Exhibit 10.3
MUTUAL ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT is made this 29th day of October
2004, between Boise Cascade Corporation, a Delaware corporation ("Old Boise")
and Forest Products Holdings, L.L.C., a Delaware limited liability company
("Newco").
R E C I T A L S
WHEREAS, Old Boise and Newco and certain of their respective subsidiaries
are parties to an Asset Purchase Agreement dated July 26, 2004, as amended
through the date hereof (the "AP Agreement") under which Newco has acquired the
timberlands, paper, and building materials manufacturing and distribution
businesses of Old Boise, and Old Boise's headquarters facility in Boise, Idaho,
including a portion but not all of Old Boise's headquarters staff operations;
WHEREAS, Old Boise owns approximately 19.9% of the issued and outstanding
common equity interest in Newco;
WHEREAS, Old Boise continues to own, through its OfficeMax, Inc. and Boise
Cascade Office Products Corporation subsidiaries and their respective
subsidiaries and affiliates, significant retail and contract office distribution
businesses headquartered in Cleveland, Ohio, and Itasca, Illinois, respectively,
together with certain residual assets and liabilities excluded from the
transaction provided for in the AP Agreement (collectively, the "Ongoing
Business");
WHEREAS, Old Boise will be in need of, for a transition period, certain
staff services in connection with the Ongoing Business which, prior to the date
hereof, have been provided by the corporate staff operations transferred under
the AP Agreement;
WHEREAS, Newco will be in need of, for a transition period, certain staff
services which, prior to the date hereof, have been provided to the business
units acquired by Newco by portions of Boise's corporate staff operations which
are not being transferred to Newco under the AP Agreement; and
WHEREAS, each of Old Boise and Newco is willing to supply the staff
services needed by the other specified herein for the term and the compensation
provided for herein.
NOW, THEREFORE, the parties do hereby agree as follows:
1. SERVICES. Each party shall use commercially reasonable efforts to
provide the administrative services identified in Exhibit A to this Agreement
(collectively, "Services" and each a "Service") to the other on the terms and
subject to the conditions
hereof. The scope of each such Service shall be as reasonably requested by the
receiving party, but not greater than the scope and level of such Service
provided by the relevant staff organization prior to the date hereof.
2. TERM. The terms and conditions applicable to the provision of Services
hereunder shall continue for so long as any of the Services are being provided
to a party. Exhibit A specifies (i) the provider and the recipient of each
Service; and (ii) an initial time period for each Service to be provided (the
"Initial Term"). Each party shall continue to provide each of the individual
Services after the expiration of the Initial Term in respect of any Service
provided that, either party may elect to reduce or eliminate such Service at any
time upon 30 days prior written notice to the other party and any such election
shall be irrevocable. For any Service for which notice of termination or
reduction is given, in lieu of termination or reduction, the parties may elect
to change the fee structure and continue the specific Service arrangement.
3. FEES AND REIMBURSABLE COSTS. For the months of November and December
2004, the estimated fees to be paid for each Service shall be as set forth on
Exhibit A. These fees have been developed by the parties using the methodology
reflected in Exhibit B (the "Fee Estimate Methodology"). The actual fees payable
for Services shall be based on the actual time spent providing the Services as
such time is priced in accordance with the Fee Estimate Methodology. On or
before December 25, 2004 and on or before the 25th day of each month thereafter
to the extent that a Service shall continued to be rendered in the following
month, the parties shall mutually evaluate the prior month's fees in light of
the actual cost incurred and, using this historical experience as well as the
Fee Estimate Methodology, shall set the fees for each Service for the following
month In addition to such fees, the recipient of a Service shall also pay all
out-of-pocket costs to the provide of such Service, including travel expenses.
The parties acknowledge that Old Boise's former staff functions have
traditionally utilized certain levels of outside consulting services, including
outside counsel, in the provision of the Services and it is agreed and
understood that a party providing a Service may, at its discretion, continue to
utilize similar levels of such outside consulting services. The cost of such
outside consulting services shall be reimbursed as an out-of-pocket expense in
addition to the fees otherwise payable under this paragraph 3. If any consent is
required from, or if any payments are required to be made to, any licensor or
third party in order for Newco or Boise to provide any of the Services required
hereunder, the party requiring such service shall obtain the required consent or
make the required payment.
4. SERVICES FOR LITIGATION. For a period of five years following Closing
under the AP Agreement, each party shall make available to one another the
services of any of their respective employees who have knowledge of facts
involved in any proceeding or litigation involving the other or one of its
subsidiaries or affiliates to assist the requesting party and its counsel in
defending or prosecuting such litigation. A party requesting such services by an
employee of the other shall reimburse the employing party for its reasonable
expenses, including travel, but excluding compensation charges. The provision of
employees as witnesses shall be in addition to the legal Service provided
pursuant to Exhibit A.
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5. PAYMENT. On or before the 15th day of each month, each party shall
submit to the other a statement describing in reasonable detail the Services
provided by the invoicing party during the previous month together with the Fee
and cost reimbursement therefore. Payment of the amount invoiced shall be made
in full within 15 days of the receipt of invoice. Late payments shall bear
interest at the rate set forth in Section 15.1 hereof.
6. SAFETY AND SECURITY REQUIREMENTS. Whenever the provision of goods or
services under the Agreement requires a party to be on the property of the other
party, each party shall observe all reasonable security and safety procedures or
requirements imposed by the other party on third parties providing like goods or
services.
7. STANDARDS OF PERFORMANCE. All Services supplied by a party shall be
performed in accordance with the same standard of care that the provider
observes in providing similar services to its own operations provided, however,
a party will not be liable for any damages arising out of any Service provided
hereunder unless such damages result in whole or in substantial part from the
providing party's gross negligence or willful misconduct.
8. DISCLAIMER OF IMPLIED WARRANTIES. EACH PARTY HEREBY DISCLAIMS ALL
WARRANTIES IN RESPECT OF GOODS OR SERVICES SUPPLIED BY IT UNDER THIS AGREEMENT
WHICH ARE IMPLIED BY LAW OR BY THE TERMS OF THE AGREEMENT INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS, ANY IMPLIED
WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE
AND ANY OBLIGATIONS, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, EXCEPT FOR THE
EXPLICIT WARRANTIES SET FORTH HEREIN. THE FOREGOING DISCLAIMER SHALL NOT BE
CONSTRUED TO NEGATE OR LIMIT IN RESPECT OF ANY GOODS SUPPLIED UNDER THIS
AGREEMENT ANY WARRANTY OF TITLE OR RIGHT TO SELL IMPLIED BY LAW OR CUSTOM OF
TRADE AND EACH PARTY HEREBY EXPRESSLY WARRANTS, IN RESPECT OF ALL GOODS TO BE
SOLD HEREUNDER, THAT IT WILL HAVE AND WILL CONVEY TO THE PURCHASER THEREOF GOOD
AND MERCHANTABLE TITLE TO SUCH GOODS AND THAT IT WILL WARRANT AND DEFEND SUCH
TITLE AGAINST THE CLAIMS OF ALL PERSONS WHATSOEVER.
9. LIMITATION OF LIABILITY. Neither party shall be liable for any lost
profits or revenue, incidental, indirect, special, collateral, consequential,
exemplary, or punitive damages arising from a failure by such party to provide
or utilized goods or services in accordance with the standards of this Agreement
whether arising in contract, tort, or otherwise. In respect of Services, the
remedy for failure to meet the standards of service required hereby shall be
that the provider shall be required to re-perform the Service without charge. In
respect of goods, without limiting the provisions of the first sentence of this
Section 9, the remedy for failure of the goods to conform to the quality
specifications set forth in the Agreement shall be as provided in the Uniform
Commercial Code as in force from time to time in the state of Delaware and as
specifically set forth in the
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Agreement. The foregoing limitation of remedy shall not impair the rights of the
parties under Section 16 of this Agreement.
10. INSURANCE. The provisions of this Section 10 shall apply for only so
long as Old Boise occupies office space in Newco's headquarters complex
(pursuant to Section 11 hereof) and shall be superceded in their entirety by any
lease of space subsequently entered into by the parties for the purpose of
formalizing the provision of such office space for a period beyond the Initial
Term for such Service. The coverage afforded by the liability policies provided
for below shall be limited to claims arising from Old Boise's use and occupation
of Newco's headquarters facilities.
10.1 OLD BOISE COVERAGES. Old Boise shall carry the following
policies of insurance for so long as is required by Section 10:
10.1.1 WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY. Workers
Compensation insurance as required by the law of Idaho and employers' liability
insurance in amounts not less than $1,000,000 each accident for bodily injury by
accident, $1,000,000 policy limit for bodily injury by disease, and $1,000,000
for each employee for bodily injury by disease.
10.1.2 GENERAL LIABILITY. A commercial general liability
(occurrence) policy, which policy shall include coverage for premises and
operations, products and completed operations, contractual liability, broad form
property damage, including completed operations, explosion, collapse and
underground hazards, and personal injury liability. The policy shall have a
combined single limit for bodily injury and property damage of $5,000,000 each
occurrence; $5,000,000 for personal injury liability; $5,000,000 aggregate for
products/completed operations; and $5,000,000 general aggregate.
10.1.3 AUTOMOBILE LIABILITY. An automobile liability policy with
a combined single limit for bodily injury and property damage of not less than
$5,000,000 for each accident. The policy shall cover all owned, hired, and
nonowned automobiles used by Old Boise in the performance of the Agreement and
shall include coverage for automobile contractual liability.
10.1.4 PROPERTY INSURANCE. Old Boise shall maintain a policy or
policies of property damage insurance which shall provide all risk coverage
(including boiler and machinery coverage) of all assets of Old Boise which are
used in or may be exposed to risk by reason of the performance of this
Agreement. Such insurance shall provide coverage to the full replacement cost of
the property covered and shall include business interruption coverage for losses
resulting from covered losses to property covered thereby.
10.2 NEWCO COVERAGES. Newco shall carry the following policies of
insurance for so long as is required by Section 10:
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10.2.1 PROPERTY INSURANCE. Newco shall maintain a policy or
policies of property damage insurance which shall provide all risk coverage of
all assets of Newco which are used in or may be exposed to risk by reason of the
performance of this Agreement. Such insurance shall provide coverage to the full
replacement cost of the property covered and shall include business interruption
coverage for losses resulting from covered losses to property covered thereby.
10.3 CERTIFICATES OF INSURANCE. Each party to this Agreement shall
provide the other annually with certificates issued by the respective carriers
of each of the policies they are required to carry hereunder. Such certificates
shall evidence the coverage required above and shall:
10.3.1 ADDITIONAL INSURED. Name the other party, its
subsidiaries, affiliates, and the directors, officers, and employees thereof as
additional named insureds with respect to the policies required by Sections
10.1.2 and 10.1.3 above insofar as the insured liability arises out of or is
connected with the provision of goods or services under this Agreement by the
party providing such insurance;
10.3.2 CANCELLATION NOTICE. Provide on their face that the
policies they represent will not be terminated, adversely amended, or allowed to
expire without 30 days' prior written notice to the party to whom each such
certificate is addressed; and
10.3.3 SEVERABILITY OF INTERESTS. Provide on its face, in
respect of the coverages required by Sections 10.1.2 and 10.1.3 above, that the
policies it represents contain a severability of interests clause, generally
providing "the insurance afforded applies separately to each insured against
whom claim is made or suit is brought, except with respect to the limits of the
insurer's liability."
10.4 DEDUCTIBLES; ADJUSTMENT OF LIABILITY LIMITS. Each party to this
Agreement may purchase insurance required of it hereunder with such reasonable
deductibles as it may elect; provided that, if the other party suffers a loss
within the scope of the coverage to be afforded such party under such policy,
the party procuring such insurance shall be responsible for the other party's
loss to the extent of such deductible. The limits of liability provided for
above shall be adjusted annually on the anniversary of this Agreement (rounded
to the nearest million dollars) in accordance with changes in the U.S. Consumer
Price Index.
10.5 WAIVER OF SUBROGATION. Each party hereby waives all rights that
each might now or hereafter have against the other, its subsidiaries, or
affiliates or against the officers, directors, or employees of any of the
foregoing to the extent that the loss so waived is compensated by the property
damage insurance required hereby or in fact carried by the party suffering such
loss (without regard to any deductible or risk retention feature of such
insurance).
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11. OFFICE SPACE. For a period of [eight] months beginning on the date of
this Agreement, Newco shall provide office space in its headquarters facilities
for the members of Old Boise's staff members who are, as of Closing under the AP
Agreement, employed by the Excluded Staff Functions as defined in the AP
Agreement. The space to be made available shall be the space occupied by such
Excluded Staff Functions as of the date of this Agreement. Rent shall be paid
monthly in arrears for such space at the rate of $1.67 per square foot per
month. Such rental shall cover lighting, HVAC, janitorial services, access to
common areas of the building, parking (subject to charges to the employee at Old
Boise's customary rate), mail service, and other services normally included in a
full service office space lease. It shall also cover use of the furnishings and
fixtures currently in use by the Excluded Staff Functions. In addition the
employees using such space shall have continued access to Newco's telephone,
printer and copier systems, e-mail, internet access, and Microsoft Office suite
computer services at charge levels equal to the fully allocated cost. Use of
such systems shall be subject to such policies and procedures as may be
applicable to employees of Newco with similar systems access. Old Boise will
provide office space and services for Newco employees at Old Boise's Itasca,
Illinois headquarters facility on a going-forward basis following the Closing.
The rent for such space shall be calculated on the basis set forth above (i.e.,
fully allocated cost taking into account location and quality of space), and the
rental period and other terms of such arrangement shall be agreed by the parties
prior to Closing.
12. ARBITRATION. Any dispute arising under or in respect of this Agreement
shall be resolved by binding arbitration utilizing a single arbitrator selected
by the parties, or failing agreement on such arbitrator, appointed on the
application of either party, by the chief judge of the US District Court for the
District of Idaho. Such arbitration shall be conducted in accordance with the
rules of the American Arbitration Association. The cost of the arbitrator shall
be borne equally by the parties. The outcome of the arbitration shall be final
and binding by the parties and fully enforceable in any court with jurisdiction
over the parties.
13. FORCE MAJEURE. The term "Force Majeure" shall mean any flood, storm,
earthquake, or other act of God, fire, explosion, labor dispute, civil
disturbance, military action, shortage of labor or stores, issuance of directive
by any legal authority asserting jurisdiction over either of the parties which
directive purports to prohibit the performance of any material part of the
duties of that party, or other event beyond the control of the party claiming
Force Majeure, which event or directive prevents performance by a party or makes
performance commercially impracticable.
Each party shall promptly notify the other if there is Force Majeure.
Such notice shall describe the Force Majeure, the corrective action to be taken,
if any, and the estimated time of the Force Majeure interruption. If either
party is prevented from performing any of its obligations hereunder, in whole or
in part by reason of Force Majeure, it shall be excused from performance for so
long as and to the extent that Force Majeure shall so prevent its performance.
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14. RIGHT OF OFFSET. All debts, liabilities and obligations of Old Boise
and Newco to each other are mutual and subject to setoff. For purposes of this
paragraph, "Old Boise" and "Newco" shall be deemed to include each party's
respective subsidiaries and affiliates which directly or indirectly control or
are controlled by that party.
15. EVENTS OF DEFAULT.
15.1 PAYMENT DEFAULTS. If either party fails to pay any amount owed
by it hereunder when due, such sum shall earn interest from the date on which it
is due at a rate equal to ten percent per annum. Such interest shall be payable
on demand. If either party fails to pay any amount owed hereunder (including
interest accruing under the preceding sentence) within 30 days after its receipt
of written demand therefor, the other party shall have the right, in addition to
any other right provided under applicable law or this Agreement for such breach,
to terminate this Agreement or to suspend its performance hereof until payment
of such delinquent sum is made in full.
15.2 NONPAYMENT DEFAULTS. If either party commits any breach of this
Agreement, other than those described in Section 15.1 above, or if either party
commits any of the breaches described in such section on a repeated basis so as
to materially frustrate the reasonable business expectations of the other party
in respect of this Agreement, the other party may, if such breach is not cured
within 30 days after the complaining party gives notice of such breach to the
party in breach, terminate this Agreement. Such remedy shall be in addition to
any other remedy which may be available under applicable law or the terms hereof
for such breach. Notwithstanding the foregoing, if the nature of the breach
complained of is such that its cure may be reasonably expected to take more than
30 days to execute, no right to terminate shall accrue so long as the party in
breach shall have commenced its efforts to effect a cure and shall be diligently
pursuing such efforts. Neither party shall have any liability to the other party
for the services provided hereunder except for the payment defaults described in
Section 15.1 above.
16. CONFIDENTIALITY. The parties hereby covenant and agree to hold in
trust and maintain confidential all Confidential Information relating to the
other party or any of its Affiliates. For purposes of this Agreement,
"Confidential Information" shall mean all information disclosed by either party
to the other in connection with this Agreement, whether orally, visually, in
writing, or in any other tangible form, including but not limited to technical,
economic, and business data, financial, corporate, tax and other records,
know-how, flow sheets, drawings, business plans, computer information databases,
inventions, processes, and the like. The parties shall not make any use of the
other party's Confidential Information except as reasonably required for the
performance of this Agreement and shall not divulge Confidential Information to
third parties without the prior written consent of the other party except:
16.1 When such information has become a matter of public knowledge
without wrongful action by the disclosing party;
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16.2 When such information was in the possession of the party
obligated to maintain confidentiality prior to its receipt thereof by the other
party; and
16.3 When such disclosure is required by law; provided that, if
either party is involved in litigation or an administrative proceeding in which
a third party is requesting disclosure of Confidential information, it shall
promptly notify the disclosing party of such fact so as to permit the disclosing
party to appear in such proceeding to protect its interest in nondisclosure of
such Confidential Information.
17. NOTICES. Any notice or demand required or permitted to be given under
the terms of this Agreement shall be deemed to have been duly given or made if
given by any of the following methods:
17.1 Deposited in the United States mail, in a sealed envelope,
postage prepaid, by registered or certified mail, return receipt requested, or
hand delivered, respectively addressed as follows:
To Newco: Forest Products Holdings, L.L.C.
Attention: Chief Financial Officer
0000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxx 00000
Telecopy No. 208/384-4912
With copies to: Forest Products Holdings, L.L.C.
Attention: General Counsel
0000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxx 00000
Telecopy No. 208-384-4912
Madison Dearborn Partners, LLC
Attention: Xxxxxx X. Xxxxxxx and
Xxxxxx X. Soulelis
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy No. 312/895-1056
Xxxxxxxx & Xxxxx LLP
Attention: Xxxxxxx X. Xxxxxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No. 312/861-2200
To Old Boise: OfficeMax, Incorporated
Attention: Chief Executive Officer
000 Xxxxxx Xxxx
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Xxxxxx, XX 00000
Telecopy No. 000-000-0000
With a copy to: OfficeMax Incorporated
Attention: General Counsel
000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Telecopy No. 000-000-0000
17.2 Sent to the above address via an established national overnight
delivery service (such as Federal Express), charges prepaid; or
17.3 Sent via any electronic communications method, provided the
sender obtains written confirmation of receipt of the communication by the
electronic communication equipment at the office of the addressee listed above;
provided also that, if this method is used, the party shall immediately follow
such notice with a second notice in one of the methods set forth in subsections
17.1 or 17.2 above.
Notices shall be effective on the day sent if sent in accordance
with Section 17.3, on the first business day after the day sent, if sent in
accordance with Section 17.2 and on the seventh business day after the day sent,
if sent in accordance with Section 17.1.
Either party may change its address specified above for delivery
of notices by written notice given to the other party in accordance with the
requirements of this Section 17.
18. ASSIGNMENT. This Agreement shall be binding upon the parties and their
successors and assigns, but no party shall make any sale, assignment, or other
transfer of all or any portion of its rights or obligations hereunder without
the prior written consent of the other party, such consent not to be
unreasonably withheld. Nothing in the foregoing shall preclude either party from
granting a bona fide mortgage, pledge, or security interest in the Agreement in
connection with a mortgage or pledge of the granting party's facility, assets or
rights to which the Agreement relates.
19. SEVERABILITY AND RENEGOTIATION. If any part of this Agreement is found
to be illegal, void, or unenforceable, such illegality, invalidity, or
unenforceability shall not extend beyond the part affected, and unaffected parts
of this Agreement will continue in full force and will be binding on the parties
hereto. Should any term or provision of this Agreement be found invalid by any
court or regulatory body having jurisdiction thereover, the parties shall
immediately use their best efforts to renegotiate such term or provision of the
Agreement to eliminate such invalidity.
20. INDEPENDENT CONTRACTOR. In performing services under this Agreement,
each party shall act solely as an independent contractor; neither party nor any
of its employees or agents shall be treated as or deemed to be employees of the
other.
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Nothing in this Agreement shall be construed to create a partnership, agency,
joint venture, or employer-employee relationship between the parties. Neither
party shall hold itself out or otherwise represent itself to any person or
entity as anything other than an independent contractor of the other party.
21. NONWAIVER. Any waiver, at any time, by any part of its rights,
remedies, duties, and/or obligations with respect to any matters arising in
connection with this Agreement, shall not be deemed a waiver of any other right,
remedy, duty, and/or obligation with respect to such matter or with respect to
any subsequent matter.
22. CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed,
interpreted, and enforced under the laws of the state of Idaho, without regard
to its choice of law rules. The courts of the state of Idaho and federal courts
sitting therein shall have exclusive jurisdiction to hear and settle litigation
in respect of this Agreement. In any suit between the parties or their
Affiliates, each party hereby consents to receive service of process in any
jurisdiction in which it is doing business, including without limitation, the
state of its incorporation, provided that such service of process is issued by a
federal or state court of general jurisdiction sitting in Idaho. This Section 22
shall not apply in respect of any cross claim brought in any litigation
initiated by a person other than a party or one of its Affiliates in a
jurisdiction other than Idaho.
23. CAPTIONS. All indices, titles, subject headings, and similar items in
this Agreement are provided for the purpose of reference and convenience and are
not intended to be inclusive, definitive, or to affect the meaning of the
content or scope of this Agreement.
24. INTERPRETATION. As used in this Agreement, the masculine gender shall
include the feminine or neuter gender, and the plural shall include the singular
wherever appropriate.
25. AMENDMENT. This Agreement may be amended only by a written instrument
signed by a duly authorized representative of each party. No failure of any
party to insist upon strict performance of obligations owed it hereunder by the
other party shall waive or release such party's right to insist on strict
performance of such obligation in the future.
26. COUNTERPARTS. This Agreement may be executed in two or more duplicate
counterparts and upon such execution shall be considered a single document as
though each party had executed the same counterpart.
27. AUDITS. Each party shall have the right to audit the other party's
books and accounts to verify volumes, costs, pricing and price adjustments
pursuant to this Agreement once per year. Such audits shall be conducted at the
expense of the party requesting the audit.
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28. THIRD PARTY CLAIMS. If the party providing a Service becomes subject
to a third party claim relating to or in connection with such Service, then the
recipient shall indemnify the provider and hold it harmless against all
liabilities and costs associated with such claim.
29. MCI SERVICES. Old Boise will retain the telecommunications contract
with MCI, and will provide to Newco the benefit of, and the full right to use
telecommunication services under the MCI contract (on the same terms available
to Old Boise) for the remainder of the term of the MCI contract. Newco will not
be required to pay any transfer or consent fees.
30. ENTIRE AGREEMENT. The terms and provisions herein contained constitute
the entire agreement between the parties and supersede all agreements, either
verbal or written, between the parties hereto with respect to the subject matter
hereof.
IN WITNESS HEREOF, the parties have executed this Agreement as of the
day and year first above written.
FOREST PRODUCTS HOLDINGS L.L.C. BOISE CASCADE CORPORATION
By /s/ Xxxx X. Xxxxxxxx By /s/ Xxxx X. Xxxxxxxx
-------------------------------- -------------------------------
Title Vice President Title Senior Vice President
----------------------------- and General Counsel
----------------------------
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EXHIBIT A
BOISE INTERNAL
TRANSITION
SERVICE EMPLOYER OF STAFF RECIPIENT OF INITIAL TERM ESTIMATED
SERVICE PROVIDED? FUNCTION TRANSITION SERVICE END DATE COMPENSATION
--------------------------------------------------------------------------------------------------------------------------------
FINANCE GROUP
Financial Reporting Yes Newco Old Boise 4-1-05 $50,000
(including Internal Reporting
and Consolidation
Treasury/Investment Yes Newco Old Boise 4-1-05 $10,000
Management Oversight
Shared Accounting Services Yes Newco Old Boise 2-1-05
SAS - Architectural Products $3,000
SAS - Accts. Pay and Corp.
Accounting $7,500
Cash Management Yes Newco Old Boise 3-1-05 $20,000
Risk Management Yes Newco Old Boise 12-31-04 $4,500
Retirement Funds Yes Newco Old Boise 12-31-04 $3,000
Tax (federal and state income Yes Newco Old Boise 6-30-05 $112,500
and franchise)
Tax (sales and property) Yes Newco Old Boise 6-30-05 Included in
federal and
state income
and franchise
Planning/Budgets and Forecasts Yes Newco Old Boise 2-1-05 $3,000
Real Estate Yes Newco Old Boise 6-30-05 $750
Minerals No Newco N/A
Internal Audit Yes Newco Old Boise 3-1-05 $45,000
Security and Loss Prevention Yes Newco Old Boise 2-1-05 $22,000
Timberland Resources No Newco N/A
Information Services Yes Newco Old Boise 12-31-05 $21,500 monthly
and projects on a
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TRANSITION
SERVICE EMPLOYER OF STAFF RECIPIENT OF INITIAL TERM ESTIMATED
SERVICE PROVIDED? FUNCTION TRANSITION SERVICE END DATE COMPENSATION
--------------------------------------------------------------------------------------------------------------------------------
case-by-case
basis
Corporate Procurement No Newco N/A
NW Fiber Procurement No Newco N/A
LEGAL; ADMIN; PUBLIC POLICY;
RECORDS; AND SHAREHOLDER
SERVICES
Legal - Business support Yes Newco Old Boise 4-1-05 $90,000 for all
(including environment) Legal Services
Legal - Securities and Finance Yes Newco Old Boise 4-1-05 See above
Legal - Litigation Yes Old Boise Newco 12-31-05 See above
Legal - Human Resources/Labor Yes Newco Old Boise 4-1-05 See above
Legal - Employee Benefits Yes Newco Old Boise 7-1-05 See above
Legal - Admin & Records Yes Newco Old Boise 4-1-05 See above
Corp. Secretary and Board Yes Newco Old Boise 4-1-05 See above
Admin
Public Policy and Environment Yes Newco & Old Boise Old Boise & Newco 4-1-05 $10,000 paid by
Newco and
$24,000 paid by
Old Boise
Shareholder Services No Old Boise N/A
HUMAN RESOURCES
HR Leadership and data base Yes Newco Old Boise 7-1-05 $90,000 for all
HR Services
(plus $190,000
for November
and December
2004 only)
HR strategic Planning No Newco N/A
Labor and Employment Practices No Newco N/A
Workers Comp Yes Newco Old Boise See above
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TRANSITION
SERVICE EMPLOYER OF STAFF RECIPIENT OF INITIAL TERM ESTIMATED
SERVICE PROVIDED? FUNCTION TRANSITION SERVICE END DATE COMPENSATION
--------------------------------------------------------------------------------------------------------------------------------
Safety No Newco N/A
Business and Corp Staff HR No Newco N/A
Leadership
Comp and Benefits Yes Newco Old Boise 4-1-05 See above
Benefits Yes Newco Old Boise 4-1-05 See above
Compensation Yes Newco Old Boise 2-1-05 See above
HR Vendor Management Yes Newco Old Boise 2-1-05 See above
Benefits Service Center Yes Newco Old Boise 6-30-05 See above
Payroll Yes Newco Old Boise 4-1-05 See above
Headquarters Facility No Newco N/A
Operations
TRANSPORTATION AND AVIATION
Transportation Services No Newco N/A
Trucking Operations No Newco N/A
MD&W No Newco N/A
Aviation Yes Newco Old Boise 6-30-05 Separate
Agreement
COMMUNICATIONS AND INVESTOR
RELATIONS
Investor Relations No Old Boise N/A
Communications No Newco N/A
ARCHITECTURAL PRODUCTS
DIVISION
OPERATIONS Yes Newco Old Boise 4-30-05 $34,000
ENGINEERING Yes Newco Old Boise 4-30-05 $63,000
PAPER SOLUTIONS
Yes Old Boise Newco 2-1-05 ?
BUILDING SOLUTIONS
Yes Old Boise Newco 2-1-05 ?
MISCELLANEOUS (EXECUTIVE Yes Newco Old Boise 6-30-05 $22,000
ASSISTANTS)
- 14 -
EXHIBIT B
TRANSITION SERVICE CHARGE METHODOLOGIES
FINANCIAL REPORTING (INCLUDING INTERNAL REPORTING & CONSOLIDATION)
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: March 2005 or May 2005; work in the HR Benefits area will
continue through April, and possibly as late as the end of 3rd quarter
MONTHLY BUDGET AMOUNT (full budget less T&E and most printing costs):
Approximately $100,000
METHODOLOGY: A flat hourly department rate of $75 per hour will be charged, plus
T&E and incremental costs. The HR Benefits area will charge at the same rate for
work that will continue longer, until as late as the end of 3rd quarter 2005.
The rate approximates the fully loaded salary and benefit costs of the more
senior people in Financial Reporting who will be directing and involved in much
of this work. This rate is comparable or less than an external professional
consulting services rate. Hours will be tracked in half-day increments.
Depending on how soon OMX is able to fill a key position, an estimated 25% to
50% of Financial Reporting's resources will be dedicated to OMX work. In
addition, some temporary staff time may need to be procured and charged to OMX
depending on how soon OMX is able to fill this key position and start the
transition process.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $50,000 (50% of
staff/budget at $100k per month)
TREASURY/INVESTMENT MANAGEMENT OVERSIGHT
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: January
MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: Will charge an hourly rate for project work that includes fully
loaded salary and benefit costs of Treasurer and Manager of Finance and
Investments. The rate will be $100 per hour, plus any T&E and incremental costs
incurred for OMX.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $10,000 (100 hours at
$100 per hour)
CASH MANAGEMENT
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: February
MONTHLY BUDGET AMOUNT (full budget less T&E and professional fees and outside
services): $40,000
METHODOLOGY: Will charge 50% of department's budgeted costs excluding T&E and
professional fees and outside services (LLC side of business) until a functional
department is established and operating in Chicago. This includes oversight by
the Treasurer. The charge per month will be approximately $20,000, plus any T&E
and incremental costs incurred for OMX.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $20,000
- 1 -
RISK MANAGEMENT
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: Yearend 2004
MONTHLY BUDGET AMOUNT (FULLY LOADED STAFF TIME): $18,000
METHODOLOGY: Will charge 25% of fully loaded staff time for manager and one
employee through yearend or until services are no longer needed. This includes
oversight by the Treasurer. The charge per month will be approximately $4,500,
plus any T&E and incremental costs incurred for OMX.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $4,500
RETIREMENT FUNDS
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: Yearend 2004
MONTHLY BUDGET AMOUNT (FULLY LOADED STAFF TIME): Approximately $9,000
METHODOLOGY: Will charge 1/3 of manager's fully loaded salary and benefits
through yearend, or until services are no longer needed. This includes oversight
by the Treasurer. The charge per month will be approximately $3,000, plus any
T&E and incremental costs incurred for OMX.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $3,000
TAX DEPARTMENT
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: June 30, 2005 (JUNE 30, 2006 FOR A SMALL AMOUNT OF RESIDUAL
WORK)
MONTHLY 2005 BUDGET AMOUNT (FULL BUDGET LESS T&E): $150,000
METHODOLOGY: There are 5 service areas, as follows, with projected ending dates:
1. Compliance (quarterly estimates and extensions) April 15, 2005
2. State audits April 30, 2005
3. Federal audits June 30, 2005
4. Tax provision work March 2005
5. Systems work (incl. migration of systems and data to OMX) Yearend 2004
- THROUGH MARCH 15, 2005 the charge will be 75% of total department costs,
plus OMX-related T&E and incremental expenses.
- BEGINNING MARCH 16, 2005 the charges will be based on an hourly rate of
$75 for work performed for OMX, plus OMX-related T&E and incremental
expenses. Hours will be tracked in half-day increments. The expected
department dedication to OMX will be approximately 50% starting March 16,
then fall steadily to perhaps 20% in June.
- A small amount of work will likely continue longer, through June 30, 2006,
for ongoing litigation, property tax work on properties retained by OMX,
and unclaimed property filings, but this should amount to 5% or less of
total staff time. This work also will be charged using an hourly rate,
either the $75 rate or a more appropriate rate based on loaded salary and
benefit costs for sales and property tax staff.
- The above estimates for March 15, 2005 to June 30, 2006 could be low if
hiring a Tax staff at OMX takes longer than expected.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $112,500 (75% of
total department cost)
- 2 -
PLANNING AND BUDGETS & FORECASTS
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: January 2005
MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: Support work may need to be done for OMX CFO and Executive Chairman
through the end of 2004 and into early 2005. This could amount to 40-50 or more
hours per month; project hours will be tracked. Based on the 2005 department
budget, excluding executive assistant loaded salary and benefit cost, the rate
is $60 per hour.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $3,000 (50 hours at
$60/hour)
REAL ESTATE
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: June 30, 2005
MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: For ongoing project work related to several OMX-retained
properties, a rate of $75 per hour, based on loaded salary and benefit cost for
the Corporate Real Estate Manager, will be charged. T&E and any incremental
costs also will be charged. Hours per month are an estimated 1-20. Project hours
will be tracked.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $750 (10 hours at
$75/hour)
INTERNAL AUDIT
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: January or February
MONTHLY BUDGET AMOUNT (2005 BUDGET LESS T&E AND PROFESSIONAL SERVICES, FOR BOTH
BOISE AND CHICAGO STAFF): $280,000
METHODOLOGY: An hourly rate of $60 has been calculated based on full budget less
T&E and professional services for 29.5 FTE's (both Boise and Chicago staffs
prior to transaction). Boise staff will track time for OMX projects each month
in half-day increments. OMX-related T&E and incremental costs also will be
charged. In November and December approximately 30% of the Boise staff's time
will be spent on OMX work. Through January and into February 20% or less of the
workload will be for OMX, then OMX work will trend down quickly.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $45,000 (an estimated
750 hours)
SECURITY & LOSS PREVENTION
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: January
MONTHLY BUDGET AMOUNT (2005 FULL BUDGET LESS T&E): $74,000 per month
METHODOLOGY: Using the 2005 department budget, less T&E, an hourly rate of $90
will be charged, plus OMX-related T&E and incremental costs. Boise staff will
track time for OMX projects each month in half-day increments. There will be a
moderate amount of work performed, perhaps 30% of total staff time, for OMX
through year-end, and a lower percentage in January of 2005.
- 3 -
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $22,000 (30% of
monthly budget)
INFORMATION SERVICES
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: Yearend 2005
ANNUAL/MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: Various monthly services will be provided to OMX and OMX employees,
and require charges or reimbursement:
TECHNOLOGY
- Computer service and support, network and internet access for 34 OMX
employees remaining in Boise HQ
- Local, long distance and faxing services
- Copier/printer service and support
- Other charges, such as cell phones, that will be moved to OMX when
practical
Estimated monthly cost: $14,500
APPLICATION/SYSTEM SERVICES AND ACCESS
- Xxxxxxxx-Xxxxx server and software support
- EDI & FTP transactions (staff time, infrastructure costs, transaction
charges)
- Firewall/WAN access
- Applicant flow and EEO Lotus Notes
Estimated monthly cost: $7,000
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $21,500
- IN ADDITION, PROJECT WORK remains for the transition of remaining HR data
to OMX. Estimated cost for hardware, software, staff time, T&E, and
incremental costs: $200,000
ESTIMATED MONTHLY PROJECT CHARGE TO OMX FOR NOVEMBER AND DECEMBER: NONE
LEGAL DEPARTMENT
PROVIDER OF TRANSITION SERVICE: BOTH Newco and OMX
Expected End Date: The bulk of the transition services will be completed in 1st
quarter of 2005; some litigation support will continue for a longer time.
MONTHLY BUDGET AMOUNT (2005 fully loaded budget less T&E and outside legal
services): $450,000 (41 FTE's averaging $11,000 each)
METHODOLOGY: Most of the services will be provided by LLC for OMX, but
Litigation staff will be employed by OMX and provide services to LLC. At the
beginning of each month the general counsel for LLC and OMX will jointly
estimate the time each team is expected to spend for each business, netting the
Litigation services provided by OMX. That amount will then be allocated and
charged to OMX, plus any T&E and incremental costs incurred for OMX. For
November the current estimate is 11 FTE's of work provided to OMX and three
Litigation FTE's provided to LLC, for a net of 8 FTE's charged to OMX.
Estimated Monthly Charge to OMX for November and December: $90,000
(Approximately 20% of total FTE's that cost $450,000 per month)
- 4 -
PUBLIC POLICY & ENVIRONMENT (PP&E) - NEWCO TO OMX
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: March 31, 2005
MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: The expected environmental work for OMX will be based on an hourly
rate based on the loaded salary and benefit cost of one corporate environmental
manager. That rate is $60.00 per hour. The expected hours per month will be one
FTE, or 170 hours.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $10,000
PUBLIC POLICY & ENVIRONMENT (PP&E) - OMX TO NEWCO
PROVIDER OF TRANSITION SERVICE: OMX to Newco
EXPECTED END DATE: March 31, 2005
MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: The Vice President of PP&E will remain an OMX employee but will
continue to manage PP&E until March 31, 2005. Accordingly, loaded salary and
benefit costs for this VP will be charged to LLC at an amount of $24,000 per
month.
ESTIMATED MONTHLY CHARGE TO NEWCO FOR NOVEMBER AND DECEMBER: $24,000
HUMAN RESOURCES
- Benefits
- Compensation
- HR Services Center (includes Payroll)
- EEO
- Workers Compensation
- Organizational Development Project Management
- HR Leadership and Systems
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: June 30, 2005
MONTHLY 2005 BUDGET AMOUNT (FULL BUDGET LESS T&E): $705,000
METHODOLOGY: Human Resources has developed a schedule by area that allocates FTE
equivalents that will be dedicated to OMX during the transition period. Of 53
FTE's, the current view is that 7 will be dedicated to OMX, at an average
per-month FTE cost of approximately $13,000 (excluding T&E). The FTE number
includes the time of the Sr. VP that oversees the Human Resources function. The
monthly allocation for each HR department will cease when that function has been
fully transitioned to OMX. NOTE THAT BEGINNING IN JANUARY THE FTE'S DEDICATED TO
OMX WILL INCREASE FROM 7 TO 16, FOR A TOTAL COST OF $206,000. AT THE SAME TIME
THE MONTHLY PER-EMPLOYEE HR SERVICES FEES IN THE SECTION BELOW WILL CEASE.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $90,000
- 5 -
HUMAN RESOURCES - MONTHLY PER-EMPLOYEE FEES
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: December 31, 2004
MONTHLY 2005 BUDGET AMOUNT (FULL BUDGET): N/A
Methodology: For November and December, an existing charge of $24 for employees
who worked on the Boise Office Solutions side of OMX will continue. For these
two months this per-employee charge, for benefits, payroll, and HR
administration, will be in lieu of the 9 FTE's in HR Services that will be
charged at a rate of approximately $13,000 (excluding T&E) beginning in January.
- For November and December, the per-employee charge will be about $190,000
per month (approximately 7,900 OMX and Xxxx employees at $24 each).
- NOTE THAT FOR JANUARY THROUGH JUNE, THIS PER-EMPLOYEE CHARGE WILL CEASE
AND BE REPLACED WITH AN FTE STAFF CHARGE OF ABOUT $115,000 (9 FTE'S AT
APPROXIMATELY $13,000 EACH) AS DETAILED IN THE HUMAN RESOURCES SECTION
ABOVE.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $190,000
ARCHITECTURAL PRODUCTS (HR, ACCOUNTING, IS, VP OF OPERATIONS)
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: April 2005
MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: BBSM management has developed a schedule that allocated staff time
and costs for Human Resources, Accounting, various IS functions and systems, and
management from the VP of Operations. A detailed schedule lists these costs,
which amount to approximately $34,000 per month. Some T&E is included;
incremental T&E and costs will be additional.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $34,000
ARCHITECTURAL PRODUCTS (ENGINEERING SERVICES)
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: April 2005
MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: BBSM management has developed a schedule for three engineers and
the engineering manager's staff time, plus estimated T&E. For November and
December the amount will be approximately $63,000, which falls to $50,000 per
month for 1st quarter of 2005 and $47,500 for 2nd quarter of 2005.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $63,000
SHARED ACCOUNTING SERVICES - ARCHITECTURAL PRODUCTS
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: April 2005
MONTHLY BUDGET AMOUNT: N/A
- 6 -
METHODOLOGY: SAS will be providing cash, banking, accounts receivable, and
accounts payable services for OMX's Architectural Products business. Cash will
be collected by LLC through a lockbox and remitted to OMX on a monthly or more
frequent basis. The hourly rates for staff time will be $30-$40. Hours will be
tracked in half-day or finer increments.
- Accounts receivable should require fewer than 10 hours per month.
- Accounts payable should require fewer than 10 hours per month.
- Asset system support for Architectural Products (and the Tax Department)
will require an estimated 35, 80, and 70 hours for November through
January, then fewer than 10 hours February through April.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $3,000
SHARED ACCOUNTING SERVICES - ACCOUNTS PAYABLE AND CORPORATE ACCOUNTING
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: April 2005
MONTHLY BUDGET AMOUNT: N/A
METHODOLOGY: SAS will perform certain Accounts Payable functions and Corporate
Accounting functions as these responsibilities are transitioned to OMX in
Chicago. Work includes Form 1099 processing, ledger work, Treasury support, and
various other work. (SAS has developed a detailed transitional services
schedule.) Hourly rates vary from $30 to $50 per hour. Work will ramp up in
December and January, then trend down in February through April. Hours will be
tracked in half-day or finer increments.
- NOTE: Business unit tax packages for OMX will require an additional
800-1000 hours of staff time in January and February (for the OMX business
units owned for 10 months in 2004). Estimated cost in January and February
for this project work is $30,000-$40,000.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $7,500
MISCELLANEOUS
PROVIDER OF TRANSITION SERVICE: Newco to OMX
EXPECTED END DATE: June 30, 2005
MONTHLY BUDGET AMOUNT (FULLY LOADED STAFF TIME): $22,000
METHODOLOGY: Four executive assistants will be LLC employees but support OMX
executives. X. Xxxxxxxxx currently does Board Administration for OMX.
Accordingly the fully loaded salary and benefits costs for these four will be
charged to OMX while they support OMX. Estimated total cost is $265,000, or
$22,000 per month.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $22,000
RENT FOR OMX OFFICE SPACE
PROVIDER OF TRANSITION SERVICE: Newco to OMX
METHODOLOGY: Approximately 30 people who will be OMX employees will use LLC
office space at Boise HQ. Square footage per office ranges from 100-600 square
feet. The monthly rent rate is $1.66 per square foot, and the total monthly rent
will be approximately $10,000, depending on the final list and square footage.
ESTIMATED MONTHLY CHARGE TO OMX FOR NOVEMBER AND DECEMBER: $10,000
- 7 -
