EXHIBIT 10.28
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 Xxxxx Xxxxxxx ("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
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 1/3% 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
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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
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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).
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(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
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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
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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
Xxxx X. Xxxxxxxx ceases to serve as Chairman of the Affiliated Company and Xxxxx
X. Xxxxxxxx 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
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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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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
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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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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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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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"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
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
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
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
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/ Xxxx X. Xxxxxxxx
----------------------------------
Its: Chairman and Chief Executive
Officer
/s/ Xxxxx Xxxxxxx
----------------------------------
Xxxxx Xxxxxxx
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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.
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:
HOTEL CITY STATE
----- ---- -----
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 Xxxxxxx Point Stevens Point Wisconsin
Key Biscayne Grand Bay Key Biscayne Florida
Marriott Residence Xxxxxxx Xxxxx
Xxxx Xxxxx Xxxxx Xxx Xxxxxxx Xxxxxx
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
