Exhibit 4.2
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FORM OF
AMENDMENT NO. 2 TO
PAIRING AGREEMENT
THIS AMENDMENT is made as of ___________ ____, 1997 to the Pairing
Agreement dated as of February 17, 1983 and amended as of February 18, 1988 (the
"Pairing Agreement") between CALIFORNIA JOCKEY CLUB (formerly Bay Xxxxxxx Realty
Enterprises, Inc.), a Delaware corporation ("Realty"), and BAY XXXXXXX OPERATING
COMPANY, a Delaware corporation ("Operating Company").
WHEREAS, Realty, Patriot American Hospitality, Inc., a Virginia corporation
("Patriot"), Patriot American Hospitality Partnership, L.P., a Virginia limited
partnership, and Operating Company have entered into an Agreement and Plan of
Merger dated as of February 24, 1997 (the "Merger Agreement") whereby Patriot
will merge with and into Realty (the "Merger") and in connection with the Merger
(i) Realty's name will be changed to "Patriot American Hospitality, Inc." and
(ii) Operating Company's name will be changed to "Patriot American Hospitality
Operating Company"; and
WHEREAS, to assist Realty in qualifying and maintaining its status as a
real estate investment trust, the Amended and Restated Certificate of
Incorporation of Realty and the Amended and Restated Certificate of
Incorporation of Operating Company (collectively, the "New Charters") will
provide that (i) no Person (as defined in the New Charters) may Beneficially Own
or Constructively Own (as these terms are defined in the New Charters) shares of
any class or series of common stock, par value $.01 per share, or preferred
stock, par value $.01 per share (collectively, "Equity Stock"), of Realty or
Operating Company in excess of 9.8% of the total outstanding shares of such
class or series of Equity Stock of Realty or Operating Company (the "Ownership
Limit"), unless the Ownership Limit is waived by the Board of Directors of the
relevant corporation, and that (ii) any Transfer (as defined in the New
Charters) that, if effective, would (a) result in any Person Beneficially Owning
or Constructively Owning shares of Equity Stock in excess of the Ownership
Limit, (b) result in the shares of capital stock of Realty being beneficially
owned (within the meaning of Section 856(a)(5) of the Internal Revenue Code of
1986, as amended (the "Code")) by fewer than 100 persons within the meaning of
Section 856(a)(5) of the Code, (c) result in Realty being "closely held" within
the meaning of Section 856(h) of the Code or (d) cause Realty to Constructively
Own (as defined in the New Charters) 10% or more of the ownership interest in a
tenant of the real property of Realty or a subsidiary of Realty within the
meaning of Section 856(d)(2)(B) of the Code (collectively, the "Transfer
Restrictions"), shall be void ab initio, and the intended transferee shall
acquire no right or interest in such shares of Equity Stock; and
WHEREAS, the New Charters will each provide that any shares of any class or
series of Equity Stock of Realty or Operating Company that are Transferred to a
Person in excess of the Ownership Limit or in violation of any of the Transfer
Restrictions shall, subject to certain provisions of the New Charters, be
automatically converted into an equal number of shares of excess stock, par
value $.01 per share ("Excess Stock"), of Realty or Operating Company, as the
case may be, and shall be simultaneously transferred to a trust (a "Trust") and
registered in the name of a trustee (a "Trustee") and that such Trust and
Trustee shall be designated by Realty and Operating Company in accordance with
the Pairing Agreement; and
WHEREAS, the New Charters will each provide that all shares of Excess Stock
of Realty and Operating Company shall be held in a Trust for the exclusive
benefit of a beneficiary (a "Beneficiary") and that such Beneficiary shall be
designated by Realty and Operating Company pursuant to the terms of the Pairing
Agreement; and
WHEREAS, pursuant to and in compliance with Section 9 of the Pairing
Agreement, Realty and Operating Company desire to amend the Pairing Agreement to
provide for the coordination of any exemption from the Ownership Limit, the
designation of a Trustee and a Beneficiary and for the termination of the
Ownership Limit and the Transfer Restrictions as set forth in this Amendment.
NOW THEREFORE, in consideration of the mutual agreements set forth herein
and in the Pairing Agreement, the parties hereto agree as follows:
1. Section 6 of the Pairing Agreement is hereby deleted in its entirety
and shall be replaced with the following:
"6. Shares in Excess of the Ownership Limit or in Violation of
the Transfer Restrictions; Designation of Trustee and Beneficiaries. Until
such time as the Board of Directors of Realty determine that it is no
longer in the best interest of Realty to attempt to, or continue to,
qualify under the Internal Revenue Code of 1986, as amended (the "Code"),
as a real estate investment trust (a "REIT"):
(a) Upon the conversion of a share of any class or series of
common stock, par value $.01 per share, or preferred stock, par
value $.01 per share (collectively, "Equity Stock"), of Realty
into a share of excess stock, par value $.01 per share ("Excess
Stock"), of Realty in accordance with the provisions of the
Amended and Restated Certificate of Incorporation of Realty (the
"Realty Charter"), if such share of Equity Stock was paired prior
to its conversion into Excess Stock, the corresponding paired
share of that same class or series of Equity Stock of Operating
Company shall be simultaneously converted into a share of Excess
Stock of Operating Company; such shares of Excess Stock of Realty
and Operating Company shall be paired and shall be simultaneously
transferred to a trust established by Realty and Operating
Company for such purpose (a "Trust").
(b) Upon the conversion of a share of any class or series of
Equity Stock of Operating Company into a share of Excess Stock of
Operating Company in accordance with the provisions of the
Amended and Restated Certificate of Incorporation of Operating
Company (the "Operating Company Charter"), if such share of
Equity Stock was paired prior to its conversion into Excess
Stock, the corresponding paired share of that same class or
series of Equity Stock of Realty shall be simultaneously
converted into a share of Excess Stock of Realty; such shares of
Excess Stock of Realty and Operating Company shall be paired and
shall be simultaneously transferred to a Trust.
(c) Upon the conversion of a share of Excess Stock of Realty
into a share of Equity Stock of Realty of the same class or
series from which such Excess Stock was converted in accordance
with the provisions of the Realty Charter, if such share of
Excess Stock was paired prior to its conversion from Equity Stock
into Excess Stock, the corresponding paired share of Excess Stock
of Operating Company shall be simultaneously converted into a
share of Equity Stock of Operating Company of the same class or
series from which such Excess Stock was converted and such shares
of Equity Stock shall be paired.
(d) Upon the conversion of a share of Excess Stock of Operating
Company into a share of Equity Stock of Operating Company of the
same class or series from which such Excess Stock was converted
in accordance with the provisions of the Operating Company
Charter, if such share of Excess Stock was paired prior to its
conversion from Equity Stock into Excess Stock, the corresponding
paired share of Excess Stock of Realty shall be simultaneously
converted into a share of Equity Stock of Realty of the same
class or series from which such Excess Stock was converted and
such shares of Equity Stock shall be paired.
(e) With respect to an offer made by the Trust to Realty or
Operating Company to purchase shares of Excess Stock from a Trust
pursuant to the Realty Charter or the Operating Company Charter
(together, the "New Charters"), as the case may be, in the case
of shares of Excess Stock that are paired, neither Realty nor
Operating Company shall accept such offer with respect to its
shares of Excess Stock without the agreement of the other company
to accept such offer with respect to the corresponding paired
shares of its Excess Stock.
(f) The Trustee (as defined in the New Charters) of each Trust
shall initially be [________________] and any successor trustee
shall thereafter be designated by mutual agreement of the Board
of Directors of Realty and the Board of Directors of Operating
Company.
(g) The Beneficiary (as defined in the New Charters) with
respect to each Trust shall be designated by mutual agreement of
the Board of Directors of Realty and the Board of Directors of
Operating Company.
(h) At such time that the Board of Directors of Realty no longer
deems it in the best interests of Realty to attempt to, or
continue to, qualify under the Code as a REIT, it shall notify
the Board of Directors of Operating Company in writing of such
determination and the Ownership Limit and the Transfer
Restrictions shall cease to have effect, as provided in Section C
of Article IV of the New Charters."
2. Section 10 is hereby added to the Pairing Agreement and shall read in
its entirety as follows:
"10. Exemption from the Ownership Limit. Operating Company agrees
that it shall not exempt any Person (as defined in the New Charters) from
the Ownership Limit (as defined in the New Charters) pursuant to Section C
of Article IV of the New Charters without the prior written consent of
Realty, which consent shall not be unreasonably withheld."
3. This Amendment shall become effective as of the Effective Time of the
Merger (as defined in the Merger Agreement).
4. Subject to the Amendment set forth herein, the Pairing Agreement shall
continue to be in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
CALIFORNIA JOCKEY CLUB,
a Delaware Corporation,
By_____________________________________
Xxxxx X. Xxxxx, Chairman of the Board
BAY XXXXXXX OPERATING
COMPANY, a Delaware Corporation
By_____________________________________
F. Xxxx Xxxxxx, President and Chief
Executive Officer
