Exhibit 99.1
IN THE COURT OF COMMON PLEAS
CUYAHOGA COUNTY, OHIO
MICHAEL WALLACE, On Behalf of Himself
and All Others Similarly Situated,
1520 Sheridan Avenue Case No.
Prosser, Washington 99350
Judge
Plaintiff
vs. COMPLAINT
OFFICEMAX, Inc. Jury Demand Endorsed Hereon
c/o Statutory Agent, CT Corporation
1300 East 9th Street, Suite 1010
Cleveland, Ohio 44114
and
MICHAEL FEUER
c/o OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
and
MICHAEL F. KILLEEN
c/o OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
and
JACQUELINE F. WOODS
c/o OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
and
BURNETT W. DONOHO
c/o OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
and
EDWIN J. HOLMAN
c/o OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
and
JERRY S. THORNTON
c/o OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
and
IVAN J. WINFIELD
c/o OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
Defendants
* * * *
Plaintiff, by his attorneys, alleges as follows:
SUMMARY OF THE ACTION
1. This is a stockholder class action brought by plaintiff on behalf of
the holders of OfficeMax, Inc. ("OfficeMax" or the "Company") common stock
against OfficeMax and its directors arising out of their attempts to provide
certain OfficeMax insiders and directors with
2
preferential treatment in connection with their efforts to complete the sale
of OfficeMax to Boise Cascade Corporation (the "Acquisition"). This action
seeks equitable relief only.
2. In pursuing the unlawful plan to sell OfficeMax, each of the
defendants violated applicable law by directly breaching and/or aiding the
other defendants' breaches of their fiduciary duties of loyalty, due care,
independence, good faith and fair dealing.
3. In fact, instead of attempting to obtain the highest price reasonably
available for OfficeMax for its shareholders, the individual defendants spent
substantial effort tailoring the structural terms of the Acquisition to meet
the specific needs of Boise Cascade Corporation ("Boise"). In fact, defendants
agreed to pay Boise a termination fee totaling $45 million if the OfficeMax
shareholders do not approve the transaction. This act threatens the stability
of the Company and restricts shareholder suffrage as the Company has less than
$75 million in its coffer.
4. In essence, the proposed Acquisition is the product of a hopelessly
flawed process that was designed to ensure the sale of OfficeMax to one buying
group, and one buying group only, on terms preferential to Boise and to
subvert the interests of plaintiffs and the other public stockholders of
OfficeMax.
JURISDICTION AND VENUE
5. This Court has jurisdiction over defendants because they conduct
business in Ohio and/or are citizens of Ohio. This action is not removable.
6. Venue is proper in this Court because the conduct at issue took place
and had an effect in this County.
PARTIES
7. Plaintiff Michael Wallace is, and at all times relevant hereto was, a
shareholder of OfficeMax.
8. Defendant OfficeMax is an Ohio corporation. OfficeMax operates a chain
of high-volume office products superstores.
3
9. Defendant Michael Feuer ("Feuer") is Chairman, CEO and a Board member
of the Company.
10. Defendant Michael F. Killeen ("Killeen") is CFO, Sr. Executive Vice
President, Financial and Corporate Strategies and a Board member of the
Company.
11. Defendant Jacqueline F. Woods ("Woods") is a Board member of the
Company.
12. Defendant Burnett W. Donoho ("Donoho") is a Board member of the
Company.
13. Defendant Edwin J. Holman ("Holman") is a Board member of the
Company.
14. Defendant Ivan J. Winfield ("Winfield") is a Board member of the
Company.
15. Defendant Jerry S. Thornton ("Thornton") is a Board member of the
Company.
16. The defendants named above in {para}{para}9-15 are sometimes
collectively referred to herein as the "Individual Defendants."
DEFENDANTS' FIDUCIARY DUTIES
17. In accordance with their duties of loyalty, care and good faith, the
defendants, as directors and/or officers of OfficeMax, are obligated to
refrain from:
a. participating in any transaction where the directors' or
officers' loyalties are divided;
b. participating in any transaction where the directors or officers
receive or are entitled to receive a personal financial benefit not equally
shared by the public shareholders of the corporation; and/or
c. unjustly enriching themselves at the expense or to the detriment
of the public shareholders.
18. Plaintiff alleges herein that the Individual Defendants, separately
and together, in connection with the sale of OfficeMax, violated the fiduciary
duties owed to plaintiff and the other public shareholders of OfficeMax,
including their duties of loyalty, good faith and independence, insofar as
they stood on both sides of the transaction and engaged in self-dealing and
obtained for
4
themselves personal benefits, including personal financial benefits not shared
equally by plaintiff or the Class.
19. Because the Individual Defendants have breached their duties of
loyalty, good faith and independence in connection with the sale of OfficeMax,
the burden of proving the inherent or entire fairness of this Acquisition,
including all aspects of its negotiation and structure, is placed upon the
Individual Defendants as a matter of law.
CLASS ACTION ALLEGATIONS
20. Plaintiff brings this action on his own behalf and as a class action
pursuant to Ohio Rule of Civil Procedure 23 on behalf of all holders of
OfficeMax stock who are being and will be harmed by defendants' actions
described below (the "Class"). Excluded from the Class are defendants herein
and any person, firm, trust, corporation or other entity related to or
affiliated with any defendant.
21. This action is properly maintainable as a class action.
22. The Class is so numerous that joinder of all members is
impracticable. According to OfficeMax's Securities and Exchange Commission
("SEC") filings, there were more than 124.4 million shares of OfficeMax common
stock outstanding.
23. There are questions of law and fact which are common to the Class and
which predominate over questions affecting any individual Class member. The
common questions include, inter alia, the following:
a. whether defendants have breached their fiduciary duties of
undivided loyalty, independence or due care with respect to plaintiff and the
other members of the Class in connection with the Acquisition;
b. whether the Individual Defendants are engaging in self-dealing in
connection with the Acquisition;
5
c. whether the Individual Defendants are unjustly enriching
themselves and other insiders or affiliates of OfficeMax;
d. whether defendants have breached any of their other fiduciary
duties to plaintiff and the other members of the Class in connection with the
Acquisition, including the duties of good faith, diligence, honesty and fair
dealing;
e. whether the defendants, in bad faith and for improper motives,
have impeded or erected barriers to discourage other offers for the Company or
its assets; and
f. whether plaintiff and the other members of the Class would suffer
irreparable injury were the transactions complained of herein consummated.
24. Plaintiff's claims are typical of the claims of the other members of
the Class and plaintiff does not have any interests adverse to the Class.
25. Plaintiff is an adequate representative of the Class, has retained
competent counsel experienced in litigation of this nature and will fairly and
adequately protect the interests of the Class.
26. The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for the party opposing the Class.
27. Plaintiff anticipates that there will be no difficulty in the
management of this litigation. A class action is superior to other available
methods for the fair and efficient adjudication of this controversy.
28. Defendants have acted on ground generally applicable to the Class
with respect to the matters complained of herein, thereby making appropriate
the relief sought herein with respect to the Class as a whole.
BACKGROUND TO THE PROPOSED ACQUISITION
29. OfficeMax operates a chain of high-volume office products
superstores.
6
30. By the first week of June 2003, defendants knew that the Company's
domestic same-store sales were up more than nine percent through the first
five weeks of the current quarter.
31. Defendants also knew the Company is on track to achieve current
second quarter guidance of mid-single digit comparable-store sales gains that
will result in at least a 19 percent improvement over last year's seasonal
loss to approximately $0.22 per share on a GAAP basis, or $0.13 per share
using a 40% tax rate.
32. Knowing this, defendants and Boise rushed to lock up the transaction
before the disclosure of the Company's Q-2 2003 results.
33. On July 14, 2003, Bloomberg issued a press release entitled, "Boise
Cascade-OfficeMax Deal has $45 Million Breakup Fee." The press release stated
in part:
Boise Cascade Corp.'s proposed acquisition of OfficeMax Inc.
has a $45 million breakup fee, according to a Form 8-K filed Monday
with the Securities and Exchange Commission.
The deal may be terminated by either company if it's not
completed by Jan. 31, 2004, the filing said.
Earlier Monday, Boise Cascade said it agreed to pay $1.154
billion for OfficeMax, giving the paper products company a direct
retail outlet. Boise Cascade agreed to pay $9 a share, using 30%
cash and 70% stock, for each OfficeMax share.
According to the filing, OfficeMax would be responsible
for the breakup fee if an alternative proposal for it has been
publicly announced, the Boise Cascade deal is terminated because
OfficeMax's shareholders don't approve it, and OfficeMax enters an
alternative deal within 12 months of the termination.
OfficeMax would also be responsible for the breakup fee if an
alternative deal for it has been publicly announced, the Boise
Cascade deal is terminated because OfficeMax's board changes or
withdraws its recommendation of the deal or recommends an
alternative deal, and OfficeMax enters an alternative deal within 12
months of the termination.
Also, OfficeMax would be responsible for the fee if the deal is
terminated due to an uncurable breach of the deal and it enters an
alternative deal within 12 months of the termination.
The companies expect to close the deal, which is subject to
shareholder and regulatory approval, in the fourth quarter.
7
SELF-DEALING
34. By reason of their positions with OfficeMax, the Individual
Defendants are in possession of non-public information concerning the
financial condition and prospects of OfficeMax, and especially the true value
and expected increased future value of OfficeMax and its assets, which they
have not disclosed to OfficeMax's public stockholders. Moreover, despite their
duty to maximize shareholder value, the defendants have clear and material
conflicts of interest and are acting to better their own interests at the
expense of OfficeMax's public shareholders.
35. The proposed sale is wrongful, unfair and harmful to OfficeMax's
public stockholders, and represents an effort by defendants to aggrandize
their own financial position and interests at the expense of and to the
detriment of Class members. The Acquisition is an attempt to deny plaintiff
and the other members of the Class their rights while usurping the same for
the benefit of Boise on unfair terms.
36. In light of the foregoing, the Individual Defendants must, as their
fiduciary obligations require:
a. rescind the $45 million termination fee;
b. withdraw their consent to the sale of OfficeMax and allow the
shares to trade freely - without impediments;
c. act independently so that the interests of OfficeMax's public
stockholders will be protected, including, but not limited to, the retention
of truly independent advisors and/or the appointment of a truly independent
Special Committee; and
d. adequately ensure that no conflicts of interest exist between
defendants' own interests and their fiduciary obligation to maximize
stockholder value or, if such conflicts exist, to ensure that all conflicts be
resolved in the best interests of OfficeMax's public stockholders.
8
37. The Individual Defendants have also approved the Acquisition so that
it transfers 100% of OfficeMax's revenues and profits to Boise, thus all of
OfficeMax's operations will now accrue to the benefit of Boise.
CAUSE OF ACTION
CLAIM FOR BREACH OF FIDUCIARY DUTIES
38. Plaintiff repeats and realleges each allegation set forth herein.
39. The defendants have violated fiduciary duties of care, loyalty,
candor and independence owed under Ohio law to the public shareholders of
OfficeMax and have acted to put their personal interests ahead of the
interests of OfficeMax's shareholders.
40. By the acts, transactions and courses of conduct alleged herein,
defendants, individually and acting as a part of a common plan, are attempting
to advance their interests at the expense of plaintiff and other members of the
Class.
41. The Individual Defendants have violated their fiduciary duties by
entering into a transaction with Boise without regard to the fairness of the
transaction to OfficeMax's shareholders. Defendant OfficeMax directly breached
and/or aided and abetted the other defendants' breaches of fiduciary duties
owed to plaintiff and the other holders of OfficeMax stock.
42. As demonstrated by the allegations above, the Individual Defendants
failed to exercise the care required, and breached their duties of loyalty,
good faith, candor and independence owed to the shareholders of OfficeMax
because, among other reasons:
a. they failed to properly value OfficeMax; and
b. they ignored or did not protect against the numerous conflicts of
interest immediate and irreparable injury which defendants' actions threaten
to inflict.
PRAYER FOR RELIEF
WHEREFORE, plaintiff demands preliminary and permanent injunctive
relief in his favor and in favor of the Class and against defendants as
follows:
9
(1) Declaring that this action is properly maintainable as a class
action;
(2) Declaring and decreeing that the Acquisition agreement was entered
into in breach of the fiduciary duties of the defendants and is therefore
unlawful and unenforceable;
(3) Enjoining defendants, their agents, counsel, employees and all
persons acting in concert with them from consummating the Acquisition, unless
and until the Company adopts and implements a procedure or process to obtain
the highest possible price for shareholders;
(4) Directing the Individual Defendants to exercise their fiduciary
duties to obtain a transaction which is in the best interests of OfficeMax's
shareholders;
(5) Rescinding, to the extent already implemented, the Acquisition or any
of the terms thereof, including the $45 million termination fee;
(6) Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys' and experts' fees; and
(7) Granting such other and further equitable relief as this Court may
deem just and proper.
JURY DEMAND
-----------
Pursuant to Rule 38(B) of the Ohio Rules of Civil Procedure, Plaintiff
hereby demands trial by jury.
10
DATED: August 6, 2003 WEISMAN, KENNEDY & BERRIS CO., L.P.A.
R. ERIC KENNEDY (0006174)
DANIEL P. GOETZ (0065549)
/s/ Daniel Goetz
-------------------------------------
1600 Midland Building
101 Prospect Avenue, W.
Cleveland, OH 44115
(216) 781-1111 (telephone)
(216) 781-6747 (fax)
STRAUSS & TROY
RICHARD S. WAYNE (0022390)
Federal Reserve Building
150 East Fourth Street
Cincinnati, OH 45202-4018
(513) 621-2120 (telephone)
(513) 241-8259 (fax)
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
DARREN J. ROBBINS
401 B. Street, Suite 1700
San Diego, CA 92101
(619) 231-1058 (telephone)
(619) 231-7423 (fax)
Attorneys for Plaintiff