EXHIBIT 10.3
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made and
entered into as of the 7th day of August, 2002, by and between Penn National
Gaming, Inc., a Pennsylvania corporation ("Parent"), Hollywood Casino
Corporation, a Delaware corporation ("Company"), and Xxxx X. Xxxxx, Xx.
("Stockholder"). Parent, Company and Stockholder are sometimes referred to in
this Agreement individually as a "Party" or collectively as the "Parties."
RECITALS
This Agreement is entered into with reference to the following
facts, objectives and definitions:
A. Contemporaneously with the execution and delivery of this
Agreement, Parent, P Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and Company, are entering into
an Agreement and Plan of Merger, dated as of the date of this Agreement (the
"Merger Agreement"), pursuant to which it is contemplated that Company will
merge (the "Merger") with Merger Sub, upon the terms and conditions set forth in
the Merger Agreement; and
B. The Board of Directors of Company (the "Company Board") has
previously approved the Merger Agreement and the execution and delivery by
Company of this Agreement; and
C. On the date hereof each of the other stockholders of
Company set forth on Schedule A attached hereto (collectively, the "Other
Stockholders") is entering into a Stockholder Agreement in a form substantially
similar to this Agreement (collectively, the "Other Stockholder Agreements");
and
D. Stockholder owns, or has rights with respect to, certain of
the outstanding shares of Class A Common Stock, par value $0.0001 per share
("Class A Common Stock"), of Company, and may acquire rights with respect to
additional shares of Class A Common Stock after the date of this Agreement, and
desires to facilitate the consummation of the Merger, and for such purpose and
in order to induce Parent to enter into the Merger Agreement, Stockholder has
agreed, among other matters set forth herein, (i) to vote these shares and (ii)
to grant Parent or its designee an irrevocable proxy to exercise the voting
power of Stockholder with respect to these shares, all as provided in this
Agreement.
NOW, THEREFORE, in consideration of the covenants and
conditions contained in this Agreement, the Parties represent, warrant, and
agree as follows:
AGREEMENT
1. Representations and Warranties of Stockholder. Stockholder
represents and warrants that: (i) Stockholder is the holder of record (free and
clear of any liens, encumbrances, pledges or restrictions except as described
under the heading "Record Share Encumbrances" on Schedule B attached hereto (the
"Record Share Encumbrances")), of the number of outstanding shares of Class A
Common Stock, if any, set forth under the heading "Shares Held of Record" on
Schedule B attached hereto (the "Record Shares"), and, except as may be
described on Schedule B attached hereto, Stockholder possesses the sole right to
vote and dispose of the Record Shares; (ii) Stockholder holds (free and clear of
any liens, encumbrances, pledges or restrictions) the options to acquire shares
of Class A Common Stock, if any, set forth under the heading "Options" on
Schedule B attached hereto (the "Options"); (iii) except as may be described
under the heading "Additional Voting Shares" on Schedule B attached hereto
Stockholder maintains the right to vote or direct the vote of, but does not
solely own and cannot dispose of, the additional shares of Class A Common Stock,
if any, set forth under the heading "Additional Voting Shares" on Schedule B
attached hereto (the "Additional Voting Shares" and, collectively with the
Record Shares as to which Stockholder holds the right to vote, the "Voting
Shares"); (iv) Stockholder holds the right to sell or otherwise dispose of, but
cannot vote or direct the vote of, the additional shares of Class A Common
Stock, if any, set forth under the heading "Additional Disposition Shares" on
Schedule B attached hereto (the "Additional Disposition Shares" and, together
with the Record Shares as to which Stockholder holds the right of disposition,
the "Disposition Shares"; the Record Shares, the Additional Voting Shares, the
Additional Disposition Shares and the New Shares, as hereinafter defined, are
referred to in this Agreement as the "Shares"); (v) Stockholder does not
directly or indirectly hold or beneficially own any shares of capital stock or
other securities of Company, or any option, warrant or other right to acquire
capital stock or other securities of Company, or any option, warrant or other
right to acquire (by purchase, conversion or otherwise) any shares of capital
stock or other securities of Company, other than as described on Schedule B
hereto; (vi) Stockholder has full power and authority to make, enter into, and
carry out the terms of this Agreement; (vii) the execution, delivery, and
performance of this Agreement by Stockholder will not violate any agreement to
which Stockholder is a party, including, without limitation, any voting
agreement, stockholder agreement, or voting trust; and (viii) this Agreement
constitutes the legal, valid and binding obligation of Stockholder, enforceable
against Stockholder in accordance with its terms.
2. Agreement to Vote the Shares. During the term of this Agreement,
Stockholder shall vote all of the Voting Shares over which Stockholder has sole
voting power and will cause all of the Voting Shares over which he has shared
voting power as described on Schedule B to be voted (other than any Shares that
may have been sold in accordance with the terms of this Agreement) (i) in favor
of the Merger Agreement, and the Merger or any transaction contemplated by the
Merger Agreement, (ii) as otherwise necessary or appropriate to enable Parent,
Company and Merger Sub to consummate the transactions contemplated by the Merger
Agreement, (iii) against any action or agreement that would result in a breach
in any material aspect of any covenant, representation, or warranty or any other
obligation or agreement of Company under the Merger Agreement, (iv) against any
action or agreement that would terminate, impede, interfere with, delay,
postpone, or attempt to discourage the Merger, including, but not limited to:
(A) a sale or transfer of a material amount of the assets of Company or any of
its subsidiaries or a reorganization, recapitalization, or liquidation of
Company or any of its subsidiaries, (B) any change in the Company Board, except
as provided for in the last sentence of this Section or Section 10 or as
otherwise agreed to in writing by the Parties, (C) any change in the present
capitalization or dividend policy of Company, or (D) any other change in
Company's corporate structure; and (v) against any other proposal which would
result in any of the conditions to Parent's obligations under the Merger
Agreement not being fulfilled. Notwithstanding the foregoing, nothing herein
shall prevent Stockholder from taking any actions as an officer and/or a
director of Company so long as such actions are not prohibited by the Merger
Agreement or any other provision of this Agreement, including without
limitation, the nomination for and filling of any vacancy in the Company Board
2
arising due to the death, resignation or removal of any current director of
Company.
3. Grant of Irrevocable Proxy. In the event that Stockholder does not
vote all of the Voting Shares in accordance with Section 2 hereof, subject to
the approval of all applicable Gaming Authorities (as defined in the Merger
Agreement), Stockholder hereby irrevocably appoints Parent or any designee of
Parent the lawful agent, attorney, and proxy of Stockholder, during the term of
this Agreement, to vote all of the Voting Shares in accordance with Section 2
hereof. Stockholder intends this proxy to be irrevocable, during the term of
this Agreement, and coupled with an interest and will take such further action
or execute such other instruments as may be necessary to effectuate the intent
of this proxy and hereby revokes any proxy previously granted by Stockholder
with respect to the Voting Shares. Stockholder shall not hereafter, unless and
until the Termination Time, purport to vote (or execute a consent with respect
to) any of the Voting Shares (other than through this irrevocable proxy or in
accordance with Section 2 hereof) or grant any other proxy or power of attorney
with respect to any of the Voting Shares, deposit any of the Voting Shares into
a voting trust or enter into any agreement (other than this Agreement),
arrangement, or understanding with any person, directly or indirectly, to vote,
grant any proxy, or give instructions with respect to the voting of any of the
Voting Shares. Stockholder shall retain at all times the right to vote the
Voting Shares in Stockholder's sole discretion on all matters other than those
set forth in Section 2 hereof that are presented for a vote to the stockholders
of Company generally.
4. Manner of Voting. The Voting Shares may be voted pursuant to this
Agreement in person, by proxy, by written consent, or in any other manner
permitted by applicable law.
5. No Solicitation. From the date of this Agreement until the Effective
Time (as such date is defined in the Merger Agreement) or the Termination Time
(as hereinafter defined), Stockholder will not, nor will Stockholder permit any
investment banker, attorney, accountant or other advisor or representative of
Stockholder to, directly or indirectly, (i) initiate, solicit or encourage any
inquiries, offers or proposals that constitute, or may reasonably be expected to
lead to an Acquisition Proposal (as such term is defined in the Merger
Agreement), (ii) participate in any discussions or negotiations concerning, or
provide to any person any information or data relating to Company or any
subsidiary of Company for the purpose of making, or take any other action to
facilitate, any Acquisition Proposal or any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) agree to, approve or recommend any Acquisition
Proposal or (iv) take any other action materially inconsistent with Company's
obligations and commitments assumed pursuant to Section 6.6 of the Merger
Agreement. For avoidance of doubt, if Stockholder is a director or officer of
Company, this Section 5 shall not limit Stockholder's participation as a
director or officer in actions permitted to be taken by the Company Board or
officers of Company, as applicable, under the Merger Agreement.
6. No Transfer. From the date of this Agreement until the earlier of
(a) the Effective Time (as defined in the Merger Agreement) and (b) the
Termination Time (as hereinafter defined), Stockholder shall not sell, pledge,
or otherwise transfer, dispose of or encumber any of the Record Shares,
Additional Disposition Shares or New Shares (as hereinafter defined), or any
rights in respect thereof and shall not consent to any sale, pledge or other
transfer, disposition of, or encumbrance of, any Additional Voting Shares, or
any rights in respect thereof; provided, however, that this Section 6 shall not
3
prohibit (i) the Record Share Encumbrances, (ii) the surrender of any Shares to
Company by Stockholder as consideration for the exercise of any Options, or
(iii) the pledge of any Shares as collateral for any funds used by Stockholder
to exercise any Options or to pay withholding taxes on any such Options,
provided such pledge is subject to the terms and conditions hereof and such
pledgee agrees to be bound by the terms and conditions hereof if such pledgee
acquires voting power or dispositive power with respect to, and/or becomes the
record owner of, such Shares. Notwithstanding anything in this Agreement to the
contrary, Stockholder may (i) sell, in any manner chosen in the sole discretion
of Stockholder, Shares held of record by Stockholder, his children, his
grandchildren or trusts for the benefit of his children or grandchildren, (ii)
margin, in any manner chosen in the sole discretion of Stockholder, Shares held
of record by Stockholder, his children, his grandchildren or trusts for the
benefit of his children or grandchildren or (iii) gift Shares to a charitable
organization or a relative of the Stockholder or a trust for the benefit of any
relative of the Stockholder; provided that in the case of clauses (i), (ii) and
(iii), the aggregate number of shares sold, margin, gifted or otherwise
transferred pursuant thereto, during the term of this Agreement, shall not
exceed 110,000 Shares.
7. Additional Purchases; Option Exercise. If, during the period
commencing on the date of this Agreement and ending on the earlier of (i) the
Effective Time and (ii) the Termination Time, Stockholder purchases or otherwise
acquires any additional shares of Class A Common Stock or any rights in respect
thereof, including, without limitation, pursuant to the exercise of
Stockholder's Options, such shares (the "New Shares") shall be subject to the
terms of this Agreement and for all purposes shall be and constitute a portion
of the Shares. As to all Options listed on Schedule B (other than Options for
which shares are issued by the Company as a result of Stockholder's exercise of
such Options), if the Merger is consummated, Stockholder shall receive, in
accordance with Section 2.2 of the Merger Agreement, cash for each such Option
in the amount of the difference between the Merger Consideration and the
exercise price of such Option plus applicable withholding tax. During the term
of this Agreement, the Company will not cause the expiration date of any of the
foregoing Options to be accelerated to a date prior to the Effective Time or
refuse to honor the exercise of the Options that expire on September 11, 2002 or
June 19, 2003, as long as the exercise of the Options is made within, but not
before, the 30-day period immediately preceding the expiration date of such
Options. The Parties' foregoing agreement with respect to such Options, shall
not be deemed an admission of any fact by, or used against, any Party in
connection with the defense or prosecution of the Lawsuits (as hereinafter
defined) or any other legal action brought by any of the Parties hereto other
than litigation arising out of a breach of this Agreement.
8. Adjustments to Prevent Dilution. In the event of any change in the
Class A Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, or the exchange of shares, 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.
9. Waiver of Appraisal Rights. Stockholder hereby irrevocably and
unconditionally waives any right of appraisal relating to the Merger that
Stockholder may have by virtue of ownership of the Shares.
4
10. Director Qualifications; Resignation of Stockholder. Stockholder
shall comply with all orders, decrees, rulings or other requirements of all
Gaming Authorities (as defined in the Merger Agreement) and all Gaming Laws (as
defined in the Merger Agreement) having jurisdiction over or applicability to
Company or any of its subsidiaries at all times during which Stockholder is
serving in any position with the Company or any of its subsidiaries, whether as
a director, officer or otherwise, subject to Stockholder's right to appeal any
such orders in the manner provided for by, and in accordance with, applicable
law. Stockholder hereby resigns from all positions with the Company and any of
its subsidiaries, whether as a director, officer or otherwise, effective only at
the Effective Time (as defined in the Merger Agreement). Stockholder also agrees
to resign from all positions with Company and any of its subsidiaries, whether
as a director, officer or otherwise, at any time that a Gaming Authority
determines that Stockholder is not qualified or suitable to serve in any of such
positions, or otherwise denies or revokes approval of such individual for
service in any of such positions, subject to Stockholder's right to retain any
of such positions during any appeal of such determination to the extent such
retention is permitted under applicable law.
11. Litigation Standstill.
(a) Stay of Litigation. Stockholder and Company agree to stay
all activities in the Lawsuits until the Termination Time, including,
without limitation, refraining from seeking any discovery, filing any
motions or amendments to pleadings or previous motions, and to further
postpone any deadlines, discovery cut-offs, response dates, or similar
matters which have not expired prior to the date of this Agreement.
Stockholder and Company shall cooperate in taking all reasonable steps
to ensure a stay of all activities in the Lawsuits and to ensure that
the Lawsuits, to the extent within the control of Stockholder and
Company, remain inactive in all respects involving Stockholder and
Company. If not previously dismissed prior to the Effective Time, all
Lawsuits will be dismissed with prejudice promptly following the
Effective Time.
(b) Tolling. All limitations periods applicable to the
Lawsuits will be tolled until 15 days after the Termination Time.
(c) Definitions. For purposes of this Agreement, "Lawsuits"
means each of the lawsuits styled as follows: (a) Hollywood Casino
Corporation v. Xxxx X. Xxxxx v. Xxxxxx X. Xxxxx III, Xxxxxx X. Xxxxx
and Xxxx X. Xxxxx, Cause No. 02-01516, in the District Court of Dallas
County, Texas, 116th Judicial District; (b) Hollywood Casino
Corporation v. Xxxxxx X. Xxxxxxx, et al., Civil Action No.
3:02CV0325-M, in the United Stated District Court for the Northern
District of Texas, Dallas Division; and (c) Xxxx X. Xxxxx v. Hollywood
Casino Corporation, a Delaware corporation, C.A. No. 19504, in the
Court of Chancery of the State of Delaware in and for New Castle
County.
(d) Standstill on other Actions. From the date of this
Agreement through the earlier to occur of the Termination Time or the
Effective Time, the Parties agree as follows:
(i) The Stockholder Parties (as hereinafter defined)
and the Company Controlled Parties (as hereinafter defined)
shall not bring any actions against any Company Parties (as
hereinafter defined) or Stockholder Parties, respectively,
5
other than with respect to an activity that is unrelated to
the Company; provided, however, that such Parties may still
report or make public disclosure of any violations of Law (as
defined in the Merger Agreement).
(ii) Company shall not increase the size of its Board
of Directors.
(iii) Company will continue to pay or make available
to Stockholder the current salary and benefits of Stockholder.
12. General Release and Covenant Not to Xxx.
(a) Release by Stockholder Parties. EFFECTIVE AS OF THE
EFFECTIVE TIME, STOCKHOLDER, ON BEHALF OF STOCKHOLDER, STOCKHOLDER'S
ATTORNEYS, HEIRS, EXECUTORS, ADMINISTRATORS, ASSIGNS, AND TRUSTS,
PARTNERSHIPS AND OTHER ENTITIES UNDER STOCKHOLDER'S CONTROL (TOGETHER
THE "STOCKHOLDER PARTIES"), HEREBY GENERALLY RELEASES AND FOREVER
DISCHARGES COMPANY AND ITS PREDECESSORS, SUCCESSORS, ASSIGNS,
SUBSIDIARIES AND AFFILIATES AND FAMILY MEMBERS (AS DEFINED BELOW),
OFFICERS (OTHER THAN XXXX XXXXX AND XXXXXX XXXXX), EMPLOYEES, AGENTS,
REPRESENTATIVES, PRINCIPALS AND ATTORNEYS, AND, SUBJECT TO SECTION 14
HEREOF, DIRECTORS, XXXX XXXXX AND XXXXXX XXXXX (TOGETHER THE "COMPANY
PARTIES") FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, SUITS,
DAMAGES, LOSSES, EXPENSES, ATTORNEYS' FEES, OBLIGATIONS OR CAUSES OF
ACTION, KNOWN OR UNKNOWN OF ANY KIND AND EVERY NATURE WHATSOEVER, AND
WHETHER OR NOT ACCRUED OR MATURED (COLLECTIVELY, "CLAIMS"), WHICH ANY
OF THEM MAY HAVE ARISING OUT OF OR RELATING TO ANY OMISSION, ACTS OR
FACTS THAT HAVE OCCURRED UP AND UNTIL AND INCLUDING THE EFFECTIVE TIME,
INCLUDING WITHOUT LIMITATION:
i. any and all Claims relating to, arising from, or
in connection with the Lawsuits;
ii. any and all Claims relating to, arising from, or
in connection with, the employment of Stockholder by the
Company or the termination of such employment;
iii. any and all Claims relating to, or arising from,
Stockholder's right to purchase, or actual purchase of shares
of stock of Company, including, without limitation, any Claims
for fraud, misrepresentation, breach of fiduciary duty, breach
of duty under applicable state corporate law, and securities
fraud under any state or federal law;
iv. any and all Claims for wrongful discharge of
employment; fraud; misrepresentation; termination in violation
of public policy; discrimination; breach of contract, both
express and implied; breach of a covenant of good faith and
fair dealing, both express and implied; promissory estoppel;
negligent or intentional infliction of emotional distress;
6
negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic
advantage; breach of fiduciary duty; unfair business
practices; breach of confidentiality provision, defamation;
libel; slander; negligence; personal injury; assault; battery;
invasion of privacy; false imprisonment; tortious
interference, theft, embezzlement, and conversion;
v. any and all Claims for violation of any federal,
state or municipal statute, including, but not limited to,
Title VII of the Civil Rights Act of 1964, the Civil Rights
Act of 1991, the Family Medical Leave Act, the Americans with
Disabilities Act of 1990, the Fair Labor Standards Act, the
Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, Older Workers
Benefit Protection Act and the Texas Commission on Human
Rights Act;
vi. any and all Claims for violation of the federal,
or any state, constitution;
vii. any and all Claims arising out of any other laws
and regulations relating to employment or employment
discrimination; and
viii. any and all Claims for attorneys' fees,
expenses, and costs other than fees, costs or expenses which
are otherwise indemnifiable under Section 6.8 of the Merger
Agreement.
"FAMILY MEMBERS" SHALL MEAN, WITH RESPECT TO ANY PARTY THAT IS AN INDIVIDUAL,
THE SPOUSE OF A PARTY, ANY PARENT OF SUCH PARTY, OR ANY LINEAL DESCENDENT OF A
PARENT OF SUCH PARTY (WHETHER NATURAL BORN OR ADOPTED).
NOTWITHSTANDING THE FOREGOING, THIS RELEASE DOES NOT IN ANY WAY RELEASE, IMPAIR,
OR LIMIT ANY OBLIGATIONS INCURRED BY OR OWING FROM THE COMPANY PARTIES (1) UNDER
THIS AGREEMENT, (2) UNDER THE MERGER AGREEMENT, INCLUDING, WITHOUT LIMITATION,
SECTION 6.8 THEREOF AND (3) WITH RESPECT TO CLAIMS UNDER THE AGE DISCRIMINATION
IN EMPLOYMENT ACT OF 0000 ("XXXX XXXXXX"). FURTHER, THIS RELEASE DOES NOT IN ANY
WAY RELEASE ANY OF COMPANY'S INSURERS FROM COVERING STOCKHOLDER FOR ANY CONDUCT,
ACTS, INJURIES, OR ACTIONS ARISING FROM, IN CONNECTION WITH, OR RELATED TO THE
TIME PERIOD SUCH PERSON WAS EMPLOYED BY OR SERVING AS AN OFFICER OR DIRECTOR OF
COMPANY.
(b) Prosecution by Stockholder and Stockholder Parties.
EFFECTIVE AS OF THE EFFECTIVE TIME, STOCKHOLDER, ON BEHALF OF
STOCKHOLDER AND THE STOCKHOLDER PARTIES, HEREBY COVENANTS FOREVER NOT
TO ASSERT, FILE, PROSECUTE, MAINTAIN, COMMENCE, INSTITUTE (OR SPONSOR
OR PURPOSELY FACILITATE ANY PERSON IN CONNECTION WITH THE FOREGOING),
ANY COMPLAINT OR LAWSUIT OR ANY LEGAL, EQUITABLE OR ADMINISTRATIVE
7
PROCEEDING OF ANY NATURE, AGAINST ANY OF THE COMPANY PARTIES IN
CONNECTION WITH ANY MATTER RELEASED IN SECTION 12(a), INCLUDING,
WITHOUT LIMITATION, THE LAWSUITS, AND REPRESENTS AND WARRANTS THAT TO
THE EXTENT WITHIN STOCKHOLDER'S CONTROL, NO OTHER PERSON OR ENTITY HAS
OR WILL INITIATE ANY SUCH PROCEEDING ON BEHALF OF STOCKHOLDER OR ANY
STOCKHOLDER PARTY.
NOTWITHSTANDING THE FOREGOING, THIS COVENANT DOES NOT IN ANY WAY PROHIBIT
STOCKHOLDER OR ANY OF THE STOCKHOLDER PARTIES FROM REPORTING OR MAKING PUBLIC
DISCLOSURE OF ANY VIOLATIONS OF LAW.
(c) Release by Company. EFFECTIVE AS OF THE EFFECTIVE TIME,
COMPANY, ON BEHALF OF ITSELF AND THE COMPANY PARTIES UNDER ITS CONTROL
(THE "COMPANY CONTROLLED PARTIES"), HEREBY GENERALLY RELEASES AND
FOREVER DISCHARGES STOCKHOLDER, THE STOCKHOLDER PARTIES AND THEIR
FAMILY MEMBERS FROM ANY AND ALL CLAIMS, WHICH ANY OF THEM MAY HAVE,
ARISING OUT OF OR RELATING TO ANY OMISSION, ACTS OR FACTS THAT HAVE
OCCURRED UP AND UNTIL AND INCLUDING THE EFFECTIVE TIME, INCLUDING
WITHOUT LIMITATION, THE LAWSUITS.
NOTWITHSTANDING THE FOREGOING, THIS RELEASE DOES NOT IN ANY WAY RELEASE, IMPAIR,
OR LIMIT (i) ANY OBLIGATIONS INCURRED BY OR OWING FROM STOCKHOLDER OR ANY OF THE
STOCKHOLDER PARTIES (1) UNDER THIS AGREEMENT, AND (2) WITH RESPECT TO ADEA
CLAIMS OR (ii) THE RIGHTS OF COMPANY OR ANY OF ITS PREDECESSORS, SUCCESSORS,
ASSIGNS OR SUBSIDIARIES AGAINST STOCKHOLDER OR STOCKHOLDER PARTIES WITH RESPECT
TO ANY CRIMINAL OR FRAUDULENT ACTIVITY OTHER THAN ACTIVITIES THAT ARE THE
SUBJECT OF THE LAWSUITS.
(d) Prosecutions by Company and Company Controlled Parties.
EFFECTIVE AS OF THE EFFECTIVE TIME, COMPANY, ON BEHALF OF ITSELF AND
THE COMPANY CONTROLLED PARTIES, HEREBY COVENANTS FOREVER NOT TO ASSERT,
FILE, PROSECUTE, MAINTAIN, COMMENCE, INSTITUTE (OR SPONSOR OR PURPOSELY
FACILITATE ANY PERSON IN CONNECTION WITH THE FOREGOING), ANY COMPLAINT
OR LAWSUIT OR ANY LEGAL, EQUITABLE OR ADMINISTRATIVE PROCEEDING OF ANY
NATURE, AGAINST ANY OF THE STOCKHOLDER PARTIES IN CONNECTION WITH ANY
MATTER RELEASED IN SECTION 12(c), INCLUDING, WITHOUT LIMITATION, THE
LAWSUITS, AND REPRESENTS AND WARRANTS THAT, TO THE EXTENT WITHIN ITS
CONTROL, NO OTHER PERSON OR ENTITY HAS INITIATED OR WILL INITIATE ANY
SUCH PROCEEDING ON ITS OR THEIR BEHALF.
8
NOTWITHSTANDING THE FOREGOING, THIS COVENANT DOES NOT IN ANY WAY PROHIBIT THE
COMPANY OR ANY OF THE COMPANY PARTIES FROM REPORTING OR MAKING PUBLIC DISCLOSURE
OF ANY VIOLATIONS OF LAW.
13. Employment, Severance and Pension Matters. In consideration for the
foregoing, promptly after the Effective Time, Parent agrees to cause Company to
pay to Stockholder $3,392,595 less any salary and consulting payments paid after
June 30, 2002, less applicable withholding and other taxes, as compensation for
and in full settlement of all employment, consulting, severance, pension, death
benefit or other matters.
14. Third-Party Beneficiary Rights. Subject to the following sentence,
no provision of this Agreement is intended to nor shall it be interpreted to
provide or create any third-party beneficiary rights or any other rights of any
kind in any other person or entity who is not a Party. The provisions of
Sections 11 and 12 are intended to and shall be interpreted to provide and
create third party beneficiary rights for each director, officer, employee, and
agent of the Company, provided that in the case of each director, Xxxx Xxxxx and
Xxxxxx Xxxxx, such person must, deliver to Stockholder a fully executed
agreement within five business days of the date of this Agreement containing
provisions, where reasonably applicable, identical to the provisions of Section
11 (with respect to the stay of the Lawsuits) and Section 12 (with respect to
the release of the Stockholder Parties).
15. Further Assurances. Each Party shall do and perform or cause to be
done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments, or documents as
any other Party shall reasonably request from time to time in order to carry out
the intent and purposes of this Agreement. No Party shall voluntarily undertake
any course of action inconsistent with satisfaction of the requirements
applicable to such Party as set forth in this Agreement, and each Party shall
promptly do all acts and take all measures as may be appropriate or necessary to
enable such Party to perform, as early as practicable, the obligations required
to be performed by such Party under this Agreement. Without limiting the
foregoing, if requested by Company or Parent, Stockholder will obtain a written
acknowledgement from any entity or person that Stockholder purports to act on
behalf of acknowledging that such Stockholder has the authority to execute this
Agreement on such person or entity's behalf and to so bind such person or
entity.
16. Injunctive Relief. The Parties acknowledge that it is impossible to
measure in money the damages that will accrue to one or more of them by reason
of the failure of either of them to abide by the provisions of this Agreement,
that every such provision is material, and that in the event of any such
failure, the other Party will not have an adequate remedy at law or damages.
Therefore, if any Party shall institute any action or proceeding to enforce the
provisions of this Agreement, in addition to any other relief, the court in such
action or proceeding may grant injunctive relief against any Party found to be
in breach or violation of this Agreement, as well as or in addition to any
remedies at law or damages, and such Party waives the claim or defense in any
such action or proceeding that the Party bringing such action has an adequate
remedy at law, and such Party shall not argue or assert in any such action or
proceeding the claim or defense that such remedy at law exists. No Party shall
seek and each Party shall waive any requirement for, the securing or posting of
a bond in connection with the other Party seeking or obtaining such equitable
relief.
9
17. Court Modification. Should any portion of this Agreement be
declared by a court of competent jurisdiction to be unreasonable, unenforceable,
or void for any reason or reasons, the involved court shall modify the
applicable provision(s) of this Agreement so as to be reasonable or as is
otherwise necessary to make this Agreement enforceable and valid and to protect
the interests of the Parties intended to be protected by this Agreement to the
maximum extent possible.
18. Facsimile Transmission and Counterparts. This Agreement may be
executed by facsimile transmission and in one or more counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same Agreement.
19. Notices. All notices, requests, demands, and other communications
under this Agreement ("Notices") shall be in writing and shall be delivered (i)
personally, (ii) by certified mail, return receipt requested, postage prepaid,
(iii) by overnight courier or (iv) by facsimile transmission properly addressed
as follows:
If to Parent to:
Penn National Gaming, Inc.
000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Chief Executive Officer
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
If to Company to:
Hollywood Casino Corporation
Two Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, General Counsel
with a copy to:
10
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
and if to Stockholder, at the address specified in on the signature page to this
Agreement or, in either case, to such other address or addresses as a Party to
this Agreement may indicate to the other Party in the manner provided for in
this Paragraph 19. Notices given by mail, by overnight courier and by personal
delivery shall be deemed effective and complete upon delivery and notices by
facsimile transmission shall be deemed effective upon receipt.
20. Effective Date; Term. This Agreement shall become effective upon
(i) its execution and delivery by all Parties and (ii) the execution and
delivery of each of the Other Stockholder Agreements by the parties thereto;
provided, however, that Section 12 of this Agreement shall not become effective
until the Effective Time. This Agreement shall continue in full force and effect
until the first to occur of (A) the written agreement of all the Parties to
terminate this Agreement and (B) the termination of the Merger Agreement in
accordance with its terms (the first to occur of (A) and (B) the "Termination
Time").
21. Non-Solicitation of Employees. Stockholder hereby agrees for a
period of eighteen (18) months after the Effective Date that Stockholder will
not, without the prior written consent of Parent, such consent not to be
unreasonably withheld or delayed, directly or indirectly, (i) solicit, recruit
or hire any person who is now or in the future becomes an executive or
management employee of Company or any subsidiary of Company (a "Key Employee")
to work for any person or entity other than Company or any such subsidiary or
(ii) engage in any activity that would cause any employee to violate any
agreement with Company or any of its subsidiaries; provided, however, that the
above provisions shall not apply with respect to any Key Employee who is not
employed by Parent, Surviving Corporation (as defined in the Merger Agreement)
or any of their respective subsidiaries following the Effective Time for at
least one-hundred twenty (120) days unless such unemployment occurred in
connection with a violation by Stockholder of this Section 21.
22. Gaming Approvals; Cooperation. Company shall (i) promptly file all
required applications to obtain the approvals from all applicable Gaming
Authorities necessary for Stockholder to grant the proxy set forth in Section 3,
(ii) shall request an accelerated review from such Gaming Authorities in
connection with such filings, and (iii) shall otherwise use its reasonable best
efforts to obtain such approvals. Each of the Parties shall use such Party's
reasonable best efforts to cooperate with Company and all applicable Gaming
Authorities in making such filings and obtaining such approvals.
23. Other Agreements.
(a) This Agreement supersedes all prior agreements or
understandings of the Parties on the subject matter of this Agreement.
There are no representations, warranties, or agreements, whether
express or implied, or oral or written, with respect to the subject
matter of this Agreement, except as set forth in this Agreement. This
Agreement (i) shall not be modified by any oral agreement, either
11
express or implied, and all amendments or modifications of this
Agreement shall be in writing and be signed by all of the Parties, and
(ii) shall be binding on and shall inure to the benefit of the Parties
and their respective heirs, legal representatives, successors and
assigns.
(b) The paragraph headings in this Agreement are for the
purpose of convenience only and shall not limit or otherwise affect any
of the terms of this Agreement.
(c) Should any Party be in default under or breach of any of
the covenants or agreements contained in this Agreement, or in the
event a dispute shall arise as to the meaning of any term of this
Agreement, the defaulting or nonprevailing Party shall pay all costs
and expenses, including reasonable attorneys' fees, of the other Party
that may arise or accrue from enforcing this Agreement, securing an
interpretation of any provision of this Agreement, or in pursuing any
remedy provided by law whether such remedy is pursued or interpretation
is sought by the filing of a lawsuit, an appeal, or otherwise.
(d) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, which
internal laws exclude any provision or interpretation of such laws that
would call for, or permit, the application of the laws of any other
state or jurisdiction, and any dispute arising therefrom and the
remedies available shall be determined solely in accordance with such
internal laws.
(e) Where the context requires, the singular shall include the
plural, the plural shall include the singular, and any gender shall
include all other genders.
(f) Stockholder certifies that Stockholder has read the terms
of this Agreement, that Stockholder has been informed by this document
that Stockholder should discuss this Agreement with the attorney of
Stockholder's own choice, that Stockholder has had an opportunity to do
so and that Stockholder understands this Agreement's terms and effects.
(g) The Parties have jointly participated jointly in the
negotiation and drafting of this Agreement. In the event any ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any provisions of this Agreement.
24. Spousal Joinder. The spouse of Stockholder joins in the execution
of this Agreement for the purpose of evidencing her knowledge of its existence,
her acknowledgment that she agrees to the provisions of this Agreement and her
agreement to bind her community interest, if any, in any of the Shares to the
performance of this Agreement, and she further agrees that the covenants in this
Agreement shall be, and hereby are, accepted as binding on her individually and
upon all persons ever to claim under her as though such Shares were held of
record by her; provided, however, nothing contained in this Section 24 is
intended to, nor shall be deemed to, confer or create any community property
interest in the Shares upon her.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, each of the Parties has executed this Agreement on
or as of the date of this Agreement.
PARENT:
PENN NATIONAL GAMING, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President, Secretary
and Treasurer
COMPANY:
HOLLYWOOD CASINO CORPORATION
By: /s/ Xxxxxx X. Xxxxx III
---------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Chief Executive Officer
STOCKHOLDER: SPOUSE:
/s/ Xxxx X. Xxxxx, Xx. /s/ Xxxxxx Xxxxx
---------------------- ----------------
Xxxx X. Xxxxx, Xx. Xxxxxx Xxxxx
Address:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
With a copy to:
Xxxxxx, Lidji & Werbner
Attn: Xxxxx X. Xxxxx
4400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
SCHEDULE A
OTHER STOCKHOLDERS EXECUTING STOCKHOLDER AGREEMENTS
Xxxxx X. Xxxxx
Xxxxxx Xxxxx Xxxxxx
Xxxxx Xxxxx Xxxxx
Xxxxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxx XxXxxxxx
Xxxx X. Xxxxx
Xxxxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxx III
Xxxxxxx X. Xxxxx, Xx.
SCHEDULE B
SHARES HELD OF RECORD:
Stockholder holds of record 4,110,477 shares of Class A Common Stock.
OPTIONS:
Total of 875,000 options, of which options to acquire 800,000 shares of Class A
Common Stock are vested, and 75,000 additional shares vest in 25,000 share
increments on May 5 of 2003, 2004 and 2005. The right to acquire 150,000 of
these shares will expire on September 11, 2002; the right to acquire 150,000 of
these shares will expire on June 19, 2003; the right to acquire 450,000 of these
shares will expire on April 5, 2004; and the right to acquire 125,000 of these
shares will expire on May 5, 2010. All of such options, which have not been
previously exercised, will vest at the Effective Time of the Merger.
ADDITIONAL VOTING SHARES:
Stockholder has sole power to vote the following shares of Class A Common Stock:
1,642,001 shares owned of record by C.A. Xxxxx Partners, Ltd., of which
Stockholder is the General Partner; 487,568 shares that Stockholder owns of
record as Custodian for Xxxxxxx Xxxxx Xxxxx; 487,568 shares that Stockholder
owns of record as Custodian for Xxxxxxxx de La Xxxxxxxx Xxxxx; 31,500 shares
Stockholder holds as trustee under certain trusts for the benefit of
Stockholder's family; and 408,767 shares owned of record by Xxxx Xxxxx XxXxxxxx
and 521,616 shares owned of record by Xxxx X. Xxxxx, both subject to a proxy
granting Stockholder the right to vote but not to dispose of such shares.
Stockholder has shared power to vote the following shares of Class A Common
Stock: 14,000 shares owned of record by the MEP Family Partnership, of which
Stockholder is the Managing Partner, and 7,000 shares owned of record by the CLP
Family Partnership, of which Stockholder is the Managing Partner.
ADDITIONAL DISPOSITION SHARES:
Stockholder has sole power to dispose of the following shares of Class A Common
Stock: 1,642,001 shares owned of record by C.A. Xxxxx Partners, Ltd., of which
Stockholder is the General Partner; 487,568 shares that Stockholder owns of
record as Custodian for Xxxxxxx Xxxxx Xxxxx; 487,568 shares that Stockholder
owns of record as Custodian for Xxxxxxxx de La Xxxxxxxx Xxxxx; and 31,500 shares
Stockholder holds as trustee under certain trusts for the benefit of
Stockholder's family.
Stockholder has shared power to dispose of the following shares of Class A
Common Stock: 14,000 shares owned of record by the MEP Family Partnership, of
which Stockholder is the Managing Partner, and 7,000 shares owned of record by
the CLP Family Partnership, of which Stockholder is the Managing Partner.
RECORD SHARE ENCUMBRANCES:
Stockholder has a $100,000 margin loan against an account, which contains
approximately 500,000 shares of Class A Common Stock. There is also a $91,918
margin loan against an account, which contains the 31,500 shares of Class A
Common Stock Stockholder holds as trustee under certain trusts for the benefit
of Stockholder's family.
