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 Xxxxxxx Xxxxxx, 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.
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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.
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2.01 Maximum Term of Option. In no event may the Option be exercised,
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in whole or in part, after January 15, 2007 (the "Expiration Date").
2.02 Exercise of Option.
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(a) General. Provided the Optionee's employment with Resorts
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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
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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
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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
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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
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.
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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.
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(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:
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(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
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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.
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(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
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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.
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(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) xxxx 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.
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3.01 Limited Transferability of Option.
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(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 Xxxxxxx 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.
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(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,
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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
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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
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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
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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
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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
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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
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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.
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4.01 Designation as Non-qualified Stock Option. The Option is
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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
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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
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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
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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
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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
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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
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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/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Vice President
Accepted this 16th day of January, 1997
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
"Optionee"
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