EXHIBIT 10.37
OPTION AGREEMENT
BY AND AMONG
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P.
AND THE
GRANTORS NAMED HEREIN
April 14, 1997
TABLE OF CONTENTS
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Page
ARTICLE I: THE OPTION........................................................................ 1
1.1 Grant of Option................................................................ 1
1.2 Term and Exercise of Option.................................................... 2
1.3 Purchase Price and Payment..................................................... 2
1.4 No Transfers................................................................... 2
ARTICLE II: CONTRACT TO PURCHASE AND CLOSING PROCEDURES...................................... 3
2.1 Purchase and Sale.............................................................. 3
2.2 Closing; Condition to Obligations.............................................. 3
2.3 Documents to be Delivered at Closing........................................... 3
2.4 Further Assurances............................................................. 4
ARTICLE III: REPRESENTATIONS, WARRANTIES AND COVENANTS
OF GRANTOR..................................................................... 4
3.1 Title to Interests............................................................. 4
3.2 Authority...................................................................... 5
3.3 Litigation..................................................................... 5
3.4 No Other Agreements to Sell.................................................... 6
3.5 No Brokers..................................................................... 6
3.6 Covenant to Remedy Breaches.................................................... 6
3.7 WFLP Indebtedness.............................................................. 6
3.8 Lease Agreement................................................................ 6
3.9 Additional Consenting Partners................................................. 6
3.10 Stockholders' Agreement........................................................ 6
ARTICLE IV: REPRESENTATIONS, WARRANTIES AND COVENANTS
OF OPTIONEE.................................................................... 7
4.1 Authority...................................................................... 7
4.2 No Brokers..................................................................... 7
4.3 Covenant to Remedy Breaches.................................................... 7
ARTICLE V: INDEMNIFICATION................................................................... 8
5.1 Indemnification by the Grantors................................................ 8
5.2 Indemnification by Optionee.................................................... 8
5.3 Third Party Claims............................................................. 8
ARTICLE VI: MISCELLANEOUS.................................................................... 9
6.1 Amendment...................................................................... 9
(i)
Page
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6.2 Entire Agreement; Counterparts; Applicable Law................................. 9
6.3 Assignability.................................................................. 9
6.4 Titles......................................................................... 9
6.5 Third Party Beneficiary........................................................ 9
6.6 Severability...................................................................10
6.7 Dispute Resolution.............................................................10
6.8 Equitable Remedies.............................................................11
6.9 Attorneys' Fees................................................................11
6.10 Notices; Exercise of Grantor's Purchase Option.................................11
6.11 Waiver of Rights; Consents with Respect to Partnership Interests...............12
6.12 Computation of Time............................................................13
6.14 Time of the Essence............................................................13
6.15 Consents with Respect to General Partner; Proxy................................13
(ii)
OPTION AGREEMENT
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This Option Agreement (hereinafter referred to as this "Option Agreement")
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is executed as of the 14th day of April, 1997 by and among Patriot American
Hospitality Partnership, L.P., a Virginia limited partnership, or its designee
or designees as permitted by Section 7.3 hereof ("Optionee") and those persons
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whose names are set forth on Exhibit A hereto ("Ownership Exhibit") and who
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become signatories hereto (each, a "Grantor" and, collectively, the "Grantors")
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and, for purposes of joining in this Option Agreement in order to consent to the
transactions hereunder contemplated, certain persons or entities that are not
Grantors but are partners in the Kinetic Group Limited Partnership, a Texas
limited partnership (the "Company"), or in WH-MIS LP, a Texas limited
partnership, or are shareholders in the general partner of the Company (the
"Consenting Partners");
WHEREAS, WH-MIS LP owns a limited partnership interest (the "Partnership
Interest") in the Company, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("JDC") owns common stock (the
"Equity Interest") in Kinetic Group I, Inc., the general partner of the Company
(the "General Partner"), in the amounts set forth on the Ownership Exhibit (the
Partnership Interests and the Equity Interests are collectively referred to
herein as the "Interests");
WHEREAS, Optionee, California Jockey Club, a Delaware corporation ("CJC"),
and Bay Meadow Operating Company, a Delaware corporation ("BMOC"), have entered
into an Agreement and Plan of Merger, dated as of February 24, 1997, pursuant to
which Optionee, CJC and BMOC agreed to engage in a business combination among
Optionee, CJC and BMOC;
WHEREAS, in consideration of, among other things, the execution and
delivery of that Agreement and Plan of Merger by and between Wyndham Hotel
Corporation, a Delaware corporation, and Optionee, dated effective as of April
14, 1997 (the "Merger Agreement"), WH-MIS LP and JDC desire to undertake and
agree to do as herein set forth; and
WHEREAS, Optionee desires to acquire, and WH-MIS LP and JDC desire to grant
to Optionee, an option to purchase, on the terms and conditions set forth
herein, certain Interests owned by WH-MIS LP and JDC.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Optionee, WH-MIS LP, JDC and
Consenting Partners hereby agree as follows:
ARTICLE I: THE OPTION
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1.1 Grant of Option. WH-MIS LP hereby grants to Optionee an option to
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purchase all right, title and interest of WH-MIS LP in a 49.5% Partnership
Interest, and JDC hereby
grants to Optionee an option to purchase all right, title and interest of JDC in
a 50% Equity Interest (each such option is hereinafter referred to as a
"Purchase Option") on the terms and conditions hereinafter set forth. WH-MIS LP
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and JDC are individually referred to herein as "Grantor" and collectively as
"Grantors."
1.2 Term and Exercise of Option.
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(a) Each Purchase Option becomes effective and may be exercised at
any time from and after the date of the effectiveness of the Wyndham Merger (as
such term is defined in Section 2.1 hereof) through 5:00 p.m., Dallas, Texas
time, on the earlier of (i) April 30, 1999 or (ii) the "Termination Date" (as
such term is defined in Section 1.2(b) hereof) (the earlier of such dates, the
"Option Termination Date"). Each Grantor's Purchase Option can be exercised only
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by the giving of notice by Optionee to such Grantor (an "Option Exercise
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Notice"). If Optionee does not exercise a Grantor's Purchase Option by the
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Option Termination Date, such Grantor's Purchase Option shall be deemed
terminated and shall be of no further force and effect and such Grantor shall
have no further obligations hereunder. If Optionee exercises any Purchase
Option, Optionee must exercise all Purchase Options.
(b) If at any time the Merger Agreement shall have been effectively
terminated pursuant to its terms (the date of such termination being referred to
as the "Termination Date"), all parties hereto will be relieved of all
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obligations under this Option Agreement and all Closing Documents (as defined in
Section 2.3), and this Option Agreement shall be of no further force and effect
(except for obligations arising under Sections 3.5 and 4.2 and Article V).
1.3 Purchase Price and Payment. The full purchase price for the Interests
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of each Grantor that will be purchased upon the exercise of such Grantor's
Purchase Option (such purchase price with respect to such Grantor hereinafter
referred to as such Grantor's "Purchase Price") shall be $20.00 for JDC's
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Interest and $80.00 for WH-MIS LP's Interest.
1.4 No Transfers. From the date hereof to the Option Termination Date,
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each Grantor hereby agrees not to (i) effect any transfer of its interest in the
Company or (ii) allow any Encumbrance (as defined in Section 3.1) to attach
thereto (with the exception of JDC's obligation to remit to Wyndham Finance
Limited Partnership, a Texas limited partnership ("WFLP"), all or a portion of
the proceeds received upon the disposition of his Interest in satisfaction of
indebtedness owed by him to WFLP (the "WFLP Indebtedness")). Notwithstanding the
foregoing, JDC may transfer a 50% Equity Interest to ▇▇▇▇▇▇ ▇▇▇▇▇, and WH-MIS LP
may transfer a 49.5% Partnership Interest to ▇▇▇▇▇▇▇▇ ▇▇▇▇ Company (the
"Permitted Transfer").
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ARTICLE II: CONTRACT TO PURCHASE AND CLOSING PROCEDURES.
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2.1 Purchase and Sale. Upon (i) Optionee's exercise of a Grantor's
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Purchase Option, and (ii) Optionee's payment of such Grantor's Purchase Price,
which for JDC shall be paid to WFLP on behalf of JDC, such Grantor shall,
subject to Section 2.2 hereof, sell, transfer, assign, and convey to Optionee,
and Optionee shall purchase and accept from such Grantor, all right, title and
interest of such Grantor in those Interests of Grantor free and clear of all
Encumbrances (as defined in Section 3.1), in accordance with this Article II;
provided, that, in the event that the merger ("Wyndham Merger") described in the
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Merger Agreement shall not have become effective, no exercise of a Grantor's
Purchase Option shall be of any effect.
2.2 Closing; Condition to Obligations. In connection with or at any time
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after the exercise by Optionee of its Purchase Options, Optionee will specify a
closing date, which date will be no later than the Option Termination Date, for
the closing (the "Closing") of the purchase and sale contemplated by each
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Purchase Option. At such Closing, which shall be held in Dallas, Texas, at a
place and time mutually agreeable between the Company and Optionee, Optionee and
each Grantor will execute and deliver the Closing Documents (as defined in
Section 2.3) and deliver the same to Optionee or a person designated by Optionee
(the "Closing Agent"), and Optionee shall cause to be delivered to WH-MIS LP,
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and to WFLP on behalf of JDC, such Grantor's Purchase Price.
2.3 Documents to be Delivered at Closing. At the Closing, each Grantor
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shall execute, acknowledge where deemed desirable or necessary by Optionee, and
deliver to Optionee or the Closing Agent, as applicable, in addition to any
other documents mentioned elsewhere herein, the following (the "Closing
Documents"):
(a) An Assignment and Assumption of Interests (the "Assignment"),
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which assignment shall be in a form satisfactory to Optionee and Grantor, shall
contain a warranty of title that such Grantor owns such Grantor's Interests free
and clear of all Encumbrances (as defined in Section 3.1) (with the exception of
the WFLP Indebtedness in the case of JDC), and shall either (i) reaffirm the
accuracy of all representations and warranties and the satisfaction of all
covenants made by such Grantor in Article III hereof or (ii) if such
reaffirmation cannot be made, identify those representations, warranties and
covenants of Article III hereof (other than Section 3.6) with respect to which
circumstances have changed, represent that such Grantor has used its best
efforts to prevent and remedy such breach, and reaffirm the accuracy of all
other representations and warranties and the satisfaction of all other covenants
made by such Grantor in Article III hereof.
(b) If requested by Optionee, a certified copy of all appropriate
corporate resolutions or partnership actions authorizing the execution, delivery
and performance by Grantor of this Option Agreement, any agreements or
instruments executed in connection with the transactions contemplated by the
exercise of the applicable Purchase Option, including,
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without limitation, any waiver, consent or amendment regarding any rights such
Grantor might have pursuant to the partnership agreement of the Company, or
elsewhere, which consent, waiver or amendment, could, if not given or made,
adversely affect the ability of Optionee to consummate the transactions
hereunder contemplated.
(c) Any other documents reasonably necessary to assign, transfer and
convey such Grantor's Interests and effectuate the transactions contemplated
hereby, including filings with any applicable governmental jurisdiction in which
the Optionee is required to file its partnership documentation.
2.4 Further Assurances. Each Grantor will, from time to time, execute and
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deliver to Optionee all such other and further instruments and documents and
take or cause to be taken all such other and further action as Optionee may
reasonably request in order to effect the transactions contemplated by this
Option Agreement, including instruments or documents deemed necessary or
desirable by Optionee to effect and evidence the conveyance of such Grantor's
Interests in accordance with the terms of this Option Agreement.
ARTICLE III: REPRESENTATIONS, WARRANTIES AND
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COVENANTS OF GRANTORS
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As a material inducement to Optionee to enter into this Option Agreement
and to consummate the transactions contemplated hereby, each Grantor hereby
severally makes to Optionee each of the representations and warranties set forth
in this Article III, which representations and warranties are true as of the
date hereof. As a condition to Optionee's obligation to complete the purchase
of each Grantor's Interests, such representations and warranties must continue
to be true as of the date of the Closing (except a otherwise provided in Section
2.3(a)).
3.1 Title to Interests. With the exception of the WFLP Indebtedness, such
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Grantor owns beneficially and of record, free and clear of any claim, lien,
pledge, voting agreement, option, charge, security interest, mortgage, deed of
trust, encumbrance, rights of assignment, purchase rights or other rights of any
nature whatsoever of any third party (collectively, "Encumbrances"), and has
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full power and authority to convey free and clear of any Encumbrances, its
Interests and, upon delivery of an Assignment by such Grantor conveying all of
its Interests and payment for such Interests as herein provided, Optionee (or
its designee or designees) will acquire good and valid title thereto, free and
clear of any Encumbrance except Encumbrances created in favor of Optionee by the
transactions contemplated hereby and those created by Optionee. All of such
Grantor's Interests are set forth on the Ownership Exhibit as such Grantor's
Interests. To the knowledge of Grantor, all of such Grantor's Interests have
been validly issued, and Grantor has funded (or will fund before the same is
past due) all capital contributions and advances to the Company that are
required to be funded or advanced prior to the date hereof and the date of the
Closing. There are no agreements,
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instruments or understandings with respect to any of such Grantor's Interests
except as described herein or as set forth in the partnership agreement of the
Company or WH-MIS LP or the Articles of Incorporation or Bylaws of the General
Partner. In making the representations in this Section 3.1 regarding the absence
of Encumbrances, each Grantor may assume that the consents and waivers of rights
set forth in Section 6.11 hereof have been given by all partners of the Company
that are signatories hereto, and that the WFLP Indebtedness has been repaid.
3.2 Authority. Such Grantor has full right, authority, power and capacity
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(i) to enter into this Option Agreement and each agreement, document and
instrument to be executed and delivered by or on behalf of such Grantor pursuant
to this Option Agreement, (ii) to carry out the transactions contemplated hereby
and thereby and (iii) to transfer, sell and deliver all of such Grantor's
Interests to Optionee (or its designee or designees) upon exercise by Optionee
of such Grantor's Purchase Option and payment therefor in accordance with this
Option Agreement. This Option Agreement and each agreement, document and
instrument executed and delivered by or on behalf of such Grantor pursuant to
this Option Agreement constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation of such Grantor, each
enforceable in accordance with its respective terms. The execution, delivery
and performance of this Option Agreement and each such agreement, document and
instrument by or on behalf of such Grantor (x) does not and will not violate
such Grantor's partnership agreement, declaration of trust, charter or bylaws,
if applicable, (y) to Grantor's knowledge does not and will not violate any
foreign, federal, state, local or other laws applicable to such Grantor or
require such Grantor to obtain any approval, consent or waiver of, or make any
filing with, any person or authority (governmental or otherwise) that has not
been obtained or made or which does not remain in effect, and (z) to Grantor's
knowledge, with the exception of that Lease Agreement by the Company for a
business premises in or around Dallas, Texas (the "Lease Agreement"), does not
and will not result in a breach of, constitute a default under, accelerate any
obligation under or give rise to a right of termination of, any indenture, loan
or credit agreement, or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which such Grantor is a party or by which
the property of such Grantor is bound or affected, or result in the creation of
any Encumbrance on any of the property or assets of the Company, which would
adversely affect Grantor's ability to transfer good title. In making the
representations set forth in this Section 3.2, each Grantor may assume that the
consents and waivers of rights set forth in Section 6.11 hereof have been given
by all Grantors and Consenting Partners.
3.3 Litigation. There is no litigation or proceeding, either judicial or
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administrative, pending or overtly threatened, affecting all or any portion of
such Grantor's Interests or its ability to consummate the transactions
contemplated hereby. Such Grantor knows of no outstanding order, writ,
injunction or decree of any court, government, governmental entity or authority
or arbitration against or affecting all or any portion of its
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Interests, which in any such case would impair such Grantor's ability to enter
into and perform all of its obligations under this Option Agreement.
3.4 No Other Agreements to Sell. With the exception of the Permitted
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Transfer, such Grantor represents that it has made no agreement with, and will
not up to the Option Termination Date enter into any agreement with, and has no
obligation (absolute or contingent) to, any other person or firm to sell,
transfer or in any way encumber any of such Grantor's Interests or to refrain
from selling such Grantor's Interests, or to enter into any agreement with
respect to a sale, transfer or encumbrance of, or put or call right with respect
to, such Grantor's Interests. In making the representations set forth in this
Section 3.4, each Grantor may assume that the consents and waivers of rights set
forth in Section 6.11 hereof have been given by all Grantors and Consenting
Partners.
3.5 No Brokers. Such Grantor represents that it has not entered into,
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and covenants that it will not enter into, any agreement, arrangement or
understanding with any person or firm which will result in the obligation of
Optionee to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
3.6 Covenant to Remedy Breaches. Each Grantor covenants to use its best
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efforts (i) to prevent the breach of any representation or warranty of such
Grantor hereunder, (ii) to satisfy all covenants of such Grantor hereunder and
(iii) to promptly cure any breach of a representation, warranty or covenant of
such Grantor hereunder upon its learning of same.
3.7 WFLP Indebtedness. Pursuant to the terms of the WFLP Indebtedness,
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there are no restrictions on JDC's repayment of such indebtedness as
contemplated hereby.
3.8 Lease Agreement. Each of the Grantors and the Company shall use its
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reasonable efforts to obtain required consents under the Lease Agreement or a
lease with substantially equivalent economic terms to be executed and delivered
as of the Closing (which shall, in no event, require any economic expenditure on
the part of the Grantors).
3.9 Additional Consenting Partners. The Company will use its reasonable
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best efforts to cause any holder of a limited partnership interest in WH-MIS LP
not a party hereto on the date hereof to become a party to this Option
Agreement.
3.10 Stockholders' Agreement. Upon the exercise of the Purchase
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Options, Optionee, the General Partner and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, agree to use
reasonable best efforts to enter into a stockholders' agreement containing terms
and conditions reasonably satisfactory to ▇▇. ▇▇▇▇▇, Optionee and the General
Partner.
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ARTICLE IV: REPRESENTATIONS, WARRANTIES AND COVENANTS OF OPTIONEE
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As a material inducement to each Grantor to enter into this Option
Agreement and to consummate the transactions contemplated hereby, Optionee
hereby makes to each Grantor each of the representations and warranties set
forth in this Article IV, which representations and warranties shall be true as
of the date hereof. As a condition to each Grantor's obligation to complete the
assignment of its Interests specified in an Option Exercise Notice, such
representations and warranties must continue to be true as of the date of the
Closing or, if not continuing to be true as of the date of the Closing, will not
materially adversely affect Optionee's ability to pay the Purchase Price.
4.1 Authority. Optionee has full right, authority, power and capacity (i)
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to enter into this Option Agreement and each agreement, document and instrument
to be executed and delivered by or on behalf of it pursuant to this Option
Agreement and (ii) to carry out the transactions contemplated hereby and
thereby. This Option Agreement and each agreement, document and instrument
executed and delivered by Optionee pursuant to this Option Agreement
constitutes, or when executed and delivered will constitute, the legal, valid
and binding obligation of Optionee, each enforceable in accordance with their
respective terms. The execution, delivery and performance of this Option
Agreement and each such agreement, document and instrument by Optionee (x) does
not and will not violate such Optionee's partnership agreement, (y) to
Optionee's knowledge does not and will not violate any foreign, federal, state,
local or other laws applicable to such Optionee or require Optionee to obtain
any approval, consent or waiver of, or make any filing with, any person or
authority (governmental or otherwise) that has not been obtained or made or
which does not remain in effect, and (z) to Optionee's knowledge does not and
will not result in a breach of, constitute a default under, accelerate any
obligation under or give rise to a right of termination of, any indenture, loan
or credit agreement, or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which Optionee is a party or by which the
property of such Grantor is bound or affected, or result in the creation of any
Encumbrance on any of the property or assets of the Company, which would
materially adversely affect Optionee's ability to pay the Purchase Price to each
Grantor.
4.2 No Brokers. Optionee represents that it has not entered into, and
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covenants that it will not enter into, any agreement, arrangement or
understanding with any person or firm which will result in the obligation of any
Grantor to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
4.3 Covenant to Remedy Breaches. Optionee covenants to use its best
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efforts (i) to prevent the breach of any of its representations or warranties
hereunder, (ii) to satisfy all of its covenants hereunder, and (iii) to promptly
cure any breach of a representation, warranty or covenant of Optionee hereunder
upon its learning of same.
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ARTICLE V: INDEMNIFICATION
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5.1 Indemnification by the Grantors. Each Grantor shall indemnify and
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hold Optionee, its designee or designees hereunder, and their officers,
directors, partners and shareholders harmless against and in respect of any and
all losses, costs, expenses, claims, damages, obligations and liabilities,
including interest, costs of investigation, penalties and reasonable attorneys'
fees and disbursements ("Damages") which Optionee or any such person may suffer,
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incur or become subject to arising out of, based upon, as a consequence of
relying upon or otherwise in respect of any inaccuracy in or breach of any
representation or warranty of such Grantor made in or pursuant to this Option
Agreement or any breach or nonfulfillment of any covenant or obligation of such
Grantor contained in this Option Agreement.
5.2 Indemnification by Optionee. Optionee shall indemnify and hold the
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Grantors and their officers, directors, partners and shareholders harmless
against and in respect of any and all Damages which the Grantors or any such
person may suffer, incur or become subject to arising out of, based upon, as a
consequence of relying upon or otherwise in respect of any inaccuracy in or
breach of any representation or warranty of Optionee made in or pursuant to this
Option Agreement or any breach or nonfulfillment of any covenant or obligation
of Optionee contained in this Option Agreement.
5.3 Third Party Claims.
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(a) Each party shall promptly notify the other of the assertion by
any third party of any claim with respect to which the indemnification set forth
in this Section relates. The indemnifying party shall have the right, upon
notice to the indemnified party within ten (10) business days after the receipt
of any such notice, to undertake the defense of and, with the consent of the
indemnified party (which consent shall not unreasonably be withheld), to settle
or compromise such claim. The failure of the indemnifying party to give such
notice and to undertake the defense of or to settle or compromise such a claim
shall constitute a waiver of the indemnifying party's rights under this Section
5.3(a) and in the absence of gross negligence or willful misconduct on the part
of the indemnified party shall preclude the indemnifying party from disputing
the manner in which the indemnified party may conduct the defense of such claim
or the reasonableness of any amount paid by the indemnified party in
satisfaction of such claim.
(b) The election by the indemnifying party, pursuant to Section
5.3(a), to undertake the defense of a third party claim shall not preclude the
party against which such claim has been made also from participating or
continuing to participate in such defense, so long as such party bears its own
legal fees and expenses for so doing.
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ARTICLE VI: MISCELLANEOUS
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6.1 Amendment. Any amendment hereto shall be effective only against those
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parties hereto who have acknowledged in writing their consent to such amendment,
provided that Optionee may amend this Option Agreement without notice to or the
consent of any Grantor (i) for the purpose of adding additional Grantors as
parties hereto or deleting Grantors as parties herefrom and conforming the
Ownership Exhibit in connection with such additions or deletions and (ii) to
conform the Ownership Exhibit to the extent the Interests set forth therein do
not accurately or completely reflect the interests of such Grantor in the
Company. No waiver of any provisions of this Option Agreement shall be valid
unless in writing and signed by the party against whom enforcement is sought.
6.2 Entire Agreement; Counterparts; Applicable Law. This Option Agreement
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and all Closing Documents (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, (b) may be executed in several
counterparts, each of which will be deemed an original and all of which shall
constitute one and the same instrument and (c) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Texas without giving effect to the conflict of law provisions thereof.
This Agreement shall be enforceable as between a Grantor or Consenting Partner
on the one hand, and the Optionee on the other hand, upon the execution by both
of signature pages hereto, even though other Grantors may be added hereto
thereafter.
6.3 Assignability. This Option Agreement shall be binding upon, and shall
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be enforceable by and inure to the benefit of, the parties hereto and their
respective heirs, legal representatives, successors and assigns; provided,
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however, that this Option Agreement may not be assigned (except by operation of
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law) by any Grantor or Optionee without the prior written consent of the
Optionee or all Grantors, respectively, and any attempted assignment without
such consent shall be void and of no effect; and provided, further, that
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Optionee may assign this Option Agreement, the Closing Documents and any
agreement contemplated hereunder or thereunder, in whole or in part, or the
right to acquire from a Grantor its Interest after exercise of such Grantor's
Purchase Option, to a direct or indirect subsidiary of Optionee or to BMOC or a
direct or indirect subsidiary of BMOC without the consent of any Grantor or
Consenting Partner.
6.4 Titles. The titles and captions of the Articles, Sections and
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paragraphs of this Option Agreement are included for convenience of reference
only and shall have no effect on the construction or meaning of this Option
Agreement.
6.5 Third Party Beneficiary. No provision of this Option Agreement is
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intended, nor shall it be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any customer, affiliate,
stockholder, partner, director, officer or employee of any party hereto or any
other person or entity; provided, however, that Section
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6.11 of this Option Agreement shall be enforceable by and shall inure to the
benefit of the persons described therein.
6.6 Severability. If any provision of this Option Agreement, or the
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application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Option Agreement and application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Option Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provision and
to execute any amendment, consent or agreement deemed necessary or desirable by
Optionee to effect such replacement.
6.7 Dispute Resolution. Any dispute relating to or any determination with
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respect to any matter set forth in this Option Agreement shall be finally
settled by arbitration conducted expeditiously in accordance with the Center for
Public Resources Rules for Nonadministered Arbitration of Business Disputes (the
"CPR Rules"). The Center for Public Resources shall appoint a neutral advisor
from its National CPR Panel having appropriate experience in the matters that
are the subject of the dispute (the "Advisor"). The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. (S)(S)1-16, and judgment
upon the award rendered by the Advisor may be entered by any court having
jurisdiction thereof. The place of arbitration shall be Dallas, Texas.
Such proceedings shall be administered by the Advisor in accordance with
the CPR Rules as he/she deems appropriate; however, such proceedings shall in
any event be governed by the following agreed upon procedures:
(a) the Advisor shall be appointed within 10 days of the service of a
statement of claim, the initial pre-hearing conference shall take place within
twenty (20) days after appointment of the Advisor, and the arbitration hearing
shall commence within sixty (60) days after appointment of the Advisor;
(b) Subject to the following agreed-upon modifications, discovery
shall be governed by Rule 10 of the CPR Rules:
(i) the parties agree to a mandatory exchange of all relevant
documents, to be accomplished within twenty (20) days of request by the
other party; and
(ii) each party shall be entitled to no more than two (2)
depositions; such depositions may be scheduled on ten (10) days notice to
the other Party;
(c) hearings before the Advisor which shall consist of a presentation
by each side of not more than three days; such hearings to take place on six
days at a maximum; and
10
(d) decision to be rendered in writing, with a statement of reasons
supporting the decision, not more than fifteen (15) days following such
hearings.
6.8 Equitable Remedies. The parties hereto agree that irreparable damage
------------------
would occur in the event that any of the provisions of this Option Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Option Agreement and to
enforce specifically the terms and provisions hereof in any federal or state
court located in Dallas, Texas (as to which the parties agree to submit to
jurisdiction for the purposes of such action), this being in addition to any
other remedy to which they are entitled at law or in equity.
6.9 Attorneys' Fees. In connection with any litigation or a court
---------------
proceeding arising out of this Option Agreement, the prevailing party shall be
entitled to recover all costs incurred, including reasonable attorneys' fees and
legal assistants' fees and costs whether incurred prior to trial, at trial, or
on appeal.
6.10 Notices; Exercise of Grantor's Purchase Option. Any notice or
----------------------------------------------
demand which must or may be given under this Option Agreement (including an
Option Exercise Notice) or by law shall, except as otherwise provided, be in
writing and shall be deemed to have been given (i) when physically received by
personal delivery (which shall include the confirmed receipt of a telecopied
facsimile transmission), (ii) five (5) business days after being deposited in
the United States certified or registered mail, return receipt requested,
postage prepaid, or (iii) one (1) business day after being deposited with a
nationally known commercial courier service providing next day delivery service
(such as Federal Express); addressed and delivered or telecopied (a) in the case
of a notice to the Optionee at the following address and telecopy number:
c/o Patriot American Hospitality, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman and
Chief Executive Officer
and (b) in the case of a notice to a Grantor or a Consenting Partner, at the
respective address and telecopy number set forth on the Ownership Exhibit
hereto.
6.11 Waiver of Rights; Consents with Respect to Partnership Interests.
----------------------------------------------------------------
Each Grantor and each Consenting Partner acknowledges that the agreements
contained herein and the transactions contemplated hereby and any actions taken
in contemplation of the transactions contemplated hereby may conflict with, and
may not have been contemplated by,
11
the partnership agreement of the Company or WH-MIS LP, the Articles of
Incorporation and Bylaws of the General Partner (the "Charter Documents"), one
or more other agreements among one or more of the partners of the Company or
between the Company and Wyndham Hotel Corporation or ▇▇▇▇▇▇▇▇ ▇▇▇▇ Company. With
respect to all of its Interests in the Company, the General Partner or WH-MIS LP
or any such agreement to which it may be a party or beneficiary, each Grantor
and each Consenting Partner from the date hereof to the Option Termination Date
expressly gives all Consents (and any consents necessary to authorize the proper
parties in interest to give all Consents) and Waivers (as such terms are
hereinafter defined).
As used herein, the term "Consent" means, any consent necessary or
-------
desirable under the partnership agreement of the Company or WH-MIS LP, the
Charter Documents, any other agreement among all or any of the holders of
interests therein, any other agreement relating thereto or referred to therein
or any service agreement between the Company and Wyndham Hotel Corporation or
▇▇▇▇▇▇▇▇ ▇▇▇▇ Company (i) to permit any and all actions hereunder contemplated
relating thereto or to amend such partnership agreements, Charter Documents
and/or other agreements so that no provision thereof prohibits, restricts,
impairs or interferes with any such action (such amendments to include, without
limitation, the deletion of provisions which could cause a default under such
partnership agreements or Charter Documents if Interests therein were
transferred, among other things, for cash or for property or in violation of
notice, rights-of-first refusal or other provisions), (ii) to admit Optionee, or
its designee or designees, as a substituted limited partner or general partner
of the Company or as a stockholder of the General Partner upon Optionee's, or
its designee's or designees' (as permitted by Section 6.3), acquisition of a
limited or general partner interest in the Company or an equity interest in the
General Partner respectively, and to adopt such amendment as may be necessary or
desirable to effect such admission, and (iii) to continue such partnership and
such company following the transfer of interests therein to Optionee. As used
herein, the term "Waiver" means, the waiving of any and all rights that such
------
Grantor or Consenting Partner may have with respect to, and (to the extent
possible) that any other person may have with respect to, or that may accrue to
such Grantor or Consenting Partner or other person upon the occurrence of the
actions hereunder contemplated, including, but not limited to, rights of notice,
rights to response periods, rights to purchase the direct or indirect interests
of another partner in the Company or of a shareholder in the General Partner or
to sell such Grantor's or other person's direct or indirect interest therein to
another partner or person, rights to sell such Grantor's or other person's
direct or indirect interest therein at a price other than as provided herein, or
rights to prohibit, limit, invalidate, otherwise restrict or impair any such
action or to cause a termination or dissolution of the Company because of such
action. Each Grantor and Consenting Partner further covenants that such Grantor
or Consenting Partner will take no action to enjoin, or seek damages resulting
from, any action hereunder contemplated by any holder of a direct or indirect
interest in the Company or the General Partner.
12
6.12 Computation of Time. Any time period provided for herein which
-------------------
shall end on a Saturday, Sunday or legal holiday shall extend to 5:00 p.m. of
the next full business day. All times are Central Time.
6.13 Survival. It is the express intention and agreement of the parties
--------
hereto that the representations, warranties and covenants of each Grantor set
forth in Section 3.1 of this Option Agreement shall survive the consummation of
the transactions contemplated hereby.
6.14 Time of the Essence. Time is of the essence with respect to all
-------------------
obligations of each Grantor under this Option Agreement.
6.15 Consents with Respect to General Partner; Proxy.
-----------------------------------------------
(a) JDC and ▇▇▇▇▇▇ ▇▇▇▇▇ (following the Permitted Transfer), as the
stockholders (the "Stockholders") of the General Partner, acknowledge that the
agreements contained herein and the transactions contemplated hereby and any
actions taken in contemplation of the transactions taken hereby may conflict
with, and may not have been contemplated by, the Articles of Incorporation and
Bylaws of the General Partner or one or more other agreements between the
Stockholders and the General Partner. With respect to all of their interests in
the General Partner, the Stockholders hereby consent and agree (i) to the
transfer to Optionee, upon the exercise of the Grantor Purchase Option, of ▇▇.
▇▇▇▇▇▇▇▇'▇ 50% Equity Interest in the General Partner; and (ii) to the amendment
to the Articles of Incorporation, Bylaws and any other agreements among the
Stockholders and the Company, upon Optionee's exercise of the Grantor Purchase
Option, in order to (x) effect the transfer of JDC's Equity Interest in the
General Partner to Optionee, and (y) permit Optionee's designee or designees, as
applicable, to serve on the Board of Directors of the General Partner and as
officers of the General Partner.
(b) Effective upon Optionee's exercise of the Grantor Purchase Option
for JDC's Equity Interest in the General Partner and the transfer of such
interest to Optionee upon the terms and conditions contained herein, ▇▇. ▇▇▇▇▇
constitutes and appoints Optionee or its designee, with full power of
substitution, as ▇▇. ▇▇▇▇▇'▇ true and lawful attorney and irrevocable proxy, for
and in ▇▇. ▇▇▇▇▇'▇ name, place and stead, to vote all shares held by ▇▇. ▇▇▇▇▇
in General Partner in favor of Optionee's designee or designees to the Board of
Directors such that Optionee's designee or designees, as applicable, shall
constitute one half of the General Partner's Board of Directors at the first
annual or special meeting called by Optionee for the purpose thereof. The proxy
granted hereby is limited to and is solely for the purpose set forth above. ▇▇.
▇▇▇▇▇ intends this proxy to be irrevocable and coupled with an interest during
the "proxy term." The "proxy term" as used herein shall be from the date hereof
until the earlier to occur of the Option Termination Date or the election of
Optionee's designee or designees, as applicable, to the Board of Directors of
the General Partner.
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
OPTION AGREEMENT RE:
KINETIC GROUP LIMITED PARTNERSHIP
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement, or caused this Option Agreement to be duly executed on its behalf, as
of the date first above written.
OPTIONEE: PATRIOT AMERICAN HOSPITALITY
PARTNERSHIP, L.P., a Virginia limited
partnership
By: PAH GP, Inc., a Virginia corporation, its
general partner
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman and CEO
CONSENTING PARTNERS: ▇▇▇▇▇▇▇▇ ▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: CEO
KINETIC GROUP I, INC., a Texas
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
CONSENTING PARTNERS: CROW FAMILY PARTNERSHIP, L.P., a
Delaware limited partnership
By: Crow Family, Inc., its general partner
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
GRANTOR SIGNATURE PAGE
The undersigned, each desiring to become one of the within named Grantors
to that certain Option Agreement by and among Patriot American Hospitality
Partnership, L.P., a Virginia limited partnership, and such Grantors, dated as
of the date first written above, and to grant the Purchase Option described
therein, each hereby becomes a party to such Option Agreement and agrees to the
terms and conditions thereof and makes the representations, warranties and
covenants contained therein. Each of the undersigned agrees that this signature
page may be attached to any counterpart of said Option Agreement.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇-MIS LP, a Texas limited partnership
By: WH-MIS I, Inc., its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
18