Exhibit (c)(13)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 19, 1997, among HFS
Incorporated, a Delaware corporation ("Parent"), HJ Acquisition Corp., a
Virginia corporation and a wholly owned subsidiary of Parent (the "Purchaser"),
and Xxxxxxx Xxxxxx Inc., a Virginia corporation (the "Company"). Capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement (as defined below).
WHEREAS, Parent, the Purchaser and the Company propose to enter into
an Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"), which would provide, among other things,
that the Purchaser, upon the terms and subject to the conditions thereof, would
make a cash tender offer (the "Offer") for all outstanding shares of common
stock, par value $.02 per share, of the Company (the "Shares") and thereafter
the Purchaser would merge with and into the Company (the "Merger"); and
WHEREAS, as an inducement and a condition to their willingness to
enter into the Merger Agreement, Parent and the Purchaser have required that the
Company agree, and the Company has agreed, as set forth herein, to grant to the
Purchaser an option to purchase authorized but unissued Shares.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and in
the Merger Agreement, the parties hereto agree as follows:
1. GRANT OF OPTION.
(a) The Company hereby grants to the Purchaser an irrevocable option,
exercisable as provided herein (the "Option"), to purchase for $68.00 per share
(the "Exercise Price") up to an aggregate of 1,326,331 Shares (the "Option
Shares"); PROVIDED, HOWEVER, that in no event shall the number of Option Shares
exceed 19.9% of the Company's issued and outstanding Shares (without giving
effect to any Shares subject to or issued pursuant
to the Option). The number of Option Shares that may be received upon the
exercise of the Option and the Exercise Price are subject to adjustment as
herein set forth.
(b) In the event that any additional Shares are either (i) issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement) or (ii) redeemed, repurchased, retired or otherwise
cease to be outstanding after the date of this Agreement, the number of Option
Shares shall be increased or decreased, as appropriate, so that, after such
issuance, such number equals 19.9% of the number of Shares then issued and
outstanding without giving effect to any Shares subject to issuance pursuant to
the Option.
2. EXERCISE OF OPTION. The Option may be exercised by the Purchaser
at any time or from time to time following the occurrence of a Triggering Event
(as hereinafter defined), in whole or in part, until the expiration of six
months following the termination of the Merger Agreement in accordance with its
terms. If the Purchaser wishes to exercise the Option, the Purchaser shall give
written notice to the Company of its intention to exercise the Option,
specifying the number of Option Shares it will purchase and a place, time and
date not earlier than one day and not later than 20 days from the date such
notice is given for the closing of such purchase (a "Closing"). Each Closing
shall be held on the date specified in such notice unless, on such date, there
shall be any preliminary or permanent injunction or other order by any court of
competent jurisdiction or any other legal restraint or prohibition preventing
the consummation of such purchase, in which event such Closing shall be held as
soon as practicable following the lifting, termination or suspension of such
injunction, order, restraint or prohibition preventing the consummation of such
purchase, but in any event within two days thereof. The Company's obligation to
issue Option Shares upon exercise of the Option is subject to the conditions
that (i) all waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), required for the purchase of the Option
Shares upon such exercise shall have expired or been waived and (ii) there shall
not be in effect any preliminary injunction or other order issued by any
Governmental Entity prohibiting the exercise of the Option pursuant to this
Agreement. Parent and the Company shall each promptly
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make such filings and provide such information as may be required under the HSR
Act with respect to the purchase of the Option Shares. Notwithstanding the
termination of the Option, the Purchaser will be entitled to exercise its rights
under this Section 2 if it has exercised such rights in accordance with the
terms hereof prior to the termination of the Option.
The term "Triggering Event" shall mean the occurrence of any of the
following events (a) a person, entity or group (as such terms are defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder), other than Parent and its subsidiaries or
affiliates (each such person, entity or group being a "Third Party"), shall
publicly propose (x) any merger, tender offer, exchange offer, sale of assets,
sale of shares of capital stock or debt securities or similar transactions
involving the Company or any Subsidiary, (y) that any change be made in the
composition of a majority of the Board of Directors of the Company and such
Third Party shall file proxy materials or other documents with the Securities
and Exchange Commission in respect of such proposal or (z) the purchase of 20
percent or more of the total voting power of the Company, including by tender or
exchange offer, (b) the Purchaser shall have accepted Shares for payment
pursuant to the Offer constituting a majority of the Shares outstanding on a
fully diluted basis (excluding Shares issuable pursuant to this Agreement), (c)
the Company shall have breached the covenants contained in Section 5.4 of the
Merger Agreement, (d) one or more of the events set forth in paragraphs (e) of
Annex A to the Merger Agreement shall have occurred, or (e) an event as a result
of which Parent is, or, as a result of an Acquisition Proposal having been made,
may be, entitled to receive the Termination Fee pursuant to Section 8.1 of the
Merger Agreement. The Company shall notify the Purchaser promptly in writing of
the occurrence of any Triggering Event of which it has knowledge, it being
understood that the giving of such notice by the Company shall not be a
condition to the right of the Purchaser to exercise the Option.
3. PAYMENT AND DELIVERY OF CERTIFICATES. At any Closing hereunder (a)
the Purchaser shall make payment to the Company of the aggregate purchase price
for the Option Shares so purchased in immediately available
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funds by certified or official bank check or by wire transfer to a bank account
designated by the Company to the Purchaser prior to such Closing and (b) the
Company shall deliver to or cause to be delivered to the Purchaser a certificate
or certificates, duly executed by the Company and registered in the name of the
Purchaser, representing the number of Option Shares so purchased.
4. REPURCHASE OBLIGATION. If, at any time during the period
commencing on the occurrence of an event as a result of which Parent is, or, as
a result of an Acquisition Proposal having been made, may be, entitled to
receive the Termination Fee pursuant to Section 8.1 of the Merger Agreement and
ending on the termination of the Option in accordance with Section 2, (a) the
Purchaser sends to the Company an exercise notice indicating the Purchaser's
election to exercise its right pursuant to this Section 4, then the Company
shall pay to the Purchaser on the Closing, in exchange for the cancellation of
the Option with respect to such number of Option Shares as the Purchaser
specifies in the exercise notice, an amount in cash equal to such number of
Option Shares multiplied by the difference between (a) the Market/Offer Price
(as defined below) and (ii) the Exercise Price, or (b) the owner of Option
Shares from time to time (the "Owner") sends to the Company an exercise notice
indicating the Owner's election to exercise its right pursuant to this Section
4, then the Company shall pay to the Owner on the Closing, in exchange for the
Option Shares as specified in the notice, an amount in cash equal to such number
of Option Shares multiplied by the Market/Offer Price.
The term "Market/Offer Price" shall mean the highest of (i) the price
per Share at which a tender offer or exchange offer therefor has been made, (ii)
the price per Share to be paid by any third party pursuant to an agreement with
the Company, (iii) the highest closing price for the Shares within the six-month
period immediately preceding the date the Purchaser gives notice of the required
repurchase of the Option or the Owner gives notice of the required repurchase of
Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of the Company's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of the
Company as determined by a nationally recognized invest-
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ment banking firm mutually selected by the Purchaser or the Owner, as the case
may be, on the one hand, and the Company, on the other hand, divided by the
number of Shares outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm mutually selected
by the Purchaser or the Owner, as the case may be, on the one hand, and the
Company, on the other hand. Notwithstanding the termination of the Option, the
Purchaser or the Owner, as the case may be, will be entitled to exercise its
rights under this Section 4 if it has exercised such rights in accordance with
the terms hereof prior to the termination of the Option.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent and the Purchaser as follows:
(a) DUE AUTHORIZATION, ETC. (a) The Company has the corporate
power and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by the
Company will not violate any other agreement to which it is a party. 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. The Board of Directors of the Company
(at a meeting duly called and held) has duly and validly approved the
transactions contemplated hereby and by the Merger Agreement, including the
Offer and the Merger and the acquisitions of Option Shares contemplated hereby
and thereby for purposes of Section 13.1-727 and Sections 13.1-728.1 ET SEQ. of
the Virginia Stock Corporation Act (the "VSCA"), such approval occurring prior
to the time the Purchaser became an "interested shareholder", as that term is
defined in Section 13.1-725 of the VSCA.
(b) OPTION SHARES. The Company has taken all necessary corporate
action to authorize and reserve for issuance upon exercise of the Option the
Option Shares and will take all necessary corporate action to authorize and
reserve for issuance all additional Shares or other securities which may be
issued as a result of Section 7 hereof upon exercise of the Option. The Shares
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(or such other securities) to be issued upon due exercise, in whole or in part,
of the Option, when paid for as provided herein, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights,
without liability attaching to the ownership thereof, and will be delivered free
and clear of all claims, liens, encumbrances and security interests of any kind
whatsoever.
(c) NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby and (ii) none of the execution and delivery of this
Agreement by the Company, the consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof shall (A) conflict with or result in any breach of any organizational
documents applicable to the Company, (B) 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, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which the Company is a party or by which the Company
or any of its properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, statute, rule or regulation applicable to it or
any of its properties or assets.
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each
of Parent and the Purchaser hereby represents and warrants to the Company as
follows:
(a) DUE AUTHORIZATION, ETC. Parent and Purchaser each has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement. The execution, delivery and performance of this Agreement
by each of Parent and the Purchaser will not violate any other agreement to
which either of them is a party. This Agreement has been duly and validly
executed and delivered by each of Parent and the Purchas-
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er and constitutes a valid and binding agreement of each of Parent and the
Purchaser, enforceable against each of Parent and the Purchaser in accordance
with its terms.
(b) NO DISTRIBUTION. The Purchaser is acquiring the Option, and
will acquire the Option Shares issuable upon exercise of the Option, for its own
account and not with a view to or for sale in connection with any distribution
thereof, and the Purchaser will not sell or otherwise dispose of the Option, or
any Option Shares, except in each case in compliance with the Securities Act and
the rules and regulations thereunder.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any
change in the Shares by reason of any stock dividend, extraordinary dividend or
distribution, split-up, recapitalization, combination, exchange of shares or the
like, the number of Option Shares subject to the Option and the Exercise Price
shall be appropriately adjusted.
8. REGISTRATION UNDER THE SECURITIES ACT. If the Option is exercised
and the Purchaser so requests, the Company shall effect as promptly as
practicable after receiving such request, but only after the termination of the
Merger Agreement in accordance with its terms, the registration under the
Securities Act and any applicable state securities laws of such Shares owned by
Parent, the Purchaser or any of Parent's other subsidiaries as such notice shall
designate and to keep such registration effective for a period of not less than
six months (or such shorter period as may be necessary to effect the
distribution of such Shares); PROVIDED, HOWEVER, that the Company shall not be
obligated to effect more than two such registrations. The Company shall pay all
fees and expenses in connection with such registrations, including the
reasonable fees and expenses of counsel and accountants of Parent and the
Purchaser, but excluding underwriting discounts and commissions to brokers or
dealers. In connection with any registration pursuant to this Section 8, the
Company shall provide the Purchaser, Parent, their officers, directors and
agents, and any underwriters retained by them in connection with the sale of
such Shares, with customary representations, warranties, covenants, indemnities
and contribution.
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9. LISTING. If the Shares or any other securities to be acquired
upon exercise of the Option are then listed on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") (or any other national
securities quotation system or national securities exchange), the Company, upon
the request of the Purchaser, will promptly file an application to list the
Shares or other securities to be acquired upon exercise of the Option on NASDAQ
(and any other national securities quotation system or national securities
exchange) and will use reasonable efforts to obtain approval of such listing as
promptly as practicable.
10. FURTHER ASSURANCES. From time to time, at the other parties'
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties hereto, provided that Parent or the Purchaser may assign, in their sole
discretion, their rights and obligations hereunder to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve Parent
or the Purchaser of its obligations hereunder if such assignee does not perform
such obligations, provided, further, that nothing herein shall limit the right
of Parent to effect the consummation of its merger with and into CUC
International ("CUC") pursuant to the Agreement and Plan of Merger, dated as of
May 27, 1997, between CUC and Parent.
(c) AMENDMENTS, WAIVERS, ETC. This Agreement may not be
amended, changed, supplemented,
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waived or otherwise modified or terminated, except upon the execution and
delivery of a written agreement executed by the parties hereto.
(d) 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 upon receipt) in accordance with the terms of
Section 8.4 of the Merger Agreement.
(e) 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.
(f) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes
and acknowledges that a breach by it of any 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 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.
(g) REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(h) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect
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hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) NO THIRD PARTY BENEFICIARIES. Except for the Owner as
provided in Section 4, this Agreement is not intended to be for the benefit of,
and shall not be enforceable by, any person or entity who or which is not a
party hereto.
(j) CONSENTS. Each of the parties hereto will use its best
efforts to obtain consents of all third parties and Governmental Entities
necessary to the consummation of the transactions contemplated by this
Agreement.
(k) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof; PROVIDED, however, that
the laws of the respective jurisdictions of incorporation of each of the parties
shall govern the relative rights, obligations, powers, duties and other internal
affairs of such party and its board of directors.
(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
(m) 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.
(n) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
(o) REVOCATION OF APPROVALS. The Company will not revoke the
approvals contemplated by Section 5(a) hereof.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the Parent, the Purchaser and the Company on the date first above
written.
HFS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice Chairman and Chief Financial Officer
HJ ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice Chairman and Chief Financial Officer
XXXXXXX XXXXXX INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman, President and Chief
Executive Officer
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