EXHIBIT 10.26
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of this
_________ day of June, 1997, between Patriot American Hospitality, Inc., a
Virginia corporation (the "Company"), and Xxxx Xxxxx ("Executive").
WHEREAS, Patriot is desirous of engaging Executive as Executive Vice
President - Acquisitions and Development; 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 extend from the date
hereof (the "Commencement Date") until the third anniversary of the Commencement
Date. The term of this Agreement shall be subject to termination as provided in
Paragraph 7 and may be referred to herein as the "Period of Employment."
2. POSITION AND DUTIES. During the Period of Employment, Executive shall serve
as Executive Vice President - Acquisitions and Development of the Company,
reporting to the Chairman of the Board of the Company (the "Chairman") on all
matters, 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.
Executive shall devote 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 or engage in religious, charitable or other community
activities as long as such services and activities are disclosed to the Chairman
and 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") equal to the annual rate of Two Hundred Fifty Thousand Dollars
and xx/100 Cents ($250,000.00). Should the Company complete a Carnival
transaction or another transaction of a similar size prior to January 1, 1998,
Executive's Base Salary shall be increased to an annual rate of Two Hundred
Seventy-Five Thousand Dollars and xx/100 Cents ($275,000.00). 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. 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. The incentive
compensation potential shall be up to eighty percent (80%) of Base Salary or
Adjusted Base Salary. For 1997, Executive shall be entitled to a minimum
incentive compensation of sixty percent (60%) of Base Salary, less any incentive
compensation that he receives from The Hampstead Group for services rendered in
1997 (other than distributions from investments). 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) RESTRICTED STOCK GRANT. Upon execution of this Agreement, the Company
shall issue to Executive 60,000 shares of the common stock, no par value, of the
Company ("Common Stock"). Such shares shall vest and become nonforfeitable on a
ratable basis over five (5) years, on each anniversary of the date of grant.
(E) OPTION GRANT. Upon execution of this Agreement, the Company shall
issue to Executive a non-qualified stock option (the "Option") to acquire
100,000 shares of Common Stock. The Option shall vest and become exercisable
ratably over seven (7) years, on each anniversary of the date of grant. The
Option shall expire on the tenth anniversary of the date of grant. The exercise
price per share for the Option shall be the quoted closing price per share for
the Common Stock on the New York Stock Exchange on the date of execution of this
Agreement. If such date is not a business day, the price shall be determined as
of the immediately preceding business day.
(F) 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
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arrangement established and maintained by the Company on the date hereof for
employees of the same status within the hierarchy of the Company. During the
Period of Employment, Executive shall 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(f) 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.
(G) 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.
(H) 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. Executive plans
to take vacation from August 2, 1997 through August 9, 1997 and from August 19,
1997 through August 28, 1997, and Executive will be paid for such vacation time.
(I) 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.
4. UNAUTHORIZED DISCLOSURE.
(A) CONFIDENTIAL INFORMATION. Executive acknowledges that in the course of
his employment with 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 Patriot American Hospitality Operating
Company's ("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,
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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 as he deems 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 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 make every effort to 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.
(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 eighteen (18)
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. 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
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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 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 Hampstead Group or its
subsidiaries or affiliates ("The Hampstead Group") after his termination of
employment shall not be deemed to be a violation of the foregoing non-compete
provisions.
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 not less than two-thirds (2/3) of the entire
membership 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; or (C) continued,
deliberate non-performance by Executive of his duties
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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.
(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 not less than two-thirds (2/3) of the entire
membership of the Board at a meeting of the Board called and held for such
purpose; and (ii) Executive has materially failed to perform his duties
hereunder or has violated, in material respects, the 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 not less than two-thirds (2/3) of the
entire membership 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. The termination of Executive's
employment as a result of the expiration of the Period of Employment without
extension shall also 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
substantial adverse change, not consented to by Executive, in the nature or
scope of Executive's responsibilities, authorities, powers, functions or duties
from the responsibilities, 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; or (E) 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
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required travel on the Company's business to an extent substantially consistent
with Executive's business travel obligations. "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 ninety (90) 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 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.
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(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 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 provides 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 in a form and manner satisfactory to the Company,
(i) the Company shall pay Executive, on the Date of Termination,
such additional amounts to which Executive may be entitled in accordance
with the Company's then current severance policies (the "Severance
Amount"), provided that, at a minimum, Executive shall be entitled to
receive an amount in a lump sum (the "Minimum Severance Amount") equal to
the sum of Executive's Average Base Salary and Average Incentive
Compensation payable for twenty-four (24) months or the sum of Executive's
Average Base Salary and Average Incentive Compensation payable for the
remaining length of the original three-year term after the Date of
Termination, whichever is greater. 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
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such fewer number of complete 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 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 thirty (30) days after
the occurrence of the event or events which constitute such Good Reason as
specified in clauses (A), (B), (C), (D), (E) and (F) 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 twenty-four (24) months 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, unless otherwise provided in the applicable
option or award agreement, all stock options in which Executive otherwise
would have vested if he would have remained employed for a period of
eighteen (18) months or if termination of employment occurs within the
first eighteen (18) months of the Commencement Date, the remaining length
of the original three-year term, shall immediately accelerate and become
exercisable or nonforfeitable as of the Date of Termination, and all
restricted stock awards in which Executive otherwise would have vested if
he would have remained employed for a period of twenty-four (24) months or
if termination of employment occurs within the first twelve (12) months of
the Commencement Date, the remaining length of the original three-year,
shall immediately accelerate and become 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
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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 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) Nothing contained in the foregoing Subparagraphs 7(a) through 7(e)
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 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:
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(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) unless otherwise provided in the applicable option agreement or
award agreement, 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 income tax (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 income 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 opinion of tax counsel selected by Executive and approved by the
Company, which approval will not be unreasonably withheld. 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
11
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. Notwithstanding the foregoing, neither the merger of the Company
with California Jockey Club nor the merger of the Company with Wyndham
Hotel Corporation shall be deemed a Change in Control for purposes of this
Agreement.
"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
occurring within ninety (90) days prior to, or at any time after, the
occurrence of a Change in Control.
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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, Inc.
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, 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.
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13. ARBITRATION; OTHER DISPUTES. Any dispute or controversy arising under or
in connection with this Agreement shall be settled 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 Subparagraphs 7(b) 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 shall not materially and adversely
affect Executive or expose Executive to an increased probability of civil or
criminal litigation. 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, 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 reimburse 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 Operating Company.
14
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Its: Chairman and Chief Executive
Officer
/s/ Xxxx Xxxxx
---------------------------------
Xxxx Xxxxx
15
SCHEDULE I TO EMPLOYMENT AGREEMENT
Title: Executive Vice President - Acquisitions and Development.
Reports directly to Chairman, Chief Executive Officer
Location: Dallas, Texas
Responsibility: Oversight of property acquisition and new development
activities.
SCHEDULE II TO EMPLOYMENT AGREEMENT
A. Equity position in lodging related holdings of The Hampstead Group.
1. Bedrock Partners - ownership of 15 Wyndham Garden Hotels and 2 Wyndham
Hotels and Resorts and approximately 2.2 million shares of Wyndham
Hotel Corp. stock.
2. Bristol Hotel Company - ownership of approximately 33% of the stock of
this NYSE company.
B. Equity position in a hotel acquisition partnership with Xxxxxxx. X. Xxxxx
of Los Angeles, California.
1. Essex House Hotel - 81 rooms and suites in South Beach, Miami Beach,
Florida.
2. The Lafayette Hotel - 60+ rooms in South Beach, Miami Beach, Florida.
Note: Any future investments with this partnership would be presented to
the Company prior to individual investment seeking the Company's
approval and verification of no conflict of interest with the
Company.
