SECOND CONSENT AND AMENDMENT
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SECOND CONSENT AND AMENDMENT, dated as of December 15, 1994,
among Philippe Touret, Jean-Marcel Rouff, Thomas G. Gentithes, Brian
Fiderer and Julia Ng (individually a "Seller" and collectively, the
"Sellers"), Colleen May ("May") and Anthony Rodriguez (together with
May, the "Additional Recipients"), and Duty Free International, Inc., a
Maryland corporation (the "Purchaser").
W I T N E S E T H:
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WHEREAS, the Sellers, Inflight Sales Group Ltd., a Bermuda
company (the "Company") and the Purchaser entered into a Stock Purchase
Agreement dated as of March 29, 1994, as amended (the "Stock Purchase
Agreement");
WHEREAS, the Company has been liquidated; and
WHEREAS, the Stock Purchase Agreement required the Purchaser
to make certain additional payments to the Sellers and the Additional
Recipients, including payments to be made by the Purchaser pursuant to
the Notes (as defined in the Stock Purchase Agreement) that were secured
by irrevocable bank letters of credit (the "Letters of Credit")
delivered to each Seller and each Additional Recipient and further
payments to be made by the Purchaser to certain of the Sellers and May.
WHEREAS, the Purchaser asserted claims (the "Claims"), which
the Majority Sellers have disputed, in connection with the Stock
Purchase Agreement in two letters each dated September 12, 1994, which
were delivered to the Majority Sellers on September 13, 1994; and
WHEREAS, the Purchaser and the Sellers desire to (i) satisfy
any and all of the obligations of the Purchaser to make additional and
further payments to the Sellers and the Additional Recipients under the
Stock Purchase Agreement, except as set forth in Section 2(a) of this
Agreement, (ii) settle their dispute with respect to the Claims, (iii)
amend the Stock Purchase Agreement as set forth herein, and (iv) amend
the Majority Seller Purchaser Options, the Employment Agreement and the
Consulting Agreements in certain respects;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein and
not otherwise defined have the respective meanings given such terms in
the Stock Purchase Agreement.
2. Satisfaction of Payment Obligations and Claims.
Effective from and after the Closing hereunder:
(a) the Purchaser shall have no further obligation to pay
any Seller or any Additional Recipient any additional or further amount
pursuant to t he Stock Purchase Agreement (except as provided in Section
3.6(g) and (h) thereof), provided, however, that (x) the Purchaser's
obligations to make a payment under Section 1.2(a)(iv) to each of Julia
Ng and Colleen J. May shall continue in full force and effect as to, in
each case, the percentage set forth in column 6 of Exhibit B to the
Stock Purchase Agreement opposite such person's name, if such person is
employed by the Purchaser or one of its subsidiaries or affiliates at
the time such payment becomes due and (y) the Purchaser hereby
undertakes and agrees, for the sole benefit of Judi Bishop, to pay to
Judi Bishop an amount equal to the amount payable under Section
1.2(a)(iv) to Julia Ng and to Colleen J. May as aforesaid (that is, to
each of said three persons 4% of five times the amount, if any, by which
the arithmetical average of the Earnings of the Company for each of the
fiscal years ending January 31, 1996, 1997 and 1998 exceeds
$10,900,000); and provided, further, that such payments to Julia Ng,
Colleen J. May and Judi Bishop shall not, notwithstanding Section
1.2(a)(iv) ofthe Stock Purchase Agreement, be subject to set-off as
provided in such Section 1.2(a)(iv) or be reduced by any amount for
payment to Walden Partners Ltd., nor shall any liquidated payment under
Section 1.5 of the Stock Purchase Agreement become payable to any of
them at any time or upon the occurrence of any event.
(b) the Claims shall be deemed settled in full and no
Seller or Additional Recipient shall have any further obligation in
respect there of to the Purchaser;
(c) the Stock Purchase Agreement shall be amended as
hereinafter provided;
(d) the amendments to the Majority Seller Purchaser
Options, the Employment Agreement and the Consulting Agreements, in the
forms of Exhibits 1, 2, 3, 4, 5 and 6 hereto, shall become effective;
and
(e) Thomas G. Gentithes shall have an option to purchase
40,000 shares of Common Stock.
3. Closing. (a) The closing of the transactions
contemplated hereby (the "Closing") shall commence at 10:00 a.m. at the
offices of Morgan, Lewis & Bockius, 101 Park Avenue, New York, New York
10178 on December 15, 1994, or at such other time on such other day or
place as shall be mutually agreed upon in writing by the Purchaser and
the Majority Sellers (the "Closing Date").
(b) At the Closing:
(i) the Purchaser shall pay, against receipt of the
documents specified in subsections (ii), (iii)
and (v) below, in cash, by wire transfers as
directed by the Majority Sellers, to (x) each
Seller and each Additional Recipient, in full
and complete satisfaction of all amounts due him
or her under the Stock Purchase Agreement at any
time, except as set forth in Section 3.6(g) and
(h) of the Stock Purchase Agreement with respect
to the Sellers and in Section 2(a) of this
Second Consent and Amendment with respect to
Julia Ng and Colleen May, without any right of
set-off, the total amounts set forth in the
fourth and ninth columns on the first page of
Exhibit 7 opposite such Seller's or Additional
Recipient's name, and (y) Walden Partners Ltd.
the amount of $35,000, for an aggregate payment
of $12,700,000, and shall deliver to each Seller
and each Additional Recipient a fully completed
and executed release in the form of Exhibit 8
and to Walden Partners Ltd. a fully completed
and executed release in the form of Exhibit 13;
(ii) each Seller and each Additional Recipient shall
deliver to the Purchaser, against receipt:
(A) the Note (marked "Cancelled - Paid in
Full") and each Letter of Credit issued by
the Purchaser to him or her at the Closing
under the Stock Purchase Agreement;
(B) a fully completed and executed
Cancellation Notice in the form of Exhibit
9 hereto, with respect to each Letter of
Credit to be delivered to the Purchaser by
such Seller or Additional Recipient; and
(C) a fully completed and executed release in
the form of Exhibit 10.
(iii) the Purchaser and each of Thomas G. Gentithes, Jean-
Marcel Rouff and Philippe Touret shall execute and
deliver an Amendment to his Employment Agreement or
his Consulting Agreement, in the appropriate form
attached as Exhibit 4, 5 or 6 hereto and their
respective resignations in the form attached as
Exhibit 14, 15 or 16;
(iv) the Purchaser shall (x) issue to Thomas G. Gentithes a
non-qualified stock option to purchase 40,000 shares
of common stock, par value $.01 per share, of the
Purchaser, exercisable at a per share price equal to
the last reported sale price of the Purchaser Common
Stock on the New York Stock Exchange Composite Tape on
December 14, 1994 in accordance with, and execute and
deliver to him, an Option Agreement in the form of
Exhibit 11 hereto and pay him the sum of $200,000
(less appropriate withholding as provided in Section
7.10 of his Employment Agreement), (y) pay on behalf
of Glorient Trading, Ltd. to Philippe Touret the sum
of $80,000 in accordance with the Amendment to his
Consulting Agreement and (z) pay, on behalf of
Glorient Trading, Ltd., to Jean-Marcel Rouff the sum
of $16,666.64 in accordance with the Amendment to his
Consulting Agreement; and
(v) the Sellers shall deliver to the Purchaser the release
of Walden Partners Ltd. in the form of Exhibit 12.
4. Amounts Payable by the Purchaser. (a) The total
amount payable pursuant to Section 3(b)(i) of this Agreement to each
Seller and each Additional Recipient represents: (i) a prepayment of the
amount due him or her on May 2, 1995 and May 2, 1996 as the first and
second installments of principal due on the Note delivered to him or her
at the Closing under the Stock Purchase Agreement, less the amount
agreed upon by the Purchaser and the Sellers and the Additional
Recipients as a set-off against the first installment of principal in
respect of and in full settlement of the Claims, together with interest
accrued on the amount prepaid; (ii) a payment in full satisfaction of
his or her share of the amount (if any) payable under Section
1.2(a)(iii) of the Stock Purchase Agreement, including interest on the
amount being so paid; and (iii) the statutory withholding amount, if
any, being withheld with respect to the payments to him or her. The
aggregate of the respective amounts referred to in clauses (i) through
(iii) of the preceding sentence (reduced by a proportionate share of the
amount payable to Walden Partners Ltd. as set forth above) are set forth
opposite the name of each Seller and each Additional Recipient in the
fourth and ninth columns on the first page of Exhibit 7.
(b) The provisions of Section 1.2(f) of the Stock Purchase
Agreement shall be applicable to the payments to be made to the Sellers,
the Additional Recipients and to Judi Bishop pursuant to this Agreement
to the extent appropriate.
(c) Each of Jean-Marcel Rouff and Philippe Touret severally
represents and warrants, as to himself, that he is not, and, at all
times hereafter and through December 31, 1994, he will not be, a "10-
percent shareholder" of Purchaser within the meaning of Section
871(h)(3) of the Code.
(d) Each Seller and each Additional Recipient severally
represents and warrants, as to himself or herself, that the information
provided in his or her respective Forms W-8 and W-9 submitted to
Purchaser on the Closing Date under the Stock Purchase Agreement is true
and correct on the date hereof.
5. Amendments to Stock Purchase Agreement. The
Stock Purchase Agreement is amended as of the Closing Date as follows:
(a) Sections 1.2(a)(ii) and (iii); and 1.2(a) (iv), (b),
(c), (d) and (e) (except as they apply to Julia Ng, Colleen May and Judi
Bishop); 1.5, 3.6(d) and (f) (except for the first sentence thereof);
3.9 and Article V (except insofar as the provisions thereof are
applicable to claims by Sellers under Section 3.6(g) and (h)) are hereby
deleted in their entireties; and
(b) all representations and warranties of the Sellers and
the Purchaser shall expire upon consummation of the Closing, including
with respect to any breaches and violations heretofore or theretofore
specified by the Purchaser with respect to any of the Sellers or the
Company or by any of the Sellers with respect to the Purchaser.
6. No Further Claims. From and after the date hereof
none of the Purchaser, the Sellers or the Additional Recipients shall be
entitled to make (x) any further claim for breach or violation (known or
unknown) of any representation, warranty or covenant in, or for
indemnification, damages or other payment under any provision of, the
Stock Purchase Agreement (except for claims under Section 3.6(g) and
(h)), (y) any claim under applicable federal or state common law or
statutory laws, including the securities laws, or (z) any claim with
respect to the letter dated as of May 1, 1994, from the Purchaser to the
Sellers, confirmed by the Sellers, with respect to the allocation of
responsibility for any damages that might be incurred by the Company or
the Purchaser in connection with the resolution of any claims asserted
by Northwest Airlines that it is owed monies under the guarantee
referred to in Item (j)10 of the Disclosure Letter. Upon completion of
the Closing hereunder, all such claims, whether known or unknown,
whether or not heretofore or theretofore asserted (including without
limitation, the Claims), shall be deemed satisfied in full.
7. Confidentiality. Each of the Sellers and each of the
Additional Recipients agree that he or she shall keep in confidence, and
not disclose to any person (other than his or her personal advisors or
appropriate government representatives, or as required by judicial
process), the terms of this Agreement and the transactions contemplated
hereby.
8. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same instrument.
9. Stock Purchase Agreement. The Stock Purchase
Agreement, except as otherwise set forth herein, shall remain in full
force and effect in all other respects.
10. Governing Law. This Agreement shall be deemed to be
made in and in all respects shall be interpreted, construed and governed
by and in accordance with the law of the State of New York.
11. Expenses. The parties shall bear their own respective
expenses (including, but not limited to, all compensation and expenses
of counsel, financial advisors, consultants and independent accountants)
incurred in connection with the preparation and execution of this
Agreement and consummation of the transactions contemplated hereby.
12. Miscellaneous. This Agreement and the documents (in
the forms of the Exhibits attached hereto) executed in connection
herewith constitute the entire agreement among the parties hereto and
supersede all prior agreements and understandings, both written and
oral, among the parties, with respect to the subject matter hereof. The
terms of this Agreement may be modified only in a writing signed by all
of the parties hereto.
13. Section Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.
14. United States Dollars. Any and all dollar amounts
specified in this Agreement or the Exhibits hereto shall be deemed to be
United States Dollars, and any and all computations and payments to be
made pursuant to this Agreement shall be made in lawful currency of the
United States.
15. No Admission or Representations. This Agreement is in
compromise and settlement of disputed claims and shall never at any time
for any purpose be considered as an admission of liability, fault or
responsibility on the part of any party hereto. In entering into this
Agreement, no party has relied on any representation made by or on
behalf of any other party hereto, except as expressly stated herein.
16. Third Party Beneficiary. Purchaser agrees that Judi
Bishop shall be entitled solely to enforce the provisions of Section
2(a) hereof with respect to the payments to be made to her as provided
therein. Her consent shall not be required to amend any provision of
this Agreement which does not affect any such payment to her.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
DUTY FREE INTERNATIONAL, INC.,
on be half of itself and INFLIGHT
SALES GROUP LTD. /s/ Philippe Touret
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Philippe Touret
By:/s/ John A. Couri
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Name: John A. Couri
Chairman of the Board /s/ Jean-Marcel Rouff
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Jean-Marcel Rouff
/s/ Thomas G. Gentithes
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Thomas G. Gentithes
/s/ Brian Fiderer
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Brian Fiderer
/s/ Julia Ng
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Julia Ng
/s/ Colleen J. May
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Colleen J. May
/s/ Anthony Rodriquez
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Anthony Rodriguez
Exhibit Index
Exhibits
Exhibit 1 Amendment to T. Gentithes Majority Seller Option Agreement
Exhibit 2 Amendment to J-M. Rouff Majority Seller Option Agreement
Exhibit 3 Amendment to P. Touret Majority Seller Option Agreement
Exhibit 4 Amendment to T. Gentithes Employment Agreement
Exhibit 5 Amendment to P. Touret Consulting Agreement
Exhibit 6 Amendment to J-M. Rouff Consulting Agreement
Exhibit 7 Payment Allocations
Exhibit 8 Form of Release from Duty Free International, Inc. ("DFI")
Exhibit 9 Form of Cancellation Notice
Exhibit 10 Form of Release from Sellers and Additional Recipients
Exhibit 11 Form of T. Gentithes Option Agreement
Exhibit 12 Form of Release from Walden Partners Ltd.
Exhibit 13 Form of Release from DFI to Walden Partners Ltd.
Exhibit 14 Resignation of T. Gentithes
Exhibit 15 Resignation of P. Touret
Exhibit 16 Resignation of J-M. Rouff