CONSULTING AGREEMENT
This CONSULTING AGREEMENT, dated as of June 10, 1998 (the
"Agreement"), by and between U.S. Office Products Company, a Delaware
corporation (the "Company"), and Xxxxxxx, Dubilier & Rice, Inc., a Delaware
corporation ("CD&R"),
W I T N E S S E T H:
WHEREAS, the Company and CDR-PC have entered into an
Investment Agreement, dated as of January 12, 1998 (as amended by Amendment No.
1 thereto dated as of February 3, 1998, the "Investment Agreement"), subject to
the terms and conditions set forth therein;
WHEREAS, the Company and CD&R are entering into this Agreement
pursuant to Section 9.03(h) of the Investment Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company is entering into an Indemnification Agreement, dated as
of the date hereof (the "Indemnification Agreement"), by and among the Company,
CDR-PC Acquisition, L.L.C., a Delaware limited liability company ("CDR-PC"),
Xxxxxxx, Dubilier & Rice Fund V Limited Partnership, a Cayman Islands exempted
limited partnership (together with any other investment vehicle managed by CD&R,
the "CD&R Fund"), and CD&R (capitalized terms used herein without definition
having the meanings ascribed in the Indemnification Agreement);
WHEREAS, CD&R has performed financial, management advisory and
other services for the Company, including but not limited to providing
assistance in connection with (i) the preparation, negotiation, execution and
delivery of the Distribution Agreement and other agreements, instruments and
documents relating to the Restructuring Transactions or any transactions
contemplated thereby, (ii) the preparation, filing and circulation of the Proxy
Statement, Equity 13E-4, 2001 Debt 13E-4, 2003 Debt 13E-4, S-4, Distribution
S-1s, and related materials to the stockholders of the Company, (iii) the
retention of various financial and other advisors and consultants in connection
with the Investment, Restructuring Transactions and Securities Offerings, (iv)
the preparation, negotiation, execution and delivery of the commitment, fee and
engagement letters, registration rights and purchase agreements, credit
agreements, indentures and
indenture supplements, guarantees, mortgages, pledge agreements and other
security agreements, subscription, registration rights and participation
agreements, exchange agent agreements, and other agreements, instruments and
documents, relating to the Senior Secured Credit Facilities, the Senior
Subordinated Note Offering, or otherwise relating to the Financing or the other
Restructuring Transactions, (v) the preparation and circulation of information
and offering memoranda and other materials in connection with the Senior Secured
Credit Facilities and the Senior Subordinated Note Offering and (vi) the
structuring, implementation and consummation of the foregoing transactions;
WHEREAS, the Company desires to receive financial and
managerial advisory services from CD&R, and CD&R desires to provide such
services to the Company;
NOW, THEREFORE, in consideration of the premises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, the parties hereto hereby agree as follows:
1. Engagement. The Company hereby engages CD&R as a
consultant, and CD&R hereby agrees to provide financial and managerial advisory
ser vices to the Company, all on the terms and subject to the conditions set
forth below.
2. Services, etc. (a) CD&R hereby agrees during the term of
this Agreement to assist, advise and consult with the respective Boards of
Directors and management of the Company and its Subsidiaries in such manner and
on such business, management and financial matters, and provide such other
financial and other advisory services (collectively, the "Continuing Services"),
as may be reasonably requested from time to time by the Board of Directors of
the Company, including but not limited to assistance, advice or consultation in:
(i) establishing and maintaining banking, legal and other business
relation ships for the Company and its Subsidiaries;
(ii) developing and implementing corporate and business strategy
and planning for the Company and its Subsidiaries, including
plans and programs for improving operating, marketing and
financial performance, budgeting of future corporate
investments, acquisition and divestiture strategies, and
reorganizational programs;
(iii) arranging future debt and equity financings and refinancings;
and
(iv) providing professional employees to serve as directors or
officers of the Company and its Subsidiaries.
(b) The Company will furnish CD&R with such information as
CD&R reasonably believes appropriate to its engagement hereunder (all such
information so furnished being referred to herein as the "Information"). The
Company recognizes and confirms that (i) CD&R will use and rely primarily on the
Information and on in formation available from generally recognized public
sources in performing the services to be performed hereunder and (ii) CD&R does
not assume responsibility for the accuracy or completeness of the Information
and such other information. CD&R will keep all non-public Information
confidential except to the extent such Information (x) is required to be
disclosed by law or pursuant to stock exchange rules or (y) shall have become
public other than through unauthorized disclosure by CD&R.
3. Compensation; Payment of Expenses. (a) The Company agrees
to pay to CD&R, as compensation for the Continuing Services rendered and to be
rendered by CD&R hereunder, a fee of $500,000 per year (the "Continuing Services
Fee"), payable on the first day of each month in monthly installments of
$41,666.66 in arrears commencing on July 1, 1998. Such Continuing Services Fee
may, in the sole discretion of a majority of the members of the Company's Board
of Directors who are not affiliated with CD&R, be increased but may not be
decreased without the prior written consent of CD&R. If any employee of CD&R
shall be elected to serve on the Board of Directors or as an officer of the
Company (a "Designated Director"), in consideration of the Continuing Services
Fee being paid to CD&R, CD&R shall cause such Designated Director to waive any
and all fees (including stock options) to which such director would otherwise be
entitled as a director for any period for which the Continuing Services Fee or
any installment thereof is paid and for which such Designated Director continues
to be employed by CD&R.
(b) The Company agrees to reimburse CD&R for such travel and
other reasonable out-of-pocket expenses ("Expenses") as may have been or be
incurred by CD&R and its employees, agents and advisors in the course or on
account of rendering of the Continuing Services, including but not limited to
any reasonable fees and expenses of any legal, accounting or other professional
advisors to CD&R engaged in connection with the Continuing Services (provided
that such fees and expenses of advisors to CD&R shall not exceed $200,000 per
annum in the aggregate without the prior consent of the Company) and any
reasonable expenses incurred by any Designated Director in connection with the
performance of his duties as a director. CD&R may submit monthly expense
statements, which shall be payable within thirty days from the date of such
submission.
4. Term, etc. (a) This Agreement shall be in effect until, and
shall terminate upon, the earlier to occur of (x) the fifth anniversary of the
date hereof and (y) the date on which CDR-PC is entitled to nominate only one
member of the Board of Directors of the Company pursuant to Section 4.01 of the
Investment Agreement. The provisions of this Agreement shall survive any
termination of this Agreement, except for the provisions of Section 1, Section
2(a), the first sentence of Section 2(b) and (solely as to any portion of the
Continuing Services Fee or any Expense not paid or reimbursed prior to such
termination and not required to be paid or reimbursed thereafter pursuant to
Section 4(c) hereof) Section 3 hereof.
(b) Upon any consolidation or merger, or any conveyance,
transfer or lease of all or substantially all of the assets of the Company, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made, shall succeed to,
and be substituted for, the Company under this Agreement with the same effect as
if such successor corporation had been a party thereto. No such consolidation,
merger or conveyance, transfer or lease of all or substantially all of the
assets of the Company shall have the effect of terminating this Agreement or of
releasing the Company or any such successor corporation from its obligations
hereunder.
(c) Upon any termination of this Agreement, any accrued and
unpaid installment of the Continuing Services Fee or portion thereof (pro rated,
with respect to the month in which such termination occurs, for the portion of
such month that precedes such termination), and any unpaid and unreimbursed
Expenses that shall have been incurred prior to such termination (whether or not
such Expenses shall then have become payable), shall be immediately paid or
reimbursed, as the case may be, by the Company. In the event of the liquidation
of the Company, all amounts due CD&R hereunder shall be paid to CD&R before any
liquidating distributions or similar payments are made to stockholders of the
Company.
5. Indemnification. The Company confirms and reaffirms its
obligations pursuant to the Indemnification Agreement.
6. Independent Contractor Status. The parties agree that CD&R
shall perform services hereunder as an independent contractor, retaining control
over and responsibility for its own operations and personnel. Neither CD&R nor
any of its employees or agents shall, solely by virtue of this Agreement or the
arrangements hereunder, be considered employees or agents of the Company nor
shall any of them have authority to contract in the name of or bind the Company,
except (a) to the extent that any
professional employee of CD&R may be serving as a director or officer of the
Company pursuant to Section 2(a)(iv) hereof or (b) as expressly agreed to in
writing by the Company.
7. Notices. Any notice or other communication required or
permitted to be given or made under this Agreement by one party to the other
party shall be in writing and shall be deemed to have been duly given and
effective (i) on the date of delivery if delivered personally or (ii) when sent
if sent by prepaid telegram, or mailed first-class, postage prepaid, registered
or certified mail, or facsimile transmission as follows (or to such other
address as shall be given in writing by one party to the other party in
accordance herewith):
If to the Company, to:
U.S. Office Products Company
0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Director
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
If to CD&R, to:
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
8. Entire Agreement. This Agreement, together with the
Indemnification Agreement and the Investment Agreement, (a) contains the
complete and entire understanding and agreement of CD&R and the Company with
respect to the sub ject matter hereof and (b) supersedes all prior and
contemporaneous understandings, conditions and agreements, oral or written,
express or implied, in respect of the subject matter hereof, including but not
limited to in respect of the engagement of CD&R in connection with the subject
matter hereof. There are no representations or warranties of CD&R in connection
with this Agreement or the services to be provided hereunder, except as
expressly made and contained in this Agreement.
9. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
11. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns and to each Indemnitee, provided that, neither
CD&R nor the Company may assign any of its rights or obligations under this
Agreement without the express written consent of the other party hereto. This
Agreement is not intended to confer any right or remedy hereunder upon any
person other than the parties to this Agreement and their respective successors
and permitted assigns and each Indemnitee.
12. Governing Law. This Agreement shall be governed in all
respects
including as to validity, interpretations and effects by the laws of the State
of New York, without giving effect to its principles or rules of conflict of
laws to the extent such principles or rules would require or permit the
application of the laws of another jurisdiction. The Company and CD&R hereby
irrevocably submit to the jurisdiction of the courts of the State of New York
and the Federal courts of the United States of America, in each case located in
the State, City and County of New York, solely in respect of the interpretation
and enforcement of the provisions of this Agreement, and hereby waive, and agree
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
such courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a New York State or Federal court. The
Company and CD&R hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of any such dispute and
agree that mailing of process or other papers in connection with any such action
or proceeding in the manner provided in Section 7, or in such other manner as
may be permitted by law, shall be valid and sufficient service thereof.
13. Waiver of Jury Trial. Each party hereto acknowledges and
agrees that any controversy that may arise under this Agreement is likely to
involve complicated and difficult issues, and therefore it hereby irrevocably
and unconditionally waives any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of or relating to this
Agreement, or the breach, termination or validity of this Agreement, or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (a) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (b) it understands
and has considered the implications of this waiver, (c) it makes this waiver
voluntarily, and (d) it has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications contained in this Section
13.
14. Amendment; Waivers. No amendment, modification, supplement
or discharge of this Agreement, and no waiver hereunder, shall be valid or
binding unless set forth in writing and duly executed by the party or Indemnitee
against whom enforcement of the amendment, modification, supplement, discharge
or waiver is sought (and in the case of the Company, approved by resolution of
the Board of Directors of the Company). Any such waiver shall constitute a
waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the party or Indemnitee granting such
waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto or any Indemnitee of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any
party hereto or any Indemnitee on one or more occasions, to enforce any of
the provisions of this Agreement or to exercise any right, powers or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions,
rights, power or privileges hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that
any party or Indemnitee may otherwise have at law or in equity or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
XXXXXXX, DUBILIER & RICE, INC.
By: /s/ Xxxxxx X. Xxxx, III
--------------------------------------
Name: Xxxxxx X. Xxxx, III
Title: Chairman
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Xxxx X. Director
--------------------------------------
Name: Xxxx X. Director
Title: Executive Vice President--Administration,
General Counsel and Secretary
