Exhibit (c)(3)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated as of July 2, 1997,
by and between BAA plc, a company organized and existing under the laws of
England (the "Parent"), and Duty Free International, Inc., a company organized
and existing under the laws of Maryland (the "Company").
RECITALS
Concurrently herewith, Parent, W & G Acquisition Corporation (the
"Purchaser"), a company organized under the laws of Maryland and a direct,
wholly owned subsidiary of Parent, and the Company are entering into an
Agreement and Plan of Merger (the "Merger Agreement") dated as of the date
herewith (capitalized terms used but not defined herein shall have the meanings
set forth in the Merger Agreement), pursuant to which Purchaser agrees to make a
tender offer (the "Offer") for all outstanding common shares with par value $.01
per share (the "Common Shares"), of the Company, at $24 per share, net to the
seller in cash.
As a condition to their willingness to enter into the Merger Agreement
and make the Offer, Parent and Purchaser have required that the Company agree,
and believing it to be in the best interests of the Company, the Company has
agreed, among other things, to grant to Parent the Option (as hereinafter
defined).
AGREEMENT
To implement the foregoing and in consideration of the mutual
representations and agreements contained herein, the parties agree as follows:
1. OPTION TO PURCHASE SHARES.
1.1 GRANT OF OPTION. The Company hereby grants to Parent an
irrevocable option to purchase up to 5,434,367 newly issued common shares (the
"Shares"), on the terms and subject to the conditions set forth herein (the
"Option").
1.2 EXERCISE OF OPTION.
(a) The Option may be exercised by Parent, in whole or in part, at
any time, or from time to time, commencing upon the Exercise Date and prior to
the Expiration Date (as herein-
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after defined). As used herein, the term "Exercise Date" means the date or
dates of the first to occur of any of the following events:
(i) any corporation (including the Company or any of its
Subsidiaries or affiliates), partnership, person, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act) other than Parent, Sub or
any of their respective Affiliates or other Persons with whom any of the
foregoing are a part of a group (collectively, "Persons") shall have become
the beneficial owner of more than 20% of the outstanding Shares and the
Merger Agreement is terminated pursuant to Section 9.01(c) or (d) (but only
in the case of paragraph (d) to Exhibit A to the Merger Agreement) thereof;
(ii) (x) any Person other than Parent, Sub, any of their respective
affiliates or other Persons with whom any of the foregoing is part of a
group shall have commenced or publicly proposed a Takeover Proposal and (y)
the Merger Agreement is terminated pursuant to Section 9.01 (c) or (d) (but
only in the case of paragraph (d) to Exhibit A to the Merger
Agreement)thereof; or
As used herein, the term "Expiration Date" means the FIRST to occur of
any of the following dates:
(w) the date the Minimum Condition is satisfied;
(x) 120 days after the later of (i) the termination of the Merger
Agreement in accordance with its terms and (ii) the expiration or
termination of the applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable
to the exercise of the Option;
(y) December 31, 1997; or
(z) the date on which written notice of termination of this Agreement
is made by Parent to the Company.
(b) In the event Parent wishes to exercise the Option, Parent shall
send a written notice to the Company of its intention to so exercise the Option
(a "Notice"), specifying the number of Shares to be purchased (and the
denominations of the certificates, if more than one) and the place, time and
date of the closing of such purchase (the "Closing Date" or the "Closing"),
which date shall not be less than 5 business days
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nor more than ten business days from the date on which a Notice is delivered;
PROVIDED, that the Closing shall be held only if (i) such purchase would not
otherwise violate, or cause the violation of, any applicable law or regulations
(including, without limitation, the HSR Act and the Exon-Xxxxxx Amendment) or
the rules of the NYSE, and (ii) no United States or United Kingdom statute,
rule, regulation, decree, order or injunction shall have been promulgated,
enacted, entered into, or enforced by any United States or United Kingdom
government, governmental agency or authority or court which prohibits delivery
of the Shares, whether temporary, preliminary or permanent (PROVIDED, HOWEVER,
that the parties hereto shall use their best efforts to have any such order,
decree or injunction vacated or reversed). In the event the Closing is delayed
pursuant to clause (i) or (ii) above, the Closing Date shall be within five
business days following the cessation of such restriction, violation, potential
violation, order, decree or injunction, as the case may be, provided that no
other such restriction, violation, potential violation, order, decree or
injunction, as the case may be, shall have occurred.
(c) Subject to Section 1.3, at any Closing, the Company shall deliver
to Parent all of the Shares to be purchased in accordance with the Company's
Restated Articles of Incorporation and at such Closing the Company shall issue
share certificates representing the Shares in the name of the Purchaser and
shall further amend its Register of Shareholders in accordance with its Restated
Articles of Incorporation pursuant to the exercise of the Option.
1.3 PAYMENTS. The purchase and sale of the Shares pursuant to
Section 1.2 of this Agreement shall be at a cash purchase price per Share equal
to $24 per Share (the "Exercise Price"). At any Closing, Parent shall pay to
the Company by certified or bank check payable in same-day funds or a wire
transfer of same-day funds to the order of the Company an amount equal to the
Exercise Price multiplied by the number of Shares purchased pursuant to this
Section 1 (the "Aggregate Purchase Price").
2. REPRESENTATIONS AND WARRANTIES.
2.1 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to the Company as follows:
(a) DUE AUTHORIZATION. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby (including the
exercise of the Option)
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have been duly and validly authorized by the Board of Directors of Parent,
and no other corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Parent and constitutes a valid and binding agreement of the Parent,
enforceable against Parent in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors'
rights generally and (ii) is subject to general principles of equity.
(b) NO CONFLICTS. Except for (i) filings under the HSR Act, if
applicable, (ii) the applicable requirements of the Exchange Act and the
United States Securities Act of 1933, as amended (the "Securities Act"),
(iii) the applicable requirements of United States state securities,
takeover or Blue Sky laws, and (iv) listing requirements of the NYSE, (A)
no filing with, and no permit, authorization, consent or approval of, any
state, federal or foreign public body or authority is necessary for the
execution of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby (including the exercise of the Option) and
(B) neither the execution and delivery of this Agreement by Parent nor the
consummation by Parent of the transactions contemplated hereby nor
compliance by Parent with any of the provisions hereof shall (1) conflict
with or result in any breach of any provision of the articles of
association, certificate of incorporation or the by-laws (or similar
documents) of Parent, or (2) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent, or any of its properties
or assets, except in the case of (2) for violations, breaches or defaults
which would not in the aggregate materially impair the ability of Parent to
perform its obligations hereunder.
(c) GOOD STANDING. Parent is a corporation duly organized, validly
existing and in good standing under the laws of England and has all
requisite corporate power and authority to execute and deliver this
Agreement.
(d) DISTRIBUTION. Any Shares acquired by Parent upon exercise of the
Option will not be sold, assigned, transferred or otherwise disposed of
except in a transaction registered or exempt from registration under the
Se-
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curities Act and applicable state and Blue Sky securities laws.
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Parent as follows:
(a) DUE AUTHORIZATION. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby (including the
exercise of the Option) have been duly and validly authorized by the Board
of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability (i) may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally, (ii)
is subject to general principles of equity.
(b) OPTION SHARES. Subject to Section 2.2(c), the Company has taken
all necessary corporate and other action to authorize and reserve for
issuance, and to permit it to issue, and at all times from the date hereof
until such time as the obligation to deliver Shares hereunder terminates
will have reserved for issuance, upon exercise of the Option Shares. All
of such Shares, upon issuance and payment pursuant hereto, shall be duly
authorized, validly issued, fully paid and nonassessable with no personal
liability attached to the ownership thereof, shall be delivered free and
clear of all claims, liens, encumbrances, security interests and charges of
any nature whatsoever, and shall not be subject to any preemptive right of
any shareholder of the Company or to rescission by the Company.
(c) NO CONFLICTS. Except for (i) filings under the HSR Act, if
applicable, (ii) the applicable requirements of the Exchange Act and the
Securities Act, (iii) the applicable requirements of state securities,
takeover or Blue Sky laws, (iv) voluntary notification to be made pursuant
to the Exon-Xxxxxx Amendment, and (v) listing requirements of the NYSE, (A)
no filing with, and no permit, authorization, consent or approval of, any
state, federal or foreign public body or authority is necessary for the
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execution of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby (including the exercise of
the Option) and (B) neither the execution and delivery of this Agreement by
the Company nor the consummation by the Company of the transactions
contemplated hereby (including the exercise of the Option) nor compliance
by the Company with any of the provisions hereof shall (x) conflict with or
result in any breach of, or require any vote under any provision of the
Restated Articles of Incorporation of the Company, (y) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation
to which the Company 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 (z) violate
any order, writ, injunction, decree, statute, rule or regulation applicable
to the Company, and of its subsidiaries or any of the properties or assets,
except in the case of (y) or (z) for violations, breaches or defaults which
would not, in the aggregate, have a Company Material Adverse Effect.
(d) STATUS. The Company is a corporation duly organized and validly
existing under the laws of Maryland and has all requisite corporate power
and authority to execute and deliver this Agreement.
3. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any
change to the Restated Articles of Incorporation of the Company and/or in the
number of issued and outstanding Common Shares by reason of any options granted
to third parties, stock dividend, split-up, merger, recapitalization,
combination, exchange of shares, spin-off or other change in the corporate or
capital structure of the Company which could have the effect of diluting
Parent's rights hereunder, the number and kind of Shares or other securities
subject to the Option and the Exercise Price therefor shall be appropriately
adjusted so that Parent shall receive upon exercise (or, if such a change occurs
between exercise and Closing, upon Closing) of the Option the number and kind of
shares or other securities or property that Parent would have received in
respect of the Shares that Parent is entitled to purchase upon exercise of the
Option if the Option had been exercised (or the purchase thereunder had been
consummated, as the case may be)
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immediately prior to such event; PROVIDED, HOWEVER, that if securities are
issued in bona fide arms length transactions to parties that are not affiliates
of the Company, the Exercise Price shall be adjusted based on a weighted average
price antidilution formula and there shall be a corresponding increase in the
number of Shares subject to purchase pursuant to this Option. The rights of
Parent under this Section shall be in addition to, and shall in no way limit,
its rights against the Company for breach of the Merger Agreement.
4. REGISTRATION OF SHARES UNDER THE SECURITIES ACT. If the Option is
exercised and if Parent shall request in writing on or before December 31, 1997,
the Company shall use its reasonable efforts to effect the registration under
the Securities Act or any successor statute then in effect, and any applicable
state law (a "Registration"), of such number of Shares owned by Parent and its
subsidiaries as Parent shall request and to keep such Registration effective for
a period of not less than one year. If the Option is exercised, the Company and
the Parent hereby agree to enter into a registration rights agreement with
customary terms and conditions, including but not limited to, those relating to
indemnification of Parent. In addition, the Company shall use its reasonable
efforts to cause such Shares to be approved for listing on the NYSE, subject to
official notice of issuance, which notice shall be given by the Company upon
issuance. The out-of-pocket expenses incurred by the Company in connection with
any such Registration pursuant to this Section 4 shall be borne by the Company,
excluding legal and underwriting fees, expenses and commissions. The Company
shall have no obligation hereunder after two Registrations pursuant to this
Section 4 has been effected.
5. FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take al1 such further action as may be
necessary or desirable to consummate the transactions contemplated by this
Agreement, including, without limitation, to vest in Parent good title to any
Shares purchased hereunder.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the Company and Parent contained herein or in
any certificates or other documents delivered at or prior to the Closing shall
survive the closing of the transactions contemplated hereby for one year, and
the agreements contained in Sections 4, 6 and 7 shall survive the closing of the
transactions contemplated hereby.
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7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) shall not
be assigned by operation of law or otherwise, provided that Parent may assign
its rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations.
7.2 AMENDMENTS. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
7.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to Company: 00 Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq.
copy to: Xxxxxx Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
If to Parent: BAA plc
Xxxxxxxx Xxxxx
000 Xxxxxx Xxxx
Xxxxxx XX0X 0XX
Attention: Xxxxxx Xxxxx
copy to: Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
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or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7.4 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
7.5 CONSENT TO JURISDICTION. The parties hereto agree that the
appropriate and exclusive forum for any dispute between any of the parties
hereto arising out of this Agreement or the transactions contemplated hereby
shall be in any state or federal court in the State of Maryland. The parties
hereto further agree that the parties will not bring suit with respect to any
dispute arising out of this Agreement or the transactions contemplated hereby,
except as expressly set forth below for the execution or enforcement of
judgment, in any court or jurisdiction other than the above specified court.
The foregoing shall not limit the rights of any party to obtain execution of
judgment in any other jurisdiction. The parties further agree, to the extent
permitted by law, that final and unappealable judgment against any of them in
any action or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and amount of such judgment.
7.6 CERTAIN FILINGS. If so requested by Parent, promptly after the
date hereof, the Company shall make all filings which are required under the HSR
Act and the parties shall furnish to each other such necessary information and
reasonable assistance as may be requested in connection with the preparation of
filings and submissions to any governmental agency, including, without
limitation, filings under the provisions of the HSR Act and the Exon-Xxxxxx
Amendment. The Company and Parent shall supply each other with copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between the Company or Parent, as the case may be, and its
representatives and the Federal Trade Commission, the Department of Justice, and
any other governmental agency or authority and members of their respective
staffs with respect to this Agreement and the transactions contemplated hereby.
7.7 SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any
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covenants or agreements contained in this Agreement will cause the other party
to sustain damages for which it would not have an adequate remedy at law for
money damages, and therefore, each of the parties hereto agrees that in the
event of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
7.8 COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same Agreement.
7.9 DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
7.10 SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
IN WITNESS WHEREOF, the Company and Parent have caused this Agreement
to be duly executed as of the day and year first above written.
BAA PLC
By: /s/ Xxxxx Xxxxxx
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Name: X X XXXXX XXXXXX
Title: DIRECTOR
DUTY FREE INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxx
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Name: XXXXXX XXXXXXX
Title: PRESIDENT
