172-94-000230 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19941121 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: OFFICEMAX INC /OH/ CENTRAL INDEX KEY: 0000929428 STANDARD INDUSTRIAL CLASSIFICATION: 5331 IRS NUMBER: 341573735 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-43377 FILM NUMBER: 94561363 BUSINESS ADDRESS: STREET 1: 3605 WARRENSVILLE CENTER RD CITY: SHAKER HEIGHTS STATE: OH ZIP: 44122 BUSINESS PHONE: 2169216900 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KMART CORP CENTRAL INDEX KEY: 0000056824 STANDARD INDUSTRIAL CLASSIFICATION: 5331 IRS NUMBER: 380729500 STATE OF INCORPORATION: MI FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 3100 W BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 BUSINESS PHONE: 3136431000 MAIL ADDRESS: STREET 1: 3100 W. BIG BEAVER ROAD CITY: TROY STATE: MI ZIP: 48084 FORMER COMPANY: FORMER CONFORMED NAME: KRESGE S S CO DATE OF NAME CHANGE: 19770921 SC 13D 1 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. EX-1 2 UNDERWRITING AGREEMENT 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 EX-99 3 EXHIBIT 6 - INTERCOMPANY AGREEMENT 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 EX-99 4 EXHIBIT 7 - REGISTRATION RIGHTS AGREEMENT 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 -----END PRIVACY-ENHANCED MESSAGE-----