AGREEMENT
This AGREEMENT, dated as of September 30, 1997 (this "Agreement"), among
Patriot American Hospitality Operating Company, a Delaware corporation
("PAHOC"), Patriot American Hospitality Operating Company Acquisition
Subsidiary, a Delaware corporation and a wholly owned subsidiary of PAHOC
("Acquisition Sub"), Patriot American Hospitality, Inc., a Delaware corporation
("Patriot") (collectively, PAHOC, Acquisition Sub and Patriot are referred to
herein as the "Parties"), and Xxxxx X. Xxxxxxxx ("Xxxxxxxx"). All capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Merger Agreement (as defined below).
WHEREAS, as of the date hereof Xxxxxxxx owns (i) of record and
beneficially, the number of shares of common stock, par value $.01 per share
(the "WHG Common Stock"), and of Series B preferred stock, par value $.01 per
share (the "WHG Preferred Stock"), of WHG Resorts & Casinos Inc., a Delaware
corporation ("WHG") (collectively, "WHG Stock"), set forth in Column 1 of
Exhibit A hereto and (ii) owns beneficially but not of record the additional
shares of WHG Stock set forth in Column 2 of Exhibit A hereto (all such shares
and any shares hereafter acquired by Xxxxxxxx prior to the termination of this
Agreement being referred to herein as the "Shares");
WHEREAS, the Parties and WHG propose to enter into an Agreement and Plan
of Merger, dated as of the date hereof (as the same may be amended from time to
time, the "Merger Agreement"), which provides, upon the terms and subject to the
conditions thereof, for the merger of Acquisition Sub with and into WHG (the
"Merger");
WHEREAS, as a condition to the willingness of the Parties to enter into
the Merger Agreement, the Parties have requested that Xxxxxxxx agree, and, in
order to induce the Parties to enter into the Merger Agreement, Xxxxxxxx has
agreed to (i) grant PAHOC an irrevocable proxy to vote Xxxxxxxx'x Shares subject
to the terms contained herein, (ii) not offer, sell, contract to sell, make any
short sale, pledge, grant any option to purchase or otherwise dispose of the
Paired Shares received as Merger Consideration for a period of 90 days after the
Effective Time subject to the terms contained herein; (iii) grant PAHOC or its
designee an irrevocable option to purchase Xxxxxxxx'x WHG Preferred Stock
subject to the terms contained herein, and (iv) an employment agreement with
Surviving Corporation, substantially in the form of Exhibit B attached hereto;
and
WHEREAS, contemporaneously with the execution of this Agreement,
Xxxxxxxx has delivered to the Parties an affiliate letter.
NOW, THEREFORE, in consideration of the promises and of the mutual
agreements and covenants set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF XXXXXXXX
Xxxxxxxx hereby represents and warrants to the Parties as follows:
SECTION 1.01. Due Authority. (a) Xxxxxxxx has full power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Xxxxxxxx and, assuming its due authorization, execution and delivery by the
Parties, constitutes a legal, valid and binding obligation of Xxxxxxxx,
enforceable against Xxxxxxxx in accordance with its terms.
(b) There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which Xxxxxxxx is trustee whose
consent is required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 1.02. No Conflict; Consents. (a) The execution and delivery of
this Agreement by Xxxxxxxx does not, and the performance of the transactions
contemplated by this Agreement by Xxxxxxxx and the compliance by Xxxxxxxx with
any provisions hereof shall not, (i) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Xxxxxxxx or by which
Xxxxxxxx'x Shares are bound, (ii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of Xxxxxxxx'x Shares pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Xxxxxxxx is a party or by which Xxxxxxxx or
Xxxxxxxx'x Shares are bound, or (iii) violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to Xxxxxxxx or
any of Xxxxxxxx'x Shares.
(b) The execution and delivery of this Agreement by Xxxxxxxx do
not, and the performance of this Agreement by Xxxxxxxx will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority except for applicable requirements,
if any, of the Securities Exchange Act of 1934, as amended.
SECTION 1.03. Title to Shares. (a) Xxxxxxxx is (i) the record and
beneficial owner of the number of shares of WHG Stock set forth in Column 1 of
Exhibit A hereto free and clear of any proxy or voting restriction other than
pursuant to this Agreement and (ii) the beneficial owner of the additional
number of shares of WHG Stock set forth in Column 2 of Exhibit A hereto free and
clear of any proxy or voting restriction other than pursuant to this Agreement.
The Shares set forth opposite Xxxxxxxx'x name on Exhibit A hereto constitute all
of the shares of WHG Stock owned of record or beneficially by Xxxxxxxx.
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(b) Xxxxxxxx has sole power of disposition with respect to all
the Shares set forth opposite Xxxxxxxx'x name on Exhibit A hereto and the sole
voting power with respect to the matters set forth in Article II hereof, in each
case with respect to all of the Shares set forth opposite Xxxxxxxx'x name on
Exhibit A hereto, with no restrictions on such rights.
SECTION 1.04. No Encumbrances. Xxxxxxxx'x Shares and the certificates
representing such Shares are now and at all times during the Proxy Term (as
hereinafter defined) will be held by Xxxxxxxx, or by a nominee or custodian for
the benefit of Xxxxxxxx, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever except for proxies arising under this
Agreement.
SECTION 1.05. Acknowledgment of Reliance. Xxxxxxxx understands and
acknowledges that the Parties are entering into the Merger Agreement in reliance
upon Xxxxxxxx'x execution and delivery of this Agreement.
SECTION 1.06. Brokers. The Parties shall not be obligated or otherwise
liable for 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 Xxxxxxxx.
ARTICLE II
TRANSFER AND VOTING OF SHARES
SECTION 2.01. Transfer of Shares. During the Proxy Term Xxxxxxxx shall
not (a) sell, tender, transfer, pledge, encumber, assign or otherwise dispose of
any of his Shares, (b) deposit his Shares into a voting trust or enter into a
voting agreement or arrangement with respect to such Shares or grant any proxy
or power of attorney with respect thereto, (c) enter into any contract, option
or other arrangement or undertaking with respect to the direct or indirect sale,
transfer, pledge, encumbrance, assignment or other disposition of any WHG Stock,
or (d) take any action that would make any representation or warranty of
Xxxxxxxx contained herein untrue or incorrect or have the effect of preventing
or disabling Xxxxxxxx from performing his obligations under this Agreement.
SECTION 2.02. Voting of Shares; Further Assurances. (a) Xxxxxxxx, by
this Agreement, with respect to those Shares that he currently owns of record
and any Shares he hereafter owns of record, does hereby constitute and appoint
PAHOC, or any nominee of PAHOC, with full power of substitution, during and for
the Proxy Term, as his true and lawful attorney and irrevocable proxy, for and
in his name, place and xxxxx, to vote each of such Shares as his proxy, at every
meeting of the stockholders of WHG or any adjournment thereof or in connection
with any written consent of WHG's stockholders, (i) in favor of the adoption of
the Merger Agreement and approval of the Merger and the other transactions
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contemplated by the Merger Agreement, (ii) against (x) any Acquisition Proposal,
as that term is defined in the Merger Agreement, and any proposal for any action
or agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of WHG under the Merger Agreement
or which could result in any of the conditions of WHG's obligations under the
Merger Agreement not being fulfilled and (y) any change in the directors of WHG,
any change in the present capitalization of WHG or any amendment to WHG's
certificate of incorporation or bylaws, any other material change in WHG's
corporate structure or business, or any other action which in the case of each
of the matters referred to in this clause (y) could reasonably be expected to
impede, interfere with, delay, postpone or materially adversely affect the
transactions contemplated by the Merger Agreement or the likelihood of such
transactions being consummated, and (iii) in favor of any other matter necessary
for consummation of the transactions contemplated by the Merger Agreement which
is considered at any such meeting of stockholders or in such consent, and in
connection therewith to execute any documents which are necessary or appropriate
in order to effectuate the foregoing including the ability for PAHOC or its
nominees to vote such Shares directly. Xxxxxxxx intends this proxy to be
irrevocable and coupled with an interest during the Proxy Term and hereby
revokes any proxy previously granted by him with respect to his Shares.
(b) Xxxxxxxx hereby further agrees, with respect to any Shares
not voted pursuant to paragraph (a) above, including without limitation any
shares owned beneficially but not of record by him, that during the Proxy Term,
at any meeting of stockholders of WHG, however called, or in connection with any
written consent of WHG's stockholders, Xxxxxxxx shall vote (or cause to be
voted) all such Shares, except as specifically requested in writing by PAHOC in
advance, (i) in favor of the adoption of the Merger Agreement and approval of
the Merger and the other transactions contemplated by the Merger Agreement, (ii)
against (x) any Acquisition Proposal, as that term is defined in the Merger
Agreement, and any proposal for any action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of WHG under the Merger Agreement or which could result in any of the
conditions of WHG's obligations under the Merger Agreement not being fulfilled
or (y) any change in the directors of WHG, any change in the present
capitalization of WHG or any amendment to WHG's certificate of incorporation or
bylaws, any other material change in WHG's corporate structure or business, or
any other action which in the case of each of the matters referred to in this
clause (y) could reasonably be expected to, impede, interfere with, delay,
postpone or materially adversely affect the transactions contemplated by the
Merger Agreement or the likelihood of such transactions being consummated, and
(iii) in favor of any other matter necessary for consummation of the
transactions contemplated by the Merger Agreement which is considered at any
such meeting of stockholders or in such consent, and in connection therewith to
execute any documents which are necessary or appropriate in order to effectuate
the foregoing.
(c) For the purposes of this Agreement, "Proxy Term" shall mean
the period from the execution of this Agreement until the earliest of (i) the
termination of the Merger Agreement pursuant to Section 11.1 (other than Section
11.1(g)), (ii) April 15, 1998, or (iii) the Effective Time of the Merger.
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(d) During the Proxy Term, Xxxxxxxx in his capacity as an
individual and as a holder of WHG Stock but not in his capacity as an officer or
director of WHG or any WHG Subsidiary, shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
carry out the provisions of this Agreement.
SECTION 2.03. Certain Events. Xxxxxxxx agrees that this Agreement and
the obligations hereunder shall attach to Xxxxxxxx'x 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 Xxxxxxxx'x heirs, guardians, administrators and successors.
ARTICLE III
CERTAIN COVENANTS
SECTION 3.01. No Solicitation. During the Proxy Term Xxxxxxxx shall not
in his capacity as an individual and as a holder of WHG Stock but not in his
capacity as an officer or director of WHG or any WHG Subsidiary, (i) solicit,
initiate or knowingly encourage the submission of, any inquiries, proposals or
offers from any person relating to a Acquisition Proposal, (ii) enter into any
agreement with respect to any Acquisition Proposal, or (iii) enter into or
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to knowingly
facilitate any inquiries or the making of any proposal that constitutes, or
would reasonably be expected to lead to, any Acquisition Proposal.
SECTION 3.02. Public Announcements. Each of the parties hereto shall
consult with the other before issuing any press release or otherwise making any
public statements with respect to this Agreement, provided, however, that a
party may, if applicable, without consulting the others, issue any press release
or make any such public statement as may be required by law or the applicable
rules of the New York Stock Exchange or any other stock exchange on which any
securities of such party are listed if it has used its best efforts to consult
with the others but has been unable to do so in a timely manner.
ARTICLE IV
STANDSTILL
Xxxxxxxx confirms, covenants and agrees, for the benefit of the Parties,
that during the period beginning from and including the Closing Date and
continuing to and including the date 90 days after the Effective Time, Xxxxxxxx
will not offer, sell, contract to sell, make any short sale, pledge, grant any
option to purchase or otherwise dispose of any Paired Shares received by
Xxxxxxxx in the Merger or any securities of the Parties received by Xxxxxxxx in
the Merger
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which are substantially similar to, or derivative of, Paired Shares, or which
are convertible into or exchangeable or exercisable for, or that otherwise
represent the right to receive, Paired Shares without the prior written consent
of the Parties; provided, however, that Xxxxxxxx may from time to time during
such period sell Paired Shares in compliance with law provided that the
aggregate proceeds from such sales do not exceed $3,000,000.
ARTICLE V
OPTION TO PURCHASE SHARES
5.1 Grant of the Option. Subject to the terms, provisions and conditions
contained in this Agreement, Xxxxxxxx hereby grants to PAHOC and its designees
an option to purchase all but not less than all of the 300,000 shares of WHG
Preferred Stock (the "Preferred Shares") held by Xxxxxxxx at the Exercise Price
(as hereinafter defined) per share (the "Option").
5.2 Notice of, and Procedures for, Exercise of Option.
(a) The Option may, subject to Section 6.1 hereof, be exercised
at any time from and after the date hereof by written notice to Xxxxxxxx from
PAHOC stating its intention to exercise the Option, which notice shall include a
date and time at which the closing for such exercise (the "Option Closing")
shall occur, such date to be not less than 24 hours and not more than five days
after the giving of such notice. The sale and delivery and the purchase and
acceptance of the Preferred Shares shall take place at the offices of Xxxxxxx,
Procter & Xxxx LLP at Exchange Place, Boston, Massachusetts, or such other place
as shall be mutually agreed upon by the parties hereto.
(b) At the Option Closing, PAHOC or its designee shall pay the
Exercise Price (as determined pursuant to Section 5.3 below) for each Preferred
Share being purchased in cash by a cashiers check or federal funds wire transfer
to an account designated by Xxxxxxxx against delivery of any necessary or
appropriate stock certificates and duly executed instruments of transfer to
PAHOC or its designee. In addition, if the Exercise Price for the Option Closing
is determined pursuant to clause (ii) of the first sentence of Section 5.3,
PAHOC or its designee shall pay to Xxxxxxxx in cash an amount equal to any
dividends accrued which are unpaid as of the date of the Option Closing on the
Shares purchased at the Option Closing.
Xxxxxxxx represents and warrants to PAHOC and its designee that upon payment of
the applicable purchase price at the Option Closing, Xxxxxxxx shall have
transferred to PAHOC or its designee the legal and beneficial ownership of the
Preferred Shares, free and clear of any liens, encumbrances, charges,
restrictions or other adverse claims.
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5.3 Exercise Price. The exercise price (the "Exercise Price") for each
Preferred Share shall be the greater of (i) $22.22 or (ii) the product of 1.11
times the Value of the Paired Shares (as hereinafter defined). The "Value of the
Paired Shares" shall equal the product of (i) the average of the closing prices
of the Paired Shares on the New York Stock Exchange on the ten trading days
ending immediately prior to the date PAHOC sends the applicable notice of
exercise to Xxxxxxxx (the "Calculation Price") and (ii) the Exchange Ratio
determined pursuant to the Merger Agreement as if the Average Closing Price were
equal to the Calculation Price.
5.4 As additional consideration for the purchase of the Preferred
Shares, PAHOC shall pay to Xxxxxxxx, as and when received by PAHOC or its
designee, in cash or in kind, 50% of the amount by which (a) any proceeds
received prior to the date which is 180 days after the date of the Option
Closing by PAHOC or its designee from the sale, exchange, transfer or other
disposition of the Preferred Shares sold at the Option Closing or the WHG Common
Stock issued upon conversion of such Preferred Shares exceeds (b) the sum of (i)
the aggregate amount paid pursuant to Section 5.3 and (ii) any amount paid with
respect to such Preferred Shares pursuant to the last sentence of Section
5.2(b).
5.5 Escrow. Upon request by PAHOC, Xxxxxxxx agrees to place the
Preferred Shares subject to the Option in escrow with a mutually agreeable
escrow agent until the termination of the Option.
5.6 Term of Option. The Option shall terminate on April 15, 1998 or, if
the March 31, 1998 date set forth in Section 11.1(c) is extended, fifteen (15)
days after the termination of the Merger Agreement.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. Severability. If any term or other provision of this
Agreement is determined by any appropriate court to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 6.02. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
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SECTION 6.03. 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.
SECTION 6.04. Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 6.05. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 6.06. Specific Performance. 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 hereof in
any Delaware Court (as defined below), 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.
SECTION 6.07. 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 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.
SECTION 6.08. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank}
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PATRIOT AMERICAN HOSPITALITY
OPERATING COMPANY
By: /s/ Xxxxxx Xx
------------------------------------
Name: Xxxxxx Xx
Title: Senior VP
PATRIOT AMERICAN HOSPITALITY
OPERATING COMPANY ACQUISITION SUBSIDIARY
By: /s/ Xxxxxxx X. Xxxxx III
------------------------------------
Name: Xxxxxxx X. Xxxxx III
Title: President
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Xxxxxxx X. Xxxxx III
------------------------------------
Name: Xxxxxxx X. Xxxxx III
Title: President
/s/ Xxxxx X. Xxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxx
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EXHIBIT A
Column 1 Column 2
-------- --------
Number of Shares of Number of Shares of
WHG Stock WHG Stock
Name and Address Owned of Record and Owned Beneficially But
of Stockholder Beneficially by Stockholder Not of Record by Stockholder
---------------- --------------------------- ----------------------------
Xxxxx X. Xxxxxxxx 1,158 Common 0 Common
300,000 Series B Preferred 0 Series B Preferred
