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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): AUGUST 13, 1998
VIKING OFFICE PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
CALIFORNIA 0-18237 95-2082946
- ---------------------------- ----------- -------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
950 WEST 190TH STREET
TORRANCE, CALIFORNIA 90502
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 225-4500
NONE
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
On August 13, 1998, Viking Office Products, Inc., a California
corporation ("Viking"), reached an agreement in principle for the settlement of
the action entitled Szymczak v. Helford et al., Case No. BC191390, pending in
the Superior Court of the State of California, County of Los Angeles (the
"Action"). The settlement agreement provides that the measures set forth below
shall be taken in connection with the merger (the "Merger") of VK Acquisition
Corp., a California corporation ("Merger Sub") and a wholly owned subsidiary of
Office Depot, Inc., a Delaware corporation ("Office Depot"), with and into
Viking. The terms of the Merger are set forth in an Agreement and Plan of Merger
(the "Merger Agreement") dated as of May 18, 1998 among Office Depot, Merger Sub
and Viking.
1. Viking will cause its investment bankers, Merrill Lynch, Pierce
Fenner & Smith Incorporated and SBC Warburg Dillon Read Inc. to update each
investment banker's written opinion to the Viking board of directors, dated May
17, 1998, regarding the fairness of the merger consideration to Viking
stockholders from a financial point of view. The fairness opinions will be dated
as of July 22, 1998, the date on which the Joint Proxy Statement/Prospectus on
Form S-4 (the "Proxy Statement") was filed with the Securities & Exchange
Commission, or such other date as the parties may agree.
2. The Merger Agreement provides that Viking shall pay Office Depot a
termination fee (the "Termination Fee") and Office Depot may terminate the
Merger Agreement if (i) the Viking stockholders do not approve the Merger, (ii)
the Viking board of directors withdraws or modifies its recommendation that the
Merger be approved, (iii) after receipt by Viking of an acquisition proposal
from a party other than Office Depot, Office Depot requests in writing that the
Viking board of directors reconfirm its recommendation of the Merger and the
Viking board fails to do so, (iv) the Viking board of directors has recommended
an alternative transaction in which an entity other than Office Depot would
acquire more than 25% of the outstanding shares of Viking common stock or would
acquire control of Viking's assets, (v) a tender offer or exchange for 25% or
more of the outstanding shares of Viking common stock is commenced and the
Viking board of directors recommends that the Viking stockholders tender their
shares or fails to recommend that the stockholders reject such tender or
exchange offer, or (vi) Viking fails to call or hold a special meeting of
stockholders by November 30, 1998, The Termination Fee is $30 million and, if an
alternative transaction described in clause (iv) above is consummated within
twelve months after the termination of the Merger Agreement, an additional $50
million. Under the terms of the settlement agreement, the parties to the Merger
Agreement have entered into an amendment to the Merger Agreement that provides
that the Termination Fee payable by Viking is reduced by 5% to $28,500,000 and
$47,500,000, respectively.
3. The parties to the Action will attempt in good faith to negotiate and
execute the stipulation of settlement and any other documents required to obtain
the approval of the settlement. The stipulation of settlement will expressly
provide that the defendants in the Action continue to deny that they violated
any law and are settling the Action to avoid the expense of further litigation.
1
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The parties will use their best efforts to obtain final court approval of the
settlement and dismissal with prejudice of the Action. The consummation of the
settlement is subject to the completion by plaintiff of discovery and the
drafting of the stipulation of settlement.
4. The settlement will not be binding until the Merger is consummated,
an appropriate stipulation of settlement has been signed and the dismissal of
the Action with prejudice and without costs other than reasonable out-of-pocket
attorneys fees and expenses not exceeding $300,000 has been obtained. Office
Depot or Viking will pay plaintiff's counsel such attorneys, fees and expenses
as may be awarded by the court, and will not oppose the application for award of
such fees and expenses, up to $300,000.
The foregoing summary of the settlement agreement, the Merger Agreement
and the amendment to the Merger Agreement is qualified in its entirety by
reference to (i) the Merger Agreement, which is filed as Annex I to the Proxy
Statement and which is incorporated herein by reference, (ii) the amendment to
the Merger Agreement, which is filed as an Exhibit hereto, and (iii) the
memorandum of understanding, which also is filed as an Exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) - (b) Not Applicable.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of May 18, 1998
among Office Depot, Inc., VK Acquisition Corp. and
Viking Office Products, Inc. (filed as Annex I to the
Joint Proxy Statement/Prospectus on Form S-4 dated
July 23, 1998 and incorporated by reference herein).
2.2 First Amendment to Agreement and Plan of Merger,
dated as of August 13, 1998, among Office Depot,
Inc., VK Acquisition Corp. and Viking Office
Products, Inc.
2.3 Memorandum of Understanding, dated August 13, 1998,
among counsel for plaintiff Thaddeus Szymczak and the
Class, Office Depot, Inc., Viking Office Products,
Inc., Irwin Helford, M. Bruce Nelson, Lee A. Ault,
III, Neil R. Austrian, Charles P. Durkin, Jr. and
Joan D. Manley.
99.1 Text of joint press release dated August 14, 1998,
issued by Office Depot, Inc. and Viking Office
Products, Inc.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned hereunto
duly authorized.
VIKING OFFICE PRODUCTS, INC.
Dated: August 14, 1998 By: /s/ Frank Jarc
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Frank Jarc, Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
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<S> <C>
2.1 Agreement and Plan of Merger dated as of May 18, 1998 among
Office Depot, Inc., VK Acquisition Corp. and Viking Office
Products, Inc. (filed as Annex I to the Joint Proxy
Statement/Prospectus on Form S-4 dated July 23, 1998 and
incorporated by reference herein).
2.2 First Amendment to Agreement and Plan of Merger, dated as of August 13,
1998, among Office Depot, Inc., VK Acquisition Corp. and Viking Office
Products, Inc.
2.3 Memorandum of Understanding, dated August 13, 1998, among counsel for
plaintiff Thaddeus Szymczak and the Class, Office Depot, Inc., Viking Office
Products, Inc., Irwin Helford, M. Bruce Nelson, Lee A. Ault, III, Neil R.
Austrian, Charles P. Durkin, Jr. and Joan D. Manley.
99.1 Text of joint press release dated August 14, 1998, issued by Office Depot,
Inc. and Viking Office Products, Inc.
</TABLE>
4
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EXHIBIT 2.2
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
First Amendment (the "First Amendment"), dated as of August 13, 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") to Agreement and Plan of Merger (the "Merger Agreement"),
dated May 18, 1998, between Depot, Sub and Viking.
RECITALS
The Board of Directors of each of Depot, Sub and Viking have approved
the terms of this First Amendment to the Merger Agreement. Depot, Sub and Viking
desire to enter into this First Amendment, and the proposed First Amendment is
in compliance with the terms of Section 8.04 of the Merger Agreement relating to
amendments to the Merger Agreement. This amendment precedes approval by the
stockholders of Viking and Depot of the matters presented in connection with the
Merger (as defined in the Merger Agreement).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
ARTICLE I
CERTAIN MODIFICATIONS TO THE MERGER AGREEMENT
Section 1.1 AMENDMENT OF SECTION 3.17 AND THE
VIKING DISCLOSURE SCHEDULE.
(a) Section 3.17 of the Merger Agreement is hereby amended to delete
the word "Neither" in the first line thereof and to substitute in its place
"Except as disclosed in Section 3.17 of the Viking Disclosure Schedule,
neither".
(b) The Viking Disclosure Schedule to the Merger Agreement is hereby
amended to add the following to the end of such schedule:
"Schedule 3.17
1. Employees of Viking Direct France, S.A.R.L., a subsidiary of Viking,
are party to a collective bargaining agreement.
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2. Employees of Viking Office Products Pty Limited are members of a
labor union as prescribed by Australian law. Such union activity is ordinary
course for like businesses in Australia."
Section 1.2. AMENDMENT OF SECTION 8.03(C). Section 8.03(c)
of the Merger Agreement is hereby amended to read in its entirety as follows:
"(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 $28,500,000 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 $47,500,000.
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."
ARTICLE II
MISCELLANEOUS
Section 2.1 TERMS AND CONDITIONS. Except as specifically modified
herein, all other terms and conditions of the Merger Agreement shall remain in
full force and effect.
Section 2.2 BINDING EFFECT OF AMENDMENT TO MERGER AGREEMENT. This First
Amendment is an amendment to the Merger Agreement and, as provided therein, will
be binding on all the parties thereto.
Section 2.3 COUNTERPARTS. This First Amendment 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.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
Office Depot, Inc.
By: _____________________
Name: David I. Fuente
Title: Chairman of the Board
By: _____________________
Name: Barry J. Goldstein
Title: Secretary
VK Acquisition Corp.
By: _____________________
Name: David I. Fuente
Title: President
By: _____________________
Name: Barry J. Goldstein
Title: Secretary
Viking Office Products, Inc.
By: _____________________
Name: Irwin Helford
Title: Chairman of the Board
By: _____________________
Name: Charlotte Wiethoff
Title: Secretary
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EXHIBIT 2.3
MEMORANDUM OF UNDERSTANDING
The parties to the action entitled Szymczak v. Helford et al., Case No.
BC191390, pending in the Superior Court of the State of California, County of
Los Angeles (the "Action") have reached an agreement in principle for the
settlement of the Action on the terms and subject to the conditions set forth
below:
1. As a result of the negotiations between the undersigned attorneys
for the parties, the following measures shall be taken in connection with the
proposed merger provided for in the Agreement and Plan of Merger, dated as of
May 18, 1998, among VK Acquisition Corp., a wholly owned subsidiary of Office
Depot, Inc. ("Office Depot"), and Viking Office Products, Inc. ("Viking"), (the
"Merger Agreement"):
a. Viking will cause its investment bankers, Merrill Lynch, Pierce
Fenner & Smith Incorporated ("Merrill Lynch") and SBC Warburg Dillon Reed Inc.
("Warburg Dillon Reed") (collectively, the "financial advisors") to update
each's written opinion to the Viking board of directors, dated May 17, 1998
(collectively, the "fairness opinion"), in which Merrill Lynch and Warburg
Dillon Reed each opined that as of that date the
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exchange ratio provided for in the Merger Agreement of one share of Office
Depot common stock for each share of Viking common stock was fair from a
financial point of view to the holders of shares of Viking common stock. The
updated fairness opinion will reflect the financial advisors' opinion of the
fairness of the exchange ratio from a financial point of view to the holders of
shares of Viking common stock as of the date the Joint Proxy
Statement/Prospectus on Form S-4 (the "Proxy Statement") was filed with the
United States Securities Exchange Commission in final form (July 22, 1998), or
such other date as the parties may agree. Viking will promptly publicly
disclose through a press release the conclusion reached by its financial
advisors in the updated fairness opinion;
b. The Merger Agreement will be modified to provide that the
termination fee ("Termination Fee") payable, under certain circumstances, by
Viking to Office Deport pursuant to Section 8.03 of the Merger Agreement shall
be reduced by five percent. Viking will promptly disclose through a press
release the reduction in the Termination Fee.
2. The parties to the Action will attempt in good faith to agree upon
and execute a Stipulation of Settlement and such other documentation as may be
required in order to obtain
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the approval of the California State Court of the settlement and the dismissal
of the Action upon the terms set forth in this Memorandum of Understanding. The
Stipulation of Settlement will expressly provide, inter alia, that Defendants
in the Action have denied, and continue to deny, that they have committed or
have threatened to commit any violations of law and that they are entering into
the Stipulation because the proposed settlement would eliminate the burden and
expense of further litigation.
3. The parties to the Action will present the settlement to the
California State Court for approval following appropriate notice to the class
members on whose behalf the Action was instituted, and will use their best
efforts to obtain final court approval of the settlement, and the dismissal with
prejudice of the Action, as against the named plaintiff and the class members on
whose behalf the Action was brought.
4. The consummation of the settlement is subject to the completion by
Plaintiff of such discovery as is deemed necessary by Plaintiff's Counsel
(subject to appropriate objections), the drafting and execution of an
appropriate Stipulation of Settlement and such other documentation as may be
required to obtain final court approval of the settlement and the dismissal of
the Action with prejudice as to all claims asserted
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therein as against the named Plaintiff and the class of Viking shareholders on
whose behalf the Action was brought and without costs to any party (except as
provided for in paragraph 6 below).
5. The Settlement contemplated by this Memorandum of Understanding will
not be binding upon any party until the transaction referred to in paragraph 1
is consummated, discovery referred to in paragraph 4 is completed, an
appropriate Stipulation of Settlement has been signed, final court approval of
the settlement and the dismissal of the Action with prejudice and without costs
(except as provided in paragraph 6 below) has been obtained. This Memorandum of
Understanding shall be null and void and of no force and effect should any of
these conditions not be met or should Plaintiff's Counsel determine based upon
discovery or otherwise, that the settlement is not fair and reasonable and, in
that event, this Memorandum of Understanding shall not be admissible in any
proceeding or be deemed to prejudice in any way the positions of the parties
with respect to any action.
6. Plaintiff's Counsel in the Action intend to apply to the California
State Court for an award of attorneys fees and reasonable out-of-pocket
disbursements in an aggregate amount not to exceed $300,000 (together, the
"Fees"). Subject to the terms
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and conditions of this Memorandum of Understanding and the Stipulation of
Settlement contemplated hereby, Office Depot or Viking and/or their successors
in interest will pay Plaintiff's Counsel the Fees, up to such amount of $300,000
as may be awarded by the California State Court. Office Depot and Viking and/or
their successors in interest shall pay the costs and expenses related to
providing notice of the settlement to members of the plaintiff class in the
Action. Office Depot and Viking and/or their successors in interest agree not to
oppose Plaintiff's Counsel's application for fees.
7. The parties shall agree to extensions of time with respect to
pleadings and other court filings as are appropriate in the context of this
agreement in principle.
8. This Memorandum of Understanding may be executed in any number of
counterparts with the same effect as if all parties hereto had executed the same
document. All such counterparts shall be construed together and shall constitute
one instrument.
Dated: August __, 1998
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MILBERG WEISS HERSHAD HYNES
& LERACH LLP
By: [SIG]
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Counsel for Plaintiff Thaddeus
Szymczak and the Class
355 South Grand Avenue
Suite 4170
Los Angeles, CA 90071
Telephone: (213) 617-9007
and
One Pennsylvania Plaza
New York, NY 10129-0165
Telephone: (212) 594-5300
BERNSTEIN LIEBHARD & LIFSHITZ
By: [SIG]
----------------------------------
Counsel for Plaintiff Thaddeus
Szymczak and the Class
274 Madison Avenue
New York, NY 10016
Telephone: (212) 799-1414
SIMPSON THACHER & BARTLETT
By: [SIG]
----------------------------------
Counsel for Defendant,
Office Depot, Inc.
101 Universal City Plaza
Suite 852
Universal City, CA 91608
Telephone: (818) 755-7000
and
425 Lexington Avenue
New York, NY 10017
Telephone: (212) 455-2000
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LATHAM & WATKINS
By: /s/ THOMAS WATSON
-----------------
Counsel for Defendants
Viking Office Products, Inc.,
Irwin Helford, M. Bruce Nelson,
Lee A. Ault, III, Neil R. Austrian,
Charles P. Durkin, Jr. and
Joan D. Manley
633 West Fifth Street
Suite 4000
Los Angeles, CA 90071-2007
Telephone: (213) 485-1234
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Exhibit 99.1
PRESS RELEASE
Office Depot Contacts Viking Office Products Contacts
- --------------------- -------------------------------
Barry Goldstein Frank R. Jarc
Executive Vice President & CFO Executive Vice President & CFO
561/438-4237 310/225-4466
Gary Schweikhart Charlotte Wiethoff
Vice President Public Relations Vice President Administration &
Secretary Secretary
561/438-4399 310/225-4263
Office Depot, Inc. and Viking Office Products, Inc.
Settle Shareholder Litigation
AUGUST 14, 1998 (Delray Beach, FL and Los Angeles, CA) - OFFICE DEPOT, INC.
(NYSE: ODP) and VIKING OFFICE PRODUCTS, INC. (Nasdaq: VKNG) today announced
the settlement of Viking shareholder litigation in connection with the
companies' May 18, 1998 agreement to merge into a single company.
On August 13, 1998, Office Depot, Viking and the individual defendants, reached
an agreement in principle for the settlement of the action entitled Szymczak v.
Helford et al., Case No. BC191390, pending in the Superior Court of the State of
California, County of Los Angeles. The terms of the settlement agreement are set
forth in a Form 8-K filed today with the Securities and Exchange Commission,
which is attached.
Various statements in this release may constitute forward-looking statements.
Actual results may differ materially from those indicated as a result of various
important factors, which are discussed in Viking's and Office Depot's most
recent Annual Reports or Forms 10-K and 10-Q, which are on file with the
Securities and Exchange Commission.
