<PAGE>
As filed with the Securities and Exchange Commission on December 10, 1997
Registration Statement No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
PATRIOT AMERICAN HOSPITALITY, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
94-0358820
(I.R.S. Employer Identification No.)
1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
(214) 863-1000
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of
Registrant's Principal Executive Offices)
PATRIOT AMERICAN HOSPITALITY, INC.
1995 INCENTIVE PLAN
NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
1997 INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENTS
(Full Title of the Plans)
-------------------------
PATRIOT AMERICAN HOSPITALITY
OPERATING COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
94-2878485
(I.R.S. Employer Identification No.)
1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
(214) 863-1000
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of
Registrant's Principal Executive Offices)
PATRIOT AMERICAN HOSPITALITY
OPERATING COMPANY
1995 INCENTIVE PLAN
NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
1997 INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENTS
(Full Title of the Plans)
-------------------------
PAUL A. NUSSBAUM
Chairman of the Board, Chief Executive Officer
and President
Patriot American Hospitality, Inc.
1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
(214) 863-1000
(Name, Address, Including Zip Code, and
Telephone Number, Including Area Code,
of Agent for Service)
PAUL A. NUSSBAUM
Chairman of the Board and Chief Executive Officer
Patriot American Operating Company
1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
(214) 863-1000
(Name, Address, Including Zip Code, and
Telephone Number, Including Area Code and
of Agent for Service)
---------------------
copies to:
GILBERT G. MENNA, P.C.
KATHRYN I. MURTAGH, ESQ.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
---------------------
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Title of Securities Being Amount to be Proposed Maximum Offering Proposed Maximum Amount of
Registered Registered (1) Price Per Share Aggregate Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 1,090,015 (3) (6) 12.00 $ 13,080,180 $ 3,858.65
per share, of Patriot 345,404 (3) (6) 13.438 4,641,539 1,369.25
American Hospitality Inc. 25,000 (3) 13.875 346,875 102.33
Paired With Shares of Common 3,200 (3) 14.25 45,600 13.45
Stock, par value $.01 per share, 8,000 (3) 15.125 121,000 35.70
of Patriot American Hospitality 780,008 (4) 19.12 14,913,753 4,399.56
Operating Company 1,350,022 (3) 22.375 30,206,742 8,910.99
100,002 (3) 22.625 2,262,545 667.45
560,009 (4) 24.125 13,510,217 3,985.51
250,004 (3) 24.61 6,152,598 1,815.02
250,004 (3) 27.07 6,767,608 1,996.44
250,004 (3) 29.78 7,445,119 2,196.31
280,000 (4) 32.063 8,977,640 2,648.40
250,004 (3) 32.761 8,190,381 2,416.16
250,004 (3) 36.041 9,010,394 2,658.07
100,000 (5) 32.625 3,262,500 962.44
5,900,000 29.875 (2) 172,262,500 50,817.44
---------- ------------ ----------
11,791,680 $301,197,193 $88,854.00
========== ============ ==========
</TABLE>
================================================================================
(1) Plus such additional number of shares as may be required pursuant to the
Patriot American Hospitality, Inc./ Patriot American Hospitality Operating
Company 1995 Incentive Plan (the "1995 Incentive Plan"), the Patriot
American Hospitality, Inc./ Patriot American Hospitality Operating Company
Non-Employee Directors' Incentive Plan (the "Directors' Plan"), the Patriot
American Hospitality, Inc. 1997 Incentive Plan (the "REIT Plan"), the
Patriot American Hospitality Operating Company 1997 Incentive Plan (the
"OpCo Plan") and each of the Non-Qualified Stock Option Agreements
(collectively, the "Plans") in the event of a stock dividend, reverse stock
split, split-up, recapitalization, forfeiture of stock under the Plans or
other similar event. This number also includes certain options and
restricted paired shares issued pursuant to individual agreements.
(2) This estimate is made pursuant to Rule 457(c) and (h) under the Securities
Act of 1933, as amended (the "Securities Act"), solely for the purposes of
determining the registration fee and is based upon the price at which
outstanding securities were issued or may be exercised and the market value
of outstanding paired shares of Patriot American Hospitality, Inc. Common
Stock, $.01 par value per share, and Patriot American Hospitality Operating
Company, par value $.01 per share, on December 8, 1997, utilizing the
average of the high and low sale prices reported on the New York Stock
Exchange for that date.
(3) Options granted pursuant to the 1995 Incentive Plan.
(4) Options granted pursuant to certain Non-Qualified Option agreements.
(5) Options for 50,000 Paired Shares granted pursuant to the REIT Plan.
Options for 50,000 Paired Shares granted pursuant to the OpCo Plan.
(6) Options granted pursuant to the Directors' Plan.
================================================================================
1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
-----------------------------------------------
Patriot American Hospitality, Inc. (the "REIT") and Patriot American
Hospitality Operating Company (the "Operating Company") hereby incorporate by
reference the documents listed below, which have previously been filed with the
Securities and Exchange Commission (the "Commission").
REIT and Operating Company
1. Current Reports on Form 8-K of the REIT and the Operating Company dated
(i) July 1, 1997 (Nos. 001-09319 and 001-09320 filed July 15, 1997), (ii) July
15, 1997 (Nos. 001-09319 and 001-09320 filed July 21, 1997), (iii) July 22, 1997
(Nos. 001-09319 and 001-09320 filed July 22, 1997), (iv) September 17, 1997
(Nos. 001-09319 and 001-09320 filed September 17, 1997), (v) September 30, 1997,
as amended (Nos. 001-09319 and 001-09320 filed October 14, 1997 and October 28,
1997), (vi) September 30, 1997 (Nos. 001-09319 and 001-09320 filed November 12,
1997), (vii) December 2, 1997 (Nos. 001-09319 and 001-09320 filed December 4,
1997) and (viii) December 10, 1997 (Nos. 001-09319 and 001-09320 filed December
10, 1997);
2. The description of the Paired Shares of Patriot American Hospitality,
Inc. Common Stock, par value $.01 per share, ("REIT Common Stock") and Patriot
American Hospitality Operating Company Common Stock, par value $.01 per share
("Operating Company Common Stock") contained or incorporated by reference in
REIT's and Operating Company's Registration Statement on Form 8-A (Nos. 001-
09319, 001-09320), including any amendments thereto;
3. Quarterly Report on Form 10-Q of the REIT and the Operating Company
(Nos. 001-09319, 001-09320) for the fiscal quarter ended June 30, 1997; and
4. Quarterly Report on Form 10-Q of the REIT and the Operating Company
(Nos. 001-09319 and 001-09320) for the fiscal quarter ended September 30, 1997.
California Jockey Club and Bay Meadows Operating Company
1. Annual Report on Form 10-K of California Jockey Club and Bay Meadows
Operating Company (Nos. 001-09319, 001-09320) for the fiscal year ended December
31, 1996;
2. Current Reports on Form 8-K of California Jockey Club and Bay Meadows
Operating Company dated (i) February 24, 1997 (Nos. 001-09319, 001-09320 filed
March 3, 1997) and (ii) May 28, 1997 (Nos. 001-09319, 001-09320 filed June 5,
1997);
3. Quarterly Report on Form 10-Q of California Jockey Club and Bay Meadows
Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter ended March
31, 1997; and
4. Quarterly Report on Form 10-Q/A of California Jockey Club and Bay
Meadows Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter
ended March 31, 1997 (filed May 16, 1997).
2
<PAGE>
Patriot American Hospitality, Inc. ("Old Patriot REIT")
1. Annual Report on Form 10-K of Old Patriot REIT (No. 001-13898) for
the fiscal year ended December 31, 1996;
2. Current Reports on Form 8-K of Old Patriot REIT, dated: (i) April 2,
1996, as amended (No. 001-13898 filed April 17, 1996 and June 14, 1996), (ii)
December 5, 1996 (No. 001-13898 filed December 5, 1996), (iii) January 16, 1997,
as amended (No. 001-13898 filed January 31, 1997, February 21, 1997, April 8,
1997, April 9, 1997 and May 19, 1997), (iv) February 24, 1997 (No. 001-13898
filed March 3, 1997) and (v) April 14, 1997, as amended (No. 001-13898 filed
April 17, 1997 and April 18, 1997); and
3. Quarterly Report on Form 10-Q of Old Patriot REIT (No. 001-13898) for
the fiscal quarter ended March 31, 1997.
Item 4. Description of Securities.
-------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
The Amended and Restated Certificate of Incorporation of the REIT (the
"REIT Restated Charter") and Amended and Restated Certificate of Incorporation
of the Operating Company (the "OpCo Restated Charter" and collectively with the
REIT Restated Charter referred to hereinafter as the "Restated Charters") in
conjunction with the Delaware General Corporation Law (the "DGCL"), eliminate a
director's personal liability to the REIT or the Operating Company, as the case
may be, or their respective stockholders for breach of fiduciary duty, except
for liability (i) for any breach of the director's duty of loyalty to the REIT
or the Operating Company, as the case may be, or their respective stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper personal
benefit.
The DGCL permits, but does not require, a corporation to indemnify its
directors, officers, employees or agents and expressly provides that the
indemnification provided for under the DGCL shall not be deemed exclusive of any
indemnification right under any bylaw, vote of stockholders or disinterested
directors, or otherwise. The DGCL permits indemnification against expenses and
certain other liabilities arising out of legal actions brought or threatened
against such persons for their conduct on behalf of the corporation, provided
that each such person acted in good faith and in a manner that he or she
reasonably believed was in or not opposed to the corporation's best interests
and in the case of a criminal proceeding, had no reasonable cause to believe his
or her conduct was unlawful. The DGCL does not allow indemnification of
directors in the case of an action by or in the right of the corporation
(including stockholder derivative suits) unless the directors successfully
defend the action or indemnification is ordered by the court. The Amended and
Restated Bylaws of the REIT (the "REIT Restated Bylaws") and the Amended and
Restated Bylaws of the Operating Company (the "OpCo Restated Bylaws" and
collectively with the REIT Restated Bylaws referred hereinafter as the "Restated
Bylaws") provide for indemnification to the fullest extent authorized by the
DGCL and, therefore, these statutory indemnification rights are available to the
directors, officers, employees and agents of the REIT and the Operating Company.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors and officers of the REIT or the Operating Company
pursuant to the foregoing provision or otherwise, the REIT and the Operating
Company have been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and is therefore,
unenforceable.
The REIT and the Operating Company have purchased director and officer
liability insurance for the purpose of providing a source of funds to pay any
indemnification described above.
3
<PAGE>
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
The following is a complete list of exhibits filed or incorporated by
reference as part of this registration statement.
Exhibits
- --------
4.1 Patriot American Hospitality, Inc./Patriot American Hospitality
Operating Company 1995 Stock Option and Incentive Plan
4.2 Patriot American Hospitality, Inc./Patriot American Hospitality
Operating Company Non-Employee Directors' Incentive Plan
4.3 Patriot American Hospitality, Inc. 1997 Incentive Plan
4.4 Patriot American Hospitality Operating Company 1997 Incentive Plan
4.5 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement
(grant to William W. Evans, III) dated February 14, 1997
4.6 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Richard Holtzman) dated January 15, 1997
4.7 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Scott Lyon) dated January 15, 1997
4.8 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to David Beckham) dated January 15, 1997
4.9 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to William Nassikas) dated January 15, 1997
4.10 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Michael Surguine) dated January 15, 1997
4.11 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Del Goehring) dated January 15, 1997
4.12 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Bruce Campbell) dated January 15, 1997
4.13 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to William Gamble) dated January 15, 1997
4.14 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Richard Riess) dated January 15, 1997
4.15 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Charles F. Kercheval) dated January 15, 1997
4.16 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Michael J. Byrd) dated January 15, 1997
4.17 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Kenneth B. Humes) dated January 15, 1997
4.18 Patriot American Hospitality, Inc. Non-Qualified Stock Option
Agreement, (grant to Toni Dawson) dated January 15, 1997
4.19 Patriot American Hospitality Operating Company Executive Employment
Agreement, (grant to Karim Alibhai) dated October 1, 1997
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being registered
23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto)
23.2 Consent of Deloitte & Touche LLP, San Francisco, California
23.3 Consent of Deloitte & Touche LLP, Houston, Texas
23.4 Consent of Ernst & Young LLP, Dallas, Texas
23.5 Consent of Ernst & Young LLP, Seattle, Washington
23.6 Consent of Ernst & Young LLP, Phoenix, Arizona
23.7 Consent of Ernst & Young LLP, San Juan, Puerto Rico
23.8 Consent of Ernst & Young LLP, Miami, Florida
23.9 Consent of Coopers & Lybrand, L.L.P., Fort Lauderdale, Florida
23.10 Consent of Coopers & Lybrand, L.L.P., Pittsburgh, Pennsylvania
4
<PAGE>
23.11 Consent of Coopers & Lybrand, L.L.P., Dallas, Texas
23.12 Consent of Coopers & Lybrand, L.L.P., Phoenix, Arizona
23.13 Consent of Coopers & Lybrand, L.L.P., Newport Beach, California
23.14 Consent of Coopers & Lybrand, L.L.P., Tampa, Florida
23.15 Consent of Pannell Kerr Forster PC, Alexandria, Virginia
23.16 Consent of Price Waterhouse LLP, Miami, Florida
23.17 Consent of Arthur Andersen LLP, Dallas, Texas
24.1 Powers of Attorney (contained in signature pages on pages 8 and 10 of
this Registration Statement)
Item 9. Undertakings
------------
(a) Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectuses any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the
form of prospectuses filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the registrant pursuant to Section 13 or 15(d) of the Exchange
Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) Each undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall
be
5
<PAGE>
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit it to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
6
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on this 10th day of December,
1997.
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Paul A. Nussbaum
------------------------------------------
Paul A. Nussbaum
President and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Patriot American Hospitality, Inc., hereby severally constitute
Paul A. Nussbaum, as our true and lawful attorney with full power to sign for us
and in our names in the capacities indicated below, the Registration Statement
filed herewith and any and all amendments to said Registration Statement, and
generally to do all such things in our names and in our capacities as officer
and directors to enable Patriot American Hospitality, Inc. to comply with the
provisions of the Securities Act of 1933, and all requirements of the Securities
and Exchange Commission, hereby ratifying and confirming our signatures as they
may be signed by our said attorney to said Registration Statement and any and
all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Paul A. Nussbaum Chairman of the Board, President December 10, 1997
------------------------------ and Chief Executive Officer
Paul A. Nussbaum (Principal Executive Officer)
/s/ Rex E. Stewart Chief Financial Officer, Treasurer and December 10, 1997
- ------------------------------- Secretary (Principal Financial Officer)
Rex E. Stewart
/s/ William W. Evans III Director December 10, 1997
- -------------------------------
William W. Evans III
/s/ John H. Daniels Director December 10, 1997
- ------------------------------
John H. Daniels
/s/ John C. Deterding Director December 10, 1997
- -----------------------------
John C. Deterding
/s/ Gregory R. Dillon Director December 10, 1997
- -----------------------------
Gregory R. Dillon
/s/ Thomas S. Foley Director December 10, 1997
- -----------------------------
Thomas S. Foley
/s/ Arch K. Jacobson Director December 10, 1997
- -----------------------------
Arch K. Jacobson
</TABLE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on this 10th day of December,
1997.
PATRIOT AMERICAN HOSPITALITY
OPERATING COMPANY
By: /s/ Paul A. Nussbaum
----------------------------
Paul A. Nussbaum
Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Patriot American Hospitality Operating Company, hereby severally
constitute Paul A. Nussbaum, as our true and lawful attorney with full power to
sign for us and in our names in the capacities indicated below, the Registration
Statement filed herewith and any and all amendments to said Registration
Statement, and generally to do all such things in our names and in our
capacities as officer and directors to enable Patriot American Hospitality
Operating Company to comply with the provisions of the Securities Act of 1933,
and all requirements of the Securities and Exchange Commission, hereby ratifying
and confirming our signatures as they may be signed by our said attorney to said
Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Paul A. Nussbaum Chairman of the Board and Chief December 10, 1997
- ------------------------------- Executive Officer (Principal
Paul A. Nussbaum Executive Officer)
/s/ Rex E. Stewart Chief Financial Officer, Treasurer December 10, 1997
- ------------------------------- and Secretary (Principal Financial
Rex E. Stewart Officer)
/s/ Leonard Boxer Director December 10, 1997
- -------------------------------
Leonard Boxer
/s/ Russ Lyon, Jr. Director December 10, 1997
- -------------------------------
Russ Lyon, Jr.
/s/ Burton C. Einspruch Director December 10, 1997
- -------------------------------
Burton C. Einspruch
/s/ Arch K. Jacobson Director December 10, 1997
- -------------------------------
Arch K. Jacobson
/s/ Karim Alibhai Director December 10, 1997
- -------------------------------
Karim Alibhai
/s/ Sherwood M. Weiser Director December 10, 1997
- -------------------------------
Sherwood M. Weiser
</TABLE>
<PAGE>
INDEX TO EXHIBITS TO REGISTRATION STATEMENT ON FORM S-8
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C>
4.1 Patriot American Hospitality, Inc. 1995 Stock Option and Incentive Plan 13
4.2 Patriot American Hospitality, Inc. Non-Employee Directors' Incentive Plan 30
4.3 Patriot American Hospitality, Inc. 1997 Incentive Plan 41
4.4 Patriot American Hospitality Operating Company 1997 Incentive Plan 63
4.5 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement
(grant to William W. Evans, III) dated February 14, 1997 83
4.6 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Richard Holtzman) dated January 15, 1997 88
4.7 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Scott Lyon) dated January 15, 1997 95
4.8 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to David Beckham) dated January 15, 1997 102
4.9 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to William Nassikas) dated January 15, 1997 109
4.10 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Michael Surguine) dated January 15, 1997 116
4.11 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Del Goehring) dated January 15, 1997 123
4.12 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Bruce Campbell) dated January 15, 1997 130
4.13 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to William Gamble) dated January 15, 1997 137
4.14 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Richard Riess) dated January 15, 1997 144
4.15 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Charles F. Kercheval) dated January 15, 1997 151
4.16 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Michael J. Byrd) dated January 15, 1997 158
4.17 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Kenneth B. Humes) dated January 15, 1997 165
4.18 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement,
(grant to Toni Dawson) dated January 15, 1997 172
4.19 Patriot American Hospitality Operating Company Executive Employment Agreement,
(grant to Karim Alibhai) dated October 1, 1997 179
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the securities
being registered 193
23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1 hereto) 193
23.2 Consent of Deloitte & Touche LLP, San Francisco, California 194
23.3 Consent of Deloitte & Touche LLP, Houston, Texas 195
23.4 Consent of Ernst & Young LLP, Dallas, Texas 196
23.5 Consent of Ernst & Young LLP, Seattle, Washington 197
23.6 Consent of Ernst & Young LLP, Phoenix, Arizona 198
23.7 Consent of Ernst & Young LLP, San Juan, Puerto Rico 199
23.8 Consent of Ernst & Young LLP, Miami, Florida 200
23.9 Consent of Coopers & Lybrand, L.L.P., Fort Lauderdale, Florida 201
23.10 Consent of Coopers & Lybrand, L.L.P., Pittsburgh, Pennsylvania 202
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
23.11 Consent of Coopers & Lybrand, L.L.P., Dallas, Texas 203
23.12 Consent of Coopers & Lybrand, L.L.P., Phoenix, Arizona 207
23.13 Consent of Coopers & Lybrand, L.L.P., Newport Beach, California 205
23.14 Consent of Coopers & Lybrand, L.L.P., Tampa, Florida 206
23.15 Consent of Pannell Kerr Forster PC, Alexandria, Virginia 207
23.16 Consent of Price Waterhouse LLP, Miami, Florida 208
23.17 Consent of Arthur Andersen LLP, Dallas, Texas 209
24.1 Powers of Attorney 8, 10
</TABLE>
<PAGE>
Exhibit 4.1
PATRIOT AMERICAN HOSPITALITY, INC.
1995 INCENTIVE PLAN
AS AMENDED AND RESTATED
AS OF MARCH 24, 1997
<PAGE>
PATRIOT AMERICAN HOSPITALITY, INC.
1995 INCENTIVE PLAN
AS AMENDED AND RESTATED
AS OF MARCH 24, 1997
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C> <C> <C>
ARTICLE I - DEFINITIONS...................................................1
1.01 Administrator...........................................1
1.02 Affiliate...............................................1
1.03 Agreement...............................................1
1.04 Board...................................................1
1.05 Code....................................................1
1.06 Committee...............................................1
1.07 Common Stock............................................1
1.08 Company.................................................1
1.09 Deferred Stock Unit.....................................1
1.10 Dividend Equivalent Right...............................2
1.11 Exchange Act............................................2
1.12 Fair Market Value.......................................2
1.13 Option..................................................2
1.14 Participant.............................................2
1.15 Performance Shares......................................2
1.16 Plan....................................................2
1.17 Stock Award.............................................2
1.18 Ten Percent Shareholder.................................3
ARTICLE II - PURPOSES.....................................................3
ARTICLE III - ADMINISTRATION..............................................3
ARTICLE IV - ELIGIBILITY..................................................5
ARTICLE V - STOCK SUBJECT TO PLAN.........................................5
5.01 Shares Issued...........................................5
5.02 Aggregate Limit.........................................5
5.03 Reallocation of Shares..................................5
ARTICLE VI - OPTIONS......................................................6
6.01 Award...................................................6
6.02 Option Price............................................6
6.03 Maximum Option Period...................................7
6.04 Nontransferability......................................7
6.05 Transferable Options....................................7
6.06 Employee Status.........................................8
6.07 Exercise................................................8
6.08 Payment.................................................9
6.09 Shareholder Rights......................................9
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C> <C> <C>
6.10 Disposition of Stock.....................................9
ARTICLE VII - STOCK AWARDS................................................10
7.01 Award...................................................10
7.02 Vesting.................................................10
7.03 Performance Objectives..................................10
7.04 Employee Status.........................................11
7.05 Shareholder Rights......................................11
ARTICLE VIII - PERFORMANCE SHARE AWARDS...................................11
8.01 Award...................................................12
8.02 Earning the Award.......................................12
8.03 Payment.................................................12
8.04 Shareholder Rights......................................13
8.05 Nontransferability......................................13
8.06 Transferable Performance Shares.........................13
8.07 Employee Status.........................................14
ARTICLE IX - DEFERRED STOCK UNITS.........................................14
9.01 Elections to Receive Deferred Stock Units in Lieu of
Compensation............................................14
9.02 Terms and Conditions....................................14
9.03 Form of Payment.........................................14
9.04 Shareholder Rights......................................15
9.05 Nontransferability......................................15
ARTICLE X - DIVIDEND EQUIVALENT RIGHTS....................................15
10.01 Awards..................................................15
10.02 Payment.................................................16
10.03 Shareholder Rights......................................16
10.04 Nontransferability......................................16
ARTICLE XI - CHANGE IN CONTROL PROVISIONS.................................17
ARTICLE XII - ADJUSTMENT UPON CHANGE IN COMMON STOCK......................19
12.01 Adjustments.............................................19
12.02 Mergers or Other Corporate Transaction..................20
ARTICLE XIII - COMPLIANCE WITH LAW........................................21
ARTICLE XIV - GENERAL PROVISIONS..........................................22
14.01 Effect on Employment and Service........................22
14.02 Unfunded Plan...........................................22
14.03 Rules of Construction...................................23
ARTICLE XV - AMENDMENT....................................................23
ARTICLE XVI - DURATION OF PLAN............................................23
ARTICLE XVII - EFFECTIVE DATE OF PLAN.....................................23
</TABLE>
(ii)
<PAGE>
PATRIOT AMERICAN HOSPITALITY, INC.
1995 INCENTIVE PLAN
AS AMENDED AND RESTATED
AS OF MARCH 24, 1997
1. - DEFINITIONS
----------------
1.01 Administrator means the Committee and any delegate of the
-------------
Committee that is appointed in accordance with Article III.
1.02 Affiliate means any "subsidiary" or "parent" corporation (within
---------
the meaning of Section 424 of the Code) of the Company.
1.03 Agreement means a written agreement (including any amendment or
---------
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Stock Award, an award of Performance Shares or an award of
Deferred Stock Units, Options or Dividend Equivalent Right granted to such
Participant.
1.04 Board means the Board of Directors of the Company.
-----
1.05 Code means the Internal Revenue Code of 1986, and any
----
amendments thereto.
1.06 Committee means the Compensation Committee of the Board. Each
---------
member of the Committee shall be an "outside director" within the meaning of
Section 162(m) of the Code and the regulations promulgated thereunder and a
"non-employee director" within the meaning of Rule 16b-3(b)(3)(i) promulgated
under the Exchange Act.
1.07 Common Stock means the common stock of the Company.
------------
1.08 Company means Patriot American Hospitality, Inc.
-------
1.09 Deferred Stock Unit means an award granted pursuant to Article IX
-------------------
which entitles the holder to defer receipt of current cash compensation in
exchange for a right to receive shares of Common Stock in the future at the
price or prices set forth in the Agreement.
1.10 Dividend Equivalent Right means an award granted pursuant to
-------------------------
Article X which entitles the holder to receive compensation based on cash
dividends payable by the Company with respect to its Common Stock.
1
<PAGE>
1.11 Exchange Act means the Securities Exchange Act of 1934, as amended
------------
and as in effect on the date of this Agreement.
1.12 Fair Market Value means, on any given date, the highest closing
-----------------
price of a share of Common Stock reported on the New York Stock Exchange. In any
case, if no sale of Common Stock is made on the New York Stock Exchange on that
date, then Fair Market Value shall be determined as of the next preceding day on
which there was a sale.
1.13 Option means a stock option that entitles the holder to purchase
------
from the Company a stated number of shares of Common Stock at the price set
forth in an Agreement.
1.14 Participant means an employee of the Company or an Affiliate, a
-----------
member of the Board, or an individual whose efforts contribute to the
performance or success of the Company or an Affiliate, who satisfies the
requirements of Article IV and is selected by the Administrator to receive a
Stock Award, an Option, an award of Performance Shares, Dividend Equivalent
Right or Deferred Stock Units or a combination thereof.
1.15 Performance Shares means an award, in the amount determined by the
------------------
Administrator and specified in an Agreement, stated with reference to a
specified number of shares of Common Stock, that entitles the holder to receive
a payment for each specified share equal to the Fair Market Value of Common
Stock on the date of payment.
1.16 Plan means the Patriot American Hospitality, Inc. 1995 Incentive
----
Plan.
1.17 Stock Award means Common Stock awarded to a Participant under
-----------
Article VII.
1.18 Ten Percent Shareholder means any individual owning more than ten
-----------------------
percent (10%) of the total combined voting power of all classes of stock of the
Company or of an Affiliate. An individual shall be considered to own any voting
stock owned (directly or indirectly) by or for his brothers, sisters, spouse,
ancestors or lineal descendants and shall be considered to own proportionately
any voting stock owned (directly or indirectly) by or for a corporation,
partnership, estate or trust of which such individual is a shareholder, partner
or beneficiary.
2
<PAGE>
2. - PURPOSES
-------------
The Plan is intended to assist the Company and its Affiliates in
recruiting and retaining individuals with ability and initiative by enabling
such persons to participate in the future success of the Company and its
Affiliates and to associate their interests with those of the Company and its
shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and Options
not so qualifying, and the grant of Stock Awards, Performance Shares, Deferred
Stock Units and Dividend Equivalent Rights. No Option that is intended to be an
incentive stock option shall be invalid for failure to qualify as an incentive
stock option. The proceeds received by the Company from the sale of Common Stock
pursuant to this Plan shall be used for general corporate purposes.
3. - ADMINISTRATION
-------------------
The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Stock Awards, Performance Shares, Options,
Deferred Stock Units and Dividend Equivalent Rights upon such terms (not
inconsistent with the provisions of this Plan) as the Administrator may consider
appropriate. Such terms may include conditions (in addition to those contained
in this Plan) on the exercisability of all or any part of an Option or on the
transferability or forfeitability of any award. Notwithstanding any such
conditions, the Administrator may, in its discretion, accelerate the time at
which any Option may be exercised, or the time at which a Stock Award may become
transferable or nonforfeitable or the time at which Performance Shares, Deferred
Stock Units and Dividend Equivalent Rights may be settled. In addition, the
Administrator shall have complete authority to interpret all provisions of this
Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of this Plan.
The express grant in the Plan of any specific power to the Administrator shall
not be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any act done
in good faith with respect to this Plan or any Agreement or award. All expenses
of administering this Plan shall be borne by the Company.
3
<PAGE>
The Committee, in its discretion, may delegate to one or more officers
of the Company all or part of the Committee's authority and duties with respect
to grants and awards to individuals who are not "covered employees" within the
meaning of Section 162(m) of the Code or subject to the reporting and other
provisions of Section 16 of the Exchange Act. The Committee may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Committee's delegate or delegates that were consistent with
the terms of the Plan.
4. - ELIGIBILITY
----------------
Any employee of the Company or an Affiliate (including a corporation
that becomes an Affiliate after the adoption of this Plan) or a person whose
efforts contribute to the performance or success of the Company or an Affiliate
(including a corporation that becomes an Affiliate after the adoption of this
Plan) is eligible to participate in this Plan if the Administrator, in its sole
discretion, determines that such person has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company or
an Affiliate. Directors of the Company are also eligible to participate in this
Plan.
5. - STOCK SUBJECT TO PLAN
--------------------------
5.01 Shares Issued. Upon the award of shares of Common Stock pursuant
-------------
to a Stock Award, the Company may issue shares of Common Stock from its
authorized but unissued Common Stock. Upon the exercise of an Option, the
Company may deliver to the Participant (or the Participant's broker if the
Participant so directs), shares of Common Stock from its authorized but unissued
Common Stock.
5.02 Aggregate Limit. The maximum aggregate number of shares of Common
---------------
Stock that may be issued under this Plan is increased from 2,000,000 shares to
5,000,000 shares. The maximum aggregate number of shares that may be issued
under this Plan shall be subject to adjustment as provided in Article XII.
5.03 Reallocation of Shares. If an Option is terminated, in whole or in
----------------------
part, for any reason other than its exercise, the number of shares of Common
Stock allocated to the Option or portion thereof may be reallocated to other
awards to be granted under this Plan. If an award of Deferred Stock Units is
terminated, in whole or in part, for any reason other than its settlement, the
number of shares of Common Stock underlying such award or portion thereof may be
reallocated to other awards to be granted under this Plan. If an award
4
<PAGE>
of Performance Shares or Stock Award is terminated, in whole or in part, the
number of shares of Common Stock allocated to the Performance Share award, Stock
Award or portion thereof may be reallocated to other awards to be granted under
this Plan.
6. - OPTIONS
------------
6.01 Award. In accordance with the provisions of Article IV, the
-----
Administrator will designate each individual to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by such awards;
provided, however, that no individual may be granted Options in any calendar
year covering more than 2,600,000 shares of Common Stock.
6.02 Option Price. The price per share for Common Stock purchased on
------------
the exercise of an Option shall be determined by the Administrator on the date
of grant; provided, however, that the price per share for Common Stock purchased
on the exercise of any Option shall not be less than the Fair Market Value on
the date of grant or, with respect to Options granted in connection with the
initial employment of an individual following the effective date of the
registration statement relating to the Company's initial public offering of
Common Stock, eighty-five percent (85%) of the Fair Market Value on the date the
Option is granted. Notwithstanding the preceding sentence, the price per share
for Common Stock purchased on the exercise of any Option that is an incentive
stock option shall not be less than the Fair Market Value on the date the Option
is granted or, in the case of an incentive stock option granted to an individual
who is a Ten Percent Shareholder on the date such option is granted, shall not
be less than one hundred ten percent (110%) of the Fair Market Value on the date
the Option is granted.
6.03 Maximum Option Period. The maximum period in which an Option may
---------------------
be exercised shall be determined by the Administrator on the date of grant,
except that no Option that is an incentive stock option shall be exercisable
after the expiration of ten years from the date such Option was granted. In the
case of an incentive stock option that is granted to a Participant who is a Ten
Percent Shareholder on the date of grant, such option shall not be exercisable
after the expiration of five years from the date of grant. The terms of any
Option that is an incentive stock option may provide that it is exercisable for
a period less than such maximum period.
5
<PAGE>
6.04 Nontransferability. Except as provided in Section 6.05, each
------------------
Option granted under this Plan shall be nontransferable except by will or by the
laws of descent and distribution. During the lifetime of the Participant to whom
the Option is granted, the Option may be exercised only by the Participant. No
right or interest of a Participant in any Option shall be liable for, or subject
to, any lien, obligation, or liability of such Participant.
6.05 Transferable Options. Section 6.04 to the contrary
--------------------
notwithstanding, if the Agreement provides, an Option that is not an incentive
stock option may be transferred by a Participant to the Participant's children,
grandchildren, spouse, one or more trusts for the benefit of such family members
or a partnership in which such family members are the only partners or a
charitable organization; provided, however, that the Participant may not receive
any consideration for the transfer. In addition to transfers described in the
preceding sentence the Administrator may grant Options that are not incentive
stock options that are transferable on other terms and conditions as may be
permitted under Securities Exchange Commission Rule 16b-3 as in effect from time
to time. The holder of an Option transferred pursuant to this section shall be
bound by the same terms and conditions that governed the Option during the
period that it was held by the Participant.
6.06 Employee Status. For purposes of determining the applicability of
---------------
Section 422 of the Code (relating to incentive stock options), or in the event
that the terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Administrator may decide to what extent leaves of absence for governmental
or military service, illness, temporary disability, or other reasons shall not
be deemed interruptions of continuous employment.
6.07 Exercise. Subject to the provisions of this Plan and the
--------
applicable Agreement, an Option may be exercised in whole at any time or in part
from time to time at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that incentive stock options
(granted under the Plan and all plans of the Company and its Affiliates) may not
be first exercisable in a calendar year for stock having a Fair Market Value
(determined as of the date an Option is granted) exceeding $100,000. An Option
granted under this Plan may be exercised with respect to any number of whole
shares less than the full number for which the Option could be exercised. A
partial exercise of an Option shall not affect the right
6
<PAGE>
to exercise the Option from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the Option.
6.08 Payment. Unless otherwise provided by the Agreement, payment of
-------
the Option price shall be made in cash or a cash equivalent acceptable to the
Administrator. If the Agreement provides, payment of all or part of the option
price may be made by surrendering shares of Common Stock to the Company that are
not then subject to restrictions under any Company plan and that have been
beneficially owned by the Participant for at least six months. If Common Stock
is used to pay all or part of the Option price, the sum of the cash and cash
equivalent and the Fair Market Value (determined as of the day preceding the
date of exercise) of the shares surrendered must not be less than the option
price of the shares for which the Option is being exercised. If the Agreement
provides, payment of all or part of the option price may be made by the
Participant delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the Company to pay the
purchase price; provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements
as the Administrator shall prescribe as a condition of such payment procedure.
6.09 Shareholder Rights. No Participant shall have any rights as a
------------------
shareholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.10 Disposition of Stock. A Participant shall notify the Company of
--------------------
any sale or other disposition of Common Stock acquired pursuant to an Option
that was an incentive stock option if such sale or disposition occurs (i) within
two years of the grant of an Option or (ii) within one year of the issuance of
the Common Stock to the Participant. Such notice shall be in writing and
directed to the Secretary of the Company.
7. - STOCK AWARDS
-----------------
7.01 Award. In accordance with the provisions of Article IV, the
-----
Administrator will designate each individual to whom a Stock Award is to be made
and will specify the number of shares of Common Stock covered by such awards.
7
<PAGE>
7.02 Vesting. The Administrator, on the date of the award, may
-------
prescribe that a Participant's rights in the Stock Award shall be forfeitable or
otherwise restricted for a period of time or subject to such conditions as may
be set forth in the Agreement. If imposed, the period of restriction shall be at
least three years; provided, however, that the minimum period of restriction
shall be at least one year in the case of a Stock Award that will become
transferable and nonforfeitable on account of the satisfaction of performance
objectives prescribed by the Administrator. The Administrator may also provide
in the Agreement that a Stock Award is not subject to any restrictions.
7.03 Performance Objectives. In accordance with Section 7.02, the
----------------------
Administrator may prescribe that Stock Awards will become vested or transferable
or both based on objectives stated with respect to the Company's, an Affiliate's
or an operating unit's return on equity, funds from operations, cash available
for distribution, earnings per share, total earnings, earnings growth, return on
capital, return on assets, or Fair Market Value of the Common Stock. If the
Administrator, on the date of award, prescribes that a Stock Award shall become
nonforfeitable and transferable only upon the attainment of performance
objectives stated with respect to one or more of the foregoing criteria, the
shares subject to such Stock Award shall become nonforfeitable and transferable
only to the extent that the Administrator certifies that such objectives have
been achieved.
7.04 Employee Status. In the event that the terms of any Stock Award
---------------
provide that shares may become transferable and nonforfeitable thereunder only
after completion of a specified period of employment, the Administrator may
decide in each case to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
7.05 Shareholder Rights. Prior to their forfeiture (in accordance with
------------------
the applicable Agreement and while the shares of Common Stock granted pursuant
to the Stock Award may be forfeited or are nontransferable), a Participant will
have all rights of a shareholder with respect to a Stock Award, including the
right to receive dividends and vote the shares; provided, however, that during
such period (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to
a Stock Award, (ii) the Company shall retain custody of the certificates
evidencing shares of
8
<PAGE>
Common Stock granted pursuant to a Stock Award, and (iii) the Participant will
deliver to the Company a stock power, endorsed in blank, with respect to each
Stock Award. The limitations set forth in the preceding sentence shall not apply
after the shares of Common Stock granted under the Stock Award are transferable
and are no longer forfeitable.
8. - PERFORMANCE SHARE AWARDS
-----------------------------
8.01 Award. In accordance with the provisions of Article IV, the
-----
Administrator will designate each individual to whom an award of Performance
Shares is to be made and will specify the number of shares of Common Stock
covered by such awards.
8.02 Earning the Award. The Administrator, on the date of the grant of
-----------------
an award, may prescribe that the Performance Shares, or portion thereof, will be
earned, and the Participant will be entitled to receive payment pursuant to the
award of Performance Shares only upon the satisfaction of certain requirements
or the attainment of certain objectives. By way of example and not of
limitation, the restrictions may provide that Performance Shares will be
forfeited without payment if the Participant separates from the service of the
Company and its Related Entities before the expiration of a stated term or
unless the Company, an Affiliate or an operating unit achieves objectives stated
with reference to the Company's an Affiliate's or an operating unit's return on
equity, funds from operations, cash available for distribution, earnings per
share, total earnings, earnings growth, return on capital, return on assets or
Fair Market Value of the Common Stock. If the Administrator, on the date of
award, prescribes that no payments will be made with respect to Performance
Shares unless performance objectives stated with respect to the foregoing
criteria are attained, no such payment will be made unless, and then only to the
extent that, the Administrator certifies that such objectives have been
achieved.
8.03 Payment. In the discretion of the Administrator, the amount
-------
payable when an award of Performance Shares is earned may be settled in cash, by
the issuance of Common Stock or a combination of cash and Common Stock. A
fractional share shall not be deliverable when an award of Performance Shares is
earned, but a cash payment will be made in lieu thereof.
9
<PAGE>
8.04 Shareholder Rights. No Participant shall, as a result of receiving
------------------
an award of Performance Shares, have any rights as a shareholder until and to
the extent that the award of Performance Shares is earned and settled by the
issuance of Common Stock. After an award of Performance Shares is earned, if
settled completely or partially in Common Stock, a Participant will have all the
rights of a shareholder with respect to such Common Stock.
8.05 Nontransferability. Except as provided in Section 8.06,
------------------
Performance Shares granted under this Plan shall be nontransferable except by
will or by the laws of descent and distribution. No right or interest of a
Participant in any Performance Shares shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.
8.06 Transferable Performance Shares. Section 8.05 to the contrary
-------------------------------
notwithstanding, if the Agreement provides, an award of Performance Shares may
be transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners or a charitable
organization; provided, however, that the Participant may not receive any
consideration for the transfer. In addition to transfers described in the
preceding sentence the Administrator may grant Performance Shares that are
transferable on other terms and conditions as may be permitted under Securities
Exchange Commission Rule 16b-3 as in effect from time to time. The holder of
Performance Shares transferred pursuant to this section shall be bound by the
same terms and conditions that governed the Performance Shares during the period
that they were held by the Participant.
8.07 Employee Status. In the event that the terms of any Performance
---------------
Share award provides that no payment will be made unless the Participant
completes a stated period of employment, the Administrator may decide to what
extent leaves of absence for government or military service, illness, temporary
disability, or other reasons shall not be deemed interruptions of continuous
employment.
9. - DEFERRED STOCK UNITS
-------------------------
9.01 Elections to Receive Deferred Stock Units in Lieu of Compensation.
-----------------------------------------------------------------
Upon the request of a Participant and with the consent of the Administrator,
each such Participant may, pursuant to an advance written election delivered to
the Company no later than the date specified by the Administrator, elect to
defer receipt
10
<PAGE>
of all or a portion of the cash compensation otherwise due to such Participant.
The amount of the deferred compensation shall be converted to Deferred Stock
Units at the Fair Market Value of the Common Stock (or such other lower price
determined by the Administrator) on the date the cash compensation would
otherwise be paid.
9.02 Terms and Conditions. At the time the Participant makes a deferred
--------------------
compensation election, the Administrator shall direct the Company to enter into
an Agreement with the Participant which sets forth the terms and conditions of
deferral, including the timing of payment and any vesting schedule. During the
term of deferral, the Participant's Deferred Stock Units will be credited with
Dividend Equivalent Rights.
9.03 Form of Payment. Deferred Stock Units shall be settled in shares
---------------
of Common Stock, in a single installment or installments. A fractional share of
Deferred Stock Unit shall be settled in cash.
9.04 Shareholder Rights. No Participant shall, as a result of receiving
------------------
Deferred Stock Units, have any rights as a shareholder until and to the extent
that the Deferred Stock Units are settled by the issuance of Common Stock. After
the Deferred Stock Units are settled in Common Stock, a Participant will have
all the rights of a shareholder with respect to such Common Stock.
9.05 Nontransferability. Deferred Stock Units shall be nontransferable
------------------
except by will or by the laws of descent and distribution. No right or interest
of a Participant in any Deferred Stock Units shall be liable for, or subject to,
any lien, obligation, or liability of such Participant.
10. - DIVIDEND EQUIVALENT RIGHTS
--------------------------------
10.01 Awards. In accordance with the provisions of Article IV, the
------
Administrator will designate each individual to whom an award of Dividend
Equivalent Rights is to be made. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Common Stock specified in the Dividend Equivalent Right
(or other award to which it relates) if such shares were held by the recipient.
A Dividend Equivalent Right may be granted hereunder to any Participant as a
component of another award or as a freestanding award. The terms and conditions
of Dividend Equivalent Rights shall be specified in the grant. Dividend
equivalents credited to the holder of a Dividend Equivalent Right may be paid
currently or may be deemed to be reinvested in additional shares of Common
Stock, which
11
<PAGE>
may thereafter accrue additional equivalents. Any such reinvestment shall be at
Fair Market Value on the date of reinvestment or such other price as may then
apply under a dividend reinvestment plan sponsored by the Company, if any. A
Dividend Equivalent Right granted as a component of another award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement,
or payment of, or lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the
same conditions as such other award. A Dividend Equivalent Right granted as a
component of another award may also contain terms and conditions different from
such other award.
10.02 Payment. In the discretion of the Administrator and as provided
-------
in the Agreement, Dividend Equivalent Rights may be settled in cash or shares of
Common Stock or a combination thereof, in a single installment or installments.
10.03 Shareholder Rights. No Participant shall, as a result of
------------------
receiving an award of Dividend Equivalent Rights, have any rights as a
shareholder until and to the extent that the award of Dividend Equivalent Rights
is earned and settled by the issuance of Common Stock. After an award of
Dividend Equivalent Rights is earned, if settled completely or partially in
Common Stock, a Participant will have all the rights of a shareholder with
respect to such Common Stock.
10.04 Nontransferability. Unless otherwise provided in the Agreement,
------------------
Dividend Equivalent Rights granted under this Plan shall be nontransferable
except by will or by the laws of descent and distribution. No right or interest
of a Participant in any Dividend Equivalent Right shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
11. - CHANGE IN CONTROL PROVISIONS
----------------------------------
(a) A "Change in Control" with respect to the Company shall be deemed
to have taken place if any of the following events occurs:
(i) Any person, as that term is used in Section 13(d) and
Section 14(d)(2) of the Exchange Act, becomes, is discovered to be or files a
report on Schedule 13D or 14D-1 (or any successor schedule, form or report)
disclosing that such person is, a beneficial owner (as defined in Rule 13d-3
under the Exchange Act or any successor rule or regulation), directly or
indirectly, of securities of the Company
12
<PAGE>
representing 20% or more of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election of directors
(unless such person is known to be already such a beneficial owner on October
25, 1996);
(ii) Individuals who, as of October 25, 1996, constitute the
Board of Directors of the Company cease for any reason to constitute at least a
majority of the Board of Directors of the Company, unless any such change is
approved by a unanimous vote of the members of the Board of Directors of the
Company in office immediately prior to such cessation;
(iii) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, or securities of the Company
are exchanged for securities of another corporation or other legal person, and
immediately after such merger, consolidation, reorganization or exchange less
than a majority of the combined voting power of the then-outstanding securities
of such corporation or person immediately after such transaction are held,
directly or indirectly, in the aggregate by the holders of securities entitled
to vote generally in the election of directors of the Company immediately prior
to such transaction;
(iv) The Company in any transaction or series of related
transactions, sells all or substantially all of its assets to any other
corporation or other legal person and less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such sale or sales are held, directly or indirectly, in the
aggregate by the holders of securities entitled to vote generally in the
election of directors of the Company immediately prior to such sale;
(v) The Company and its affiliates shall sell or dispose of
(in a single transaction or series of related transactions) business operations
that generated two-thirds of the consolidation revenues (determined on the basis
of the Company's four most recently completed fiscal quarters for which reports
have been filed under the Exchange Act) of the Company and its subsidiaries
immediately prior thereto;
(vi) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any
13
<PAGE>
successor schedule, form or report or item therein) that a change in control of
the Company has or may have occurred or will or may occur in the future pursuant
to any then-existing contract or transaction; or
(vii) Any other transaction or series of related transactions
occur that have substantially the effect of the transactions specified in any of
the preceding clauses in this sentence.
Notwithstanding the provisions of Section (a)(i) or (a)(iv) hereof,
unless otherwise determined in a specific case by majority vote of the Board of
Directors of the Company, a Change in Control shall not be deemed to have
occurred for purposes of this Plan solely because (i) the Company, (ii) an
entity in which the Company directly or indirectly beneficially owns 50% or more
of the voting securities or (iii) any Company- sponsored employee stock
ownership plan, or any other employee benefit plan of the Company, either files
or becomes obligated to file a report or a proxy statement under or in response
to Schedule 13D, Schedule 14D, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item thereon) under the Exchange Act, disclosing
beneficial ownership by it of shares of stock of the Company, or because the
Company reports that a Change in Control of the Company has or may have occurred
or will or may occur in the future by reason of such beneficial ownership.
(b) Upon the occurrence of a Change in Control, unless otherwise
provided in the applicable Agreement, each Participant shall have immediate
vesting of, and the immediate right to, exercise all outstanding Options, and
any risk of forfeiture included in any Stock Award, Dividend Equivalent Rights
and Deferred Stock Units shall lapse.
12. - ADJUSTMENT UPON CHANGE IN COMMON STOCK
--------------------------------------------
12.01 Adjustments. The maximum number of shares as to which awards may
-----------
be granted under this Plan, the terms of outstanding awards and the per
individual limitations on the number of shares for which Options, Stock Awards
and Performance Shares may be granted, shall be adjusted as the Committee shall
determine to be equitably required in the event that (a) the Company (i) effects
one or more stock dividends, stock split-ups, subdivisions or consolidations of
shares or (ii) engages in a transaction to which Section 424 of the Code applies
or (b) there occurs any other event which, in the judgment of the Committee
necessitates such action. Any determination made under this Article XII by the
Committee shall be final and conclusive.
14
<PAGE>
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
maximum number of shares as to which awards may be granted, the per individual
limitations on the number of shares for which Options, Stock Awards and
Performance Shares may be granted or the terms of outstanding awards.
The Committee may grant awards in substitution for performance shares,
phantom shares, stock awards, stock options, stock appreciation rights, or
similar awards held by an individual who becomes an employee of the Company or
an Affiliate in connection with a transaction described in the first paragraph
of this Section 12.01. Notwithstanding any provision of the Plan (other than the
limitation of Section 5.02), the terms of such substituted award shall be as the
Committee, in its discretion, determines is appropriate.
12.02 Mergers or Other Corporate Transaction. Upon consummation of a
--------------------------------------
consolidation or merger or sale of all or substantially all of the assets of the
Company in which outstanding shares of Common Stock are exchanged for
securities, cash or other property of an unrelated corporation or business
entity or in the event of a liquidation of the Company (in each case, a
"Transaction"), the Board, or the board of directors of any corporation assuming
the obligations of the Company, may, in its discretion, take any one or more of
the following actions, as to outstanding Options: (i) provide that such Options
shall be assumed or equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), (ii) upon written notice to
the optionees, provide that all unexercised Options will terminate immediately
prior to the consummation of the Transaction unless exercised by the optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the optionees equal to the difference between (A) the value (as
determined by the Committee) of the consideration payable per share of Common
Stock pursuant to the business combination (the "Merger Price") times the number
of shares of
15
<PAGE>
Common Stock subject to such outstanding Options (to the extent then exercisable
at prices not in excess of the Merger Price) and (B) the aggregate exercise
price of all such outstanding Options in exchange for the termination of such
Options. In the event Options will terminate upon the consummation of the
Transaction, each optionee shall be permitted, within a specified period
determined by the Committee, to exercise all non-vested Options, subject to the
consummation of the Transaction.
13. - COMPLIANCE WITH LAW
AND APPROVAL OF REGULATORY BODIES
---------------------------------
No Option shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company's shares may be
listed. The Company shall have the right to rely on an opinion of its counsel as
to such compliance. Any share certificate issued to evidence Common Stock when a
Stock Award is granted or for which an Option is exercised or a Performance
Share settled may bear such legends and statements as the Administrator may deem
advisable to assure compliance with federal and state laws and regulations. No
Option shall be exercisable, no Stock Award shall be granted, no Common Stock
shall be issued, no certificate for shares shall be delivered, and no payment
shall be made under this Plan until the Company has obtained such consent or
approval as the Administrator may deem advisable from regulatory bodies having
jurisdiction over such matters.
14. - GENERAL PROVISIONS
------------------------
14.01 Effect on Employment and Service. Neither the adoption of this
--------------------------------
Plan, its operation, nor any documents describing or referring to this Plan (or
any part thereof) shall confer upon any individual any right to continue in the
employ or service of the Company or an Affiliate or in any way affect any right
and power of the Company or an Affiliate to terminate the employment or service
of any individual at any time with or without assigning a reason therefor.
14.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall
-------------
be unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under this
16
<PAGE>
Plan. Any liability of the Company to any person with respect to any grant under
this Plan shall be based solely upon any contractual obligations that may be
created pursuant to this Plan. No such obligation of the Company shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of the
Company.
14.03 Rules of Construction. Headings are given to the articles and
---------------------
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
15. - AMENDMENT
---------------
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan, (ii) the amendment changes the class of
individuals eligible to become Participants or (iii) the amendment materially
increases the benefits that may be provided under the Plan. No amendment shall,
without a Participant's consent, adversely affect any rights of such Participant
under any award outstanding at the time such amendment is made.
16. - DURATION OF PLAN
----------------------
No award may be granted under this Plan with respect to the reserved
shares of Common Stock added to the Plan as a result of the amendment and
restatement of this Plan more than ten years after the date this amended and
restated Plan is adopted by the Board. Awards granted before that date shall
remain valid in accordance with their terms.
17. - EFFECTIVE DATE OF PLAN
----------------------------
Options, Deferred Stock Units, Dividend Equivalent Rights and
Performance Share Awards may be granted under this amended and restated Plan
upon its adoption by the Board, provided that no such award shall be effective
or exercisable unless this Plan is approved by the holders of a majority of the
votes present or represented and entitled to be cast by the Company's
shareholders, voting either in person or by proxy, at a duly held shareholders'
meeting. Stock Awards may be granted under this Plan upon the later of its
adoption by the Board or its approval by shareholders in accordance with the
preceding sentence.
17
<PAGE>
Exhibit 4.2
PATRIOT AMERICAN HOSPITALITY, INC.
NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
<PAGE>
1. DEFINITIONS
-----------
1.01 Date means the date of the first Board meeting after each annual
----
meeting of the Company's shareholders beginning with the annual meeting of
shareholders in 1996.
1.02 Board means the Board of Trustees of the Company.
-----
1.03 Committee means the committee appointed by the Board to administer
---------
the Plan.
1.04 Common Stock means the common stock of the Company.
------
1.05 Company means Patriot American Hospitality, Inc.
-------
1.06 Fair Market Value means, on any given date, the current fair market
-----------------
value of a share of Common Stock as determined pursuant to subsection (a) or (b)
below.
(a) The Fair Market Value on the First Award Date for Founding
Directors shall be the initial public offering price of the Common Stock.
(b) Except as provided in subsection (a), Fair Market Value shall
be determined as follows: if the Common Stock is not listed on an established
stock exchange, Fair Market Value shall be the average of the final bid and
asked quotations on the over-the-counter market in which the Common Stock is
traded or, if applicable, the reported "closing" price of a share of Common
Stock in the New York over-the-counter market as reported by the National
Association of Securities Dealers, Inc. If the Common Stock is listed on an
established stock exchange or exchanges, Fair Market Value shall be deemed to be
the highest closing price of a share of Common Stock reported on that stock
exchange or exchanges. In any case, if no sale of Common Stock is made on any
stock exchange or over-the-counter market on that date, then Fair Market Value
shall be determined as of the next preceding day on which there was a sale.
1.07 First Award Date means (i) with respect to Founding Directors, the
----------------
date that the registration statement relating to the Company's initial public
offering of Common Stock is declared effective by the Securities and Exchange
Commission, and (ii) with respect to Non-Founding Directors, the date of the
meeting of the Company's shareholders at which the Non-Founding Director is
first elected to the Board or the date of the Board meeting at which a Non-
Founding Director is first elected to the Board to fill a vacancy on the Board.
<PAGE>
1.08 Founding Director means a Participant who is a member of the Board
-----------------
on the date that the registration statement relating to the Company's initial
public offering of Common Stock is declared effective by the Securities and
Exchange Commission.
1.09 Non-Founding Director means a Participant who is not a Founding
---------------------
Director.
1.10 Option means a stock option that entitles the holder to purchase
------
shares of Common Stock from the Company on the terms set forth in Article IV of
this Plan.
1.11 Participant means a member of the Board who, on the First Award Date
-----------
or applicable Award Date, is not an employee or officer of the Company or any
"subsidiary" or "parent" corporation of the Company within the meaning of
Section 424 of the Internal Revenue Code and who is not a member of the
Committee.
1.12 Plan means the Patriot American Hospitality, Inc. Non-Employee
----
Director's Incentive Plan.
2. PURPOSES
--------
The Plan is intended to (i) assist the Company in recruiting and retaining
non-employee directors and (ii) promote a greater identity of interest between
Participants and shareholders by enabling Participants to participate in the
Company's future success.
3. ADMINISTRATION
--------------
The Plan shall be administered by the Committee. The Committee shall have
authority to grant Options and award shares of Common Stock upon such terms (not
inconsistent with the provisions of the Plan) as the Committee may consider
appropriate. In addition, the Committee shall have complete authority to
interpret all provisions of the Plan; to adopt, amend, and rescind rules and
regulations pertaining to the administration of the Plan and to make all other
determinations necessary or advisable for the administration of the Plan. The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. Any decision
made, or action taken, by the Committee in connection with the administration of
the Plan shall be final and conclusive. No member of the Committee shall be
liable for any
2
<PAGE>
act done in good faith with respect to the Plan. All expenses of administering
the Plan shall be borne by the Company.
4. OPTIONS
-------
4.01 Grant of Options. Each Participant shall be granted an Option for
----------------
7,500 shares of Common Stock on the applicable First Award Date. Each
Participant shall be granted an Option for 2,500 shares on each Award Date.
Notwithstanding the preceding sentences, no Participant may be granted Options
under this Plan for more than 17,500 shares of Common Stock. All Options shall
be evidenced by Agreements that shall be subject to the applicable provisions of
this Plan and to such other provisions as the Committee may adopt.
4.02 Exercise of Options. Subject to the provisions of Article VI, all
-------------------
Options granted under the Plan shall be immediately exercisable as of the date
of grant for all or part of the shares of Common Stock subject to the Option.
Options granted under the plan may be exercised after the Participant's death by
the Participant's estate or the person or persons or entity or entities that
succeed to Participant's rights under the Option by will or the laws of descent
and distribution.
4.03 Option Price. The price per share of Common Stock purchased on the
------------
exercise of an Option shall be the Fair Market Value on the date that the Option
is granted.
4.04 Maximum Option Period. The maximum period during which an Option may
---------------------
be exercised shall be ten years from the date of grant.
4.05 Payment of Option Price. Payment of the Option price shall be made
-----------------------
in cash, cash equivalent acceptable to the Committee, by the surrender of shares
of Common Stock, or a combination thereof. If shares of Common Stock are
surrendered in payment of the Option price, the shares surrendered must have an
aggregate Fair Market Value (determined as of the day preceding the exercise
date) that, together with any cash or cash equivalent paid, is not less than the
Option price for the number of shares of Common Stock for which this Option is
being exercised.
4.06 Nontransferability. Each Option granted under this Plan shall be
------------------
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom an Option is
3
<PAGE>
granted, the Option may be exercised only by the Participant. No right or
interest of a Participant in any Option shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.
4.07 Shareholder Rights. No Participant shall have any rights as a
------------------
shareholder with respect to shares of Common Stock subject to his or her Option
until the date of exercise of such Option.
4.08 Shares Subject to Options. Upon the exercise of any Option, the
-------------------------
Company may deliver to the Participant (or the Participant's broker if the
Participant so directs), shares of Common Stock from its previously authorized
but unissued Common Stock.
5. SHARE AWARDS
------------
5.01 Eligibility. Each Participant will be awarded shuts of Common Stock
-----------
on each Award Date. The number of shares of Common Stock issued to each
Participant in accordance with the preceding sentence will be the number of
whole shares that has an aggregate Fair market Value on the Award Date that as
nearly as possible equals $6,250. Shares of Common Stock will be awarded to each
Founding Director (on the date that the registration statement relating to the
Company's initial public offering of Common Stock is declared effective by the
Securities and Exchange Commission) and to each member of the Board (i) who is
not an employee of the Company or any "subsidiary" or "parent" corporation of
the Company within the meaning of Section 424 of the Internal Revenue Code, (ii)
who is not a member of the Committee and (iii) who is first elected to the Board
to fill a vacancy on the Board other than at the regularly scheduled annual
meeting of the Company's shareholders (on the date that he becomes a member of
the Board). The number of shares issued in accordance with the preceding
sentence will be the number of whole shares that have an aggregate Fair Market
Value on the date of award that as nearly as possible equals the product of
$6,250 and a fraction, the numerator of which is the number of full months
preceding the next Award Date and the denominator of which is twelve.
5.02 Vesting. Shares of Common Stock issued under Section 5.1 shall be
-------
immediately and fully vested.
4
<PAGE>
5.03 Shareholder Rights. A member of the Board who is issued shares of
------------------
Common Stock under Section 5.1. will have the right to vote all such shares and
to receive all dividends thereon and shall have all the rights of a shareholder
of the Company with respect to such shares.
5.04 Shares Subject to Awards. Upon the award of shares of Common Stock
------------------------
in accordance with this Article V, the Company may issue shares from its
previously authorized but unissued shares.
6. ADJUSTMENT UPON CHANGE IN COMMON STOCK
--------------------------------------
The provisions of this Plan and the terms of outstanding Options shall be
revised as the Committee shall determine to be equitably required in the event
that (a) the Company (i) effects one or more stock dividends, stock split-ups,
subdivisions or consolidation of shares or (ii) engages in a transaction
described in Section 424(a) of the Internal Revenue Code or (b) there occurs any
other event which, in the judgment of the Committee, necessitates such action.
Any determination made under this Article VI by the Committee shall be final and
conclusive.
The issuance by the Company of shares of any class, or securities
convertible into shares of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares of obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the provisions of
this Plan or the terms of outstanding Options.
7. COMPLIANCE WITH LAW AND
-----------------------
APPROVAL OF REGULATORY BODIES
-----------------------------
No Common Stock shall be issued and no certificates for shares of Common
Stock shall be delivered under the Plan except in compliance with all applicable
federal and state laws and regulations, any listing agreement to which the
Company is a party, and the rules of all domestic stock exchanges on which the
Company's Common Stock may be listed. The Company shall have the right to rely
on an opinion of its counsel as to such compliance. Any certificate issued to
evidence Common Stock issued upon the exercise of an Option granted under the
Plan may bear such legends and statements as the Committee may deem advisable to
assure compliance with federal and state laws and regulations. No Common Stock
shall be issued and no certificate for shares of Common Stock shall be delivered
upon the exercise of an Option granted under the Plan
5
<PAGE>
until the Company has obtained such consent or approval as the Committee may
deem advisable from regulatory bodies having jurisdiction over such matters.
8. GENERAL PROVISIONS
------------------
8.01 Unfunded Plan. The Plan, insofar as it provides for awards, shall be
-------------
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by awards under the Plan. Any liability of the
Company to any person with respect to any award to be made under the Plan shall
be based solely upon any contractual obligations that may be created pursuant to
the Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
8.02 Rules of Construction. Headings are given to the articles and
---------------------
sections of the Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
9. AMENDMENT
---------
The Board may amend from time to time or terminate the Plan at any time;
provided, however, that no amendment may become effective until shareholder
approval is obtained if the amendment materially (i) increases the aggregate
number of shares of Common Stock that may be issued under this Plan (other than
an adjustment authorized under Article VI), (ii) increases the benefits to be
awarded under the Plan or (iii) changes the class of individuals eligible to
become Participants. The preceding sentence to the contrary notwithstanding, the
Plan may not be amended more than once every six months other than to comport
with changes in the Internal Revenue Code, the Employee Retirement Income
Security Act of 1974, or the rules thereunder. An amendment or termination of
the Plan shall not affect a Participant's rights under awards made prior to such
action.
10. DURATION OF PLAN
----------------
No Options may be granted under the Plan after December 31, 2005. Options
granted before that date shall remain valid in accordance with their terms. No
shares of Common Stock may be awarded pursuant to Article V after the Award Date
that occurs in 2005.
6
<PAGE>
11. EFFECTIVE DATE OF PLAN
----------------------
Options may be granted under the Plan on the First Award Date, provided
that, the Plan has been approved (at a duly held shareholders' meeting at which
a quorum is present) by a majority of the votes cast by the Company's
shareholders, voting either in person or by proxy, or by unanimous consent of
the Company's shareholders.
7
<PAGE>
Exhibit 4.3
PATRIOT AMERICAN HOSPITALITY, INC.
1997 INCENTIVE PLAN
<PAGE>
PATRIOT AMERICAN HOSPITALITY, INC.
1997 INCENTIVE PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - DEFINITIONS........................................................1
1.01 Affiliate....................................................1
1.02 Agreement....................................................1
1.03 Award or Awards..............................................2
1.04 Board........................................................2
1.05 Code.........................................................2
1.06 Committee....................................................2
1.07 Deferred Paired Unit Award...................................2
1.08 Dividend Equivalent Rights...................................2
1.09 Effective Date...............................................2
1.10 Exchange Act.................................................2
1.11 Fair Market Value............................................2
1.12 Independent Director.........................................3
1.13 Operating Company............................................3
1.14 Operating Company Common Stock...............................3
1.15 Paired Share Award...........................................3
1.16 Pairing Agreement............................................3
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
1.17 Participant..................................................3
1.18 Plan.........................................................3
1.19 REIT.........................................................3
1.20 REIT Common Stock............................................3
1.21 Restricted Paired Unit Award.................................4
ARTICLE II - PURPOSES..........................................................4
ARTICLE III - ADMINISTRATION...................................................5
ARTICLE IV - ELIGIBILITY.......................................................6
ARTICLE V - PAIRED SHARES SUBJECT TO PLAN......................................7
5.01 Paired Shares Issued.........................................7
5.02 Substitute Awards............................................8
ARTICLE VI - PAIRED OPTIONS....................................................8
6.01 Award........................................................8
6.02 Paired Option Price..........................................8
6.03 Stock Options Granted to Independent Directors...............9
6.04 Maximum Paired Option Period.................................9
6.05 Nontransferability...........................................9
6.06 Transferable Paired Options.................................10
6.07 Employee Status.............................................10
6.08 Exercise....................................................10
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.09 Payment...............................................................11
6.10 Shareholder Rights....................................................12
ARTICLE VII - PAIRED SHARE AWARDS.......................................................12
ARTICLE VIII - RESTRICTED PAIRED UNIT AWARDS............................................12
8.01 Award.................................................................12
8.02 Vesting...............................................................12
8.03 Performance Objectives................................................13
8.04 Employee Status.......................................................13
8.05 Shareholder Rights....................................................14
8.06 Nontransferability....................................................14
ARTICLE IX - DEFERRED PAIRED UNIT AWARDS................................................14
9.01 Elections to Receive Deferred Paired Unit Awards in Lieu of
Compensation..........................................................14
9.02 Terms and Conditions..................................................14
9.03 Form of Payment.......................................................15
9.04 Shareholder Rights....................................................15
9.05 Nontransferability....................................................15
ARTICLE X - DIVIDEND EQUIVALENT RIGHTS..................................................15
10.01 Awards................................................................15
10.02 Payment...............................................................16
10.03 Shareholder Rights....................................................16
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
10.04 Nontransferability.........................................17
ARTICLE XI - CHANGE IN CONTROL PROVISIONS....................................17
ARTICLE XII - ADJUSTMENT UPON CHANGE IN PAIRED SHARES........................18
12.01 Adjustments................................................18
12.02 Mergers or Other Corporate Transactions....................19
ARTICLE XIII - COMPLIANCE WITH LAW...........................................20
ARTICLE XIV - GENERAL PROVISIONS.............................................21
14.01 Effect on Employment and Service...........................21
14.02 Unfunded Plan..............................................21
14.03 Rules of Construction......................................22
ARTICLE XV - AMENDMENT.......................................................22
ARTICLE XVI - TERMINATION OF PAIRING AGREEMENT...............................22
ARTICLE XVII - EFFECTIVE DATE OF PLAN........................................23
ARTICLE XVIII - GOVERNING LAW................................................23
</TABLE>
(iv)
<PAGE>
PATRIOT AMERICAN HOSPITALITY, INC.
1997 INCENTIVE PLAN
The name of the plan is the Patriot American Hospitality, Inc. 1997
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, Independent Directors and other key persons (including
consultants) of Patriot American Hospitality, Inc. (the "REIT") and its
Affiliates upon whose judgment, initiative and efforts the REIT largely depends
for the successful conduct of its business to acquire a proprietary interest in
the REIT. It is anticipated that providing such persons with a direct stake in
the REIT's welfare will assure a closer identification of their interests with
those of the REIT, thereby stimulating their efforts on the REIT's behalf and
strengthening their desire to remain with the REIT.
12. - DEFINITIONS
-----------------
12.01 Affiliate means any "subsidiary" or "parent" corporation (within
---------
the meaning of Section 424 of the Code) of the REIT or means any corporation or
other entity (other than the REIT) in any unbroken chain of corporations or
other entities beginning with the REIT if each of the corporations or entities
(other than the last corporation or entity in the unbroken chain) owns stock or
other interests possessing 50 percent or more of the economic interest or the
total combined voting power of all classes of stock or other interests in one of
the other corporations or entities in the chain.
12.02 Agreement means a written agreement (including any amendment or
---------
supplement thereto) between the REIT and a Participant specifying the terms and
conditions of an Award.
12.03 Award or Awards, except when referring to a particular category
----- ------
of grant under the Plan, shall include Paired Options, Paired Share Awards,
Restricted Paired Unit Awards, Deferred Paired Unit Awards, or awards of
Dividend Equivalent Rights.
12.04 Board means the Board of Directors of the REIT.
-----
12.05 Code means the Internal Revenue Code of 1986, and any amendments
----
thereto.
12.06 Committee means the Compensation Committee of the Board. Each
---------
member of the Committee shall be an "outside director" within the meaning of
Section 162(m) of the Code and the regulations
<PAGE>
promulgated thereunder and a "non-employee director" within the meaning of Rule
16b-3(b)(3)(i) promulgated under the Exchange Act.
12.07 Deferred Paired Unit Award means an award granted pursuant to
--------------------------
Article IX which entitles the holder to defer receipt of current cash
compensation in exchange for a right to receive Paired Shares in the future at
the price or prices set forth in the Agreement.
12.08 Dividend Equivalent Rights means an award granted pursuant to
--------------------------
Article X which entitles the holder to receive compensation based on cash
dividends and distributions payable with respect to the Paired Shares.
12.09 Effective Date means the date on which the Plan is approved by
--------------
shareholders as set forth in Article XVII.
12.10 Exchange Act means the Securities Exchange Act of 1934, as
------------
amended and as in effect on the date of this Agreement.
12.11 Fair Market Value means, on any given date, the closing price of
-----------------
a Paired Share, as reported on the New York Stock Exchange. In any case, if no
sale of Paired Shares is made on the New York Stock Exchange on that date, then
Fair Market Value shall be determined as of the next preceding day on which
there was a sale of such security.
12.12 Independent Director means a member of the Board who is not also
--------------------
an employee of the REIT or any Affiliate.
12.13 Operating Company means Patriot American Hospitality Operating
-----------------
Company.
12.14 Operating Company Common Stock means the common stock of the
------------------------------
Operating Company.
12.15 Paired Share Award means Paired Shares awarded to a Participant
------------------
under Article VII as incentive compensation or in lieu of current cash
compensation.
12.16 Pairing Agreement means the agreement entered into in February,
-----------------
1983, as amended, between the REIT (formerly named Bay Meadows Realty
Enterprises, Inc.) and Operating Company (formerly named Bay Meadows Operating
Company), which provides that all outstanding shares of REIT Common Stock and
2
<PAGE>
Operating Company Common Stock are paired on a one-for-one basis and trade as
units consisting of one share of REIT Common Stock and one share of Operating
Company Common Stock.
12.17 Participant means an employee of the REIT or an Affiliate, a
-----------
member of the Board, or an individual whose efforts contribute to the
performance or success of the REIT or an Affiliate, who satisfies the
requirements of Article IV and is selected by the Committee to receive an Award
under the Plan.
12.18 Plan means the Patriot American Hospitality, Inc. 1997 Incentive
----
Plan.
12.19 REIT means Patriot American Hospitality, Inc.
----
12.20 REIT Common Stock means the common stock of the REIT.
-----------------
12.21 Restricted Paired Unit Award means an Award granted pursuant to
----------------------------
Article VIII which entities the holder to receive a payment of Paired Shares
upon the satisfaction of the vesting restriction period or performance goals.
13. - PURPOSES
--------------
The Plan is intended to assist the REIT and its Affiliates in
recruiting and retaining individuals with ability and initiative by enabling
such persons to participate in the future success of the REIT and its
Affiliates, and to associate their interests with those of the REIT and its
shareholders. Pursuant to the Pairing Agreement, all outstanding REIT Common
Stock and Operating Company Common Stock are paired on a one-for-one basis and
trade as units consisting of one share of REIT Common Stock and one share of
Operating Company Common Stock ("Paired Shares"). Accordingly, each option to
purchase shares of REIT Common Stock ("REIT Option") shall be paired with an
option to purchase an equal number of shares of Operating Company Common Stock
(an "Operating Company Option" and each such paired REIT Option and Operating
Company Option is herein referred to as a "Paired Option"); similarly, each
other Award of shares of REIT Common Stock shall be paired with an Award of an
equal number of shares of Operating Company Common Stock.
The Plan is intended to permit the grant of Paired Options which do not
qualify under Section 422 of the Code as incentive stock options. The Plan is
also intended to permit the grant of Paired Share Awards, Restricted Paired Unit
Awards, Deferred Paired Unit Awards and Dividend Equivalent Rights. The proceeds
received by the REIT from the sale of Paired Shares pursuant to this Plan shall
be used for general corporate
3
<PAGE>
purposes. Each Paired Option or other Award may be exercised, terminated,
canceled, forfeited, transferred or otherwise disposed of only in units
consisting of Paired Shares. Accordingly, a REIT Option, or a portion thereof,
or a share of REIT Common Stock, may be exercised, terminated, canceled,
forfeited, transferred or otherwise disposed of only in connection with, and to
the same extent as, the exercise, termination, cancellation, forfeiture,
transfer or other disposition of an Operating Company Option, or a share of
Operating Company Common Stock, as the case may be.
14. - ADMINISTRATION
--------------------
The Plan shall be administered by the Committee. The Committee shall
have authority to grant any Awards upon such terms (not inconsistent with the
provisions of this Plan) as the Committee may consider appropriate. Such terms
may include conditions (in addition to those contained in this Plan) on the
exercisability of all or any part of a Paired Option or on the transferability
or forfeitability of any Award. The Committee may in connection with the death,
disability or other termination of employment of a Participant or a Change in
Control of the REIT accelerate the time at which any Paired Option may be
exercised or, the time at which a Restricted Paired Unit Award may become
transferable or nonforfeitable. In addition, the Committee shall have complete
authority to interpret all provisions of this Plan; to prescribe the form of
Agreements; to adopt, amend, and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or
advisable for the administration of this Plan. The express grant in the Plan of
any specific power to the Committee shall not be construed as limiting any power
or authority of the Committee. Any decision made, or action taken, by the
Committee or in connection with the administration of this Plan shall be final
and conclusive. No member of the Committee shall be liable for any act done in
good faith with respect to this Plan or any Agreement or Award. All expenses of
administering this Plan shall be borne by the REIT.
The Committee, in its discretion, may delegate to one or more officers
of the REIT all or part of the Committee's authority and duties with respect to
grants and awards to individuals who are not "covered employees" within the
meaning of Section 162(m) of the Code or subject to the reporting and other
provisions of Section 16 of the Exchange Act. Any such delegation by the
Committee shall include a limitation as to the amount of Awards that may be
granted during the period of the delegation and shall contain guidelines as to
the
4
<PAGE>
determination of the exercise price of any Option, the conversion ratio or price
of other Awards and the vesting criteria. The Committee may revoke or amend the
terms of a delegation at any time but such action shall not invalidate any prior
actions of the Committee's delegate or delegates that were consistent with the
terms of the Plan.
15. - ELIGIBILITY
-----------------
Any employee of the REIT or an Affiliate (including a corporation or
other entity that becomes an Affiliate after the adoption of this Plan) or a
person whose efforts contribute to the performance or success of the REIT or an
Affiliate (including a corporation or other entity that becomes an Affiliate
after the adoption of this Plan), including a consultant, is eligible to
participate in this Plan if the Committee, in its sole discretion, determines
that such person has contributed significantly or can be expected to contribute
significantly to the profits or growth of the REIT or an Affiliate. Independent
Directors of the REIT are also eligible to participate in this Plan.
16. - PAIRED SHARES SUBJECT TO PLAN
-----------------------------------
16.01 Paired Shares Issued. Subject to adjustment as provided in
--------------------
Section 13.01, the aggregate number of Paired Shares available from time to time
for all Awards under this Plan and the Operating Company's 1997 Stock Incentive
Plan (the "Operating Company Plan") shall be such aggregate number of shares as
does not exceed the sum of (i) 3,000,000 shares; plus (ii) as of the beginning
of each calendar quarter, beginning with October 1, 1997, 10 percent of any net
increase since the beginning of the preceding calendar quarter in the total
number of Paired Shares actually outstanding (assuming all units of partnership
interest in the Patriot American Hospitality Partnership, L.P. and the Patriot
American Hospitality Operating Partnership, L.P. that are subject to redemption
rights are converted into Paired Shares); reduced by (iii) the aggregate number
of Paired Shares subject to Awards under this Plan and the Operating Company
Plan. For purposes of this limitation, if any portion of an Award is forfeited,
canceled, reacquired by the REIT, satisfied without the issuance of Stock or
otherwise terminated, the Paired Shares underlying such portion of the Award
shall be added back to the Paired Shares available for issuance under the Plan.
Notwithstanding the foregoing, the maximum number of Paired Shares for which
Restricted Paired Unit Awards, Paired Share Awards and
5
<PAGE>
Deferred Paired Unit Awards may be granted under this Plan and the Operating
Company Plan during the term of the Plans shall not exceed forty percent (40%)
of the Paired Shares issuable under the Plans, and the maximum number of Paired
Shares with respect to which Awards may be granted during any calendar year
period to any Participant shall not exceed 1,500,000 shares, subject to
adjustment as provided in Section 12.01.
Paired Shares to be delivered under the Plan shall be made available
(A) by the REIT from authorized and unissued shares of REIT Common Stock issued
by the REIT directly to the holder and (B) by the Operating Company from
authorized and unissued shares of Operating Company Common Stock issued by the
Operating Company directly to the holder.
16.02 Substitute Awards. The Committee may grant Awards under the Plan
-----------------
in substitute for stock and stock-based awards held by employees of another
employer who become employees of the REIT or an Affiliate as the result of a
merger or consolidation of the employer with the REIT or an Affiliate, the
acquisition by the REIT or an Affiliate of property or stock of the employer, or
as a result of a transfer of employment or directorship from the Operating
Company (or affiliate thereof) to the REIT or an Affiliate. The Administrator
may direct that the substitute awards be granted on such terms and conditions as
the Administrator consider appropriate in the circumstances whether or not
specifically authorized under the Plan. Unless otherwise provided by the
Administrator, any grants of Paired Shares under this Section 5.02 shall not
count against the Paired Shares available for issuance under the Plan under
Section 5.01.
17. - PAIRED OPTIONS
--------------------
17.01 Award. In accordance with the provisions of Article IV, the
-----
Committee will designate each individual to whom a Paired Option is to be
granted and will specify the number of Paired Shares covered by such awards.
17.02 Paired Option Price. The price per Paired Share purchased on the
-------------------
exercise of a Paired Option shall be determined by the Committee on the date of
grant; provided, however, that the price per Paired Share purchased on the
exercise of any Paired Option shall not be less than one hundred percent (100%)
of the Fair Market Value of a Paired Share on the date of grant of such Paired
Option. Except as provided in Section 12.01, the Paired Option price may not be
reduced after the date of grant.
6
<PAGE>
17.03 Stock Options Granted to Independent Directors. Each Independent
----------------------------------------------
Director who is serving as Director of the Company on each annual meeting of
shareholders, beginning with the 1997 annual meeting, shall automatically be
granted on such day a non-qualified stock option to acquire 10,000 Paired
Shares, subject to adjustments as provided in Section 12.01. The exercise price
per Paired Share covered by a Paired Option granted under this Section 6.03
shall be equal to the Fair Market Value of a Paired Share on the date of grant.
The Committee, in its discretion, may grant additional Paired Options
to Independent Directors. Any such grant may vary among individual Independent
Directors. Unless otherwise determined by the Committee, an Option granted under
Section 6.03 shall be exercisable in full as of the grant date.
17.04 Maximum Paired Option Period. The maximum period in which a
----------------------------
Paired Option may be exercised shall be determined by the Committee on the date
of grant and may not exceed ten years from the date such Paired Option was
granted.
17.05 Nontransferability. Except as provided in Section 6.06, each
------------------
Paired Option granted under this Plan shall be nontransferable except by will or
by the laws of descent and distribution. During the lifetime of the Participant
to whom the Paired Option is granted, the Paired Option may be exercised only by
the Participant. No right or interest of a Participant in any Paired Option
shall be liable for, or subject to, any lien, obligation, or liability of such
Participant.
17.06 Transferable Paired Options. Section 6.05 to the contrary
---------------------------
notwithstanding, the Committee may provide in an Agreement regarding a given
Paired Option that a Paired Option that is not an incentive stock option may be
transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners; provided,
however, that the Participant may not receive any consideration for the
transfer. The holder of a Paired Option transferred pursuant to this section
shall be bound by the same terms and conditions that governed the Paired Option
during the period that it was held by the Participant.
17.07 Employee Status. In the event that the terms of any Paired Option
---------------
provide that it may be exercised only during employment or within a specified
period of time after termination of employment, the
7
<PAGE>
Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
17.08 Exercise. Subject to the provisions of this Plan and the
--------
applicable Agreement, a Paired Option may be exercised in whole at any time or
in part from time to time at such times and in compliance with such requirements
as the Committee shall determine. A Paired Option granted under this Plan may be
exercised with respect to any number of whole shares less than the full number
for which the Paired Option could be exercised. A partial exercise of a Paired
Option shall not affect the right to exercise the Paired Option from time to
time in accordance with this Plan and the applicable Agreement with respect to
the remaining shares subject to the Paired Option.
17.09 Payment. Unless otherwise provided by the Agreement, payment of
-------
the Paired Option price shall be made in cash or a cash equivalent acceptable to
the Committee. If the Agreement provides, payment of all or part of the option
price may be made by surrendering to the REIT previously owned whole Paired
Shares (which the Participant has held for at least six months prior to the
delivery of such Paired Shares or which the Participant purchased on the open
market and for which the Participant has good title, free and clear of all liens
and encumbrances). If Paired Shares are used to pay all or part of the Paired
Option price, the sum of the cash, cash equivalent, and the Fair Market Value
(determined as of the day preceding the date of exercise) of the Paired Shares
surrendered must not be less than the option price of the Paired Shares for
which the Paired Option is being exercised. If the Agreement provides, payment
of all or part of the option price may be made by the Participant delivering to
the REIT a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the REIT cash or a check payable
and acceptable to the REIT to pay the purchase price; provided that in the event
the Participant chooses to pay the purchase price as so provided, the
Participant and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Committee shall prescribe as
a condition of such payment procedure. If the Agreement provides and if the
Board has authorized the loan of funds to the Participant for the purpose of
enabling or assisting the Participant to exercise his Paired Option, payment of
the option price may be made
8
<PAGE>
by the Participant with a promissory note, provided that at least so much of the
exercise price as represents the par value of the Paired Shares shall be paid
other than with a promissory note.
17.10 Shareholder Rights. No Participant shall have any rights as a
------------------
shareholder with respect to Paired Shares subject to his Paired Option until the
date of exercise of such Paired Option.
18. - PAIRED SHARE AWARDS
-------------------------
In accordance with the provisions of Article IV, the Committee will
designate each individual to whom a Paired Share Award is to be made and will
specify the number of Paired Shares covered by such award. A Paired Share Award
shall be granted as incentive compensation or in lieu of current cash
compensation otherwise payable to a Participant and shall be free of any vesting
restrictions. The REIT shall issue or cause to be issued Paired Shares to a
Participant who receives a Paired Share Award.
19. - RESTRICTED PAIRED UNIT AWARDS
-----------------------------------
19.01 Award. In accordance with the provisions of Article IV, the
-----
Committee will designate each individual to whom a Restricted Paired Unit Award
is to be made and will specify the number of Paired Shares covered by such
award. Such an award shall entitle the Participant to receive a payment of
Paired Shares upon the satisfaction of the vesting restriction period or
satisfaction of performance objectives; provided, however, that the Committee
may permit a Participant to elect, pursuant to an advance written election
delivered to the REIT no later than the date prescribed to the Committee, to
defer receipt of some or all of the Paired Shares.
19.02 Vesting. The Committee, on the date of the award, shall prescribe
-------
that a Participant's rights in the Restricted Paired Unit Award shall be
forfeitable or otherwise restricted for a period of time or subject to such
conditions as may be set forth in the Agreement. The period of restriction shall
be at least three years; provided, however, that the minimum period of
restriction shall be at least one year in the case of a Restricted Paired Unit
Award that will become transferable and nonforfeitable on account of the
satisfaction of performance objectives prescribed by the Committee. During the
restriction period, the Committee may provide that the Participant's Restricted
Paired Unit Award be credited with Dividend Equivalent Rights.
19.03 Performance Objectives. In accordance with Section 8.02, the
----------------------
Committee may prescribe that Restricted Paired Unit Awards will become vested,
transferable, or both, based on objectives stated with respect
9
<PAGE>
to the REIT's, an Affiliate's, or an operating unit's return on equity, funds
from operations, cash available for distribution, earnings per share, total
earnings, earnings growth, return on capital, return on assets, or Fair Market
Value of the Paired Shares. If the Committee, on the date of the award,
prescribes that a Restricted Paired Unit Award shall become nonforfeitable and
transferable only upon the attainment of performance objectives stated with
respect to one or more of the foregoing criteria, the Paired Shares subject to
such Restricted Paired Unit Award shall become nonforfeitable and transferable
only to the extent that the Committee certifies that such objectives have been
achieved.
19.04 Employee Status. In the event that the terms of any Restricted
---------------
Paired Unit Award provide that Paired Shares may become transferable and
nonforfeitable thereunder only after completion of a specified period of
employment, the Committee may decide in each case to what extent leaves of
absence for governmental or military service, illness, temporary disability, or
other reasons shall not be deemed interruptions of continuous employment.
19.05 Shareholder Rights. No Participant shall, as a result of
------------------
receiving a Restricted Paired Unit Award, have any rights as a shareholder until
and to the extent that the Restricted Paired Unit Award is settled by the
issuance of Paired Shares. After the Restricted Paired Unit Award is settled in
Paired Shares, a Participant will have all the rights of a shareholder with
respect to such Paired Shares. The REIT shall issue, or cause to be issued,
Paired Shares to the Participant.
19.06 Nontransferability. A Restricted Paired Unit Award shall be
------------------
nontransferable except by will or by the laws of descent and distribution. No
right or interest of a Participant in any Restricted Paired Unit Award shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
20. - DEFERRED PAIRED UNIT AWARDS
---------------------------------
20.01 Elections to Receive Deferred Paired Unit Awards in Lieu of
-----------------------------------------------------------
Compensation. The Committee may, in its sole discretion, permit a Participant to
- ------------
elect, pursuant to an advance written election delivered to the REIT no later
than the date specified by the Committee, to defer receipt of all or a portion
of the cash compensation otherwise due to such Participant. The amount of the
deferred compensation shall be converted
10
<PAGE>
to a Deferred Paired Unit Award using the Fair Market Value of the Paired Shares
on the date immediately prior to the date the cash compensation would otherwise
be paid.
20.02 Terms and Conditions. At the time the Participant makes a
--------------------
deferred compensation election, the Committee shall direct the REIT to enter
into an Agreement with the Participant which sets forth the terms and conditions
of deferral, including the timing of payment and any vesting schedule. During
the term of deferral, the Participant's Deferred Paired Unit Award will be
credited with Dividend Equivalent Rights.
20.03 Form of Payment. Deferred Paired Unit Award shall be settled in
---------------
Paired Shares, in a single installment or installments. A fractional share of a
Deferred Paired Unit shall be settled in cash. The REIT shall issue, or cause to
be issued, Paired Shares to the Participant.
20.04 Shareholder Rights. No Participant shall, as a result of
------------------
receiving a Deferred Paired Unit Award, have any rights as a shareholder until
and to the extent that the Deferred Paired Unit Award is settled by the issuance
of Paired Shares. After the Deferred Paired Unit Award is settled in Paired
Shares, a Participant will have all the rights of a shareholder with respect to
such Paired Shares.
20.05 Nontransferability. A Deferred Paired Unit Award shall be
------------------
nontransferable except by will or by the laws of descent and distribution. No
right or interest of a Participant in any Deferred Paired Unit Award shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
21. - DIVIDEND EQUIVALENT RIGHTS
--------------------------------
21.01 Awards. In accordance with the provisions of Article IV, the
------
Committee will designate each individual to whom an award of Dividend Equivalent
Rights is to be made. An award of Dividend Equivalent Rights entitles the
recipient to receive credits based on cash dividends that would have been paid
on the Paired Shares specified in the award of Dividend Equivalent Rights (or
other award to which it relates) if such shares had been issued to and held by
the recipient. An award of Dividend Equivalent Rights may be granted hereunder
to any Participant as a component of another award or as a freestanding award.
The terms and conditions of Dividend Equivalent Rights shall be specified in the
Agreement. Dividend equivalents credited to the holder of a Dividend Equivalent
Rights may be paid currently or may be deemed to be reinvested in additional
Paired Shares, which may thereafter accrue additional equivalents. Any such
reinvestment shall be
11
<PAGE>
at Fair Market Value on the date of reinvestment or such other price as may then
apply under a dividend reinvestment plan sponsored by the REIT, if any. Dividend
Equivalent Rights granted as a component of another award may provide that such
Dividend Equivalent Rights shall be settled upon exercise, settlement, or
payment of, or lapse of restrictions on, such other award, and that such
Dividend Equivalent Rights shall expire or be forfeited or annulled under the
same conditions as such other award. Dividend Equivalent Rights granted as a
component of another award may also contain terms and conditions different from
such other award.
21.02 Payment. In the discretion of the Committee and as provided in
-------
the Agreement, Dividend Equivalent Rights may be settled in cash, Paired Shares,
or a combination thereof, in a single installment or installments.
21.03 Shareholder Rights. No Participant shall, as a result of
------------------
receiving an award of Dividend Equivalent Rights, have any rights as a
shareholder until and to the extent that the award of Dividend Equivalent Rights
is earned and settled by the issuance of Paired Shares. After an award of
Dividend Equivalent Rights is earned, if settled completely or partially in
Paired Shares, a Participant will have all the rights of a shareholder with
respect to such Paired Shares. The REIT shall issue, or cause to be issued,
Paired Shares to the Participant.
21.04 Nontransferability. Unless otherwise provided in the Agreement,
------------------
Dividend Equivalent Rights granted under this Plan shall be nontransferable
except by will or by the laws of descent and distribution. No right or interest
of a Participant in any Dividend Equivalent Rights shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
22. - CHANGE IN CONTROL PROVISIONS
----------------------------------
(a) A "Change in Control" with respect to the REIT shall be deemed to
have taken place if any of the following events occurs:
(i) Any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than an Affiliate, a trustee or other fiduciary holding
securities under an employee benefit plan of the REIT, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of
12
<PAGE>
the REIT representing 25% or more of the combined voting power of the REIT's
then outstanding securities; or
(ii) individuals who, as of July 2, 1997, constitute the Board
and any new director (other than a director designated by a person who has
entered into an agreement with the REIT to effect a transaction described in
clauses (i) or (iii) of this paragraph) whose election by the Board or
nomination for election by the REIT's shareholders was approved by a vote of at
least eighty percent (80%) of the directors then still in office who either were
directors as of July 2, 1997 or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
Board; or
(iii) the shareholders of the REIT approve a merger or
consolidation of the REIT with or into any other corporation, other than a
merger or consolidation which would result in the voting securities of the REIT
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least sixty percent (60%) of the combined voting power of
the voting securities of the REIT or such surviving entity outstanding
immediately after such merger or consolidation, or the shareholders of the REIT
approve a plan of complete liquidation of the REIT or an agreement for the sale
or disposition by the REIT of all or substantially all the REIT's assets.
Notwithstanding the above provisions, the merger of Wyndham Hotel
Corporation with the REIT shall not be deemed to result in a Change in Control
of the REIT.
(b) Upon the occurrence of a Change in Control, unless otherwise
provided in an Agreement, each Participant shall have immediate vesting of, and
the immediate right to, exercise all outstanding Paired Options, and any risk of
forfeiture included in any Restricted Paired Unit Award and Dividend Equivalent
Rights shall lapse.
23. - ADJUSTMENT UPON CHANGE IN PAIRED SHARES
---------------------------------------------
23.01 Adjustments. The maximum number of Paired Shares as to which
-----------
awards may be granted under this Plan, the terms of outstanding awards and the
per individual limitations on the number of Paired Shares for which Paired
Options or other Awards may be granted, shall be adjusted as the Committee shall
determine to be equitably required in the event that (a) the REIT (i) effects
one or more stock dividends, stock
13
<PAGE>
split-ups, subdivisions or consolidations of shares or (ii) engages in a
transaction to which Section 424 of the Code applies or (b) there occurs any
other event which, in the judgment of the Committee, necessitates such action.
Any determination made under this Article XII by the Committee shall be final
and conclusive. Any adjustment made pursuant to this Section 12.01 shall also be
made in the Operating Company Plan.
23.02 Mergers or Other Corporate Transactions. Upon consummation of a
---------------------------------------
consolidation, merger, or sale of all or substantially all of the assets of the
REIT in which outstanding Paired Shares are exchanged for securities, cash, or
other property of an unrelated corporation or business entity, or in the event
of a liquidation of the REIT (in each case, a "Transaction"), the Board, or the
board of directors of any corporation assuming the obligations of the REIT, may,
in its discretion, take any one or more of the following actions, as to
outstanding Awards: (i) provide that such Awards shall be assumed or equivalent
awards shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof), (ii) upon written notice to the Participants, provide that
all Awards will terminate immediately prior to the consummation of the
Transaction. In the event that, pursuant to clause (ii) above, Awards will
terminate immediately prior to the consummation of the Transaction, all Awards,
other than Paired Options, shall be fully settled in cash or in kind at such
appropriate consideration as determined by the Committee in its sole discretion
after taking into account the consideration payable per Paired Share pursuant to
the business combination (the "Merger Price") and all Paired Options shall be
fully settled, in cash or in kind, in an amount equal to the difference between
(A) the Merger Price times the number of Paired Shares subject to such
outstanding Paired Options (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all such
outstanding Paired Options; provided, however, that each Participant shall be
permitted, within a specified period determined by the Committee prior to the
consummation of the Transaction, to exercise all outstanding Paired Options,
including those that are not then exercisable, subject to the consummation of
the Transaction.
24. - COMPLIANCE WITH LAW
AND APPROVAL OF REGULATORY BODIES
---------------------------------
No Paired Option shall be exercisable, no Paired Shares shall be
issued, no certificates for Paired Shares shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal
and state laws and regulations (including, without limitation, withholding tax
requirements),
14
<PAGE>
any listing agreement to which the REIT is a party, and the rules of all
domestic stock exchanges on which the Paired Shares may be listed. The REIT
shall have the right to rely on an opinion of its counsel as to such compliance.
Any share certificate issued to evidence a Paired Share when a Paired Share
Award is granted, or for which a Paired Option is exercised or a Restricted
Paired Unit Award or Deferred Paired Unit Award settled, may bear such legends
and statements as the Committee may deem advisable to assure compliance with
federal and state laws and regulations. No Paired Option shall be exercisable,
no Paired Share Award shall be granted, no Paired Share shall be issued, no
certificate for Paired Shares shall be delivered, and no payment shall be made
under this Plan until the REIT has obtained such consent or approval as the
Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
Notwithstanding any other provision hereunder, no Paired Option shall
be exercisable, no Paired Shares shall be issued, no certificates for Paired
Shares shall be delivered, and no payment shall be made under this Plan if and
to the extent that to do so would (i) result in the failure of the REIT to
satisfy the Code requirements pertaining to real estate investment trusts (which
such Code requirements include, but are not limited to, qualification of the
REIT as a real estate investment trust and retention of the REIT's status as
grandfathered under Section 132(c)(3) of the Deficit Reduction Act of 1984) or
(ii) violate (or cause any person to violate) the restrictions on ownership and
transfer of equity stock set forth in Article IV of the Amended and Restated
Certificate of Incorporation of Patriot American Hospitality, Inc. (as amended
or any successor thereto) or in Article IV of the Amended and Restated
Certificate of Incorporation of Patriot American Hospitality Operating Company
(as amended or any successor thereto).
25. - GENERAL PROVISIONS
------------------------
25.01 Effect on Employment and Service. Neither the adoption of this
--------------------------------
Plan, its operation, nor any documents describing or referring to this Plan (or
any part thereof) shall confer upon any individual any right to continue in the
employ or service of the REIT or an Affiliate or in any way affect any right and
power of the REIT or an Affiliate to terminate the employment or service of any
individual at any time with or without assigning a reason therefor.
15
<PAGE>
25.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall
-------------
be unfunded, and the REIT shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the REIT
to any person with respect to any grant under this Plan shall be based solely
upon any contractual obligations that may be created pursuant to this Plan. No
such obligation of the REIT shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the REIT.
25.03 Rules of Construction. Headings are given to the articles and
---------------------
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
26. - AMENDMENT
---------------
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of Paired Shares
that may be issued under the Plan, (ii) the amendment changes the class of
individuals eligible to become Participants or (iii) the amendment materially
increases the benefits that may be provided under the Plan. No amendment shall,
without a Participant's consent, adversely affect any rights of such Participant
under any award outstanding at the time such amendment is made. Nothing in this
Article XV shall limit the Board's authority to take any action pursuant to
Section 12.02.
27. - TERMINATION OF PAIRING AGREEMENT
--------------------------------------
Notwithstanding anything herein to the contrary, if at any time the
Pairing Agreement is terminated for any reason and, as a result of such
termination, shares of REIT Common Stock and Operating Company Common Stock are
no longer required to be transferred as a single unit, then as of the date of
such termination: Paired Options shall no longer be granted hereunder; Paired
Share Awards shall no longer be made hereunder with respect to Paired Shares;
Deferred Paired Unit Awards and Restricted Paired Unit Awards shall no longer be
paid hereunder in the form of Paired Shares; and Dividend Equivalent Rights
shall no longer be granted hereunder with respect to shares of Operating Company
Common Stock. Furthermore, as of the date of such termination: only REIT
Options, Awards of REIT Common Stock and Restricted Unit Awards relating to
shares of REIT Common Stock may be granted hereunder; elections may be made
hereunder only as to Deferred
16
<PAGE>
Paired Units Awards based on REIT Common Stock; and Dividend Equivalent Rights
shall be granted hereunder only with respect to shares of REIT Common Stock.
28. - EFFECTIVE DATE OF PLAN
----------------------------
Paired Options, Restricted Paired Unit Awards, Deferred Paired Unit
Awards and Dividend Equivalent Rights may be granted under this Plan upon its
adoption by the Board, provided that no such Award shall be effective or
exercisable unless this Plan is approved by the holders of a majority of the
votes present or represented and entitled to be cast by the REIT's shareholders,
voting either in person or by proxy, at a duly held shareholders' meeting.
Paired Share Awards may be granted under this Plan upon the later of its
adoption by the Board or its approval by shareholders in accordance with the
preceding sentence.
29. - GOVERNING LAW
-------------------
The Plan and all Awards and action taken thereunder shall be governed
by, and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.
17
<PAGE>
Exhibit 4.4
PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
1997 INCENTIVE PLAN
<PAGE>
PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
1997 INCENTIVE PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE I - DEFINITIONS.....................................................1
<C> <S> <C>
1.01 Affiliate....................................................1
1.02 Agreement....................................................1
1.03 Award or Awards..............................................2
1.04 Board........................................................2
1.05 Code.........................................................2
1.06 Committee....................................................2
1.07 Deferred Paired Unit Award...................................2
1.08 Dividend Equivalent Rights...................................2
1.09 Effective Date...............................................2
1.10 Exchange Act.................................................2
1.11 Fair Market Value............................................2
1.12 Independent Director.........................................3
1.13 Operating Company............................................3
1.14 Operating Company Common Stock...............................3
1.15 Paired Share Award...........................................3
1.16 Pairing Agreement............................................3
1.17 Participant..................................................3
1.18 Plan.........................................................3
1.19 REIT.........................................................3
1.20 REIT Common Stock............................................4
1.21 Restricted Paired Unit Award.................................4
ARTICLE II - PURPOSES.......................................................4
ARTICLE III - ADMINISTRATION................................................5
ARTICLE IV - ELIGIBILITY....................................................6
ARTICLE V - PAIRED SHARES SUBJECT TO PLAN...................................7
5.01 Paired Shares Issued.........................................7
5.02 Substitute Awards............................................8
ARTICLE VI - PAIRED OPTIONS.................................................8
6.01 Award........................................................8
6.02 Paired Option Price..........................................9
6.03 Stock Options Granted to Independent Directors...............9
6.04 Maximum Paired Option Period.................................9
6.05 Nontransferability...........................................9
6.06 Transferable Paired Options.................................10
6.07 Employee Status.............................................10
6.08 Exercise....................................................10
6.09 Payment.....................................................11
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
6.10 Shareholder Rights..........................................12
ARTICLE VII - PAIRED SHARE AWARDS.........................................12
ARTICLE VIII - RESTRICTED PAIRED UNIT AWARDS...............................12
8.01 Award.......................................................12
8.02 Vesting.....................................................13
8.03 Performance Objectives......................................13
8.04 Employee Status.............................................13
8.05 Shareholder Rights..........................................14
8.06 Nontransferability..........................................14
ARTICLE IX - DEFERRED PAIRED UNIT AWARDS...................................14
9.01 Elections to Receive Deferred Paired Unit Awards
in Lieu of Compensation.....................................14
9.02 Terms and Conditions........................................15
9.03 Form of Payment.............................................15
9.04 Shareholder Rights..........................................15
9.05 Nontransferability..........................................15
ARTICLE X - DIVIDEND EQUIVALENT RIGHTS.....................................15
10.01 Awards......................................................15
10.02 Payment.....................................................16
10.03 Shareholder Rights..........................................16
10.04 Nontransferability..........................................17
ARTICLE XI - CHANGE IN CONTROL PROVISIONS..................................17
ARTICLE XII - ADJUSTMENT UPON CHANGE IN PAIRED SHARES......................18
12.01 Adjustments.................................................18
12.02 Mergers or Other Corporate Transactions.....................19
ARTICLE XIII - COMPLIANCE WITH LAW.........................................20
ARTICLE XIV - GENERAL PROVISIONS...........................................21
14.01 Effect on Employment and Service............................21
14.02 Unfunded Plan...............................................22
14.03 Rules of Construction.......................................22
ARTICLE XV - AMENDMENT.....................................................22
ARTICLE XVI - TERMINATION OF PAIRING AGREEMENT.............................22
ARTICLE XVII - EFFECTIVE DATE OF PLAN......................................23
ARTICLE XVIII - GOVERNING LAW..............................................24
</TABLE>
(ii)
<PAGE>
PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
1997 INCENTIVE PLAN
The name of the plan is the Patriot American Hospitality Operating
Company 1997 Incentive Plan (the "Plan"). The purpose of the Plan is to
encourage and enable the officers, employees, Independent Directors and other
key persons (including consultants) of Patriot American Hospitality Operating
Company (the "Operating Company") and its Affiliates upon whose judgment,
initiative and efforts the Operating Company largely depends for the successful
conduct of its business to acquire a proprietary interest in the Operating
Company. It is anticipated that providing such persons with a direct stake in
the Operating Company's welfare will assure a closer identification of their
interests with those of the Operating Company, thereby stimulating their efforts
on the Operating Company's behalf and strengthening their desire to remain with
the Operating Company.
30. - DEFINITIONS
-----------------
30.01 Affiliate means any "subsidiary" or "parent" corporation
---------
(within the meaning of Section 424 of the Code) of the Operating Company or
means any corporation or other entity (other than the Operating Company) in any
unbroken chain of corporations or other entities beginning with the Operating
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50
percent or more of the economic interest or the total combined voting power of
all classes of stock or other interests in one of the other corporations or
entities in the chain.
30.02 Agreement means a written agreement (including any amendment
---------
or supplement thereto) between the Operating Company and a Participant
specifying the terms and conditions of an Award.
30.03 Award or Awards, except when referring to a particular
----- ------
category of grant under the Plan, shall include Paired Options, Paired Share
Awards, Restricted Paired Unit Awards, Deferred Paired Unit Awards, or awards of
Dividend Equivalent Rights.
30.04 Board means the Board of Directors of the Operating Company.
-----
30.05 Code means the Internal Revenue Code of 1986, and any
----
amendments thereto.
30.06 Committee means the Compensation Committee of the Board. Each
---------
member of the Committee shall be an "outside director" within the meaning of
Section 162(m) of the Code and the regulations
<PAGE>
promulgated thereunder and a "non-employee director" within the meaning of Rule
16b-3(b)(3)(i) promulgated under the Exchange Act.
30.07 Deferred Paired Unit Award means an award granted pursuant to
--------------------------
Article IX which entitles the holder to defer receipt of current cash
compensation in exchange for a right to receive Paired Shares in the future at
the price or prices set forth in the Agreement.
30.08 Dividend Equivalent Rights means an award granted pursuant to
--------------------------
Article X which entitles the holder to receive compensation based on cash
dividends and distributions payable with respect to the Paired Shares.
30.09 Effective Date means the date on which the Plan is approved by
--------------
shareholders as set forth in Article XVII.
30.10 Exchange Act means the Securities Exchange Act of 1934, as
------------
amended and as in effect on the date of this Agreement.
30.11 Fair Market Value means, on any given date, the closing price
-----------------
of a Paired Share, as reported on the New York Stock Exchange. In any case, if
no sale of Paired Shares is made on the New York Stock Exchange on that date,
then Fair Market Value shall be determined as of the next preceding day on which
there was a sale of such security.
30.12 Independent Director means a member of the Board who is not
--------------------
also an employee of the Operating Company or any Affiliate.
30.13 Operating Company means Patriot American Hospitality Operating
-----------------
Company.
30.14 Operating Company Common Stock means the common stock of the
------------------------------
Operating Company.
30.15 Paired Share Award means Paired Shares awarded to a
------------------
Participant under Article VII as incentive compensation or in lieu of current
cash compensation.
30.16 Pairing Agreement means the agreement entered into in
-----------------
February, 1983, as amended, between Operating Company (formerly named Bay
Meadows Operating Company) and the REIT (formerly named Bay Meadows Realty
Enterprises, Inc.), which provides that all outstanding shares of Operating
Company Common
2
<PAGE>
Stock and REIT Common Stock are paired on a one-for-one basis and trade as units
consisting of one share of Operating Company Common Stock and one share of REIT
Common Stock.
30.17 Participant means an employee of the Operating Company or an
-----------
Affiliate, a member of the Board, or an individual whose efforts contribute to
the performance or success of the Operating Company or an Affiliate, who
satisfies the requirements of Article IV and is selected by the Committee to
receive an Award under the Plan.
30.18 Plan means the Patriot American Hospitality Operating Company
----
1997 Incentive Plan.
30.19 REIT means Patriot American Hospitality, Inc.
----
30.20 REIT Common Stock means the common stock of the REIT.
-----------------
30.21 Restricted Paired Unit Award means an Award granted pursuant
----------------------------
to Article VIII which entities the holder to receive a payment of Paired Shares
upon the satisfaction of the vesting restriction period or performance goals.
31. - PURPOSES
--------------
The Plan is intended to assist the Operating Company and its Affiliates
in recruiting and retaining individuals with ability and initiative by enabling
such persons to participate in the future success of the Operating Company and
its Affiliates, and to associate their interests with those of the Operating
Company and its shareholders. Pursuant to the Pairing Agreement, all outstanding
Operating Company Common Stock and REIT Common Stock are paired on a one-for-one
basis and trade as units consisting of one share of Operating Company Common
Stock and one share of REIT Common Stock ("Paired Shares"). Accordingly, each
option to purchase shares of Operating Company Common Stock (an "Operating
Company Option") shall be paired with an option to purchase an equal number of
shares of REIT Common Stock (a "REIT Option" and each such paired Operating
Company Option and REIT Option is herein referred to as a "Paired Option");
similarly, each other Award of shares of Operating Company Common Stock shall be
paired with an Award of an equal number of shares of REIT Common Stock.
The Plan is intended to permit the grant of Paired Options which do not
qualify under Section 422 of the Code as incentive stock options. The Plan is
also intended to permit the grant of Paired Share Awards,
3
<PAGE>
Restricted Paired Unit Awards, Deferred Paired Unit Awards and Dividend
Equivalent Rights. The proceeds received by the Operating Company from the sale
of Paired Shares pursuant to this Plan shall be used for general corporate
purposes. Each Paired Option or other Award may be exercised, terminated,
canceled, forfeited, transferred or otherwise disposed of only in units
consisting of Paired Shares. Accordingly, an Operating Company Option, or a
portion thereof, or a share of Operating Company Common Stock, may be exercised,
terminated, canceled, forfeited, transferred or otherwise disposed of only in
connection with, and to the same extent as, the exercise, termination,
cancellation, forfeiture, transfer or other disposition of a REIT Option, or a
share of REIT Common Stock, as the case may be.
32. - ADMINISTRATION
--------------------
The Plan shall be administered by the Committee. The Committee shall
have authority to grant any Awards upon such terms (not inconsistent with the
provisions of this Plan) as the Committee may consider appropriate. Such terms
may include conditions (in addition to those contained in this Plan) on the
exercisability of all or any part of a Paired Option or on the transferability
or forfeitability of any Award. The Committee may in connection with the death,
disability or other termination of employment of a Participant or a Change in
Control of the Operating Company accelerate the time at which any Paired Option
may be exercised or, the time at which a Restricted Paired Unit Award may become
transferable or nonforfeitable. In addition, the Committee shall have complete
authority to interpret all provisions of this Plan; to prescribe the form of
Agreements; to adopt, amend, and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or
advisable for the administration of this Plan. The express grant in the Plan of
any specific power to the Committee shall not be construed as limiting any power
or authority of the Committee. Any decision made, or action taken, by the
Committee or in connection with the administration of this Plan shall be final
and conclusive. No member of the Committee shall be liable for any act done in
good faith with respect to this Plan or any Agreement or Award. All expenses of
administering this Plan shall be borne by the Operating Company.
The Committee, in its discretion, may delegate to one or more officers
of the Operating Company all or part of the Committee's authority and duties
with respect to grants and awards to individuals who are not
4
<PAGE>
"covered employees" within the meaning of Section 162(m) of the Code or subject
to the reporting and other provisions of Section 16 of the Exchange Act. Any
such delegation by the Committee shall include a limitation as to the amount of
Awards that may be granted during the period of the delegation and shall contain
guidelines as to the determination of the exercise price of any Option, the
conversion ratio or price of other Awards and the vesting criteria. The
Committee may revoke or amend the terms of a delegation at any time but such
action shall not invalidate any prior actions of the Committee's delegate or
delegates that were consistent with the terms of the Plan.
33. - ELIGIBILITY
-----------------
Any employee of the Operating Company or an Affiliate (including a
corporation or other entity that becomes an Affiliate after the adoption of this
Plan) or a person whose efforts contribute to the performance or success of the
Operating Company or an Affiliate (including a corporation or other entity that
becomes an Affiliate after the adoption of this Plan), including a consultant,
is eligible to participate in this Plan if the Committee, in its sole
discretion, determines that such person has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Operating
Company or an Affiliate. Independent Directors of the Operating Company are also
eligible to participate in this Plan.
34. - PAIRED SHARES SUBJECT TO PLAN
-----------------------------------
34.01 Paired Shares Issued. Subject to adjustment as provided in
--------------------
Section 13.01, the aggregate number of Paired Shares available from time to time
for all Awards under this Plan and the REIT's 1997 Stock Incentive Plan (the
"REIT Plan") shall be such aggregate number of shares as does not exceed the sum
of (i) 3,000,000 shares; plus (ii) as of the beginning of each calendar quarter,
beginning with October 1, 1997, 10 percent of any net increase since the
beginning of the preceding calendar quarter in the total number of Paired Shares
actually outstanding (assuming all units of partnership interest in the Patriot
American Hospitality Operating Partnership, L.P. and the Patriot American
Hospitality Partnership, L.P. that are subject to redemption rights are
converted into Paired Shares); reduced by (iii) the aggregate number of Paired
Shares subject to Awards under this Plan and the REIT Plan. For purposes of this
limitation, if any portion of an Award is forfeited, canceled, reacquired by the
Operating Company, satisfied without the issuance of Stock or
5
<PAGE>
otherwise terminated, the Paired Shares underlying such portion of the Award
shall be added back to the Paired Shares available for issuance under the Plan.
Notwithstanding the foregoing, the maximum number of Paired Shares for which
Restricted Paired Unit Awards, Paired Share Awards and Deferred Paired Unit
Awards may be granted under this Plan and the REIT Plan during the term of the
Plans shall not exceed forty percent (40%) of the Paired Shares issuable under
the Plans, and the maximum number of Paired Shares with respect to which Awards
may be granted during any calendar year period to any Participant shall not
exceed 1,500,000 shares, subject to adjustment as provided in Section 12.01.
Paired Shares to be delivered under the Plan shall be made available
(A) by the Operating Company from authorized and unissued shares of Operating
Company Common Stock issued by the Operating Company directly to the holder and
(B) by the REIT from authorized and unissued shares of REIT Common Stock issued
by the REIT directly to the holder.
34.02 Substitute Awards. The Committee may grant Awards under the
-----------------
Plan in substitute for stock and stock-based awards held by employees of another
employer who become employees of the Operating Company or an Affiliate as the
result of a merger or consolidation of the employer with the Operating Company
or an Affiliate, the acquisition by the Operating Company or an Affiliate of
property or stock of the employer, or as a result of a transfer of employment or
directorship from the REIT (or affiliate thereof) to the Operating Company or an
Affiliate. The Administrator may direct that the substitute awards be granted on
such terms and conditions as the Administrator consider appropriate in the
circumstances whether or not specifically authorized under the Plan. Unless
otherwise provided by the Administrator, any grants of Paired Shares under this
Section 5.02 shall not count against the Paired Shares available for issuance
under the Plan under Section 5.01.
35. - PAIRED OPTIONS
--------------------
35.01 Award. In accordance with the provisions of Article IV, the
-----
Committee will designate each individual to whom a Paired Option is to be
granted and will specify the number of Paired Shares covered by such awards.
35.02 Paired Option Price. The price per Paired Share purchased on
-------------------
the exercise of a Paired Option shall be determined by the Committee on the date
of grant; provided, however, that the price per Paired Share
6
<PAGE>
purchased on the exercise of any Paired Option shall not be less than one
hundred percent (100%) of the Fair Market Value of a Paired Share on the date of
grant of such Paired Option. Except as provided in Section 12.01, the Paired
Option price may not be reduced after the date of grant.
35.03 Stock Options Granted to Independent Directors. Each
----------------------------------------------
Independent Director who is serving as Director of the Company on each annual
meeting of shareholders, beginning with the 1997 annual meeting, shall
automatically be granted on such day a non-qualified stock option to acquire
10,000 Paired Shares, subject to adjustments as provided in Section 12.01. The
exercise price per Paired Share covered by a Paired Option granted under this
Section 6.03 shall be equal to the Fair Market Value of a Paired Share on the
date of grant.
The Committee, in its discretion, may grant additional Paired Options
to Independent Directors. Any such grant may vary among individual Independent
Directors. Unless otherwise determined by the Committee, an Option granted under
Section 6.03 shall be exercisable in full as of the grant date.
35.04 Maximum Paired Option Period. The maximum period in which a
----------------------------
Paired Option may be exercised shall be determined by the Committee on the date
of grant and may not exceed ten years from the date such Paired Option was
granted.
35.05 Nontransferability. Except as provided in Section 6.06, each
------------------
Paired Option granted under this Plan shall be nontransferable except by will or
by the laws of descent and distribution. During the lifetime of the Participant
to whom the Paired Option is granted, the Paired Option may be exercised only by
the Participant. No right or interest of a Participant in any Paired Option
shall be liable for, or subject to, any lien, obligation, or liability of such
Participant.
35.06 Transferable Paired Options. Section 6.05 to the contrary
---------------------------
notwithstanding, the Committee may provide in an Agreement regarding a given
Paired Option that a Paired Option that is not an incentive stock option may be
transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners; provided,
however, that the Participant may not receive any consideration for the
transfer. The holder of a Paired Option transferred pursuant to this section
shall be bound by the same terms and conditions that governed the Paired Option
during the period that it was held by the Participant.
7
<PAGE>
35.07 Employee Status. In the event that the terms of any Paired
---------------
Option provide that it may be exercised only during employment or within a
specified period of time after termination of employment, the Committee may
decide to what extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment.
35.08 Exercise. Subject to the provisions of this Plan and the
--------
applicable Agreement, a Paired Option may be exercised in whole at any time or
in part from time to time at such times and in compliance with such requirements
as the Committee shall determine. A Paired Option granted under this Plan may be
exercised with respect to any number of whole shares less than the full number
for which the Paired Option could be exercised. A partial exercise of a Paired
Option shall not affect the right to exercise the Paired Option from time to
time in accordance with this Plan and the applicable Agreement with respect to
the remaining shares subject to the Paired Option.
35.09 Payment. Unless otherwise provided by the Agreement, payment
-------
of the Paired Option price shall be made in cash or a cash equivalent acceptable
to the Committee. If the Agreement provides, payment of all or part of the
option price may be made by surrendering to the Operating Company previously
owned whole Paired Shares (which the Participant has held for at least six
months prior to the delivery of such Paired Shares or which the Participant
purchased on the open market and for which the Participant has good title, free
and clear of all liens and encumbrances). If Paired Shares are used to pay all
or part of the Paired Option price, the sum of the cash, cash equivalent, and
the Fair Market Value (determined as of the day preceding the date of exercise)
of the Paired Shares surrendered must not be less than the option price of the
Paired Shares for which the Paired Option is being exercised. If the Agreement
provides, payment of all or part of the option price may be made by the
Participant delivering to the Operating Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Operating Company cash or a check payable and acceptable to the Operating
Company to pay the purchase price; provided that in the event the Participant
chooses to pay the purchase price as so provided, the Participant and the broker
shall comply with such procedures and enter into such agreements of indemnity
and other agreements as the Committee shall prescribe as a condition of such
payment procedure. If the Agreement provides and if the Board has authorized
8
<PAGE>
the loan of funds to the Participant for the purpose of enabling or assisting
the Participant to exercise his Paired Option, payment of the option price may
be made by the Participant with a promissory note, provided that at least so
much of the exercise price as represents the par value of the Paired Shares
shall be paid other than with a promissory note.
35.10 Shareholder Rights. No Participant shall have any rights as a
------------------
shareholder with respect to Paired Shares subject to his Paired Option until the
date of exercise of such Paired Option.
36. - PAIRED SHARE AWARDS
-------------------------
In accordance with the provisions of Article IV, the Committee will
designate each individual to whom a Paired Share Award is to be made and will
specify the number of Paired Shares covered by such award. A Paired Share Award
shall be granted as incentive compensation or in lieu of current cash
compensation otherwise payable to a Participant and shall be free of any vesting
restrictions. The Operating Company shall issue or cause to be issued Paired
Shares to a Participant who receives a Paired Share Award.
37. - RESTRICTED PAIRED UNIT AWARDS
-----------------------------------
37.01 Award. In accordance with the provisions of Article IV, the
-----
Committee will designate each individual to whom a Restricted Paired Unit Award
is to be made and will specify the number of Paired Shares covered by such
award. Such an award shall entitle the Participant to receive a payment of
Paired Shares upon the satisfaction of the vesting restriction period or
satisfaction of performance objectives; provided, however, that the Committee
may permit a Participant to elect, pursuant to an advance written election
delivered to the Operating Company no later than the date prescribed to the
Committee, to defer receipt of some or all of the Paired Shares.
37.02 Vesting. The Committee, on the date of the award, shall prescribe
-------
that a Participant's rights in the Restricted Paired Unit Award shall be
forfeitable or otherwise restricted for a period of time or subject to such
conditions as may be set forth in the Agreement. The period of restriction shall
be at least three years; provided, however, that the minimum period of
restriction shall be at least one year in the case of a Restricted Paired Unit
Award that will become transferable and nonforfeitable on account of the
satisfaction of
9
<PAGE>
performance objectives prescribed by the Committee. During the restriction
period, the Committee may provide that the Participant's Restricted Paired Unit
Award be credited with Dividend Equivalent Rights.
37.03 Performance Objectives. In accordance with Section 8.02, the
----------------------
Committee may prescribe that Restricted Paired Unit Awards will become vested,
transferable, or both, based on objectives stated with respect to the Operating
Company's, an Affiliate's, or an operating unit's return on equity, funds from
operations, cash available for distribution, earnings per share, total earnings,
earnings growth, return on capital, return on assets, or Fair Market Value of
the Paired Shares. If the Committee, on the date of the award, prescribes that a
Restricted Paired Unit Award shall become nonforfeitable and transferable only
upon the attainment of performance objectives stated with respect to one or more
of the foregoing criteria, the Paired Shares subject to such Restricted Paired
Unit Award shall become nonforfeitable and transferable only to the extent that
the Committee certifies that such objectives have been achieved.
37.04 Employee Status. In the event that the terms of any Restricted
---------------
Paired Unit Award provide that Paired Shares may become transferable and
nonforfeitable thereunder only after completion of a specified period of
employment, the Committee may decide in each case to what extent leaves of
absence for governmental or military service, illness, temporary disability, or
other reasons shall not be deemed interruptions of continuous employment.
37.05 Shareholder Rights. No Participant shall, as a result of receiving
------------------
a Restricted Paired Unit Award, have any rights as a shareholder until and to
the extent that the Restricted Paired Unit Award is settled by the issuance of
Paired Shares. After the Restricted Paired Unit Award is settled in Paired
Shares, a Participant will have all the rights of a shareholder with respect to
such Paired Shares. The Operating Company shall issue, or cause to be issued,
Paired Shares to the Participant.
37.06 Nontransferability. A Restricted Paired Unit Award shall be
------------------
nontransferable except by will or by the laws of descent and distribution. No
right or interest of a Participant in any Restricted Paired Unit Award shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
10
<PAGE>
38. - DEFERRED PAIRED UNIT AWARDS
---------------------------------
38.01 Elections to Receive Deferred Paired Unit Awards in Lieu of
-----------------------------------------------------------
Compensation. The Committee may, in its sole discretion, permit a Participant to
- ------------
elect, pursuant to an advance written election delivered to the Operating
Company no later than the date specified by the Committee, to defer receipt of
all or a portion of the cash compensation otherwise due to such Participant. The
amount of the deferred compensation shall be converted to a Deferred Paired Unit
Award using the Fair Market Value of the Paired Shares on the date immediately
prior to the date the cash compensation would otherwise be paid.
38.02 Terms and Conditions. At the time the Participant makes a deferred
--------------------
compensation election, the Committee shall direct the Operating Company to enter
into an Agreement with the Participant which sets forth the terms and conditions
of deferral, including the timing of payment and any vesting schedule. During
the term of deferral, the Participant's Deferred Paired Unit Award will be
credited with Dividend Equivalent Rights.
38.03 Form of Payment. Deferred Paired Unit Award shall be settled in
---------------
Paired Shares, in a single installment or installments. A fractional share of a
Deferred Paired Unit shall be settled in cash. The Operating Company shall
issue, or cause to be issued, Paired Shares to the Participant.
38.04 Shareholder Rights. No Participant shall, as a result of receiving
------------------
a Deferred Paired Unit Award, have any rights as a shareholder until and to the
extent that the Deferred Paired Unit Award is settled by the issuance of Paired
Shares. After the Deferred Paired Unit Award is settled in Paired Shares, a
Participant will have all the rights of a shareholder with respect to such
Paired Shares.
38.05 Nontransferability. A Deferred Paired Unit Award shall be
------------------
nontransferable except by will or by the laws of descent and distribution. No
right or interest of a Participant in any Deferred Paired Unit Award shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
39. - DIVIDEND EQUIVALENT RIGHTS
--------------------------------
39.01 Awards. In accordance with the provisions of Article IV, the
------
Committee will designate each individual to whom an award of Dividend Equivalent
Rights is to be made. An award of Dividend Equivalent Rights entitles the
recipient to receive credits based on cash dividends that would have been paid
on the Paired
11
<PAGE>
Shares specified in the award of Dividend Equivalent Rights (or other award to
which it relates) if such shares had been issued to and held by the recipient.
An award of Dividend Equivalent Rights may be granted hereunder to any
Participant as a component of another award or as a freestanding award. The
terms and conditions of Dividend Equivalent Rights shall be specified in the
Agreement. Dividend equivalents credited to the holder of a Dividend Equivalent
Rights may be paid currently or may be deemed to be reinvested in additional
Paired Shares, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan sponsored by
the Operating Company, if any. Dividend Equivalent Rights granted as a component
of another award may provide that such Dividend Equivalent Rights shall be
settled upon exercise, settlement, or payment of, or lapse of restrictions on,
such other award, and that such Dividend Equivalent Rights shall expire or be
forfeited or annulled under the same conditions as such other award. Dividend
Equivalent Rights granted as a component of another award may also contain terms
and conditions different from such other award.
39.02 Payment. In the discretion of the Committee and as provided in
-------
the Agreement, Dividend Equivalent Rights may be settled in cash, Paired Shares,
or a combination thereof, in a single installment or installments.
39.03 Shareholder Rights. No Participant shall, as a result of receiving
------------------
an award of Dividend Equivalent Rights, have any rights as a shareholder until
and to the extent that the award of Dividend Equivalent Rights is earned and
settled by the issuance of Paired Shares. After an award of Dividend Equivalent
Rights is earned, if settled completely or partially in Paired Shares, a
Participant will have all the rights of a shareholder with respect to such
Paired Shares. The Operating Company shall issue, or cause to be issued, Paired
Shares to the Participant.
39.04 Nontransferability. Unless otherwise provided in the Agreement,
------------------
Dividend Equivalent Rights granted under this Plan shall be nontransferable
except by will or by the laws of descent and distribution. No right or interest
of a Participant in any Dividend Equivalent Rights shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
12
<PAGE>
40. - CHANGE IN CONTROL PROVISIONS
----------------------------------
(a) A "Change in Control" with respect to the Operating Company shall
be deemed to have taken place if any of the following events occurs:
(i) Any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than an Affiliate, a trustee or other fiduciary holding
securities under an employee benefit plan of the Operating Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Operating Company
representing 25% or more of the combined voting power of the Operating Company's
then outstanding securities; or
(ii) individuals who, as of July 2, 1997, constitute the Board and
any new director (other than a director designated by a person who has entered
into an agreement with the Operating Company to effect a transaction described
in clauses (i) or (iii) of this paragraph) whose election by the Board or
nomination for election by the Operating Company's shareholders was approved by
a vote of at least eighty percent (80%) of the directors then still in office
who either were directors as of July 2, 1997 or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the Board; or
(iii) the shareholders of the Operating Company approve a merger or
consolidation of the Operating Company with or into any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Operating Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power of the voting securities of the Operating Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
shareholders of the Operating Company approve a plan of complete liquidation of
the Operating Company or an agreement for the sale or disposition by the
Operating Company of all or substantially all the Operating Company's assets.
(b) Upon the occurrence of a Change in Control, unless otherwise
provided in an Agreement, each Participant shall have immediate vesting of, and
the immediate right to, exercise all outstanding Paired Options,
13
<PAGE>
and any risk of forfeiture included in any Restricted Paired Unit Award and
Dividend Equivalent Rights shall lapse.
41. - ADJUSTMENT UPON CHANGE IN PAIRED SHARES
---------------------------------------------
41.01 Adjustments. The maximum number of Paired Shares as to which
-----------
awards may be granted under this Plan, the terms of outstanding awards and the
per individual limitations on the number of Paired Shares for which Paired
Options or other Awards may be granted, shall be adjusted as the Committee shall
determine to be equitably required in the event that (a) the Operating Company
(i) effects one or more stock dividends, stock split-ups, subdivisions or
consolidations of shares or (ii) engages in a transaction to which Section 424
of the Code applies or (b) there occurs any other event which, in the judgment
of the Committee, necessitates such action. Any determination made under this
Article XII by the Committee shall be final and conclusive. Any adjustment made
pursuant to this Section 12.01 shall also be made in the REIT Plan.
41.02 Mergers or Other Corporate Transactions. Upon consummation of a
---------------------------------------
consolidation, merger, or sale of all or substantially all of the assets of the
Operating Company in which outstanding Paired Shares are exchanged for
securities, cash, or other property of an unrelated corporation or business
entity, or in the event of a liquidation of the Operating Company (in each case,
a "Transaction"), the Board, or the board of directors of any corporation
assuming the obligations of the Operating Company, may, in its discretion, take
any one or more of the following actions, as to outstanding Awards: (i) provide
that such Awards shall be assumed or equivalent awards shall be substituted, by
the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon
written notice to the Participants, provide that all Awards will terminate
immediately prior to the consummation of the Transaction. In the event that,
pursuant to clause (ii) above, Awards will terminate immediately prior to the
consummation of the Transaction, all Awards, other than Paired Options, shall be
fully settled in cash or in kind at such appropriate consideration as determined
by the Committee in its sole discretion after taking into account the
consideration payable per Paired Share pursuant to the business combination (the
"Merger Price") and all Paired Options shall be fully settled, in cash or in
kind, in an amount equal to the difference between (A) the Merger Price times
the number of Paired Shares subject to such outstanding Paired Options (to the
extent then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate
14
<PAGE>
exercise price of all such outstanding Paired Options; provided, however, that
each Participant shall be permitted, within a specified period determined by the
Committee prior to the consummation of the Transaction, to exercise all
outstanding Paired Options, including those that are not then exercisable,
subject to the consummation of the Transaction.
42. - COMPLIANCE WITH LAW
AND APPROVAL OF REGULATORY BODIES
---------------------------------
No Paired Option shall be exercisable, no Paired Shares shall be issued, no
certificates for Paired Shares shall be delivered, and no payment shall be made
under this Plan except in compliance with all applicable federal and state laws
and regulations (including, without limitation, withholding tax requirements),
any listing agreement to which the Operating Company is a party, and the rules
of all domestic stock exchanges on which the Paired Shares may be listed. The
Operating Company shall have the right to rely on an opinion of its counsel as
to such compliance. Any share certificate issued to evidence a Paired Share when
a Paired Share Award is granted, or for which a Paired Option is exercised or a
Restricted Paired Unit Award or Deferred Paired Unit Award settled, may bear
such legends and statements as the Committee may deem advisable to assure
compliance with federal and state laws and regulations. No Paired Option shall
be exercisable, no Paired Share Award shall be granted, no Paired Share shall be
issued, no certificate for Paired Shares shall be delivered, and no payment
shall be made under this Plan until the Operating Company has obtained such
consent or approval as the Committee may deem advisable from regulatory bodies
having jurisdiction over such matters.
Notwithstanding any other provision hereunder, no Paired Option shall be
exercisable, no Paired Shares shall be issued, no certificates for Paired Shares
shall be delivered, and no payment shall be made under this Plan if and to the
extent that to do so would (i) result in the failure of the REIT to satisfy the
Code requirements pertaining to real estate investment trusts (which such Code
requirements include, but are not limited to, qualification of the REIT as a
real estate investment trust and retention of the REIT's status as grandfathered
under Section 132(c)(3) of the Deficit Reduction Act of 1984) or (ii) violate
(or cause any person to violate) the restrictions on ownership and transfer of
equity stock set forth in Article IV of the Amended and Restated Certificate of
Incorporation of Patriot American Hospitality Operating Company (as amended or
any successor
15
<PAGE>
thereto) or in Article IV of the Amended and Restated Certificate of
Incorporation of Patriot American Hospitality, Inc. (as amended or any successor
thereto).
43. - GENERAL PROVISIONS
------------------------
43.01 Effect on Employment and Service. Neither the adoption of this
--------------------------------
Plan, its operation, nor any documents describing or referring to this Plan (or
any part thereof) shall confer upon any individual any right to continue in the
employ or service of the Operating Company or an Affiliate or in any way affect
any right and power of the Operating Company or an Affiliate to terminate the
employment or service of any individual at any time with or without assigning a
reason therefor.
43.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall
-------------
be unfunded, and the Operating Company shall not be required to segregate any
assets that may at any time be represented by grants under this Plan. Any
liability of the Operating Company to any person with respect to any grant under
this Plan shall be based solely upon any contractual obligations that may be
created pursuant to this Plan. No such obligation of the Operating Company shall
be deemed to be secured by any pledge of, or other encumbrance on, any property
of the Operating Company.
43.03 Rules of Construction. Headings are given to the articles and
---------------------
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
44. - AMENDMENT
---------------
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of Paired Shares
that may be issued under the Plan, (ii) the amendment changes the class of
individuals eligible to become Participants or (iii) the amendment materially
increases the benefits that may be provided under the Plan. No amendment shall,
without a Participant's consent, adversely affect any rights of such Participant
under any award outstanding at the time such amendment is made. Nothing in this
Article XV shall limit the Board's authority to take any action pursuant to
Section 12.02.
45. - TERMINATION OF PAIRING AGREEMENT
--------------------------------------
16
<PAGE>
Notwithstanding anything herein to the contrary, if at any time the Pairing
Agreement is terminated for any reason and, as a result of such termination,
shares of Operating Company Common Stock and REIT Common Stock are no longer
required to be transferred as a single unit, then as of the date of such
termination: Paired Options shall no longer be granted hereunder; Paired Share
Awards shall no longer be made hereunder with respect to Paired Shares; Deferred
Paired Unit Awards and Restricted Paired Unit Awards shall no longer be paid
hereunder in the form of Paired Shares; and Dividend Equivalent Rights shall no
longer be granted hereunder with respect to shares of REIT Common Stock.
Furthermore, as of the date of such termination: only Operating Company Options,
Awards of Operating Company Common Stock and Restricted Unit Awards relating to
shares of Operating Company Common Stock may be granted hereunder; elections may
be made hereunder only as to Deferred Paired Units Awards based on Operating
Company Common Stock; and Dividend Equivalent Rights shall be granted hereunder
only with respect to shares of Operating Company Common Stock.
46. - EFFECTIVE DATE OF PLAN
----------------------------
Paired Options, Restricted Paired Unit Awards, Deferred Paired Unit Awards
and Dividend Equivalent Rights may be granted under this Plan upon its adoption
by the Board, provided that no such Award shall be effective or exercisable
unless this Plan is approved by the holders of a majority of the votes present
or represented and entitled to be cast by the Operating Company's shareholders,
voting either in person or by proxy, at a duly held shareholders' meeting.
Paired Share Awards may be granted under this Plan upon the later of its
adoption by the Board or its approval by shareholders in accordance with the
preceding sentence.
47. - GOVERNING LAW
-------------------
The Plan and all Awards and action taken thereunder shall be governed by,
and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.
17
<PAGE>
Exhibit 4.5
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of February 14, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to William W. Evans, III, an
executive officer of the Company (the "Optionee"), as of February 14, 1997 (the
"Option Date"), a non-qualified option (the "Option") to purchase from the
Company 280,000 shares of Common Stock, at the price of $48.25 per share,
subject to the terms and conditions set forth below. The Option is not being
granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the
"Plan"); however, capitalized terms not defined herein shall have the meanings
specified in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after February 14, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with the
-------
Company continues through such date, the Option shall become exercisable as to
23,334 shares of Common Stock on April 1, 1997, with respect to an additional
23,334 shares of Common Stock on the first day of the next ten calendar quarters
thereafter and with respect to the remaining shares of Common Stock subject to
this Option on January 1, 2000 and otherwise as provided below in this Section
2.2.
(b) Termination Not For Cause or Constructive Termination. If
-----------------------------------------------------
the Optionee's employment is terminated by the Company other than for "Cause,"
or if the Optionee's employment by the Company is terminated by the Optionee in
a "Constructive Termination," in each case as defined below, the Optionee shall
become fully vested in the Option and the Optionee may exercise the Option at
any time before the Expiration Date.
(c) Exercise After Termination of Employment. Except as provided
----------------------------------------
in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by the Company is
terminated by the Company for "Cause" or the Optionee's employment by the
Company is terminated by Optionee in circumstances other than a "Constructive
Termination," the Optionee may exercise this Option only to the extent that it
is exercisable on the effective date of his termination of employment. Such
exercise may be made at any time prior to the Expiration Date. The portion of
the Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of the Company, this Option
shall become fully exercisable and may be exercised by the Optionee's estate or
by the person or persons to whom his rights under this Option shall pass by will
or the laws of descent and distribution. The Optionee's estate or such persons
may exercise this Option with respect to all or part of the shares of Common
Stock that remain subject to this Option during the remainder of the period
preceding the Expiration Date.
<PAGE>
(e) Exercise in the Event of Disability. In the event the
-----------------------------------
Optionee becomes disabled within the meaning of Section 14 of the Employment
Agreement before the Expiration Date and while employed by the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option during the remainder of the period preceding the Expiration Date.
(f) Definitions.
-----------
(i) "Cause" shall mean the termination of the Optionee's
employment by act of the Board of Directors of the Company (the
"Board") in accordance with Section 15(a) of the Employment Agreement.
(ii) "Constructive Termination" shall mean the termination
of the Optionee's employment with the Company by the Optionee in one or
more circumstances described in Section 16(b) of the Employment
Agreement.
(iii) "Employment Agreement" means the Agreement of the same
name entered into as of February 14, 1997 by and between the Company and the
Optionee.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise. Subject to the limitations set forth in this
------------------
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (i) in cash, (ii) in
previously owned whole shares of Common Stock (which the Optionee has held for
at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date of exercise, equal to the aggregate purchase
price payable pursuant to the Option by reason of such exercise, (iii) in cash
by a broker-dealer acceptable to the Company to whom the Optionee has submitted
an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2)
by executing such documents as the Company may reasonably
2
<PAGE>
request. The Board or a committee thereof shall have sole discretion to
disapprove of an election pursuant to either clause (ii) or (iii). Any fraction
of a share of Common Stock which would be required to pay such purchase price
shall be disregarded and the remaining amount due shall be paid in cash by the
Optionee. No certificate representing a share of Common Stock shall be delivered
until the full purchase price therefor has been paid.
2.4 Termination of Option. In no event may the Option be exercised
---------------------
after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3, on the
Expiration Date.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction, this Option shall be converted on an
equitable basis to an option to acquire the stapled interest in each of the
paired entities.
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of Common
Stock upon exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company, in addition to the purchase price of the shares of
Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his obligation to advance
the Required Tax Payments by any of the following means: (1) a cash payment to
the Company pursuant to Section 3.2(a), (2) delivery to the Company of
previously owned whole shares of Common Stock (which the Optionee has held for
at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
3
<PAGE>
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price for a share of Common Stock under the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not
---------------------------------------
be entitled to any privileges of ownership with respect to shares of Common
Stock subject to the Option unless and until purchased and delivered upon the
exercise of the Option, in whole or in part, and the Optionee becomes a
stockholder of record with respect to such delivered shares of Common Stock; and
the Optionee shall not be considered a stockholder of the Company with respect
to any such shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to
---------------------
the expiration or termination of the Option reserve or cause to be reserved and
keep or cause to be kept available, either in its treasury or out of its
authorized but unissued shares of Common Stock, the full number of shares of
Common Stock subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4
<PAGE>
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the
Commonwealth of Virginia and construed in accordance therewith without giving
effect to principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
4.07 Further Assurances. The Company and the Optionee shall execute
------------------
and deliver such further instruments and take such additional action as each
party may reasonably request to effect, consummate, confirm or evidence the
grant of the Option to the Optionee, and they shall each execute such documents
as may be reasonably necessary to assist each other in preserving or perfecting
their respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
/s/ Paul A. Nussbaum
-------------------------------------------
By: Paul A. Nussbaum
Its: Chairman and Chief Executive Officer
Accepted this 14th day of February, 1997
/s/ William W. Evans, III
- --------------------------------------
William W. Evans, III
"Optionee"
5
<PAGE>
Exhibit 4.6
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Richard Holtzman, an
individual serving as a consultant to the Company (the "Optionee"), as of
January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to
purchase from the Company 85,000 shares of Common Stock, at the price of $38.25
per share, subject to the terms and conditions set forth below. The Option is
not being granted under the Patriot American Hospitality, Inc. 1995 Incentive
Plan (the "Plan"); however, capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability. In
-------------------------------------------------------
the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company
(in either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in connection
with the performance of any of his duties, including, without
limitation, misappropriation of funds or property of Resorts, the
Company or the affiliates of either of them or without the prior
approval of the Board, securing or attempting to secure
personally any profit in connection with any transaction entered
into on behalf of Resorts, the Company or the affiliates of
either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if he
were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit of
his creditors; or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or
the Company (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from a resignation
by the Optionee for Good Reason) after a written demand for
substantial performance is delivered to the Optionee by the
Board, which demand specifically identifies the manner in which
the Board believes that the Optionee has not substantially
performed the Optionee's duties, and which performance is not
substantially corrected by the Optionee within ten (10) days of
receipt of such demand. For purposes of the previous sentence, no
act or failure to act on the Optionee's part shall be deemed
"willful" unless done, or omitted to be done, by the Optionee not
in good faith and without reasonable belief that the Optionee's
action or omission was in the best interest of Resorts or the
Company. Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until there
shall have been delivered to the Optionee a copy of a resolution
duly adopted by affirmative vote of not less than the majority of
the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to the
Optionee and an opportunity for the Optionee, together with the
Optionee's counsel, to be heard before the Board), finding that
in the good faith opinion of the Board the Optionee was guilty of
conduct set forth above in clause (A), (B) or (C) of this
subsection and specifying the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration
of the Optionee's position, the Optionee's titles, or the
nature or status of the Optionee's responsibilities from those
in effect immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the
Company in the Optionee's annual base salary as in effect
immediately prior to the Option Date or as the same may be
increased from time to time thereafter; or
(C) The relocation of the corporate
headquarters of Resorts to a location which is outside the
Phoenix, Arizona metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall
---------------------------------------
not be entitled to any privileges of ownership with respect to shares of Common
Stock subject to the Option unless and until purchased and delivered upon the
exercise of the Option, in whole or in part, and the Optionee becomes a
stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee
-------------------------------
thereof) shall have the right to resolve all questions which may arise in
connection with the Option or its exercise. Any interpretation, determination or
other action made or taken by the Board (or Committee thereof) regarding this
Agreement shall be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to
---------------------
the expiration or termination of the Option reserve or cause to be reserved and
keep or cause to be kept available, either in its treasury or out of its
authorized but unissued shares of Common Stock, the full number of shares of
Common Stock subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is
-----------------------------------------
hereby designated as not constituting an "incentive stock option" within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended. This
Agreement shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to
----------
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications
-------
provided for in this Agreement shall be made, if to the Company, to the
Secretary of the Company at the Company's principal executive office, and if to
the Optionee, to his address on the books of the Company (or to such other
address as the Company or the Optionee may give to the other for purposes of
notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all
-------------
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Virginia and construed in accordance therewith without giving
effect to principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two
------------
counterparts, each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute
------------------
and deliver such further instruments and take such additional action as each
party may reasonably request to effect, consummate, confirm or evidence the
grant of the Option to the Optionee, and they shall each execute such documents
as may be reasonably necessary to assist each other in preserving or perfecting
their respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
----------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Richard Holtzman
- -----------------------------------------
Richard Holtzman
"Optionee"
7
<PAGE>
Exhibit 4.7
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Scott Lyon, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 85,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the
Optionee's employment by act of the Board of Directors of Resorts or
the Company (in either case, the "Board") for any of the following
reasons:
(A) Willful misconduct of the Optionee in
connection with the performance of any of his duties,
including, without limitation, misappropriation of funds or
property of Resorts, the Company or the affiliates of either
of them or without the prior approval of the Board, securing
or attempting to secure personally any profit in connection
with any transaction entered into on behalf of Resorts, the
Company or the affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if
he were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit
of his creditors; or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or
the Company (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from a
resignation by the Optionee for Good Reason) after a written
demand for substantial performance is delivered to the
Optionee by the Board, which demand specifically identifies
the manner in which the Board believes that the Optionee has
not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee
within ten (10) days of receipt of such demand. For purposes
of the previous sentence, no act or failure to act on the
Optionee's part shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or
omission was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to the Optionee a copy of a
resolution duly adopted by affirmative vote of not less than
the majority of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board the Optionee was guilty of conduct set forth above
in clause (A), (B) or (C) of this subsection and specifying
the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration
of the Optionee's position, the Optionee's titles, or the
nature or status of the Optionee's responsibilities from those
in effect immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the
Company in the Optionee's annual base salary as in effect
immediately prior to the Option Date or as the same may be
increased from time to time thereafter; or
(C) The relocation of the corporate
headquarters of Resorts to a location which is outside the
Phoenix, Arizona metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall
---------------------------------------
not be entitled to any privileges of ownership with respect to shares of Common
Stock subject to the Option unless and until purchased and delivered upon the
exercise of the Option, in whole or in part, and the Optionee becomes a
stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
---------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Scott Lyon
- ----------------------------------------
Scott Lyon
"Optionee"
7
<PAGE>
Exhibit 4.8
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to David Beckham, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 85,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company
(in either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in
connection with the performance of any of his duties,
including, without limitation, misappropriation of funds or
property of Resorts, the Company or the affiliates of either
of them or without the prior approval of the Board, securing
or attempting to secure personally any profit in connection
with any transaction entered into on behalf of Resorts, the
Company or the affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if
he were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit
of his creditors; or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or
the Company (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from a
resignation by the Optionee for Good Reason) after a written
demand for substantial performance is delivered to the
Optionee by the Board, which demand specifically identifies
the manner in which the Board believes that the Optionee has
not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee
within ten (10) days of receipt of such demand. For purposes
of the previous sentence, no act or failure to act on the
Optionee's part shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or
omission was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to the Optionee a copy of a
resolution duly adopted by affirmative vote of not less than
the majority of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board the Optionee was guilty of conduct set forth above
in clause (A), (B) or (C) of this subsection and specifying
the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration
of the Optionee's position, the Optionee's titles, or the
nature or status of the Optionee's responsibilities from those
in effect immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the
Company in the Optionee's annual base salary as in effect
immediately prior to the Option Date or as the same may be
increased from time to time thereafter; or
(C) The relocation of the corporate
headquarters of Resorts to a location which is outside the
Phoenix, Arizona metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of Common
Stock upon exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company, in addition to the purchase price of the shares of
Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not be
---------------------------------------
entitled to any privileges of ownership with respect to shares of Common Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
---------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ David Beckham
- ----------------------------------------
David Beckham
"Optionee"
7
<PAGE>
Exhibit 4.9
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the laws
of Virginia (the "Company"), hereby grants to William Nassikas, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 45,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this Agreement
by executing it in the space provided below and returning such original
execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company (in
either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in connection
with the performance of any of his duties, including, without
limitation, misappropriation of funds or property of Resorts, the
Company or the affiliates of either of them or without the prior
approval of the Board, securing or attempting to secure personally
any profit in connection with any transaction entered into on behalf
of Resorts, the Company or the affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if he
were to be retained in his position, including, without limitation,
conviction of a felony involving moral turpitude, bankruptcy,
insolvency or general assignment for the benefit of his creditors;
or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or the
Company (other than any such failure resulting from the Optionee's
incapacity due to physical or mental illness or any such actual or
anticipated failure resulting from a resignation by the Optionee for
Good Reason) after a written demand for substantial performance is
delivered to the Optionee by the Board, which demand specifically
identifies the manner in which the Board believes that the Optionee
has not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee within
ten (10) days of receipt of such demand. For purposes of the
previous sentence, no act or failure to act on the Optionee's part
shall be deemed "willful" unless done, or omitted to be done, by the
Optionee not in good faith and without reasonable belief that the
Optionee's action or omission was in the best interest of Resorts or
the Company. Notwithstanding the foregoing, the Optionee shall not
be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Optionee a copy of a resolution
duly adopted by affirmative vote of not less than the majority of
the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice to the Optionee
and an opportunity for the Optionee, together with the Optionee's
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board the Optionee was guilty of conduct set
forth above in clause (A), (B) or (C) of this subsection and
specifying the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the Optionee's
employment prior to the Expiration Date as a result of any of the
following:
2
<PAGE>
(A) A meaningful and detrimental alteration of the
Optionee's position, the Optionee's titles, or the nature or status
of the Optionee's responsibilities from those in effect immediately
prior to the Option Date;
(B) A meaningful reduction by Resorts or the Company
in the Optionee's annual base salary as in effect immediately prior
to the Option Date or as the same may be increased from time to time
thereafter; or
(C) The relocation of the corporate headquarters of
Resorts to a location which is outside the Phoenix, Arizona
metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as otherwise
--------------------------------------
provided in Section 3.1(c), upon consummation of a consolidation or merger or
sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement, the
Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this Agreement,
upon receipt of any notice of option exercise by the Optionee, in lieu of
issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it terminates as
set forth in this Section 2.4. The Option shall terminate, to the extent not
exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2,
on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Common Stock subject to the Option expire or are exercised, canceled
or forfeited, the Optionee shall promptly return this Agreement to the Company
for full or partial cancellation, as the case may be. Such cancellation shall be
effective regardless of whether the Optionee returns this Agreement. If the
Optionee continues to have rights to purchase shares of Common Stock hereunder,
the Company shall, within 10 days of the Optionee's delivery of this Agreement
to the Company, either (i) mark this Agreement to indicate the extent to which
the Option has expired or been exercised, canceled or forfeited or (ii) issue to
the Optionee a substitute option agreement applicable to such rights, which
agreement shall otherwise be identical to this Agreement in form and substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the Option
may not be transferred by the Optionee other than by will or the laws of descent
and distribution or pursuant to beneficiary designation procedures approved by
the Company. The Option (or any part thereof) may be transferred to the
Optionee's children, grandchildren, spouse, one or more trusts for the benefit
of such family members or one or more partnerships in which such family members
are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the Optionee's
lifetime the Option shall be exercisable only by the Optionee or the Optionee's
Legal Representative. Except as permitted by Section 3.1(a), the Option may not
be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and Bay
Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of Common
Stock upon exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company, in addition to the purchase price of the shares of
Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the Option
---------------------
Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in whole
------------------------
or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not be
---------------------------------------
entitled to any privileges of ownership with respect to shares of Common Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided for
-------
in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
-------------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ William Nassikas
- ----------------------------------------
William Nassikas
"Optionee"
7
<PAGE>
Exhibit 4.10
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the laws
of Virginia (the "Company"), hereby grants to Michael Surguine, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 45,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this Agreement
by executing it in the space provided below and returning such original
execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised, in
----------------------
whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as provided
----------------------------------------
in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the
Company is terminated by Resorts or the Company for "Cause" or the Optionee's
employment by Resorts or the Company is terminated by Optionee without "Good
Reason", the Optionee may exercise this Option only to the extent that it is
exercisable on the effective date of his termination of employment. Such
exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee dies
------------------------------
before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability. In
-------------------------------------------------------
the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company (in
either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in connection
with the performance of any of his duties, including, without
limitation, misappropriation of funds or property of Resorts, the
Company or the affiliates of either of them or without the prior
approval of the Board, securing or attempting to secure personally
any profit in connection with any transaction entered into on behalf
of Resorts, the Company or the affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if he
were to be retained in his position, including, without limitation,
conviction of a felony involving moral turpitude, bankruptcy,
insolvency or general assignment for the benefit of his creditors;
or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or the
Company (other than any such failure resulting from the Optionee's
incapacity due to physical or mental illness or any such actual or
anticipated failure resulting from a resignation by the Optionee for
Good Reason) after a written demand for substantial performance is
delivered to the Optionee by the Board, which demand specifically
identifies the manner in which the Board believes that the Optionee
has not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee within
ten (10) days of receipt of such demand. For purposes of the
previous sentence, no act or failure to act on the Optionee's part
shall be deemed "willful" unless done, or omitted to be done, by the
Optionee not in good faith and without reasonable belief that the
Optionee's action or omission was in the best interest of Resorts or
the Company. Notwithstanding the foregoing, the Optionee shall not
be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Optionee a copy of a resolution
duly adopted by affirmative vote of not less than the majority of
the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice to the Optionee
and an opportunity for the Optionee, together with the Optionee's
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board the Optionee was guilty of conduct set
forth above in clause (A), (B) or (C) of this subsection and
specifying the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the Optionee's
employment prior to the Expiration Date as a result of any of the
following:
2
<PAGE>
(A) A meaningful and detrimental alteration of the
Optionee's position, the Optionee's titles, or the nature or status
of the Optionee's responsibilities from those in effect immediately
prior to the Option Date;
(B) A meaningful reduction by Resorts or the Company
in the Optionee's annual base salary as in effect immediately prior
to the Option Date or as the same may be increased from time to time
thereafter; or
(C) The relocation of the corporate headquarters of
Resorts to a location which is outside the Phoenix, Arizona
metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as otherwise
--------------------------------------
provided in Section 3.1(c), upon consummation of a consolidation or merger or
sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement, the
Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this Agreement,
upon receipt of any notice of option exercise by the Optionee, in lieu of
issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it terminates as
set forth in this Section 2.4. The Option shall terminate, to the extent not
exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2,
on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
shares of Common Stock subject to the Option expire or are exercised, canceled
or forfeited, the Optionee shall promptly return this Agreement to the Company
for full or partial cancellation, as the case may be. Such cancellation shall be
effective regardless of whether the Optionee returns this Agreement. If the
Optionee continues to have rights to purchase shares of Common Stock hereunder,
the Company shall, within 10 days of the Optionee's delivery of this Agreement
to the Company, either (i) mark this Agreement to indicate the extent to which
the Option has expired or been exercised, canceled or forfeited or (ii) issue to
the Optionee a substitute option agreement applicable to such rights, which
agreement shall otherwise be identical to this Agreement in form and substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the Option
may not be transferred by the Optionee other than by will or the laws of descent
and distribution or pursuant to beneficiary designation procedures approved by
the Company. The Option (or any part thereof) may be transferred to the
Optionee's children, grandchildren, spouse, one or more trusts for the benefit
of such family members or one or more partnerships in which such family members
are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the Optionee's
lifetime the Option shall be exercisable only by the Optionee or the Optionee's
Legal Representative. Except as permitted by Section 3.1(a), the Option may not
be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and Bay
Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of Common
Stock upon exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company, in addition to the purchase price of the shares of
Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the Option
---------------------
Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in whole
------------------------
or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not be
---------------------------------------
entitled to any privileges of ownership with respect to shares of Common Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided for
-------
in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
-------------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Michael Surguine
- -----------------------------------------
Michael Surguine
"Optionee"
7
<PAGE>
Exhibit 4.11
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Del Goehring, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 20,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be
----------------------
exercised, in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company
(in either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in connection
with the performance of any of his duties, including, without
limitation, misappropriation of funds or property of Resorts,
the Company or the affiliates of either of them or without the
prior approval of the Board, securing or attempting to secure
personally any profit in connection with any transaction
entered into on behalf of Resorts, the Company or the
affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if
he were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit
of his creditors; or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or
the Company (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from a
resignation by the Optionee for Good Reason) after a written
demand for substantial performance is delivered to the
Optionee by the Board, which demand specifically identifies
the manner in which the Board believes that the Optionee has
not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee
within ten (10) days of receipt of such demand. For purposes
of the previous sentence, no act or failure to act on the
Optionee's part shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or
omission was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to the Optionee a copy of a
resolution duly adopted by affirmative vote of not less than
the majority of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board the Optionee was guilty of conduct set forth above
in clause (A), (B) or (C) of this subsection and specifying
the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration of the
Optionee's position, the Optionee's titles, or the nature or
status of the Optionee's responsibilities from those in effect
immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the Company
in the Optionee's annual base salary as in effect immediately
prior to the Option Date or as the same may be increased from
time to time thereafter; or
(C) The relocation of the corporate headquarters of
Resorts to a location which is outside the Phoenix, Arizona
metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall
---------------------------------------
not be entitled to any privileges of ownership with respect to shares of Common
Stock subject to the Option unless and until purchased and delivered upon the
exercise of the Option, in whole or in part, and the Optionee becomes a
stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
------------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Del Goehring
- ----------------------------------------
Del Goehring
"Optionee"
7
<PAGE>
Exhibit 4.12
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Bruce Campbell, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 5,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company
(in either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in connection
with the performance of any of his duties, including, without
limitation, misappropriation of funds or property of Resorts,
the Company or the affiliates of either of them or without the
prior approval of the Board, securing or attempting to secure
personally any profit in connection with any transaction
entered into on behalf of Resorts, the Company or the
affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if
he were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit
of his creditors; or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or
the Company (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from a
resignation by the Optionee for Good Reason) after a written
demand for substantial performance is delivered to the
Optionee by the Board, which demand specifically identifies
the manner in which the Board believes that the Optionee has
not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee
within ten (10) days of receipt of such demand. For purposes
of the previous sentence, no act or failure to act on the
Optionee's part shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or
omission was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to the Optionee a copy of a
resolution duly adopted by affirmative vote of not less than
the majority of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board the Optionee was guilty of conduct set forth above
in clause (A), (B) or (C) of this subsection and specifying
the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration
of the Optionee's position, the Optionee's titles, or the
nature or status of the Optionee's responsibilities from those
in effect immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the
Company in the Optionee's annual base salary as in effect
immediately prior to the Option Date or as the same may be
increased from time to time thereafter; or
(C) The relocation of the corporate
headquarters of Resorts to a location which is outside the
Phoenix, Arizona metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not be
---------------------------------------
entitled to any privileges of ownership with respect to shares of Common Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
-----------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Bruce Campbell
- --------------------------------------
Bruce Campbell
"Optionee"
7
<PAGE>
Exhibit 4.13
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to William Gamble, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 5,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the
Optionee's employment by act of the Board of Directors of Resorts or
the Company (in either case, the "Board") for any of the following
reasons:
(A) Willful misconduct of the Optionee in connection
with the performance of any of his duties, including, without
limitation, misappropriation of funds or property of Resorts,
the Company or the affiliates of either of them or without the
prior approval of the Board, securing or attempting to secure
personally any profit in connection with any transaction
entered into on behalf of Resorts, the Company or the
affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if
he were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit
of his creditors; or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or
the Company (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from a
resignation by the Optionee for Good Reason) after a written
demand for substantial performance is delivered to the
Optionee by the Board, which demand specifically identifies
the manner in which the Board believes that the Optionee has
not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee
within ten (10) days of receipt of such demand. For purposes
of the previous sentence, no act or failure to act on the
Optionee's part shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or
omission was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to the Optionee a copy of a
resolution duly adopted by affirmative vote of not less than
the majority of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board the Optionee was guilty of conduct set forth above
in clause (A), (B) or (C) of this subsection and specifying
the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration of the
Optionee's position, the Optionee's titles, or the nature or
status of the Optionee's responsibilities from those in effect
immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the Company
in the Optionee's annual base salary as in effect immediately
prior to the Option Date or as the same may be increased from
time to time thereafter; or
(C) The relocation of the corporate headquarters of
Resorts to a location which is outside the Phoenix, Arizona
metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club
and Bay Meadows Operating Company transaction (the "Merger"), this Option shall
be converted on an equitable basis to an option to acquire the stapled interest
in each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation
to advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall
---------------------------------------
not be entitled to any privileges of ownership with respect to shares of Common
Stock subject to the Option unless and until purchased and delivered upon the
exercise of the Option, in whole or in part, and the Optionee becomes a
stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee
-------------------------------
thereof) shall have the right to resolve all questions which may arise in
connection with the Option or its exercise. Any interpretation, determination or
other action made or taken by the Board (or Committee thereof) regarding this
Agreement shall be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to
---------------------
the expiration or termination of the Option reserve or cause to be reserved and
keep or cause to be kept available, either in its treasury or out of its
authorized but unissued shares of Common Stock, the full number of shares of
Common Stock subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is
-----------------------------------------
hereby designated as not constituting an "incentive stock option" within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended. This
Agreement shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to
----------
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications
-------
provided for in this Agreement shall be made, if to the Company, to the
Secretary of the Company at the Company's principal executive office, and if to
the Optionee, to his address on the books of the Company (or to such other
address as the Company or the Optionee may give to the other for purposes of
notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all
-------------
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Virginia and construed in accordance therewith without giving
effect to principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two
------------
counterparts, each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute
------------------
and deliver such further instruments and take such additional action as each
party may reasonably request to effect, consummate, confirm or evidence the
grant of the Option to the Optionee, and they shall each execute such documents
as may be reasonably necessary to assist each other in preserving or perfecting
their respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
-------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ William Gamble
- -----------------------------------------
William Gamble
"Optionee"
7
<PAGE>
Exhibit 4.14
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Richard Riess, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 3,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company
(in either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in
connection with the performance of any of his duties,
including, without limitation, misappropriation of funds or
property of Resorts, the Company or the affiliates of either
of them or without the prior approval of the Board, securing
or attempting to secure personally any profit in connection
with any transaction entered into on behalf of Resorts, the
Company or the affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if
he were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit
of his creditors; or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or
the Company (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from a
resignation by the Optionee for Good Reason) after a written
demand for substantial performance is delivered to the
Optionee by the Board, which demand specifically identifies
the manner in which the Board believes that the Optionee has
not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee
within ten (10) days of receipt of such demand. For purposes
of the previous sentence, no act or failure to act on the
Optionee's part shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or
omission was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to the Optionee a copy of a
resolution duly adopted by affirmative vote of not less than
the majority of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board the Optionee was guilty of conduct set forth above
in clause (A), (B) or (C) of this subsection and specifying
the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration of the
Optionee's position, the Optionee's titles, or the nature or
status of the Optionee's responsibilities from those in effect
immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the Company
in the Optionee's annual base salary as in effect immediately
prior to the Option Date or as the same may be increased from
time to time thereafter; or
(C) The relocation of the corporate headquarters of
Resorts to a location which is outside the Phoenix, Arizona
metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall
---------------------------------------
not be entitled to any privileges of ownership with respect to shares of Common
Stock subject to the Option unless and until purchased and delivered upon the
exercise of the Option, in whole or in part, and the Optionee becomes a
stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee
-------------------------------
thereof) shall have the right to resolve all questions which may arise in
connection with the Option or its exercise. Any interpretation, determination or
other action made or taken by the Board (or Committee thereof) regarding this
Agreement shall be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to
---------------------
the expiration or termination of the Option reserve or cause to be reserved and
keep or cause to be kept available, either in its treasury or out of its
authorized but unissued shares of Common Stock, the full number of shares of
Common Stock subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is
-----------------------------------------
hereby designated as not constituting an "incentive stock option" within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended. This
Agreement shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to
----------
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications
-------
provided for in this Agreement shall be made, if to the Company, to the
Secretary of the Company at the Company's principal executive office, and if to
the Optionee, to his address on the books of the Company (or to such other
address as the Company or the Optionee may give to the other for purposes of
notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all
-------------
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Virginia and construed in accordance therewith without giving
effect to principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two
------------
counterparts, each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute
------------------
and deliver such further instruments and take such additional action as each
party may reasonably request to effect, consummate, confirm or evidence the
grant of the Option to the Optionee, and they shall each execute such documents
as may be reasonably necessary to assist each other in preserving or perfecting
their respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Richard Riess
- -----------------------------------------
Richard Riess
"Optionee"
7
<PAGE>
Exhibit 4.15
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Charles F. Kercheval, an
individual serving as a consultant to the Company (the "Optionee"), as of
January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to
purchase from the Company 3,000 shares of Common Stock, at the price of $38.25
per share, subject to the terms and conditions set forth below. The Option is
not being granted under the Patriot American Hospitality, Inc. 1995 Incentive
Plan (the "Plan"); however, capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability. In
-------------------------------------------------------
the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company
(in either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in connection with
the performance of any of his duties, including, without
limitation, misappropriation of funds or property of Resorts, the
Company or the affiliates of either of them or without the prior
approval of the Board, securing or attempting to secure personally
any profit in connection with any transaction entered into on
behalf of Resorts, the Company or the affiliates of either of
them;
(B) Conduct by the Optionee that would result in material
injury to the reputation of Resorts or the Company if he were to
be retained in his position, including, without limitation,
conviction of a felony involving moral turpitude, bankruptcy,
insolvency or general assignment for the benefit of his creditors;
or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or the
Company (other than any such failure resulting from the Optionee's
incapacity due to physical or mental illness or any such actual or
anticipated failure resulting from a resignation by the Optionee
for Good Reason) after a written demand for substantial
performance is delivered to the Optionee by the Board, which
demand specifically identifies the manner in which the Board
believes that the Optionee has not substantially performed the
Optionee's duties, and which performance is not substantially
corrected by the Optionee within ten (10) days of receipt of such
demand. For purposes of the previous sentence, no act or failure
to act on the Optionee's part shall be deemed "willful" unless
done, or omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or omission
was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to the Optionee a copy of a resolution duly adopted
by affirmative vote of not less than the majority of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice to the Optionee and an
opportunity for the Optionee, together with the Optionee's
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board the Optionee was guilty of conduct set
forth above in clause (A), (B) or (C) of this subsection and
specifying the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the Optionee's
employment prior to the Expiration Date as a result of any of the
following:
2
<PAGE>
(A) A meaningful and detrimental alteration
of the Optionee's position, the Optionee's titles, or the
nature or status of the Optionee's responsibilities from those
in effect immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the
Company in the Optionee's annual base salary as in effect
immediately prior to the Option Date or as the same may be
increased from time to time thereafter; or
(C) The relocation of the corporate
headquarters of Resorts to a location which is outside the
Phoenix, Arizona metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
------------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not be
---------------------------------------
entitled to any privileges of ownership with respect to shares of Common Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
----------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Charles F. Kercheval
- -------------------------------------
Charles F. Kercheval
"Optionee"
7
<PAGE>
Exhibit 4.16
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Michael J. Byrd, an
individual serving as a consultant to the Company (the "Optionee"), as of
January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to
purchase from the Company 3,000 shares of Common Stock, at the price of $38.25
per share, subject to the terms and conditions set forth below. The Option is
not being granted under the Patriot American Hospitality, Inc. 1995 Incentive
Plan (the "Plan"); however, capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company
(in either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in connection with
the performance of any of his duties, including, without
limitation, misappropriation of funds or property of Resorts, the
Company or the affiliates of either of them or without the prior
approval of the Board, securing or attempting to secure personally
any profit in connection with any transaction entered into on
behalf of Resorts, the Company or the affiliates of either of
them;
(B) Conduct by the Optionee that would result in material
injury to the reputation of Resorts or the Company if he were to
be retained in his position, including, without limitation,
conviction of a felony involving moral turpitude, bankruptcy,
insolvency or general assignment for the benefit of his creditors;
or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or the
Company (other than any such failure resulting from the Optionee's
incapacity due to physical or mental illness or any such actual or
anticipated failure resulting from a resignation by the Optionee
for Good Reason) after a written demand for substantial
performance is delivered to the Optionee by the Board, which
demand specifically identifies the manner in which the Board
believes that the Optionee has not substantially performed the
Optionee's duties, and which performance is not substantially
corrected by the Optionee within ten (10) days of receipt of such
demand. For purposes of the previous sentence, no act or failure
to act on the Optionee's part shall be deemed "willful" unless
done, or omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or omission
was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to the Optionee a copy of a resolution duly adopted
by affirmative vote of not less than the majority of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice to the Optionee and an
opportunity for the Optionee, together with the Optionee's
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board the Optionee was guilty of conduct set
forth above in clause (A), (B) or (C) of this subsection and
specifying the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the Optionee's
employment prior to the Expiration Date as a result of any of the
following:
2
<PAGE>
(A) A meaningful and detrimental alteration
of the Optionee's position, the Optionee's titles, or the
nature or status of the Optionee's responsibilities from those
in effect immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the
Company in the Optionee's annual base salary as in effect
immediately prior to the Option Date or as the same may be
increased from time to time thereafter; or
(C) The relocation of the corporate
headquarters of Resorts to a location which is outside the
Phoenix, Arizona metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not be
---------------------------------------
entitled to any privileges of ownership with respect to shares of Common Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
-----------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Michael J. Byrd
- ---------------------------------
Michael J. Byrd
"Optionee"
7
<PAGE>
Exhibit 4.17
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Kenneth B. Humes, an
individual serving as a consultant to the Company (the "Optionee"), as of
January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to
purchase from the Company 3,000 shares of Common Stock, at the price of $38.25
per share, subject to the terms and conditions set forth below. The Option is
not being granted under the Patriot American Hospitality, Inc. 1995 Incentive
Plan (the "Plan"); however, capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be exercised,
----------------------
in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total Disability.
-------------------------------------------------------
In the event the Optionee becomes permanently and totally disabled within the
meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled")
before the Expiration Date and while employed by Resorts or the Company, this
Option shall become fully exercisable and may be exercised by the Optionee with
respect to all or part of the shares of Common Stock that remain subject to this
Option within one year of the date he ceases to be employed by Resorts or the
Company as a result of his becoming Permanently and Totally Disabled or during
the remainder of the period preceding the Expiration Date, whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the Optionee's
employment by act of the Board of Directors of Resorts or the Company
(in either case, the "Board") for any of the following reasons:
(A) Willful misconduct of the Optionee in
connection with the performance of any of his duties,
including, without limitation, misappropriation of funds or
property of Resorts, the Company or the affiliates of either
of them or without the prior approval of the Board, securing
or attempting to secure personally any profit in connection
with any transaction entered into on behalf of Resorts, the
Company or the affiliates of either of them;
(B) Conduct by the Optionee that would result in
material injury to the reputation of Resorts or the Company if
he were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit
of his creditors; or
(C) The Optionee's willful and continued failure
substantially to perform the Optionee's duties with Resorts or
the Company (other than any such failure resulting from the
Optionee's incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from a
resignation by the Optionee for Good Reason) after a written
demand for substantial performance is delivered to the
Optionee by the Board, which demand specifically identifies
the manner in which the Board believes that the Optionee has
not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee
within ten (10) days of receipt of such demand. For purposes
of the previous sentence, no act or failure to act on the
Optionee's part shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or
omission was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to the Optionee a copy of a
resolution duly adopted by affirmative vote of not less than
the majority of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board the Optionee was guilty of conduct set forth above
in clause (A), (B) or (C) of this subsection and specifying
the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration of the
Optionee's position, the Optionee's titles, or the nature or
status of the Optionee's responsibilities from those in effect
immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or the Company
in the Optionee's annual base salary as in effect immediately
prior to the Option Date or as the same may be increased from
time to time thereafter; or
(C) The relocation of the corporate headquarters of
Resorts to a location which is outside the Phoenix, Arizona
metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
4
<PAGE>
3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not be
---------------------------------------
entitled to any privileges of ownership with respect to shares of Common Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
6
<PAGE>
4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
--------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Kenneth B. Humes
- -----------------------------------------
Kenneth B. Humes
"Optionee"
7
<PAGE>
Exhibit 4.18
PATRIOT AMERICAN HOSPITALITY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Dated as of January 15, 1997
Patriot American Hospitality, Inc., a corporation organized under the
laws of Virginia (the "Company"), hereby grants to Toni Dawson, an individual
serving as a consultant to the Company (the "Optionee"), as of January 15, 1997
(the "Option Date"), a non-qualified option (the "Option") to purchase from the
Company 3,000 shares of Common Stock, at the price of $38.25 per share, subject
to the terms and conditions set forth below. The Option is not being granted
under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan");
however, capitalized terms not defined herein shall have the meanings specified
in the Plan.
1. Option Subject to Acceptance of Agreement.
-----------------------------------------
The Option may not be exercised unless the Optionee accepts this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.01 Maximum Term of Option. In no event may the Option be
----------------------
exercised, in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
------------------
(a) General. Provided the Optionee's employment with Resorts
-------
Services, Inc. (or any successor thereof) ("Resorts") or the Company continues
through such date, the Option shall become exercisable as to one-fourth of the
number of shares of Common Stock subject to the Option on each anniversary of
the Option Date, commencing with the first anniversary occurring in 1998, and
otherwise as provided below in this Section 2.2.
(b) Termination Not For Cause or For Good Reason. If the
--------------------------------------------
Optionee's employment is terminated by Resorts or the Company other than for
"Cause," or if the Optionee's employment by Resorts or the Company is terminated
by the Optionee for "Good Reason," in each case as defined below, the Optionee
shall continue to vest in the Option pursuant to the provision of Section 2.2(a)
and the Optionee may exercise the vested portion of the Option at any time
before the Expiration Date.
(c) Exercise After Termination of Employment. Except as
----------------------------------------
provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by
Resorts or the Company is terminated by Resorts or the Company for "Cause" or
the Optionee's employment by Resorts or the Company is terminated by Optionee
without "Good Reason", the Optionee may exercise this Option only to the extent
that it is exercisable on the effective date of his termination of employment.
Such exercise may be made at any time within three months of the date of such
termination (but in any event prior to the Expiration Date). The portion of the
Option that is not exercisable on the effective date of the termination of
employment shall expire immediately on such date.
(d) Exercise in the Event of Death. In the event the Optionee
------------------------------
dies before the Expiration Date while in the employ of Resorts or the Company or
during the one year period described in Section 2.2(e), this Option shall become
fully exercisable and may be exercised by the Optionee's estate or by the person
or persons to whom his rights under this Option shall pass by will or the laws
of descent and distribution. The Optionee's estate or such persons may exercise
this Option with respect to all or part of the shares of Common
<PAGE>
Stock that remain subject to this Option within one year of the Optionee's death
or during the remainder of the period preceding the Expiration Date, whichever
is shorter.
(e) Exercise in the Event of Permanent and Total
--------------------------------------------
Disability. In the event the Optionee becomes permanently and totally disabled
- ----------
within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally
Disabled") before the Expiration Date and while employed by Resorts or the
Company, this Option shall become fully exercisable and may be exercised by the
Optionee with respect to all or part of the shares of Common Stock that remain
subject to this Option within one year of the date he ceases to be employed by
Resorts or the Company as a result of his becoming Permanently and Totally
Disabled or during the remainder of the period preceding the Expiration Date,
whichever is shorter.
(f) Definitions.
-----------
(i) "Cause shall mean the termination of the
Optionee's employment by act of the Board of Directors of Resorts or
the Company (in either case, the "Board") for any of the following
reasons:
(A) Willful misconduct of the Optionee in
connection with the performance of any of his duties,
including, without limitation, misappropriation of funds or
property of Resorts, the Company or the affiliates of either
of them or without the prior approval of the Board, securing
or attempting to secure personally any profit in connection
with any transaction entered into on behalf of Resorts, the
Company or the affiliates of either of them;
(B) Conduct by the Optionee that would result
in material injury to the reputation of Resorts or the Company
if he were to be retained in his position, including, without
limitation, conviction of a felony involving moral turpitude,
bankruptcy, insolvency or general assignment for the benefit
of his creditors; or
(C) The Optionee's willful and continued
failure substantially to perform the Optionee's duties with
Resorts or the Company (other than any such failure resulting
from the Optionee's incapacity due to physical or mental
illness or any such actual or anticipated failure resulting
from a resignation by the Optionee for Good Reason) after a
written demand for substantial performance is delivered to the
Optionee by the Board, which demand specifically identifies
the manner in which the Board believes that the Optionee has
not substantially performed the Optionee's duties, and which
performance is not substantially corrected by the Optionee
within ten (10) days of receipt of such demand. For purposes
of the previous sentence, no act or failure to act on the
Optionee's part shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith and
without reasonable belief that the Optionee's action or
omission was in the best interest of Resorts or the Company.
Notwithstanding the foregoing, the Optionee shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to the Optionee a copy of a
resolution duly adopted by affirmative vote of not less than
the majority of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Optionee and an opportunity for the
Optionee, together with the Optionee's counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board the Optionee was guilty of conduct set forth above
in clause (A), (B) or (C) of this subsection and specifying
the particulars thereof in detail.
(ii) "Good Reason" shall mean a resignation of the
Optionee's employment prior to the Expiration Date as a result of any
of the following:
2
<PAGE>
(A) A meaningful and detrimental alteration
of the Optionee's position, the Optionee's titles, or the
nature or status of the Optionee's responsibilities from those
in effect immediately prior to the Option Date;
(B) A meaningful reduction by Resorts or
the Company in the Optionee's annual base salary as in effect
immediately prior to the Option Date or as the same may be
increased from time to time thereafter; or
(C) The relocation of the corporate
headquarters of Resorts to a location which is outside the
Phoenix, Arizona metropolitan area.
(g) Mergers or Other Corporate Transaction. Except as
--------------------------------------
otherwise provided in Section 3.1(c), upon consummation of a consolidation or
merger or sale of all or substantially all of the assets of the Company in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board or the
Company, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to the Option: (i) provide that such Option shall be assumed or an
equivalent option shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that the unexercised portion of the Option will terminate immediately
prior to the consummation of the Transaction unless exercised by the Optionee
within a specified period following the date of such notice, and/or (iii) in the
event of a business combination under the terms of which holders of the Common
Stock of the Company will receive upon consummation thereof a cash payment for
each share surrendered in the business combination, make or provide for a cash
payment to the Optionee equal to the difference between (A) the value (as
determined by the Board of the Company) of the consideration payable per share
of Common Stock pursuant to the business combination (the "Merger Price") times
the number of shares of Common Stock subject to the Option (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of the outstanding Option in exchange for the termination of such
Option. In the event the Option will terminate upon the consummation of the
Transaction, the Optionee shall be permitted, within a specified period
determined by the Board of the Company, to exercise the non-vested portion of
the Option, subject to the consummation of the Transaction.
2.3 Method of Exercise.
------------------
(a) Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee (1) by giving written notice to the
Company specifying the number of whole shares of Common Stock to be purchased
and accompanied by payment therefor in full (or arrangement made for such
payment to the Company's satisfaction) either (i) in cash, (ii) in previously
owned whole shares of Common Stock (which the Optionee has held for at least six
months prior to the delivery of such shares of Common Stock or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Board or a
committee thereof shall have sole discretion to disapprove of an election
pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the full purchase
price therefor has been paid.
(b) Notwithstanding anything to the contrary in this
Agreement, upon receipt of any notice of option exercise by the Optionee, in
lieu of issuing shares of Common Stock to the Optionee with respect to
3
<PAGE>
the Option exercise, the Company, in its sole discretion, may elect to satisfy
such obligation by making a cash payment to the Optionee in an amount equal to
the Fair Market Value (on the date of exercise) of the shares of Common Stock
that would otherwise be issuable upon such Option exercise less the requisite
option price and the amount of the Required Tax Payment (as defined in Section
3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt
of notice from the Optionee pursuant to Section 2.3(a), the Company shall give
notice to the Optionee specifying whether the Company elects to satisfy the
Company's obligations with respect to the Optionee's notice by making the Cash
Settlement Payment in lieu of issuing shares of Common Stock; provided, however,
that in the event the Company fails to provide the Optionee with timely notice
of the Optionee's election, the Company shall be deemed to have elected to
satisfy the Company's obligations by making the Cash Settlement Payment.
2.4 Termination of Option.
---------------------
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall terminate, to the
extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to
Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Common Stock subject to the Option expire or are exercised,
canceled or forfeited, the Optionee shall promptly return this Agreement to the
Company for full or partial cancellation, as the case may be. Such cancellation
shall be effective regardless of whether the Optionee returns this Agreement. If
the Optionee continues to have rights to purchase shares of Common Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be identical to this Agreement in form and
substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.01 Limited Transferability of Option.
---------------------------------
(a) Except as provided in the next succeeding sentence, the
Option may not be transferred by the Optionee other than by will or the laws of
descent and distribution or pursuant to beneficiary designation procedures
approved by the Company. The Option (or any part thereof) may be transferred to
the Optionee's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or one or more partnerships in which such family
members are the only partners, provided that the Optionee may not receive any
consideration for such transfer, and provided further that the rights of any
such transferee with respect to the Option shall be subject to the terms and
conditions of this Agreement.
(b) Except as permitted by Section 3.1(a), during the
Optionee's lifetime the Option shall be exercisable only by the Optionee or the
Optionee's Legal Representative. Except as permitted by Section 3.1(a), the
Option may not be sold, transferred, assigned, pledged, hypothecated,
voluntarily encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process.
(c) On and after the closing of the California Jockey Club and
Bay Meadows Operating Company transaction (the "Merger"), this Option shall be
converted on an equitable basis to an option to acquire the stapled interest in
each of the paired entities.
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3.02 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery of shares of
Common Stock upon exercise of the Option, the Optionee shall, upon request by
the Company, pay to the Company, in addition to the purchase price of the shares
of Common Stock, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company
of previously owned whole shares of Common Stock (which the Optionee has held
for at least six months prior to the delivery of such shares of Common Stock or
which the Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a Fair Market
Value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, or (4) any
combination of (1) and (2). The Board shall have sole discretion to disapprove
of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a share of Common Stock which would
be required to satisfy any such obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.
3.03 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, combination, exchange of shares, spin-off or
other similar change in capitalization or event, or any distribution to holders
of shares of Common Stock other than a regular cash dividend, the number and
class of securities subject to the Option and the purchase price per security
shall be appropriately and equitably adjusted by the Board without an increase
in the aggregate purchase price. If any adjustment would result in a fractional
security being subject to the Option, the Company shall pay the Optionee, in
connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value of a share of Common Stock on the exercise
date over (B) the exercise price of the Option.
3.04 Registration; Listing. Prior to the first anniversary of the
---------------------
Option Date, the Company shall (i) file, and continue in effect, registration
statements on Form S-8 with respect to the shares covered by the Option, and
(ii) cause the shares covered by the Option to be listed on the New York Stock
Exchange and/or on such other securities exchange on which such shares are then
listed and traded.
3.05 Delivery of Certificates. Upon the exercise of the Option, in
------------------------
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares of Common Stock purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
3.06 Option Confers No Rights as Stockholder. The Optionee shall not be
---------------------------------------
entitled to any privileges of ownership with respect to shares of Common Stock
subject to the Option unless and until purchased and delivered upon the exercise
of the Option, in whole or in part, and the Optionee becomes a stockholder of
5
<PAGE>
record with respect to such delivered shares of Common Stock; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares of Common Stock not so purchased and delivered.
3.07 Decisions of Board or Committee. The Board (or Committee thereof)
-------------------------------
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board (or Committee thereof) regarding this Agreement shall
be final, binding and conclusive.
3.08 Reservation of Shares. The Company shall at all times prior to the
---------------------
expiration or termination of the Option reserve or cause to be reserved and keep
or cause to be kept available, either in its treasury or out of its authorized
but unissued shares of Common Stock, the full number of shares of Common Stock
subject to the Option from time to time.
4. Miscellaneous Provisions.
------------------------
4.01 Designation as Non-qualified Stock Option. The Option is hereby
-----------------------------------------
designated as not constituting an "incentive stock option" within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended. This Agreement
shall be interpreted and treated consistently with such designation.
4.02 Meaning of Certain Terms. As used herein, the term "Legal
------------------------
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof
or (ii) designated pursuant to beneficiary designation procedures which may be
approved by the Company.
4.03 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.04 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the Company
or the Optionee may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mail to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not received during
regular business hours, it shall be deemed to be received on the next succeeding
business day of the Company.
4.05 Governing Law. The Option, this Agreement, and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Virginia and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.06 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
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4.07 Further Assurances. The Company and the Optionee shall execute and
------------------
deliver such further instruments and take such additional action as each party
may reasonably request to effect, consummate, confirm or evidence the grant of
the Option to the Optionee, and they shall each execute such documents as may be
reasonably necessary to assist each other in preserving or perfecting their
respective rights in the Option.
PATRIOT AMERICAN HOSPITALITY, INC.
By /s/ Michael Murphy
--------------------------------
Michael Murphy
Vice President
Accepted this 16th day of January, 1997
/s/ Toni Dawson
- -----------------------------------------
Toni Dawson
"Optionee"
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Exhibit 4.19
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of the first
day of October, 1997, between Patriot American Hospitality Operating Company, a
Delaware corporation (the "Company"), and Karim Alibhai ("Executive").
WHEREAS, Gencom Lessee, L.P. a Delaware limited partnership has entered
into a Contribution Agreement with Patriot American Hospitality Operating
Company Partnership, a Delaware limited partnership (the "Operating Company")
which provides, upon the terms and subject to the conditions thereof, for the
contribution of its interests in GAH-II, L.P., a Delaware limited partnership,
to the Operating Partnership;
WHEREAS, the Company is desirous of engaging Executive to serve as the
President and Chief Operating Officer of the Company effective upon the closing
of the Contribution Agreement; and
WHEREAS, Executive is desirous of committing to serve the Company on the
terms herein provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment. The initial term of this Agreement shall begin on the
effective closing date of the Contribution Agreement (the "Commencement Date")
and end on the third anniversary of the Commencement Date. On or before the
second anniversary of the Commencement Date (and each even anniversary thereof),
the term of this Agreement shall be extended for an additional two (2) years
unless either the Company or Executive provides written notice of its or his
intent not to extend the Agreement at least forty-five (45) days prior to such
anniversary date in which event this Agreement shall expire in accordance with
its terms. The term of this Agreement shall be subject to termination as
provided in Paragraph 6 and may be referred to herein as the "Period of
Employment."
2. Position and Duties. During the Period of Employment, Executive shall
serve as President and Chief Operating Officer of the Company, reporting solely
to the Chairman of the Board of the Company (the "Chairman"), shall have
supervision and control over and responsibility for the day-to-day business and
affairs of those functions and operations of the Company described on Schedule I
attached hereto and made a part hereof by this reference and shall have such
other powers and duties as may from time to time be prescribed by the Chairman,
provided that such duties are consistent with Executive's position or other
positions that he may hold from time to time. The Company shall take such
action as necessary to elect Executive as a Class II Director with an initial
term expiring at the 1998 annual meeting. Executive shall serve as a member of
the Transactions Committee and the Cooperation Committee when such committees
are formed. Executive shall devote substantially his full working time and
efforts to the business and affairs of the Company. Notwithstanding the
<PAGE>
foregoing, Executive may serve on other boards of directors, engage in
religious, charitable or other community activities and oversee personal
investments and family business as long as such services and activities do not
materially interfere with Executive's performance of his duties to the Company
as provided in this Agreement.
3. Compensation and Related Matters.
(a) Base Salary. Initially, Executive shall receive an annual base salary
("Base Salary") of Three Hundred Fifty Thousand Dollars and xx/100 Cents
($350,000.00). Thereafter, Executive's Base Salary shall be redetermined at
least thirty (30) days before each annual compensation determination date
established by the Company during the Period of Employment in an amount to be
fixed by the Board, but may never be decreased except in connection with across-
the-board salary reductions similarly affecting all executives of the Company
and the Affiliated Company (as defined below). The Base Salary, as
redetermined, may be referred to herein as "Adjusted Base Salary." The Base
Salary or Adjusted Base Salary shall be payable in substantially equal bi-weekly
installments and shall in no way limit or reduce the obligations of the Company
hereunder.
(b) Incentive Compensation. In addition to Base Salary or Adjusted Base
Salary, Executive shall be eligible to receive, on or about the annual
compensation determination date established by the Company of each year, during
the Period of Employment, cash incentive compensation in an amount determined by
the Compensation Committee of the Board based on individual performance,
performance by the Company and total return to shareholders. Such performance
criteria will be established by mutual agreement of Executive and the Company on
an annual basis. The incentive compensation potential shall be up to eighty
percent (80%) of Base Salary or Adjusted Base Salary; provided in no event will
such incentive compensation be less then $75,000 paid for each full year of
employment. Executive will also participate in such incentive compensation
plans as the Board of Directors of the Company ("Board") shall determine.
(c) Expenses. Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him (in accordance with the policies and
procedures then in effect and established by the Company for its senior
executive officers) in performing services hereunder during the Period of
Employment, provided that Executive properly accounts therefor in accordance
with Company policy.
(d) Option Grant. On the Commencement Date, the Company shall issue to
Executive a non-qualified stock option (the "Option") to acquire 280,000 shares
of the paired common stock ("Paired Shares") of the Company and Patriot American
Hospitality, Inc. ("Affiliated Company"). The Option shall vest and become
exercisable with respect to 8% of the number of Paired Shares underlying the
Option quarterly on the first day of each calendar quarter thereafter, such that
all the Paired Shares underlying the Option have vested and are exercisable on
or before the third anniversary of the Commencement Date. The
2
<PAGE>
exercise price per Paired Share for the Option shall be the quoted closing price
per Paired Share on the New York Stock Exchange on the Commencement Date.
(e) Other Benefits. During the Period of Employment, Executive shall be
entitled to continue to participate in or receive benefits under all of the
Company's Employee Benefit Plans in effect on the date hereof, or under plans or
arrangements that provide Executive with at least substantially equivalent
benefits to those provided under such Employee Benefit Plans. As used herein,
"Employee Benefit Plans" include, without limitation, each pension and
retirement plan; supplemental pension, retirement and deferred compensation
plan; savings and profit-sharing plan; stock ownership plan; stock purchase
plan; stock option plan; life insurance plan; medical insurance plan; disability
plan; and health and accident plan or arrangement established and maintained by
the Company on the date hereof for employees of the same status within the
hierarchy of the Company. To the extent that the scope or nature of benefits
described in this section are determined under the policies of the Company based
in whole or in part on the seniority or tenure of an employee's service,
Executive shall be deemed to have a tenure with the Company equal to the actual
time of Executive's service with Company plus the actual service by Executive
with GAH-II, L.P. (the "Previous Employer"). During the Period of Employment,
Executive shall be entitled to receive all perquisites and fringe benefits
available to the President of Affiliated Company. During the Period of
Employment, Executive shall also be entitled to participate in or receive
benefits under any employee benefit plan or arrangement which may, in the
future, be made available by the Company to its executives and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plan or arrangement. Nothing paid to Executive
under the Employee Benefit Plans presently in effect or any employee benefit
plan or arrangement which may be made available in the future shall be deemed to
be in lieu of compensation payable to Executive under Subparagraphs 3(a) and
3(b). Any payments or benefits payable to Executive under a plan or arrangement
referred to in this Subparagraph 3(e) in respect of any calendar year during
which Executive is employed by the Company for less than the whole of such year
shall, unless otherwise provided in the applicable plan or arrangement, be
prorated in accordance with the number of days in such calendar year during
which he is so employed. Should any such payments or benefits accrue on a
fiscal (rather than calendar) year, then the proration in the preceding sentence
shall be on the basis of a fiscal year rather than calendar year.
(f) Life Insurance. The Company shall pay the premiums on, and maintain in
effect throughout the Period of Employment, a life insurance policy on the life
of Executive in an amount not less than the sum of the amount of Executive's
then current Base Salary or Adjusted Base Salary plus the mid-point of his bonus
range. Executive shall have the right to designate the beneficiary under such
policy.
(g) Vacations. Executive shall be entitled to the number of paid vacation
days in each calendar year determined by the Company from time to time for its
senior executive officers. Executive shall also be entitled to all paid
holidays given by the Company to its senior executive officers. To the extent
that the scope or nature of benefits described in this
3
<PAGE>
section are determined under the policies of the Company based in whole or in
part on the seniority or tenure of an employee's service, Executive shall be
deemed to have a tenure with the Company equal to the actual time of Executive's
service with Company plus the actual service by Executive to the Previous
Employer.
(h) Disability Insurance. The Company shall pay the premiums on, and
maintain in effect throughout the Period of Employment, long-term disability
insurance providing for payment of benefits at rates not less than 60% of
Executive's current Base Salary or Adjusted Base Salary.
(i) Indemnification and Directors' and Officers' Insurance. During
Executive's employment, Executive shall receive the maximum indemnification
protection from the Company as permitted by applicable law and shall receive
directors' and officers' insurance coverage provided to any other director or
officer of the Company or the Affiliated Company.
4. Unauthorized Disclosure.
(a) Confidential Information. Executive acknowledges that in the course of
his employment with the Previous Employer or the Company (and, if applicable,
the predecessors of either of them), he has been allowed to become, and will
continue to be allowed to become, acquainted with the Company's and Affiliated
Company's business affairs, information, trade secrets, and other matters which
are of a proprietary or confidential nature, including but not limited to the
Company's and Affiliated Company's and their respective predecessors'
operations, business opportunities, price and cost information, finance,
customer information, business plans, various sales techniques, manuals,
letters, notebooks, procedures, reports, products, processes, services, and
other confidential information and knowledge (collectively the "Confidential
Information") concerning the Company's, Affiliated Company's and their
respective predecessors' business. The Company agrees to provide on an ongoing
basis such Confidential Information as the Company deems necessary or desirable
to aid Executive in the performance of his duties. Executive understands and
acknowledges that such Confidential Information is confidential, and he agrees
not to disclose such Confidential Information to anyone outside the Company or
the Affiliated Company except to the extent that Executive deems such disclosure
or use reasonably necessary or appropriate in connection with performing his
duties on behalf of the Company. Executive further agrees that he will not
during employment and/or at any time thereafter use such Confidential
Information (to the extent it has not become public) in competing, directly or
indirectly, with the Company or the Affiliated Company. At such time as
Executive shall cease to be employed by the Company, he will immediately turn
over to the Company all Confidential Information, including papers, documents,
writings, electronically stored information, other property, and all copies of
them provided to or created by him during the course of his employment with the
Company (or, if applicable, Previous Employer).
4
<PAGE>
(b) Heirs, successors, and legal representatives. The foregoing provisions
of this Paragraph 4 shall be binding upon Executive's heirs, successors, and
legal representatives. The provisions of this Paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Covenant Not to Compete. The provisions of this Paragraph 5 shall apply
during Executive's employment with the Company and for a period of twenty-four
(24) months or such longer period for which severance is payable under Paragraph
7 commencing when the employment relationship has ended for any reason other
than death; provided, however, that the prohibition set forth in the second
sentence of this Paragraph 5 shall not apply in the case of termination of
employment solely as a result of the expiration of the Period of Employment
without extension. In consideration for Executive's employment by the Company
under the terms provided in this Agreement and as a means to aid in the
performance and enforcement of the terms of the Unauthorized Disclosure
provisions of Paragraph 4, Executive agrees that Executive will not, directly or
indirectly, as an owner, director, principal, agent, officer, employee, partner,
consultant, servant, or otherwise, carry on, operate, manage, control, or become
involved in any manner with any business, operation, corporation, partnership,
association, agency, or other person or entity which is in the business of
owning, operating, managing or granting franchise rights with respect to hotels,
motels or other lodging facilities in any area or territory in which the Company
or Affiliated Company conducts operations; provided, however, that the foregoing
does not prohibit Executive from owning up to one percent (1%) of the
outstanding stock of a publicly held corporation engaged in the hospitality
business; and provided, further, that the foregoing does not prohibit activities
in the hotel industry by Executive's family partnerships in which Executive does
not have a management role. Executive also agrees that Executive will not,
directly or indirectly, either for himself or for any other business, operation,
corporation, partnership, association, agency, or other person or entity, call
upon, compete for, solicit, divert, or take away, or attempt to divert or take
away any of the customers of the Company or Affiliated Company in any of the
areas or territories in which the Company or Affiliated Company conducts
operations. Further, Executive will not directly or indirectly solicit or
induce any present or future employee of the Company or Affiliated Company to
accept employment with Executive or with any business, operation, corporation,
partnership, association, agency, or other person or entity with which Executive
may be associated, and Executive will not employ or cause any business,
operation, corporation, partnership, association, agency, or other person or
entity with which Executive may be associated to employ any present or future
employee of the Company or Affiliated Company without providing the Company or
Affiliated Company with ten (10) days' prior written notice of such proposed
employment. Should Executive violate the provisions of this Paragraph, then in
addition to all other rights and remedies available to the Company or Affiliated
Company at law or in equity, the duration of this covenant shall automatically
be extended for the period of time from which Executive began such violation
until he permanently ceases such violation. Notwithstanding the foregoing,
Executive shall be permitted to continue to engage in activities that would
otherwise be prohibited by this Paragraph 5 with respect to the interests he
currently owns and which are described in Schedule II attached hereto and made a
part hereof by this reference and to engage in such activities with respect to
any other hotel, motel or lodging facility that would be immaterial to
5
<PAGE>
the operations of the Company in the area or territory in question.
Immateriality, for purposes of the foregoing sentence, shall be determined in
the sole discretion of the Board of Directors in good faith. Notwithstanding
anything to the contrary contained herein, Executive's acceptance of a position
with the Gencom Group of companies or affiliates, including any of the family-
owned business or establishment of his own business after his termination of
employment shall not be deemed to be a violation of the foregoing non-compete
provisions so long as Executive does not become an employee of or become
affiliated with a hospitality company that owns a brand that competes in any of
the business tiers of the Company. By way of illustration solely, as of the
Commencement Date, Executive would be deemed to violate the non-compete
provisions if he should become an employee of Promus, Hyatt or Starwood/Westin,
but Executive would not be deemed to violate the non-compete provisions if he
should become an employee of American General, Interstate or Microtel.
6. Termination. Executive's employment hereunder may be terminated without
any breach of this Agreement under the following circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of Executive's incapacity due to physical
or mental illness, Executive shall have been absent from his duties hereunder on
a full-time basis for one hundred eighty (180) calendar days in the aggregate in
any twelve (12) month period, the Company may terminate Executive's employment
hereunder.
(c) Termination by Company For Cause. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder for Cause
if such termination is approved by a majority of the Board at a meeting of the
Board called and held for such purpose. For purposes of this Agreement "Cause"
shall mean: (A) conduct by Executive constituting a material act of willful
misconduct in connection with the performance of his duties, including, without
limitation, misappropriation of funds or property of the Company or any of its
affiliates other than the occasional, customary and de minimis use of Company
property for personal purposes; (B) criminal or civil conviction or conduct by
Executive that would reasonably be expected to result in material injury to the
reputation of the Company if he were retained in his position with the Company,
including, without limitation, conviction of a felony involving moral turpitude;
(C) continued, willful and deliberate non-performance by Executive of his
material duties hereunder (other than by reason of Executive's physical or
mental illness, incapacity or disability) and such non-performance has continued
for more than thirty (30) days following written notice of such non-performance
from the Board; or (D) a breach by Executive of any of the provisions contained
in Paragraphs 4 and 5 of this Agreement.
(d) Termination by Company for Performance Reasons. At any time during the
Period of Employment, the Company may terminate Executive's employment if (i)
such termination is approved by a majority of the Board at a meeting of the
Board called and held for such purpose; and (ii) Executive has materially failed
to perform his material duties
6
<PAGE>
hereunder or has violated, in material respects, the material policies and
procedures of the Company and such failure or violation has continued for more
than ninety (90) days following written notice of such violation from the Board.
(e) Termination Without Cause. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder without
Cause if such termination is approved by a majority of the Board at a meeting of
the Board called and held for such purpose. Any termination by the Company of
Executive's employment under this Agreement which does not constitute a
termination for Cause under Subparagraph 6(c), termination for performance under
Subparagraph 6(d), or result from the death or disability of the Executive under
Subparagraph 6(a) or (b) shall be deemed a termination without Cause.
(f) Termination by Executive. At any time during the Period of Employment,
Executive may terminate his employment hereunder for any reason, including but
not limited to Good Reason. For purposes of this Agreement, "Good Reason" shall
mean that Executive has complied with the "Good Reason Process" (hereinafter
defined) following the occurrence of any of the following events: (A) a
significant adverse change, not consented to in writing by Executive, in the
nature or scope of Executive's responsibilities, status, authorities, powers,
functions or duties from the responsibilities, status, authorities, powers,
functions or duties exercised by Executive immediately prior to the Commencement
Date; (B) any removal, during the Period of Employment, of Executive from or,
any failure by management to nominate, or, if nominated, any failure by the
Board to re-elect, Executive to any of the positions indicated in Paragraph 2,
except in connection with a termination of Executive's employment; (C) an
involuntary reduction in Executive's Base Salary or Adjusted Base Salary or
involuntary reduction in cash incentive compensation plan (but not reduction in
incentive compensation appropriate for level of performance) except for across-
the-board salary reductions similarly affecting all or substantially all
management employees; (D) a breach by the Company of any of its other material
obligations under this Agreement and the failure of the Company to cure such
breach within thirty (30) days after written notice thereof by Executive; (E) if
Paul A. Nussbaum ceases to serve as Chairman of the Affiliated Company and James
D. Carreker ceases to be Chairman of the Company; or (F) the relocation of the
Company's offices at which Executive is principally employed or the relocation
of the offices of Executive's primary workgroup to a location more than thirty
(30) miles from such offices, or the requirement by the Company for Executive to
be based anywhere other than the Company's offices at such location on an
extended basis, except for required travel on the Company's business to an
extent substantially consistent with Executive's business travel obligations;
provided however, that this clause (F) shall not apply to the initial relocation
from Houston, Texas to Dallas, Texas. "Good Reason Process" shall mean that (i)
the Executive reasonably determines in good faith that a "Good Reason" event has
occurred; (ii) Executive notifies the Company in writing of the occurrence of
the Good Reason event; (iii) Executive cooperates in good faith with the
Company's efforts, for a period not less than sixty (60) days following such
notice, to modify Executive's employment situation in a manner acceptable to
Executive and Company; and (iv) notwithstanding such efforts, one or more of the
Good
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Reason events continues to exist and has not been modified in a manner
acceptable to Executive.
(g) Notice of Termination. Except for termination as specified in
Subparagraph 6(a), any termination of Executive's employment by the Company or
any such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.
(h) Date of Termination. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Subparagraph
6(b), the date on which Notice of Termination is given; (C) if Executive's
employment is terminated by the Company under Subparagraph 6(c), (d) or (e),
thirty (30) days after the date on which a Notice of Termination is given; and
(D) if Executive's employment is terminated by Executive under Subparagraph
6(f), thirty (30) days after the date on which a Notice of Termination is given.
7. Compensation Upon Termination or During Disability.
(a) If Executive's employment terminates by reason of his death, the
Company shall, within ninety (90) days of death, pay in a lump sum amount to
such person as Executive shall designate in a notice filed with the Company or,
if no such person is designated, to Executive's estate, Executive's accrued and
unpaid Base Salary or, if applicable, his Adjusted Base Salary, to the date of
his death, plus his accrued and unpaid incentive compensation under Subparagraph
3(b). All unvested stock options and stock-based grants shall immediately vest
in Executive's estate or other legal representatives and become exercisable, and
Executive's estate or other legal representatives shall have one (1) year from
the Date of Termination, or remaining option term, if earlier, to exercise the
stock options. For a period of one (1) year following the Date of Termination,
the Company shall pay such health insurance premiums as may be necessary to
allow Executive's spouse and dependents to receive health insurance coverage
substantially similar to coverage they received prior to the Date of
Termination. In addition to the foregoing, any payments to which Executive's
spouse, beneficiaries, or estate may be entitled under any employee benefit plan
shall also be paid in accordance with the terms of such plan or arrangement.
Such payments, in the aggregate, shall fully discharge the Company's obligations
hereunder.
(b) During any period that Executive fails to perform his duties hereunder
as a result of incapacity due to physical or mental illness, Executive shall
continue to receive his accrued and unpaid Base Salary or, if applicable, his
Adjusted Base Salary and accrued and unpaid incentive compensation payments
under Subparagraph 3(b), until Executive's employment is terminated due to
disability in accordance with Subparagraph 6(b) or until Executive terminates
his employment in accordance with Subparagraph 6(f), whichever first occurs.
All unvested stock options and stock-based grants shall immediately vest and
become exercisable and Executive shall have one (1) year from the Date of
Termination, or remaining
8
<PAGE>
option term, if earlier, to exercise the stock options. For a period of one (1)
year following the Date of Termination, the Company shall pay such health
insurance premiums as may be necessary to allow Executive, Executive's spouse
and dependents to receive health insurance coverage substantially similar to
coverage they received prior to the Date of Termination. Upon termination due to
death prior to the termination first to occur as specified in the preceding
sentence, Subparagraph 7(a) shall apply.
(c) If Executive's employment is terminated by Executive other than for
Good Reason as provided in Subparagraph 6(f), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary at the rate in effect at the time Notice of
Termination is given. Thereafter, the Company shall have no further obligations
to Executive except as otherwise expressly provided under this Agreement,
provided any such termination shall not adversely affect or alter Executive's
rights under any employee benefit plan of the Company in which Executive, at the
Date of Termination, has a vested interest, unless otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.
(d) If Executive terminates his employment for Good Reason as provided in
Subparagraph 6(f) or if Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 6(e), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base-Salary at the rate in effect at the time Notice of
Termination is given and his accrued and unpaid incentive compensation under
Subparagraph 3(b). In addition, subject to signing by Executive of a general
release of claims (other than continuing rights under this Agreement in a form
and manner satisfactory to the Company,
(i) the Company shall continue Executive's compensation at a rate
equal to the sum of Executive's Average Base Salary and Average Incentive
Compensation for the remaining term of the Agreement (but not less than
twenty-four (24) months) (the "Minimum Severance Amount") or such longer
period provided by the Company's then current severance polices (the
"Severance Amount"); provided, however, that in the event Executive
commences any employment during the period of salary continuation, the
Company shall be entitled to set-off against the remaining amount of salary
continuation by the amount of any cash compensation received by Executive
from the new employer. Such salary continuation shall be payable in equal
installments, in advance, on a quarterly basis. The amount payable in each
quarter will not be subject to any set-off so long as Executive certifies
in writing prior to each quarterly payment that he has not accepted
employment with a new employer (including, without limitation, contract and
consulting engagements). Notwithstanding the foregoing, if the Executive
breaches any of the provisions contained in Paragraphs 4 and 5 of this
Agreement, all salary continuation payments shall immediately cease. For
purposes of this Agreement, "Average Base Salary" shall mean the average of
the annual Base Salary or, if applicable, Adjusted Base Salary received by
Executive for each of the three (3) immediately preceding fiscal years or
such fewer number of complete or
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<PAGE>
partial fiscal years as Executive may have been employed by the Company.
For purposes of this Agreement, "Average Incentive Compensation" shall mean
the average of the annual incentive compensation under Subparagraph 3(b)
received by Executive for the three (3) immediately preceding fiscal years
or such fewer number of complete or partial fiscal years as Executive may
have been employed by the Company. Notwithstanding the foregoing, in the
event Executive terminates his employment for Good Reason as provided in
Subparagraph 6(f), he shall be entitled to the Severance Amount or the
Minimum Severance Amount only if he provides the Notice of Termination
provided for in Subparagraph 6(g) within sixty (60) days after the
occurrence of the event or events which constitute such Good Reason as
specified in clauses (A), (B), (C), (D) and (E) of Subparagraph 6(f);
(ii) in addition to any other benefits to which Executive may be
entitled in accordance with the Company's then existing severance policies,
the Company shall:
(a) for a period of six (6) months commencing on the Date of
Termination, pay for the cost of executive outplacement services
selected by Executive for use in connection with obtaining alternate
employment; and
(b) for a period of one (1) year commencing on the Date of
Termination, pay such health insurance premiums as may be necessary to
allow Executive, Executive's spouse and dependents to continue to
receive health insurance coverage substantially similar to the
coverage they received prior to his termination of employment; and
(iii) Executive shall receive all the rights and benefits granted or
in effect with respect to Executive under the Company's employee stock
option or incentive plans and agreements with Executive pursuant thereto.
In addition to the foregoing, all stock options and other stock-based
awards in which Executive otherwise would have vested if he would have
remained employed for a period of twenty-four (24) months or the remaining
term of the Agreement, if longer, shall immediately accelerate and become
exercisable or nonforfeitable as of the Date of Termination.
(e) If Executive's employment is terminated by the Company for Cause as
provided in Subparagraph 6(c) or for performance as provided in Subparagraph
6(d), then the Company shall, through the Date of Termination, pay Executive his
accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary at
the rate in effect at the time Notice of Termination is given and in case of
termination for performance as provided by Subparagraph 6(d), his accrued and
unpaid incentive compensation under Subparagraph 3(b). Thereafter, the Company
shall have no further obligations to Executive except as otherwise expressly
provided under this Agreement, provided any such termination shall not adversely
affect or alter Executive's rights under any employee benefit plan of the
Company in which Executive, at the Date of Termination, has a vested interest,
unless otherwise provided in such employee benefit plan or any agreement or
other instrument attendant thereto. Notwithstanding the foregoing
10
<PAGE>
and in addition to whatever other rights or remedies the Company may have at law
or in equity, all stock options held by Executive shall immediately expire on
the Date of Termination if Executive's employment is terminated by the Company
for Cause as provided by Subparagraph 6(c).
(f) If Executive's employment is terminated as a result of the expiration
of the Period of Employment without extension, then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary at the rate in effect at the time Notice of
Termination is given and his accrued and unpaid incentive compensation under
Subparagraph 3(b). Thereafter, the Company shall have no further obligations to
Executive except as otherwise expressly provided under this Agreement, provided
any such termination shall not adversely affect or alter Executive's rights
under any employee benefit plan of the Company in which Executive, at the Date
of Termination, has a vested interest, unless otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.
(g) Regardless the reason for termination, for a period of three (3) years
beginning on the Date of Termination, the Company will provide at the expense of
the Company such reasonable assistance and support to Executive as he shall
reasonably require in connection with the preparation and filing of tax returns,
statements and forms insofar as such returns, statements and forms relate to
Executive's association with the Company, Affiliated Company, Previous Employer
or any of their respective predecessors or affiliates. At the Company's
election, such assistance and support shall be provided by either tax personnel
of the Company or certified public accountants selected and compensated by the
Company.
(h) Nothing contained in the foregoing Subparagraphs 7(a) through 7(f)
shall be construed so as to affect Executive's rights or the Company's
obligations relating to agreements or benefits which are unrelated to
termination of employment.
8. Parachute Payment. The provisions of this Paragraph 8 set forth certain
terms of an agreement reached between Executive and the Company regarding
Executive's rights and obligations upon the occurrence of a Change in Control of
the Company. These provisions are intended to assure and encourage in advance
Executive's continued attention and dedication to his assigned duties and his
objectivity during the pendency and after the occurrence of any such event.
These provisions shall apply in lieu of, and expressly supersede, the provisions
of Subparagraph 7(d)(i) regarding severance pay upon a termination of
employment, if such termination of employment occurs within eighteen (18) months
after the occurrence of the first event constituting a Change in Control. These
provisions shall terminate and be of no further force or effect beginning
eighteen (18) months after the occurrence of a Change in Control.
(a) Escrow. Within fifteen (15) days after the occurrence of the first
event constituting a Change in Control, the Company shall place funds in an
amount equal to the estimated Parachute Amount in escrow, pursuant to
arrangements that are mutually acceptable to the Company and Executive providing
for the payment of the Parachute Amount in the event
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<PAGE>
Executive becomes entitled thereto pursuant to Subparagraph 8(b)(i) (the "Escrow
Arrangement"). The Escrow Arrangement shall be maintained until the earlier of
(A) eighteen (18) months after the occurrence of the first event constituting a
Change in Control or (B) the payment to Executive of the Parachute Amount
pursuant to the provisions of Subparagraph 8(b)(i).
(b) Change in Control. If within eighteen (18) months after the occurrence
of the first event constituting a Change in Control, Executive's employment
terminates for any reason other than (A) death, (B) his inability, due to
illness, accident, or other physical or mental incapacity, to perform his duties
for more than one hundred eighty (180) days during any twelve-month period or
(C) his Voluntary Resignation ("Termination"), then:
(i) the Company shall pay Executive in a lump sum an amount equal to
the applicable Parachute Amount on the tenth (10th) day following
Executive's Termination; and
(ii) all stock options and other stock-based awards granted to
Executive by the Company shall immediately accelerate and become
exercisable or non-forfeitable as of the date of Change in Control, and
Executive shall be entitled to any other rights and benefits with respect
to stock-related awards, to the extent and upon the terms provided in the
employee stock option or incentive plan or any agreement or other
instrument attendant thereto pursuant to which such options or awards were
granted.
(c) Gross Up Payment.
(i) Excess Parachute Payment. If Executive incurs the tax (the
"Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") on "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code, the Company will pay to Executive an amount (the
"Gross Up Payment") such that the net amount retained by Executive, after
deduction of any Excise Tax on the excess parachute payment and any
federal, state and local taxes (together with penalties and interest) and
Excise Tax upon the payment provided for by this Subparagraph 8(c)(i), will
be equal to the Parachute Amount.
(ii) Applicable Rates. For purposes of determining the amount of the
Gross Up Payment, Executive will be deemed to pay federal income taxes at
the highest marginal rate of federal taxation in the calendar year in which
the Gross Up Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality of Executive's
residence on the date of Executive's Termination, net of the maximum
reduction in federal income taxes that could be obtained from deduction of
such state and local taxes.
(iii) Determination of Gross Up Payment Amount. The determination of
whether the Excise Tax is payable and the amount thereof will be based upon
the
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<PAGE>
opinion of tax counsel selected by Executive and approved by the Company,
which approval will not be unreasonably withheld. The costs of obtaining
the opinion of tax counsel shall be borne by the Company. If such opinion
is not finally accepted by the Internal Revenue Service (or state and local
taxing authorities), then appropriate adjustments to the Excise Tax will be
computed and additional Gross Up Payments will be made in the manner
provided by this Subparagraph (c).
(iv) Time For Payment. The Company will pay the estimated amount of
the Gross Up Payment in cash to Executive concurrent with Employee's
Termination. Executive and the Company agree to reasonably cooperate in the
determination of the actual amount of the Gross Up Payment. Further,
Executive and the Company agree to make such adjustments to the estimated
amount of the Gross Up Payment as may be necessary to equal the actual
amount of the Gross Up Payment, which in the case of Executive will refer
to refunds of prior overpayments and in the case of the Company will refer
to makeup of prior underpayments.
(d) Definitions. For purposes of this Paragraph 8, the following terms
shall have the following meanings:
"Change in Control" shall mean an event which shall be deemed to have
occurred if (i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities; or (ii) individuals who at the Commencement Date constitute the
Board and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in clauses (i) or (iii) of this paragraph) whose election by the
Board or nomination for election by the Company's stockholders was approved
by a vote of at least eighty percent (80%) of the directors then still in
office who either were directors at the Commencement Date or whose election
or nomination for election was previously so approved, cease for any reason
to constitute a majority of the Board; or (iii) the stockholders of the
Company approve a merger or consolidation of the Company with or into any
other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least
sixty percent (60%) of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation; or (iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets.
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<PAGE>
"Parachute Amount" shall mean an amount equal to the greater of the
Severance Amount or the Minimum Severance Amount provided for in
Subparagraph 7(d)(i).
"Voluntary Resignation" shall mean any termination of Executive's
employment by his own act, unless such termination is for Good Reason.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
if to the Executive:
At his home address as shown
in the Company's personnel records;
if to the Company:
Patriot American Hospitality Operating Company
3030 LBJ Freeway, Suite 1500
Dallas, TX 75234
Attn.: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. Miscellaneous. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, unless specifically
referred to herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Texas (without regard to principles of
conflicts of laws).
11. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. The invalid portion of this Agreement,
14
<PAGE>
if any, shall be modified by any court having jurisdiction to the extent
necessary to render such portion enforceable.
12. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
13. Arbitration; Other Disputes. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first
promptly try in good faith to settle such dispute or controversy by mediation
under the Commercial Mediation Rules of the American Arbitration Association
before resorting to arbitration. In the event such dispute or controversy
remains unresolved in whole or in part for a period of thirty (30) days after it
arises, the parties will settle any remaining dispute or controversy exclusively
by arbitration in Dallas, Texas, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding the above,
the Company shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of any violation of
Paragraph 4 or 5 hereof. Furthermore, should a dispute occur concerning
Executive's mental or physical capacity as described in Subparagraph 6(b), 6(c)
or 7(b), a doctor selected by Executive and a doctor selected by the Company
shall be entitled to examine Executive. If the opinion of the Company's doctor
and Executive's doctor conflict, the Company's doctor and Executive's doctor
shall together agree upon a third doctor, whose opinion shall be binding. Any
amount to which Executive is entitled under this Agreement (including any
disputed amount), which is not paid when due, shall bear interest at a rate
equal to the lesser of eighteen percent (18%) per annum or the maximum lawful
rate.
14. Third-Party Agreements and Rights. Executive represents to the Company
that Executive's execution of this Agreement, Executive's employment with the
Company and the performance of Executive's proposed duties for the Company will
not violate any obligations Executive may have to any employer or other party,
and Executive will not bring to the premises of the Company any copies or other
tangible embodiments of non-public information belonging to or obtained from any
such previous employment or other party.
15. Litigation and Regulatory Cooperation. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation in Executive's good faith opinion shall
not materially and adversely affect Executive or expose Executive to an
increased probability of civil or criminal litigation or materially interfere,
in Executive's good faith opinion, with Executive's personal and business
activities. Executive's cooperation in connection with such claims or actions
shall include, but not be limited to, being available to meet with counsel to
prepare for discovery or trial and to act as a witness on behalf of the Company
at mutually convenient times. During and after Executive's employment, to the
15
<PAGE>
extent that it does not materially interfere, in Executive's good faith opinion,
with Executive's personal and business activities, Executive also shall
cooperate fully with the Company in connection with any investigation or review
of any federal, state or local regulatory authority as any such investigation or
review relates to events or occurrences that transpired while Executive was
employed by the Company. The Company shall also provide Executive with
compensation on an hourly basis calculated at his final base compensation rate
for requested litigation and regulatory cooperation that occurs after his
termination of employment, and pay in advance upon request Executive for all
costs and expenses incurred in connection with his performance under this
Paragraph 15, including, but not limited to, reasonable attorneys' fees and
costs.
16. Assignment. At the sole election of the Company, this Agreement may be
assigned by the Company to Patriot American Hospitality, Inc.
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
By: /s/ Paul A. Nussbaum
-------------------------
Its: Chairman and Chief Executive Officer
-------------------------
/s/ Karim Alibhai
-------------------------
Karim Alibhai
16
<PAGE>
SCHEDULE I TO EXECUTIVE EMPLOYMENT AGREEMENT
Title: President and Chief Operating Officer
Reports directly to Chairman and Chief Executive Officer
Location: Dallas, Texas
Responsibilities: The Chief Financial Officer of the Company and the GAH
Division will report to Executive. The group overseeing
asset management function for the Company will report
directly to Executive or at the election of Executive, to
the Chief Financial Officer of the Company.
17
<PAGE>
SCHEDULE II TO EXECUTIVE EMPLOYMENT AGREEMENT
Executive has ownership interests in Gencom Asset Management Services,
L.P., which provides asset management services to hotels. Executive also has
ownership interests in the following hotels:
<TABLE>
<CAPTION>
HOTEL CITY STATE
----- ---- -----
<S> <C> <C>
Crowne Plaza Miami Miami Florida
Days Inn Astrodome Houston Texas
Days Inn Austin Austin Texas
Days Inn Greenspoint Houston Texas
Days Inn Port Lavaca Houston Texas
Denton Radisson Denton Texas
Desjardins Registry Hotel Montreal Canada
Edmonton Sheraton Edmonton Canada
Four Points Dunwoody Atlanta Georgia
Hampton Inn Corpus Corpus Christi Texas
Hawthorne Suites Houston Texas
Holiday Inn Astrodome Houston Texas
Holiday Inn Galleria Houston Texas
Holiday Inn Stevens Point Stevens Point Wisconsin
Key Biscayne Grand Bay Key Biscayne Florida
Marriott Residence Houston Texas
Park Plaza Grand Bay Toronto Canada
Philadelphia Grand Bay Philadelphia Pennsylvania
Radisson Astrodome Houston Texas
Ramada Astrodome Houston Texas
Sheraton Acapulco Acapulco Mexico
Sheraton Astrodome Houston Texas
The Inn at Maingate Orlando Florida
</TABLE>
18
<PAGE>
Exhibit 5.1
December 10, 1997
Patriot American Hospitality, Inc.
Patriot American Hospitality Operating Company
1950 Stemmons Freeway, Suite 6001
Dallas, Texas 75207
Ladies and Gentleman:
We are familiar with the proceedings taken by Patriot American
Hospitality, Inc. ("REIT"), a Delaware corporation, and Patriot American
Hospitality Operating Company ("OpCo"), a Delaware corporation (collectively
REIT and OpCo are hereinafter referred to as the "Companies"), with respect to
(i) 4,051,663 shares of Common Stock, par value $.01 per share, of each of REIT
and OpCo ("Paired Shares") offered and sold pursuant to the Companies' 1995
Incentive Plan ("1995 Plan Shares"); (ii) 120,000 Paired Shares offered and sold
pursuant to the Companies Non-Employee Directors' Plan (the "Directors' Plan
Shares"); (iii) 1,620,017 Paired Shares offered and sold pursuant to various
Non-Qualified Option Agreements ("NQO Shares"); (iv) 3,000,000 Paired Shares to
be offered and sold from time to time pursuant to the REIT 1997 Incentive Plan
(the "REIT Plan Shares"); and (v) 3,000,000 Paired Shares to be offered and sold
from time to time pursuant to the OpCo 1997 Incentive Plan (the "OpCo Plan
Shares"). As counsel for the Companies, we have assisted in the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") to be filed by
the Companies with the Securities and Exchange Commission (the "Commission") to
effect the registration of the 1995 Plan Shares, the Directors' Plan Shares, the
NQO Shares, the REIT Plan Shares and the OpCo Plan Shares under the Securities
Act of 1933, as amended (the "Securities Act").
In connection with rendering this opinion, we have examined the REIT
Amended and Restated Certificate of Incorporation, the OpCo Amended and Restated
Certificate of Incorporation, the REIT Amended and Restated Bylaws, the OpCo
Amended and Restated Bylaws, such records of the corporate proceedings of the
Companies as we deemed material, the Registration Statement, the Patriot
American Hospitality, Inc./Patriot American Hospitality Operating Company 1995
Incentive Plan, the Patriot American Hospitality, Inc./Patriot American
Hospitality Operating Company Non-Employee Directors' Incentive Plan, the
Patriot American Hospitality, Inc. 1997 Incentive Plan, the Patriot American
Hospitality Operating Company 1997 Incentive Plan and the various Non-Qualified
Option Agreements (together, the "Plans"), and such other certificates,
receipts, records and documents as we considered necessary for the purposes of
this opinion.
Based upon the foregoing, we are of the opinion that when the Paired
Shares have been issued and paid for in accordance with the terms of the Plans
and Registration Statement, the Shares will be legally issued, fully paid and
nonassessable Paired Shares.
We are attorneys admitted to practice in the Commonwealth of
Massachusetts. We express no opinion concerning the laws of any jurisdictions
other than the laws of the United States of America and the Commonwealth of
Massachusetts.
This opinion is intended solely for your use in the above-described
transaction and may not be reproduced, filed publicly or relied upon by any
other person for any purpose without the express written consent of the
undersigned.
The foregoing assumes that all requisite steps will be taken to comply
with the requirements if the Securities Act and applicable requirements of state
laws regulating the offer and sale of securities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality
Operating Company of our report dated March 28, 1997 (which expresses an
unqualified opinion and includes an explanatory paragraph relating to a proposed
merger and certain disagreements between the Companies), appearing in the Annual
Report on Form 10-K of Bay Meadows Operating Company and of California Jockey
Club for the year ended December 31, 1996.
/s/ DELOITTE & TOUCHE LLP
San Francisco, California
December 5, 1997
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Joint Registration
Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company of our report dated September 30, 1997 (relating
to the financial statements of Partnerships of Acquired Hotels as of December
31, 1996 and 1995 and for each of the two years in the period ended December 31,
1996) appearing in the report on Form 8-K/A No. 1 dated September 30, 1997
Patriot American Hospitality, Inc. and of Patriot American Hospitality Operating
Company.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
December 5, 1997
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Joint Registration Statement
on Form S-8 of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company of our reports (a) dated January 31, 1997 (except
for Note 14, as to which the date is March 18, 1997) with respect to the
Consolidated Financial Statements and financial statement schedules of Patriot
American Hospitality, Inc. included in its 1996 Annual Report on Form 10-K and
included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company dated July
1, 1997; (b) dated February 16, 1996, with respect to the Combined Financial
Statements of the Initial Hotels (which is based in part on the reports of
Coopers & Lybrand L.L.P., independent accountants, as set forth in their reports
on Certain of the Initial Hotels and Troy Hotel Investors) included in Patriot
American Hospitality, Inc.'s 1996 Annual Report on Form 10-K; (c) dated March 5,
1996, with respect to the Financial Statements of Buckhead Hospitality Joint
Venture included in the Current Report on Form 8-K of Patriot American
Hospitality, Inc., dated April 2, 1996, as amended; (d) dated March 1, 1996
(except for Note 7, as to which the date is April 2, 1996) with respect to the
Combined Financial Statements of Gateway Hotel Limited Partnership and Wenatchee
Hotel Limited Partnership included in the Current Report on Form 8-K of Patriot
American Hospitality, Inc., dated April 2, 1996, as amended; (e) dated February
28, 1996 (except for Note 5, as to which the date is April 2, 1996) with respect
to the Statement of Direct Revenue and Direct Operating Expenses of Plaza Park
Suites Hotel included in the Current Report on Form 8-K of Patriot American
Hospitality, Inc., dated April 2, 1996, as amended; (f) dated February 26, 1996
(except for Note 5, as to which the date is April 2, 1996) with respect to the
Statement of Direct Revenue and Direct Operating Expenses of Roosevelt Hotel
included in the Current Report on Form 8-K of Patriot American Hospitality,
Inc., dated April 2, 1996, as amended; (g) dated April 10, 1996 with respect to
the Statement of Direct Revenue and Direct Operating Expenses of Marriott
WindWatch Hotel for the year ended December 29, 1995 included in the Current
Report on Form 8-K of Patriot American Hospitality, Inc., dated December 5,
1996; (h) dated August 30, 1996 with respect to the Financial Statements of
Concord O'Hare Limited Partnership for the year ended December 29, 1995 included
in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated
December 5, 1996; (i) dated September 10, 1996 with respect to the Statement of
Direct Revenue and Direct Operating Expenses of the Mayfair Suites Hotel for the
year ended December 31, 1995 included in the Current Report on Form 8-K of
Patriot American Hospitality, Inc., dated December 5, 1996; and (j) dated
January 23, 1997 (except for Note 8, as to which the date is September 30, 1997)
with respect to the Consolidated Financial Statements of GAH-II, L.P. for the
years ended December 31, 1996 and 1995, included in the Joint Current Report on
Form 8-K of Patriot American Hospitality, Inc. and Patriot American Hospitality
Operating Company dated September 30, 1997, as amended, all filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Dallas, Texas
December 5, 1997
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Joint Registration
Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company of our report dated March 5, 1997 with respect to
the Financial Statements of NorthCoast Hotels, L.L.C. included in Patriot
American Hospitality, Inc.'s 1996 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Seattle, Washington
December 5, 1997
<PAGE>
Exhibit 23.6
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Joint Registration
Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company of our reports (a) dated March 14, 1997 with
respect to the Consolidated Financial Statements of Resorts Limited Partnership
included in the Current Report on Form 8-K of Patriot American Hospitality,
Inc., dated January 16, 1997, as amended; (b) dated February 13, 1997, with
respect to the Financial Statements of CV Ranch Limited Partnership included in
the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated
January 16, 1997, as amended; and (c) dated February 12, 1997 with respect to
the Financial Statements of Telluride Resort and Spa Limited Partnership
included in the Current Report on Form 8-K of Patriot American Hospitality,
Inc., dated January 16, 1997, as amended, all filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
December 5, 1997
<PAGE>
Exhibit 23.7
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by refernce in the Joint Registration Statement
on Form S-8 of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company of our reports (a) dated August 7, 1997 (except
for Note 18, as to which the date is September 17, 1997) with respect to the
Consolidated Financial Statements of WHG Resorts & Casinos Inc. and related
financial statement schedule; (b) dated August 7, 1997 with respect to the
financial statements of Posadas de San Juan Associates and related financial
statement schedule; (c) dated August 11, 1997 with respect to the financial
statements of WKA El Con Associates; and (d) dated May 2, 1997 with respect to
the financial statements of E1 Conquistador Partnership L.P.; all of which are
included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company, dated
December 10, 1997, all filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG L.L.P.
San Juan, Puerto Rico
December 5, 1997
<PAGE>
Exhibit 23.8
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Joint Registration Statement
on Form S-8 of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company of our reports (a) dated March 13, 1997 (except
for the third paragraph of Note 7, as to which the date is April 2, 1997) with
respect to the Financial Statements of G.B.H. Joint Venture (d/b/a Grand Bay
Hotel) for the years ended December 31, 1995 and 1996; (b) dated September 23,
1997 with respect to the Financial Statements of River House Associates (d/b/a
Sheraton Gateway Hotel) for the years ended December 31, 1995 and 1996; and (c)
dated September 19, 1997 with respect to the Financial Statements of W-L Tampa,
Ltd. (the Sheraton Grand Hotel) for the years ended December 31, 1995 and 1996;
all of which are included in the Joint Current Report on Form 8-K/A No. 1 of
Patriot American Hospitality, Inc. and Patriot American Hospitality Operating
Company, dated September 30, 1997, as amended, all filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG L.L.P.
Miami, Florida
December 5, 1997
<PAGE>
Exhibit 23.9
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8
of our report dated January 15, 1996, on our audit of the financial statements
of Certain of the Initial Hotels.
/s/ COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
December 8, 1997
<PAGE>
Exhibit 23.10
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8
of our reports (i) dated February 12, 1997, except for Note 21, Note 22 and the
last paragraph of Note 2, as to which the date is December 1, 1997, of our audit
of the consolidated financial statements of Interstate Hotels Company, (ii)
dated January 17, 1996, on our audit of the financial statements of Troy Hotel
Investors and (iii) dated February 7, 1995, on our audit of the financial
statements of Troy Park Associates.
/s/ COOPERS & LYBRAND L.L.P.
Pittsburgh, Pennsylvania
December 8, 1997
<PAGE>
Exhibit 23.11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement Prospectus of Patriot
American Hospitality, Inc. and Patriot American Hospitality Operating Company on
Form S-8 of our reports (i) dated October 15, 1996, on our audit of the
statements of Direct Revenue and Direct Operating Expenses of the Holiday Inn
Miami Airport; (ii) dated February 19, 1997, on our audits of the consolidated
financial statements of Wyndham Hotel Corporation as of December 31, 1996 and
1995, and for the years ended December 31, 1996, 1995 and 1994, (iii) dated May
12, 1997 on our audit of the Combined Financial Statements of the Minneapolis
Hotels as of and for the year ended December 31, 1996, (iv) dated June 27, 1997
on our audit of the Combined Statement of Direct Revenue and Direct Operating
Expenses of the Met Life Hotels for the year ended December 31, 1996, and (v)
dated September 8, 1997 on our audit of the Combined Financial Statements of the
Snavely Hotels as of and for the year ended December 31, 1996.
/s/ COOPERS & LYBRAND L.L.P.
Dallas, Texas
December 8, 1997
<PAGE>
Exhibit 23.12
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8
of our report (i) dated March 7, 1997, except for note 12 as to which the date
is October 7, 1997, on our audits of the Financial Statements of SCP (Buttes),
Inc., as of and for the year ended December 31, 1996.
/s/ COOPERS & LYBRAND L.L.P.
Phoenix, Arizona
December 8, 1997
<PAGE>
Exhibit 23.13
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8
of our report dated March 8, 1996 related to the financial statements of
Newporter Beach Hotel Investments L.L.C. as of December 31, 1995, and for the
period from March 10, 1995 through December 31, 1995.
/s/ COOPERS & LYBRAND L.L.P.
Newport Beach, California
December 8, 1997
<PAGE>
Exhibit 23.14
CONSENT OF INDEPENDENT ACCOUNTS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8
of our report dated January 17, 1997, except for Note 7, as to which the date is
November 25, 1997, on our audit of the financial statements of Royal Palace
Hotel Associates.
/s/ COOPERS & LYBRAND L.L.P.
Tampa, Florida
December 9, 1997
<PAGE>
Exhibit 23.15
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of Patriot American Hospitality Operating Company and Patriot American
Hospitality, Inc. of our report dated March 1, 1996 on the financial statements
of Historic Hotel Partners of Birmingham, Limited Partnership, our reports dated
October 8, 1997 and February 28, 1997 on the Financial Statements of Historic
Hotel Partners of Chicago Limited Partnership, and our reports dated October 8,
1997 and February 21, 1997 on the financial statements of Historic Hotel
Partners of Nashville Limited Partnership.
/s/ PANNELL KERR FORSTER PC
Alexandria, Virginia
December 9, 1997
<PAGE>
Exhibit 23.16
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company of our reports (a) dated October 3, 1997 relating
to the financial statements of CHC International Inc. Hospitality Division as of
and for the years ended November 30, 1995 and 1996, which appears in the Current
Report on Form 8-K of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company; and (b) dated February 13, 1997, except as to
Note 4, which is as of March 18, 1997, relating to the financial statements of
CHC Lease Partners for the year ended December 31, 1996 and the period inception
(October 2, 1995) through December 31, 1995 which appears in the Current Report
on Form 8-K of Patriot American Hospitality, Inc. and Patriot American
Hospitality Operating Company dated July 1, 1997.
/s/ PRICE WATERHOUSE LLP
Miami, Florida
December 5, 1997
<PAGE>
Exhibit 23.17
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated September 17, 1997, on the combined financial statements of the Crow
Family Hotel Partnerships (and to all references to our Firm) included in or
made part of this Joint Registration Statement on Form S-8 of Patriot American
Hospitality, Inc. and Patriot American Hospitality Operating Company.
/s/ ARTHUR ANDERSEN LLP
Dallas, Texas
December 5, 1997
