<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
DUTY FREE INTERNATIONAL, INC.
(Name of Subject Company)
------------------------
BAA PLC
W&G ACQUISITION CORPORATION
(Bidders)
------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
------------------------
267 08410
(CUSIP Number of Class of Securities)
------------------------
ROBERT HERGA
HEAD OF LEGAL SERVICES
BAA PLC
STOCKLEY HOUSE
130 WILTON ROAD
LONDON SW1V 1LQ
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
------------------------
COPY TO:
STEPHEN A. GREENE, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
CALCULATION OF FILING FEE
------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE*
- -------------------------------------------------------- --------------------------------------------------------
$707,911,392 $141,582
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 27,340,088 shares of Common Stock of the Subject Company at
$24.00 net per share in cash and the purchase of all outstanding options of
the Subject Company.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by Bidders for such number of
Shares.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form of Registration No.: Not Applicable Date Filed: Not Applicable
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit Index begins on Page 9
(Page 1 of 9 Pages)
<PAGE>
CUSIP No. G3774N 10 0
- --------------------------------------------------------------------------------
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
BAA PLC I.R.S. No. Not Applicable
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(See Instructions) (a) / /
(b) /X/
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
BK, WC
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e)
or 2(f) / /
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
England
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
14,060,440*
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row (7)
Excludes Certain Shares (See Instructions) / /
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Approximately 43% of the shares outstanding as of July 1, 1997 (plus the
Shares issuable pursuant to the Option Agreement)*.
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
Exhibit Index begins on Page 9
(Page 2 of 9 Pages)
<PAGE>
CUSIP No. G3774N 10 0
- --------------------------------------------------------------------------------
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
W&G Acquisition Corporation I.R.S. No.
(pending)
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(See Instructions) (a) / /
(b) /X/
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
BK, WC
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e)
or 2(f) / /
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Maryland
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
14,060,440*
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) / /
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Approximately 43% of the shares outstanding as of July 1, 1997, (plus the
shares issuable pursuant to the Option Agreement).
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
- ------------------------
* On July 2, 1997, W&G Acquisition Corporation (the "Purchaser") and BAA plc
("Parent") entered into a Shareholders Agreement (the "Shareholders
Agreement") with certain shareholders (the "Selling Shareholders") of Duty
Free International, Inc. (the "Company"), pursuant to which, upon the terms
set forth therein, the Selling Shareholders have agreed to tender, in
accordance with the terms of the tender offer described in this statement (the
"Offer"), all of the shares of common stock, par value $.01 per share (the
"Shares") of the Company, owned (beneficially or of record) by the Selling
Shareholders. As of July 2, 1997, the Selling Shareholders owned (either
beneficially or of record), excluding Shares issuable upon the exercise of
stock options currently outstanding) 8,626,073 Shares, which are reflected in
Rows 7 and 9 in each of the tables above. The Shareholders Agreement is
described more fully in Section 12 of the Offer to Purchase dated July 9,
1997. In addition, on July 2, 1997, the Company and Parent entered into a
Stock Option Agreement (the "Option Agreement") pursuant to which the Company
has an irrevocable option (the "Option") to purchase up to 5,434,367 newly
issued Shares (the "Option Shares") upon the terms and subject to the
conditions of the Option Agreement, at a price of $24 per Option Share. The
Option Agreement is described more fully in Section 12 of the Offer to
Purchase dated July 9, 1997.
Exhibit Index begins on Page 9
(Page 3 of 9 Pages)
<PAGE>
This Schedule 14D-1 relates to the offer by W&G Acquisition Corporation (the
"Purchaser"), a Maryland company and a wholly-owned subsidiary of BAA plc, a
corporation organized under the laws of England ("Parent"), to purchase all of
the outstanding Common Stock, par value $.01 per share (the "Shares"), of Duty
Free International, Inc., a Maryland corporation (the "Company"), at a purchase
price of $24.00 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated July 9, 1997 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), which are annexed to and filed with this
Schedule 14D-1 as Exhibits (a)(1) and (a)(2). The item numbers and responses
thereto below are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(A) The name of the subject company is Duty Free International, Inc. The
address of its principal executive offices is 63 Copps Hill Road, Ridgefield,
Connecticut 06877.
(b) The equity securities to which this Schedule 14D-1 relates are the
Shares. Reference is hereby made to the information set forth in the
"Introduction" and Section 1 ("Terms of the Offer") of the Offer to Purchase,
which is incorporated herein by reference.
(c) Reference is hereby made to the information set forth in Section 6
("Price Range of the Shares; Dividends") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)--(d) Reference is hereby made to the information set forth in the
"Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent") and Schedule I ("Directors and Executive Officers of Parent and the
Purchaser") of the Offer to Purchase, which is incorporated herein by reference.
(e)--(f) During the last five years, neither Parent nor the Purchaser, nor, to
their knowledge, any of their respective executive officers and directors listed
in Schedule I ("Directors and Executive Officers of Parent and the Purchaser")
of the Offer to Purchase has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which any such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws.
(g) Reference is hereby made to the information set forth in Schedule I
("Directors and Executive Officers of Parent and the Purchaser") of the Offer to
Purchase, which is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)--(b) Reference is hereby made to the information set forth in the
"Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent"), Section 11 ("Background of the Offer; Contacts with the Company") and
Section 12 ("Purpose of the Offer, Merger, Merger Agreement, Shareholders
Agreement, and Option Agreement") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)--(b) Reference is hereby made to the information set forth in Section 10
("Source and Amount of Funds") of the Offer to Purchase, which is incorporated
herein by reference.
(c) Not applicable.
Exhibit Index begins on Page 9
(Page 4 of 9 Pages)
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER.
(a)--(g) Reference is hereby made to the information set forth in the
"Introduction," Section 11 ("Background of the Offer; Contacts with the
Company"), Section 12 ("Purpose of the Offer, Merger, Merger Agreement,
Stockholder Agreement, and Option Agreement"), Section 7 ("Effect of the Offer
on the Market for the Shares; NYSE Quotation and Exchange Act Registration") and
Section 13 ("Dividends and Distributions") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)--(b) Reference is hereby made to the information set forth in (i) the
"Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent"), Section 11 ("Background of the Offer; Contacts with the Company"),
Section 12 ("Purpose of the Offer, Merger, Merger Agreement, Shareholders
Agreement, and Option Agreement") and Schedule I ("Directors and Executive
Officers of Parent and the Purchaser") of the Offer to Purchase and (ii) the
Merger Agreement, each of which is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO THE SUBJECT
COMPANY'S SECURITIES.
Reference is hereby made to the information set forth in (i) the
"Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent"), Section 11 ("Background of the Offer; Contacts with the Company") and
Section 12 ("Purpose of the Offer, Merger, Merger Agreement, Shareholders
Agreement, and Option Agreement") of the Offer to Purchase, (ii) the Merger
Agreement, the Shareholders Agreement and the Option Agreement each of which is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth in Section 16 ("Fees
and Expenses") of the Offer to Purchase, which is incorporated herein by
reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not Applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Reference is hereby made to the information set forth in Section 12
("Purpose of the Offer, Merger, Merger Agreement, Shareholders Agreement, and
Option Agreement") of the Offer to Purchase, which is incorporated herein by
reference.
(b)--(c) Reference is hereby made to the information set forth in Section 15
("Certain Legal Matters") of the Offer to Purchase, which is incorporated herein
by reference.
(d) Reference is hereby made to the information set forth in Section 7
("Effect of the Offer on the Market for the Shares; NYSE Quotation and Exchange
Act Registration") of the Offer to Purchase, which is incorporated herein by
reference.
(e) To the best knowledge of Parent and the Purchaser, no such proceedings
are pending or have been instituted.
(f) Reference is hereby made to the entire text of the Offer to Purchase and
the related Letter of Transmittal, which is incorporated herein by reference.
Exhibit Index begins on Page 9
(Page 5 of 9 Pages)
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) --Offer to Purchase, dated July 9, 1997.
(a)(2) --Letter of Transmittal.
(a)(3) --Notice of Guaranteed Delivery.
(a)(4) --Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) --Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) --Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) --Text of press release issued by Parent dated July 3, 1997.
(a)(8) --Form of Summary Advertisement, dated July 9, 1997.
(b) --Not applicable.
(c)(1) --Agreement and Plan of Merger dated as of July 2, 1997, among Parent, the Purchaser
and the Company.
(c)(2) --Shareholders Agreement dated as of July 2, 1997 among the Company, the
shareholders named therein, the Parent and the Purchaser.
(c)(3) --Stock Option Agreement dated as of July 2, 1997 among the Company and the Parent.
(c)(4) --Confidentiality Agreements dated as of January 6, 1997 among the Company and the
Parent.
(d) --Not applicable.
(e) --Not applicable.
(f) --Not applicable.
</TABLE>
Exhibit Index begins on Page 9
(Page 6 of 9 Pages)
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
BAA PLC
By: /s/ J. RUSSELL F. WALLS
----------------------------------------
Name: J. Russell F. Walls
Title: Group Finance Director
Dated: July 9, 1997
Exhibit Index begins on Page 9
(Page 7 of 9 Pages)
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
W&G ACQUISITION CORPORATION
By: /s/ J. RUSSELL F. WALLS
----------------------------------------
Name: J. Russell F. Walls
Title: President
Dated: July 9, 1997
Exhibit Index begins on Page 9
(Page 8 of 9 Pages)
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- ----------- ---------------------------------------------------------------------------- -------------------
<S> <C> <C> <C>
(a)(1) -- Offer to Purchase, dated July 9, 1997.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) -- Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) -- Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) -- Text of press release issued by Parent dated July 3, 1997.
(a)(8) -- Form of Summary Advertisement, dated July 9, 1997.
(b) -- Not applicable.
(c)(1) -- Agreement and Plan of Merger dated as of July 2, 1997 among Parent, the
Purchaser and the Company.
(c)(2) -- Shareholders Agreement dated as of July 2, 1997 among the Company, the
shareholders named therein, the Parent and the Purchaser.
(c)(3) -- Stock Option Agreement dated as of July 2, 1997 among the Company and the
Parent.
(c)(4) -- Confidentiality Agreements dated as of January 6, 1997 among the Company and
the Parent.
</TABLE>
Exhibit Index begins on Page 9
(Page 9 of 9 Pages)
<PAGE>
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DUTY FREE INTERNATIONAL, INC.
AT
$24 NET PER SHARE
BY
W&G ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BAA PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON AUGUST 5, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES (AS DEFINED HEREIN) WHICH CONSTITUTES AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS
AND CONDITIONS. SEE SECTION 14.
IN CONNECTION WITH THE EXECUTION OF THE MERGER AGREEMENT (AS DEFINED
HEREIN), THE BENEFICIAL OWNERS OF APPROXIMATELY 32% OF THE OUTSTANDING SHARES
AGREED TO TENDER SUCH SHARES PURSUANT TO THE OFFER.
------------------------
THE BOARD OF DIRECTORS OF DUTY FREE INTERNATIONAL, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT (AS DEFINED
HEREIN), HAS DETERMINED THAT THE TERMS OF THE OFFER, THE MERGER AND THE MERGER
AGREEMENT ARE ADVISABLE AND FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $.01 per share, of the Company (the "Shares")
should either (a) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the certificate(s) evidencing tendered Shares,
and any other required documents, to the Depositary or tender such Shares
pursuant to the procedures for book-entry transfer set forth in Section 3 or (b)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. A stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such stockholder desires to tender such
Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer described in this Offer to Purchase on a
timely basis may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may also be directed to the
Information Agent. A
<PAGE>
stockholder may also contact brokers, dealers, commercial banks and trust
companies for assistance concerning this Offer.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
GLEACHER NATWEST INC.
July 9, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
INTRODUCTION............................................................................................... 1
1. Terms of the Offer..................................................................................... 2
2. Acceptance for Payment and Payment for Shares.......................................................... 4
3. Procedures for Tendering Shares........................................................................ 5
4. Withdrawal Rights...................................................................................... 8
5. Certain Federal Income Tax Consequences................................................................ 8
6. Price Range of Shares; Dividends....................................................................... 9
7. Effect of the Offer on the Market for the Shares; NYSE Quotation and Exchange Act Registration......... 9
8. Certain Information Concerning the Company............................................................. 10
9. Certain Information Concerning the Purchaser and Parent................................................ 12
10. Source and Amount of Funds............................................................................. 13
11. Background of the Offer; Contacts with the Company..................................................... 13
12. Purpose of the Offer, Merger, Merger Agreement, Shareholders Agreement, and Option Agreement........... 14
13. Dividends and Distributions............................................................................ 23
14. Conditions to the Offer................................................................................ 24
15. Certain Legal Matters.................................................................................. 25
16. Fees and Expenses...................................................................................... 28
17. Miscellaneous.......................................................................................... 28
Schedule I-- DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER.................................. I-1
</TABLE>
i
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
DUTY FREE INTERNATIONAL, INC.:
INTRODUCTION
W&G Acquisition Corporation, a Maryland corporation (the "Purchaser") and a
wholly owned subsidiary of BAA plc, a corporation organized under the laws of
England ("Parent"), hereby offers to purchase all outstanding shares of common
stock, par value $.01 per share (the "Shares"), of Duty Free International,
Inc., a Maryland corporation (the "Company"), at $24 per Share (the "Offer
Price"), net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all fees of Gleacher NatWest Inc.,
which is acting as the Dealer Manager (the "Dealer Manager"), and all fees and
expenses of IBJ Schroder Bank & Trust Company, which is acting as the Depositary
(the "Depositary"), and of MacKenzie Partners, Inc., which is acting as the
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16.
The Offer is conditioned upon, among other things, there having been validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which would represent at least a majority of the Shares outstanding on a
fully diluted basis (the "Minimum Condition"). The Offer is also conditioned
upon the Purchaser obtaining certain governmental approvals. See Section 14.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 2, 1997 (the "Merger Agreement"), by and among the Company, Parent
and the Purchaser. The Merger Agreement provides that, among other things,
following the consummation of the Offer and the satisfaction or waiver of the
other conditions set forth in the Merger Agreement and in accordance with the
relevant provisions of the Maryland General Corporation Law as amended (the
"MGCL"), the Purchaser will be merged with the Company (the "Merger"). Following
consummation of the Merger, the surviving corporation (the "Surviving
Corporation") will be a wholly owned subsidiary of Parent. At the effective time
of the Merger (the "Effective Time"), each outstanding Share (other than Shares
owned by the Company or by any subsidiary of the Company and Shares owned by
Parent, the Purchaser or any other subsidiary of Parent or held by stockholders,
if any, who are entitled to and who properly exercise dissenters' rights under
the MGCL) will be converted into the right to receive an amount in cash equal to
the price per Share paid pursuant to the Offer, without interest. See Section
12.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER AND THE MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER,
THE MERGER AND THE MERGER AGREEMENT ARE ADVISABLE AND FAIR TO AND IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Compass Partners International, L.L.C., the Company's financial advisor, has
delivered to the Board of Directors of the Company its written opinion dated
July 2, 1997 that, as of such date and on the basis of and subject to the
matters set forth therein, the cash consideration to be received by the holders
of Shares in the Offer and the Merger was fair, from a financial point of view,
to such holders. Such opinion is set forth in full as an exhibit to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9"), which is being mailed to stockholders of the Company herewith.
Under the MGCL, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, the Purchaser may elect
to approve and adopt the Merger without a vote of the Company's stockholders. In
such event, Parent, the Purchaser and the Company have agreed to take, at the
1
<PAGE>
request of the Purchaser, all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of the Company's stockholders. If, however, the Purchaser does
not acquire at least 90% of the then outstanding Shares pursuant to the Offer or
otherwise or does not elect to consummate the Merger without a stockholder vote,
a longer period of time will be required to effect the Merger. See Section 12.
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions to the Offer, the Purchaser will accept for payment, in
accordance with the terms of the Offer, all Shares validly tendered pursuant to
the Offer as soon as practicable after the Expiration Date (as hereinafter
defined). The Merger Agreement provides that the Purchaser may under certain
circumstances, from time to time, extend the expiration date of the Offer beyond
the time it would otherwise be required to accept validly tendered Shares for
payment. The Offer will not remain open following the time Shares are accepted
for payment.
In connection with the execution of the Merger Agreement, Parent and the
Purchaser entered into a Shareholders Agreement, dated as of July 2, 1997 (the
"Shareholders Agreement"), with certain shareholders (the "Selling
Stockholders"), the beneficial owners of an aggregate of 8,626,073 Shares, or
approximately 32% of the Shares outstanding on July 1, 1997. Pursuant to the
Shareholders Agreement, the Selling Stockholders have agreed to validly tender
pursuant to the Offer and not withdraw all Shares which are beneficially owned
by the Selling Stockholders not later than the fifth business day after the
commencement of the Offer. The Shareholders Agreement is more fully described in
Section 12.
In connection with the Merger Agreement, Parent and the Company have entered
into a stock option agreement, dated as of July 2, 1997 (the "Option
Agreement"), pursuant to which the Company has granted to Parent an irrevocable
option (the "Option") to purchase up to 5,434,367 newly issued Shares (the
"Option Shares"), upon the terms and subject to the conditions of the Option
Agreement, at a price of $24 per Option Share. The Option is exercisable upon
the occurrence of certain events. See Section 12 for a description of the Option
Agreement.
According to the Company, as of July 1, 1997 there were 27,353,088 Shares
issued and outstanding, and 2,143,220 Shares reserved for issuance pursuant to
the Company's outstanding stock options. Based upon the foregoing information,
the Minimum Condition would be satisfied if 14,748,155 Shares were validly
tendered.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares which
are validly tendered prior to the Expiration Date and not withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 Midnight, New
York City time, on August 5, 1997, unless and until the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the Purchaser obtaining certain governmental approvals.
See Section 14, which sets forth in full the conditions to the Offer. If the
Minimum Condition is not satisfied or any or all of the other events set forth
in Section 14 shall have occurred or shall be determined by the Purchaser to
have occurred prior to the Expiration Date, the Purchaser reserves the right
(but shall not be obligated) to (i) decline to purchase any of the Shares
tendered in the Offer and terminate the Offer and return all tendered Shares to
the tendering
2
<PAGE>
stockholders, (ii) waive any or all conditions to the Offer, to the extent
permitted by applicable law and the provisions of the Merger Agreement and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "SEC"), purchase all Shares validly tendered, (iii)
subject to the terms of the Merger Agreement, extend the Offer and, subject to
the right of stockholders to withdraw Shares until the Expiration Date, retain
the Shares which have been tendered during the period or periods for which the
Offer is extended or (iv) subject to the terms of the Merger Agreement, amend
the Offer. The Merger Agreement provides that the Purchaser will not, without
the consent of the Company, reduce the number of Shares sought in the Offer,
reduce the Offer Price, modify or add to the conditions of the Offer set forth
in "Conditions to the Offer" below or otherwise amend the Offer in any manner
materially adverse to the Company's stockholders, except as provided in the next
two sentences, extend the Offer or change the form of consideration payable in
the Offer. Notwithstanding the foregoing, the Purchaser may, without the consent
of the Company, (i) extend the Offer for a period of not more than 10 business
days beyond the initial expiration date of the Offer (which initial expiration
date shall be 20 business days following commencement of the Offer), if on the
date of such extension less than 90% of the outstanding Shares have been validly
tendered and not properly withdrawn pursuant to the Offer, (ii) extend the Offer
from time to time if at the initial expiration date or any extension thereof the
Minimum Condition or any of the other conditions to the Purchaser's obligation
to purchase Shares set forth in paragraphs (a), (b) and (e) under "Conditions to
the Offer" below shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (iii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer and (iv) extend the Offer for any reason
for a period of not more than 10 business days beyond the latest expiration date
that would otherwise be permitted under clause (i), (ii) or (iii) of this
sentence. In addition, the Purchaser shall at the request of the Company extend
the Offer for five business days if at any scheduled expiration date of the
Offer any of the conditions to the Purchaser's obligation to purchase Shares
shall not be satisfied; PROVIDED, HOWEVER, that the Purchaser shall not be
required to extend the Offer beyond December 31, 1997.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time, subject to the terms of the Merger Agreement and
regardless of whether or not any of the events set forth in Section 14 shall
have occurred or shall have been determined by the Purchaser to have occurred,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (ii) to amend the
Offer in any respect by giving oral or written notice of such amendment to the
Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer pursuant to Section
14. Any extension, amendment or termination will be followed as promptly as
practicable by public announcement thereof, the announcement in the case of an
extension to be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act. Without limiting
the obligation of the Purchaser under such rules or the manner in which the
Purchaser may choose to make any public announcement, the Purchaser currently
intends to make announcements by issuing a release to the Dow Jones News Service
and the London Stock Exchange.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchaser to delay the payment for Shares that the Purchaser has accepted
for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the offer.
3
<PAGE>
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including the Minimum Condition, subject to the Merger Agreement), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange
Act. The minimum period during which the Offer must remain open following
material changes in the terms of the Offer or information concerning the Offer,
other than a change in price or a change in percentage of securities sought,
will depend upon the facts and circumstances, including the relative materiality
of the terms or information. With respect to a change in price or a change in
percentage of securities sought, a minimum ten business day period is required
to allow for adequate dissemination to stockholders and investor response. If,
prior to the Expiration Date, the Purchaser should decide to increase the price
per Share being offered in the Offer, such increase will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer. The
Merger Agreement provides that, without the Company's consent, the Purchaser
will not decrease the price or the number of Shares sought in the Offer. As used
in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Exchange Act.
The Company has provided the Purchaser with its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will purchase, by accepting for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) promptly after the later to occur of (i)
the Expiration Date, (ii) any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to
the purchase of Shares pursuant to the Offer having expired or been terminated
and (iii) the receipt of all necessary consents and approvals from each of the
U.S. Customs Service and the Bureau of Alcohol, Tobacco and Firearms applicable
to the purchase of Shares pursuant to the Offer. Subject to the applicable rules
of the SEC and the terms of the Merger Agreement, the Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any such regulatory approvals specified in Section 14,
including approval under the HSR Act. See Sections 14 and 15. The Purchaser
understands that, in accordance with the applicable rules of the SEC, any delay
in accepting Shares regardless of cause may not exceed an "unreasonable length
of time." Accordingly, if it appears at the time that the Offer is scheduled to
expire that the approval under the HSR Act specified in Section 14 hereof is not
likely to be obtained within a reasonable length of time thereafter, the
Purchaser will either extend the Offer or terminate the Offer.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares ("Stock Certificates") or timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Shares into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository Trust
Company (each, a "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3, (ii) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an
Agent's Message (as defined below) and (iii) any other documents required by the
Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the
4
<PAGE>
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance of
such Shares for payment. Payment for Shares accepted pursuant to the Offer will
be made by deposit of the purchase price with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payments from the
Purchaser and transmitting payments to such tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE
PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering stockholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.
If any tendered Shares are not accepted pursuant to the Offer for any
reason, or if Stock Certificates are submitted evidencing more Shares than are
tendered, Stock Certificates evidencing Shares not purchased or tendered will be
returned, without expense to the tendering stockholder (or in the case of Shares
tendered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedures set forth in Section 3, such Shares
will be credited to an account maintained at such Book-Entry Transfer Facility),
as promptly as practicable after the expiration, termination or withdrawal of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole at any time
or in part from time to time, to Parent or to one or more of its affiliates, the
right to purchase all or a portion of the Shares tendered pursuant to the Offer,
but any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES
VALID TENDER. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (in the
case of any book-entry transfer), and any other required documents, must be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase prior to the Expiration Date. In addition, either (i) the
Stock Certificates evidencing Shares must be received by the Depositary along
with the Letter of Transmittal or Shares must be tendered pursuant to the
procedures for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date or
(ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at its address set forth on the
back cover of this Offer to Purchase prior to the Expiration Date or the
tendering stockholder must comply with the guaranteed delivery procedures
described below.
5
<PAGE>
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal, or (ii)
for the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If a Stock Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Stock
Certificate is not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then such Stock Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appears on such Stock
Certificate, with the signature(s) on such Stock Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
THE METHOD OF DELIVERY OF STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Stock Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, or the procedures for book-entry transfer cannot
be completed on a timely basis, such Shares may nevertheless be tendered if all
the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary prior to the Expiration Date as provided below;
and
(iii) the Stock Certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of
Transmittal, are received by the Depositary within three New York Stock
Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by the
Depositary of (i) Stock Certificates evidencing such Shares or a Book-Entry
Confirmation of the delivery of such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
6
<PAGE>
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE FOR SHARES PURCHASED
PURSUANT TO THE OFFER, EACH TENDERING STOCKHOLDER MUST PROVIDE THE DEPOSITARY
WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND
CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING. IF A
STOCKHOLDER DOES NOT PROVIDE SUCH STOCKHOLDER'S CORRECT TIN OR FAILS TO PROVIDE
THE CERTIFICATIONS DESCRIBED ABOVE, THE INTERNAL REVENUE SERVICE MAY IMPOSE A
PENALTY ON SUCH STOCKHOLDER AND PAYMENTS THAT ARE MADE TO SUCH STOCKHOLDER WITH
RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER MAY BE SUBJECT TO BACKUP
WITHHOLDING AT A RATE OF 31%. ALL STOCKHOLDERS SURRENDERING SHARES PURSUANT TO
THE OFFER SHOULD COMPLETE AND SIGN THE MAIN SIGNATURE FORM AND THE SUBSTITUTE
FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL TO PROVIDE THE
INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP WITHHOLDING (UNLESS AN
APPLICABLE EXEMPTION EXISTS AND IS PROVED IN A MANNER SATISFACTORY TO THE
PURCHASER AND THE DEPOSITARY). SEE INSTRUCTION 9 AND "IMPORTANT TAX INFORMATION"
IN THE LETTER OF TRANSMITTAL.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. The Purchaser reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right, in its sole discretion, subject to the Merger Agreement, to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to Shares of any particular stockholder, and the Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions thereto) will be final and binding. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification.
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Purchaser
as the stockholder's attorneys-in-fact and proxies, in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by the Purchaser (and any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date of the Merger Agreement). All such proxies shall be considered
coupled with an interest in the tendered Shares. This appointment will be
effective when, and only to the extent that, the Purchaser accepts Shares for
payment. Upon acceptance for payment, all prior proxies given by the stockholder
with respect to the Shares or other securities will, without further action, be
revoked, and no subsequent proxies may be given nor any subsequent written
consent executed by such stockholder (and if given or executed, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
will, with respect to the Shares and other securities, be empowered to exercise
all voting and other rights of such stockholder as they in their sole discretion
may deem proper at any annual, special or adjourned meeting of the Company's
stockholders, by written consent or otherwise. The Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights of a record and beneficial
holder, including rights in respect of acting by written consent, with respect
to such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer. The Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
7
<PAGE>
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, provided that Shares tendered pursuant to
the Offer may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after September 6, 1997, or at such later time as
may apply if the Offer is extended.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Stock Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Stock Certificates, the serial numbers of the particular Stock
Certificates and a signed notice of withdrawal with signature guaranteed by an
Eligible Institution, except in the case of Shares tendered for the account of
an Eligible Institution, must also be furnished to the Depositary as described
above. If Shares have been tendered pursuant to the procedures for book-entry
transfer set forth in Section 3, any notice of withdrawal must also specify the
name and number of the account at the appropriate Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
ANY SHARES PROPERLY WITHDRAWN WILL BE DEEMED NOT TO HAVE BEEN VALIDLY
TENDERED FOR PURPOSES OF THE OFFER. However, withdrawn Shares may be re-tendered
by following one of the procedures described in Section 3 at any time prior to
the Expiration Date.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer (or the Merger) will be
a taxable transaction for U.S. federal income tax law purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. The tax
consequences of such receipt pursuant to the Offer (or the Merger) may vary
depending upon, among other things, the particular circumstances of the
stockholder. In general, a stockholder who receives cash for Shares pursuant to
the Offer (or the Merger) will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received in exchange
for the Shares sold and such stockholder's adjusted tax basis in such Shares.
Provided that the Shares constitute capital assets in the hands of the
stockholder, such gain or loss will be capital gain or loss, and will be long
term capital gain or loss if the holder has held the Shares for more than one
year at the time of sale. Under present law, long term capital gains recognized
by an individual stockholder generally will be taxed at a maximum U.S. federal
marginal tax rate of 28%, and long term capital gains recognized by a corporate
stockholder will be taxed at a maximum U.S. federal marginal tax rate of 35%. In
addition, under present law, the ability to use capital losses to offset
ordinary income is limited.
A stockholder that tenders Shares may be subject to backup withholding at a
rate of 31% unless a TIN is provided by such stockholder and such stockholder
certifies that such number is correct or properly certifies that such
stockholder is awaiting a TIN, or unless an exemption applies. See "Backup
Federal Income Tax Withholding" under Section 3 and Instruction 9 and "Important
Tax Information" in the Letter of Transmittal.
8
<PAGE>
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER (OR THE MERGER) TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS. IN ADDITION, THE
DISCUSSION SET FORTH ABOVE MAY NOT APPLY TO PARTICULAR CATEGORIES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO
ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES, AND FOREIGN CORPORATIONS,
LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS OR
ENTITIES THAT ARE OTHERWISE SUBJECT TO SPECIAL TAX TREATMENT.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares trade on the New York Stock Exchange (the "NYSE") under the
symbol "DFI". The following table sets forth, for the fiscal quarters indicated
the high and low sales price per Share on the New York Stock Exchange, as well
as dividends paid. All prices set forth are as reported in published financial
sources:
<TABLE>
<CAPTION>
MARKET PRICE
------------------
<S> <C> <C>
HIGH LOW
------- -------
Fiscal 1996:
First Quarter....... $ 8 7/8 $ 7
Second Quarter...... 10 5/8 7 3/8
Third Quarter....... 15 3/4 9
Fourth Quarter...... 16 3/4 13 1/8
Fiscal 1997:
First Quarter....... $15 1/8 $11 3/4
Second Quarter...... 17 1/4 12 1/2
Third Quarter....... 15 3/4 13 1/8
Fourth Quarter...... 17 7/8 13 1/8
Fiscal 1998:
First Quarter....... $15 3/4 $12 3/8
Second Quarter
(through July 8)... 23 7/8 13 7/8
</TABLE>
Cash dividends declared were approximately $6,536,000, or $0.24 per share,
and $5,450,000, or $0.20 per share, for the years ended January 26, 1997 and
January 28, 1996. The Company intends to pay quarterly dividends of $0.06 per
share during fiscal 1998.
On July 1, 1997, the last full trading day prior to the announcement of the
terms of the Merger Agreement, the reported closing sales price per Share on the
New York Stock Exchange was $20 1/8. On July 8, 1997, the last full trading day
prior to the commencement of the Offer, the reported closing sales price per
Share on the New York Stock Exchange was $23 13/16. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NYSE QUOTATION AND EXCHANGE
ACT REGISTRATION
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of Shares
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the aggregate market value and per share price of any Shares
not purchased pursuant to the Offer, the Shares may no longer meet the standards
for continued inclusion in the NYSE, which require that an issuer have at least
600,000 publicly held shares (excluding shares held by officers, directors,
their immediate families and other concentrated holdings of 10% or more) with a
market value
9
<PAGE>
of $5 million held by at least 1,200 shareholders of at least 100 shares. If
these standards were not met, quotations might continue to be published in the
over-the-counter "additional list" or in one of the "local lists," but if the
number of holders of Shares falls below 300, or if the number of publicly held
Shares falls below 100,000, or if there are not at least two market makers for
the Shares, the National Association of Securities Dealers ("NASD") rules
provide that the securities would no longer be "authorized" for NYSE reporting
and NYSE would cease to provide any quotations. Shares held directly or
indirectly by an officer or director of the Company, or by any beneficial owner
of more than 10 percent of the Shares, ordinarily will not be considered as
being publicly held for this purpose. In the event the Shares were no longer
eligible for NYSE quotation, quotations might still be available from other
sources. The extent of the public market for the Shares and availability of such
quotations would, however, depend upon the number of holders of Shares remaining
at such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act, as described below, and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, following the Offer it
is possible that the Shares would no longer constitute "margin securities" for
the purpose of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are not listed on a national securities
exchange or Nasdaq and there are fewer than 300 record holders of the Shares.
Termination of registration of the Shares under the Exchange Act would reduce
substantially the information required to be furnished by the Company to its
stockholders and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement in connection with stockholders'
meetings pursuant to Section 14(a) and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions no longer applicable
to the Company. Furthermore, if the Purchaser acquires a substantial number of
Shares or the registration of the Shares under the Exchange Act were to be
terminated, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 under the Securities Act of 1933 may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated prior to the
consummation of the Merger, the Shares would no longer be "margin securities" or
be eligible for Nasdaq reporting. It is the present intention of the Purchaser
to seek to cause the Company to make an application for termination of
registration of the Shares as soon as possible following the Offer if the
requirements for termination of registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or is based upon publicly
available documents and records on file with the SEC and other public sources.
Neither Parent nor the Purchaser assumes any responsibility for the accuracy or
completeness of the information concerning the Company contained in such
documents and records or for any failure by the Company to disclose events which
may have occurred or may affect the significance or accuracy of any such
information but which were unknown to Parent or the Purchaser.
10
<PAGE>
The Company is a Maryland corporation with its principal executive offices
located at 63 Copps Hill Road, Ridgefield, Connecticut 06877. The telephone
number of the Company at such offices is (203) 431-6057.
The Company operates in several distinct markets of the duty free industry
in the United States and abroad. This highly specialized industry sells
merchandise such as liquor, tobacco products, perfume and luxury gifts free of
all duties and sales and excise taxes to persons leaving the United States or
travelling on international airlines and to foreign diplomats serving in the
United States. The Company offers quality brand-name merchandise at savings
generally ranging from 20% to 60% off retail prices in the countries of its
customers' destinations.
The Company is the leading operator in the United States of duty free stores
along both the United States/Canada and the United States/Mexico borders and is
one of the leading operators of duty free and retail stores in international
airports in the United States and Puerto Rico, and is a prime concessionaire and
supplier of merchandise to international airlines' in-flight duty free shops.
The Company is also the largest supplier of duty free merchandise to foreign
diplomats in the United States and is a major supplier of merchandise to
merchant and cruise ships from ports in the Northeast United States and Miami,
Florida.
Set forth below is a summary of certain consolidated financial information
with respect to the Company, excerpted or derived from the information contained
in the Company's Annual Report on Form 10-K for the fiscal year ended January
26, 1997 and from its Quarterly Report on Form 10-Q for the fiscal quarter ended
April 27, 1997. More comprehensive financial information is included in such
reports and other documents filed by the Company with the SEC, and the following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports and other documents may be inspected and copies
may be obtained from the offices of the SEC in the manner set forth below.
DUTY FREE INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
INCOME STATEMENT DATA:
Net Sales............................................ $ 570,895 $ 515,058 $ 501,761 $ 376,436 $ 361,823
Gross Profit......................................... 249,162 218,885 200,374 147,740 146,425
Operating Income (Loss).............................. 39,653 30,346 (26,722) 39,535 49,647
Earnings (Loss) Before Income Taxes.................. 34,080 25,389 (31,149) 43,082 49,786
Net Earnings (Loss).................................. 21,470 15, 996 (24,802) 27,393 30,373
Earnings (Loss) Per Share............................ $ 0.79 $ 0.59 $ (0.91) $ 1.01 $ 1.08
Dividends Per Common Share........................... $ 0.24 $ 0.20 $ 0.20 $ 0.20 $ 0.15
</TABLE>
<TABLE>
<CAPTION>
JANUARY 26, JANUARY 28, JANUARY 29, JANUARY 31, JANUARY 31,
1997 1996 1995 1994 1993
----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets.............................. $ 415,348 $ 390,708 $ 387,142 $ 387,600 $ 255,819
Long-Term Obligations..................... 123,604 122,238 118,891 121,821 9,629
Stockholders' Equity...................... 227,715 212,482 201,151 231,861 207,343
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
------------------------
APRIL 27, APRIL 28,
1997 1996
----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales................................. $ 133,047 $ 117,979
Gross Profit.............................. 56,991 50,801
Operating Income (Loss)................... 5,659 4,889
Earnings (Loss) Before Income Taxes....... 4,126 3,464
Net Earnings (Loss)....................... 2,599 2,182
Earnings (Loss) Per Share................. $ 0.10 $ 0.08
Dividends Per Common Share................ $ 0.06 $ 0.06
</TABLE>
<TABLE>
<CAPTION>
APRIL 27,
1997
-----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets.............................. $ 420,811
Long-Term Obligations..................... 123,628
Stockholders' Equity...................... 228,822
</TABLE>
AVAILABLE INFORMATION. The Company is subject to the information filing
requirements of the Exchange Act and is required to file reports and other
information with the SEC relating to its business, financial condition and other
matters. Information, as of particular dates, concerning the Company's directors
and officers, their remuneration, options granted to them, the principal holders
of the Company's securities and any material interest of such persons in
transactions with the Company is required to be described in proxy statements
distributed to the Company's stockholders and filed with the SEC. These reports,
proxy statements and other information should be available for inspection and
copying at the SEC's office at 450 Fifth Street, N.W., Washington, D.C. 20549,
and also should be available for inspection and copying at the regional offices
of the SEC located at Seven World Trade Center, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of this material may also be obtained by mail, upon
payment of the SEC's customary fees, from the SEC's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains an internet
web site at http://www.sec.gov that contains reports, proxy statements and other
information. Copies should also be available at the office of the New York Stock
Exchange.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser is a newly incorporated Maryland corporation and a wholly
owned subsidiary of Parent. To date the Purchaser has not conducted any business
other than in connection with the Offer and the Merger. The principal executive
offices of the Purchaser are located c/o The Corporation Trust Incorporated, 32
South Street, Baltimore Maryland 21202.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I
hereto.
Parent is a corporation organized under the laws of England with its
principal office located at Stockley House, 130 Wilton Road, London SW1V 1LQ.
Until immediately prior to the time the Purchaser purchases Shares pursuant
to the Offer, it is not anticipated that the Purchaser will have any significant
assets or liabilities or engage in activities other than those incident to its
formation and capitalization and the transactions contemplated by the Offer and
the Merger. Because the Purchaser is a newly formed corporation and has minimal
assets and capitalization, no meaningful financial information regarding the
Purchaser is available.
12
<PAGE>
Except as set forth in this Offer to Purchase, none of the Purchaser or
Parent (collectively, the "Purchaser Entities"), or, to the best knowledge of
any of the Purchaser Entities, any of the persons listed on Schedule I, has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any securities of the Company, joint ventures, loan or option
arrangement, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of any of the Purchaser Entities, any of the persons
listed on Schedule I, has had any business relationships or transactions with
the Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the SEC. Except as set forth in this Offer
to Purchase, there have been no contacts, negotiations or transactions between
the Purchaser Entities, or their respective subsidiaries or, to the best
knowledge of any of the Purchaser Entities, any of the persons listed on
Schedule I, and the Company or its affiliates, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors or a sale or other transfer of a material amount of
assets. Except as set forth in this Offer to Purchase, none of the Purchaser
Entities or, to the best knowledge of any of the Purchaser Entities, any of the
persons listed on Schedule I, beneficially owns any Shares or has effected any
transactions in the Shares in the past 60 days.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and to pay related fees and expenses is
approximately $715 million. The Purchaser plans to obtain all funds needed for
the Offer and the Merger through loans from Parent which Parent will fund from
cash accounts and available lines of credit. No final decisions have been made
by Parent concerning the source of funds to be used for purchase of the Shares.
However, the Offer is not conditioned on obtaining financing.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In October 1996, Alfred Carfora, the President and Chief Executive Officer
of the Company met Barry Gibson, Group Retail Director of Parent at an industry
conference at which they discussed possible business combinations between the
Company and Parent. They agreed to meet again in January 1997 to continue such
discussions.
On January 6, 1997, Parent and the Company entered into confidentiality
agreements preceding Parent's review of certain information concerning the
Company and continued discussing different possible transactions including a
joint venture of the Company's and Parent's duty free retail operations, a
contribution of Parent's duty free retail operations to the Company in exchange
for shares of the Company's Common Stock and other possible combinations.
On April 19, Mr. Gibson asked Mr. Carfora whether the Company would be
willing to consider an offer by Parent to purchase all of the outstanding Shares
of the Company. The parties discussed matters that would need to be addressed in
connection with such a transaction, and Mr. Gibson advised Mr. Carfora that if
Parent were to proceed it would require the Company to enter into an exclusivity
agreement for a certain period of time.
During March and April 1997, the Company supplied Parent with certain
historical financial information and forecasts relating to the Company.
On April 25, Mr. Carfora met with representatives of Parent to discuss the
acquisition of the Company by Parent in a cash tender offer at a per share price
in the range of $21-23.
On May 2, representatives of Parent met with representatives of the Company
to discuss Parent's review of information concerning the Company.
13
<PAGE>
On May 7, the Company entered into an exclusivity agreement with Parent (the
"Exclusivity Agreement"), providing, among other things, that until May 30, the
Company would not initiate or solicit offers for a business combination from any
other person. Promptly thereafter, Parent commenced a due diligence review of
the Company's business, including non-public information provided by the
Company.
Between May 8 and May 17, representatives of Parent met with representatives
of the Company to discuss the Company's business, valuation parameters of the
Company and to discuss generally the terms and conditions of a possible
transaction, including Parent's requirement that the Selling Stockholders sign a
Shareholders Agreement providing for the sale of the Shares owned by them to
Parent, through a tender of such Shares in the Offer or otherwise and that the
Company enter into the Option Agreement with Parent.
On May 18, the Company advised Parent of the Company's receipt of an
expression of interest from another interested party, although the name of such
party was not disclosed at that time to Parent.
On May 23, representatives of Parent distributed the initial draft of the
Merger Agreement and related documents to the Company's representatives. The
draft Merger Agreement did not set forth any terms regarding the price to be
proposed by Parent, a subject which was left for discussion between the chief
executives of the Company and Parent.
On June 5, Parent informed the Company that Parent would not be in a
position to proceed with further discussions regarding the price range for any
possible business combination until after July 2.
On June 13, the Company provided Parent with comments on the proposed draft
of the Merger Agreement.
On June 18, Mr. Carfora suggested to Mr. Gibson that Parent should propose a
price of $26.00 per share. Mr. Gibson said he would need to discuss this price
with the directors of Parent. On June 23, representatives of the Company and
Parent reached a tentative understanding on a price per share in the range of
$23.00 to $25.00.
On June 28, Parent provided the Company with a revised draft of the Merger
Agreement.
On June 30, the Company provided to Parent its comments on the revised
Merger Agreement, as well as the Shareholders Agreement and the Option
Agreement, although an express stipulation was made by the Company that there
was no agreement that the Option Agreement and/or the Shareholders Agreement
would be entered into.
On July 1, representatives of the Company and Parent met to negotiate the
provisions of the Merger Agreement.
On July 2, further discussions were held by the representatives of the
Company and Parent with respect to the proposed price for the transaction. At
the conclusion of such discussions, the Parent proposed to acquire 100% of the
equity of the Company for $24 per share, conditioned upon the execution and
delivery of the Option Agreement by the Company and the Shareholders Agreement
by the Selling Stockholders. Revised drafts of the Merger Agreement, the Option
Agreement and the Shareholders Agreement were circulated by Parent and further
negotiation thereof among representatives of the Company and Parent ensued
throughout the day. Late in the day the Boards of Directors of the Company and
the Parent each unanimously approved the terms and conditions of the Offer,
including the terms and conditions of the Merger Agreement and the other
transaction documents contemplated thereby.
On the morning of July 3, the parties executed the Merger Agreement, dated
as of July 2, 1997, and publicly announced the transactions contemplated
thereby.
14
<PAGE>
12. PURPOSE OF THE OFFER, MERGER, MERGER AGREEMENT, SHAREHOLDERS AGREEMENT, AND
OPTION AGREEMENT
The purpose of the Offer, the Merger, the Merger Agreement, Shareholders
Agreement and Option Agreement is to enable Parent to acquire control of, and
the entire equity interest in, the Company. Upon consummation of the Merger, the
Company will become a subsidiary of Parent. The Shareholders Agreement is
intended to increase the likelihood that the Merger will be effected.
MERGER AGREEMENT. The following is a summary of certain provisions of the
Merger Agreement. The summary is qualified in its entirety by reference to the
Merger Agreement which is incorporated herein by reference and a copy of which
has been filed with the SEC as an exhibit to Parent's and the Purchaser's Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"). The Merger Agreement
may be examined and copies may be obtained at the places and in the manner set
forth in Section 8 of this Offer to Purchase.
THE OFFER. The Merger Agreement provides that, subject to the provisions of
the Merger Agreement, as promptly as practicable but in no event later than five
business days after the announcement of the execution of the Merger Agreement,
the Purchaser will commence the Offer and that, upon the terms and subject to
prior satisfaction or waiver of the conditions of the Offer, the Purchaser will
purchase all Shares validly tendered pursuant to the Offer. The Merger Agreement
provides that, without the written consent of the Company, the Purchaser will
not reduce the number of shares sought in the offer, reduce the Offer Price,
modify or add to the conditions of the Offer set forth in "Conditions to the
Offer" below or otherwise amend the Offer in any manner materially adverse to
the Company's stockholders, except as provided in the next two sentences, extend
the Offer or change the form of consideration payable in the Offer.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer for a period of not more than 10 business days
beyond the initial expiration date of the Offer (which initial expiration date
shall be 20 business days following commencement of the Offer), if on the date
of such extension less than 90% of the outstanding Shares have been validly
tendered and not properly withdrawn pursuant to the Offer, (ii) extend the Offer
from time to time if at the initial expiration date or any extension thereof the
Minimum Condition or any of the other conditions to the Purchaser's obligation
to purchase Shares set forth in paragraphs (a), (b) and (e) under "Conditions to
the Offer" below, shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (iii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer and (iv) extend the Offer for any reason
for a period of not more than 10 business days beyond the latest expiration date
that would otherwise be permitted under clauses (i), (ii) or (iii) of this
sentence. In addition, the Purchaser shall at the request of the Company extend
the Offer for five business days if at any scheduled expiration date of the
Offer any of the conditions to the Purchaser's obligation to purchase Shares
shall not be satisfied; PROVIDED, HOWEVER, that that the Purchaser shall not be
required to extend the Offer beyond December 31, 1997.
THE MERGER. The Merger Agreement provides that following the satisfaction
or waiver of the conditions described below under " Conditions to the Merger"
and in accordance with the MGCL, the Purchaser will be merged with the Company,
and each then outstanding Share (other than Shares owned by the Company or by
any subsidiary of the Company and Shares owned by Parent, the Purchaser or any
other subsidiary of Parent or held by stockholders, if any, who are entitled to
and who properly exercise dissenters' rights under the MGCL), will be converted
into the right to receive an amount in cash equal to the price per Share paid
pursuant to the Offer, without interest.
VOTE REQUIRED TO APPROVE MERGER. The MGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must be
approved by the Board of Directors and generally by the holders of the Company's
outstanding voting securities. The Board of Directors of the Company has
approved the Offer and the Merger, consequently, the only additional action of
the Company that may be necessary to effect the Merger is approval by such
stockholders if the "short-form" merger procedure
15
<PAGE>
described below is not utilized. Under the Company's Restated Certificate of
Incorporation, the affirmative vote of holders of a majority of the outstanding
Shares (including any Shares owned by the Purchaser), is generally required to
approve the Merger. If the Purchaser acquires, through the Offer or otherwise,
voting power with respect to at least a majority of the outstanding Shares, it
would have sufficient voting power to effect the Merger without the vote of any
other stockholder of the Company. However, the MGCL also provides that if a
parent company owns at least 90% of each class of stock of a subsidiary, the
parent company can effect a short-form merger with that subsidiary without the
action of the other stockholders of the subsidiary. Accordingly, if, as a result
of the Offer or otherwise, the Purchaser acquires or controls the voting power
of at least 90% of the outstanding Shares, the Purchaser could ,if it elects to
do so, effect the Merger without any action by any other stockholder of the
Company.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the Merger is
subject to the satisfaction or waiver of the following conditions: (1) if
required by applicable law, the Merger Agreement shall have been adopted by the
affirmative vote or consent of the holders of a majority of the outstanding
Shares in accordance with applicable law and the Company's Restated Certificate
of Incorporation, (2) the waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired, (3) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect; PROVIDED, HOWEVER, that each of the Company, the Purchaser and Parent
shall have used its best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other order
that may be entered and (4) the receipt of all necessary consents and approvals
from each of the U.S. Customs Service and the Bureau of Alcohol, Tobacco and
Firearms applicable to the purchase of shares pursuant to the Merger.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company, (1) by mutual written consent of the Company and the Purchaser, (2) by
either the Company or Parent if (a) the Purchaser shall not have purchased that
number of Shares which constitutes the Minimum Tender Condition pursuant to the
Offer prior to December 31, 1997, PROVIDED, HOWEVER, that the passage of such
period shall be tolled for any part thereof during which any party shall be
subject to a non final order, decree, ruling or action restraining, enjoining or
otherwise prohibiting the purchase of Shares pursuant to the Offer or the
consummation of the Merger; or (b) if any Federal, state or local government or
any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Government Entity"),
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the purchase of
Shares pursuant to the Offer or the Merger and such order, decree or ruling or
other action shall have become final and nonappealable, (3) by either Parent or
the Company if the Merger shall not have been consummated by April 30, 1998 or
such later date mutually agreed to by the parties; PROVIDED, HOWEVER, that the
passage of such period shall be tolled for any part thereof during which any
party shall be subject to a non final order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the purchase of shares of Common
Stock pursuant to the Offer or the consummation of the Merger; PROVIDED,
FURTHER, HOWEVER, that the right to terminate the Merger Agreement pursuant to
such clause shall not be available to any party whose failure to perform any
obligations under the Merger Agreement results in the failure of the Merger to
be consummated by such time; (4) by the Company if (a) the Board of Directors of
the Company approves or recommends a superior proposal under circumstances
described below in the second paragraph under "Takeover Proposals; No
Solicitation" and (b) the Company has paid to the Purchaser an amount in cash
equal to the sum of the Termination Fee (as defined below;), or (5) by the
Purchaser or Parent if the Purchaser terminates the Offer as a result of the
occurrence of any event set forth in paragraph (d), (f) and (g) of "Conditions
to the Offer" below; (6) by the Company if Purchaser terminates the Offer as a
result of the occurrence of any event set forth in paragraph (a), (b), (c), (e),
(f) or (g) of "Conditions to the Offer" below; (7) by the Company in the event
16
<PAGE>
the Company has convened a meeting of the Company's stockholders in accordance
with the Merger Agreement and the Merger and the Merger Agreement have not been
approved by the affirmative vote or consent of the holders of the requisite
number of outstanding shares of Common Stock in accordance with applicable law
and the Company's Restated Certificate of Incorporation; (8) by the Company if
Purchaser (a) shall have failed to commence the Offer within the time required
under the Exchange Act or (b) shall have failed to pay for any Common Stock
accepted for payment pursuant to the Offer and, in the case of Clause (c),
Purchaser shall have failed to make such payment within three business days of
receipt of written notice thereof from the Company; PROVIDED, HOWEVER, that any
such failure is not caused by a material breach by the Company; or (9) by the
Company if Parent or Purchaser fail to perform in any material respect any
provision of the Merger Agreement and Parent or Purchaser have failed to perform
such obligation or cure such breach within 10 business days of its receipt of
written notice from the Company and such failure to perform has not been waived
in accordance with the terms of the Merger Agreement; PROVIDED, HOWEVER, that
such failure to perform is not caused by a material breach by the Company.
TAKEOVER PROPOSALS; NO SOLICITATION. (a) The Company has agreed in the
Merger Agreement that, from and after the date of the Merger Agreement, the
Company will not, and will not permit any officer or director of the Company or
any officer or director of its subsidiaries to, and nor shall it authorize or
permit any officer, director or employee of, or any investment banker, attorney
or other advisor or representative of, the Company or any of its subsidiaries
to, (i) solicit or initiate the submission of, any Takeover Proposal (ii) except
as provided in (b) below, enter into any agreement with respect to any Takeover
Proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to any Takeover
Proposal, or take any other action to solicit or initiate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal; provided, however, that prior to the acceptance for
payment of Shares pursuant to the Offer, the Company may, after taking into
account the advice of outside counsel, in response to an unsolicited written
bona fide Takeover Proposal which contains no financing condition from a person
that the Board of Directors of the Company (the "Company Board") reasonably
believes has the financial ability to make a Superior Proposal, subject to
compliance with the notification requirements described below in (c), furnish
non-public information with respect to the Company to such person pursuant to a
customary confidentiality agreement and participate in discussions or
negotiations with such person. For purpose of the Merger Agreement, "Takeover
Proposal" means any written proposal for a merger or other business combination
involving the Company or any of its subsidiaries or any proposal or offer to
acquire in any manner, directly or indirectly, more than 20% of the equity
securities of the Company or more than 20% of the Company's consolidated total
assets, other than the transactions contemplated by the Merger Agreement.
(b) Neither the Company Board nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Company Board or any such
committee of the Offer, the Merger Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, the Company Board may approve or recommend (and,
in connection therewith withdraw or modify its approval or recommendation of the
Offer, the Merger Agreement or the Merger) a Superior Proposal. For purposes of
the Merger Agreement, "Superior Proposal" means a bona fide Takeover Proposal
which contains no financing condition made by a third party on terms which the
Company Board determines in its good faith judgment, after taking into account
the written advice of the Company's investment banker, to be more favorable to
the Company's stockholders than the Offer and the Merger.
(c) The Company has agreed to promptly advise Parent orally and in writing
of any Takeover Proposal or any inquiry with respect to or which it believes
would be reasonably likely to lead to any Takeover Proposal unless the Company
Board is advised by outside legal counsel that the furnishing of such advice
17
<PAGE>
would be inconsistent with the legal obligations of the Company Board. The
Company has agreed to keep Parent informed of the status of any such Takeover
Proposal or inquiry.
(d) The Merger Agreement provides that nothing in the provisions thereof
described above shall prevent the Company and the Company Board from complying
with Rule 14e-2 under the Exchange Act, or issuing a communication meeting the
requirements of Rule 14d-9(e) under the Exchange Act, with respect to any tender
offer or otherwise prohibit the Company from making any public disclosures
required by law or the requirements of the New York Stock Exchange; provided,
however, that the Company may not, except as permitted by (b) above, withdraw or
modify its position with respect to the Offer or the Merger or approve or
recommend, or propose to approve or recommend, a Takeover Proposal.
FEES AND EXPENSES. The Merger Agreement provides that the Company shall pay
to Parent upon demand a fee of $20 million (the "Termination Fee") if (i) the
Purchaser or the Company terminates the Merger Agreement under the circumstances
described in clause 2(a) under "Termination of the Merger Agreement" as a result
of the failure of any condition set forth in paragraph (d) under "Conditions to
the Offer" below, (ii) (a) after the date of the Merger Agreement, any person or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall have
publicly made a Takeover Proposal, (b) the Offer shall have remained open until
at least the scheduled expiration date immediately following the date such
Takeover Proposal is made (and in any event for at least ten business days
following the date such takeover proposal is made), (c) the Minimum Condition
shall not have been satisfied at the expiration of the Offer, (d) the Merger
Agreement shall thereafter be terminated by either the Purchaser or the Company
under the circumstances described in clause 2(a) under "Termination of the
Merger Agreement," and (e) the Board of Directors of the Company, within 10
business days after the public announcement of such Takeover Proposal, either
fails to recommend against acceptance of such Takeover Proposal by the Company's
stockholders or announces that it takes no position with respect to the
acceptance of such Takeover Proposal by the Company's stockholders or (iii) the
Merger Agreement is terminated under the circumstances described in clause (4)
or (5) under "Termination of the Merger Agreement." In the event the Merger
Agreement is terminated pursuant to clause 5 under "Termination of Merger
Agreement" as a result of any condition set forth in paragraph (f) of
"Conditions to the Offer", and provided that no Termination Fee is or would
become payable thereunder, the Company shall pay to Parent all of Parent's
expenses up to and including $1,000,000. In the event the Merger Agreement is
terminated, the Offer is terminated or the Merger does not occur, solely due to
a breach by Parent or the Purchaser of any of its covenants, agreements or
obligations under the Merger Agreement, without limitation of any other rights
or remedies available to the Company at law or in equity, Parent and the
Purchaser shall pay to the Company, upon demand, all expenses of the Company up
to and including $4,000,000.
CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides that
during the period from the date of the Merger Agreement to the earlier of the
Effective Time and the appointment or election of the Purchaser's designees to
the Board of Directors of the Company pursuant to the terms of the Merger
Agreement (such earlier time, the "Control Time"), the Company shall, and shall
cause its subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as conducted prior
to the date of the Merger Agreement and, to the extent consistent therewith, use
all reasonable efforts to preserve intact their current business organizations,
keep available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Effective Time. The
Merger Agreement further provides that, except as contemplated by the Merger
Agreement or otherwise approved in writing by Parent, during the period from the
date of the Merger Agreement to the Effective Time, the Company shall not, and
shall not permit any of its subsidiaries to, (1) (a) declare, set aside or pay
any dividends on (except for the regular quarterly dividends of $.06 per share),
or make any other distributions in respect of, any of its capital stock, other
than dividends and distributions by any direct or indirect wholly owned
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subsidiary of the Company to its parent, (b) 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 (c)
purchase, redeem or otherwise acquire any shares of capital stock of the Company
or any of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities; (2) issue,
deliver, sell, pledge or otherwise encumber any shares of its capital stock, any
other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities other than the issuance of Shares upon the exercise of
Stock Options outstanding on the date of the Merger Agreement in accordance with
their present terms; (3) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents; (4) acquire or agree to
acquire (a) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof or (b) any assets that are material,
individually or in the aggregate, to the Company and its subsidiaries taken as a
whole, except purchases of inventory in the ordinary course of business
consistent with past practice; (5) sell, lease, license, mortgage or otherwise
encumber or subject to any lien (other than liens required by law) or otherwise
dispose of any of its properties or assets, except sales of inventory in the
ordinary course of business consistent with past practice; (6) (a) incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or warrants or other rights to acquire
any debt securities of the Company or any of its subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other agreement
to maintain any financial statement condition of another person or enter into
any arrangement having the economic effect of any of the foregoing, except for
short term borrowings incurred in the ordinary course of business consistent
with past practice and pursuant to existing agreements, or (b) make any loans,
advances or capital contributions to, or investments in, any other person, other
than to the Company or any direct or indirect wholly owned subsidiary of the
Company; (7) make or agree to make any new capital expenditure or expenditures
not contemplated by the Company's current budget; (8) (a) grant to any officer
of the Company or any of its subsidiaries any increase in compensation, except
as was required under employment agreements in effect as of January 26, 1997,
(b) grant to any officer of the Company or any of its subsidiaries any increase
in severance or termination pay, except as was required under employment,
severance or termination agreements in effect as of January 26, 1997, (c) enter
into any employment, severance or termination agreement with any officer of the
Company or any of its subsidiaries or (d) amend any benefit plan in any respect;
(9) make any change in accounting methods, principles or practices materially
affecting the Company's assets, liabilities or business, except insofar as may
have been required by a change in generally accepted accounting principles; (10)
pay, discharge, settle or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms; (11) except in the ordinary course of business, modify, amend
or terminate any material note, bond, mortgage, indenture, lease, 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 waive or release or assign any material
rights or claims; (12) make any material tax election or settle or compromise
any material income tax liability; or (13) authorize any of, or commit or agree
to take any of, the foregoing actions.
Pursuant to the Merger Agreement, the Company shall not, and shall not
permit any of its subsidiaries to, take any action that would or that could
reasonably be expected to result in (1) any of its representations and
warranties set forth in the Merger Agreement that are qualified as to
materiality becoming untrue, (2) any of such representations and warranties that
are not so qualified becoming untrue in any material respect or (3) except as
otherwise permitted by the provisions of the Merger Agreement described above
under "Takeover Proposals; No Solicitation", any of the conditions to the Offer
or to the Merger not being satisfied.
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In addition, the Merger Agreement provides that the Company shall promptly
advise the Parent orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, would have, a material adverse effect on
the Company and its subsidiaries taken as a whole.
BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment by Purchaser for, any Shares pursuant to
the Offer, the Purchaser shall be entitled to designate such number of directors
on the Board of Directors of the Company as shall give the Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors of the Company equal to at least that number of directors, rounded
up to the next whole number, which is the product of (a) the total number of
directors on the Board of Directors of the Company (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of Shares so accepted for payment and paid for by the
Purchaser plus the number of Shares otherwise owned by the Purchaser or any
other subsidiary of the Parent bears to (ii) the number of such Shares
outstanding, and the Company shall, at such time, cause the Purchaser's
designees to be so elected. Subject to applicable law, the Company has agreed to
take all action requested by the Parent necessary to effect any such election,
including mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company shall make such mailing with the mailing
of the Schedule 14D-9 (provided that the Purchaser shall have provided to the
Company on a timely basis all information required to be included in the
Information Statement with respect to the Purchaser's designees). In connection
with the foregoing, the Company shall promptly, at the option of the Purchaser,
either increase the size of the Board of Directors of the Company or obtain the
resignation of such number of its current directors as is necessary to enable
the Purchaser's designees to be elected or appointed to the Board of Directors
of the Company as provided above. The Merger Agreement also provides that the
provisions of this paragraph are in addition to and shall not limit any rights
which the Purchaser or any of its affiliates may have as a holder or beneficial
owner of Shares as a matter of law with respect to the election of directors or
otherwise.
STOCK OPTIONS. The Merger Agreement provides that as soon as practicable
following the consummation of the Offer, the Board of Directors of the Company
(or, if appropriate, any committee administering the Stock Plans) shall adopt
such resolutions or take such other actions as are required to adjust the terms
of all outstanding Stock Options to provide that, at the Effective Time, each
Stock Option outstanding immediately prior to the acceptance for payment of
Shares pursuant to the Offer shall be canceled in exchange for a cash payment by
the Company of, or can only be exercised for net cash equal to, an amount equal
to (i) the excess, if any, of (a) the price per Share to be paid pursuant to the
Offer over (b) the exercise price per Share subject to such Stock Option,
multiplied by (ii) the number of Shares for which such Stock Option shall not
theretofore have been exercised.
The Merger Agreement provides further that all Stock Plans shall terminate
as of the Effective Time and the provisions in any other benefit plan of the
Company providing for the issuance, transfer or grant of any capital stock of
the Company or any interest in respect of any capital stock of the Company shall
be terminated as of the Effective Time, and the Company shall ensure that
following the Effective Time no holder of a Stock Option or any participant in
any Stock Plan or any other benefit plan of the Company shall have any right
thereunder to acquire any capital stock of the Company or the Surviving
Corporation.
INDEMNIFICATION. From and after the Effective Time, Parent and the
Surviving Corporation have agreed to indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date of the Merger
Agreement or who becomes prior to the Effective Time, an officer, director or
employee of the Company or any of its subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs, expenses (including attorney's
fees and expenses), liabilities or judgments or amounts that are paid in
settlement (which settlement shall require the prior written consent of Parent,
which consent shall not be unreasonably withheld or delayed) of or in connection
with any claim, action, suit, proceeding or investigation (a "Claim") in which
an Indemnified Party is, or is threatened to be made,
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a party or a witness based in whole or in part on or arising in whole or in part
out of the fact that such person is or was an officer, director or employee of
the Company or any of its subsidiaries, whether such Claim pertains to any
matter or fact arising, existing or occurring at or prior to the Effective Time,
regardless of whether such Claim is asserted or claimed prior to, at or after
the Effective Time (the "Indemnified Liabilities"), and (ii) all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to the Merger Agreement, the Merger, the Offer, the Operative
Agreements (as defined in the Merger Agreement) or the other transactions
contemplated by the Merger Agreement or by the Operative Agreements, in the case
of either clause (i) or (ii) to the full extent the Company would have been
permitted under Maryland law and its Restated Certificate of Incorporation and
Bylaws to indemnify such person (and Parent shall pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the full extent permitted by law and under such Restated Certificate of
Incorporation or Bylaws, upon receipt of any undertaking required by such
Restated Certificate of Incorporation, Bylaws or applicable law). The
obligations of Parent described above shall continue in full force and effect,
without any amendment thereto, for a period of not less than six years from the
Effective Time.
Parent and the Surviving Corporation have agreed to cause to be maintained
in effect for not less than six years from the Effective Time the current
policies of directors' and officers' liability insurance maintained by the
Company and its subsidiaries (provided that Parent and the Surviving Corporation
may substitute therefor policies of at least the same coverage containing terms
and conditions which are no less advantageous to the Indemnified Parties in all
material respects so long as no lapse in coverage occurs as a result of such
substitution) with respect to all matters, including the transactions
contemplated hereby, occurring prior to, and including, the Effective Time,
provided that, in the event that any Claim is asserted or made within such
six-year period, such insurance shall be continued in respect of any such Claim
until final disposition of any and all such Claims, provided, further, that
Parent shall not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 150% of the premiums paid as of the date
hereof by Parent for such insurance.
The obligations of Parent and the Surviving Corporation described above are
intended to benefit, and be enforceable against Parent and the Surviving
Corporation directly by, the Indemnified Parties, and shall be binding on all
respective successors of Parent and the Surviving Corporation.
REASONABLE NOTIFICATION. The Merger Agreement provides that, on the terms
and subject to the conditions of the Merger Agreement, each of the parties shall
use its reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer and the Merger
and the other transactions contemplated by the Merger Agreement.
PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. The Merger
Agreement provides that in the event the Purchaser's designees are appointed or
elected to the Board of Directors of the Company as described above under "Board
of Directors," after the acceptance for payment of Shares pursuant to the Offer
and prior to the Effective Time, the affirmative vote of a majority of the
Directors (other than Purchaser's designees or appointees) shall be required for
the Company to amend or terminate the Merger Agreement, exercise or waive any of
its rights or remedies under the Merger Agreement or extend the time for
performance of the Purchaser's and Parent's respective obligations under the
Merger Agreement.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, capitalization, financial
statements, public filings, conduct of business, employee benefit plans, labor
relations and employment matters, compliance with laws, subsidiaries, tax
matters, litigation, vote required to approve the Merger Agreement, undisclosed
liabilities, information supplied, the absence of any material adverse changes
in the Company since January 26, 1997, absence of excess parachute
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payments, inapplicability of state takeover statutes, the opinion of the
Company's financial advisor, brokers, fees and expenses, intellectual property,
environmental protection, and contracts.
THE SHAREHOLDERS AGREEMENT. As an inducement and a condition to entering
into the Merger Agreement, Parent required that the Selling Stockholders agree,
and the Selling Stockholders agreed, to enter into the Shareholders Agreement.
The following is a summary of the material terms of the Shareholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the SEC as an exhibit to the Schedule 14D-1. The Shareholders
Agreement may be examined, and copies thereof may be obtained, as set forth in
Section 8 above.
TENDER OF SHARES. Upon the terms and subject to the conditions of the
Shareholders Agreement, each Selling Stockholder has agreed to validly tender
(and not to withdraw) pursuant to and in accordance with the terms of the Offer,
not later than the fifth business day after commencement of the Offer, the
number of Shares set forth opposite such stockholder's name on Schedule I to the
Shareholders Agreement and beneficially owned by him, her or it. Each Selling
Stockholder has acknowledged and agreed that Purchaser's obligation to accept
for payment and pay for Shares in the Offer is subject to the terms and
conditions of the Offer.
VOTING. Each Selling Stockholder has agreed that during the period
commencing on the date of the Shareholders Agreement and continuing until the
first to occur of the purchase of Shares by Purchaser pursuant to the Offer the
Effective Time or termination of the Merger Agreement in accordance with its
terms, at any meeting of the Company's stockholders, however called, or in
connection with any written consent of the Company's stockholders, such Selling
Stockholder will vote (or cause to be voted) the Shares held of record or
beneficially owned by such Selling Stockholder, whether issued, heretofore owned
or hereafter acquired, (i) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and the
Shareholders Agreement and any actions required in furtherance thereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or the Shareholders Agreement (after
giving effect to any materiality or similar qualifications contained therein);
and (iii) except as otherwise agreed to in writing in advance by Parent, against
the following actions (other than the Merger and the transactions contemplated
by the Merger Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Board of Directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Restated Certificate of Incorporation or By-Laws; (3)
any other material change in the Company's corporate structure or business; or
(4) any other action involving the Company or its subsidiaries which is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by the Shareholders Agreement and the Merger Agreement. Each
Selling Stockholder further agreed not to enter into any agreement or
understanding with any person or entity, the effect of which would be
inconsistent or violative of the provisions and agreements described above.
REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER AGREEMENTS. Each Selling
Stockholder has made certain customary representations, warranties and
covenants, including with respect to (i) ownership of the Shares to be tendered
by it or him, (ii) the authority to enter into and perform its or his
obligations under the Shareholders Agreement, (iii) the absence of required
consents or contractual conflicts relating to the Shareholders Agreement, (iv)
the absence of liens and encumbrances on and in respect of its or his Shares
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to be tendered by it or him, (v) no finder's fees, (vi) the solicitation of
Acquisition Proposals, (vii) transfers of Shares, (viii) waiver of appraisal
rights and (ix) further assurances.
TERMINATION. Other than as provided therein, the covenants and agreements
contained in the Shareholders Agreement will terminate upon the earlier of (x)
the Effective Time, (y) if the Effective Time does not occur, the termination of
the Merger Agreement or the withdrawal or modification by the Board of Directors
of the Company of its recommendation of the Offer or the Merger as permitted by
the Merger Agreement and (z) the first anniversary of the date of the
Shareholders Agreement.
THE OPTION AGREEMENT. Simultaneously with the execution of the Merger
Agreement, Parent and the Company entered into the Option Agreement as a
condition to Parent's willingness to proceed with the Offer. The Option
Agreement provides for the grant by the Company to Parent of an irrevocable
option to purchase up to 5,434,367 Option Shares at a price of $24 per Option
Share. The Option Agreement provides that the Option may be exercised by Parent,
in whole or in part, at any time or from time to time, commencing upon the
Option Exercise Date (as defined below) and prior to the Option Expiration Date
(as defined below). "Option Exercise Date" is defined in the Option Agreement as
the first to occur of any of the following dates: (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 or any of its subsidiaries (collectively, "Persons") shall have
become the beneficial owner of more than 20% of the outstanding Shares and the
Merger Agreement is terminated pursuant to its terms; (ii) (x) any Person has
commenced, publicly proposed or communicated to the Company a proposal which
constitutes, or may reasonably be expected to lead to, any acquisition or
purchase of a substantial amount of assets of, or any equity interest in, the
Company or any of its subsidiaries or any tender offer (including a self tender
offer) or exchange offer, merger, consolidation, business combination, sale of
substantially all assets, sale of securities, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries for consideration having a value greater than the aggregate
consideration to be received by holders of Shares pursuant to the Offer and (y)
the Merger Agreement is terminated pursuant to its terms; "Option Expiration
Date" is defined in the Option Agreement as the first to occur of any of the
following dates: (w) the satisfaction of the Minimum Condition, (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 HSR Act applicable to the exercise of the Option; (y) December
31, 1997; or (z) the date on which written notice of termination of the Merger
Agreement is made by Parent to the Company.
The Option Agreement provides that if the Option is exercised and if Parent
has requested in writing on or before December 31, 1997, the Company will use
its reasonable efforts to effect the registration under the Securities Act of
1933, as amended, of such number of Shares owned by Parent and its subsidiaries
as Parent may request and to keep such registration statement effective for a
period of not less than one year, unless, in the written opinion of counsel to
the Company, such registration is not required in order to lawfully sell and
distribute such Shares in the manner contemplated by Parent. The Company has no
obligation thereunder after two registrations pursuant to the Option Agreement
have been effected.
Parent may exercise the Option and purchase Option Shares pursuant to the
Option Agreement only if (i) such purchase would not otherwise violate, or cause
the violation of, any applicable law or regulation (including, without
limitation, the HSR Act or the rules of the NYSE), and (ii) no United States or
U.K. statute, rule, regulation, decree, order or injunction has been
promulgated, enacted, entered into or enforced by any United States or U.K.
government, governmental agency or authority or court which prohibits delivery
of the Option Shares, whether temporary, preliminary or permanent (PROVIDED,
HOWEVER, that Parent and the Company have agreed to use their best efforts to
have any such order, decree or injunction vacated or reversed).
The Option Agreement contains customary representations and warranties by
the Company and Parent.
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CONFIDENTIALITY AGREEMENTS
COMPANY CONFIDENTIALITY AGREEMENT. Pursuant to a Confidentiality Agreement
entered into as of January 6, 1997 by Parent and the Company (the "Company
Confidentiality Agreement"), the parties agreed to provide, among other things,
for the confidential treatment of their discussions regarding the Offer and the
Merger and the exchange of certain confidential information concerning the
Company. Parent also agreed, for a two year period commencing on the date of the
Confidentiality Agreement, without the prior written approval of the Company,
not to (i) in any manner acquire, agree to acquire or make any proposal to
acquire, directly or indirectly, any securities or direct or indirect rights to
acquire any securities of the Company or any of its subsidiaries, (ii) propose
to enter into, directly or indirectly, any merger or business combination
involving the Company or any of its subsidiaries or to purchase, directly or
indirectly, a material portion of the assets of the Company or any of its
subsidiaries, (iii) make, or in any way participate, directly or indirectly, in
any "solicitations" of "proxies" (as such terms are used in the proxy rules of
the SEC) to vote, or seek to advise or influence any person with respect to the
voting of, any securities of the Company or any of its subsidiaries, (iv) form,
join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any securities of the Company or
any of its subsidiaries, (v) otherwise act, alone or in concert with others, to
seek to control or influence the management, Board of Directors or policies of
the Company, (vi) disclose any intention, plan or arrangement inconsistent with
the foregoing, or (vii) advise, assist or encourage any other persons in
connection with any of the foregoing. The Company Confidentiality Agreement may
be examined and copies may be obtained at the places and in the manner set forth
under the heading "Available Information" in Section 8 of this Offer to
Purchase.
PARENT CONFIDENTIALITY AGREEMENT. Pursuant to a Confidentiality Agreement
entered into as of January 6, 1997 by Parent and the Company (the "Parent
Confidentiality Agreement") , the Company agreed, among other things, to treat
as confidential certain information and documents concerning Parent to be
provided to the Company in connection with the transactions contemplated by the
Merger Agreement. The Company also agreed that until the expiration of two years
from the date of the Parent Confidentiality Agreement it would not, and would
ensure that its associates (as defined in Section 435 of the English Insolvency
Act of 1986), advisors and certain other related persons would not, without the
prior written approval of the Parent (i) in any manner acquire, agree to acquire
or make any proposal to acquire, directly or indirectly, any securities or
direct or indirect rights to acquire any securities of Parent or any of its
subsidiaries, (ii) propose to enter into, directly or indirectly, any merger or
business combination involving the Parent or any of its subsidiaries or to
purchase, directly or indirectly, a material portion of the assets of the Parent
or any of its subsidiaries, (iii) otherwise act, alone or in concert with
others, to seek to control or influence the management, Board of Directors or
policies of the Company, (iv) disclose any intention, plan or arrangement
inconsistent with the foregoing, or (v) advise, assist or encourage any other
persons in connection with any of the foregoing. The Parent Confidentiality
Agreement may be examined and copies may be obtained at the places and in the
manner set forth under the heading "Available Information" in Section 8 of this
Offer to Purchase.
OTHER MATTERS. Under the Company's Restated Certificate of Incorporation,
the affirmative vote of holders of a majority of the outstanding Shares entitled
to vote, including any Shares owned by the Purchaser, would be required to adopt
the Merger. If the Purchaser acquires, through the Offer or otherwise, voting
power with respect to at least a majority of the outstanding Shares, which would
be the case if the Minimum Condition were satisfied, it would have sufficient
voting power to effect the Merger without the vote of any other stockholder of
the Company. The MGCL provides that if a parent company owns at least 90% of
each class of stock of a subsidiary, the parent company can effect a merger with
the subsidiary without the authorization of the other stockholders of the
subsidiary. Accordingly, if, as a result of the Offer, the Shareholders
Agreement or otherwise, the Purchaser acquires at least 90% of the outstanding
Shares, the Purchaser could, effect the Merger without approval of any other
stockholder of the Company.
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No appraisal rights are available in connection with the Offer. Appraisal
rights with respect to the Shares will not be available in connection with the
Merger if, among other things, the Shares are listed on a national securities
exchange or are designated as national market system securities on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. on the record date for determining stockholders entitled to vote on the
Merger. See "Section 7--Certain Effects of the Transaction." If such appraisal
rights become available, a holder of Shares will have such rights with respect
to the Merger if such holder properly exercises his appraisal rights under the
MGCL and the Merger is consummated (the "Merger Dissenter"). If the right to
receive fair value is applicable and the statutory procedures for exercising or
perfecting dissenters' appraisal rights are complied with in accordance with the
MGCL, then generally a judicial determination will be made of the fair value
required to be paid in cash to the Merger Dissenters for their Shares. Any such
judicial determination of the fair value of Shares may not include any
appreciation or depreciation which directly or indirectly results from the
Merger and could be based upon considerations other than or in addition to the
price paid pursuant to the Offer or the market value of the Shares. Fair value
may be more or less than the price paid pursuant to the Offer.
An objecting stockholder shall cease to have any rights as a stockholder
with respect to the Shares except the right to receive payment of the fair value
thereof. The stockholder's rights may be restored only upon the withdrawal, with
the consent of the Company, of the demand for payment, no filing of a petition
for appraisal within the time required, a determination of the court that the
stockholder is not entitled to an appraisal, or the abandonment or rescission of
the transaction to which the stockholder objected.
The foregoing summary of the rights of objecting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise their dissenter appraisal rights. The
preservation and exercise of dissenters' rights are conditioned on strict
adherence to the applicable provisions of the MGCL.
The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable to
certain "going private" transactions and which may under certain circumstances
be applicable to the Merger or another business combination following the
purchase of Shares pursuant to the Offer in which the Purchaser seeks to acquire
the remaining Shares not held by it. The Purchaser believes, however, that Rule
13e-3 will not be applicable to the Merger because it is anticipated that the
Merger will be effected within one year following consummation of the Offer.
Rule 13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the SEC and disclosed to stockholders prior to
consummation of the transaction.
The Purchaser or an affiliate of the Purchaser may, following the
consummation or termination of the Offer, seek to acquire additional Shares
through open market purchases, privately negotiated transactions, a tender offer
or exchange offer or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less than the price to be paid pursuant to the
Offer. The Purchaser and its affiliates also reserve the right to dispose of any
or all Shares acquired by them.
Upon the completion of the Offer, Parent intends to conduct a detailed
review of the Company and its assets, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel and
consider what, if any, changes would be desirable in light of the circumstances
which then exist. Such changes could include changes in the Company's business,
corporate structure, charter, by-laws, capitalization, Board of Directors,
management or dividend policy, although Parent has no current plans with respect
to any of such matters, except as described in this Offer to Purchase.
Except as noted in this Offer to Purchase, neither Parent nor the Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation, relocation
of operations, or sale or transfer of assets, involving the Company or any of
its subsidiaries, or any material changes in the Company's corporate structure,
business or composition of its management or personnel.
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13. DIVIDENDS AND DISTRIBUTIONS
As described above, the Merger Agreement provides that, prior to the
Effective Time, the Company will not, except as explicitly permitted by the
Merger Agreement, (i) declare, set aside or pay any dividend (except for the
regular quarterly dividends of $.06 per share) or make any other distributions
in respect of, any of its capital stock, other than dividends and distributions
by any direct or indirect wholly owned subsidiary of the Company to its parent,
(ii) 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 (iii) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities.
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14. CONDITIONS TO THE OFFER
Notwithstanding any other terms of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay for
any Shares tendered pursuant to the Offer, unless (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of Shares which would represent at least a majority of the Shares
outstanding on a fully diluted basis and (ii) any waiting period under the HSR
Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated. Furthermore, notwithstanding any other term of the
Offer or the Merger Agreement, the Purchaser shall not be required to accept for
payment or, subject as aforesaid, to pay for any Shares not theretofore accepted
for payment or paid for, and may terminate the Offer if, at any time on or after
the date of the Merger Agreement and before the acceptance of such shares for
payment or the payment therefor, any of the following conditions exists:
(a) there shall be threatened or pending any suit, action or proceeding
by any Governmental Entity (including, without limitation, the Department of
the Treasury, the U.S. Customs Service and the Bureau of Alcohol, Tobacco
and Firearms) or any other person (in the case of any suit, action or
proceeding by a person other than a Governmental Entity, such suit, action
or proceeding having a reasonable likelihood of success) (i) challenging the
acquisition by Parent or the Purchaser of any Shares, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Merger
Agreement, or seeking to obtain from the Company, Parent or the Purchaser
any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries, or to compel the
Company, Parent or any of their respective subsidiaries to dispose of or
hold separate any material portion of the business or assets of the Company,
Parent or any of their respective subsidiaries, as a result of the Offer or
any of the other transactions contemplated by the Merger Agreement, (iii)
seeking to impose limitations on the ability of Parent or the Purchaser to
acquire or hold or exercise full rights of ownership of, any Shares,
including the right to vote the Shares purchased by it on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in
any material respect the business or operations of the Company or its
subsidiaries, or (v) which otherwise is reasonably likely to prevent
consummation of the transactions contemplated by the Merger Agreement;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued (each of the
foregoing, a "Legal Event") with respect to, or deemed applicable to, or any
consent or approval withheld with respect to, (i) Parent, the Company or any
of their respective subsidiaries or (ii) the Offer, the Merger or any of the
other transactions contemplated by the Merger Agreement by any Governmental
Entity or before any court or governmental authority, agency or tribunal,
domestic or foreign, that has a substantial likelihood of resulting,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) since the date of the Merger Agreement there shall have occurred any
material adverse change or any development that, insofar as reasonably can
be foreseen, is reasonably likely to result in a material adverse change in
the business, properties, assets, condition (financial or otherwise),
results of operations or prospects of the Company and its subsidiaries taken
as a whole other than changes resulting from currency exchange rate
fluctations, customs, tax and duty law changes and changes relating to the
economy in general and to the Company's industry in general and not
specifically relating to the Company or any of its subsidiaries;
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(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any takeover proposal or (ii)
the Board of Directors of the Company or any committee thereof shall have
resolved to do any of the foregoing;
(e) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange or on
the London Stock Exchange, for a period in excess of 24 hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States (whether or not mandatory), (iii) a
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States or involving the
United Kingdom and, in the case of armed hostilities involving the United
Kingdom, having, or which could reasonably be expected to have, a
substantial continuing general effect on business and financial conditions
in the United Kingdom, (iv) any limitation (whether or not mandatory) by any
United States or the United Kingdom governmental authority on the extension
of credit generally by banks or other financial institutions, or (v) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof;
(f) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time and
the failure to be so true and correct in any material respect is a Company
Material Adverse Effect (as defined in the Merger Agreement), and except
with respect to representations and warranties made as of an earlier time;
(g) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement and such failure would result in a Company Material Adverse
Effect (as defined in the Merger Agreement); or
(h) the Merger Agreement shall have been terminated in accordance with
its terms,
Subject to the provisions of the Merger Agreement set forth under "The
Offer" above, the foregoing conditions (i) may be asserted by Parent and the
Purchaser regardless of the circumstances giving rise to such condition and (ii)
are for the sole benefit of Parent and the Purchaser and may be waived by Parent
or the Purchaser, in whole or in part at any time and from time to time in the
sole discretion of Parent or the Purchaser. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings by the Company with the SEC and other publicly available
information concerning the Company, the Purchaser is not aware of any regulatory
license or permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares by the Purchaser pursuant to the Offer or, except as set
forth below, of any approval or other action by any governmental, administrative
or regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by the Purchaser pursuant to the Offer.
Should any such approval or other action be required, the Purchaser currently
contemplates that it will be sought. While the Purchaser does not currently
intend to delay the acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that any
such approval or
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other action, if needed, would be obtained or would be obtained without
substantial conditions or that adverse consequences might not result to the
Company's business or that certain parts of the Company's business might not
have to be disposed of in the event that such approvals were not obtained or any
other actions were not taken. The Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 15.
See Section 14.
MARYLAND STATE TAKEOVER LAWS. Subtitle 6 of Title 3 of the MGCL (the
"Maryland Business Combination Law") prohibits certain "business combinations"
(including certain mergers, consolidations, share exchanges, sales or
disposition of assets, issuances of stock, liquidations, reclassifications and
benefits from the corporation, including loans or guarantees) between a Maryland
corporation and any interested shareholder (defined generally as any person who,
directly or indirectly, beneficially owns 10 percent or more of the outstanding
voting power of the stock of the corporation or an affiliate of the corporation
that, at any time within the two-year period prior to the date in question, was
the beneficial owner of ten percent or more of the voting power of the
corporation's outstanding voting stock) for five years after the most recent
date on which the interested shareholder became an interested shareholder. After
such five-year period, any such business combination must be approved by a super
majority shareholder vote, unless, among other conditions, the corporation's
common stockholders receive a minimum price (as calculated in the MGCL) for
their shares in cash or in the same form as previously paid by the interested
shareholder for its shares. These provisions of the MGCL do not apply to a
business combination with an interested shareholder that is approved or exempted
therefrom by the board of directors of the corporation prior to the date on
which the interested shareholder became such. The Company's Board of Directors
has approved the Offer, the Merger, the Merger Agreement, the Option Agreement
and the Shareholders Agreement. Accordingly, the Maryland Business Combination
Law is inapplicable to the transactions contemplated thereby.
Subtitle 7 of Title 3 of the MGCL (the "Maryland Control Share Act")
generally prohibits an acquiring person from voting control shares (as described
below) of a Maryland corporation acquired pursuant to a control share
acquisition (as described below), unless voting rights for such shares shall
have been approved by the shareholders of the corporation by the affirmative
vote of two-thirds of all votes entitled to be cast (other than interested
shares, as described below) or unless the corporation's charter or by-laws
contain a provision, adopted prior to the acquisition, permitting the
acquisition of such shares. "Control shares" generally means shares of a
corporation acquired by a person within any of the following ranges of voting
power: (i) one-fifth or more, but less than one-third of all voting power; (ii)
one-third or more, but less than a majority of all voting power; or (iii) a
majority or more of all voting power. "Control share acquisition" generally
means the acquisition of, ownership of, or the power to direct the exercise of
voting power with respect to, control shares, but does not include the
acquisition of shares in a merger, consolidation or share exchange to which the
corporation is a party. "Interested shares" generally means shares of a
corporation in respect of which an acquiring person, an officer of the
corporation or an employee of the corporation who is also a director of the
corporation is entitled to exercise voting power in the election of directors.
The Company's By-laws exempt any acquisition of shares of stock of the Company
from the Maryland Control Share Act.
STATE TAKEOVER STATUTES. A number of states have adopted "takeover"
statutes that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of business
in such states.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted "takeover"
statutes. The Purchaser does not know whether any of these statutes will, by
their terms, apply to the Offer, and has not complied with any such statutes. To
the extent that certain provisions of these statutes purport to apply to the
Offer, the Purchaser believes that there are reasonable bases for contesting
such statutes. If any person should seek to apply any state
29
<PAGE>
takeover statute, the Purchaser would take such action as then appears
desirable, which action may include challenging the validity or applicability of
any such statute in appropriate court proceedings. If it is asserted that one or
more takeover statutes apply to the Offer, and it is not determined by an
appropriate court that such statute or statutes do not apply or are invalid as
applied to the Offer, the Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities, and
the Purchaser might be unable to purchase or pay for Shares tendered pursuant to
the Offer, or be delayed in continuing or consummating the Offer. In such case,
the Purchaser may not be obligated to accept for payment or pay for Shares
tendered.
UNITED STATES ANTITRUST. The Offer, the Merger and the acquisition of
Shares pursuant to the Shareholder Agreements are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission ("FTC") and certain waiting period requirements have been satisfied.
Parent intends to promptly file a Notification and Report Form with respect to
the Offer, the Merger and the purchase of Shares pursuant to the Stockholder
Agreement.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent, unless Parent
receives a request for additional information or documentary material, or the
Antitrust Division and the FTC terminate the waiting period prior thereto. If,
within such 15-day period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by Parent with
such request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. The
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the HSR Act with
respect to the Offer have been satisfied. See Section 14.
The provisions of the HSR Act would similarly apply to any purchase of the
Shares subject to the Shareholders Agreement pursuant to the Shareholder
Agreement (other than purchases effected through a tender pursuant to the Offer
or purchases pursuant to the Shareholders Agreement occurring after the
expiration of the 15-day waiting period connected to the Offer). If, as is
expected, the purchase of Shares permitted by the Shareholders Agreement is
effected through a tender of such Shares pursuant to the Offer or pursuant to
the Shareholders Agreement after the expiration of the 15-day waiting period
connected to the Offer, the HSR requirements applicable to the Offer described
in the prior paragraph would apply.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer, the Merger and the Shareholders Agreement. At any time
before or after the Purchaser's acquisition of Shares, the Antitrust Division or
the FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or otherwise or seeking divestiture of Shares
acquired by the Purchaser or divestiture of substantial assets of Parent or its
subsidiaries. Private parties and state attorneys general may also bring legal
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which Parent and the Company are engaged, Parent and the Purchaser believe that
the acquisition of Shares by the Purchaser will not violate the antitrust laws.
Nevertheless, there can be no
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<PAGE>
assurance that a challenge to the Offer or other acquisition of Shares by the
Purchaser on antitrust grounds will not be made or, if such a challenge is made,
of the result. See Section 14 for certain conditions to the Offer, including
conditions with respect to litigation and certain governmental actions.
U.S. CUSTOMS SERVICE; BUREAU OF ALCOHOL, TOBACCO AND FIREARMS. The Company
holds certain bonds and permits necessary for the operation of its business from
the U.S. Customs Service and the Bureau of Alcohol, Tobacco and Firearms (the
"Bureau"). The U.S. Customs Service or the Bureau may seek to revoke or refuse
to grant or renew a permit or bond if either governmental authority does not
approve a person who acquires ten percent or more of the outstanding shares of
the Company's Common Stock. The Company's Restated Certificate of Incorporation
provides that in the event a stockholder owning shares representing more than
nine percent of the outstanding Shares fails to cooperate fully with the Company
in complying with reporting requirements imposed by the U.S. Customs Service or
Bureau or when such stockholder's ownership causes these governmental
authorities to revoke or refuse to grant or renew without material change bonds
or permits necessary with the Company in complying with reporting requirements
imposed by the U.S. Customs Service or Bureau or when such stockholder's
ownership causes these governmental authorities to revoke or refuse to grant or
renew without material change bonds or permits necessary for the operation of
the Company' s business, the Company may redeem, at fair market value or require
prompt disposal of all or any portion of, the shares of the Company's Common
Stock owned by such stockholder. The Purchaser will not accept for payment
Shares tendered pursuant to the Offer if the U.S. Customs Service and/or the
Bureau have objected to the Offer and Merger.
16. FEES AND EXPENSES
The Purchaser has retained Gleacher NatWest Inc. to act as the Dealer
Manager, MacKenzie Partners, Inc. to act as the Information Agent and IBJ
Schroder Bank & Trust Company to act as the Depositary in connection with the
Offer. The Dealer Manager and the Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers, commercial banks, trust companies and other nominees
to forward the Offer material to beneficial owners. The Information Agent and
the Depositary each will receive reasonable and customary compensation for their
services and will be indemnified against certain liabilities and expenses in
connection therewith, including certain liabilities under the federal securities
laws. The Information Agent and the Depositary will be reimbursed for certain
reasonable out-of-pocket expenses. Parent has agreed to pay Gleacher NatWest
Inc. and NatWest Markets Corporate Advisory Limited a retainer fee in an
aggregate amount of L50,000 (approximately $84,500) payable per month in arrears
commencing April, 1997 and a success fee of L2,880,000 (approximately
$4,867,000) which is payable upon the completion of the Offer. Any retainer fees
paid and payable will be credited against the success fee. Gleacher NatWest Inc.
is not entitled to receive any separate fee for its services as Dealer Manager.
Parent has also agreed to reimburse Gleacher NatWest Inc. and NatWest Markets
Corporate Advisory Limited for reasonable out of pocket expenses and to
indemnify them against certain liabilities and expenses, including certain
liabilities under the Federal securities laws. None of the Dealer Manager, the
Information Agent or the Depositary has been retained to make solicitations or
recommendations in connection with the Offer. Neither Parent nor the Purchaser
will pay any fees or commissions to any broker or dealer or other person (other
than the Information Agent) for soliciting tenders of Shares pursuant to the
Offer. Brokers, dealers, commercial banks and trust companies will be reimbursed
by the Purchaser for reasonable expenses incurred by them in forwarding material
to their customers.
17. MISCELLANEOUS
The Purchaser is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser becomes aware
of any jurisdiction in which the making of the Offer would not be in compliance
with applicable law, the Purchaser will make a good faith effort to comply with
any such law. If, after such good faith effort, the Purchaser cannot comply with
any such law, the Offer will
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<PAGE>
not be made to (nor will tenders be accepted from or on behalf of) the holders
of Shares residing in such jurisdiction. In those jurisdictions whose securities
or blue sky laws require the Offer to be made by a licensed broker or dealer,
the Offer is being made on behalf of the Purchaser by the Dealer Manager or by
one or more registered brokers or dealers which are licensed under the laws of
such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the SEC the Schedule 14D-1 pursuant to Rule
14d-3 under the Exchange Act, furnishing certain additional information with
respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and
any amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth under the
heading "Available Information" in Section 8 (except that they will not be
available at the regional offices of the SEC).
W&G ACQUISITION CORPORATION
July 9, 1997
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SCHEDULE I
DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, age and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of Parent. Each such person is a citizen of the
United Kingdom, unless otherwise indicated, and, except as otherwise noted, the
business address of each such person is c/o BAA plc, 130 Witton Road, London
SW1V 1LQ, England. Unless otherwise indicated, each occupation set forth first
under "Present Principal Occupation or Employment" refers to Employment with
Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
Dr. N. Brian Smith CBE (68) Non Executive Chairman since August 1991. Non Executive Chairman of Cable &
Wireless plc, Mercury House, Theobald's Road, London WC1, since November
1995. Non Executive Chairman of Hong Kong Telecommunications Ltd, 42nd
Floor, Telecom Tower, Taikoo Place, 979 Kings Road, Quarry Bay, Hong Kong,
since November 1995. Non Executive Chairman of Hydron Limited, Hawley Lane,
Farnborough, Hampshire GU14 8EQ, since May 1994. Non Executive Chairman of
Heatherwood & Wexham Park Hospitals Trust, Wexham, Slough, SL2 4HL, since
1991. Director of Oxford Diocesan Board of Finance, Diocesan Church House,
North Hinksey, Oxford OX2 0NB, since April 1990. Deputy Chairman 1990/1991
and Chairman 1991/1994 of Lister & Co. plc, Prospect Mills, Longwood,
Huddersfield HD3 4UT; Non Executive Director, Berisford International plc,
1 Baker Street, London W1M 1AA, 1990-1996. None Executive Director, Mercury
Communications Ltd, New Mercury House, 26 Red Lion Square, London WC1R 4HQ,
1990-1993.
Sir John Egan (57) Chief Executive since September 1990. Non Executive Chairman of The London
Tourist Board, 26 Grosvenor Gardens, London SW1W 0DU, since January 1994.
Non Executive Vice Chairman of Legal & General plc, Temple Court, 11 Queen
Victoria Street, London EC4N 4TT, since May 1994. Non Executive Director of
The Foreign & Colonial Investment Trust PLC, Exchange House, Primrose
Street, London EC2 since May 1994. Non Executive Director of World Travel &
Tourism Council, 20 Grosvenor Place, London SW1X 7TT, since March 1994. Non
Executive Director of Marketing Council, Moor Hall, Cookham, Maidenhead,
Berkshire SL6 9QH, since October 1995.
Marcus Agius (50) Non Executive Director since August 1995. Vice Chairman of Lazard Brothers
& Co Limited, 21 Moorfields, London EC2P 2HT, since 1990. Non Executive
Director of Credit Agricole Lazard Financial Products Limited, 135 Fleet
Street, London EC4A 2ED, since March 1995.
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
Dr. Tony C. Burrel CB (64) Non Executive Director since August 1994. Chief Executive of Offshore
Division of Health & Safety Executive, 2 Southwark Bridge, London SE1, from
December 1990 to June 1994.
G. Gordon Edington (51) Group Property Director since 1991 and Chairman of BAA International since
February 1992. Vice President of the British Property Federation since May
1997. Chairman of the Public Art Development Trust, Kirkman House, 12-14
Whitfield Street, London W1P 5RD, since January 1992.
Richard L. Everitt (48) Group Strategy & Compliance Director since 1991. Director of the Airport
Operators Association, 3 Birdcage Walk, London SW1, since March 1994.
Director of Discovery Inns PLC, Discovery House, 502 Worle Parkway, Worle,
Weston-Super-Mare, North Somerset BS22 OWA, October 1996-April 1997.
J.M. Barry Gibson (45) Group Retail Director, since October 1995. Director of Limelight Group plc,
2 Brindley Road, Old Trafford, Manchester MI6 9HQ, since October 1996.
Director Fitesse (Health & Fitness) Clubs Ltd, 1987-1994.
Mike S. Hodgkinson (53) Group Airports Director since 1992. Non Executive Director of Molins PLC,
11 Tanners Drive, Blakelands, Milton Keynes MK14 5LU since August 1994.
Director of Airports Council International, PO Box 125, 1215 Geneva 15,
Switzerland, since August 1994. Member of West London Training & Enterprise
Council, Sovereign Court, Staines Road, Hounslow. 1991-1995.
Michael P. Maine (56) Group Technical Director since 1991.
Dr. H. J. Maxmin (54)* Non Executive Director since March 1994. Non Executive Director of Dawson
International PLC since September 1995. Director of Streamline Inc. since
September 1996. Chairman of Think Ahead Inc, since April 1997. Non
Executive Director, Geest plc, West Marsh Road, Spalding, PE11 2BB,
1993-1997. Chairman, Global Brand Development since 1995. Chairman of
Informate Associates since 1995. Chief Executive Laura Ashley PLC, 27
Bagleys Lane, London SW6 2AR, 1991-1994. Director, Progressive Insurance Co
Inc,. 1989-1995.
Lawrence M. Urquhart (61) Non Executive Director since January 1993. Chairman of Burmah Castrol plc,
Burmah Castrol House, Pipers Way, Swindon, Wiltshire SN3 1RE, since July
1990. Chairman of English China Clays plc, 1015 Arlington Business Park,
Theale, Reading, RG7 4SA, since April 1995. Chairman of Scottish Widows
Fund and Life Assurance, PO Box 902, 15 Dalkeith Road, Edinburgh EH16 5BU,
since May 1995. Non Executive Director of Kleinwort Benson Group plc, PO
Box 560, 20 Fenchurch Street, London EC3P 3DB, since December, 1994. Non
Executive Director of Premier Consolidated Oilfields PLC (now Premier Oil
PLC), 23 Lower Belgrave Street, London SW1W 0NR, 1986-1994.
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
J. Russell F. Walls (53) Group Finance Director since June 1995. Director, Wellcome plc (now
Glaxo-Wellcome), Lansdowne House, Barclay Square, London W1X 6BQ, January
1995-April 1995. Director, Coats Viyella plc, 28 Saville Row, London W1,
until 1994. Non Executive Director Ladbroke Group PLC, Chancel House,
Neasden Lane, London NW10, since June 1996.
Lord Wright of Richmond Non Executive Director since August 1992. Non Executive Director, De La Rue
GC MG (65) plc, 6 Agar Street, London WC2, since 1991. Non Executive Director of The
British Petroleum Company plc, Britannic House, 1 Finsbury Circus, London
EC2M 7BA, since 1991. Non Executive Director of Unilever PlC, Unilever
House, Victoria Embankment, London EC4, since 1991. Non Executive Director
of Barclays Bank plc, Lombard Street, London EC3, 1991-1996.
Mrs. Rachel Rowson (42) Company Secretary BAA plc since September 1993. Assistant Company Secretary
since April 1987.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name, age and present principal occupation or employment, and
material occupations, positions, offices or employments for the past five years
of each director and executive officer of the Purchaser. Each such person is a
citizen of the United Kingdom, unless otherwise indicated, and the business
address of each such person is c/o BAA plc, 130 Witton Road, London SW1V 1LQ,
England.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
J. Russell F. Walls (53) President of the Purchaser; Group Finance Director BAA plc since June 1995.
Director, Wellcome plc (now Glaxo-Wellcome), Lansdowne House, Barclay
Square, London W1X 6BQ, January 1995-April 1995. Director, Coats Viyella
plc, 28 Saville Row, London W1, until 1994. Non Executive Director Ladbroke
Group PLC, Chancel House, Neasden Lane, London NW10, since June 1996.
Brian Collie (42) Vice President of the Purchaser; Retail Director, Gatwick Airport Limited
for the past 5 years. Director of Duty Free Confederation, 31 Great Peter
Street, London SW1P 3LR, May 1996-April 1997.
Peter J. Jones (41) Treasurer of the Purchaser; Finance Director, BAA International, since May
1996. Head of Financial Planning, BAA plc, 1992-May 1996.
Robert Herga (37) Secretary of the Purchaser; Head of Legal Services, BAA plc since February
1996, previously Solicitor, BAA plc.
Nicholas A. Ziebland (44) Vice President of the Purchaser; Group Retail Strategy Director, BAA plc,
since February 1996. Head of Retail Operations, October 1995-February 1996.
Head of Retail Operations BAA plc, 1992-1995.
</TABLE>
I-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank or other nominee to the
Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR BY OVERNIGHT
CARRIER:
IBJ Schroder Bank & Trust (212) 858-2611 IBJ Schroder Bank & Trust
Company Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing
Attn: Reorganization Window, Subcellar One, (SC-1)
Operations Department
</TABLE>
TO CONFIRM FACSIMILE TRANSMISSIONS CALL:
(212) 858-2103
Any questions or requests for assistance may be directed to the Dealer
Manager or the Information Agent at their respective telephone numbers and
locations listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent at its address and telephone numbers set forth below. You may
also contact your broker, dealer, commercial bank or trust company or nominee
for assistance concerning the Offer.
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
660 MADISON AVENUE
NEW YORK, NEW YORK 10021
(212) 418-4209
(CALL COLLECT)
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
<PAGE>
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
DUTY FREE INTERNATIONAL, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 9, 1997
BY
W&G ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BAA PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON AUGUST 5, 1997 UNLESS THE OFFER IS EXTENDED
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/OVERNIGHT COURIER:
<S> <C> <C>
IBJ Schroder Bank & Trust
(212) 858-2611
Company IBJ Schroder Bank & Trust
P.O. Box 84 Company
Bowling Green Station One State Street
New York, New York 10274-0084 New York, New York 10004
Attn: Reorganization Attn: Securities Processing
Operations Window, Subcellar One, (SC1)
Department
</TABLE>
TO CONFIRM FACSIMILE
TRANSMISSIONS CALL:
(212) 858-2103
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW
AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
<TABLE>
<S> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
</TABLE>
<TABLE>
<S> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
(ATTACH ADDITIONAL LIST, IF NECESSARY)
<S> <C> <C>
<CAPTION>
SHARES
SHARE EVIDENCED
CERTIFICATE BY SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C>
Total Shares.................
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, all Share Certificates delivered to the Depositary will be
deemed to have been tendered. See Instruction 4.
</TABLE>
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in Section 2 of the Offer to Purchase
dated July 9, 1997 (the "Offer to Purchase")) is utilized, if tenders of Shares
are to be made by book-entry transfer to an account maintained by IBJ Schroder
Bank & Trust Company (the "Depositary") at (the "Book-Entry Transfer Facility"),
pursuant to the procedures set forth in Section 3 of the Offer to Purchase.
Stockholders who tender Shares by book-entry transfer are referred to herein as
"Book-Entry Stockholders."
Any stockholders who desire to tender Shares and whose certificates
representing such Shares (the "Share Certificates") are not immediately
available or who cannot deliver their Share Certificates and all other required
documents to the Depositary prior to the Expiration Date (as defined in the
Offer to Purchase) or who cannot complete the procedures for book-entry transfer
on a timely basis may tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2
hereof. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
2
<PAGE>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Book-Entry Transfer Facility:
/ / DTC
/ / PDTC
Account Number: Transaction Code Number:
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If delivered by Book-Entry Transfer, check box of applicable Book-Entry
Transfer Facility:
/ / DTC
/ / PDTC
Account Number: Transaction Code Number:
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to W&G Acquisition Corporation, a Maryland
corporation (the "Purchaser") and a wholly owned subsidiary of BAA plc, a
corporation organized under the laws of England (the "Parent"), the above
described shares of Common Stock, par value $.01 per share (the "Shares"), of
Duty Free International, Inc., a Maryland corporation (the "Company"), at a
price of $24 per Share net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated July 9, 1997 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together with the Offer
to Purchase constitute the "Offer"). The undersigned understands that the
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its subsidiaries or affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns, and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all of the
Shares that are being tendered hereby and any and all dividends on the Shares
(other than regular quarterly cash dividends on the Shares not in excess of $.06
per share) or any distribution (including, without limitation, the issuance of
additional Shares pursuant to a stock dividend or stock split, the issuance of
other securities or the issuance of rights for the purchase of any securities)
with respect to the tendered Shares that is declared, paid or issued by the
Company on or after July 2, 1997, and is payable or distributable to
stockholders of record on a date prior to the transfer into the name of the
Purchaser or its nominees or transferees on the Company's stock transfer records
of the Shares purchased pursuant to the Offer (collectively, a "Distribution"),
and constitutes and irrevocably appoints the Depositary the true and lawful
agent, attorney-in-fact and proxy of the undersigned to the full extent of the
undersigned's rights with respect to such Shares (and any Distributions), with
full power of substitution (such power of attorney and proxy being deemed to be
an irrevocable power coupled with an interest), to (a) deliver Share
Certificates (and any Distributions), or transfer ownership of such Shares (and
any Distributions), on the account books maintained by the Book-Entry Transfer
Facilities, together in either such case with all accompanying evidences of
transfer and authenticity, to or upon the order of the Purchaser upon receipt by
the Depositary, as the undersigned's agent, of the purchase price, (b) present
such Shares (and any Distributions) for transfer on the books of the Company and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any Distributions), all in accordance with the
terms and subject to the conditions set forth in the Offer.
The undersigned hereby irrevocably appoints Brian Collie and Robert Herga,
and each of them, or any other designees of the Purchaser, as attorneys-in-fact
and proxies of the undersigned, each with full power of substitution, to vote in
such manner as each such attorney and proxy or his substitute shall, in his sole
discretion, deem proper, and otherwise act (including pursuant to written
consent) with respect to all of the Shares tendered hereby which have been
accepted for payment by the Purchaser prior to the time of such vote or action
(and any Distributions) which the undersigned is entitled to vote at any meeting
of stockholders (whether annual or special and whether or not an adjourned
meeting) of the Company, or by written consent in lieu of such meeting, or
otherwise. This power of attorney and proxy is coupled with an interest in the
Company and in the Shares and is irrevocable and is granted in consideration of,
and is effective upon, the acceptance for payment of such Shares by the
Purchaser in accordance with the terms of the Offer. Such acceptance for payment
shall revoke, without further action, any other power of attorney or proxy
granted by the undersigned at any time with respect to such Shares (and any
Distributions) and no subsequent powers of attorney or proxies will be given
(and if given will be deemed not to be effective) with respect thereto by the
undersigned. The undersigned understands that the Purchaser reserves the
absolute right to require that, in order for Shares to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser is able to exercise full voting
4
<PAGE>
rights with respect to such Shares and other securities, including voting at any
meeting of stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that when such Shares are accepted for
payment and paid for by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto (and to any Distributions), free and
clear of all liens, restrictions, charges and encumbrances and the same will not
be subject to any adverse claim. The undersigned, upon request, will execute and
deliver any additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any Distributions). In addition, the undersigned
shall promptly remit and transfer to the Depositary for the account of the
Purchaser any and all other Distributions issued to the undersigned on or after
July 2, 1997 in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer and, pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions, and may withhold the entire
purchase price, or deduct from the purchase price of Shares tendered hereby, the
amount or value thereof, as determined by the Purchaser in its sole discretion.
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Except as otherwise provided in the Offer to Purchase, tenders of
Shares made pursuant to the Offer are irrevocable.
The Purchaser's acceptance of validly tendered Shares will constitute a
binding agreement between the undersigned and the Purchaser with respect to such
Shares upon the terms and subject to the conditions set forth in the Offer. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchaser may not be required to accept for payment any of the
Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of all Shares purchased and/or
return any Share Certificates evidencing Shares not tendered or not purchased in
the name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates evidencing Shares not tendered or not purchased (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
either of the "Special Delivery Instructions" or the "Special Payment
Instructions" boxes are completed, please issue the check for the purchase price
of all Shares purchased and/or return any Share Certificates evidencing Shares
not tendered or not purchased in the name(s) of, and deliver said check and/or
return certificates to, the person(s) so indicated. Unless otherwise indicated
in this Letter of Transmittal under "Special Payment Instructions," in the case
of a book-entry delivery of Shares, please credit the account maintained by the
undersigned at the Book-Entry Facility indicated above with respect to any
Shares not purchased. The undersigned recognizes that the Purchaser has no
obligation pursuant to the "Special Payment Instructions" to transfer any Shares
from the name(s) of the registered holder(s) thereof if the Purchaser does not
accept for payment any of such Shares.
5
<PAGE>
/ / CHECK HERE IF ANY OF THE CERTIFICATES EVIDENCING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates:
- ------------------------
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share To be completed ONLY if Share
Certificates not tendered or not Certificates not tendered or not
purchased and/or the check for the purchased and/or the check for the
purchase price of Shares purchased purchase price of Shares purchased
are to be issued in the name of are to be sent to someone other
someone other than the than the undersigned, or to the
under-signed, or if Shares undersigned, at an address other
delivered by book-entry transfer than that shown under "Description
that are not purchased are to be of Shares Tendered."
returned by credit to an account
maintained at a Book-Entry Transfer
Facility, other than to the account
indicated above.
Issue check and/or Share Mail check and/or Share
Certificates to: Certificates to:
Name: Name:
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
Address: Address:
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
(TAXPAYER IDENTIFICATION OR SOCIAL (TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NO.) SECURITY NO.)
(ALSO COMPLETE SUBSTITUTE FORM W-9)
Credit unpurchased Shares delivered
by book-entry transfer to the
Book-Entry Transfer Facility
account set forth below:
/ / / /
(check one)
- -----------------------------------
(DTC/PDTC ACCOUNT NUMBER)
</TABLE>
6
<PAGE>
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9)
______________________________________________________________________________
______________________________________________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
DATED: ______________ , 1997
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity for the registered holder(s), please
provide the necessary information. See Instruction 5 hereof.)
Name(s): _____________________________________________________________________
(Please Print)
Capacity (Full Title): _______________________________________________________
Address: _____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ______________________________________________
Tax Identification or Social Security No.: ___________________________________
(Complete Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5 HEREOF)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
(Please Print)
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ______________________________________________
Dated: ______________, 1997
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a bank, broker, dealer, credit union,
savings association or other entity that is a member in good standing of the
Securities Transfer Agents Medallion Program (each, an "Eligible Institution"),
unless (i) this Letter of Transmittal is signed by the registered holder (which
term, for purposes of this document, shall include any participant in a
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Shares) of the Shares tendered hereby, and such registered
holder has not completed either the box entitled "Special Delivery Instructions"
or the box entitled "Special Payment Instructions" on this Letter of Transmittal
or (ii) such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in Section 2 of the Offer to
Purchase) is utilized, if tenders are to be made pursuant to the procedures for
tender by book-entry transfer set forth in Section 3 of the Offer to Purchase.
Share Certificates, or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at a Book-Entry
Transfer Facility, as well as this Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth herein prior to
the Expiration Date. Any stockholder who desires to tender Shares and whose
Share Certificates are not immediately available or who cannot deliver their
Share Certificates and all other required documents to the Depositary prior to
the Expiration Date or who cannot complete the procedures for book-entry
transfer on a timely basis may tender their Shares by properly completing and
duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be received
by the Depositary prior to the Expiration Date; and (iii) the Share Certificates
or a Book-Entry Confirmation representing all tendered Shares, in proper form
for transfer together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with any required
signature guarantees (or, in the case of a book-entry transfer of Shares, an
Agent's Message) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three New York Stock Exchange, Inc.
trading days after the date of execution of such Notice of Guaranteed Delivery.
If Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a manually signed facsimile thereof), waive any
right to receive any notice of the acceptance of their Shares for payment.
8
<PAGE>
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (not applicable to stockholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shares Tendered." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s) will
be sent to you, unless otherwise provided in the appropriate box marked "Special
Payment Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
When this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made, or a Share
Certificate for Shares not accepted for payment or not tendered is to be
returned, to a person other than the registered holder(s), in which case, the
Share Certificate must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such certificates. Signatures on such certificates or stock powers
must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the certificates, with the
signature on such certificate or stock power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity for
the registered holder(s), such persons should so indicate when signing, and
proper evidence satisfactory to the Purchaser of their authority so to act must
be submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such other person or otherwise)
payable on account of the transfer to such other person will be deducted from
the purchase price of such Shares purchased, unless evidence satisfactory to the
Purchaser of the payment of such taxes or exemption therefrom is submitted.
9
<PAGE>
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued in the name of and/or
certificates for unpurchased Shares are to be returned to a person other than
the signer of this Letter of Transmittal or if a check is to be sent and/or such
certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to the signer of this Letter of Transmittal but at an address
other than that shown under "Description of Shares Tendered," the appropriate
boxes on this Letter of Transmittal should be completed. If no such instructions
are given, such Shares not purchased will be returned by crediting the account
at the Book-Entry Transfer Facility designated above. See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to the Information Agent at its address or telephone number set
forth below. Requests for additional copies of the Offer to Purchase, this
Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or to brokers, dealers, commercial banks or
trust companies.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Each tendering stockholder
is required to provide the Depositary with a correct Taxpayer Identification
Number ("TIN") on the Substitute Form W-9 which is provided under "Important Tax
Information" below, and to certify, under penalties of perjury, that such number
is correct and that such stockholder is not subject to backup withholding of
federal income tax. If a tendering stockholder has been notified by the Internal
Revenue Service that such stockholder is subject to backup withholding, such
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such stockholder has since been notified by the Internal
Revenue Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such stockholder. If
the tendering stockholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such stockholder should check the
box in Part III of the Substitute Form W-9 and sign and date both the Substitute
Form W-9 and the "Certificate of Awaiting Taxpayer Identification." If the box
in Part III for "Awaiting TIN" is checked and the Depositary is not provided
with a TIN within 60 days, the Depositary will withhold 31% on all payments of
the purchase price to such stockholder until a TIN is provided to the
Depositary.
10. WAIVER OF CONDITIONS. Subject to the terms of the Offer, Purchaser
reserves the right to waive any of the specified conditions of the Offer, in
whole or in part, in the case of any Shares tendered.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed. In certain
cases it may not be possible to complete the procedures for replacing lost or
destroyed certificates prior to the Expiration Date.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY, TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS, OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE
OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law, a stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct TIN on Substitute Form W-9 below. If such stockholder
is an individual, the TIN is his social security number. If the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the stockholder should so indicate on the
Substitute Form W-9. See Instruction 9. If the Depositary is not provided with
the correct TIN, the stockholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to the stockholder
with respect to Shares purchased pursuant to the Offer may be subject to backup
federal income tax withholding at a 31% rate.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholdings and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form 9-W. In order for a
foreign individual to qualify as an exempt recipient, that stockholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that the stockholder is awaiting a TIN) and that (1) the stockholder
has not been notified by the Internal Revenue Service that he is subject to
backup withholding as a result of a failure to report all interest or dividends
or (2) the Internal Revenue Service has notified the stockholder that he is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the Social Security
Number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
11
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
SUBSTITUTE FORM W-9 PART I--PLEASE PROVIDE YOUR PART III--SOCIAL SECURITY
DEPARTMENT OF THE TIN IN THE BOX AT RIGHT AND NUMBER OR EMPLOYEE ID NUMBER
TREASURY CERTIFY BY SIGNING AND DAT- -----------------------------
INTERNAL REVENUE ING BELOW (IF AWAITING TIN WRITE
SERVICE "APPLIED FOR")
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER ("TIN")
PART II--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING, SEE THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFI-
CATION NUMBER ON SUBSTITUTE FORM W-9 AND COMPLETE AS
INSTRUCTED THEREIN.
CERTIFICATIONS--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me); and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, (b) I have not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because of underreporting
interest or dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such item (2). (Also see
instructions in the enclosed Guidelines.)
SIGNATURE -------------------------------------------------- DATE ------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
THE BOX IN PART III OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide the Depositary a Taxpayer
Identification Number within sixty (60) days.
Signature:
- ---------------------------------------- Date:
- ---------------------
12
<PAGE>
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of the
Offer to Purchase, the Letter of Transmittal and other tender offer materials
may be obtained from the Information Agent as set forth below. You may also
contact your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
660 Madison Avenue
New York, New York 10021
(212) 418-4209
(call collect)
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
13
<PAGE>
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
DUTY FREE INTERNATIONAL, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
shares of Common Stock, par value $.01 per share (the "Shares"), of Duty Free
International, Inc., a Maryland corporation (the "Company"), are not immediately
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach IBJ
Schroder Bank & Trust Company (the "Depositary") prior to the Expiration Date
(as defined in the Offer to Purchase dated July 9, 1997 (the "Offer to
Purchase")), or the procedures for book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand,
facsimile transmission or mail to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<CAPTION>
BY HAND OR BY OVERNIGHT
BY MAIL: BY FACSIMILE TRANSMISSION: COURIER:
<S> <C> <C>
IBJ Schroder Bank & Trust (212) 858-2611 IBJ Schroder Bank & Trust
Company Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing
Attn: Reorganization Window, Subcellar One, (SC-1)
Operations Department
TO CONFIRM FACSIMILE
TRANSMISSION CALL:
(212) 858-2103
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY OR ONE SUBSTANTIALLY EQUIVALENT HERETO,
PROPERLY COMPLETED AND DULY EXECUTED, MUST BE RECEIVED BY THE DEPOSITARY PRIOR
TO THE EXPIRATION DATE.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to the Eligible Institution.
<PAGE>
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to W&G Acquisition Corporation, a Maryland
corporation, (the "Purchaser") and a wholly owned subsidiary of BAA plc, a
corporation organized under the laws of England (the "Parent"), upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated July 9,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares:
Shares__________________________________________________________________________
Certificate No(s). (if available): _____________________________________________
________________________________________________________________________________
________________________________________________________________________________
If Share(s) will be tendered by book-entry transfer, check ONE box.
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number: ________________________________________________________________
Date: __________________________________________________________________________
Name(s) of Record Holder(s): ___________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Address(es): ___________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Area Code and Telephone Number(s): _____________________________________________
________________________________________________________________________________
Signature(s): __________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended, and guarantees the delivery to the Depositary of the Shares tendered
hereby, together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), and any other required
documents or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery of Shares, all within three New York Stock
Exchange Inc. trading days after the date hereof.
________________________________________________________________________________
Name of Firm
________________________________________________________________________________
Address
________________________________________________________________________________
Area Code and Tele. Number: ____________________________________________________
________________________________________________________________________________
(Authorized Signature)
Title: _________________________________________________________________________
Name: __________________________________________________________________________
________________________________________________________________________________
(Please type or print)
Date: __________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
<PAGE>
Exhibit (a)(4)
[LOGO]
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DUTY FREE INTERNATIONAL, INC.
AT
$24 NET PER SHARE
BY
W&G ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BAA PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON AUGUST 5, 1997, UNLESS THE OFFER IS EXTENDED.
July 9, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by W&G Acquisition Corporation, a Maryland
corporation (the "Purchaser") and a wholly owned subsidiary of BAA plc, a
corporation organized under the laws of England ("Parent"), to act as Dealer
Manager in connection with the Purchaser's offer to purchase all outstanding
shares of Common Stock, par value $.01 per share (the "Shares"), of Duty Free
International, Inc., a Maryland corporation (the "Company"), at a purchase price
of $24 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
July 9, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which together constitute the "Offer") enclosed herewith. The Offer is being
made in connection with the Agreement and Plan of Merger, dated July 2, 1997
among the Parent, Purchaser, and the Company (the "Merger Agreement"). Holders
of Shares whose certificates for such Shares (the "Share Certificates") are not
immediately available, or who cannot deliver their Share Certificates and all
other required documents to the Depositary (as defined below) prior to the
Expiration Date (as defined in the Offer to Purchase) or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which constitutes at least a majority of the Shares outstanding on a
fully diluted basis. The Offer is also subject to other terms and conditions
which are set forth in the Offer to Purchase.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase.
<PAGE>
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Manually signed facsimile copies of the
appropriate Letter of Transmittal may be used to tender Shares.
3. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if Share Certificates are not immediately available or time will
not permit all required documents to reach IBJ Schroder Bank & Trust Company
(the "Depositary") prior to the Expiration Date, or the procedures for
book-entry transfer cannot be completed on a timely basis.
4. A letter to stockholders of the Company from Alfred Carfora, Chief
Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON AUGUST 5, 1997, UNLESS THE
OFFER IS EXTENDED.
In order to accept the Offer, the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with any
required signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer of Shares and any other
documents required by the Letter of Transmittal should be sent to the Depositary
and either Share Certificates evidencing the tendered Shares should be delivered
to the Depositary or Shares should be tendered by book-entry transfer into the
Depositary's account maintained at one of the Book Entry Facilities (as
described in the Offer to Purchase), all in accordance with the instructions set
forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender Shares pursuant to the Offer and such
holders' Share Certificates are not immediately available or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date or the procedures for book-entry transfer cannot be completed on a timely
basis, such Shares may nevertheless be tendered by following the guaranteed
delivery procedures specified in Section 3 of the Offer to Purchase.
Neither the Purchaser, the Parent, nor any officer, director, stockholder,
agent or other representative of the Purchaser will pay any commissions or fees
to any broker, dealer or other person (other than the Dealer Manager, the
Depositary and the Information Agent, as described in the Offer to Purchase) for
soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however,
upon request, reimburse you for customary clerical and mailing expenses incurred
by you in forwarding any of the enclosed materials to your clients. The
Purchaser will pay or cause to be paid any stock transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed material may be obtained from, the
Information Agent at the address and telephone number set forth on the back
cover of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent at the address and telephone numbers set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
Gleacher NatWest Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PARENT, PURCHASER, THE COMPANY, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE OFFER TO
PURCHASE AND THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DUTY FREE INTERNATIONAL, INC.
AT
$24 NET PER SHARE
BY
W&G ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BAA PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON AUGUST 5, 1997 UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated July 9,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by W&G Acquisition
Corporation, a Maryland corporation (the "Purchaser") and a wholly owned
subsidiary of BAA plc, a corporation organized under the laws of England
("Parent"), to purchase all outstanding shares of Common Stock, par value $.01
per share (the "Shares"), of Duty Free International, Inc., a Maryland
corporation (the "Company"), at a purchase price of $24 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer. The Offer is being made in connection with
the Agreement and Plan of Merger, dated as of July 2, 1997, among the Parent,
Purchaser and the Company (the "Merger Agreement"). Also enclosed is the letter
to stockholders of the Company from the Chief Executive Officer of the Company
accompanied by the Company's Solicitation/Recommendation Statement on Schedule
14D-9.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender any or all Shares held by us for your account, upon the terms and
conditions set forth in the Offer.
Please note the following:
1. The tender price is $24 per Share, net to you in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has approved the Offer and the
Merger (as defined in the Offer to Purchase) and has determined that the
terms of the Offer and the Merger are fair to and in the best interests of
the stockholders of the Company, and recommends that stockholders accept the
Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on August 5, 1997, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which constitutes at least a majority of the Shares
outstanding on a fully diluted basis.
<PAGE>
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by the Purchaser pursuant to the
Offer. However, backup federal income tax withholding at a rate of 31% may
be required, unless an exemption applies or unless the required taxpayer
identification information is provided. See Instruction 9 of the Letter of
Transmittal.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form contained in this letter. If you authorize the tender
of your Shares, all such Shares will be tendered unless otherwise specified on
the back page of this letter. An envelope to return your instructions to us is
enclosed. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US AS SOON AS POSSIBLE TO
ALLOW US AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE
EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Shares residing in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue-sky or other laws of such jurisdiction. In any jurisdiction
where securities, blue-sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of the
Purchaser by one or more registered brokers or dealers that are licensed under
the laws of such jurisdiction.
<PAGE>
INSTRUCTION WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL
OUTSTANDING SHARES OF COMMON STOCK
OF
DUTY FREE INTERNATIONAL, INC.
BY
W&G ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF BAA PLC
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated July 9, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together constitute the "Offer") in connection with
the offer by W&G Acquisition Corporation, a Maryland corporation (the
"Purchaser") and a wholly owned subsidiary of BAA plc, a corporation organized
under the laws of England (the "Parent"), to purchase all outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of Duty Free
International, Inc., a Maryland corporation (the "Company"), at a purchase price
of $24 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares To Be Tendered:* ________________ Shares
Dated: ___________, 1997
*Unless otherwise indicated, it will be assumed that you instruct us to
tender all Shares held by us for your account.
________________________________________________________________________________
SIGN HERE
Signature(s) ___________________________________________________________________
Print Name(s) __________________________________________________________________
Address(es) ____________________________________________________________________
Area Code and Telephone Number(s) ______________________________________________
Taxpayer Identification or
Social Security Number(s) ______________________________________________________
<PAGE>
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -----------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent
committee for a person(3)
designated ward,
minor, or
incompetent person
7. a. The usual The
revocable savings grantor-trustee(1)
trust account
(grantor is also
trustee)
b. So-called trust
account that is The actual owner(1)
not a legal or
valid trust under
State law
8. Sole proprietorship The owner(4)
account
- -----------------------------------------------------
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<S> <C> <C>
- -----------------------------------------------------
9. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or The broker or
registered nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount renewed is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES.
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure due to reasonable cause and not to willful
neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income such failure will be treated as being due to
negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit (a)(7)
BAA ACQUISITION OF DUTY FREE INTERNATIONAL
JULY 3, 1997 8:28 AM EDT
LONDON--(BUSINESS WIRE)--July 3, 1997--In a major step in its strategy to expand
its core duty and tax free business internationally, BAA plc, the UK-based
airport management and development company, today announced a recommended offer
to acquire 100% of the shares of Duty Free International, Inc. (NYSE:DFI).
BAA has entered into an agreement with DFI under which it will make a tender
offer for all of the shares in DFI at $24 per share. This values the share
capital of DFI (including options) at $674 million. The tender offer will be
conditional on, inter alia, regulatory approval.
BAA's core business is the ownership and operation of airports. Through its
subsidiaries at Heathrow, Gatwick, Stansted, Glasgow, Edinburgh, Aberdeen and
Southampton, it handles over 70% of UK passenger traffic and over 80% of air
cargo. In the US, BAA is responsible for the management of the Indianapolis
airport system, and oversees the retail activities at Pittsburgh International's
AirMall. Its activities include the planning, construction, management and
security of terminals and runways, and the management of commercial facilities
at its airports, including shops, restaurants, bars, currency exchange and
parking.
Founded in 1983, DFI has expanded to be the fifth largest duty and tax free
business in the world. When combined with BAA's duty and tax free business, it
creates the second largest.
DFI now operates approximately 175 stores and employs more than 2,000 people.
Headquartered in Connecticut, DFI comprises five operating divisions, Airport
retailing, Inflight duty free, Canadian and Mexican Border duty free stores, and
a Diplomatic/Wholesale service. DFI serves 14 international airports throughout
the United States, including New York's John F. Kennedy and La Guardia,
Chicago's O'Hare, Boston's Logan and Denver. DFI specializes in the sale of
liquor, tobacco and perfume products. DFI is unaffected by the possible loss of
intra-European duty and tax free in 1999.
BAA's Chief Executive Sir John Egan said:
"It is BAA's strategy to become the most successful airport company in the world
and the development of duty and tax free retailing is essential to that. Having
become one of the most
<PAGE>
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successful duty free operators measured in sales per passenger, BAA is now in
the process, through World Duty Free, of managing this business itself. By
acquiring another large business unaffected by the possible loss of European
duty free, we will be able to protect and enhance profits, bring improved
merchandising to DFI, build on a range of synergies, and further develop the
business through a growing number of international airports."
"For our strategy this is the right company in the right business in the right
part of the world."
BAA's Group Retail Director Brian Collie said:
"DFI has five established and successful divisions which last year generated
sales of $570 million and pre-tax profits of $34 million."
"The characteristics which have made BAA's existing duty free business so
attractive are shared by DFI. It benefits from the natural growth in the world
travel market, the high disposable income levels of people who travel and the
low inventory risk which is inherent in a business which, for example, sells a
bottle of whisky every six seconds. This is an excellent opportunity to roll
out our core duty free retail strategy into a non-European environment."
"The opportunity for BAA to add value to the existing DFI operation is
exemplified by our recognized strengths in buying, supplier relationships,
marketing and implementing identified cost savings. The additional outlets also
provide significant new distribution channels for our exclusive house brands and
specialist duty free retail formats."
"This acquisition leaves us very well placed to compete in the fast growing
global duty and tax free business."
The offer for DFI represents a 19% premium to the closing middle market price on
the New York Stock Exchange of $20 1/8 per DFI share on July 1, 1997. The
acquisition will be funded from BAA's existing resources and committed
facilities and is not expected to have any short-term material dilution on BAA's
earnings.
BAA has received irrevocable undertakings to accept the tender offer from DFI
shareholders owning 7,404,250 shares, and has been granted an option by DFI to
acquire up to 5,434,367 new shares at the offer price. In total BAA expects to
receive ir-
<PAGE>
-3-
revocable undertakings and options in respect of 43% of DFI's fully diluted
share capital.
As at January 31, 1997, DFI had net assets of $228 million and reported earnings
before tax of $34 million for the year then ended. NatWest Markets and Gleacher
NatWest are advising BAA in relation to this transaction.
BAA ordinary shares trade on the London, and Australian Stock Exchanges; prices
may be accessed on Bloomberg under the symbol BAA LN, on the Reuter Equities
2000 Service under BAA.L and on Quotron under the symbol BAANU.EU. The ordinary
shares also appear on the electronic OTC Bulletin Board under the symbol
BAAPF.BAA ADRs, each equal to one ordinary share, appear on the NASD OTC
Bulletin Board under the symbol BAAPY. Additional information is available on
BAA's home page: HTTP://WWW.BAA.CO.UK.
<PAGE>
EXHIBIT (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated July 9, 1997 and the related Letter of
Transmittal, and is being made to all holders of Shares. The Purchaser (as
defined below) is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Purchaser will make a good faith effort to comply with such
state statute. If after such good faith effort, the Purchaser cannot comply
with such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser by Gleacher NatWest Inc. or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Duty Free International, Inc.
at
$24 Net Per Share
by
W&G Acquisition Corporation
a wholly owned subsidiary of
BAA plc
W&G Acquisition Corporation, a Maryland corporation (the "Purchaser") and a
wholly owned subsidiary of BAA plc, a corporation organized under the laws of
England ("Parent"), is offering to purchase all outstanding shares of the
common stock, par value $.01 per share (the "Shares"), of Duty Free
International, Inc., a Maryland corporation (the "Company"), at $24 per Share
net to the seller in cash, without any interest, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated July 9, 1997 (the
"Offer to Purchase") and in the related Letter of Transmittal (which together
constitute the "Offer"). Following the Offer, the Purchaser intends to effect
the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON AUGUST 5, 1997, UNLESS THE OFFER IS EXTENDED. THE OFFER IS
CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE)
A NUMBER OF SHARES OF THE COMPANY WHICH REPRESENTS AT LEAST A MAJORITY OF THE
TOTAL NUMBER OF SHARES OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION"). THE PURCHASER ESTIMATES THAT APPROXIMATELY 14,748,155 SHARES
WILL NEED TO BE VALIDLY TENDERED (AND NOT VALIDLY WITHDRAWN) TO SATISFY THE
MINIMUM CONDITION.
- 1 -
<PAGE>
The Offer is being made pursuant to a Merger Agreement dated as of July 2,
1997 (the "Merger Agreement"), by and among the Parent, the Purchaser and the
Company. Pursuant to the Merger Agreement, and subject to the satisfaction or
waiver of the conditions set forth therein, the Purchaser has agreed to make
the Offer and purchase all Shares validly tendered and not withdrawn
following the expiration or termination of all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), applicable to the Offer. After the completion of the Offer, the
Purchaser and the Company will merge (the "Merger") and each Share then
outstanding (other than Shares held by the Parent, the Purchaser, the Company
or any direct or indirect subsidiary of the Parent, the Purchaser or the
Company, and Shares with respect to which dissenter's rights under the
Maryland General Corporation Law, as amended (the "MGCL") are properly
exercised) will be converted upon effectiveness of the Merger (the "Effective
Time") into the right to receive $24 in cash, without any interest. Following
the consummation of the Merger, the surviving corporation will be a wholly
owned subsidiary of the Parent.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER, THE
MERGER AND THE MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER,
THE MERGER AND THE MERGER AGREEMENT ARE FAIR TO AND IN THE BEST INTERESTS OF
THE SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Simultaneously with entering into the Merger Agreement, the Parent entered
into a Shareholders Agreement (the "Shareholder's Agreement") with certain
shareholders of the Company (the "Tendering Shareholders"). Pursuant to the
Shareholder's Agreement, each Tendering Shareholder has agreed to tender (and
not withdraw) pursuant to the Offer and before the Expiration Date all of the
Shares owned of record or beneficially by such Tendering Shareholder on the
date of the Shareholder's Agreement, together with any Shares acquired by any
such Tendering Shareholder prior to the termination of the Shareholder's
Agreement. As of the date hereof, the Tendering Shareholders beneficially own
8,626,073 Shares or approximately 32% of all outstanding Shares.
In connection with the Merger Agreement, the Parent and the Company have
entered into a stock option agreement, dated as of July 2, 1997 (the "Option
Agreement"), pursuant to which the Company has granted to the Parent an
irrevocable option (the "Option") to purchase up to 5,434,367 newly issued
Shares (the "Option Shares"), upon the terms and subject to the conditions of
the Option Agreement, at a price of $24.00 per Option Share. The Option is
exercisable upon the occurrence of certain events.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied prior to the time of payment
for any Shares, the Purchaser may (i) terminate the Offer and return all
tendered shares to tendering shareholders, (ii) extend the Offer and, subject
to withdrawal rights as set forth below, retain all such Shares until the
expiration of the Offer as so extended, (iii)
- 2 -
<PAGE>
waive such condition and, subject to any requirement to extend the period of
time during which the Offer is open, purchase all Shares validly tendered by
the Expiration Date and not withdrawn, or (iv) delay acceptance for payment
of or payment for Shares, subject to applicable law, until satisfaction or
waiver of the conditions of the Offer.
For purposes of the Offer, the Purchaser shall be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when the Purchaser
gives oral or written notice to IBJ Schroder Bank & Trust Company (the
"Depositary") of the Purchaser's acceptance of such Shares for payment
pursuant to the Offer. Payment for Shares purchased pursuant to the Offer
will be made by deposit of the purchase price with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Purchaser and transmitting payments to tendering shareholders. The
Purchaser will not, under any circumstances, pay interest on the purchase
price, regardless of any delay in making such payment. In all cases, payment
for Shares purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) the certificates evidencing the Shares or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at a Book-Entry Transfer Facility (as defined in the
Offer to Purchase) pursuant to the procedures set forth in the Offer to
Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) and (iii) any other
documents required by the Letter of Transmittal.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend the period of time during which the
Offer is open (but subject to the terms and conditions of the Merger
Agreement) by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed, as soon as practicable, by
public announcement thereof, no later than 9:00 a.m. New York City time, on
the next business day after the previously scheduled Expiration Date.
Tenders of Shares made pursuant to the Offer will be irrevocable, except that
Shares tendered may be withdrawn at any time prior to the Expiration Date
and, unless previously accepted for payment, may also be withdrawn after
September 6, 1997. If the Purchaser is delayed in its acceptance or purchase
of or payment for Shares or is unable to purchase or pay for Shares for any
reason, then, without prejudice to the Purchaser's rights, tendered Shares
may be retained by the Depositary on behalf of the Purchaser and may not be
withdrawn except as described in the Offer to Purchase. For a withdrawal to
be effective, a written or facsimile transmission notice of withdrawal must
be timely received by the Depositary at one of its addresses specified on the
back cover of the Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and, if certificates representing such
Shares have been delivered or otherwise identified to the Depositary, the
name(s) in which such certificate(s) is (are) registered, if different from
the name of the person tendering
- 3 -
<PAGE>
such Shares. If certificates have been delivered or otherwise identified to
the Depositary, then prior to the physical release of such certificates, the
tendering shareholder must also submit the serial numbers shown on the
particular certificates evidencing such Shares and the signature on the
notice of withdrawal must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an
office, branch or agency in the United States or any other institution that
is a member of the Medallion Signature Guaranty Program (each being referred
to herein as an "Eligible Institution"). If Shares have been tendered
pursuant to the procedure for book-entry tender set forth in the Offer to
Purchase, the notice of withdrawal must specify the name and account
number(s) of the account(s) at the applicable Book-Entry Transfer Facility to
be credited with the withdrawn Shares. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be
determined by the Purchaser, in its sole discretion, whose determination
shall be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference. The Company has provided the Purchaser with the Company's
shareholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares. The Offer to Purchase and the
related Letter of Transmittal will be mailed to record holders of Shares and
will be furnished to brokers, dealers, banks and similar persons whose names,
or the names of whose nominees, appear on the shareholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent or the Dealer Manager at
their respective telephone numbers and locations as set forth below, and
copies will be furnished promptly at the Purchaser's expense. The Purchaser
will not pay any fees or commissions to any broker or dealer or any other
person (other than the Dealer Manager) for soliciting tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
[MacKenzie Logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
- 4 -
<PAGE>
Gleacher NatWest Inc.
660 Madison Avenue
New York, New York 10021
(212) 418-4209 (call collect)
July 9, 1997
- 5 -
<PAGE>
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
Dated as of July 2, 1997
Among
BAA PLC,
W & G ACQUISITION CORPORATION
And
DUTY FREE INTERNATIONAL, INC.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I The Offer
SECTION 1.01. The Offer.......................................................2
SECTION 1.02. Company Actions.................................................4
ARTICLE II
The Merger
SECTION 2.01. The Merger......................................................6
SECTION 2.02. Closing.........................................................6
SECTION 2.03. Effective Time..................................................6
SECTION 2.04. Charter and By-Laws.............................................6
SECTION 2.05. Directors.......................................................7
SECTION 2.06. Officers........................................................7
ARTICLE III
Effect of the Merger on the Capital Stock
of the Constituent Corporations; Exchange
of Certificates
SECTION 3.01. Effect on Stock.................................................7
SECTION 3.02. Exchange of Certificates........................................8
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Standing and Corporate Power...................................10
SECTION 4.02. Subsidiaries...................................................10
SECTION 4.03. Capital Structure..............................................11
SECTION 4.04. Authority; Noncontravention....................................12
SECTION 4.05. SEC Documents; Undisclosed Liabilities.........................13
SECTION 4.06. Information Supplied...........................................14
SECTION 4.07. Absence of Certain Changes or Events...........................15
SECTION 4.08. Litigation.....................................................15
SECTION 4.09. Absence of Changes in Benefit Plans............................16
SECTION 4.10. ERISA Compliance...............................................16
SECTION 4.11. Taxes..........................................................18
SECTION 4.12. No Excess Parachute Payments...................................19
SECTION 4.13. Voting Requirements............................................20
SECTION 4.14. State Takeover Statutes........................................20
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<PAGE>
PAGE
SECTION 4.15. Brokers; Schedule of Fees and Expenses.........................20
SECTION 4.16. Opinion of Financial Advisor...................................20
SECTION 4.17. Intellectual Property..........................................21
SECTION 4.18. Compliance with Laws...........................................21
SECTION 4.19. Environmental Protection.......................................22
SECTION 4.20. Labor Relations and Employment.................................24
SECTION 4.21. Contracts......................................................25
SECTION 4.22. Inventory......................................................26
SECTION 4.23. Balance Sheet Reserves.........................................26
SECTION 4.24. Foreign Corrupt Practices Act..................................26
ARTICLE V
Representations and Warranties of Parent and Sub
SECTION 5.01. Standing and Corporate Power...................................27
SECTION 5.02. Authority; Noncontravention....................................27
SECTION 5.03. Information Supplied...........................................28
SECTION 5.04. Brokers........................................................28
SECTION 5.05. Financing......................................................29
ARTICLE VI
Covenants Relating to Conduct of Business
SECTION 6.01. Conduct of Business............................................29
SECTION 6.02. No Solicitation................................................32
ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy Statement...........34
SECTION 7.02. Access to Information; Confidentiality.........................35
SECTION 7.03. Reasonable Efforts; Notification...............................35
SECTION 7.04. Stock Options..................................................36
SECTION 7.05. Indemnification................................................37
SECTION 7.06. Directors......................................................39
SECTION 7.07. Fees and Expenses..............................................40
SECTION 7.08. Public Announcements...........................................41
SECTION 7.09. Transfer Taxes.................................................42
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<PAGE>
PAGE
ARTICLE VIII
Conditions Precedent 42
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination....................................................43
SECTION 9.02. Effect of Termination..........................................45
SECTION 9.03. Amendment......................................................45
SECTION 9.04. Extension; Waiver..............................................45
SECTION 9.05. Procedure for Termination, Amendment, Extension or Waiver......45
ARTICLE X
General Provisions
SECTION 10.01. Nonsurvival of Representations and Warranties.................46
SECTION 10.02. Notices.......................................................46
SECTION 10.03. Definitions...................................................47
SECTION 10.04. Interpretation................................................48
SECTION 10.05. Counterparts..................................................48
SECTION 10.06. Entire Agreement; No Third-Party Beneficiaries................48
SECTION 10.07. Governing Law.................................................48
SECTION 10.08. Assignment....................................................49
SECTION 10.09. Enforcement...................................................49
Exhibit A Conditions of the Offer
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of July 2, 1997, among BAA plc,
a corporation organized under the laws of England ("Parent"), W & G Acquisition
Corporation, a Maryland corporation ("Sub") and a wholly owned subsidiary of
Parent, and Duty Free International, Inc., a Maryland corporation (the
"Company").
WHEREAS, the respective Board of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the issued and outstanding
shares of Common Stock, par value $0.01 per share, of the Company (the "Common
Stock"), at a price per share of Common Stock of $24, net to the seller in cash,
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, Sub and certain stockholders of the Company (the
"Stockholders"), are entering into a stockholder agreement (the "Stockholders
Agreement") pursuant to which the Stockholders shall agree to take certain
actions to support the transactions contemplated by this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement, Parent
and the Company are entering into a stock option agreement (the "Option
Agreement"), pursuant to which the Company has granted to Parent an irrevocable
option to purchase up to 5,434,367 newly issued shares of Common Stock (the
"Option Shares"), upon the terms and subject to the conditions of the Option
Agreement, at a price of $24 per Option Share.
WHEREAS, the Board of Directors of the Company has (a) determined that
the Offer and the Merger (as defined below) are advisable and fair to and in the
best interests of the stockholders of the Company, (b) approved (i) the
acquisition of the Company by Parent on the terms and subject to the conditions
set forth in this Agreement, (ii) the transactions contemplated by the
Stockholder Agreement and (iii) the transactions contemplated by the Option
Agreement (collectively, the "Transactions"), (c) approved the execution,
delivery and performance of this Agreement and (d) resolved to recommend accep-
<PAGE>
-2-
tance of the Offer and approval of the Merger by such stockholders;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger of Sub into the Company (the "Merger"), on the
terms and subject to the conditions set forth in this Agreement, whereby each
issued and outstanding share of Common Stock not owned directly or indirectly by
Parent or the Company shall be converted into the right to receive the per share
consideration paid pursuant to the Offer; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Offer
SECTION 1.01. THE OFFER. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the announcement of the execution of this Agreement, Sub shall, and
Parent shall cause Sub to, commence the Offer. The obligation of Sub to and of
Parent to cause Sub to, accept for payment, and pay for, any shares of Common
Stock tendered pursuant to the Offer shall be subject to the conditions set
forth in Exhibit A attached hereto and to the other conditions of this
Agreement. Sub expressly reserves the right to modify the terms of the Offer
and to waive any condition of the Offer, except that, without the consent of the
Company, Sub shall not (i) reduce the number of shares of Common Stock subject
to the Offer, (ii) reduce the price per share of Common Stock to be paid
pursuant to the Offer, (iii) modify or add to the conditions set forth in
Exhibit A or otherwise amend the Offer in any manner materially adverse to the
Company's stockholders, (iv) except as provided in the next two sentences,
extend the Offer, or (v) change the form of consideration payable in the Offer.
Notwithstanding the foregoing, Sub may, without the consent of the Company, (i)
extend the Offer for a period of not more than 10 business days beyond
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the initial expiration date of the Offer (which initial expiration date shall be
20 business days following commencement of the Offer), if on the date of such
extension less than 90% of the outstanding shares of Common Stock have been
validly tendered and not properly withdrawn pursuant to the Offer, (ii) extend
the Offer from time to time if at the initial expiration date or any extension
thereof the Minimum Tender Condition (as defined in Exhibit A) or any of the
other conditions to Sub's obligation to purchase shares of Common Stock set
forth in paragraphs (a), (b) and (e) of Exhibit A shall not be satisfied or
waived, until such time as such conditions are satisfied or waived, (iii) extend
the Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer and (iv) extend the Offer for any reason for a
period of not more than 10 business days beyond the latest expiration date that
would otherwise be permitted under clause (i), (ii) or (iii) of this sentence.
In addition, Sub shall at the request of the Company extend the Offer for five
business days if at any scheduled expiration date of the Offer any of the
conditions to Sub's obligation to purchase shares of Common Stock shall not be
satisfied; provided, however, that Sub shall not be required to extend the Offer
beyond December 31, 1997. On the terms and subject to the conditions of the
Offer and this Agreement, Sub shall, and Parent shall cause Sub to, pay for all
shares of Common Stock validly tendered and not withdrawn pursuant to the Offer
that Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer shall be made, together with any
supplements or amendments thereto, the "Offer Documents"). The Offer Documents
shall comply as to form in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder and, on the date filed with the SEC and
on the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent or Sub with
respect to information
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supplied by the Company for inclusion in the Offer Documents. Each of Parent,
Sub and the Company shall promptly correct any information provided by it for
use in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and each of Parent and Sub
shall take all steps necessary to amend or supplement the Offer Documents and to
cause the Offer Documents as so amended or supplemented to be filed with the SEC
and to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable Federal securities laws. Parent and Sub shall
provide the Company and its counsel in writing with any comments Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis all funds necessary to purchase any shares of Common Stock that Sub
becomes obligated to purchase pursuant to the Offer.
SECTION 1.02. COMPANY ACTIONS. (a) The Company hereby approves of
and consents to the Offer and represents that the Board of Directors of the
Company (the "Company Board"), at a meeting duly held, has unanimously duly
adopted resolutions (i) determining that the Offer ,the Merger and the
Transactions are advisable and fair to and in the best interests of the
stockholders of the Company, (ii) approving (A) the acquisition of the Company
by Parent on the terms and subject to the conditions set forth in this Agreement
and (B) the Offer, the Merger and the other Transactions, (iii) approving this
Agreement, (iv) amending the Company's Bylaws such that Section 3-702 of the
Maryland General Corporation Law ("MGCL") is inapplicable to the Offer, the
Merger, and the Transactions and exempting the Offer, the Merger and the
Transactions from Section 3-602 of the MGCL and (v) recommending that the
stockholders of the Company accept the Offer, tender their shares of Common
Stock pursuant to the Offer and approve the Merger; provided, however, that such
approval, determination, recommendation or other action may be withdrawn,
modified or amended in accordance with Section 6.02(b) and Section 7.01.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendations described in
Section 1.02(a) and shall as promptly as practicable thereafter mail the
Schedule 14D-9 to the stockholders of the Com-
<PAGE>
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pany. The Schedule 14D-9 shall comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations promulgated
thereunder and, on the date filed with the SEC and on the date first published,
sent or given to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or Sub for inclusion in the Schedule 14D-9. Each of the Company, Parent
and Sub shall promptly correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company shall take all
steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the extent
required by applicable Federal securities laws. The Company shall provide
Parent and its counsel in writing with any comments the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall either (i) cause
its transfer agent to furnish Sub promptly with mailing labels containing the
names and addresses of the record holders of Common Stock as of a recent date
and of those persons becoming record holders subsequent to such date, together
with copies of all lists of stockholders, security position listings and other
computer files and all other information in the Company's possession or control
regarding the beneficial owners of Common Stock and shall furnish to Sub such
information and assistance, and of stockholders, security position listings
(including updated lists of stockholders, security position listings and
computer files) as Parent may reasonably request in communicating the Offer to
the Company's stockholders or (ii) make available to Sub the services of the
Company's transfer agent for purposes of the dissemination of the Offer
Documents and any other documents necessary to consummate the Merger. Subject
to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Sub shall hold in confidence the
information contained in any such labels, listings and files, shall use such
information only in connection with the Offer, the Merger and, if this Agreement
shall be terminated, shall,
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upon request, promptly deliver to the Company any copies of such information
then in their possession.
ARTICLE II
The Merger
SECTION 2.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the MGCL, Sub
shall be merged with and into the Company at the Effective Time of the Merger
(as hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the MGCL.
SECTION 2.02. CLOSING. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Article VIII (the "Closing Date"), at the offices of
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005, unless
another date or place is agreed to in writing by the parties hereto.
SECTION 2.03. EFFECTIVE TIME. On the Closing Date, the parties shall
file articles of merger or other appropriate documents (in any such case, the
"Articles of Merger") executed in accordance with the relevant provisions of the
MGCL and shall make all other filings or recordings required under the MGCL.
The Merger shall become effective at such time as the Articles of Merger are
accepted for record by the State Department of Assessment and Taxation of
Maryland ("SDAT"), or at such other time as Sub and the Company shall agree and
shall specify in the Articles of Merger (the time the Merger becomes effective
being the "Effective Time of the Merger").
SECTION 2.04. CHARTER AND BY-LAWS. (a) The Restated Certificate of
Incorporation of the Company (the "Charter"), as in effect immediately prior to
the Effective Time shall be the charter of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
(b) The Bylaws of Sub as in effect at the Effective Time of the Merger shall be
the Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable Law.
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SECTION 2.05. DIRECTORS. The directors of Sub at the Effective Time
of the Merger shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 2.06. OFFICERS. The officers of the Company at the Effective
Time of the Merger shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE III
Effect of the Merger on the Stock of the Constituent
Corporations; Exchange of Certificates
SECTION 3.01. EFFECT ON STOCK. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any shares of Common Stock or any shares of capital stock of Sub:
(a) Each issued and outstanding share of the stock of Sub shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $0.01 per share, of the Surviving Corporation.
(b) Each share of Common Stock that is owned by any subsidiary of the
Company and each share of Common Stock that is owned by Parent, Sub or any
other subsidiary of Parent shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Each issued and outstanding share of Common Stock shall be converted
into the right to receive from the Surviving Corporation in cash, without
interest, the price per share of Common Stock paid pursuant to the Offer
(the "Merger Consideration"). As of the Effective Time of the Merger, all
such shares of Common Stock shall no longer be outstanding and shall
automatically be canceled
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and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Common Stock shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration,
without interest.
SECTION 3.02. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as paying agent (the "Paying Agent")
for the payment of the Merger Consideration upon surrender of certificates
representing Common Stock.
(b) PARENT TO PROVIDE FUNDS. Parent shall take all steps necessary
to enable and cause the Surviving Corporation to provide to the Paying Agent on
a timely basis, immediately following the Effective Time of the Merger, all the
funds necessary to pay for the shares of Common Stock pursuant to Section 3.01,
it being understood that any and all interest earned on funds made available to
the Paying Agent in accordance with this Agreement shall be turned over to
Parent.
(c) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time of the Merger, the Paying Agent shall mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time of the Merger represented outstanding shares of Common Stock (the
"Certificates") whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 3.01 (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 Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the shares of Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.01, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Common Stock which is not registered
in the transfer records of the Company, payment may be made to a per-
<PAGE>
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son other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 3.02, each Certificate shall
be deemed at any time after the Effective Time of the Merger to represent only
the right to receive upon such surrender the amount of cash, without interest,
into which the shares of Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 3.01. No interest
shall be paid or accrue on the cash payable upon the surrender of any
Certificate.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. All cash paid upon
the surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Common Stock theretofore represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Common Stock which were
outstanding immediately prior to the Effective Time of the Merger. If, after
the Effective Time of the Merger, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article III.
(e) NO LIABILITY. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to seven years after
the Effective Time of the Merger (or immediately prior to such earlier date on
which any payment pursuant to this Article III would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 4.04)),
the payment in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
<PAGE>
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ARTICLE IV
Representations and Warranties
of the Company
The Company represents and warrants to Parent and Sub, except as
disclosed in the SEC Documents (as defined below) or in the Disclosure Schedule
attached hereto (the "Disclosure Schedule") as follows:
SECTION 4.01. STANDING AND CORPORATE POWER. Each of the Company and
each of its Significant Subsidiaries (as defined below) is a corporation validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of the Company and each of its
Significant Subsidiaries is duly qualified or licensed to do business and in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a material adverse
effect on the business, properties, assets, condition (financial or otherwise),
or results of operations or prospects of the Company and its subsidiaries taken
as a whole other than as the result of currency exchange rate fluctuations,
customs, tax and duty law changes and changes relating to the economy generally
or to the Company's industry in general and not specifically relating to the
Company or any of its Subsidiaries (a "Company Material Adverse Effect"). The
Company has delivered to Parent complete and correct copies of its Restated
Charter and By-laws and the certificates of incorporation and by-laws of its
Significant Subsidiaries, in each case as amended to the date of this Agreement.
For purposes of this Agreement, a "Significant Subsidiary" means any subsidiary
of the Company that constitutes a significant subsidiary within the meaning of
Rule 1-02 of Regulation S-X of the SEC.
SECTION 4.02. SUBSIDIARIES. Section 4.02 of the Disclosure Schedule
lists each subsidiary of the Company and indicates those subsidiaries that
constitute Significant Subsidiaries. All the outstanding shares of capital
stock of, or other equity interests in, each such Significant Subsidiary have
been validly issued and are fully paid and nonassessable and, except as set
forth in Section 4.02 of the Disclosure Schedule, are owned by the Company, by
another wholly owned
<PAGE>
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subsidiary of the Company or by the Company and another such wholly owned
subsidiary, free and clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively, "Liens").
Except for the capital stock of its subsidiaries and except for the ownership
interests set forth in Section 4.02 of the Disclosure Schedule hereto, the
Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, joint venture or other
entity.
SECTION 4.03. CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 75,000,000 shares of Common Stock, par value $0.01 per
share. As of July 1, 1997, (i) 27,340,088 shares of Common Stock were issued
and outstanding, and (ii) 1,572,316 shares of Common Stock were reserved for
issuance pursuant to the outstanding employee stock options ("Plan Options")
granted pursuant to the Stock Plans (as defined in Section 7.04), and other
options ("Other Options" and, together with the Plan Options, the "Stock
Options") granted to employees, directors and consultants and former employees,
directors and consultants of the Company. Except as set forth above, as of the
date of this Agreement, no shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of the Company are, and all shares which may be issued
pursuant to the Stock Plans or pursuant to the agreements representing
outstanding Other Options described in clause (iii) above shall be, when issued
and paid for in accordance with the terms of the applicable Stock Plan or Other
Option, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are not any bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth in Section 4.03
of the Disclosure Schedule hereto, as of the date of this Agreement, there are
not any securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
Significant Subsidiaries is a party or by which any of them is bound obligating
the Company or any of its Significant Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or any of its Significant Subsidiaries or
obligating the Company or any of its Significant Subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
<PAGE>
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Agreement, there are not any outstanding contractual obligations of the Company
or any of its Significant Subsidiaries to purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Significant
Subsidiaries or to provide funds to make any investment (in the form of a loan,
capital contribution or otherwise) in any Significant Subsidiary or any other
entity.
SECTION 4.04. AUTHORITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to adoption of this Agreement by the holders of a majority of the
outstanding shares of Common Stock, to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly authorized by all necessary
corporate action on the part of the Company, subject to approval of the Merger
and the adoption of this Agreement by the holders of a majority of the
outstanding shares of Common Stock. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. The
execution and delivery of this Agreement by the Company does not, and the
consummation of the Transactions and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Significant Subsidiaries
under, (i) the Charter or By-Laws of the Company or the comparable charter or
organizational documents of any of its Significant Subsidiaries, (ii) any loan
or credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Significant Subsidiaries or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to in
the following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any of its Significant
Subsidiaries or their respective properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts, violations, defaults, rights or
Liens or judgments, orders, decrees, statutes, law ordinances, rules or
regulations that individually or in the aggregate would not (x) have a Company
Material Adverse Effect, (y) materially impair the ability of the Company to
perform its obligations under this Agreement or (z) prevent the consummation of
any of
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the Transactions. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state or local government
or any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental Entity"),
is required by or with respect to the Company or any of its Significant
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the Transactions, except for
(i) the filing of a premerger notification and report form by the Company under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (ii)
the filing with the SEC of (x) the Schedule 14D-9, (y) a proxy or information
statement relating to the approval by the Company's stockholders of the Merger
and this Agreement, if such approval is required by law (as amended or
supplemented from time to time, the "Proxy Statement"), and (z) such reports
under Section 13(a) of the Exchange Act as may be required in connection with
the Operative Agreements and the Transactions, (iii) the filing of the Articles
of Merger with the SDAT and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do business, (iv) all
necessary consents and approvals from each of the Customs Service Bureau and
Bureau of Alcohol, Tobacco and Firearms applicable to the Merger and (v) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under the laws of any foreign country in which
the Company or any of its Significant Subsidiaries conducts any business or owns
any property or assets, the failure to obtain or make would not have a Material
Adverse Effect.
SECTION 4.05. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. The Company
has filed all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1994 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied as to form in all material respects
with the requirements of the Securities Act of 1933 (the "Securities Act"), or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any SEC
Document was revised or superseded by a later filed SEC Document, none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the
<PAGE>
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statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto in effect at the time of the filing of the respective SEC
Documents were prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved and
fairly presented the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the SEC Documents hereto, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company and
its consolidated subsidiaries or in the notes thereto, except for liabilities
and obligations incurred in the ordinary course of business consistent with past
practice since the date of the most recent consolidated balance sheet included
in the SEC Documents which, individually or in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.06. INFORMATION SUPPLIED. None of the information supplied
or to be supplied by the Company for inclusion or incorporation by reference in
the Offer Documents, the Schedule 14D-9, the information statement to be filed
by the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under Exchange Act (the "Information Statement") or the Proxy Statement will, in
the case of the Offer Documents, the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents, the Schedule 14D-9 and
the Information Statement are filed with the SEC or first published, sent or
given to the Company's stockholders, or, in the case of the Proxy Statement, at
the time the Proxy Statement is first mailed to the Company's stockholders or at
the time of the meeting of the Company's stockholders held to vote on adoption
of this Agreement, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Schedule 14D-9, the Information Statement and the
Proxy Statement will comply as to form in all
<PAGE>
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material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
SECTION 4.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in Section 4.07 of the Disclosure Schedule, from January 26, 1997 to the
date of this Agreement, the Company has conducted its business only in the
ordinary course, and there has not been (i) any Company Material Adverse Effect,
(ii) except for regular quarterly dividends payable, any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, Stock
or property) with respect to the Common Stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (A) any granting by the
Company or any of its Significant Subsidiaries to any executive officer of the
Company or any Significant Subsidiaries of any increase in compensation, except
as was required under employment agreements in effect as of the date of the most
recent audited financial statements included in the SEC Documents, (B) any
granting by the Company or any of its Significant Subsidiaries to any such
executive officer of any increase in severance or termination pay, except as was
required under employment, severance or termination agreements in effect as of
the date of the most recent audited financial statements included in the SEC
Documents or (C) any entry by the Company or any of its Significant Subsidiaries
into any employment, severance or termination agreement with any such executive
officer, (v) any damage, destruction or loss, whether or not covered by
insurance, that has or could reasonably be expected to have a Company Material
Adverse Effect on the Company and its subsidiaries taken as a whole, (vi) any
change in accounting methods, principles or practices by the Company materially
affecting its assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles or (vii) any
action which would have been prohibited without Parent's approval under Section
6.01(a) if taken between the date of this Agreement and the Effective Time of
the Merger.
SECTION 4.08. LITIGATION. Except as set forth in Section 4.08 of the
Disclosure Schedule, as of the date of this Agreement (i) there is no single or
series of related suits, actions or proceedings pending or, to the knowledge of
the Com-
<PAGE>
-16-
pany, threatened against the Company or any of its Significant Subsidiaries, or
any unsatisfied judgment against the Company or any of its Significant
Subsidiaries, relating to or involving an amount greater than $500,000 and (ii)
there is not any judgment, decree, injunction or similar order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
Significant Subsidiaries or other single or series of related suits, actions or
proceedings pending or, to the knowledge of the Company, threatened that,
individually or in the aggregate, could reasonably be expected to have a Company
Material Adverse Effect or prevent the consummation of the Transactions.
SECTION 4.09. ABSENCE OF CHANGES IN BENEFIT PLANS. From January 26,
1997, to the date of this Agreement, there has not been any adoption or
amendment in any material respect by the Company or any of its Significant
Subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company or any of its
Significant Subsidiaries (other than with respect to a Foreign Benefit Plan, as
defined in Section 4.10(v)) (collectively, the "Benefit Plans"). Except as set
forth in Section 4.09 of the Disclosure Schedule, there are no employment,
consulting, severance, termination or indemnification agreements, arrangements
or understandings between the Company or any of its Significant Subsidiaries and
any current or former employee, officer or director of the Company or any of its
Significant Subsidiaries.
SECTION 4.10. ERISA COMPLIANCE. (i) Section 4.10 of the Disclosure
Schedule hereto contains a list of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (sometimes referred to herein as "Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(l) of ERISA) and all
other Benefit Plans (other than Foreign Benefit Plans) maintained, or
contributed to, by the Company, any entity which is under common control with
the Company under Code Section 414 ("ERISA Affiliate"), or any of the Company's
Significant Subsidiaries for the benefit of any current or former employees,
officers or directors of the Company or any of its ERISA Affiliates or
Significant Subsidiaries. The Company has made available to Parent true,
complete and correct copies of
<PAGE>
-17-
(A) each (or, in the case of any unwritten Benefit Plans, descriptions thereof),
(B) the most recent annual report on Form 5500 filed with the Internal Revenue
Service with respect to each Benefit Plan (if any such report was required), (C)
the most recent actuarial valuations, if any, for the Benefit Plans, (D) the
most recent description for each Benefit Plan for which such summary plan
description is required and (C) each trust agreement and group annuity contract
relating to any Benefit Plan.
(ii) All Pension Plans (other than Foreign Benefit Plans as defined in
Section 4.10(v)) ("U.S. Pension Plans) have been the subject of determination
letters from the Internal Revenue Service to the effect that such Pension Plans
are qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"), or are standardized prototype plans which properly rely on such
determination letters of the plans' sponsor and no such determination letter has
been revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any event occurred, nor has any such U.S. Pension Plan been
amended since the date of its most recent determination letter or application
therefor in any respect that would adversely affect its qualifications.
(iii) Each Benefit Plan has been administered in compliance with
its terms and applicable provisions of ERISA and the Code except for any
instances of non-compliance that, individually or in the aggregate, are not
reasonably expected to have a Company Material Adverse Effect. Neither the
Company nor any Benefit Plans have engaged in any prohibited transaction as
defined in ERISA Section 406 or Code Section 4975 that could have a Company
Material Adverse Effect. No conditions exist in connection with any Benefit
Plan (other than claims for benefits or contributions in the ordinary course)
that could give rise to liability under ERISA or the Code that would reasonably
be expected to have a Company Material Adverse Effect. None of the U.S. Pension
Plans has an "accumulated funding deficiency" (as such term is defined in
Section 302 of ERISA or Section 412 of the Code), whether or not waived, and all
minimum funding obligations have been made when due. Neither any of such
Benefit Plans nor any of such trusts has been terminated, nor has there been any
"reportable event" (as that term is defined in Section 4043 of ERISA) with
respect thereto, during the last six years which could give rise to liability
that would reasonably be expected to have a Company Material Adverse Effect.
Neither the Company, any of its subsidiaries nor any entity required to be
aggregated with the Company under
<PAGE>
-18-
Section 414 of the Code has incurred any liability under Title IV of ERISA
(other than insurance premiums) that could reasonably be expected to have a
Company Material Adverse Effect and that has not been satisfied as of the date
hereof. Neither the Company nor any ERISA Affiliates has had any obligation to
contribute to a multiemployer plan (as defined in ERISA Section 3(37) or Code
Section 414(f)) in the past six years.
(iv) With respect to any Benefit Plan that is an employee welfare benefit
plan, except as disclosed in the Disclosure Schedule, each such Benefit Plan
(including any such Plan covering retirees or other former employees) may be
amended or terminated without material liability to the Company or any of its
ERISA Affiliates or Significant Subsidiaries on or at any time after the
consummation of the Offer.
(v) With respect to any employee benefit plan, program or arrangement
maintained the Company by an ERISA Affiliate or Significant Subsidiary that is
maintained outside the United States primarily for the benefit of persons
substantially all of whom are nonresident aliens as to the United States (a
"Foreign Benefit Plan"), each such Foreign Benefit Plan has been maintained in
compliance with all applicable law other than any noncompliance that would not
reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has incurred any obligation in connection
with the termination of or withdrawal from any Foreign Benefit Plan other than
any obligation that would not reasonably be expected to have a Company Material
Adverse Effect. The present value of the accrued benefit liabilities (whether
or not vested) under each Foreign Benefit Plan which is required to be funded,
determined as of the end of the most recently ended fiscal year of the Company
on the basis of actuarial assumptions, each of which is reasonable, did not
exceed the current value of the assets of such Foreign Benefit Plan unless such
excess would not reasonably be expected to have a Company Material Adverse
Effect, and for each Foreign Benefit Plan which is not required to be funded,
the obligations of such Foreign Benefit Plan are properly accrued on the balance
sheets of the Company or the Significant Subsidiary unless such nonaccrual of
the balance sheets would not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 4.11. TAXES. Each of the Company and each of its Significant
Subsidiaries has filed all Federal income tax returns and all other tax returns
and reports required to be filed by it, except to the extent that a failure to
file, in the individual or in the aggregate, would not reasonably be ex
<PAGE>
-19-
pected to result in a Company Material Adverse Effect. All such returns are
complete and correct in all respects, other than any inaccuracy or
incompleteness that, in the individual or in the aggregate, would not reasonably
be expected to result in a Company Material Adverse Effect. The Company and
each of its Significant Subsidiaries has paid (or the Company has paid on its
subsidiaries' behalf) all taxes shown to be due on such returns and reports
except to the extent that a failure to pay, in the individual or in the
aggregate, would not reasonably be expected to result in a Company Material
Adverse Effect. The Company and each of its Significant Subsidiaries has paid
(or the Company has paid on its subsidiaries' behalf) all taxes for which no
return was required to be filed, except to the extent that a failure to pay, in
the individual or in the aggregate, would not reasonably be expected to result
in a Company Material Adverse Effect. All taxes not previously paid do not
exceed the reserve in the most recent financial statements contained in the SEC
Documents for taxes payable by the Company and its Significant Subsidiaries for
all taxable periods and portions thereof through the date of such financial
statements by an amount that would reasonably be expected to result in a Company
Material Adverse Effect. All liabilities for taxes incurred by the Company or
any of its Significant Subsidiaries since the date of the most recent
consolidated balance sheet included in the SEC Documents have been incurred in
the ordinary course of business consistent with past practice, other than any
liabilities for taxes that, individually or in the aggregate, would not
reasonably be expected to result in a Company Material Adverse Effect. No
deficiencies for any taxes have been proposed, asserted or assessed against the
Company or any of its Significant Subsidiaries in writing that would reasonably
be expected to have a Company Material Adverse Effect, and no requests for
waivers of the time to assess any such taxes are pending. The Federal income
tax returns of the Company and each of its Significant Subsidiaries consolidated
in such returns have been examined by and settled with the United States
Internal Revenue Service for all years since 1994. As used in this Agreement,
"taxes" shall include all Federal, state, local and foreign income, franchise,
property, sales, excise and other taxes, tariffs or governmental charges of any
nature whatsoever.
SECTION 4.12. NO EXCESS PARACHUTE PAYMENTS. Other than payments that
may be made to the persons previously disclosed in writing to Parent, any amount
that could be received (whether in cash or property or the vesting of property)
as a result of any of the Transactions by any employee, officer or director of
the Company or any of its affiliates who is a
<PAGE>
-20-
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Benefit Plan currently in effect
would not be characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
SECTION 4.13. VOTING REQUIREMENTS. The affirmative vote of the
holders of a majority of the outstanding shares of Common Stock approving the
Merger is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve the Merger and the Transactions.
SECTION 4.14. STATE TAKEOVER STATUTES. The Board of Directors of the
Company has (i) duly adopted a resolution exempting the Offer, the Merger and
the Transactions from Section 3-602 of the MGCL and (ii) has amended the
Company's By-laws such that the Offer, the Merger and the Transactions are
exempt from the provisions of 3-702 of the MGCL. To the best of the Company's
knowledge, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Offer, the Merger, this Agreement or any of
the Transactions.
SECTION 4.15. BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than Compass
Partners International, LLC ("Compass"), the fees and expenses of which shall be
paid by the Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of the Company. The Company's current
estimate of fees and expenses incurred and to be incurred by the Company in
connection with this Agreement and the Transactions (including the fees of the
Company's legal counsel) are set forth in Section 4.15 of the Disclosure
Schedule hereto. A true and complete copy of the engagement letter between the
Company and Compass has been provided to Parent.
SECTION 4.16. OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of Compass, dated July 2, 1997, to the effect that, as of such date
and based upon and subject to the matters set forth therein, the consideration
to be received in the Offer and the Merger by the Company's stockholders is fair
to the Company's stockholders from a financial point of view, and a signed copy
of such opinion has been delivered to Parent.
<PAGE>
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SECTION 4.17. INTELLECTUAL PROPERTY.
(i) The Company and its Significant Subsidiaries own, license or
otherwise have the right to use all copyrights, trade names, trademarks, service
marks, trade secrets, know-how, designs, software, patents, licenses and other
intellectual property rights (collectively, the "Intellectual Property") that
are necessary to conduct the business of the Company and its Significant
Subsidiaries as presently conducted free and clear of all Liens, other than
those rights the absence of which individually or in the aggregate would not
reasonably be expected to have a Company Material Adverse Effect. Section 4.17
of the Disclosure Schedule contains a list setting forth all material registered
patents and trademarks and applications therefor that are owned by the Company
or any of its Significant Subsidiaries. There are no material trade names,
trademarks or service marks owned by the Company or any of its Significant
Subsidiaries that are not registered or the subject of applications therefor.
(ii) As of the date of this Agreement, there is no suit, action or
proceeding pending or, to the Company's knowledge, threatened against or
affecting the Company or any of its Significant Subsidiaries, which challenges
the legality, validity, enforceability of, or the Company's or any of its
Significant Subsidiaries' use or ownership of any of the Intellectual Property
owned by the Company or any of its Significant Subsidiaries or, to the Company's
knowledge, licensed to the Company or to any of its Significant Subsidiaries,
other than any such suit, action or proceeding that individually or in the
aggregate would not reasonably be expected to have a Company Material Adverse
Effect.
(iii) The conduct of the Company's and its Significant
Subsidiaries' business, the Intellectual Property owned or used by the Company
and its Significant Subsidiaries, and the products or services produced, sold or
licensed by the Company and its Significant Subsidiaries do not infringe,
violate or misappropriate any Intellectual Property right or any other
proprietary right of any person or give rise to any obligations to any person as
a result of co-authority, co-authorship, co-inventorship, or any express or
implied contract for any use or transfer, other than any such infringement,
violation or appropriation that individually or in the aggregate would not
reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.18. COMPLIANCE WITH LAWS. The Company and its Significant
Subsidiaries are in material compliance with,
<PAGE>
-22-
and have not violated any applicable law, rule or regulation of any United
States federal, state, local, or foreign government or agency thereof which
materially affects the business, properties or assets of the Company and its
Significant Subsidiaries, and no notice, charge, claim, action or assertion has
been received by the Company or any of its Significant Subsidiaries or has been
filed, commenced or, to the Company's knowledge, threatened against the Company
or any of its Significant Subsidiaries alleging any such violation, except for
any matter which could not reasonably be expected to have a Company Material
Adverse Effect. All material licenses, permits and authorizations which are
required under all laws, rules and regulations to conduct the Company's and its
Significant Subsidiaries' operations as presently conducted are in full force
and effect, no appeal nor any other action is pending to revoke any such permit,
license or authorization, and the Company and its Significant Subsidiaries are
in full compliance with all terms and conditions of all such permits, licenses
and authorizations, except where the failure to have all such permits, licenses
and other authorizations, the failure to be in full force and effect and in
compliance therewith or the existence of any such appeal or other action would
not reasonably be expected to have a Company Material Adverse Effect or prevent
consummation of the Transactions.
SECTION 4.19. ENVIRONMENTAL PROTECTION.
(i) The Company and its Significant Subsidiaries have obtained all
permits, licenses and other authorizations which are required under the
Environmental Laws (as defined below) for the ownership, use and operation of
each property owned, operated or leased by the Company and its Significant
Subsidiaries (the "Property"), all such permits, licenses and authorizations are
in full force and effect, no appeal nor any other action is pending to revoke
any such permit, license or authorization, and the Company and its Significant
Subsidiaries are in full compliance with all material terms and conditions of
all such permits, licenses and authorizations, except where the failure to have
all such permits, licenses and other authorizations, the failure to be in full
force and effect and in compliance therewith or the existence of any such appeal
or other action would not reasonably be expected to have a Company Material
Adverse Effect.
(ii) The Company and its Significant Subsidiaries are in compliance in
all respects with all Environmental Laws, except where the failure to be in
compliance therewith is not
<PAGE>
-23-
reasonably expected to individually or in any series of related occurrences
result in a Company Material Adverse Effect.
(iii) There is no suit, action, demand, claim or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its Significant Subsidiaries nor, to the knowledge of the Company, is
there any investigation by any Governmental Entity under way, in any case
relating in any way to alleged noncompliance by the Company or any of its
Significant Subsidiaries with, or liability of the Company or any of its
Significant Subsidiaries under Environmental Laws.
(iv) The Company and its Significant Subsidiaries have not, and to the
Company's knowledge, no other person has, Released (as defined below), placed,
stored, buried or dumped any material quantities of Hazardous Substances (as
defined below) on, beneath or adjacent to the Property or, to the knowledge of
the Company, any property formerly owned, operated or leased by the Company or
its Significant Subsidiaries, except for the presence of such Hazardous
Substances as could not reasonably be expected to have a Company Material
Adverse Effect.
(v) Neither the Company nor any of its Significant Subsidiaries has
entered into any agreement that requires them to pay to, reimburse, guarantee,
pledge, defend, indemnify or hold harmless any person for or against any
liabilities or costs in connection with any currently pending or, to the
Company's knowledge, currently threatened suit, action, notice, proceeding or
investigation relating to alleged noncompliance with, or liability under,
Environmental Laws.
(vi) The Company and its Significant Subsidiaries have not received
any written notice or written order from any Governmental Entity or private
entity advising them that they are responsible for or potentially responsible
for cleanup or paying for the cost of Cleanup of any Hazardous Substances and
neither the Company nor any Significant Subsidiary has entered into any
agreements concerning such Cleanup, nor is the Company aware of any material
facts which the Company has specific grounds to believe will give rise to such
notice, order or agreement.
(vii) As used in this Agreement: "Cleanup" shall mean all actions
required to (a) cleanup, remove, treat or remediate Hazardous Substances in the
indoor or outdoor environment, (b) prevent the Release of Hazardous Substances
so that they do not migrate, endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, (c) perform pre-
<PAGE>
-24-
remedial studies and investigations and post-remedial monitoring and care, (d)
respond to any government requests for information or documents in any way
relating to cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Hazardous Substances in the indoor or
outdoor environment or (e) any administrative, judicial, or other proceedings
related to the above. "Environmental Laws" shall mean all applicable foreign,
federal, state and local laws, regulations, rules and ordinances relating to
pollution or protection of the environment or human health and safety, including
laws relating to Releases or threatened Releases of Hazardous Substances into
the indoor or outdoor environment including ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Substances and all laws and regulations with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Substances, and all laws relating to endangered or
threatened species of fish, wildlife and plants and the management or use of
natural resources; "Hazardous Substance" means: (a) any petrochemical or
petroleum products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls and radon gas; (b) any chemicals, materials or substances defined as
or included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "restricted hazardous materials", "extremely hazardous
substances", "toxic substances", "contaminants" or "pollutants" or words of
similar meaning and regulatory effect; or (c) any other chemical, material or
substance exposure to which is prohibited, limited or regulated by any
Environmental Law; and "release" shall mean any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal, Leaching
or migration into the indoor or outdoor environment including ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Hazardous Substances through or in the
air, soil, surface water, groundwater or property.
SECTION 4.20. LABOR RELATIONS AND EMPLOYMENT. Except as set forth in
Section 4.20 of the Disclosure Schedule, (i) there is no labor strike, or
material dispute, slowdown, stoppage or lockout actually pending, or to the
knowledge of the Company, threatened against or affecting the business of the
Company and its Significant Subsidiaries and during the past five years there
has not been any such action that was ma-
<PAGE>
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terial to the Company; (ii) to the knowledge of the Company, no union claims to
represent the employees of the Company and its Significant Subsidiaries; (iii)
neither the Company nor any Significant Subsidiary of the Company is a party to
or bound by any collective bargaining or similar agreement with any labor
organization, and no work rules or practices agreed to with any labor
organization or employee association are applicable to employees of the Company
or any Significant Subsidiary; (iv) to the knowledge of the Company, none of the
employees of the Company or any Significant Subsidiary is represented by any
labor organization; (v) there is no unfair labor practice charge or complaint
against the Company or any Significant Subsidiary pending or, to the knowledge
of the Company, threatened before the National Labor Relations Board or any
similar state or foreign agency which, if adversely determined, would reasonably
be expected to have a Company Material Adverse Effect; (vi) there is no
grievance arising out of any collective bargaining agreement or other grievance
procedure which, if adversely determined, would reasonably be expected to have a
Company Material Adverse Effect; (vii) to the knowledge of the Company, no
charges with respect to or relating to the Company or any Significant Subsidiary
are pending before the Equal Employment Opportunity Commission or any other
agency responsible for the prevention of unlawful practices which, if adversely
determined, would reasonably be expected to have a Company Material Adverse
Effect; and (viii) the Company has not received notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws to conduct an investigation with respect to or relating to
the Company or any Significant Subsidiary and, to the knowledge of the Company,
no such investigation is in progress.
SECTION 4.21. CONTRACTS. Each material note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its Significant Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound (the
"Material Contracts") is a valid and binding obligation of the Company or such
Significant Subsidiaries, as applicable, and in full force and effect, except
where failure to be valid and binding and in full force and effect would not
reasonably be expected to have a Company Material Adverse Effect, and there are
no defaults by the Company or any of its Significant Subsidiaries or, to the
Company's knowledge, any other party thereto, thereunder, except those defaults
that would not reasonably be expected to have a Company Material Adverse Effect.
<PAGE>
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SECTION 4.22. INVENTORY. Except as disclosed in Section 4.22 of the
Disclosure Schedule hereto, all inventory reflected on the most recent unaudited
balance sheet of the Company and all inventory acquired since the date of such
balance sheet, in either instance, other than inventory sold in the ordinary
course of business consistent with past practice is, as of the date hereof, the
property of the Company and its subsidiaries, free and clear of any Lien, other
than statutory Liens being contested in good faith, has not been pledged as
collateral, and is not held on consignment from others. Except as disclosed on
Schedule 4.22 hereto, all inventories held by the Company and its subsidiaries
at any location are (a) valued on the most recent unaudited balance sheet of the
Company at lower of cost or market, (b) except to the extent of any reserve
therefor on the most recent audited balance sheet of the Company, based on the
Company's experience, not obsolete, slow-moving, or damaged.
SECTION 4.23. BALANCE SHEET RESERVES. The reserves for accounts
receivable reflected in the most recent audited balance sheet of the Company
have been established in accordance with GAAP and such reserves, taken as a
whole, based on the Company's experience, are adequate to cover any losses
relating to collectibility of accounts receivable.
SECTION 4.24. FOREIGN CORRUPT PRACTICES ACT. Neither the Company
nor any of its Significant Subsidiaries, nor, to the Company's knowledge, any
director, officer or employee of the Company or any of its Significant
Subsidiaries has, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity, made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds, violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment.
ARTICLE V
Representations and Warranties of Parent and Sub
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
<PAGE>
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SECTION 5.01. STANDING AND CORPORATE POWER. Each of Parent and Sub
is a corporation validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted.
SECTION 5.02. AUTHORITY; NONCONTRAVENTION. Parent and Sub have all
the requisite corporate power and authority to enter into this Agreement and to
consummate the Transactions. The execution and delivery of this Agreement and
the consummation of the Transactions have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and binding
obligation of each such party, enforceable against each such party in accordance
with its terms. The execution and delivery of the Operative Agreements do not,
and the consummation of the Transactions and compliance with the provisions of
the Operative Agreements will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of Parent or any of its subsidiaries under,
(i) the certificate of incorporation or by-laws of Parent or Sub or the
comparable charter or organizational documents of any other subsidiary of
Parent, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to Parent or Sub or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent, Sub or any other subsidiary of Parent or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights or Liens or
judgments, orders, decrees, statutes, laws, ordinances, rules or regulations
that individually or in the aggregate would not (x) have a material adverse
effect on Parent and its subsidiaries taken as a whole, (y) impair the ability
of Parent and Sub to perform their respective obligations under this Agreement
or (z) prevent the consummation of any of the Transactions. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent, Sub or
any other subsidiary of Parent in connection with the execution and delivery of
this Agreement or the consummation by Parent or Sub, as the case may be, of any
of the Transactions, except for
<PAGE>
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(i) the filing of a premerger notification and report form under the HSR Act,
(ii) the filing with the SEC of the Offer Documents and such reports under
Sections 13 and 16(a) of the Exchange Act as may be required in connection with
the Operative Agreements and the Transactions, (iii) the filing of the
Certificate of Merger with the Maryland Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iv) all necessary consents and approvals from each of
the Customs Service Bureau and the Bureau of Alcohol, Tobacco and Firearms
applicable to the Merger and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the "takeover" or "blue sky" laws of various states.
SECTION 5.03. INFORMATION SUPPLIED. None of the information supplied
or to be supplied by Parent or Sub for inclusion or incorporation by reference
in the Offer Documents, the Schedule 14D-9, the Information Statement or the
Proxy Statement will, in the case of the Offer Documents, the Schedule 14D-9 and
the Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or, in the case of the
Proxy Statement, at the date the Proxy Statement is first mailed to the
Company's stockholders or at the time of the meeting of the Company's
stockholders held to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation by reference therein.
SECTION 5.04. BROKERS. No broker, investment banker, financial
advisor or other person, other than NatWest Markets Corporate Finance Advisory
Limited, the fees and expenses of which shall be paid by Parent, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the Transactions based upon arrangements made by or on behalf
of Parent or Sub.
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SECTION 5.05. FINANCING. Parent and Sub have readily available all
of the funds necessary to consummate the Offer and the Merger on the terms
contemplated by the Operative Agreements, and, at the expiration of the Offer
and the Effective Time of the Merger, Parent and Sub shall have available all of
the funds necessary for the acquisition of all shares of Common Stock pursuant
to the Offer and the Merger, as the case may be, and to perform their respective
obligations under this Agreement.
ARTICLE VI
Covenants Relating to Conduct of Business
SECTION 6.01. CONDUCT OF BUSINESS.
(a) ORDINARY COURSE. During the period from the date of this
Agreement to the earlier of the Effective Time of the Merger and the appointment
or election of Sub's designees to the Company Board pursuant to Section 7.06
(such earlier time, the "Control Time"), the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and, to
the extent consistent therewith, use all reasonable efforts to preserve intact
their current business organizations, keep available the services of their
current officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired at the Effective Time of the Merger. Without limiting the
generality of the foregoing, except as contemplated by this Agreement or
otherwise approved in writing by Parent, during the period from the date of this
Agreement to the Control Time, the Company shall not, and shall not permit any
of its subsidiaries to:
(i) (A) declare, set aside or pay any dividends on (except for the
regularly quarterly dividends of $.06 per share), or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by any direct or indirect wholly owned subsidiary of the
Company to its parent, (B) 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
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(C) purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any of its subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, other than the
issuance of Common Stock upon the exercise of Stock Options outstanding on
the date of this Agreement in accordance with their present terms;
(iii) amend its charter, by-laws or other comparable charter or
organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (B) any
assets that are material, individually or in the aggregate, to the Company
and its subsidiaries taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien (except for such Liens required by law) or otherwise dispose of
any of its properties or assets, except in the ordinary course of business
consistent with past practice;
(vi) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice and pursuant to existing agreements, or (B) make any loans,
advances or capital contributions to, or investments in, any other person,
other than to the Company or any direct or indirect wholly owned subsidiary
of the Company;
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(vii) make or agree to make any new capital expenditure or
expenditures not contemplated by the Company's current budget, as such
budget is set forth in Section 6.01 of the Disclosure Schedule;
(viii) (A) grant to any officer of the Company or any of its
subsidiaries any increase in compensation, except as was required under
employment agreements in effect as of January 26, 1997, (B) grant to any
officer of the Company or any of its subsidiaries any increase in severance
or termination pay, except as was required under employment, severance or
termination agreements in effect as of January 26, 1997, (C) except as set
forth in Section 6.01 of the Disclosure Schedule, enter into any
employment, severance or termination agreement with any officer of the
Company or any of its subsidiaries or (D) amend any Benefit Plan in any
respect;
(ix) make any change in accounting methods, principles or practices
materially affecting the Company's assets, liabilities or business, except
insofar as may have been required by a change in generally accepted
accounting principles;
(x) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms;
(xi) except in the ordinary course of business, modify, amend or
terminate any Material Contract or waive or release or assign any material
rights or claims under any Material Contract;
(xii) make any material tax election or settle or compromise any
material income tax liability; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) OTHER ACTIONS. The Company shall not, and shall not permit any
of its subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warran-
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ties that are not so qualified becoming untrue in any material respect or (iii)
except as otherwise permitted by Section 6.02, any of the conditions to the
Offer set forth in Exhibit A, or any of the conditions to the Merger set forth
in Article VIII, not being satisfied.
(c) ADVICE OF CHANGES. The Company shall promptly advise Parent
orally and in writing of any change or event having, or which, insofar as can
reasonably be foreseen, would have, a Company Material Adverse Effect.
SECTION 6.02. NO SOLICITATION. (a) The Company shall not, nor shall
it permit any officer or director of the Company or any officer or director of
its subsidiaries to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, (i) solicit or
initiate the submission of, any Takeover Proposal (as defined below), (ii)
except as provided in Section 6.02(b), enter into any agreement with respect to
any Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect to
any Takeover Proposal, or take any other action to solicit or initiate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal; provided, however, that prior to the
acceptance for payment of shares of Common Stock pursuant to the Offer, the
Company may, after taking into account the advice of outside counsel, in
response to an unsolicited written bona fide Takeover Proposal which contains no
financing condition from a person that the Company Board reasonably believes has
the financial ability to make a Superior Proposal (as defined in Section
6.02(b)), subject to compliance with Section 6.02(c), furnish non-public
information with respect to the Company to such person pursuant to a customary
confidentiality agreement and participate in discussions or negotiations with
such person. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
executive officer or director of the Company or any of its subsidiaries or any
investment banker/attorney or other advisor or representative of the Company or
any of its subsidiaries shall be deemed to be a breach of this Section 6.02(a)
by the Company. For purposes of this Agreement, "Takeover Proposal" means any
written proposal for a merger or other business combination involving the
Company or any of its subsidiaries or any proposal or offer to acquire in any
manner, directly or indirectly, more than 20% of the equity
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securities of the Company or more than 20% of the Company's consolidated total
assets, other than the Transactions.
(b) Neither the Company Board nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or Sub, the approval or recommendation by the Company Board or any such
committee of the Offer, this Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, the Company Board, may approve or recommend (and,
in connection therewith withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger) a Superior Proposal. For purposes of this
Agreement, "Superior Proposal" means a bona fide Takeover Proposal which
contains no financing condition made by a third party on terms which the Company
Board determines in its good faith judgment, after taking into account the
written advice of the Company's investment banker, to be more favorable to the
Company's stockholders than the Offer and the Merger.
(c) The Company shall promptly advise Parent orally and in writing of
any Takeover Proposal or any inquiry with respect to or which it believes would
be reasonably likely to lead to any Takeover Proposal unless the Company Board
is advised by outside legal counsel that the furnishing of such advice would be
inconsistent with the legal obligations of the Company Board. The Company shall
keep Parent informed of the status of any such Takeover Proposal or inquiry.
(d) Nothing in this Section 6.02 shall prevent the Company and the
Company Board from complying with Rule 14e-2 under the Exchange Act, or issuing
a communication meeting the requirements of Rule 14d-9(e) under the Exchange
Act, with respect to any tender offer or otherwise prohibit the Company from
making any public disclosures required by law or the requirements of the New
York Stock Exchange; provided, however, that the Company may not, except as
permitted by Section 6.02(b), withdraw or modify its position with respect to
the Offer or the Merger or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
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ARTICLE VII
Additional Agreements
SECTION 7.01. STOCKHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT.
(a) If stockholder approval of the Merger is required by law, except to the
extent that the Company Board shall have withdrawn or modified its approval or
recommendation of the Offer, or the Merger as permitted by Section 6.02(b), the
Company shall, at Parent's request, as soon as practicable following Sub's
purchase of shares of Common Stock in the Offer satisfying the Minimum
Condition, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of the approval of the
Merger and adoption of this Agreement. The Company shall, through the Company
Board, recommend to its stockholders the approval of the Merger, except to the
extent that the Company Board shall have withdrawn or modified its approval or
recommendation of the Offer or the Merger as permitted by Section 6.02(b).
Notwithstanding the foregoing, if Sub or any other subsidiary of Parent shall
acquire at least 90% of the outstanding shares of Common Stock the parties shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders Meeting in accordance with Section 3-106 of the MGCL.
(b) If stockholder adoption of this Agreement is required by law,
except to the extent that the Company Board shall have withdrawn or modified its
approval or recommendation of the Offer or the Merger as permitted by Section
6.02(b), the Company shall, at Parent's request, as soon as practicable
following Sub's purchase of shares of Common Stock in the Offer satisfying the
Minimum Condition, prepare and file a preliminary Proxy Statement with the SEC
and shall use its reasonable efforts to respond to any comments of the SEC or
its staff and, except to the extent that the Company Board shall have withdrawn
or modified its approval or recommendation of the Offer or the Merger as
permitted by Section 6.02(b), to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after such filing. The
Company shall notify Parent promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and shall
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff on the other
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hand, with respect to the Proxy Statement or the Merger. If at any time prior
to the adoption of this Agreement by the Company's stockholders there shall
occur any event that should be set forth in an amendment or supplement to the
Proxy Statement, this Company shall promptly prepare and mail to its
stockholders such an amendment or supplement. The Company shall not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects.
(c) Parent shall cooperate with the Company in preparing the Proxy
Statement and shall promptly furnish to the Company all information as may be
requested in connection therewith and Parent shall cause all shares of Common
Stock purchased pursuant to the Offer and all other shares of Common Stock owned
by Sub or any other subsidiary of Parent to be voted in favor of the adoption of
this Agreement.
SECTION 7.02. ACCESS TO INFORMATION; CONFIDENTIALITY. The Company
shall, and shall cause each of its Significant Subsidiaries to, afford to
Parent, and to Parent's officers, employees, accountants, counsel, financial
advisers and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time of the Merger to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of its Significant
Subsidiaries to, furnish promptly to Parent (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (b) all
other information concerning its business, properties and personnel as Parent
may reasonably request. All such information shall be held in accordance with
the confidentiality agreement (the "Confidentiality Agreement") dated
January 6, 1997.
SECTION 7.03. REASONABLE EFFORTS; NOTIFICATION. (a) Upon the terms
and subject to the conditions set forth in this Agreement, unless, to the extent
permitted by Section 6.02(b), the Company Board approves or recommends a
Superior Proposal, each of the parties shall use its reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other Transactions, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including
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filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging any Operative Agreement or the consummation of any of the
Transactions, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed and
(iv) the execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of the Operative
Agreements. In connection with and without limiting the foregoing, the Company
and the Company Board shall (i) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to the Offer, the Merger or any Operative Agreement or any of the other
Transactions and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Offer, the Merger, any Operative Agreement
or any other Transaction, take all action necessary to ensure that the Offer,
the Merger and the other Transactions may be consummated as promptly as
practicable on the terms contemplated by the Operative Agreements and otherwise
to minimize the effect of such statute or regulation on the Offer, the Merger
and the other Transactions. Notwithstanding the foregoing, the Company Board
shall not be prohibited from taking any action permitted by Section 6.02(b).
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement.
SECTION 7.04. STOCK OPTIONS. (a) Either prior to or as soon as
practicable following the consummation of the Offer, the Company Board (or, if
appropriate, any committee administering the Stock Plans) shall adopt such
resolutions or take such other actions as are required to adjust the terms of
all outstanding Stock Options heretofore granted under any stock option program
or arrangement of the Company (collectively, the "Stock Plans") or any other
stock option
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plan to provide that, at the Effective Time of the Merger, each Stock Option
outstanding immediately prior to the acceptance for payment of shares of Common
Stock pursuant to the Offer (whether or not vested) shall be canceled in
exchange for a cash payment by the Company of, or can only be exercised for net
cash equal to, an amount equal to (i) the excess, if any, of (A) the price per
share of Common Stock to be paid pursuant to the Offer over (B) the exercise
price per share of Common Stock subject to such Stock Option, multiplied by (ii)
the number of shares of Common Stock for which such Stock Option shall not
theretofore have been exercised. The Company represents and warrants that no
consents of the holders of the Stock Options are necessary to effectuate the
foregoing cash-out. After the date of this Agreement, neither the Company Board
nor any committee thereof shall cause any Stock Option to become exercisable as
a result of the execution of the Operative Agreements or the consummation of the
Transactions.
(b) All amounts payable pursuant to this Section 7.04 shall be
subject to any required withholding of taxes and shall be paid without interest.
(c) The Stock Plans shall terminate as of the Effective Time of the
Merger, and the provisions in any other Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be deleted as of the Effective Time of
the Merger, and the Company shall ensure that following the Effective Time of
the Merger no holder of a Stock Option or any participant in any Stock Plan or
other Benefit Plan shall have any right thereunder to acquire any capital stock
of the Company or the Surviving Corporation.
SECTION 7.05. INDEMNIFICATION. (a) From and after the Effective
Time, Parent and the Surviving Corporation shall indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer, director or
employee of the Company or any of its subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs, expenses (including attorney's
fees and expenses), liabilities or judgments or amounts that are paid in
settlement (which settlement shall require the prior written consent of Parent,
which consent shall not be unreasonably withheld or delayed) of or in connection
with any claim, action, suit, proceeding or investigation (a "Claim") in which
an Indemnified Party is, or is threatened to be made, a party or a witness based
in whole or in part on or arising in whole or in part out of the fact that
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such person is or was an officer, director or employee of the Company or any of
its subsidiaries, whether such Claim pertains to any matter or fact arising,
existing or occurring at or prior to the Effective Time, regardless of whether
such Claim is asserted or claimed prior to, at or after the Effective Time (the
"Indemnified Liabilities"), and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement, the Merger, the Offer, the Operative Agreements or the other
transactions contemplated hereby or by the Operative Agreements, in the case of
either clause (i) or (ii) to the full extent the Company would have been
permitted under Maryland law and its Restated Certificate of Incorporation and
By-Laws to indemnify such person (and Parent shall pay expenses in advance of
the final disposition of any such action or proceeding to each Indemnified Party
to the full extent permitted by law and under such Restated Certificate of
Incorporation or By-Laws, upon receipt of any undertaking required by such
Restated Certificate of Incorporation, By-Laws or applicable law). Any
Indemnified Party wishing to claim indemnification under this Section 7.05(a),
upon learning of any Claim, shall notify Parent (but the failure so to notify
Parent shall not relieve it from any liability which Parent may have under this
Section 7.05(a) except to the extent such failure prejudices Parent) and shall
deliver to Parent any undertaking required by such Restated Certificate of
Incorporation, By-Laws or applicable law. Parent shall use its best efforts to
assure, to the extent permitted under applicable law, that all limitations of
liability existing in favor of the Indemnified Parties as provided in the
Company's Restated Certificate of Incorporation and By-Laws, as in effect as of
the date hereof, with respect to claims or liabilities arising from facts or
events existing or occurring prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement and the Operative
Agreements), shall survive the Merger. The obligations of Parent described in
this Section 7.05(a) shall continue in full force and effect, without any
amendment thereto, for a period of not less than six years from the Effective
Time; provided, however, that all rights to indemnification in respect of any
Claim asserted or made within such period shall continue until the final
disposition of such Claim; and provided, further, that nothing in this Section
7.05(a) shall be deemed to modify applicable Maryland law regarding
indemnification of former officers and directors. The Indemnified Parties as a
group may retain only one law firm to represent them with respect to each such
matter unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties.
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(b) Parent and the Surviving Corporation shall cause to be maintained
in effect for not less than six years from the Effective Time the current
policies of directors' and officers' liability insurance maintained by the
Company and its subsidiaries (provided that Parent and the Surviving Corporation
may substitute therefor policies of at least the same coverage containing terms
and conditions which are no less advantageous to the Indemnified Parties in all
material respects so long as no lapse in coverage occurs as a result of such
substitution) with respect to all matters, including the transactions
contemplated hereby, occurring prior to, and including, the Effective Time,
provided that, in the event that any Claim is asserted or made within such
six-year period, such insurance shall be continued in respect of any such Claim
until final disposition of any and all such Claims, provided, further, that
Parent shall not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 150% of the premiums paid as of the date
hereof by Parent for such insurance.
(c) The obligations of Parent and the Surviving Corporation under
this Section 7.05 are intended to benefit, and be enforceable against Parent and
the Surviving Corporation directly by, the Indemnified Parties, and shall be
binding on all respective successors of Parent and the Surviving Corporation.
SECTION 7.06. DIRECTORS. Promptly upon the acceptance for payment
of, and payment by Sub for, any shares of Common Stock pursuant to the Offer
(which constitute at least the Minimum Condition), Sub shall be entitled to
designate such number of directors on the Company Board as shall give Sub,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Company Board equal to at least that number of directors, rounded up to the
next whole number, which is the product of (a) the total number of directors on
the Company Board (giving effect to the directors elected pursuant to this
sentence) multiplied by (b) the percentage that (i) such number of shares of
Common Stock so accepted for payment and paid for by Sub plus the number of
shares of Common Stock otherwise owned by Sub or any other subsidiary of Parent
bears to (ii) the number of such shares outstanding, and the Company shall, at
such time, cause Sub's designees to be so elected. Subject to applicable law,
the Company shall take all action requested by Parent necessary to effect any
such election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company shall make such mailing with
the mailing of the Schedule 14D-9 (provided that Sub shall have provided to the
Company on
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a timely basis all information required to be included in the Information
Statement with respect to Sub's designees). In connection with the foregoing,
the Company shall promptly, at the option of Sub, either increase the size of
the Company Board or obtain the resignation of such number of its current
directors as is necessary to enable Sub's designees to be elected or appointed
to the Company Board as provided above. The provisions of this Section 7.07 are
in addition to and shall not limit any rights which Sub, Parent or any of their
affiliates may have as a holder or beneficial owner of shares of Common Stock as
a matter of law with respect to the election of directors or otherwise.
SECTION 7.07. FEES AND EXPENSES. (a) Except as provided in
paragraphs (b) and (c) below and in Section 7.09, all fees and expenses incurred
in connection with the Offer, the Merger, this Agreement and the Transactions
shall be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated.
(b) The Company shall pay to Parent, upon demand, a fee of:
(x) $20 million (the "Termination Fee"), payable in same day funds,
if:
(i) this Agreement shall be terminated pursuant to Section
9.01(b)(i) as a result of the existence of any condition set forth in
paragraph (d) of Exhibit A;
(ii) (A) after the date of this Agreement, any person or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act),
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
publicly made a Takeover Proposal, (B) the Offer shall have remained
open until at least the scheduled expiration date immediately
following the date such Takeover Proposal is made (and in any event
for at least ten business days following the date such Takeover
Proposal is made), (C) the Minimum Tender Condition shall not have
been satisfied at the expiration of the Offer, (D) this Agreement
shall thereafter be terminated pursuant to Section 9.01(b)(i) and
(E) the Company Board, within 10 business days after the public
announcement of such Takeover Proposal, either fails to recommend
against ac-
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ceptance of such Takeover Proposal by the Company's shareholders or
announces that it takes no position with respect to the acceptance of
such Takeover Proposal by the Company's shareholders; or
(iii) this Agreement shall be terminated pursuant to
Section 9.01(c) or 9.01(d) (but, only if, in the case of paragraph (f)
of Exhibit A, where such condition existed on the date of this
Agreement); or
(y) in the event this Agreement is terminated pursuant to Section
9.01(d) as a result of any condition set forth in paragraph (f) of Exhibit
A, and provided that no Termination Fee is or would become payable
hereunder, the Company shall pay to Parent all Parent Expenses up to and
including $1,000,000. For purposes of this Section 7.07(b)(y), "Parent
Expenses" shall mean all out-of-pocket fees and expenses (including,
without limitation, all travel expenses and all fees and expenses of
counsel, investment banking firms, accountants, experts and consultants to
Parent) incurred or paid by or on behalf of Parent in connection with or
leading to this Agreement, the transactions contemplated hereby, and
performing or securing performance of the obligations of Parent hereunder,
including, without limitation, such fees and expenses related to
preparation and negotiation of documentation.
(c) In the event this Agreement is terminated, the Offer is
terminated or the Merger does not occur, solely due to a breach by Parent or Sub
of any of its covenants, agreements or obligations hereunder, without limitation
of any other rights or remedies available to the Company at law or in equity,
Parent and Sub shall pay to the Company, upon demand, all Expenses of the
Company up to and including $4,000,000. For purposes of this Section 7.07(c),
"Expenses" shall mean all out-of-pocket fees and expenses (including, without
limitation, all travel expenses and all fees and expenses of counsel, investment
banking firms, accountants, experts and consultants to the Company) incurred or
paid by or on behalf of the Company in connection with or leading to this
Agreement, the transactions contemplated hereby, and performing or securing
performance of the obligations of the Company hereunder, including, without
limitation, such fees and expenses related to preparation and negotiation of
documentation.
SECTION 7.08. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the
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opportunity to review and comment upon, any press release or other public
statements with respect to the Transactions, including the Offer and the Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange.
SECTION 7.09. TRANSFER TAXES. Parent shall pay or cause Sub to pay
any state or local taxes, use, transfer tax or similar tax (including any real
property transfer or gains tax) payable in connection with the consummation of
the Offer and/or the Merger (collectively, the "Transfer Taxes"). The Company
agrees to cooperate with Parent or Sub, as the case may be, in the filing of any
returns with respect to the Transfer Taxes, including supplying in a timely
manner a complete list of all real property interests held by the Company and
its subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the assets giving rise to such Transfer Taxes shall be agreed to by
the Company and Parent.
ARTICLE VIII
Conditions Precedent
The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) STOCKHOLDER APPROVAL. If required by applicable law, this
Agreement and the Merger shall have been approved by the affirmative vote
or consent of the holders of a majority of the outstanding shares of Common
Stock in accordance with applicable law and the Company's Charter.
(b) HSR ACT. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; provided, however, that
each of the parties shall have used its best
<PAGE>
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efforts to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any injunction or other order that may be
entered.
(d) OTHER GOVERNMENTAL CONSENTS. The Company and Parent shall have
received all necessary consents and approvals from each of the Customs
Service Bureau and the Bureau of Alcohol, Tobacco and Firearms applicable
to the Merger.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time of the Merger, whether before or after approval
of matters presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if Sub shall not have purchased that number of shares which
constitutes the Minimum Tender Condition of Common Stock pursuant to
the Offer prior to December 31, 1997; PROVIDED, HOWEVER, that the
passage of such period shall be tolled for any part thereof during
which any party shall be subject to a nonfinal order, decree, ruling
or action restraining, enjoining or otherwise prohibiting the purchase
of shares of Common Stock pursuant to the Offer or the consummation of
the Merger; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the purchase of shares of Common
Stock pursuant to the Offer or the Merger and such order, decree,
ruling or other action shall have become final and nonappealable;
(iii) if the Merger shall not have consummated by April 30,
1998 or such later date mutually agreed
<PAGE>
-44-
to by the parties; PROVIDED, HOWEVER, that the passage of such period
shall be tolled for any part thereof during which any party shall be
subject to a nonfinal order, decree, ruling or action restraining,
enjoining or otherwise prohibiting the purchase of shares of Common
Stock pursuant to the Offer or the consummation of the Merger;
PROVIDED, FURTHER, HOWEVER, that the right to terminate this Agreement
pursuant to this Section 9.01(b)(iii) shall not be available to any
party whose failure to perform any obligations under this Agreement
results in the failure of the Merger to be consummated by such time;
(c) by the Company if (x) to the extent permitted by Section 6.02(b),
the Company Board approves or recommends a Superior Proposal and (y) prior
to or contemporaneously with such termination, the Company pays to Parent
an amount in cash equal to the Termination Fee;
(d) by Parent or Sub if Sub terminates the Offer as a result of the
occurrence of any event set forth in paragraphs (d), (f) and (g) of Exhibit
A to this Agreement;
(e) by the Company if Sub terminates the Offer as a result of the
occurrence of any event set forth in paragraph (a), (b), (c), (e), (f) or
(g) of Exhibit A to this Agreement;
(f) by the Company in the event the Company has convened a
Stockholders Meeting in accordance with Section 7.01 and the Merger and
this Agreement have not been approved by the affirmative vote or consent of
the holders of the requisite number of outstanding shares of Common Stock
in accordance with applicable law and the Company's Charter;
(g) by the Company if Sub (A) shall have failed to commence the Offer
within the time required under the Exchange Act or (B) shall have failed to
pay for any Common Stock accepted for payment pursuant to the Offer and, in
the case of clause (B), Sub shall have failed to make such payment within
three business days of receipt of written notice thereof from the Company;
PROVIDED, HOWEVER, that any such failure is not caused by a material breach
by the Company; or
(h) by the Company if Parent or Sub fail to perform in any material
respect any provision of this Agreement
<PAGE>
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and Parent or Sub have failed to perform such obligation or cure such
breach within 10 business days of its receipt of written notice from the
Company and such failure to perform has not been waived in accordance with
the terms of this Agreement; PROVIDED, HOWEVER, that such failure to
perform is not caused by a material breach by the Company.
SECTION 9.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 9.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 4.15, Section 5.04, the last sentence of Section 7.02,
Section 7.07, this Section 9.02 and Article IX and except to the extent that
such termination results from the wilful and material breach by a party of any
of its representations, warranties, covenants or agreements set forth in the
Operative Agreements.
SECTION 9.03. AMENDMENT. This Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by such stockholders without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 9.04. EXTENSION; WAIVER. At any time prior to the Effective
Time of the Merger, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 9.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
SECTION 9.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 9.01, an amendment
of this Agreement to Section 9.03 or an extension or waiver pursuant to Section
9.04 shall, in
<PAGE>
-46-
order to be effective, require (a) in the case of Parent or Sub action by a
majority of its respective Board of Directors and (b) in the case of the
Company, action by a majority of the members of the Board of Directors of the
Company who were members thereof on the date of this Agreement and remain as
such hereafter; PROVIDED, HOWEVER, that in the event that Sub's designees are
appointed or elected to the Board of Directors of the Company as provided in
Section 7.06, after the acceptance for payment of shares of Common Stock
pursuant to the Offer and prior to the Effective Time of the Merger, the
affirmative vote of a majority of the Directors who are not Sub's, designees or
appointees as provided in Section 7.06, in lieu of the vote required pursuant to
clause (b) above, shall be required to (i) amend or terminate this Agreement by
the Company, (ii) exercise or waive any of the Company's rights or remedies
under this Agreement or (iii) extend the time for performance or Parent's and
Sub's respective obligations under this Agreement.
ARTICLE X
General Provisions
SECTION 10.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time of the
Merger. This Section 10.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
SECTION 10.02. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) 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 Parent or Sub, to
BAA plc
Stockley House
130 Wilton Road
London SW1V 1LQ
Attention: Robert Herga
<PAGE>
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with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Attention: Stephen A. Greene, Esq.
(b) if to the Company, to
Duty Free International, Inc.
63 Copps Hill Road
Ridgefield, CT 06877
Attention: Lawrence Caputo, Esq.
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178-0060
Attention: Stephen P. Farrell, Esq.
SECTION 10.03. DEFINITIONS. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"material" means, when used in connection with the Company or Parent,
material to the business, financial condition or results of operations of such
party and its subsidiaries taken as a whole, and the term "materially" has a
correlative meaning.
"material adverse change" or "material adverse effect" means, when
used in connection with the Parent, any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to result in any change
or effect) that is materially adverse to the business, properties, assets,
condition (financial or otherwise), results of operations or prospects of such
party and its subsidiaries taken as a whole.
<PAGE>
-48-
"Operative Agreements" means this Agreement, the Stockholder
Agreement, the Option Agreement, the Offer Documents and any other documents
necessary to consummate the Merger.
"person" means an individual, corporation, partnership, company,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
A "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 10.04. INTERPRETATION. When a references is made in this
Agreement to a Section or Exhibit, such reference shall be to a Section of, or
an Exhibit to, 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".
SECTION 10.05. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 10.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. The
Operative Agreements and the Confidentiality Agreement (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of the Operative
Agreements and (b) except for the provisions of Article III with respect to the
Paying Agent and Section 7.05, are not intended to confer upon any person other
than the parties any rights or remedies hereunder.
SECTION 10.07. 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 conflict
of laws thereof.
<PAGE>
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SECTION 10.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any of or all its rights, interests and obligations under
this Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations under
this Agreement. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 10.09. ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Maryland, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Maryland in the event any dispute
arises out of any Operative Agreement or any of the Transactions, (b) agrees
that it shall not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it shall not
bring any action relating to any Operative Agreement or any of the Transactions
in any court other than a Federal or state court sitting in the State of
Maryland.
<PAGE>
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
BAA PLC
By: /s/ Barry Gibson
-------------------------------
Name: J M BARRY GIBSON
Title: DIRECTOR
W & G ACQUISITION CORPORATION
By: /s/ Brian Collie
-------------------------------
Name: BRIAN COLLIE
Title: VICE-PRESIDENT
DUTY FREE INTERNATIONAL, INC.
By: /s/ Alfred Carfora
-------------------------------
Name: ALFRED CARFORA
Title: PRESIDENT
<PAGE>
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Common
Stock after the termination or withdrawal of the Offer), to pay for any shares
of Common Stock tendered pursuant to the Offer unless (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of shares of Common Stock which would represent at least a majority of
the Fully Diluted Shares (the "Minimum Tender Condition")and (ii) any waiting
period under the HSR Act applicable to the purchase of shares of Common Stock
pursuant to the Offer shall have expired or been terminated. The term "Fully
Diluted Shares" means all outstanding securities entitled generally to vote in
the election of directors of the Company on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Common Stock not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement and
before the acceptance of such shares for payment or the payment therefor, any of
the following conditions exists:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity (including, without limitation, the
Department of the Treasury, the Customs Service Bureau and the Bureau of
Alcohol, Tobacco and Firearms) or any other person (in the case of any
suit, action or proceeding by a person other than a Governmental Entity,
such suit, action or proceeding having a reasonable likelihood of success)
(i) challenging the acquisition by Parent or Sub of any shares of Common
Stock, seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or the performance of any of the other Transactions, or
seeking to obtain from the Company, Parent or Sub any damages that are
material in relation to the Company and its subsidiaries
<PAGE>
-2-
taken as whole, (ii) seeking to prohibit or limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries of
any material portion of the business or assets of the Company, Parent or
any of their respective subsidiaries, or to compel the Company, Parent or
any of their respective subsidiaries to dispose of or hold separate any
material portion of the business or assets of the Company, Parent or any of
their respective subsidiaries, as a result of the Offer, the Merger or any
of the other Transactions, (iii) seeking to impose limitations on the
ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Common Stock, including the right to vote the
Common Stock purchased by it on all matters properly presented to the
stockholders of the Company, or (iv) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any material respect the
business or operations of the Company or its subsidiaries, or (v) which
otherwise is reasonably likely to prevent consummation of the Transactions;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued (each of the
foregoing, a "Legal Event") with respect to, or deemed applicable to, or
any consent or approval withheld with respect to, (i) Parent, the Company
or any of their respective subsidiaries or (ii) the Offer, the Merger or
any of the other Transactions by any Governmental Entity or before any
court or governmental authority, agency or tribunal, domestic or foreign,
that has a substantial likelihood of resulting, directly or indirectly, in
any of the consequences referred to in clauses (i) through (v) of paragraph
(a) above;
(c) since the date of this Agreement there shall have occurred any
material adverse change, or any development that, insofar as reasonably can
be foreseen, is reasonably likely to result in a material adverse change,
in the business, properties, assets, condition (financial or otherwise),
results of operations or prospects of the Company and its subsidiaries
taken as a whole other than changes resulting from currency exchange rate
fluctuations, customs, tax and duty law changes and changes relating to the
economy in general and to the Company's industry in general and not
specifically relating to the Company or any of its Subsidiaries;
<PAGE>
-3-
(d) (i) the Company Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent or Sub its approval or
recommendation of the Offer, the Merger or this Agreement, or approved or
recommended any Superior Proposal or (ii) the Company Board or any
committee thereof shall have resolved to do any of the foregoing;
(e) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
or in the London Stock Exchange, for a period in excess of 24 hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (ii)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States or involving
the United Kingdom and, in the case of armed hostilities involving the
United Kingdom, having, or which could reasonably be expected to have, a
substantial continuing general effect on business and financial conditions
in the United Kingdom, (iv) any limitation (whether or not mandatory) by
any United States or the United Kingdom governmental authority on the
extension of credit generally by banks or other financial institutions or
(v) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(f) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time
and the failure to be so true and correct or so true and correct in any
material respect is a Company Material Adverse Effect, and except with
respect to representations and warranties made as of an earlier time;
(g) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agree-
<PAGE>
-4-
ment and such failure would result in a Company Material Adverse Effect; or
(h) the Merger Agreement shall have been terminated in accordance
with its terms.
Subject to Section 1.01(a), the foregoing conditions (i) may be
asserted by Parent and Sub regardless of the circumstances giving rise to such
condition and (ii) are for the sole benefit of Parent and Sub and may be waived
by Parent or Sub, in whole or in part at any time and from time to time in the
sole discretion of Parent or Sub. The failure by Parent or Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
<PAGE>
Exhibit (c)(2)
SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of July 2, 1997, among BAA plc, a corporation
organized under the laws of England (the "Parent"), W & G Acquisition
Corporation, a Maryland corporation and a direct wholly owned subsidiary of
Parent ("Merger Sub"), and the other parties signatory hereto (each a
"Shareholder," and collectively, the "Shareholders").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, concurrently herewith, Parent, Merger Sub and Duty Free
International, Inc. a Maryland corporation (the "Company"), are entering into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which, among other things, Merger Sub will be merged with and into
the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company have
agreed that as soon as practicable (and not later than five business days) after
the first public announcement of the execution and delivery of the Merger
Agreement, Merger Sub will commence a cash tender offer to purchase all
outstanding shares of Company Common Stock (as defined in Section 1), including
all of the Shares (as defined in Section 2) Beneficially Owned (as defined in
Section 1) by the Shareholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholders agree, and the Shareholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
<PAGE>
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1. DEFINITIONS. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any time the common stock,
$.01 par value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
2. TENDER OF SHARES.
(a) Subject to Section 6, each Shareholder hereby agrees to validly
tender (and not to withdraw) pursuant to and in accordance with the terms of the
Offer, not later than the fifth business day after commencement of the Offer
pursuant to Rule 14d-2 under the Exchange Act, the number of shares of Company
Common Stock set forth opposite such Shareholder's name on Schedule I hereto
(the "Existing Shares" and, together with any shares of Company Common Stock
acquired by such Shareholder after the date hereof and prior to the termination
of this Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise, the "Shares"). Each Shareholder
hereby acknowledges and agrees that Merger Sub's obligation to accept for
payment and pay for Shares in the Offer is subject to the terms and conditions
of the Offer.
(b) Subject to Section 6, each Shareholder hereby agrees to permit
Parent and Merger Sub to publish and disclose in the Offer Documents and, if
approval of the Merger by the Company's shareholders (other than Parent or any
of its wholly-owned subsidiaries) is required under applicable law, in the Proxy
Statement (including all documents and schedules filed with the SEC) his or its
identity and ownership of Company Com-
<PAGE>
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mon Stock and the nature of his or its commitments under this Agreement.
3. PROVISIONS CONCERNING COMPANY COMMON STOCK.
Each Shareholder hereby agrees that during the period commencing on
the date hereof and continuing until the first to occur of the (i) purchase of
the Shares by Merger Sub pursuant to the Offer, (ii) Effective Time or
(iii) termination of the Merger Agreement in accordance with its terms, at any
meeting of the holders of Company Common Stock, however called, or in connection
with any written consent of the holders of Company Common Stock, such
Shareholder shall vote (or cause to be voted) the Shares held of record or
Beneficially Owned by such Shareholder, whether issued, heretofore owned or
hereafter acquired, (i) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or this Agreement (after giving effect to
any materiality or similar qualifications contained therein); and (iii) except
as otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Board of Directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Articles of Incorporation or Bylaws; (3) any other
material change in the Company's corporate structure or business; or (4) any
other action involving the Company or its subsidiaries which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. Such Shareholder shall not enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent with or violative of the provisions and agreements contained in
this Section 3.
<PAGE>
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4. OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each
Shareholder hereby individually as to itself represents and warrants to Parent
as follows:
(a) OWNERSHIP OF SHARES. Such Shareholder is either (i) the record
and Beneficial Owner of, or (ii) the Beneficial Owner but not the record
holder of, the number of Existing Shares, other shares, and derivative
securities set forth opposite such Shareholder's name on Schedule I hereto.
On the date hereof, the Existing Shares set forth opposite such
Shareholder's name on Schedule I hereto constitute all of the shares or
securities issued by the Company owned of record or Beneficially Owned by
such Shareholder. Except as noted on Schedule I, such Shareholder has sole
voting power and sole power to issue instructions with respect to the
matters set forth in Sections 2 and 3 hereof, sole power of disposition,
sole power of conversion, sole power to demand appraisal rights and sole
power to agree to all of the matters set forth in this Agreement, in each
case with respect to all of the Existing Shares set forth opposite such
Shareholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights, subject to applicable
securities laws and the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Shareholder has the legal
capacity, power and authority, as applicable, to enter into and perform all
of such Shareholder's obligations under this Agreement. The execution,
delivery and performance of this Agreement by such Shareholder will not
violate any other agreement to which such Shareholder is a party including,
without limitation, any voting agreement, shareholders agreement or voting
trust. This Agreement has been duly and validly executed and delivered by
such Shareholder and constitutes a valid and binding agreement of such
Shareholder, enforceable against such Shareholder in accordance with its
terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws affecting creditors' rights generally. There is no
beneficiary or holder of a voting trust certificate or other interest of
any trust of which such Shareholder is trustee whose consent is required
for the execution and delivery of this Agreement or the consummation by
such Shareholder of the transactions contemplated hereby.
<PAGE>
-5-
(c) NO CONFLICTS. Except for filings under the HSR Act, if
applicable, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority or any other
Person is necessary for the execution of this Agreement by such Shareholder
and the consummation by such Shareholder of the transactions contemplated
hereby and (B) none of the execution and delivery of this Agreement by such
Shareholder, the consummation by such Shareholder of the transactions
contemplated hereby or compliance by such Shareholder with any of the
provisions hereof shall (1) conflict with or result in any breach of any
applicable organizational documents applicable to such Shareholder, (2)
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, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which such
Shareholder is a party or by which such Shareholder or any of such
Shareholder's properties or assets may be bound, or (3) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Shareholder or any of such Shareholder's properties or
assets.
(d) NO ENCUMBRANCES. Except as applicable in connection with the
transactions contemplated by Section 2 hereof and except as noted on
Schedule I hereto, the certificates representing such Shareholder's
Existing Shares are now, and with respect to such Shareholder's Shares
(other than the other shares listed on Schedule I) at all times during the
term hereof will be, held by such Shareholder, or by a nominee or custodian
for the benefit of such Shareholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, or any other
encumbrances whatsoever, except for any such encumbrances arising
hereunder. The transfer by each Shareholder of his or its Shares to Merger
Sub in the Offer shall pass to Merger Sub good and valid title to the
number of Shares set forth opposite such Shareholder's name on Schedule I
hereto, free and clear of all claims, liens, restrictions, security
interests, pledges, limitations and encumbrances whatsoever.
<PAGE>
-6-
(e) NO FINDER'S FEES. Other than existing financial advisory and
investment banking arrangements and agreements entered into by the Company,
no broker, investment banker, financial adviser or other Person is entitled
to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of such Shareholder.
(f) NO SOLICITATION. Subject to Section 6, no Shareholder shall, in
his or its capacity as such, directly or indirectly, solicit (including by
way of furnishing information for the purpose of soliciting) any inquiries
by any person or entity (other than Parent or any affiliate of Parent) for
the purchase or voting of his or its Shares or with respect to the Company
that constitutes a Takeover Proposal, except that a Shareholder who is a
director of the Company may take actions in such capacity as a director to
the extent permitted by the Merger Agreement. Subject to Section 6, if any
Shareholder receives any such inquiry or proposal, then such Shareholder
shall promptly inform Parent of the existence thereof. Each Shareholder
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing.
(g) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Except as
applicable in connection with the transactions contemplated by Section 2
hereof, subject to Section 6, no Shareholder shall (i) directly or
indirectly, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of such Shareholder's Shares or any interest
therein; (ii) except as contemplated by this Agreement, grant any proxies
or powers of attorney, deposit any Shares into a voting trust or enter into
a voting agreement with respect to any Shares; or (iii) take any action
that would make any representation or warranty of such Shareholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Shareholder from performing such Shareholder's obligations
under this Agreement.
<PAGE>
-7-
(h) WAIVER OF APPRAISAL RIGHTS. Each Shareholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such
Shareholder may have.
(i) RELIANCE BY PARENT. Such Shareholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter
into, the Merger Agreement in reliance upon such Shareholder's execution
and delivery of this Agreement.
(j) 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 all such further lawful
action as may be necessary or desirable to consummate and make effective,
the transactions contemplated by this Agreement.
5. STOP TRANSFER; CHANGES IN SHARES. Each Shareholder agrees with,
and covenants to, Parent that such Shareholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Shareholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Section 2 hereof). In the event of a stock dividend or
distribution, or any change in the Company Common Share by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
6. TERMINATION. Except as otherwise provided herein, the covenants
and agreements contained herein with respect to the Shares shall terminate upon
the earliest of (w) the acquisition of the Shares by Parent or Merger Sub
pursuant to the Offer, (x) the Effective Time, (y) if the Effective Time does
not occur, the termination of the Merger Agreement or the withdrawal or
modification by the Company Board of its recommendation of the Offer or the
Merger as permitted by Section 6.02(b) of the Merger Agreement and (z) the first
anniversary of the date hereof.
7. SHAREHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director
<PAGE>
-8-
of the Company makes any agreement or understanding herein in his or her
capacity as such director.
8. CONFIDENTIALITY. The Shareholders recognize that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, each Shareholder hereby agrees
not to disclose or discuss such matters with anyone not a party to this
Agreement (other than such Shareholder's counsel and advisors, if any, and other
than with another Shareholder or the Company's counsel or advisors) without the
prior written consent of Parent, except for filings required pursuant to the
Exchange Act and the rules and regulations thereunder or disclosures such
Shareholder's counsel advises are necessary in order to fulfill such
Shareholder's obligations imposed by law, in which event such Shareholder shall
give notice of such disclosure to Parent as promptly as practicable.
9. 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 supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Each Shareholder agrees that this Agreement and
the obligations hereunder shall attach to such Shareholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Shareholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Parent may assign, in its sole discretion, 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.
<PAGE>
-9-
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Shareholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any shareholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added shareholder shall be treated as a
"Shareholder" for all purposes of this Agreement.
(e) 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, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Shareholders: At the addresses set forth on Schedule I hereto
copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attn: Stephen P. Farrell, Esq.
Telecopy: (212) 309-6273
If to Parent: BAA plc
Stockley House
130 Wilton Road
London SW1 VLQ
Attention: Robert Herga
copy to: Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Telecopy: (212) 269-5420
Attention: Stephen A. Greene, Esq.
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.
<PAGE>
-10-
(f) 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.
(g) 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 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.
(h) 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.
(i) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect 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.
(j) NO THIRD PARTY BENEFICIARIES. 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.
<PAGE>
-11-
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
(l) 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.
(m) 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.
<PAGE>
-12-
IN WITNESS WHEREOF, Parent, Merger Sub and each Shareholder have
caused this Agreement to be duly executed as of the day and year first above
written.
BAA PLC
By: /s/ Barry Gibson
-----------------------------
Name: J M BARRY GIBSON
Title: Director
W & G ACQUISITION CORPORATION
By: /s/ Brian Collie
-----------------------------
Name: BRIAN COLLIE
Title: DIRECTOR
GEBR. HEINEMANN
By: /s/ Claus Heinemann Gunnar Heinemann
-------------------------------------
Name: CLAUS & GUNNAR HEINEMANN
Title: OWNERS
/s/ John A. Couri
-------------------------------
JOHN A. COURI
/s/ David H. Bernstein
-------------------------------
DAVID H. BERNSTEIN
/s/ Carl Reimerdes
-------------------------------
CARL REIMERDES
/s/ Heribert H. Diehl
-------------------------------
HERIBERT H. DIEHL
/s/ Alfred Carfora
-------------------------------
ALFRED CARFORA
<PAGE>
-13-
AGREED TO AND ACKNOWLEDGED
(with respect to Section 5):
DUTY FREE INTERNATIONAL, INC.
By: /s/ Alfred Carfora
------------------------------
Name: ALFRED CARFORA
Title: PRESIDENT/CEO
<PAGE>
Schedule I to
Shareholders Agreement
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Name and Address Derivative
of Shareholder Existing Shares Other Shares Securities
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
David H. Bernstein 1,057,069 Shares 734 Shares 190,000 shares
6691 Baymeadow Dr. indirectly subject to
Glen Burnie, MD 21060; owned option (148,334
through exercisable)
employer
401(k) plan;
John A. Couri 704,000 Shares 274,000 As trustee 202,000 shares
41 Mulberry Street for the subject to
Ridgefield, CT 06877 Couri option (148,334
Charitable exercisable)
Remainder
Trust
32,485 As trustee
with wife
for children
63,000 As trustee
for the
Couri
Charitable
Remainder
Trust
Carl Reimerdes 200 Shares 498,213 As trustee 202,666 shares
c/o Fenton Hill for the subject to
America Limited Reimerdes option (140,000
B-3 East Annuity exercisable)
Airport Ind. Trust
Office Park
145 Hook Creek 250,000 As trustee
Rd. for the
Valley Stream, Reimerdes
NY 11581 Annuity
Trust
101,535 As trustee
for the
Reimerdes
Annuity
Trust
1,156.7 Shares
indirectly
owned
through
employer
401(k) plan;
</TABLE>
<PAGE>
-2-
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Name and Address Derivative
of Shareholder Existing Shares Other Shares Securities
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gebr. Heinemann 4,571,664 Shares None
Madgeburger Str. 3
2000 Hamburg 11,
Germany
Heribert Diehl 895,422 Shares 52,334 shares
Madgeburger Str. 3 subject to
2000 Hamburg 11, option (40,334
Germany exercisable)
Alfred Carfora 175,895 Shares 700.9 Shares 225,000 shares
c/o Duty Free indirectly subject to
International owned option (133,334
63 Copps Hill Road through exercisable)
Ridgefield, CT employer
06877 401(k) plan
</TABLE>
<PAGE>
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-
<PAGE>
-2-
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 Hart-Scott-Rodino
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
<PAGE>
-3-
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-Florio 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)
<PAGE>
-4-
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-
<PAGE>
-5-
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-Florio 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
<PAGE>
-6-
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)
<PAGE>
-7-
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.
<PAGE>
-8-
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: 63 Copps Hill Road
Ridgefield, CT 06877
Attention: Larry Caputo, Esq.
copy to: Morgan Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Stephen P. Farrell, Esq.
Telecopy: (212) 309-6273
If to Parent: BAA plc
Stockley House
130 Wilton Road
London SW1V 1LQ
Attention: Robert Herga
copy to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Stephen A. Greene, Esq.
<PAGE>
-9-
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-Florio
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
<PAGE>
-10-
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.
<PAGE>
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/ Barry Gibson
-------------------------------
Name: J M BARRY GIBSON
Title: DIRECTOR
DUTY FREE INTERNATIONAL, INC.
By: /s/ Alfred Carfora
-------------------------------
Name: ALFRED CARFORA
Title: PRESIDENT
<PAGE>
Ex.(c)(4)
January 6, 1997
CONFIDENTIAL
BAA plc
130 Wilton Road
London SW1V 1LQ
Attention: Mr. J. M. Barry Gibson
Gentlemen:
In connection with your consideration of a possible negotiated transaction
with Duty Free International, Inc. (the "Company"), you will be requesting
certain non-public or confidential information and documents from the Company.
As a condition to your being furnished such information and documents, you agree
to treat any information and documents relating to the Company (whether prepared
by the Company, its advisors or otherwise) which are furnished to you by or on
behalf of the Company, whether furnished before or after the date hereof,
whether oral or written, and regardless of the manner in which they are
furnished, together with any analyses, compilations and synopses which
incorporate or reflect such information and documents (herein collectively
referred to as the "Evaluation Material") in accordance with the provisions of
this letter and to take or abstain from taking certain other actions herein set
forth. The term "Evaluation Material" does not include information and
documents which (i) are already in your possession, provided that such
information and documents are not known by you to be subject to another
confidentiality agreement with or other obligation of secrecy to the Company or
another party, or (ii) become generally available to the public other than as a
result of a disclosure by you or your directors, officers, employees, agents or
advisors, or (iii) become available to you on a non-confidential basis from a
source other than the Company or its advisors, provided that such source is not
known by you to be bound by a confidentiality agreement with or other obligation
of secrecy to the Company or another party.
You agree that the Evaluation Material will be used solely for the purpose
of evaluating a possible negotiated transaction between the Company and you, and
that the Evaluation Material will be kept confidential by you and your advisors;
provided, however, that (i) any of the Evaluation Material may be disclosed to
your directors, officers and employees and representatives of your advisors who
are actively and directly participating in, and need to know such information
for the purpose of, evaluating any such possible transaction between the Company
and you (it being understood that such directors, officers, employees and
advisors shall be informed by you of the confidential nature of such information
and shall be required by you to observe the terms of this letter agreement), and
(ii) any disclosure of such information and documents may be made to which the
Company consents in writing. You agree to be responsible
<PAGE>
BAA plc
January 6, 1997
Page 2
for any breach of this letter agreement by your directors, officers, employees
and advisors.
In the event you are requested by law or regulation, by any court or
governmental authority (by way of a subpoena or otherwise) or by the rules of
any stock exchange on which the shares of any company in your group are listed
to disclose any Evaluation Material or any other information concerning the
Company or such negotiated transaction, you will (to the extent permitted by
law) give us prompt notice of such request and cooperate with us in contesting
such request (to the extent appropriate) and in attempting to preserve
appropriate confidentiality protections for the Evaluation Material or other
information that is sought.
You understand that neither the Company nor Compass Partners International,
L.L.C., nor any of their respective officers, directors, partners or employees,
have made or make any express or implied representation or warranty as to the
accuracy or completeness of the Evaluation Material. You agree that (i) neither
the Company nor Compass Partners International, L.L.C., nor any of such other
persons, shall have any liability to you or any of your representatives or
advisors relating to the Evaluation Material or for any errors therein or
omissions therefrom; and (ii) you will be entitled to rely only upon such
representations and warranties as are made to you by the Company in any
definitive agreement which the Company and you may execute.
In the event that you do not proceed with a negotiated transaction or upon
earlier request, you and your advisors shall promptly redeliver to the Company
all written Evaluation Material and any other written material containing or
reflecting any information in the Evaluation Material (whether prepared by the
Company, its advisors or otherwise) and will not retain any copies, extracts or
other reproductions in whole or in part of such written material. All
documents, memoranda, notes and other writings whatsoever prepared by you or
your advisors based on the information in the Evaluation Material shall be
destroyed, and such destruction shall be certified in writing to the Company by
an authorized officer supervising such destruction.
Until the earliest of (i) the execution by you of a definitive agreement
between the Company and you; (ii) an acquisition of the Company by a third
party; or (iii) two years from the date of this letter agreement, you agree not
to initiate or maintain contact (except for those contacts made in the ordinary
course of business) with any officer, director or employee of the Company or its
subsidiaries regarding its business, operations, prospects or finances, except
with the express permission of the Company. It is understood that Compass
Partners International, L.L.C. will arrange for appropriate contacts for due
diligence purposes. It is further understood that all (i) communications
regarding a possible transaction, (ii) requests for additional information,
(iii) requests for facility tours or management meetings, and (iv) discussions
or questions regarding procedures, will be submitted or directed to Compass
Partners International, L.L.C. You further agree that for a period of two years
from the date hereof, you will not hire any of the employees of the Company or
its subsidiaries with whom you have contact during the
<PAGE>
BAA plc
January 6, 1997
Page 3
period of your investigation of the Company.
You agree that until the expiration of two years from the date of this
agreement, you shall not, and you will ensure that your affiliates (as defined
in Rule 12b-2 under the Securities Exchange Act of 1934) or advisors, and any
person acting on behalf of or in concert with you or any of your affiliates or
advisors, (provided that no sources of financing shall be deemed to be acting on
behalf of or in concert with you or any of your affiliates or advisors), shall
not, with the prior written approval of the Company (i) in any manner acquire,
agree to acquire or make any proposal to acquire, directly or indirectly, any
securities or direct or indirect rights to acquire any securities of the Company
or any of its subsidiaries, (ii) propose to enter into, directly or indirectly,
any merger or business combination involving the Company or any of its
subsidiaries or to purchase, directly or indirectly, a material portion of the
assets of the Company or any of its subsidiaries, (iii) make, or in any way
participate, directly or indirectly, in any "solicitations" or "proxies" (as
such terms are used in the proxy rules of the U.S. Securities and Exchange
Commission) to vote, or seek to advise or influence any person with respect to
the voting of any securities of the Company or any of its subsidiaries, (iv)
form, join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934) with respect to any securities
of the Company or any of its subsidiaries, (v) otherwise act, alone or in
concert with others, to seek to control or influence the management, Board of
Directors or policies of the Company, (vi) disclose any intention, play or
arrangement inconsistent with the foregoing, or (vii) advise, assist or
encourage any other persons in connection with any of the foregoing. You also
agree during such period not to (i) request the Company (or its directors,
officers, employees or agents), directly or indirectly, to amend or waive any
provisions of this paragraph (including this sentence) or (ii) take any action
which might require the Company to make a public announcement regarding any of
the matters specified in this paragraph. You will promptly advise the Company
of any inquiry or proposal made to you with respect to any of the foregoing.
You acknowledge that you are (i) aware that the United States securities
laws prohibit any person who has material nonpublic information about a company
from purchasing or selling securities of such company, or from communicating
such information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell such
securities, and (ii) familiar with the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder and agree that you will neither
use, nor cause any third party to use, any Evaluation Material in contravention
of such Act or any such rules and regulations, including Rules 10b-5 and 14e-3.
You agree that unless and until a definitive agreement between the Company
and you has been executed and delivered, neither the Company nor you will be
under any legal obligation of any kind whatsoever with respect to such a
transaction by virtue of this letter agreement or any written or oral expression
with respect to such transaction by the Company or any of its directors,
<PAGE>
BAA plc
January 6, 1997
Page 4
officers, employees, agents, representatives or advisors except, in the case of
this letter, for our respective obligations hereunder. For purposes hereof, the
term "definitive agreement" does not include any executed letter of intent,
heads of agreement or other preliminary agreement, nor does it include any
written or oral acceptance of any offer or proposal on your part.
The Company agrees to disclose the fact that discussions or negotiations
are taking place only to such of its officers, employees or advisors as are
actually and directly participating in, and need to know such fact for the
purposes of, advising or assisting the Company with such discussions or
negotiations.
Without the prior written consent of the other party, neither you nor the
Company will, and each of the Company and you will direct its respective
directors, officers, employees and advisors not to, disclose to any person
either the fact that discussions or negotiations are taking place between the
Company and you or any of the terms, conditions or other facts with respect to
any possible transaction, including the status thereof. If, however, pursuant
to any law or regulation or the requirements of any stock exchange upon which
the shares of the Company or of any company in your group is listed, it becomes
necessary to make a public announcement or other disclosure of our discussions
or negotiations, the text thereof will be mutually reviewed by the Company and
you prior to its dissemination.
You agree that the Company shall be entitled to equitable relief, including
injunctive relief, in the event of any breach of the provisions of this letter
agreement and that you shall not oppose the granting of such relief. This
letter agreement may be modified or waived only by a separate writing by the
Company and you expressly so modifying or waiving such agreement.
This letter shall be governed by, and construed in accordance with the laws
of the State of New York. You irrevocably consent to the jurisdiction of the
federal and state courts located in the City, County and State of New York for
the purpose of any suit involving the subject matter of this letter agreement.
It is understood and agreed that no failure or delay by us in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege hereunder.
Any assignment of this letter agreement by you without the Company's prior
written consent shall be void.
This letter agreement contains the entire agreement between you and the
Company concerning confidentiality of the Evaluation Material. Please confirm
your agreement with the foregoing by signing and returning to the undersigned
the duplicate copy of this letter enclosed herewith.
<PAGE>
BAA plc
January 6, 1997
Page 5
Very truly yours,
DUTY FREE INTERNATIONAL, INC.
By: /s/ Alfred Carfora
---------------------------------
Alfred Carfora
President and Chief
Executive Officer
Confirmed and Agreed to:
BAA plc
By: /s/ C.M. Barry Gibson
--------------------------
C. M. Barry Gibson
Date:
------------------------
<PAGE>
DUTY FREE INTERNATIONAL, INC
63 Copps Hill Road
Ridgefield
CT 06877
USA
Attention: Mr Alfred Carfora January 1997
Gentlemen
In connection with your consideration of a possible negotiated transaction with
BAA plc (the "Company"), you will be requesting certain non-public or
confidential information and documents from the Company. As a condition to your
being furnished such information and documents, you agree to treat any
information and documents relating to the Company (whether prepared by the
Company, its advisors or otherwise) which are furnished to you by or on behalf
of the Company, whether furnished before or after the date hereof, whether oral
or written, and regardless of the manner in which they are furnished, together
with any analyses, compilations and synopses which incorporate or reflect such
information and documents (herein collectively referred to as the "Evaluation
Material") in accordance with the provisions of this letter and to take or
abstain from taking certain other actions herein set forth. The term
"Evaluation Material" does not include information and documents which (i) are
already in your possession, provided that such information and documents are not
known by you to be subject to another confidentiality agreement with or other
obligation of secrecy to the Company or another party, or (ii) become generally
available to the public other than as a result of a disclosure by you or your
directors, officers, employees, agents or advisors, or (iii) become available to
you on a non-confidential basis from a source other than the Company or its
advisors, provided that such source is not known by you to be bound by a
confidentiality agreement with or other obligation of secrecy to the Company or
another party.
<PAGE>
-2-
You agree that the Evaluation Material will be used solely for the purpose of
evaluating a possible negotiated transaction between the Company and you, and
that the Evaluation Material will be kept confidential by you and your advisors;
provided, however, that (i) any of the Evaluation Material may be disclosed to
your directors, officers and employees and representatives of your advisors who
are actively and directly participating in, and need to know such information
for the purpose of, evaluating any such possible transaction between the Company
and you (it being understood that such directors, officers, employees and
advisors shall be informed by you of the confidential nature of such information
and shall be required by you to observe the terms of this letter agreement), and
(ii) any disclosure of such information and documents may be made to which the
Company consents in writing. You agree to be responsible for any breach of this
letter agreement by your directors, officers, employees and advisors.
In the event you are requested by law or regulation, by any court or
governmental authority (by way of a subpoena or otherwise) or by the rules of
any stock exchange on which the shares of your company are listed to disclose
any Evaluation Material or any other information concerning the Company or such
negotiated transaction, you will (to the extent permitted by law) give us prompt
notice of such request and cooperate with us in contesting such request (to the
extent appropriate) and in attempting to preserve appropriate confidentiality
protections for the Evaluation Material or other information that is sought.
You understand that neither the Company nor any of its officers, directors,
partners or employees, has made or make any express or implied representation or
warranty as to the accuracy or completeness of the Evaluation Material. You
agree that (i) neither the Company nor any of such other persons, shall have any
liability to you or any of your representatives or advisors relating to the
Evaluation Material or for any errors therein or omissions therefrom; and (ii)
you will be entitled to rely only upon such representations and warranties as
are made to you by the Company in any definitive agreement which the Company and
you may execute.
In the event that you do not proceed with a negotiated transaction or upon
earlier request, you and your advisors shall promptly redeliver to the Company
all written Evaluation Material and any other written material containing or
reflecting any information in the Evaluation Material (whether prepared by the
Company, its advisors or otherwise) and will not retain any copies, extracts or
other reproductions in whole or in part of such written material. All
documents, memoranda, notes and other writings whatsoever prepared by you or
your advisors based on the information in the Evaluation Material shall be
destroyed, and such destruction shall be certified in writing to the Company by
an authorized officer supervising such destruction.
Until the earliest of (i) the execution by you of a definitive agreement between
the Company and you; (ii) an acquisition of the Company by a third party; or
(iii) two years from the date of this letter agreement, you agree not to
initiate or maintain contact (except for those contacts made in the ordinary
course of business) with any officer, director or employee of the Company or its
<PAGE>
-3-
subsidiaries regarding its business, operations, prospects or finances, except
with the express permission of the Company. You further agree that for a period
of two years from the date hereof, you will not hire any of the employees of the
Company or its subsidiaries with whom you have contact during the period of your
investigation of the Company.
You agree that until the expiration of two years from the date of this
agreement, you shall not, and you will ensure that your associates (as defined
in Section 435 of the English Insolvency Act 1986) or advisors, and any person
acting on behalf of or in concert with you or any of your associates or
advisors, (provided that no sources of financing shall be deemed to be acting on
behalf of or in concert with you or any of your associates or advisors), shall
not, without the prior written approval of the Company (i) in any manner
acquire, agree to acquire or make any proposal to acquire, directly or
indirectly, any securities or direct or indirect rights to acquire any
securities of the Company or any of its subsidiaries, (ii) propose to enter
into, directly or indirectly, any merger or business combination involving the
Company or any of its subsidiaries or to purchase, directly or indirectly, a
material portion of the assets of the Company or any of its subsidiaries, (iii)
otherwise act, alone or in concert with others, to seek to control or influence
the management, Board of Directors or policies of the Company, (iv) disclose any
intention, plan or arrangement inconsistent with the foregoing, or (v) advise,
assist or encourage any other persons in connection with any of the foregoing.
You also agree during such period not to (i) request the Company (or its
directors, officers, employees or agents), directly or indirectly, to amend or
waive any provisions of this paragraph (including this sentence) or (ii) take
any action which might require the Company to make a public announcement
regarding any of the matters specified in this paragraph. You will promptly
advise the Company of any inquiry or proposal made to you with respect to any of
the foregoing.
You acknowledge that the Evaluation Material may comprise or include unpublished
price sensitive information in relation to the Company. Accordingly, you
hereby: (a) consent to being made an "insider" and to receiving information as
an Insider (within the meaning of and for the purposes of Part V of the
(English) Criminal Justice Act 1993); and (b) understand that you may not deal
in the Company's securities before all of the Evaluation Material (or such of it
as constitutes Inside Information) is made public or otherwise ceases to be
Inside Information.
You agree that unless and until a definitive agreement between the Company and
you has been executed and delivered, neither the Company nor you will be under
any legal obligation of any kind whatsoever with respect to such a transaction
by virtue of this letter agreement or any written or oral expression with
respect to such transaction by the Company or any of its directors, officers,
employees, agents, representatives or advisors except, in the case of this
letter, for our respective obligations hereunder. For purposes hereof, the term
"definitive agreement" does not include any executed letter of intent, heads of
agreement or other preliminary agreement, nor does it include any written or
oral acceptance of any offer or proposal on your part.
<PAGE>
-4-
The Company agrees to disclose the fact that discussions or negotiations are
taking place only to such of its officers, employees or advisors as are actually
and directly participating in, and need to know such fact for the purposes of,
advising or assisting the Company with such discussions or negotiations.
Without the prior written consent of the other party, neither you nor the
Company will, and each of the Company and you will direct its respective
directors, officers, employees and advisors not to, disclose to any person
either the fact that discussions or negotiations are taking place between the
Company and you or any of the terms, conditions or other facts with respect to
any possible transaction, including the status thereof. If, however, pursuant
to any law or regulation or the requirements of any stock exchange upon which
the shares of the Company or of your company are listed, it becomes necessary to
make a public announcement or other disclosure of our discussions or
negotiations, the text thereof will be mutually reviewed by the Company and you
prior to its dissemination.
You agree that the Company shall be entitled to equitable relief, including
injunctive relief, in the event of any breach of the provisions of this letter
agreement and that you shall not oppose the granting of such relief. This
letter agreement may be modified or waived only by a separate writing by the
Company and you expressly so modifying or waiving such agreement.
This letter shall be governed by, and construed in accordance with English Law.
You irrevocably consent to the jurisdiction of the courts of England for the
purpose of any suit involving the subject matter of this letter agreement.
It is understood and agreed that no failure or delay by us in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
Any assignment of this letter agreement by you without the Company's prior
written consent shall be void.
This letter agreement contains the entire agreement between you and the Company
concerning confidentiality of the Evaluation Material. Please confirm your
agreement with the foregoing by signing and returning to the undersigned the
duplicate copy of this letter enclosed herewith.
Very truly yours By: /s/ J.M. Barry Gibson
BAA plc -------------------------------------
J.M. Barry Gibson, Group Retail
Director
<PAGE>
-5-
Confirmed and Agreed to:
DUTY FREE INTERNATIONAL, INC
By: /s/ Alfred Carfora
------------------------------
Alfred Carfora
Date:----------------------------
