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 Xxxxxxx X. Xxxxx, 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.
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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 February 14, 2007 (the "Expiration Date").
2.02 Exercise of Option.
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(a) General. Provided the Optionee's employment with the
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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
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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
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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
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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.
(e) Exercise in the Event of Disability. In the event the
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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.
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(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
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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. Subject to the limitations set forth in this
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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
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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
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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.
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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, 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.
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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 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
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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 for a share of Common Stock under 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 not
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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)
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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 hereby
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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.
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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 the
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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
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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
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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,
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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
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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.
/s/ Xxxx X. Xxxxxxxx
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By: Xxxx X. Xxxxxxxx
Its: Chairman and Chief Executive Officer
Accepted this 14th day of February, 1997
/s/ Xxxxxxx X. Xxxxx, III
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Xxxxxxx X. Xxxxx, III
"Optionee"
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