OfficeMax 2010 Annual Report Download - page 97

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Guarantees
The Company provides guarantees, indemnifications and assurances to others.
Indemnification obligations may arise from the Asset Purchase Agreement between OfficeMax
Incorporated, OfficeMax Southern Company, Minidoka Paper Company, Forest Products Holdings, L.L.C. and
Boise Land & Timber Corp. The Company has agreed to provide indemnification with respect to a variety of
obligations. These indemnification obligations are subject, in some cases, to survival periods, deductibles and
caps. At December 25, 2010, the Company is not aware of any material liabilities arising from these
indemnifications.
There are eight operating leases that have been assigned to other parties but for which the Company remains
contingently liable in the event of nonpayment by the other parties. The lease terms vary and, assuming exercise
of renewal options, extend through 2019. Annual rental payments under these leases are approximately
$4.3 million.
The Company and its affiliates enter into a wide range of indemnification arrangements in the ordinary
course of business. These include tort indemnifications, tax indemnifications, officer and director
indemnifications against third-party claims arising out of arrangements to provide services to the Company and
indemnifications in merger and acquisition agreements. It is impossible to quantify the maximum potential
liability under these indemnifications. At December 25, 2010, the Company is not aware of any material
liabilities arising from these indemnifications.
16. Legal Proceedings and Contingencies
OfficeMax Incorporated and certain of its subsidiaries are named as defendants in a number of lawsuits,
claims and proceedings arising out of the operation of the paper and forest products assets prior to the closing of
the 2004 sale transaction, for which OfficeMax agreed to retain responsibility. Also, as part of the sale, we
agreed to retain responsibility for all pending or threatened proceedings and future proceedings alleging
asbestos-related injuries arising out of the operation of the paper and forest products assets prior to the closing of
the sale. We do not believe any of these retained proceedings are material to our business.
We have been notified that we are a “potentially responsible party” under the Comprehensive
Environmental Response Compensation and Liability Act (“CERCLA”) or similar federal and state laws, or have
received a claim from a private party, with respect to certain sites where hazardous substances or other
contaminants are or may be located. These sites relate to operations either no longer owned by the Company or
unrelated to its ongoing operations. For sites where a range of potential liability can be determined, we have
established appropriate reserves. We cannot predict with certainty the total response and remedial costs, our
share of the total costs, the extent to which contributions will be available from other parties or the amount of
time necessary to complete the cleanups. Based on our investigations; our experience with respect to cleanup of
hazardous substances; the fact that expenditures will, in many cases, be incurred over extended periods of time;
and in some cases, the number of solvent potentially responsible parties, we do not believe that the known actual
and potential response costs will, in the aggregate, materially affect our financial position, results of operations or
cash flows.
Over the past several years and continuing in the current year, we have been named a defendant in a number
of cases where the plaintiffs allege asbestos-related injuries from exposure to asbestos products or exposure to
asbestos while working at job sites. The claims vary widely and often are not specific about the plaintiffs’
contacts with the Company. None of the claimants seeks damages from us individually, and we are generally one
of numerous defendants. Many of the cases filed against us have been voluntarily dismissed, although we have
settled some cases. The settlements we have paid have been covered mostly by insurance, and we believe any
future settlements or judgments in these cases would be similarly covered. To date, no asbestos case against us
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