1
EXHIBIT 10.36
RATIFICATION AGREEMENT
This RATIFICATION AGREEMENT (this "Agreement"), is made and entered
into as of July 24, 1997 between Patriot American Hospitality, Inc., a Delaware
corporation which operates as a real estate investment trust ("New Patriot"),
and Wyndham Hotel Corporation, a Delaware corporation ("Wyndham").
RECITALS
WHEREAS, Patriot American Hospitality, Inc., a Virginia corporation
and the predecessor by merger to New Patriot ("Patriot"), and Wyndham entered
into an Agreement and Plan of Merger, dated as of April 14, 1997 (the "Merger
Agreement"), pursuant to which Wyndham agreed to merge with and into Patriot
(the "Merger");
WHEREAS, New Patriot (the successor by merger to Patriot and formerly
named "California Jockey Club"), Patriot and Patriot American Hospitality
Operating Company, a Delaware corporation and formerly known as Bay Xxxxxxx
Operating Company ("Patriot Operating Company"), entered into an Agreement and
Plan of Merger, dated as of February 24, 1997 (the "Business Combination
Agreement"), pursuant to which Patriot, New Patriot and BMOC agreed to effect a
business combination among Patriot, New Patriot and BMOC (the "Business
Combination");
WHEREAS, the Business Combination has been consummated, and as a
result thereof Patriot has merged with and into New Patriot, with New Patriot
being the surviving company in the Merger;
WHEREAS, as a result of the Business Combination, New Patriot has
succeeded to the rights and obligations of Patriot under the Merger Agreement;
WHEREAS, the Merger Agreement contemplates that New Patriot will
execute and deliver this Agreement pursuant to which New Patriot will expressly
agree with Wyndham to ratify and approve the Merger, the Merger Agreement and
certain Ancillary Agreements, and to perform the covenants and agreements of
Patriot thereunder;
WHEREAS, the boards of directors of New Patriot, Wyndham and Patriot
Operating Company have each determined that the Merger between New Patriot and
Wyndham, in which the outstanding shares of common stock, par value $.01 per
share, of Wyndham (the "Wyndham Stock") will be converted into cash and/or
shares of common stock, par value $.01 per share, of New Patriot (the "New
Patriot Stock") and shares of common stock, par value
1
2
$.01 per share, of Patriot Operating Company (the "Patriot Operating Company
Stock") that are paired and transferrable and traded only in combination as a
single unit (the "Paired Shares") on the New York Stock Exchange pursuant to
the Pairing Agreement dated as of February 17, 1983 between New Patriot and
Patriot Operating Company, as amended (the "Pairing Agreement"), is in the best
interests of their respective companies and stockholders and presents an
opportunity for their respective companies to achieve long-term strategic and
financial benefits, and accordingly have agreed to effect the transactions
provided for in the Merger Agreement and herein upon the terms and subject to
the conditions set forth herein;
WHEREAS, it is intended that the Stock Purchase by Patriot and the
Merger provided for herein be treated as an integrated transaction that, for
federal income tax purposes, qualifies as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code")
and pursuant to which the consideration received by all of the stockholders of
Wyndham shall be tax-free to such stockholders to the extent such consideration
consists of Patriot Unpaired Stock and, to the extent consisting of Patriot
Stock, Paired Shares of Purchase Stock and Patriot Operating Company Stock, and
for financial accounting purposes shall be accounted for as a "purchase";
WHEREAS, the boards of directors of New Patriot, Patriot Operating
Company and Wyndham have received fairness opinions from their financial
advisors, and the Special Committee of the Board of Directors of Wyndham has
received a fairness opinion from its financial advisor, relating to the
transactions contemplated hereby and by the Merger Agreement as more fully
described herein and therein;
WHEREAS, New Patriot desires to make certain representations,
warranties, covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and in
order to induce Wyndham to proceed with the Merger and the other transactions
contemplated by the Merger Agreement, the parties hereto hereby agree as
follows:
ARTICLE 1. REPRESENTATIONS AND WARRANTIES OF NEW PATRIOT
New Patriot represents and warrants to Wyndham as follows:
1.1 Existence, Good Standing, Authority. New Patriot is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
operate, lease and encumber its properties and to carry on its business as now
conducted.
2
3
1.2 Authorization, Validity and Effect of Agreement. New Patriot has
the requisite power and authority to enter into the transactions contemplated
hereby and to execute and deliver this Agreement and the other Ancillary
Agreements to which it is or will be a party. The Board of Directors of New
Patriot has approved this Agreement and the Merger, and has ratified, confirmed
and adopted the Merger Agreement, the Pairing Agreement Amendment, the Stock
Purchase Agreement, the Ancillary Agreements to which it is a party and the
transactions contemplated hereby and thereby, and has recommended that the
holders of New Patriot Stock authorize and approve the Merger Agreement, as
ratified by New Patriot pursuant to this Agreement, and the Pairing Agreement
Amendment and, if stockholder approval of the Stock Purchase Agreement is
required under applicable law or the rules of the NYSE, the Stock Purchase
Agreement, at the Patriot stockholders' meeting which will be held in
accordance with the provisions of Section 8.3 of the Merger Agreement. As of
the date hereof, all of the directors and executive officers of New Patriot
have indicated that they presently intend to vote all shares of New Patriot
Stock which they own to approve the Merger Agreement, as ratified by New
Patriot pursuant to this Agreement, the Pairing Agreement Amendment and, if
stockholder approval of the Stock Purchase Agreement is required under
applicable law or the rules of the NYSE, the Stock Purchase Agreement, at the
Patriot stockholders' meeting. Subject to the approval of the Merger Agreement,
as ratified by New Patriot pursuant to this Agreement, the Pairing Agreement
Amendment and, if stockholder approval of the Stock Purchase Agreement is
required under applicable law or the rules of the NYSE, the Stock Purchase
Agreement, by the requisite vote of the stockholders of New Patriot, the
execution by New Patriot of this Agreement, the Merger Agreement and the other
Ancillary Agreements to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
requisite corporate action on the part of New Patriot. This Agreement and the
Merger Agreement constitute, and the other Ancillary Agreements to which it is
or will become a party (when executed and delivered) will constitute, the valid
and legally binding obligations of New Patriot, enforceable against New Patriot
in accordance with their respective terms, subject to applicable bankruptcy,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
1.3 Capitalization. The authorized capital stock of New Patriot
consists of 650,000,000 shares of New Patriot Stock, 100,000,000 shares of
Preferred Stock, par value $.01 per share, and 750,000,000 shares of Excess
Stock, par value $.01 per share. All issued and outstanding shares of New
Patriot Stock are duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights.
1.4 No Violation. Except as set forth in Section 7.5 of the Patriot
Disclosure Letter, neither the execution and delivery by New Patriot of this
Agreement or the other Ancillary Agreements nor consummation by New Patriot of
the transactions contemplated by this Agreement or the other Ancillary
Agreements in accordance with their terms, will: (i)
3
4
conflict with or result in a breach of any provisions of the Patriot
Certificate, the Surviving Corporation Certificate, the Patriot Bylaws, or the
Surviving Corporation Bylaws, or the organizational documents, partnership
agreements or joint venture agreements of other Patriot or any Patriot
Subsidiary; (ii) result in a breach or violation of, a default under, or the
triggering of any payment or other material obligations pursuant to, or
accelerate vesting under, any of the Patriot Stock Plans, or any grant or award
under any of the foregoing; (iii) violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result
in the termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties of other
Patriot or any of the Patriot Subsidiaries under, or result in being declared
void, voidable, or without further binding effect, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust or any
license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which New Patriot or any of the Patriot
Subsidiaries is a party, or by which Patriot or any of the Patriot Subsidiaries
or any of their properties is bound or affected, except for any of the
foregoing matters which, individually or in the aggregate, could not reasonably
be expected to have a New Patriot Material Adverse Effect; or (iv) other than
the Regulatory Filings, require any consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority except where the failure to obtain any such consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority could not have a New Patriot Material Adverse Effect.
1.5 Taxes. Except as would otherwise not be reasonably expected to
have a New Patriot Material Adverse Effect:
(a) Each of the corporate Patriot Subsidiaries of which all the
outstanding capital stock is owned solely by New Patriot is a Qualified REIT
Subsidiary as defined in Section 856(i) of the Code.
(b) New Patriot has qualified, and shall be qualified through
the date of consummation of the Merger, to be treated as a REIT within the
meaning of Sections 856-860 of the Code, including, without limitation, the
requirements of Section 856 and 857 of the Code, for all applicable tax years
to which New Patriot's federal income tax returns are subject to audit and New
Patriot is subject to assessment for taxes reportable therein.
(c) Assuming the accuracy of the representations made by CJC in
Sections 9.10 and 9.11 of the Business Combination Agreement and the
representations made by Patriot Operating Company in Section 8.8 of the
Business Combination Agreement, the consummation of the Business Combination
and the Merger would not, if consummated as of the date of this Agreement, with
the Merger immediately following the Business Combination,
4
5
cause CJC to lose its exemption from the application of Section 269B(a)(3) of
the Code pursuant to Section 136(c)(3) of the Deficit Reduction Act of 1984
(the "Deficit Act"). As of the date hereof, Patriot has no knowledge, without
independent inquiry, of any facts indicating that the foregoing representations
made by CJC and Patriot Operating Company are inaccurate.
ARTICLE 2. COVENANTS AND AGREEMENTS OF NEW PATRIOT
2.1 Covenants and Agreements under Merger Agreement. New Patriot
hereby covenants and agrees with Wyndham that it will be bound by and will
perform each covenant and agreement set forth in the Merger Agreement that by
its terms is binding upon, or to be performed by, Patriot to the same extent as
if each such covenant and agreement were set forth herein and referred to "New
Patriot" in place of "Patriot." Each such covenant and agreement shall be
deemed to be incorporated by reference herein as if set forth in full in this
Agreement.
2.2 Ancillary Agreements. At or prior to the Closing, New Patriot
shall execute and deliver each of the Ancillary Agreements to which it is a
party that, pursuant to Section 1.4 of the Merger Agreement, is to be executed
and delivered by it at or prior to the Closing.
2.3 New Patriot Stock. New Patriot acknowledges and agrees that shares
of New Patriot Stock will be issued in accordance with Section 5.2(a) of the
Merger Agreement to the stockholders of Wyndham in connection with the Merger
and will be paired with the Patriot Operating Company Stock issued pursuant to
the Wyndham/Patriot Operating Company Subscription Agreement in accordance with
the Pairing Agreement, and that Wyndham shall not at any time become a
stockholder of Patriot Operating Company. The provisions of this Section 2.3
and the Wyndham/Patriot Operating Company Subscription Agreement are intended
to comply with Sections 2(a) and 2(b) of the Pairing Agreement.
ARTICLE 3. COVENANTS AND AGREEMENTS OF WYNDHAM
Wyndham hereby covenants and agrees with New Patriot that Wyndham will
continue to be bound by and will perform each covenant and agreement set forth
in the Merger Agreement that by its terms is binding upon, or to be performed
by, Wyndham as if each reference in the Merger Agreement to "Patriot" were a
reference to "New Patriot." Each such covenant and agreement shall be deemed to
be incorporated by reference herein as if set forth in full in this Agreement.
5
6
ARTICLE 4. TERMINATION; AMENDMENT; WAIVER
4.1 Termination. If the Merger Agreement has been terminated, this
Agreement may be terminated and abandoned, at any time prior to the Effective
Time, whether before or after approval of the matters contemplated hereby by
the stockholders of New Patriot, Wyndham or Patriot Operating Company, by the
party terminating the Merger Agreement in accordance with its terms.
4.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 4.1, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on the part of New
Patriot or Wyndham other than the provisions of this Section 4.2, the last
sentence of Section 5.3, and Section 5.4. Nothing contained in this Section 4.2
shall relieve any party for any breach of the representations, warranties,
covenants, or agreements set forth in this Agreement.
4.3 Extension; Waiver. At any time prior to the Effective Time, 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 first sentence of
Section 5.5, 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 such rights.
ARTICLE 5. GENERAL PROVISIONS
5.1 Non-Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument pursuant to this Agreement shall not survive the Merger, provided,
however, that the agreements contained in Section 2.1 and Article 3 (to the
extent that any such agreements in Section 2.1 or Article 3 relate to any
covenants in the Merger Agreement that survive the Merger) and this Article 5
shall survive the Merger.
5.2 Notices. Any notice required to be given hereunder shall be in
writing and shall be sent by facsimile transmission (confirmed by any of the
methods that follow), courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid) and addressed as follows:
6
7
If to New Patriot: Patriot American Hospitality, Inc.
Tri-West Plaza
0000 XXX Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
With copies to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, P.C.
If to Wyndham: Wyndham Hotel Corporation
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
With copies to: Xxxxx Xxxxxxx Rain Xxxxxxx
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000-0000
Attn: M. Xxxxxxx Xxxxxxxx
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
delivered.
5.3 Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned prior
to the Closing by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except
for the provisions of Section 2.1 (to the extent it relates to Sections 8.12
and 8.13 of the Merger Agreement), nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
5.4 Entire Agreement. This Agreement, the Exhibits and the Patriot
Disclosure Letter and all provisions of the Merger Agreement incorporated
herein by reference and any
7
8
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
5.5 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective boards of directors, at any time before or
after approval of matters presented in connection herewith to the stockholders
of Patriot Operating Company, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
5.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to its
rules of conflict of laws. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of Delaware and of the United States of America located in the
State of Delaware (the "Delaware Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts), waives
any objection to the laying of venue of any such litigation in the Delaware
Courts and agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in any inconvenient forum.
5.7 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
5.8 Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
5.9 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
5.10 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall
8
9
be deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
5.11 Incorporation. The Patriot Disclosure Letter and the provisions
of the Merger Agreement are hereby incorporated herein and made a part hereof
for all purposes as if fully set forth herein.
5.12 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
5.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions and other equitable remedies to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
thereof if any Delaware Court, this being in addition to any other remedy to
which they are entitled at law or in equity. Any requirements for the securing
or posting of any bond with respect to such remedy are hereby waived by each of
the parties hereto.
5.14 Certain Definitions. Capitalized terms used in this Agreement
and not otherwise defined herein shall have the meanings ascribed to them in
the Merger Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
10
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
ATTEST WYNDHAM HOTEL CORPORATION
By: /s/ XXXXX X. XXXXXXXX By: /s/ XXXX X. XXXXXXX
---------------------------------- -------------------------------
Name Xxxxx X. Xxxxxxxx Name Xxxx X. Xxxxxxx
Title Vice President, General Counsel Title Executive Vice President
and Secretary
ATTEST PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ XXXXXXX X. XXXXX, III By: /s/ XXXX X. XXXXXXXX
---------------------------------- -------------------------------
Name Xxxxxxx X. Xxxxx, III Name Xxxx X. Xxxxxxxx
Title Office of the Chairman, Title Chairman, CEO and
Patriot American Hospitality, Inc. President
10
