Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
among
Office Depot, Inc.
VK Acquisition Corp.
and
Viking Office Products, Inc.
May 18, 1998
TABLE OF CONTENTS
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Page
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ARTICLE I.
THE MERGER . . . . . . . . . . . . . . 1
Section 1.01. Effective Time of the Merger . . . . . . . . . . . . 1
Section 1.02. Closing . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.03. Effects of the Merger . . . . . . . . . . . . . . . 2
Section 1.04. Directors and Officers . . . . . . . . . . . . . . . 2
ARTICLE II.
CONVERSION OF SECURITIES . . . . . . . . . . 2
Section 2.01. Conversion of Capital Stock . . . . . . . . . . . . 2
Section 2.02. Exchange of Certificates . . . . . . . . . . . . . . 4
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF VIKING . . . . . . 6
Section 3.01. Organization of Viking . . . . . . . . . . . . . . . 7
Section 3.02. Viking Capital Structure . . . . . . . . . . . . . . 7
Section 3.03. Authority; No Conflict; Required Filings and
Consents . . . . . . . . . . . . . . . . . . . 8
Section 3.04. SEC Filings; Financial Statements . . . . . . . . . 9
Section 3.05. No Undisclosed Liabilities . . . . . . . . . . . . . 10
Section 3.06. Absence of Certain Changes or Events . . . . . . . . 10
Section 3.07. Taxes . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.08. Properties . . . . . . . . . . . . . . . . . . . . . 11
Section 3.09. Intellectual Property . . . . . . . . . . . . . . . 11
Section 3.10. Agreements, Contracts and Commitments . . . . . . . 12
Section 3.11. Litigation . . . . . . . . . . . . . . . . . . . . . 12
Section 3.12. Environmental Matters . . . . . . . . . . . . . . . 12
Section 3.13. Employee Benefit Plans . . . . . . . . . . . . . . . 13
Section 3.14. Compliance With Laws . . . . . . . . . . . . . . . . 14
Section 3.15. Accounting and Tax Matters . . . . . . . . . . . . . 14
Section 3.16. Registration Statement; Proxy Statement/Prospectus . 14
Section 3.17. Labor Matters . . . . . . . . . . . . . . . . . . . 14
Section 3.18. Insurance . . . . . . . . . . . . . . . . . . . . . 15
Section 3.19. No Existing Discussions . . . . . . . . . . . . . . 15
Section 3.20. Opinions of Financial Advisors . . . . . . . . . . . 15
Section 3.21. Anti-Takeover Laws . . . . . . . . . . . . . . . . . 15
Section 3.22. Rights Plan . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF DEPOT AND SUB . . . . . 15
Section 4.01. Organization of Depot and Sub . . . . . . . . . . . 16
Section 4.02. Depot Capital Structure . . . . . . . . . . . . . . 16
Section 4.03. Authority; No Conflict; Required Filings and
Consents . . . . . . . . . . . . . . . . . . . 17
Section 4.04. SEC Filings; Financial Statements . . . . . . . . . 18
Section 4.05. No Undisclosed Liabilities . . . . . . . . . . . . . 18
Section 4.06. Absence of Certain Changes or Events . . . . . . . . 19
Section 4.07. Taxes . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.08. Properties . . . . . . . . . . . . . . . . . . . . . 19
Section 4.09. Intellectual Property . . . . . . . . . . . . . . . 20
Section 4.10. Agreements, Contracts and Commitments . . . . . . . 20
Section 4.11. Litigation . . . . . . . . . . . . . . . . . . . . . 20
Section 4.12. Environmental Matters . . . . . . . . . . . . . . . 20
Section 4.13. Employee Benefit Plans . . . . . . . . . . . . . . . 21
Section 4.14. Compliance With Laws . . . . . . . . . . . . . . . . 22
Section 4.15. Accounting and Tax Matters . . . . . . . . . . . . . 22
Section 4.16. Registration Statement; Proxy Statement/Prospectus . 22
Section 4.18. Insurance . . . . . . . . . . . . . . . . . . . . . 23
Section 4.19. Opinion of Financial Advisor . . . . . . . . . . . . 23
Section 4.20. Rights Plan . . . . . . . . . . . . . . . . . . . . 23
Section 4.21. Interim Operations of Sub . . . . . . . . . . . . . 23
ARTICLE V.
CONDUCT OF BUSINESS . . . . . . . . . . . . 23
Section 5.01. Covenants of Viking . . . . . . . . . . . . . . . . 23
Section 5.02. Covenants of Depot . . . . . . . . . . . . . . . . . 25
Section 5.03. Cooperation . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI.
ADDITIONAL AGREEMENTS . . . . . . . . . . . 26
Section 6.01. No Solicitation . . . . . . . . . . . . . . . . . . 26
Section 6.02. Proxy Statement/Prospectus; Registration Statement . 27
Section 6.03. NYSE Listing and Nasdaq Quotation . . . . . . . . . 28
Section 6.04. Access to Information . . . . . . . . . . . . . . . 28
Section 6.05. Stockholders Meetings . . . . . . . . . . . . . . . 29
Section 6.06. Legal Conditions to Merger . . . . . . . . . . . . . 29
Section 6.07. Public Disclosure . . . . . . . . . . . . . . . . . 30
Section 6.08. Tax-Free Reorganization . . . . . . . . . . . . . . 30
Section 6.09. Pooling Accounting . . . . . . . . . . . . . . . . . 30
Section 6.10. Affiliate Agreements . . . . . . . . . . . . . . . . 30
Section 6.11. NYSE Listing . . . . . . . . . . . . . . . . . . . . 31
Section 6.12. Stock Plans . . . . . . . . . . . . . . . . . . . . 31
Section 6.13. Brokers or Finders . . . . . . . . . . . . . . . . . 32
Section 6.14. Indemnification . . . . . . . . . . . . . . . . . . 33
Section 6.15. Letter of Depot's Accountants . . . . . . . . . . . 33
Section 6.16. Letter of Viking's Accountants . . . . . . . . . . . 33
Section 6.17. Stock Option Agreements . . . . . . . . . . . . . . 34
Section 6.18. Benefit Plans . . . . . . . . . . . . . . . . . . . 34
Section 6.19. Rights Plan . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII.
CONDITIONS TO MERGER . . . . . . . . . . . 34
Section 7.01. Conditions to Each Party's Obligation To Effect the
Merger . . . . . . . . . . . . . . . . . . . . 34
Section 7.02. Additional Conditions to Obligations of Depot and
Sub . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.03. Additional Conditions to Obligations of Viking . . . 36
ARTICLE VIII.
TERMINATION AND AMENDMENT . . . . . . . . . . 37
Section 8.01. Termination . . . . . . . . . . . . . . . . . . . . 37
Section 8.02. Effect of Termination . . . . . . . . . . . . . . . 38
Section 8.03. Fees and Expenses . . . . . . . . . . . . . . . . . 39
Section 8.04. Amendment . . . . . . . . . . . . . . . . . . . . . 41
Section 8.05. Extension; Waiver . . . . . . . . . . . . . . . . . 41
ARTICLE IX.
MISCELLANEOUS . . . . . . . . . . . . . 41
Section 9.01. Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . 41
Section 9.02. Notices . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.03. Interpretation . . . . . . . . . . . . . . . . . . . 42
Section 9.04. Counterparts . . . . . . . . . . . . . . . . . . . . 42
Section 9.05. Entire Agreement; No Third Party Beneficiaries . . . 42
Section 9.06. Governing Law . . . . . . . . . . . . . . . . . . . 43
Section 9.07. Assignment . . . . . . . . . . . . . . . . . . . . . 43
TABLE OF DEFINED TERMS
Cross Reference
Terms in Agreement
Acquisition Proposal . . . . . . . . . . . . . . . . Section 6.01(a)
Affiliate . . . . . . . . . . . . . . . . . . . . . . Section 6.10
Affiliate Agreement . . . . . . . . . . . . . . . . . Section 6.10
Agreement . . . . . . . . . . . . . . . . . . . . . . Preamble
Agreement of Merger . . . . . . . . . . . . . . . . . Section 1.01
Alternative Transaction . . . . . . . . . . . . . . . Section 8.03(g)
Antitrust Laws . . . . . . . . . . . . . . . . . . . Section 6.06(b)
Bankruptcy and Equity Exception . . . . . . . . . . . Section 3.03(a)
Certificates . . . . . . . . . . . . . . . . . . . . Section 2.02(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . Section 1.02
Closing Date . . . . . . . . . . . . . . . . . . . . Section 1.02
Code . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Confidentiality Agreement . . . . . . . . . . . . . . Section 6.01(a)
Constituent Corporations . . . . . . . . . . . . . . Section 1.03
Costs . . . . . . . . . . . . . . . . . . . . . . . . Section 6.14(a)
Current Premium . . . . . . . . . . . . . . . . . . . Section 6.14(b)
Depot . . . . . . . . . . . . . . . . . . . . . . . Preamble
Depot Balance Sheet . . . . . . . . . . . . . . . . . Section 4.04(b)
Depot Common Stock . . . . . . . . . . . . . . . . . Section 2.01(b)
Depot Disclosure Schedule . . . . . . . . . . . . . . Article IV
Depot Employee Plans . . . . . . . . . . . . . . . . Section 4.13(a)
Depot Material Adverse Effect . . . . . . . . . . . . Section 4.01
Depot Material Contracts . . . . . . . . . . . . . . Section 4.10
Depot Preferred Stock . . . . . . . . . . . . . . . . Section 4.02(a)
Depot Right . . . . . . . . . . . . . . . . . . . . . Section 2.01(c)
Depot Rights Plan . . . . . . . . . . . . . . . . . . Section 2.01(c)
Depot SEC Reports . . . . . . . . . . . . . . . . . . Section 4.04(a)
Depot Stock Option Agreement . . . . . . . . . . . . Preamble
Depot Stock Plans . . . . . . . . . . . . . . . . . . Section 4.02(a)
Depot Stockholders' Meeting . . . . . . . . . . . . . Section 3.16
Depot Voting Proposal . . . . . . . . . . . . . . . . Section 6.05(a)
Exchange Ratio . . . . . . . . . . . . . . . . . . . Section 2.01(c)
Effective Time . . . . . . . . . . . . . . . . . . . Section 1.01
Environmental Law . . . . . . . . . . . . . . . . . . Section 3.12(b)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . Section 3.13(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . Section 3.13(a)
Exchange Act . . . . . . . . . . . . . . . . . . . . Section 3.03(c)
Exchange Agent . . . . . . . . . . . . . . . . . . . Section 2.02(a)
Exchange Fund . . . . . . . . . . . . . . . . . . . . Section 2.02(a)
Exchange Ratio . . . . . . . . . . . . . . . . . . . Section 2.01(c)
Governmental Entity . . . . . . . . . . . . . . . . . Section 3.03(c)
Hazardous Substance . . . . . . . . . . . . . . . . . Section 3.12(c)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . Section 3.03(c)
Indemnified Parties . . . . . . . . . . . . . . . . . Section 6.14(a)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.07(b)
Joint Proxy Statement . . . . . . . . . . . . . . . . Section 3.16
Material Adverse Change . . . . . . . . . . . . . . . Section 3.06
Material Leases . . . . . . . . . . . . . . . . . . . Section 3.08
Merger . . . . . . . . . . . . . . . . . . . . . . . Preamble
NYSE . . . . . . . . . . . . . . . . . . . . . . . . Section 2.02(e)
Order . . . . . . . . . . . . . . . . . . . . . . . . Section 6.06(b)
Outside Date . . . . . . . . . . . . . . . . . . . . Section 8.01(b)
Registration Statement . . . . . . . . . . . . . . . Section 3.16
Rule 145 . . . . . . . . . . . . . . . . . . . . . . Section 6.10
SEC . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.03(c)
Securities Act . . . . . . . . . . . . . . . . . . . Section 3.04(a)
Stock Option Agreements . . . . . . . . . . . . . . . Preamble
Sub . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Subsidiary . . . . . . . . . . . . . . . . . . . . . Section 3.01
Superior Proposal . . . . . . . . . . . . . . . . . . Section 6.01(a)
Surviving Corporation . . . . . . . . . . . . . . . . Section 1.03
Tax . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.07(a)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . Section 3.07(a)
Third Party . . . . . . . . . . . . . . . . . . . . . Section 8.03(g)
Viking . . . . . . . . . . . . . . . . . . . . . . . Preamble
Viking Balance Sheet . . . . . . . . . . . . . . . . Section 3.04(b)
Viking Common Stock . . . . . . . . . . . . . . . . . Section 2.01(b)
Viking Disclosure Schedule . . . . . . . . . . . . . Article III
Viking Employee Plans . . . . . . . . . . . . . . . . Section 3.13(a)
Viking Material Adverse Effect . . . . . . . . . . . Section 3.01
Viking Material Contracts . . . . . . . . . . . . . . Section 3.10
Viking Rights . . . . . . . . . . . . . . . . . . . . Section 3.02(b)
Viking Rights Plan . . . . . . . . . . . . . . . . . Section 3.02(b)
Viking Preferred Stock . . . . . . . . . . . . . . . Section 3.02(a)
Viking SEC Reports . . . . . . . . . . . . . . . . . Section 3.04(a)
Viking Stock Option . . . . . . . . . . . . . . . . . Section 6.12(a)
Viking Stock Option Agreement . . . . . . . . . . . . Preamble
Viking Stock Plans . . . . . . . . . . . . . . . . . Section 3.02(a)
Viking Stockholders' Meeting . . . . . . . . . . . . Section 3.16
AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of May 18,
1998, by and among Office Depot, Inc., a Delaware corporation ("Depot"), VK
Acquisition Corp., a California corporation and a direct, wholly-owned
subsidiary of Depot ("Sub"), and Viking Office Products, Inc., a California
corporation ("Viking").
WHEREAS, the Boards of Directors of Depot and Viking deem it
advisable and in the best interests of each corporation and its respective
stockholders that Depot and Viking combine in order to advance the long-term
business interests of Depot and Viking;
WHEREAS, the combination of Depot and Viking shall be effected by
the terms of this Agreement through a merger in which the stockholders of
Viking will become stockholders of Depot (the "Merger");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to each of Depot's and Viking's
willingness to enter into this Agreement, Depot and Viking have entered into
(i) a Stock Option Agreement dated as of the date of this Agreement and
attached hereto as Exhibit A (the "Viking Stock Option Agreement"), pursuant
to which Viking granted Depot an option to purchase shares of common stock of
Viking under certain circumstances and (ii) a Stock Option Agreement dated as
of the date of this Agreement and attached hereto as Exhibit B (the "Depot
Stock Option Agreement" and together with the Viking Stock Option Agreement,
the "Stock Option Agreements") pursuant to which Depot granted Viking an
option to purchase shares of common stock of Depot under certain
circumstances;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.01. Effective Time of the Merger. Subject to the
provisions of this Agreement, a merger agreement in such form as is required
by Sections 1101, 1102 and 1103 of the General Corporation Law of California
(the "Agreement of Merger") shall be duly executed by the Surviving
Corporation (as defined in Section 1.03) and Sub and thereafter delivered to
the Secretary of State of the State of California for filing, as early as
practicable on the Closing Date (as defined in Section 1.02). The Merger
shall become effective upon the filing of the Agreement of Merger with the
Secretary of State of the State of California (the "Effective Time").
Section 1.02. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m., E.S.T., on a date to be specified by Depot and
Viking, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in
Sections 7.01, 7.02(b) (other than the delivery of the officers' certificate
referred to therein) and 7.03(b) (other than the delivery of the officers'
certificate referred to therein) (provided that the other closing conditions
set forth in Article VII have been met or waived as provided in Article VII
at or prior to the Closing) (the "Closing Date"), at the offices of Xxxxxxx
Xxxxxxx & Xxxxxxxx at the address indicated in Section 9.02 unless another
date, place or time is agreed to in writing by Depot and Viking.
Section 1.03. Effects of the Merger. At the Effective Time
(i) the separate existence of Sub shall cease and Sub shall be merged with
and into Viking (Sub and Viking are sometimes referred to below as the
"Constituent Corporations" and Viking following the Merger is sometimes
referred to below as the "Surviving Corporation"), (ii) the Articles of
Incorporation of Viking shall be amended so that Article Third of such
Articles of Incorporation reads in its entirety as follows: "The total
number of shares of all classes of stock which the Corporation shall have
authority to issue is 1,000, all of which shall consist of Common Stock,"
and, as so amended, such Articles of Incorporation shall be the Articles of
Incorporation of the Surviving Corporation, and (iii) the Bylaws of Sub as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation.
Section 1.04. Directors and Officers.
(a) Prior to the Effective Time, Depot shall (i) increase the
number of the members of the Board of Directors of Depot to twelve and (ii)
take such action as may be necessary such that the four individuals named on
Schedule I attached hereto are elected to the Board of Directors of Depot as
of the Effective Time.
(b) The individuals named on Schedule 1 as executive officers
of Viking shall be corporate executive officers or operating officers of
Depot as indicated on Schedule 1 as long as they are employed by Depot or
Viking.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.01. Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
holder of any shares of Viking Common Stock (as defined in Section 2.01(b))
or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share
of the capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Depot-Owned Stock.
All shares of Common Stock of Viking ("Viking Common Stock") that are owned
by Viking as treasury stock and any shares of Viking Common Stock owned by
Depot, Sub or any other wholly-owned Subsidiary (as defined in Section 3.01)
of Depot shall be canceled and retired and shall cease to exist and no stock
of Depot or other consideration shall be delivered in exchange therefor. All
shares of Common Stock, par value $.01 per share, of Depot ("Depot Common
Stock") owned by Viking shall be unaffected by the Merger.
(c) Exchange Ratio for Viking Common Stock. Subject to
Section 2.02, each issued and outstanding share of Viking Common Stock (other
than shares, if any, as to which dissenters' rights, if any, are perfected
and shares to be canceled in accordance with Section 2.01(b)), together with
the Viking Rights (as defined below) attached thereto or associated
therewith, shall be converted into the right to receive one share (the
"Exchange Ratio") of Depot Common Stock. Pursuant to the Rights Agreement
dated as of September 4, 1996 between Depot and ChaseMellon Shareholder
Services, L.L.C. (the "Depot Rights Plan"), one right issued under the Depot
Rights Plan (a "Depot Right") will be attached to each share of Depot Common
Stock issued upon conversion of Viking Common Stock in accordance with this
Section 2.01(c), and all references in the Agreement to Depot Common Stock
shall be deemed to include the Depot Rights. All such shares of Viking
Common Stock and all Viking Rights, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to receive
the shares of Depot Common Stock and any cash in lieu of fractional shares of
Depot Common Stock to be issued or paid in consideration therefor upon the
surrender of such certificate in accordance with Section 2.02, without
interest. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of Depot Common Stock
shall have been changed into a different number of shares or a different
class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, then the Exchange
Ratio contemplated shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination
or exchange of shares.
(d) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Viking Common Stock which are dissenting
shares (as defined in Section 1300(b) of the General Corporation Law of
California), if any, shall not be converted into or represent a right to
receive any shares of Depot Common Stock, but the holders thereof shall be
entitled only to such rights as are granted by the General Corporation Law of
California. Each holder of dissenting shares who becomes entitled to payment
therefor pursuant to the General Corporation Law of California shall receive
payment from the Surviving Corporation in accordance with the General
Corporation Law of California; provided, however, that (i) if any such holder
of dissenting shares shall have failed to establish his entitlement to
appraisal rights as provided in the General Corporation Law of California,
(ii) if any such holder of dissenting shares shall have effectively withdrawn
his demand for appraisal thereof or lost his right to appraisal and payment
therefor under the General Corporation Law of California or (iii) if neither
any holder of dissenting shares nor the Surviving Corporation shall have
filed a petition demanding a determination of the value of all dissenting
shares within the time provided in the General Corporation Law of California,
such holder or holders (as the case may be) shall forfeit the right to
appraisal of such shares of Viking Common Stock and such shares of Viking
Common Stock shall thereupon be deemed to have been converted, as of the
Effective Time, into and represent shares of Depot Common Stock, without
interest thereon, as provided in Section 2.01(c) hereof.
Section 2.02. Exchange of Certificates. The procedures for
exchanging outstanding shares of Viking Common Stock for Depot Common Stock
pursuant to the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, Depot shall
deposit with a bank or trust company designated by Depot and Viking (the
"Exchange Agent"), for the benefit of the holders of shares of Viking Common
Stock, for exchange in accordance with this Section 2.02, through the
Exchange Agent, certificates representing the shares of Depot Common Stock
(such shares of Depot Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of Viking Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Viking Common Stock (the
"Certificates") whose shares were converted pursuant to Section 2.01 into the
right to receive shares of Depot Common Stock (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates
to the Exchange Agent and shall be in such form and have such other
provisions as Depot and Viking may reasonably specify) and (ii) instructions
for effecting the surrender of the Certificates in exchange for certificates
representing shares of Depot Common Stock (plus cash in lieu of fractional
shares, if any, of Depot Common Stock as provided below). Upon surrender of
a Certificate for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by Depot, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of
whole shares of Depot Common Stock which such holder has the right to receive
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall immediately be canceled. In the event of a transfer of
ownership of Viking Common Stock which is not registered in the transfer
records of Viking, a certificate representing the proper number of shares of
Depot Common Stock may be issued to a transferee if the Certificate
representing such Viking Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
and by evidence that any applicable stock transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.02, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the certificate representing shares of
Depot Common Stock and cash in lieu of any fractional shares of Depot Common
Stock as contemplated by this Section 2.02.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time
with respect to Depot Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Depot Common Stock represented thereby and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to subsection (e) below until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Depot Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu of a
fractional share of Depot Common Stock to which such holder is entitled
pursuant to subsection (e) below and the amount of dividends or other
distributions with a record date after the Effective Time previously paid
with respect to such whole shares of Depot Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with
a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole shares of
Depot Common Stock.
(d) No Further Ownership Rights in Viking Common Stock. All
shares of Depot Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to subsection (c) or (e) of this Section 2.02) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares
of Viking Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which may have been declared or made by
Viking on such shares of Viking Common Stock in accordance with the terms of
this Agreement (to the extent permitted under Section 5.01) prior to the date
hereof and which remain unpaid at the Effective Time, and from and after the
Effective Time there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Viking
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided
in this Section 2.02.
(e) No Fractional Shares. No certificate or scrip
representing fractional shares of Depot Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any other rights of a
stockholder of Depot. Notwithstanding any other provision of this Agreement,
each holder of shares of Viking Common Stock exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a share of
Depot Common Stock (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Depot Common Stock
multiplied by the average of the last reported sales prices of Depot Common
Stock, as reported on the New York Stock Exchange ("NYSE"), on each of the
ten trading days immediately preceding the date of the Effective Time.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of Viking for
180 days after the Effective Time shall be delivered to Depot, upon demand,
and any stockholders of Viking who have not previously complied with this
Section 2.02 shall thereafter look only to Depot for payment of their claim
for Depot Common Stock, any cash in lieu of fractional shares of Depot Common
Stock and any dividends or distributions with respect to Depot Common Stock.
(g) No Liability. Neither Depot nor Viking shall be liable
to any holder of shares of Viking Common Stock or Depot Common Stock, as the
case may be, for such shares (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Withholding Rights. Each of Depot and the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Viking Common Stock such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision
of state, local or foreign tax law. To the extent that amounts are so
withheld by Surviving Corporation or Depot, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Viking Common Stock in respect of which
such deduction and withholding was made by Surviving Corporation or Depot, as
the case may be.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the shares of Depot Common Stock and any cash in
lieu of fractional shares, and unpaid dividends and distributions on shares
of Depot Common Stock deliverable in respect thereof pursuant to this
Agreement.
(j) Affiliates. Notwithstanding anything herein to the
contrary, Certificates surrendered for exchange by any Affiliate (as defined
in Section 6.10) of Viking shall not be exchanged until Depot has received an
Affiliate Agreement (as defined in Section 6.10) from such Affiliate.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF VIKING
Viking represents and warrants to Depot and Sub that the statements
contained in this Article III are true and correct except as set forth herein
and in the disclosure schedule delivered by Viking to Depot on or before the
date of this Agreement (the "Viking Disclosure Schedule"). The Viking
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III and the
disclosure in any paragraph shall qualify other paragraphs in this
Article III only to the extent that it is reasonably apparent from a reading
of such disclosure that it also qualifies or applies to such other
paragraphs.
Section 3.01. Organization of Viking. Each of Viking and its
Subsidiaries (as defined below) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power to own, lease and operate
its property and to carry on its business as now being conducted and as
proposed to be conducted, and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the failure
to be so qualified would have a material adverse effect on the business,
properties, financial condition, or results of operations of Viking and its
Subsidiaries, taken as a whole (a "Viking Material Adverse Effect"). Except
as set forth in the Viking SEC Reports (as defined in Section 3.04) filed
prior to the date hereof, neither Viking nor any of its Subsidiaries directly
or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity, excluding
securities in any publicly traded company held for investment by Viking or
its Subsidiaries and comprising less than five percent (5%) of the
outstanding stock of such company. As used in this Agreement, the word
"Subsidiary" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party
or any Subsidiary of such party do not have a majority of the voting interest
in such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and one or more of its Subsidiaries.
Section 3.02. Viking Capital Structure.
(a) The authorized capital stock of Viking consists of
120,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock
("Viking Preferred Stock"). As of May 7, 1998, (i) 85,073,091 shares of
Viking Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable and (ii) no shares of Viking Common
Stock were held in the treasury of Viking or by Subsidiaries of Viking. The
Viking Disclosure Schedule shows the number of shares of Viking Common Stock
reserved for future issuance pursuant to stock options and restricted stock
awards granted and outstanding as of May 12, 1998 and the plans under which
such options or shares of restricted stock were granted or issued
(collectively, the "Viking Stock Plans"). No material change in such
capitalization has occurred between March 31, 1998 and the date of this
Agreement. As of the date of this Agreement, none of the shares of Viking
Preferred Stock is issued and outstanding. All shares of Viking Common Stock
subject to issuance as specified above are duly authorized and, upon issuance
on the terms and conditions specified in the instruments pursuant to which
they are issuable, shall be validly issued, fully paid and nonassessable.
There are no obligations, contingent or otherwise, of Viking or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of Viking
Common Stock or the capital stock of any Subsidiary or to provide funds to or
make any material investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees
of obligations of Subsidiaries entered into in the ordinary course of
business. All of the outstanding shares of capital stock of each of Viking's
Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares in
the case of foreign Subsidiaries) are owned by Viking or another Subsidiary
free and clear of all security interests, liens, claims, pledges, agreements,
limitations in Viking's voting rights, charges or other encumbrances of any
nature.
(b) Except as set forth in this Section 3.02 or as reserved
for future grants of options under the Viking Stock Plans or the Viking Stock
Option Agreement, and except for the rights (the "Viking Rights") issued and
issuable under the Rights Agreement dated January 20, 1997 between Viking and
American Stock Transfer and Trust Company (the "Viking Rights Plan"), there
are no equity securities of any class of Viking or any of its Subsidiaries,
or any security exchangeable into or exercisable for such equity securities,
issued, reserved for issuance or outstanding. There are no options,
warrants, equity securities, calls, rights, commitments or agreements of any
character to which Viking or any of its Subsidiaries is a party or by which
it is bound obligating Viking or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Viking or any of its Subsidiaries or obligating Viking or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement.
To the best knowledge of Viking, there are no voting trusts, proxies or other
voting agreements or understandings with respect to the shares of capital
stock of Viking.
Section 3.03. Authority; No Conflict; Required Filings and
Consents.
(a) Viking has all requisite corporate power and authority to
enter into this Agreement and the Viking Stock Option Agreement and to
consummate the transactions contemplated by this Agreement and the Viking
Stock Option Agreement. The execution and delivery of this Agreement and the
Viking Stock Option Agreement and the consummation of the transactions
contemplated by this Agreement and the Viking Stock Option Agreement by
Viking have been duly authorized by all necessary corporate action on the
part of Viking, subject only to the approval of the Merger by Viking's
stockholders under the General Corporation Law of California. This Agreement
and the Viking Stock Option Agreement have been duly executed and delivered
by Viking and constitute the valid and binding obligations of Viking,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles (the "Bankruptcy and Equity Exception").
(b) The execution and delivery of this Agreement and the
Viking Stock Option Agreement by Viking does not, and the consummation of the
transactions contemplated by this Agreement and the Viking Stock Option
Agreement will not, (i) conflict with, or result in any violation or breach
of, any provision of the Articles of Incorporation or Bylaws of Viking,
(ii) result in any violation or breach of, or constitute (with or without
notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, or require a consent or waiver under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which Viking
or any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Viking or any of its
Subsidiaries or any of its or their properties or assets, except in the case
of (ii) and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which are not, individually or in the
aggregate, reasonably likely to have a Viking Material Adverse Effect.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Viking or any of its Subsidiaries
in connection with the execution and delivery of this Agreement and the
Viking Stock Option Agreement or the consummation of the transactions
contemplated hereby or thereby, except for (i) the filing of the pre-merger
notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended ("HSR Act"), (ii) the filing of the Agreement of Merger with
the California Secretary of State, (iii) the filing of the Joint Proxy
Statement (as defined in Section 3.16 below) with the Securities and Exchange
Commission (the "SEC") in accordance with the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (iv) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable state securities laws and the laws of any foreign country
and the European Union, and (v) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not be
reasonably likely to have a Viking Material Adverse Effect.
Section 3.04. SEC Filings; Financial Statements.
(a) Viking has filed and made available to Depot all forms,
reports and documents required to be filed by Viking with the SEC since
January 1, 1995 other than registration statements on Form S-8 (collectively,
the "Viking SEC Reports"). The Viking SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated in such Viking SEC
Reports or necessary in order to make the statements in such Viking SEC
Reports, in the light of the circumstances under which they were made, not
misleading. None of Viking's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes) contained in the Viking SEC Reports complied
as to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly presented the consolidated
financial position of Viking and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are
not expected to be material in amount. The audited balance sheet of Viking
as of June 27, 1997 is referred to herein as the "Viking Balance Sheet."
Section 3.05. No Undisclosed Liabilities. Except as disclosed in
the Viking SEC Reports filed prior to the date hereof, and except for normal
or recurring liabilities incurred since June 27, 1997 in the ordinary course
of business consistent with past practices, Viking and its Subsidiaries do
not have any liabilities, either accrued, contingent or otherwise (whether or
not required to be reflected in financial statements in accordance with
generally accepted accounting principles), and whether due or to become due,
which individually or in the aggregate are reasonably likely to have a Viking
Material Adverse Effect.
Section 3.06. Absence of Certain Changes or Events. Except as
disclosed in the Viking SEC Reports filed prior to the date hereof, since the
date of the Viking Balance Sheet, Viking and its Subsidiaries have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice and, since such date, there has not been (i) any material
adverse change in the financial condition, results of operations, business or
properties (a "Material Adverse Change") of Viking and its Subsidiaries,
taken as a whole (other than changes that are the effect or result of
economic factors affecting the economy as a whole) or any development or
combination of developments of which the management of Viking is aware that,
individually or in the aggregate, has had, or is reasonably likely to have, a
Viking Material Adverse Effect (other than developments that are the effect
or result of actions to be taken by Depot or economic factors affecting the
economy as a whole); (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to Viking or any of its Subsidiaries
having a Viking Material Adverse Effect; (iii) any material change by Viking
in its accounting methods, principles or practices to which Depot has not
previously consented in writing; (iv) any revaluation by Viking of any of its
assets having a Viking Material Adverse Effect; or (v) any other action or
event that would have required the consent of Depot pursuant to Section 5.01
of this Agreement had such action or event occurred after the date of this
Agreement and that, individually or in the aggregate, has had or is
reasonably likely to have a Viking Material Adverse Effect.
Section 3.07. Taxes.
(a) For the purposes of this Agreement, a "Tax" or,
collectively, "Taxes," means any and all material federal, state, local and
foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment insurance, social security, business
license, occupation, business organization, stamp, environmental and property
taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
(b) Viking and each of its Subsidiaries have (i) filed all
federal, state, local and foreign tax returns and reports required to be
filed by them prior to the date of this Agreement (taking into account
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid
or accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clause (i), (ii) or (iii) for any such
filings, payments or accruals which are not reasonably likely, individually
or in the aggregate, to have a Viking Material Adverse Effect. Neither the
Internal Revenue Service (the "IRS") nor any other taxing authority has
asserted any claim for Taxes, or to the actual knowledge of the executive
officers of Viking, is threatening to assert any claims for Taxes, which
claims, individually or in the aggregate, are reasonably likely to have a
Viking Material Adverse Effect. Viking and each of its Subsidiaries have
withheld or collected and paid over to the appropriate governmental
authorities (or are properly holding for such payment) all Taxes required by
law to be withheld or collected, except for amounts which are not reasonably
likely, individually or in the aggregate, to have a Viking Material Adverse
Effect. Neither Viking nor any of its Subsidiaries has made an election
under Section 341(f) of the Code, except for any such election which shall
not have a Viking Material Adverse Effect. There are no liens for Taxes upon
the assets of Viking or any of its Subsidiaries (other than liens for Taxes
that are not yet due or that are being contested in good faith by appropriate
proceedings), except for liens which are not reasonably likely, individually
or in the aggregate, to have a Viking Material Adverse Effect.
Section 3.08. Properties.
(a) Viking has provided to Depot a true and complete list of
all real property leased by Viking or its Subsidiaries pursuant to leases
providing for the occupancy of facilities in excess of 20,000 square feet
(collectively "Material Leases"). Viking is not in default under any of such
leases, except where the existence of such defaults, individually or in the
aggregate, is not reasonably likely to have a Viking Material Adverse Effect.
(b) Viking has provided to Depot a true and complete list of
all real property that Viking or any of its Subsidiaries owns. With respect
to each such item of real property, except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Viking
Material Adverse Effect: (a) Viking or the identified Subsidiary has good and
clear record and marketable title to such property, insurable by a recognized
national title insurance company at standard rates, free and clear of any
security interest, easement, covenant or other restriction, except for
recorded easements, covenants and other restrictions which do not materially
impair the current uses or occupancy of such property; and (b) the
improvements constructed on such property are in good condition, and all
mechanical and utility systems servicing such improvements are in good
condition, free in each case of material defects.
Section 3.09. Intellectual Property. Viking owns, or is licensed
or otherwise possesses legally enforceable rights to use, all trademarks,
trade names, service marks, copyrights, and any applications for such
trademarks, trade names, service marks and copyrights, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of Viking
as currently conducted, subject to such exceptions that would not be
reasonably likely to have a Viking Material Adverse Effect.
Section 3.10. Agreements, Contracts and Commitments. Viking has
not breached, or received in writing any claim or notice that it has
breached, any of the terms or conditions of any material agreement, contract
or commitment filed as an exhibit to the Viking SEC Reports ("Viking Material
Contracts") in such a manner as, individually or in the aggregate, are
reasonably likely to have a Viking Material Adverse Effect. Each Viking
Material Contract that has not expired by its terms is in full force and
effect.
Section 3.11. Litigation. Except as described in the Viking SEC
Reports filed prior to the date hereof, there is no action, suit or
proceeding, claim, arbitration or investigation against Viking pending or as
to which Viking has received any written notice of assertion, which,
individually or in the aggregate, is reasonably likely to have a Viking
Material Adverse Effect or a material adverse effect on the ability of Viking
to consummate the transactions contemplated by this Agreement.
Section 3.12. Environmental Matters.
(a) Except as disclosed in the Viking SEC Reports filed prior
to the date hereof and except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Viking Material Adverse
Effect: (i) Viking and its Subsidiaries comply and within all applicable
statutes of limitations periods have complied with all applicable
Environmental Laws (as defined in Section 3.12(b)); (ii) Hazardous Substances
(as defined in Section 3.12(c)) are not present at any of the properties
currently or formerly owned or operated by Viking or any of its Subsidiaries
(including soils, groundwater, surface water, buildings or other structures);
(iii) neither Viking nor its Subsidiaries are subject to liability for any
Hazardous Substance disposal or contamination on any third party property;
(iv) neither Viking nor any of its Subsidiaries has been associated with any
release or threat of release of any Hazardous Substance; (v) neither Viking
nor any of its Subsidiaries has received any notice, demand, letter, claim or
request for information alleging that Viking or any of its Subsidiaries may
be in violation of or liable under any Environmental Law; (vi) neither Viking
nor any of its Subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity or is subject to any
indemnity or other agreement with any third party relating to liability under
any Environmental Law or relating to Hazardous Substances; and (vii) there
are no circumstances or conditions involving Viking or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on the ownership, use or
transfer of any property of Viking or any of its Subsidiaries pursuant to any
Environmental Law.
(b) As used herein, the term "Environmental Law" means any
federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and
safety, or natural resources, or (B) noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property.
(c) As used herein, the term "Hazardous Substance" means:
(A) any substance that is listed, classified or regulated pursuant to or that
could result in liability under any Environmental Law; (B) any petroleum
product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon; or (C)
any other substance which is the subject of regulatory action by any
Governmental Entity pursuant to any Environmental Law.
Section 3.13. Employee Benefit Plans.
(a) Viking has listed in Section 3.13 of the Viking
Disclosure Schedule all employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, and all unexpired severance agreements, written or otherwise,
for the benefit of, or relating to, any current or former employee of Viking
or any trade or business (whether or not incorporated) which is a member or
which is under common control with Viking (an "ERISA Affiliate") within the
meaning of Section 414 of the Code, or any Subsidiary of Viking (together,
the "Viking Employee Plans").
(b) With respect to each Viking Employee Plan, Viking has
made available to Depot, a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the IRS, (ii) such Viking Employee Plan,
(iii) each trust agreement and group annuity contract, if any, relating to
such Viking Employee Plan and (iv) the most recent actuarial report or
valuation relating to a Viking Employee Plan subject to Title IV of ERISA.
(c) With respect to the Viking Employee Plans, individually
and in the aggregate, no event has occurred, and to the knowledge of Viking,
there exists no condition or set of circumstances in connection with which
Viking could be subject to any liability that is reasonably likely to have a
Viking Material Adverse Effect under ERISA, the Code or any other applicable
law.
(d) With respect to the Viking Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no
unfunded benefit obligations which have not been accounted for by reserves,
or otherwise properly footnoted in accordance with generally accepted
accounting principles, on the financial statements of Viking, which
obligations are reasonably likely to have a Viking Material Adverse Effect.
(e) Except as disclosed in Viking SEC Reports filed prior to
the date of this Agreement, and except as provided for in this Agreement,
neither Viking nor any of its Subsidiaries is a party to any oral or written
(i) agreement with any officer or other key employee of Viking or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Viking of
the nature contemplated by this Agreement, (ii) agreement with any officer of
Viking providing any term of employment or compensation guarantee extending
for a period longer than one year from the date hereof and for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement.
Section 3.14. Compliance With Laws. Viking has complied with, is
not in violation of, and has not received any notices of violation with
respect to, any federal, state or local statute, law or regulation with
respect to the conduct of its business, or the ownership or operation of its
business, except for failures to comply or violations which, individually or
in the aggregate, have not had and are not reasonably likely to have a Viking
Material Adverse Effect.
Section 3.15. Accounting and Tax Matters. To its knowledge, after
consulting with its independent auditors, neither Viking nor any of its
Affiliates (as defined in Section 6.10) has taken or agreed to take any
action which would (i) prevent Depot from accounting for the business
combination to be effected by the Merger as a pooling of interests or (ii)
prevent the Merger from constituting a transaction qualifying as a
reorganization under 368(a) of the Code.
Section 3.16. Registration Statement; Proxy Statement/Prospectus.
The information to be supplied by Viking for inclusion in the registration
statement on Form S-4 pursuant to which shares of Depot Common Stock issued
in the Merger will be registered under the Securities Act (the "Registration
Statement"), shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit
to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in the Registration
Statement, in light of the circumstances under which they were made, not
misleading. The information supplied by Viking for inclusion in the joint
proxy statement/prospectus to be sent to the stockholders of Depot and Viking
in connection with the meeting of Viking's stockholders to consider this
Agreement and the Merger (the "Viking Stockholders' Meeting") and in
connection with the meeting of Depot's stockholders (the "Depot Stockholders'
Meeting") to consider the issuance of shares of Depot Common Stock pursuant
to the Merger (the "Joint Proxy Statement") shall not, on the date the Joint
Proxy Statement is first mailed to stockholders of Viking or Depot, at the
time of the Viking Stockholders' Meeting and the Depot Stockholders' Meeting
and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Viking Stockholders' Meeting or the
Depot Stockholders' Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Viking or any of its
Affiliates, officers or directors should be discovered by Viking which should
be set forth in an amendment to the Registration Statement or a supplement to
the Joint Proxy Statement, Viking shall promptly inform Depot.
Section 3.17. Labor Matters. Neither Viking nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is any such contract or agreement presently being
negotiated, nor is there, nor has there been in the last five years, a
representation question respecting any of the employees of Viking or its
Subsidiaries, and, to the best knowledge of the executive officers of Viking,
there are no campaigns being conducted to solicit cards from employees of
Viking or its Subsidiaries to authorize representation by any labor
organization, nor is Viking or its Subsidiaries a party to, or bound by, any
consent decree with, or citation by, any governmental agency relating to
employees or employment practices. Nor, as of the date hereof, is Viking or
any of its Subsidiaries the subject of any material proceeding asserting that
Viking or any of its Subsidiaries has committed an unfair labor practice or
is seeking to compel it to bargain with any labor union or labor organization
nor, as of the date of this Agreement, is there pending or, to the knowledge
of the executive officers of Viking, threatened, any material labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving Viking or any
of its Subsidiaries.
Section 3.18. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Viking or any of its Subsidiaries are
with reputable insurance carriers, provide full and adequate coverage for all
normal risks incident to the business of Viking and its Subsidiaries and
their respective properties and assets, and are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except for any such
failures to maintain insurance policies that, individually or in the
aggregate, are not reasonably likely to have a Viking Material Adverse
Effect.
Section 3.19. No Existing Discussions. As of the date hereof,
Viking is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to an Acquisition Proposal (as
defined in Section 6.01(a)).
Section 3.20. Opinions of Financial Advisors. The financial
advisors of Viking, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and
SBC Warburg Dillon Read Inc., have delivered to Viking opinions dated the
date of this Agreement to the effect that the Exchange Ratio is fair to the
holders of Viking Common Stock from a financial point of view.
Section 3.21. Anti-Takeover Laws. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation is applicable to Viking or (by reason of Viking's participation
therein) the Merger or the other transactions contemplated by this Agreement.
Section 3.22. Rights Plan. The entering into of this Agreement
and the Viking Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not result in
the grant of any rights to any person under the Viking Rights Plan or enable
or require the Viking Rights to be exercised, distributed or triggered.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF DEPOT AND SUB
Depot and Sub represent and warrant to Viking that the statements
contained in this Article IV are true and correct, except as set forth herein
and in the disclosure schedule delivered by Depot to Viking on or before the
date of this Agreement (the "Depot Disclosure Schedule"). The Depot
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article IV and the
disclosure in any paragraph shall qualify other paragraphs in this Article IV
only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other paragraphs.
Section 4.01. Organization of Depot and Sub. Each of Depot and
Sub and Depot's other Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power to own, lease and operate
its property and to carry on its business as now being conducted and as
proposed to be conducted, and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the failure
to be so qualified would have a material adverse effect on the business,
properties, financial condition, or results of operations of Depot and its
Subsidiaries, taken as a whole (a "Depot Material Adverse Effect"). Except
as set forth in the Depot SEC Reports (as defined in Section 4.04) filed
prior to the date hereof, neither Depot nor any of its Subsidiaries directly
or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity, excluding
securities in any publicly traded company held for investment by Depot or its
Subsidiaries and comprising less than five percent (5%) of the outstanding
stock of such company.
Section 4.02. Depot Capital Structure.
(a) The authorized capital stock of Depot consists of
400,000,000 shares of Common Stock, $.01 par value, and 1,000 shares of
Preferred Stock, $.01 par value ("Depot Preferred Stock"). As of May 7,
1998, (i) 159,142,921 shares of Depot Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable,
and (ii) 2,163,447 shares of Depot Common Stock were held in the treasury of
Depot or by Subsidiaries of Depot. The Depot Disclosure Schedule shows the
number of shares of Depot Common Stock reserved for future issuance pursuant
to stock options granted and outstanding as of December 27, 1997 and the
plans under which such options were granted (collectively, the "Depot Stock
Plans"). No material change in such capitalization has occurred between
March 31, 1998 and the date of this Agreement. As of the date of this
Agreement, none of the shares of Depot Preferred Stock is issued and
outstanding. All shares of Depot Common Stock subject to issuance as
specified above are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable. There are no
obligations, contingent or otherwise, of Depot or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Depot Common Stock or
the capital stock of any Subsidiary or to provide funds to or make any
material investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees
of obligations of Subsidiaries entered into in the ordinary course of
business. All of the outstanding shares of capital stock of each of Depot's
Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares in
the case of foreign Subsidiaries) are owned by Depot or another Subsidiary
free and clear of all security interests, liens, claims, pledges, agreements,
limitations in Depot's voting rights, charges or other encumbrances of any
nature.
(b) Except as set forth in this Section 4.02 or as reserved
for future grants of options under the Depot Stock Plans or the Depot Stock
Option Agreement, and except for the Depot Rights issued and issuable under
the Depot Rights Plan, there are no equity securities of any class of Depot
or any of its Subsidiaries, or any security exchangeable into or exercisable
for such equity securities, issued, reserved for issuance or outstanding.
There are no options, warrants, equity securities, calls, rights, commitments
or agreements of any character to which Depot or any of its Subsidiaries is a
party or by which it is bound obligating Depot or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of Depot or any of its Subsidiaries or obligating
Depot or any of its Subsidiaries to grant, extend, accelerate the vesting of
or enter into any such option, warrant, equity security, call, right,
commitment or agreement. To the best knowledge of Depot, there are no voting
trusts, proxies or other voting agreements or understandings with respect to
the shares of capital stock of Depot.
Section 4.03. Authority; No Conflict; Required Filings and
Consents.
(a) Each of Depot and Sub has all requisite corporate power
and authority to enter into this Agreement and (in the case of Depot) the
Depot Stock Option Agreement and to consummate the transactions contemplated
by this Agreement and (in the case of Depot) the Depot Stock Option
Agreement. The execution and delivery of this Agreement and (in the case of
Depot) the Depot Stock Option Agreement and the consummation of the
transactions contemplated by this Agreement and (in the case of Depot) the
Depot Stock Option Agreement by Depot and Sub have been duly authorized by
all necessary corporate action on the part of each of Depot and Sub
(including the approval of the Merger by Depot as the sole stockholder of
Sub), subject only to the approval of the Depot Voting Proposal (as defined
in Section 6.05) by Depot's stockholders. This Agreement and (in the case of
Depot) the Depot Stock Option Agreement have been duly executed and delivered
by each of Depot and Sub, as the case may be, and constitute the valid and
binding obligations of each of Depot and Sub, enforceable in accordance with
their terms, subject to the Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement and (in the
case of Depot) the Depot Stock Option Agreement by each of Depot and Sub does
not, and the consummation of the transactions contemplated by this Agreement
and (in the case of Depot) the Depot Stock Option Agreement will not,
(i) conflict with, or result in any violation or breach of, any provision of
the Certificate of Incorporation or Bylaws of Depot or Sub, (ii) result in
any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material
benefit) under, or require a consent or waiver under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which Depot or any
of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Depot or any of its
Subsidiaries or any of its or their properties or assets, except in the case
of (ii) and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which are not, individually or in the
aggregate, reasonably likely to have a Depot Material Adverse Effect.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Depot or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and (in the case of Depot) the Depot
Stock Option Agreement or the consummation of the transactions contemplated
hereby or thereby, except for (i) the filing of the pre-merger notification
report under the HSR Act, (ii) the filing of the Registration Statement with
the SEC in accordance with the Securities Act, (iii) the filing of the
Agreement of Merger with the California Secretary of State, (iv) the filing
of the Joint Proxy Statement with the SEC in accordance with the Exchange
Act, (v) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws and the laws of any foreign country and the European Union, and (vi)
such other consents, authorizations, filings, approvals and registrations
which, if not obtained or made, would not be reasonably likely to have a
Depot Material Adverse Effect.
Section 4.04. SEC Filings; Financial Statements.
(a) Depot has filed and made available to Viking all forms,
reports and documents required to be filed by Depot with the SEC since
January 1, 1995 other than registration statements on Form S-8 (collectively,
the "Depot SEC Reports"). The Depot SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required
to be stated in such Depot SEC Reports or necessary in order to make the
statements in such Depot SEC Reports, in the light of the circumstances under
which they were made, not misleading. None of Depot's Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes) contained in the Depot SEC Reports complied
as to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly presented the consolidated
financial position of Depot and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are
not expected to be material in amount. The audited balance sheet of Depot as
of December 27, 1997 is referred to herein as the "Depot Balance Sheet."
Section 4.05. No Undisclosed Liabilities. Except as disclosed in
the Depot SEC Reports filed prior to the date hereof, and except for normal
or recurring liabilities incurred since December 27, 1997 in the ordinary
course of business consistent with past practices, Depot and its Subsidiaries
do not have any liabilities, either accrued, contingent or otherwise (whether
or not required to be reflected in financial statements in accordance with
generally accepted accounting principles), and whether due or to become due,
which individually or in the aggregate are reasonably likely to have a Depot
Material Adverse Effect.
Section 4.06. Absence of Certain Changes or Events. Except as
disclosed in the Depot SEC Reports filed prior to the date hereof, since the
date of the Depot Balance Sheet, Depot and its Subsidiaries have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice and, since such date, there has not been (i) any Material
Adverse Change in Depot and its Subsidiaries, taken as a whole (other than
changes that are the effect or result of economic factors affecting the
economy as a whole) or any development or combination of developments of
which the management of Depot is aware that, individually or in the
aggregate, has had, or is reasonably likely to have, a Depot Material Adverse
Effect (other than developments that are the effect or result of actions to
be taken by Viking or economic factors affecting the economy as a whole);
(ii) any damage, destruction or loss (whether or not covered by insurance)
with respect to Depot or any of its Subsidiaries having a Depot Material
Adverse Effect; (iii) any material change by Depot in its accounting methods,
principles or practices to which Viking has not previously consented in
writing; (iv) any revaluation by Depot of any of its assets having a Depot
Material Adverse Effect; or (v) any other action or event that would have
required the consent of Viking pursuant to Section 5.02 of this Agreement had
such action or event occurred after the date of this Agreement and that,
individually or in the aggregate, has had or is reasonably likely to have a
Depot Material Adverse Effect.
Section 4.07. Taxes. Depot and each of its Subsidiaries have (i)
filed all federal, state, local and foreign tax returns and reports required
to be filed by them prior to the date of this Agreement (taking into account
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid
or accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clause (i), (ii) or (iii) for any such
filings, payments or accruals which are not reasonably likely, individually
or in the aggregate, to have a Depot Material Adverse Effect. Neither the
IRS nor any other taxing authority has asserted any claim for Taxes, or to
the actual knowledge of the executive officers of Depot, is threatening to
assert any claims for Taxes, which claims, individually or in the aggregate,
are reasonably likely to have a Depot Material Adverse Effect. Depot and
each of its Subsidiaries have withheld or collected and paid over to the
appropriate governmental authorities (or are properly holding for such
payment) all Taxes required by law to be withheld or collected, except for
amounts which are not reasonably likely, individually or in the aggregate, to
have a Depot Material Adverse Effect. Neither Depot nor any of its
Subsidiaries has made an election under Section 341(f) of the Code, except
for any such election which shall not have a Depot Material Adverse Effect.
There are no liens for Taxes upon the assets of Depot or any of its
Subsidiaries (other than liens for Taxes that are not yet due or that are
being contested in good faith by appropriate proceedings), except for liens
which are not reasonably likely, individually or in the aggregate, to have a
Depot Material Adverse Effect.
Section 4.08. Properties.
(a) Depot is not in default under any Material Leases, except
where the existence of such defaults, individually or in the aggregate, is
not reasonably likely to have a Depot Material Adverse Effect.
(b) Depot has provided to Viking a true and complete list of
all real property that Depot or any of its Subsidiaries owns. With respect
to each such item of real property, except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Depot
Material Adverse Effect: (a) Depot or the identified Subsidiary has good and
clear record and marketable title to such property, insurable by a recognized
national title insurance company at standard rates, free and clear of any
security interest, easement, covenant or other restriction, except for
recorded easements, covenants and other restrictions which do not materially
impair the current uses or occupancy of such property; and (b) the
improvements constructed on such property are in good condition, and all
mechanical and utility systems servicing such improvements are in good
condition, free in each case of material defects.
Section 4.09. Intellectual Property. Depot owns, or is licensed
or otherwise possesses legally enforceable rights to use, all trademarks,
trade names, service marks, copyrights, and any applications for such
trademarks, trade names, service marks and copyrights, know-how, computer
software programs or applications, and tangible or intangible proprietary
information or material that are necessary to conduct the business of Depot
as currently conducted, subject to such exceptions that would not be
reasonably likely to have a Depot Material Adverse Effect.
Section 4.10. Agreements, Contracts and Commitments. Depot has
not breached, or received in writing any claim or notice that it has
breached, any of the terms or conditions of any material agreement, contract
or commitment filed as an exhibit to the Depot SEC Reports ("Depot Material
Contracts") in such a manner as, individually or in the aggregate, are
reasonably likely to have a Depot Material Adverse Effect. Each Depot
Material Contract that has not expired by its terms is in full force and
effect.
Section 4.11. Litigation. Except as described in the Depot SEC
Reports filed prior to the date hereof, there is no action, suit or
proceeding, claim, arbitration or investigation against Depot pending or as
to which Depot has received any written notice of assertion, which,
individually or in the aggregate, is reasonably likely to have a Depot
Material Adverse Effect or a material adverse effect on the ability of Depot
to consummate the transactions contemplated by this Agreement.
Section 4.12. Environmental Matters. Except as disclosed in the
Depot SEC Reports filed prior to the date hereof and except for such matters
that, individually or in the aggregate, are not reasonably likely to have a
Depot Material Adverse Effect: (i) Depot and its Subsidiaries have complied
with all applicable Environmental Laws; (ii) Hazardous Substances are not
present at any of the properties currently or formerly owned or operated by
Depot or any of its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures); (iii) neither Depot nor its
Subsidiaries are subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (iv) neither Depot nor any of its
Subsidiaries has been associated with any release or threat of release of any
Hazardous Substance; (v) neither Depot nor any of its Subsidiaries has
received any notice, demand, letter, claim or request for information
alleging that Depot or any of its Subsidiaries may be in violation of or
liable under any Environmental Law; (vi) neither Depot nor any of its
Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (vii) there are no
circumstances or conditions involving Depot or any of its Subsidiaries that
could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of
any property of Depot or any of its Subsidiaries pursuant to any
Environmental Law.
Section 4.13. Employee Benefit Plans.
(a) Depot has listed in Section 4.13 of the Depot Disclosure
Schedule all employee benefit plans (as defined in Section 3(3) of ERISA) and
all bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar employee benefit plans,
and all unexpired severance agreements, written or otherwise, for the
benefit of, or relating to, any current or former employee of Depot or any
ERISA Affiliate of Depot, or any Subsidiary of Depot (together, the "Depot
Employee Plans").
(b) With respect to each Depot Employee Plan, Depot has made
available to Viking, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Depot Employee Plan, (iii)
each trust agreement and group annuity contract, if any, relating to such
Depot Employee Plan and (iv) the most recent actuarial report or valuation
relating to a Depot Employee Plan subject to Title IV of ERISA.
(c) With respect to the Depot Employee Plans, individually
and in the aggregate, no event has occurred, and to the knowledge of Depot,
there exists no condition or set of circumstances in connection with which
Depot could be subject to any liability that is reasonably likely to have a
Depot Material Adverse Effect under ERISA, the Code or any other applicable
law.
(d) With respect to the Depot Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no
unfunded benefit obligations which have not been accounted for by reserves,
or otherwise properly footnoted in accordance with generally accepted
accounting principles, on the financial statements of Depot, which
obligations are reasonably likely to have a Depot Material Adverse Effect.
(e) Except as disclosed in Depot SEC Reports filed prior to
the date of this Agreement, and except as provided for in this Agreement,
neither Depot nor any of its Subsidiaries is a party to any oral or written
(i) agreement with any officer or other key employee of Depot or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Depot of
the nature contemplated by this Agreement, (ii) agreement with any officer of
Depot providing any term of employment or compensation guarantee extending
for a period longer than one year from the date hereof or for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement.
Section 4.14. Compliance With Laws. Depot has complied with, is
not in violation of, and has not received any notices of violation with
respect to, any federal, state or local statute, law or regulation with
respect to the conduct of its business, or the ownership or operation of its
business, except for failures to comply or violations which, individually or
in the aggregate, have not had and are not reasonably likely to have a Depot
Material Adverse Effect.
Section 4.15. Accounting and Tax Matters. To its knowledge, after
consulting with its independent auditors, neither Depot nor any of its
Affiliates has taken or agreed to take any action which would (i) prevent
Depot from accounting for the business combination to be effected by the
Merger as a pooling of interests, or (ii) prevent the Merger from
constituting a transaction qualifying as a reorganization under Section
368(a) of the Code.
Section 4.16. Registration Statement; Proxy Statement/Prospectus.
The information in the Registration Statement (except for information
supplied by Viking for inclusion in the Registration Statement, as to which
Depot makes no representation) shall not at the time the Registration
Statement is declared effective by the SEC contain any untrue statement of a
material fact or omit to state any material fact required to be stated in the
Registration Statement or necessary in order to make the statements in the
Registration Statement, in light of the circumstances under which they were
made, not misleading. The information (except for information supplied by
Viking for inclusion in the Joint Proxy Statement, as to which Depot makes no
representation) in the Joint Proxy Statement shall not, on the date the Joint
Proxy Statement is first mailed to stockholders of Depot or Viking, at the
time of the Depot Stockholders' Meeting and the Viking Stockholder's Meeting
and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Depot Stockholders' Meeting or the
Viking Stockholders' Meetings which has become false or misleading. If at
any time prior to the Effective Time any event relating to Depot or any of
its Affiliates, officers or directors should be discovered by Depot which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement, Depot shall promptly inform Viking.
Section 4.17. Labor Matters. Neither Depot nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is any such contract or agreement presently being
negotiated, nor is there, nor has there been in the last five years, a
representation question respecting any of the employees of Depot or its
Subsidiaries, and, to the best knowledge of the executive officers of Depot,
there are no campaigns being conducted to solicit cards from employees of
Depot or its Subsidiaries to authorize representation by any labor
organization, nor is Depot or its Subsidiaries a party to, or bound by, any
consent decree with, or citation by, any governmental agency relating to
employees or employment practices. Nor, as of the date hereof, is Depot or
any of its Subsidiaries the subject of any material proceeding asserting that
Depot or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization
nor, as of the date of this Agreement, is there pending or, to the knowledge
of the executive officers of Depot, threatened, any material labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving Depot or any
of its Subsidiaries.
Section 4.18. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Depot or any of its Subsidiaries are
with reputable insurance carriers, provide full and adequate coverage for all
normal risks incident to the business of Depot and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except for any such
failures to maintain insurance policies that, individually or in the
aggregate, are not reasonably likely to have a Depot Material Adverse Effect.
Section 4.19. Opinion of Financial Advisor. The financial advisor
of Depot, Xxxxx X. Xxxxxxx Company Limited, has delivered to Depot an
opinion, dated the date of this Agreement, to the effect that the Exchange
Ratio is fair to Depot from a financial point of view.
Section 4.20. Rights Plan. The entering into of this Agreement
and the Depot Stock Option Agreement and the consummation of the transactions
contemplated hereby and thereby do not and will not result in the grant of
any rights to any person under the Depot Rights Plan or enable or require the
Depot Rights to be exercised, distributed or triggered.
Section 4.21. Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated by this
Agreement, has engaged in no other business activities and has conducted its
operations only as contemplated by this Agreement.
ARTICLE V.
CONDUCT OF BUSINESS
Section 5.01. Covenants of Viking. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, Viking agrees as to itself and its
respective Subsidiaries (except to the extent that Depot shall otherwise
consent in writing), to carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to
pay its debts and Taxes when due subject to good faith disputes over such
debts or Taxes, to pay or perform its other obligations when due, and, to the
extent consistent with such business, use all reasonable efforts consistent
with past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and key
employees and preserve its relationships with customers, suppliers,
distributors, and others having business dealings with it. Viking shall
promptly notify the other party of any material event or occurrence not in
the ordinary course of business of Viking. Except as expressly contemplated
by this Agreement, Viking shall not (and shall not permit any of its
respective Subsidiaries to), without the written consent of Depot:
(a) Accelerate, amend or change the period of exercisability
or vesting of options or restricted stock granted under any employee stock
plan of such party or authorize cash payments in exchange for any options
granted under any of such plans except as required by the terms of such plans
or any related agreements in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or purchase or
otherwise acquire, directly or indirectly, any shares of its capital stock
except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service to such party;
(c) Issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than (i) the grant of options consistent with past
practices to employees, which options represent in the aggregate the right to
acquire no more than 1,600,000 shares (net of cancellations) of Viking
Common Stock, or (ii) the issuance of shares of Viking Common Stock pursuant
to the exercise of options outstanding on the date of this Agreement and the
1994 Viking Employee Stock Purchase Plan;
(d) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership or other business organization or division, or
otherwise acquire or agree to acquire any assets (other than inventory and
other items in the ordinary course of business), except for all such
acquisitions involving aggregate consideration of not more than $7,500,000;
(e) Sell, lease, license or otherwise dispose of any of its
material properties or assets, except for transactions in the ordinary course
of business;
(f) (i) Increase or agree to increase the compensation
payable or to become payable to its officers or employees, except for
increases in salary or wages of employees in accordance with past practices
(including bonuses), (ii) grant any additional severance or termination pay
to, or enter into any employment or severance agreements with, any employees
or officers, other than payments or agreements paid to or entered into with
employees (other than officers) in the ordinary course of business in
accordance with past practices or the performance of agreements in effect on
the date of this Agreement, (iii) enter into any collective bargaining
agreement (other than as required by law or extensions to existing agreements
in the ordinary course of business), (iv) establish, adopt, enter into or
amend any bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except
as contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than
pursuant to credit agreements in effect as of the date hereof or up to $50
million (which may be denominated in foreign currency) in borrowings under
loan agreements entered into hereafter;
(i) Initiate, compromise, or settle any material litigation
or arbitration proceeding;
(j) Except in the ordinary course of business, modify, amend
or terminate any Viking Material Contract or waive, release or assign any
material rights or claims;
(k) Make or commit to make any capital expenditures that
would cause the aggregate capital budget furnished by Viking to Depot to be
exceeded; or
(l) Take, or agree in writing or otherwise to take, any of
the actions described in Sections (a) through (k) above.
Section 5.02. Covenants of Depot. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Depot agrees as to itself and its respective
Subsidiaries (except to the extent that Viking shall otherwise consent in
writing), to carry on its business in the usual, regular and ordinary course
in substantially the same manner as previously conducted, to pay its debts
and Taxes when due subject to good faith disputes over such debts or Taxes,
to pay or perform its other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with
past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and key
employees and preserve its relationships with customers, suppliers,
distributors, and others having business dealings with it. Depot shall
promptly notify the other party of any material event or occurrence not in
the ordinary course of business of Depot. Except as expressly contemplated
by this Agreement, Depot shall not (and shall not permit any of its
respective Subsidiaries to), without the written consent of Viking:
(a) Accelerate, amend or change the period of exercisability
or vesting of options or restricted stock granted under any employee stock
plan of such party or authorize cash payments in exchange for any options
granted under any of such plans except as required by the terms of such plans
or any related agreements in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock
(other than a stock dividend or stock split as a result of which the Exchange
Ratio is adjusted pursuant to Section 2.01(c)) or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly
or indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
(c) Issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than (i) the grant of options pursuant to Depot's Long Term
Equity Incentive Plan as proposed to be amended in Depot's Proxy Statement
dated Xxxxx 00, 0000, (xx) the issuance of shares of Depot Common Stock
pursuant to the exercise of options or convertible securities outstanding on
the date of this Agreement; or (iii) issuances of shares of capital stock
having a market value upon issuance of not more than $750,000,000 in the
aggregate (other than in mergers, consolidations or other acquisitions of a
substantial equity interest in or substantial portion of the assets of, or by
any business or any corporation, partnership or other business organization
or division, as to which this limitation shall not apply);
(d) Sell, lease, license or otherwise dispose of any of its
material properties or assets, except for transactions in the ordinary course
of business and except for sales or dispositions to Subsidiaries or in
connection with sale-leaseback transactions;
(e) (i) Increase or agree to increase the compensation
payable or to become payable to its officers, (ii) grant any additional
severance or termination pay to, or enter into any employment or severance
agreements with, any officers, (iii) establish, adopt, enter into or amend
any bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination,
severance or other plan, trust, fund, policy or arrangement for the benefit
of any directors or officers except as referred to in Section 5.02(c) or as
disclosed prior to the date of this Agreement;
(f) Amend or propose to amend its charter or bylaws, except
as contemplated by this Agreement; or
(g) Take, or agree in writing or otherwise to take, any of
the actions described in Sections (a) through (f) above.
Section 5.03. Cooperation. Subject to compliance with applicable
law, from the date hereof until the Effective Time, each of Depot and Viking
shall confer on a regular and frequent basis with one or more representatives
of the other party to report on the general status of ongoing operations and
shall promptly provide the other party or its counsel with copies of all
filings made by such party with any Governmental Entity in connection with
this Agreement, the Merger and the transactions contemplated hereby and
thereby.
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.01. No Solicitation.
(a) Depot and Viking each shall not, directly or indirectly,
through any officer, director, employee, financial advisor, representative or
agent of such party (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for an Alternative Transaction (as defined below) involving
such party or any of its Subsidiaries (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide any non-
public information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to or recommend any Acquisition Proposal; provided,
however, that nothing contained in this Agreement shall prevent Depot or
Viking, or their respective Board of Directors, from (A) furnishing non-
public information to, or entering into discussions or negotiations with, any
person or entity in connection with an unsolicited bona fide written
Acquisition Proposal by such person or entity or recommending an unsolicited
bona fide written Acquisition Proposal to the stockholders of such party, if
and only to the extent that (1) the Board of Directors of such party believes
in good faith (after consultation with its financial advisor) that such
Acquisition Proposal is reasonably capable of being completed on the terms
proposed and, after taking into account the strategic benefits anticipated to
be derived from the Merger and the long-term prospects of Viking and Depot as
a combined company, would, if consummated, result in a transaction more
favorable than the transaction contemplated by this Agreement (any such more
favorable Acquisition Proposal being referred to in this Agreement as a
"Superior Proposal") and the Board of Directors of such party determines in
good faith after consultation with outside legal counsel that failure to take
such action would be reasonably likely to constitute a breach of the
fiduciary duties of such Board of Directors to stockholders under applicable
law, (2) prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such person or entity, such Board of
Directors receives from such person or entity an executed confidentiality
agreement with terms no less favorable to such party than those contained in
the Agreement dated March 9, 1998 between Depot and Viking (the
"Confidentiality Agreement"), and (3) prior to furnishing such non-public
information or providing access to the properties, books or records of such
party, such party has complied with the provisions of Section 6.01(b); or
(B) complying with Rule 14e-2 promulgated under the Exchange Act with regard
to an Acquisition Proposal.
(b) Depot and Viking shall each notify the other party
immediately after receipt by Depot or Viking (or their advisors) of any
Acquisition Proposal or any request for nonpublic information in connection
with an Acquisition Proposal or for access to the properties, books or
records of such party by any person or entity that informs such party that it
is considering making, or has made, an Acquisition Proposal. Such notice
shall be made orally and in writing and shall indicate in reasonable detail
the identity of the offeror and the terms and conditions of such proposal,
inquiry or contact. Such party shall, to the extent permitted by law,
continue to keep the other party hereto informed, on a current basis, of the
status of any such discussions or negotiations and the terms being discussed
or negotiated.
Section 6.02. Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practical after the execution of this
Agreement, Depot and Viking shall prepare and file with the SEC the Joint
Proxy Statement, and Depot shall prepare and file with the SEC the
Registration Statement, in which the Joint Proxy Statement will be included
as a prospectus, provided that Depot may delay the filing of the Registration
Statement until approval of the Joint Proxy Statement by the SEC. Depot and
Viking shall use all reasonable efforts to cause the Registration Statement
to become effective as soon after such filing as practical. The Joint Proxy
Statement, and any amendment or supplement thereto, shall include the
recommendation of the Board of Directors of Viking in favor of this Agreement
and the Merger and the recommendation of the Board of Directors of Depot in
favor of the issuance of shares of Depot Common Stock pursuant to the Merger;
provided that the Board of Directors of Viking may withdraw such
recommendation if (but only if) (i) the Board of Directors of Viking has
received a Superior Proposal, and (ii) such Board of Directors upon advice of
its outside legal counsel determines that it is reasonably likely that a
failure to recommend such Superior Proposal would constitute a breach of its
fiduciary duties under applicable law, and the Board of Directors of Depot
may withdraw such recommendation if (but only if) (i) the Board of Directors
of Depot has received a Superior Proposal, and (ii) such Board of Directors
upon advice of its outside legal counsel determines that it is reasonably
likely that a failure to recommend such Superior Proposal would constitute a
breach of its fiduciary duties under applicable law.
(b) Depot and Viking shall make all necessary filings with
respect to the Merger under the Securities Act, the Exchange Act, applicable
state blue sky laws and the rules and regulations thereunder.
Section 6.03. NYSE Listing and Nasdaq Quotation. Viking agrees to
continue the quotation of Viking Common Stock on the Nasdaq National Market
during the term of this Agreement. Depot agrees to continue the listing of
Depot Common Stock on the NYSE during the term of this Agreement.
Section 6.04. Access to Information. Upon reasonable notice,
Viking and Depot shall each (and shall cause each of their respective
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of Viking
and Depot shall (and shall cause each of their respective Subsidiaries to)
furnish promptly to the other (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (b) all
other information concerning its business, properties and personnel as such
other party may reasonably request. Unless otherwise required by law, the
parties will hold any such information which is nonpublic in confidence in
accordance with the Confidentiality Agreement. No information or knowledge
obtained in any investigation pursuant to this Section 6.04 shall affect or
be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate
the Merger.
Section 6.05. Stockholders Meetings.
(a) Viking and Depot each shall call a meeting of its
respective stockholders to be held as promptly as practicable for the purpose
of voting, in the case of Viking, upon this Agreement and the Merger and, in
the case of Depot, upon the issuance of shares of Depot Common Stock pursuant
to the Merger (the "Depot Voting Proposal"). Subject to Section 6.02(a),
Depot and Viking shall use all reasonable efforts to solicit proxies in favor
of such matters. Depot and Viking shall coordinate and cooperate with
respect to the timing of such meetings and shall use their best efforts to
hold such meetings on the same day and as soon as practicable after the date
hereof. The Viking stockholder vote required for the approval of the
Agreement and Merger shall be a majority of the shares of Viking Common Stock
outstanding on the record date for the meeting. The Depot stockholder vote
required for approval of the Depot Voting Proposal shall be a majority of the
shares of Depot Common Stock present or represented at a meeting of
stockholders at which a quorum is present.
(b) Depot may also submit additional routine proposals to its
stockholders at the Depot Stockholders' Meeting, separate from the proposal
referred to in Section 6.05(a), provided that Depot shall consult with Viking
as to the submission of such proposals. The approval by Depot's stockholders
of such additional proposals shall not be a condition to the closing of the
Merger under this Agreement.
Section 6.06. Legal Conditions to Merger.
(a) Viking and Depot shall each use their best efforts to (i)
take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary and proper under applicable law to consummate and
make effective the transactions contemplated hereby as promptly as
practicable, (ii) obtain from any Governmental Entity or any other third
party any consents, licenses, permits, waivers, approvals, authorizations, or
orders required to be obtained or made by Viking or Depot or any of their
Subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
including, without limitation, the Merger, and (iii) as promptly as
practicable, make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the Merger required
under (A) the Securities Act and the Exchange Act, and any other applicable
federal or state securities laws, (B) the HSR Act and any related
governmental request thereunder, and (C) any other applicable law. Viking
and Depot shall cooperate with each other in connection with the making of
all such filings, including providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith. Viking and Depot shall use their best efforts to furnish to each
other all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable law (including all
information required to be included in the Joint Proxy Statement and the
Registration Statement) in connection with the transactions contemplated by
this Agreement.
(b) Depot and Viking agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective best
efforts to obtain any government clearances or approvals required for Closing
under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
the Federal Trade Commission Act, as amended, and any other Federal, state or
foreign law or, regulation or decree designed to prohibit, restrict or
regulate actions for the purpose or effect of monopolization or restraint of
trade (collectively "Antitrust Laws"), to respond to any government requests
for information under any Antitrust Law, and to contest and resist any
action, including any legislative, administrative or judicial action, and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order (whether temporary, preliminary or permanent) (an "Order")
that restricts, prevents or prohibits the consummation of the Merger or any
other transactions contemplated by this Agreement under any Antitrust Law.
The parties hereto will consult and cooperate with one another, and consider
in good faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to any Antitrust Law. Notwithstanding
anything to the contrary in this Section 6.06, neither Depot nor any of its
Subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or
agree to any limitation, that could reasonably be expected to have a material
adverse effect on Depot or of Depot combined with Viking after the Effective
Time.
(c) Each of Viking and Depot shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, their best efforts to obtain any
third party consents related to or required in connection with the Merger
that are (A) necessary to consummate the transactions contemplated hereby,
(B) disclosed or required to be disclosed in the Viking Disclosure Schedule
or the Depot Disclosure Schedule, as the case may be, or (C) required to
prevent a Viking Material Adverse Effect or a Depot Material Adverse Effect
from occurring prior to or after the Effective Time.
Section 6.07. Public Disclosure. Depot and Viking shall agree on
the form and content of the initial joint press release regarding the
transactions contemplated hereby, and thereafter shall consult with each
other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law.
Section 6.08. Tax-Free Reorganization. Depot and Viking shall
each use its best efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368(a) of the Code, such that a
holder of Viking Common Stock will not recognize gain for income tax purposes
as a result of the Merger unless and to the extent such holder receives
consideration other than Depot Common Stock and Depot Rights pursuant to the
Merger.
Section 6.09. Pooling Accounting. From and after the date hereof
and until the Effective Time, neither Viking nor Depot, nor any of their
respective Subsidiaries or other Affiliates shall knowingly take any action,
or knowingly fail to take any action, that is reasonably likely to jeopardize
the treatment of the Merger as a pooling of interests for accounting
purposes.
Section 6.10. Affiliate Agreements. Upon the execution of this
Agreement, Depot and Viking will provide each other with a list of those
persons who are, in Depot's or Viking's respective reasonable judgment,
"affiliates" of Depot or Viking, respectively, within the meaning of Rule 145
(each such person who is an "affiliate" of Depot or Viking within the meaning
of Rule 145 is referred to as an "Affiliate") promulgated under the
Securities Act ("Rule 145"). Depot and Viking shall provide each other such
information and documents as Viking or Depot shall reasonably request for
purposes of reviewing such list and shall notify the other party in writing
regarding any change in the identity of its Affiliates prior to the Closing
Date. Viking and Depot shall each use its best efforts to deliver or cause
to be delivered to each other by June 15, 1998 (and in any case prior to the
Effective Time) from each of its Affiliates, an executed Affiliate Agreement,
in form and substance satisfactory to Depot and Viking, by which each
Affiliate of Viking agrees to comply with the applicable requirements of
Rule 145 and such requirements as may be necessary for the Merger to be
treated as a pooling of interests for accounting purposes and each Affiliate
of Depot agrees to comply with such requirements as may be necessary for the
Merger to be treated as a pooling of interests for accounting purposes (an
"Affiliate Agreement"). Depot shall be entitled to place appropriate legends
on the certificates evidencing any Depot Common Stock to be received by such
Affiliates of Viking pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Depot
Common Stock, consistent with the terms of the Affiliate Agreements (provided
that such legends or stop transfer instructions shall be removed, two years
after the Effective Date, upon the request of any stockholder that is not
then an Affiliate of Depot).
Section 6.11. NYSE Listing. Depot shall use its best efforts to
cause the shares of Depot Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance,
prior to the Closing Date.
Section 6.12. Stock Plans.
(a) At the Effective Time, each outstanding option to
purchase shares of Viking Common Stock (a "Viking Stock Option") under the
Viking Stock Plans, whether vested or unvested, shall constitute an option to
acquire, on the same terms and conditions as were applicable under such
Viking Stock Option, the same number of shares of Depot Common Stock as the
holder of such Viking Stock Option would have been entitled to receive
pursuant to the Merger had such holder exercised such option in full
immediately prior to the Effective Time (rounded downward to the nearest
whole number), at a price per share (rounded upward to the nearest whole
cent) equal to (y) the aggregate exercise price for the shares of Viking
Common Stock purchasable pursuant to such Viking Stock Option immediately
prior to the Effective Time divided by (z) the number of full shares of Depot
Common Stock deemed purchasable pursuant to such Viking Stock Option in
accordance with the foregoing.
(b) As soon as practicable after the Effective Time, Depot
shall deliver to the participants in Viking Stock Plans appropriate notice
setting forth such participants' rights pursuant thereto and the grants
pursuant to Viking Stock Plans shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 6.12 after
giving effect to the Merger).
(c) Depot shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Depot Common Stock for
delivery under Viking Stock Plans assumed in accordance with this
Section 6.12. As soon as practicable after the Effective Time, Depot shall
file a registration statement on Form S-8 (or any successor or other
appropriate forms), or another appropriate form with respect to the shares of
Depot Common Stock subject to such options and shall use its best efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding.
(d) The Board of Directors of Viking shall, prior to or as of
the Effective Time, take all necessary actions, if any, pursuant to and in
accordance with the terms of the Viking Stock Plans and the instruments
evidencing the Viking Stock Options, to provide for the conversion of the
Viking Stock Options into options to acquire Depot Common Stock in accordance
with this Section 6.12, and that no consent of the holders of the Viking
Stock Options is required in connection with such conversion.
(e) The shares of Viking Common Stock awarded, issued and
outstanding under the Viking Long Term Stock Incentive Plan shall be
converted into Depot Common Stock on the Effective Date as provided in
Article II of this Agreement and shall remain subject to restriction and
forfeiture and to the lapse or expiration of such restrictions and risk of
forfeiture on the terms and conditions provided in the agreements under which
such shares were awarded and issued. Such agreements shall remain in full
force and effect in accordance with these terms after the Effective Date
Section 6.13. Brokers or Finders. Each of Depot and Viking
represents, as to itself, its Subsidiaries and its Affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement except Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and SBC
Warburg Dillon Read Inc. whose fees and expenses will be paid by Viking in
accordance with Viking's agreements with such firms, and Xxxxx X. Xxxxxxx
Company Limited, whose fees and expenses will be paid by Depot in accordance
with Depot's agreement with such firm. Each of Depot and Viking agrees to
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any such fees, commissions or
expenses asserted by any person on the basis of any act or statement alleged
to have been made by such party or any of its Affiliates.
Section 6.14. Indemnification.
(a) From and after the Effective Time, Depot agrees that it
will, and will cause the Surviving Corporation to, indemnify and hold
harmless each present and former director and officer of Viking (the
"Indemnified Parties"), against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities or amounts paid
in settlement (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that
Viking would have been permitted under California law and its articles of
incorporation or bylaws in effect on the date hereof to indemnify such
Indemnified Party (and Depot and the Surviving Corporation shall also advance
expenses as incurred to the fullest extent permitted under applicable law,
provided the Indemnified Party to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification).
(b) For a period of six years after the Effective Time, Depot
shall cause the Surviving Corporation to maintain (to the extent available in
the market) in effect a directors' and officers' liability insurance policy
covering those persons who are currently covered by Viking's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Depot) with coverage in amount and scope at least as favorable
as Viking's existing coverage; provided, that in no event shall Depot or the
Surviving Corporation be required to expend in excess of 250% of the annual
premium currently paid by Viking for such coverage (the "Current Premium")
(which Current Premium does not exceed $135,000); and if such premium would
at any time exceed 250% of the Current Premium, then the Surviving
Corporation shall maintain insurance policies which provide the maximum and
best coverage available at an annual premium equal to 250% of the Current
Premium.
(c) The provisions of this Section 6.14 are intended to be an
addition to the rights otherwise available to the current and former officers
and directors of Viking by law, charter, statute, bylaw or agreement, and
shall operate for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives.
Section 6.15. Letter of Depot's Accountants. Depot shall use
reasonable best efforts to cause to be delivered to Viking and Depot a letter
of Deloitte & Touche LLP, Depot's independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to Viking, in form reasonably satisfactory to
Viking and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement. In connection with Viking's efforts
to obtain such letter, if requested by Deloitte & Touche, Depot shall provide
a representation letter to Deloitte & Touche LLP complying with SAS 72, if
then required.
Section 6.16. Letter of Viking's Accountants. Viking shall use
reasonable best efforts to cause to be delivered to Depot and Viking a letter
of Deloitte & Touche LLP, Viking's independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to Depot, in form reasonably satisfactory to
Depot and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement. In connection with Depot's efforts to
obtain such letter, if requested by Deloitte & Touche, Viking shall provide a
representation letter to Deloitte & Touche complying with the SAS 72, if then
required.
Section 6.17. Stock Option Agreements. Viking and Depot each
agrees to fully perform their respective obligations under the Stock Option
Agreements.
Section 6.18. Benefit Plans. Depot agrees that, during the period
commencing at the Effective Time and ending December 31, 1999, the employees
of Viking and its Subsidiaries will continue to be provided with benefits
under health insurance, vision care, life insurance, employee assistance
programs, flexible spending accounts, disability, vacation, holiday, profit-
sharing, section 401(k), dental and sick pay plans and stock option plans
which are no less favorable than those currently provided by Viking and its
Subsidiaries to such employees.
Section 6.19. Rights Plan. The Board of Directors of Viking has
amended the Viking Rights Plan, and shall take all further action (in
addition to that referred to in Section 3.22) reasonably requested in writing
by Depot, in order to render the Viking Rights Plan inapplicable to the
Merger and the other transactions contemplated by this Agreement and the
Stock Option Agreements to the extent provided herein. Except as provided
above with respect to the Merger and other transactions contemplated by this
Agreement and the Stock Option Agreements, the Board of Directors of Viking
shall not, without the consent of Depot (a) amend the Viking Rights Plan or
(b) take any action with respect to, or make any determination under, the
Viking Rights Plan, including a redemption of the Viking Rights or any action
to facilitate an Acquisition Proposal (except as otherwise permitted by this
Agreement).
ARTICLE VII.
CONDITIONS TO MERGER
Section 7.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the satisfaction or waiver prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger
shall have been approved and adopted by the affirmative vote of the holders
of a majority of the outstanding shares of Viking Common Stock and the Depot
Voting Proposal shall have been approved by the affirmative vote of the
holders of a majority of the shares of Depot Common Stock present or
represented at the Depot Stockholders' Meeting at which a quorum is present.
(b) Regulatory Approvals. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated, and approvals and/or clearances shall have been obtained from (or
decisions indicating no objections to the Merger or other indications to that
effect satisfactory to Depot shall have been made by) the European Commission
(if applicable) and under any other antitrust or competition law applicable
to any significant operations.
(c) Approvals. Other than the filing provided for by
Section 1.02, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by,
any Governmental Entity the failure of which to file, obtain or occur is
reasonably likely to have a Depot Material Adverse Effect or Viking Material
Adverse Effect shall have been filed, been obtained or occurred.
(d) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and shall not be the subject
of any stop order or proceedings seeking a stop order.
(e) No Injunctions. No Governmental Entity or federal, state
or foreign court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Order or statute, rule, regulation which
is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(f) Pooling Letters. Depot and Viking shall have received a
letter from Deloitte & Touche LLP, addressed to Depot regarding its
concurrence with Depot's management conclusions, as to the appropriateness of
the pooling of interests accounting, under Accounting Principles Board
Opinion No. 16 for the Merger, as contemplated to be effected as of the date
of the letter, it being agreed that Depot and Viking shall each provide
reasonable best cooperation to Deloitte & Touche LLP to enable them to issue
such a letter.
(g) NYSE. The shares of Depot Common Stock to be issued in
the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(h) Dissenting Shares. Effective demands for payment under
Chapter 13 of the General Corporation Law of California shall not have been
received by Viking with respect to more than 7.5% of the outstanding shares
of Viking Common Stock.
Section 7.02. Additional Conditions to Obligations of Depot and
Sub. The obligations of Depot and Sub to effect the Merger are subject to
the satisfaction of each of the following conditions, any of which may be
waived in writing exclusively by Depot and Sub:
(a) Representations and Warranties. The representations and
warranties of Viking set forth in this Agreement shall be true and correct as
of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except for, (i) changes contemplated by
this Agreement and (ii) where the failures to be true and correct,
individually or in the aggregate, have not had and are not reasonably likely
to have a Viking Material Adverse Effect or a material adverse effect upon
the consummation of the transactions contemplated hereby; and Depot shall
have received a certificate signed on behalf of Viking by the chief executive
officer and the chief financial officer of Viking to such effect.
(b) Performance of Obligations of Viking. Viking shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date; and Depot shall
have received a certificate signed on behalf of Viking by the chief executive
officer and the chief financial officer of Viking to such effect.
(c) Tax Opinion. Depot shall have received a written opinion
from Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel to Depot, to the effect that the
Merger will be treated for Federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code; provided
that if Xxxxxxx Xxxxxxx & Xxxxxxxx does not render such opinion, this
condition shall nonetheless be deemed satisfied if Xxxxxx & Xxxxxxx renders
such opinion to Depot (it being agreed that Depot and Viking shall each
provide reasonable cooperation to Xxxxxx & Xxxxxxx or Xxxxxxx Xxxxxxx &
Xxxxxxxx, as the case may be, to enable them to render such opinion).
Section 7.03. Additional Conditions to Obligations of Viking. The
obligation of Viking to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived, in writing,
exclusively by Viking:
(a) Representations and Warranties. The representations and
warranties of Depot and Sub set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except for, (i) changes contemplated by
this Agreement and (ii) where the failures to be true and correct,
individually or in the aggregate, have not had and are not reasonably likely
to have a Depot Material Adverse Effect or a material adverse effect upon the
consummation of the transactions contemplated hereby; and Viking shall have
received a certificate signed on behalf of Depot by the chief executive
officer and the chief financial officer of Depot to such effect.
(b) Performance of Obligations of Depot and Sub. Depot and
Sub shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date;
and Viking shall have received a certificate signed on behalf of Depot by the
chief executive officer and the chief financial officer of Depot to such
effect.
(c) Tax Opinion. Viking shall have received the opinion of
Xxxxxx & Xxxxxxx, counsel to Viking, to the effect that the Merger will be
treated for Federal income tax purposes as a tax-free reorganization within
the meaning of Section 368(a) of the Code; provided that if Xxxxxx & Xxxxxxx
does not render such opinion, this condition shall nonetheless be deemed
satisfied if Xxxxxxx Xxxxxxx & Xxxxxxxx renders such opinion to Viking (it
being agreed that Depot and Viking shall each provide reasonable cooperation
to Xxxxxx & Xxxxxxx or Xxxxxxx Xxxxxxx & Xxxxxxxx as the case may be, to
enable them to render such opinion).
ARTICLE VIII.
TERMINATION AND AMENDMENT
Section 8.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time (with respect to Sections 8.01(b)
through 8.01(g), by written notice by the terminating party to the other
party), whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Viking or Depot:
(a) by mutual written consent of Depot and Viking; or
(b) by either Depot or Viking if the Merger shall not have
been consummated by November 30, 1998 (provided that either Depot or Viking
may extend such date to February 28, 1999 by providing written notice thereof
to the other party on or prior to November 30, 1998). November 30, 1998, as
it may be so extended, shall be referred to herein as the "Outside Date"
(provided that the right to terminate this Agreement under this Section
8.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date); or
(c) by either Depot or Viking if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action,
in each case having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger; or
(d) by Depot, if, at the Viking Stockholders' Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of Viking in favor of this Agreement and the Merger shall not
have been obtained; or by Viking if, at the Depot Stockholders' Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of Depot in favor of the Depot Voting Proposal shall not have
been obtained; or
(e) by Depot, if (i) the Board of Directors of Viking shall
have withdrawn or modified its recommendation of this Agreement or the Merger
or such Board shall have resolved to do so; (ii) after the receipt by Viking
of an Acquisition Proposal, Depot requests in writing that the Board of
Directors of Viking reconfirm its recommendation of this Agreement or the
Merger and the Board of Directors of Viking fails to do so within 10 business
days after its receipt of Depot's request; (iii) the Board of Directors of
Viking shall have recommended to the stockholders of Viking an Alternative
Transaction (as defined in Section 8.03(g)) or such Board shall have resolved
to do so; (iv) a tender offer or exchange offer for 25% or more of the
outstanding shares of Viking Common Stock is commenced (other than by Depot
or an Affiliate of Depot) and the Board of Directors of Viking recommends
that the stockholders of Viking tender their shares in such tender or
exchange offer or the Board of Directors fails to recommend that stockholders
reject such tender or exchange offer within 10 business days after receipt of
Depot's request to do so; or (v) for any reason Viking fails to call and hold
the Viking Stockholders' Meeting by the Outside Date (provided that Depot's
right to terminate this Agreement under such clause (v) shall not be
available if at such time Viking would be entitled to terminate this
Agreement under Section 8.01(g)); or
(f) by Viking, if (i) the Board of Directors of Depot shall
have withdrawn or modified its recommendation of the Depot Voting Proposal or
such Board shall have resolved to do so; (ii) after the receipt by Depot of
an Acquisition Proposal, Viking requests in writing that the Board of
Directors of Depot reconfirm its recommendation of the Depot Voting Proposal
and the Board of Directors of Depot fails to do so within 10 business days
after its receipt of Viking's request; (iii) the Board of Directors of Depot
shall have recommended to the stockholders of Depot an Alternative
Transaction (as defined in Section 8.03(g)) or such Board shall have resolved
to do so; (iv) a tender offer or exchange offer for 25% or more of the
outstanding shares of Depot Common Stock is commenced (other than by Viking
or an Affiliate of Viking) and the Board of Directors of Depot recommends
that the stockholders of Depot tender their shares in such tender or exchange
offer or the Board of Directors fails to recommend that stockholders reject
such tender or exchange offer within 10 business days after receipt of
Viking's request to do so; or (v) for any reason Depot fails to call and hold
the Depot Stockholders' Meeting by the Outside Date (provided that Viking's
right to terminate this Agreement under such clause (v) shall not be
available if at such time Depot would be entitled to terminate this Agreement
under Section 8.01(g)); or
(g) by Depot or Viking, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other
party set forth in this Agreement, which breach (i) causes the conditions set
forth in Section 7.02(a) or (b) (in the case of termination by Depot) or
7.03(a) or (b) (in the case of termination by Viking) not to be satisfied,
and (ii) shall not have been cured within 20 business days following receipt
by the breaching party of written notice of such breach from the other party.
Section 8.02. Effect of Termination. In the event of termination
of this Agreement as provided in Section 8.01, this Agreement shall
immediately become void and there shall be no liability or obligation on the
part of Depot, Viking, Sub or their respective officers, directors,
stockholders or Affiliates, except as set forth in Sections 6.13 and 8.03;
provided that any such termination shall not limit liability for any willful
breach of this Agreement; and provided further that, the provisions of
Sections 6.13 and 8.03, of this Agreement, the Stock Option Agreements and
the Confidentiality Agreement shall remain in full force and effect and
survive any termination of this Agreement.
Section 8.03. Fees and Expenses.
(a) Except as set forth in this Section 8.03, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated, except that each of Depot and
Viking will bear and pay one-half of the costs and expenses incurred in
connection with the filing, printing and mailing of the Joint Proxy Statement
(including SEC filing fees).
(b) Viking shall pay Depot up to $5,000,000 as reimbursement
for expenses of Depot actually incurred relating to the transactions
contemplated by this Agreement prior to termination (including, but not
limited to, fees and expenses of Depot's counsel, accountants and financial
advisors, but excluding any discretionary fees paid to such financial
advisors), upon the termination of this Agreement by Depot pursuant to
(i) Section 8.01(d) as a result of the failure to receive the requisite vote
for approval of this Agreement and the Merger by the stockholders of Viking
at the Viking Stockholders' Meeting (other than in the circumstances set
forth in Section 8.03(c)(i)) or (ii) Section 8.01(b) or Section 8.01(g) as a
result of the failure to satisfy the condition set forth in Section 7.02(a).
(c) Upon the earliest to occur of the following events:
(i) the termination of this Agreement by Depot
pursuant to Section 8.01(d), if prior to the Viking
Stockholders' Meeting a proposal for an Alternative
Transaction (as defined below) reasonably capable of being
performed involving Viking or which is a Superior Proposal
shall have been made; or
(ii) the termination of this Agreement by Depot
pursuant to Section 8.01(e),
Viking shall pay to Depot a termination fee of $30,000,000 and, in the event
an Alternative Transaction involving Viking is consummated within 12 months
after such termination, Viking shall pay to Depot an additional fee of
$50,000,000.
Viking's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Depot against Viking and any of its
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise
to such payment (other than as set forth in the Viking Stock Option
Agreement); provided such limit shall not limit liability for a willful
breach of this Agreement.
(d) Depot shall pay Viking up to $5,000,000 as reimbursement
for expenses of Viking actually incurred relating to the transactions
contemplated by this Agreement prior to termination (including, but not
limited to, fees and expenses of Viking's counsel, accountants and financial
advisors, but excluding any discretionary fees paid to such financial
advisors), upon the termination of this Agreement by Viking pursuant to (i)
Section 8.01(d) as a result of the failure to receive the requisite vote for
approval of the Depot Voting Proposal by the stockholders of Depot at the
Depot Stockholders' Meeting (other than in the circumstances set forth in
Section 8.03(e)(i)) or (ii) Section 8.01(b) or Section 8.01(g) as a result of
the failure to satisfy the condition set forth in Section 7.03(a).
(e) Upon the earliest to occur of the following events:
(i) the termination of this Agreement by Viking
pursuant to Section 8.01(d), if prior to the Depot
Stockholders' Meeting a proposal for an Alternative
Transaction (as defined below) reasonably capable of being
performed involving Depot or which is a Superior Proposal
shall have been made; or
(ii) the termination of this Agreement by Viking
pursuant to Section 8.01(f),
Depot shall pay to Viking a termination fee of $30,000,000 and, in the event
an Alternative Transaction involving Depot is consummated within 12 months
after such termination, Depot shall pay to Viking an additional fee of
$50,000,000.
Depot's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Viking against Depot and any of its
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise
to such payment (other than as set forth in the Depot Stock Option
Agreement); provided such limit shall not limit liability for a willful
breach of this Agreement.
(f) The expenses and fees, if applicable, payable pursuant to
Section 8.03(b), 8.03(c), 8.03(d) or 8.03(e) shall be paid within one
business day after the first to occur of the events described in Section
8.03(b), 8.03(c)(i) or (ii), 8.03(d) or 8.03(e)(i) or (ii).
(g) As used in this Agreement, "Alternative Transaction"
means either (i) a transaction pursuant to which any person (or group of
persons) other than Depot or Viking or their respective affiliates (a "Third
Party"), acquires more than 25% of the outstanding shares of Viking Common
Stock or Depot Common Stock, as the case may be, pursuant to a tender offer
or exchange offer or otherwise, (ii) a merger or other business combination
involving Depot or Viking pursuant to which any Third Party acquires more
than 25% of the outstanding shares of Viking Common Stock or Depot Common
Stock, as the case may be, or the entity surviving such merger or business
combination, (iii) any other transaction pursuant to which any Third Party
acquires control of assets (including for this purpose the outstanding equity
securities of Subsidiaries of Depot or Viking, and the entity surviving any
merger or business combination including any of them) of Depot or Viking
having a fair market value (as determined by the Board of Directors of Depot
or Viking, as the case may be, in good faith) equal to more than 25% of the
fair market value of all the assets of Depot or Viking, as the case may be,
and its Subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the
foregoing.
Section 8.04. Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Viking or of Depot, but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 8.05. Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE IX.
MISCELLANEOUS
Section 9.01. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Sections
1.04, 2.01, 2.02, 6.08, 6.14, 6.17, 6.18 and Article IX, and the agreements
of the Affiliates delivered pursuant to Section 6.10. The Confidentiality
Agreement shall survive the execution and delivery of this Agreement.
Section 9.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Depot or Sub, to
Office Depot, Inc.
0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx, Executive Vice President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
(b) if to Viking, to
Viking Office Products, Inc.
000 Xxxx 000xx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx, President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
Section 9.03. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to
be made available. The phrases "the date of this Agreement", "the date
hereof," and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to May 18, 1998.
Section 9.04. Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 9.05. Entire Agreement; No Third Party Beneficiaries.
This Agreement (including the documents and the instruments referred to
herein) (a) constitute the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) except as provided in Section
6.14 are not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder; provided that the Confidentiality Agreement
shall remain in full force and effect until the Effective Time. Each party
hereto agrees that, except for the representations and warranties contained
in this Agreement, neither Viking nor Depot makes any other representations
or warranties, and each hereby disclaims any other representations and
warranties made by itself or any of its officers, directors, employees,
agents, financial and legal advisors or other representatives, with respect
to the execution and delivery of this Agreement Agreement, the documents and
the instruments referred to herein, or the transactions contemplated hereby
or thereby, notwithstanding the delivery or disclosure to the other or the
other's representatives of any documentation or other information with
respect to any one or more of the foregoing.
Section 9.06. Governing Law. Except to the extent that the
General Corporation Law of California shall govern the Merger, this Agreement
shall be governed and construed in accordance with the laws of the State of
Delaware without regard to any applicable conflicts of law.
Section 9.07. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
IN WITNESS WHEREOF, Depot, Sub and Viking have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
Office Depot, Inc.
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Title: Chairman of the Board
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
Title: Secretary
VK Acquisition Corp.
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Title: President
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
Title: Secretary
Viking Office Products, Inc.
By: /s/ Xxxxx Xxxxxxx
-----------------------
Title: Chairman of the Board
By: /s/ Xxxxxxxxx Xxxxxxxx
-----------------------
Title: Secretary
Schedule I
----------
Directors
---------
Xxxxx Xxxxxxx
Xxxxx Xxxxxx
Two additional directors, selected from Viking's current Board
___________________________________
Corporate Executive Officers
----------------------------
Xxxxx Xxxxxxx
Xxxxx Xxxxxx
___________________________________
Operating Officers
------------------
Xxxx Xxxxx
Xxxx Xxxx
Xxxxxx Xxxxxxx
Xxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxx
Xxxx Xxxxxxxx
Xxxx Abt
