-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Io8ZseuHu7PD+zRI5mvxuc8JyhsuBsRPoOyMZfNBM9R2rNxDJ8W90IoS8M1L0kLO c7ym++MWdb/WEvsBACU7oA== 0000927016-97-003335.txt : 19971211 0000927016-97-003335.hdr.sgml : 19971211 ACCESSION NUMBER: 0000927016-97-003335 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 37 FILED AS OF DATE: 19971210 EFFECTIVENESS DATE: 19971210 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PATRIOT AMERICAN HOSPITALITY OPERATING CO\DE CENTRAL INDEX KEY: 0000715273 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 942878485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-41927 FILM NUMBER: 97735795 BUSINESS ADDRESS: STREET 1: 3030 LBJ FREEWAY STREET 2: STE 1500 CITY: DALLAS STATE: TX ZIP: 75234 MAIL ADDRESS: STREET 1: 3030 LBJ FREEWAY STREET 2: STE 1500 CITY: DALLAS STATE: TX ZIP: 75234 FORMER COMPANY: FORMER CONFORMED NAME: BAY MEADOWS OPERATING CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PATRIOT AMERICAN HOSPITALITY INC/DE CENTRAL INDEX KEY: 0000016343 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942872485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-41927-01 FILM NUMBER: 97735796 BUSINESS ADDRESS: STREET 1: 3030 LBJ FREEWAY STREET 2: STE 1500 CITY: DALLAS STATE: TX ZIP: 75234 BUSINESS PHONE: 9728888000 MAIL ADDRESS: STREET 1: 3030 LBJ FREEWAY STREET 2: STE 1500 CITY: DALLAS STATE: TX ZIP: 75234 FORMER COMPANY: FORMER CONFORMED NAME: PATRIOT AMERICAN HOSPITALITY OPERATING CO DATE OF NAME CHANGE: 19970717 FORMER COMPANY: FORMER CONFORMED NAME: CALIFORNIA JOCKEY CLUB DATE OF NAME CHANGE: 19920703 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on December 10, 1997 Registration Statement No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------- PATRIOT AMERICAN HOSPITALITY, INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE (State or Other Jurisdiction of Incorporation or Organization) 94-0358820 (I.R.S. Employer Identification No.) 1950 Stemmons Freeway Suite 6001 Dallas, Texas 75207 (214) 863-1000 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) PATRIOT AMERICAN HOSPITALITY, INC. 1995 INCENTIVE PLAN NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN 1997 INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AGREEMENTS (Full Title of the Plans) ------------------------- PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY (Exact Name of Registrant as Specified in its Charter) DELAWARE (State or Other Jurisdiction of Incorporation or Organization) 94-2878485 (I.R.S. Employer Identification No.) 1950 Stemmons Freeway Suite 6001 Dallas, Texas 75207 (214) 863-1000 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY 1995 INCENTIVE PLAN NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN 1997 INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AGREEMENTS (Full Title of the Plans) ------------------------- PAUL A. NUSSBAUM Chairman of the Board, Chief Executive Officer and President Patriot American Hospitality, Inc. 1950 Stemmons Freeway Suite 6001 Dallas, Texas 75207 (214) 863-1000 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) PAUL A. NUSSBAUM Chairman of the Board and Chief Executive Officer Patriot American Operating Company 1950 Stemmons Freeway Suite 6001 Dallas, Texas 75207 (214) 863-1000 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code and of Agent for Service) --------------------- copies to: GILBERT G. MENNA, P.C. KATHRYN I. MURTAGH, ESQ. Goodwin, Procter & Hoar LLP Exchange Place Boston, Massachusetts 02109-2881 (617) 570-1000 --------------------- CALCULATION OF REGISTRATION FEE ================================================================================
Title of Securities Being Amount to be Proposed Maximum Offering Proposed Maximum Amount of Registered Registered (1) Price Per Share Aggregate Offering Price Registration Fee - --------------------------------------------------------------------------------------------------------------------------------- Common Stock, par value $.01 1,090,015 (3) (6) 12.00 $ 13,080,180 $ 3,858.65 per share, of Patriot 345,404 (3) (6) 13.438 4,641,539 1,369.25 American Hospitality Inc. 25,000 (3) 13.875 346,875 102.33 Paired With Shares of Common 3,200 (3) 14.25 45,600 13.45 Stock, par value $.01 per share, 8,000 (3) 15.125 121,000 35.70 of Patriot American Hospitality 780,008 (4) 19.12 14,913,753 4,399.56 Operating Company 1,350,022 (3) 22.375 30,206,742 8,910.99 100,002 (3) 22.625 2,262,545 667.45 560,009 (4) 24.125 13,510,217 3,985.51 250,004 (3) 24.61 6,152,598 1,815.02 250,004 (3) 27.07 6,767,608 1,996.44 250,004 (3) 29.78 7,445,119 2,196.31 280,000 (4) 32.063 8,977,640 2,648.40 250,004 (3) 32.761 8,190,381 2,416.16 250,004 (3) 36.041 9,010,394 2,658.07 100,000 (5) 32.625 3,262,500 962.44 5,900,000 29.875 (2) 172,262,500 50,817.44 ---------- ------------ ---------- 11,791,680 $301,197,193 $88,854.00 ========== ============ ==========
================================================================================ (1) Plus such additional number of shares as may be required pursuant to the Patriot American Hospitality, Inc./ Patriot American Hospitality Operating Company 1995 Incentive Plan (the "1995 Incentive Plan"), the Patriot American Hospitality, Inc./ Patriot American Hospitality Operating Company Non-Employee Directors' Incentive Plan (the "Directors' Plan"), the Patriot American Hospitality, Inc. 1997 Incentive Plan (the "REIT Plan"), the Patriot American Hospitality Operating Company 1997 Incentive Plan (the "OpCo Plan") and each of the Non-Qualified Stock Option Agreements (collectively, the "Plans") in the event of a stock dividend, reverse stock split, split-up, recapitalization, forfeiture of stock under the Plans or other similar event. This number also includes certain options and restricted paired shares issued pursuant to individual agreements. (2) This estimate is made pursuant to Rule 457(c) and (h) under the Securities Act of 1933, as amended (the "Securities Act"), solely for the purposes of determining the registration fee and is based upon the price at which outstanding securities were issued or may be exercised and the market value of outstanding paired shares of Patriot American Hospitality, Inc. Common Stock, $.01 par value per share, and Patriot American Hospitality Operating Company, par value $.01 per share, on December 8, 1997, utilizing the average of the high and low sale prices reported on the New York Stock Exchange for that date. (3) Options granted pursuant to the 1995 Incentive Plan. (4) Options granted pursuant to certain Non-Qualified Option agreements. (5) Options for 50,000 Paired Shares granted pursuant to the REIT Plan. Options for 50,000 Paired Shares granted pursuant to the OpCo Plan. (6) Options granted pursuant to the Directors' Plan. ================================================================================ 1 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Certain Documents by Reference. ----------------------------------------------- Patriot American Hospitality, Inc. (the "REIT") and Patriot American Hospitality Operating Company (the "Operating Company") hereby incorporate by reference the documents listed below, which have previously been filed with the Securities and Exchange Commission (the "Commission"). REIT and Operating Company 1. Current Reports on Form 8-K of the REIT and the Operating Company dated (i) July 1, 1997 (Nos. 001-09319 and 001-09320 filed July 15, 1997), (ii) July 15, 1997 (Nos. 001-09319 and 001-09320 filed July 21, 1997), (iii) July 22, 1997 (Nos. 001-09319 and 001-09320 filed July 22, 1997), (iv) September 17, 1997 (Nos. 001-09319 and 001-09320 filed September 17, 1997), (v) September 30, 1997, as amended (Nos. 001-09319 and 001-09320 filed October 14, 1997 and October 28, 1997), (vi) September 30, 1997 (Nos. 001-09319 and 001-09320 filed November 12, 1997), (vii) December 2, 1997 (Nos. 001-09319 and 001-09320 filed December 4, 1997) and (viii) December 10, 1997 (Nos. 001-09319 and 001-09320 filed December 10, 1997); 2. The description of the Paired Shares of Patriot American Hospitality, Inc. Common Stock, par value $.01 per share, ("REIT Common Stock") and Patriot American Hospitality Operating Company Common Stock, par value $.01 per share ("Operating Company Common Stock") contained or incorporated by reference in REIT's and Operating Company's Registration Statement on Form 8-A (Nos. 001- 09319, 001-09320), including any amendments thereto; 3. Quarterly Report on Form 10-Q of the REIT and the Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter ended June 30, 1997; and 4. Quarterly Report on Form 10-Q of the REIT and the Operating Company (Nos. 001-09319 and 001-09320) for the fiscal quarter ended September 30, 1997. California Jockey Club and Bay Meadows Operating Company 1. Annual Report on Form 10-K of California Jockey Club and Bay Meadows Operating Company (Nos. 001-09319, 001-09320) for the fiscal year ended December 31, 1996; 2. Current Reports on Form 8-K of California Jockey Club and Bay Meadows Operating Company dated (i) February 24, 1997 (Nos. 001-09319, 001-09320 filed March 3, 1997) and (ii) May 28, 1997 (Nos. 001-09319, 001-09320 filed June 5, 1997); 3. Quarterly Report on Form 10-Q of California Jockey Club and Bay Meadows Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter ended March 31, 1997; and 4. Quarterly Report on Form 10-Q/A of California Jockey Club and Bay Meadows Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter ended March 31, 1997 (filed May 16, 1997). 2 Patriot American Hospitality, Inc. ("Old Patriot REIT") 1. Annual Report on Form 10-K of Old Patriot REIT (No. 001-13898) for the fiscal year ended December 31, 1996; 2. Current Reports on Form 8-K of Old Patriot REIT, dated: (i) April 2, 1996, as amended (No. 001-13898 filed April 17, 1996 and June 14, 1996), (ii) December 5, 1996 (No. 001-13898 filed December 5, 1996), (iii) January 16, 1997, as amended (No. 001-13898 filed January 31, 1997, February 21, 1997, April 8, 1997, April 9, 1997 and May 19, 1997), (iv) February 24, 1997 (No. 001-13898 filed March 3, 1997) and (v) April 14, 1997, as amended (No. 001-13898 filed April 17, 1997 and April 18, 1997); and 3. Quarterly Report on Form 10-Q of Old Patriot REIT (No. 001-13898) for the fiscal quarter ended March 31, 1997. Item 4. Description of Securities. ------------------------- Not Applicable. Item 5. Interests of Named Experts and Counsel. -------------------------------------- Not Applicable. Item 6. Indemnification of Directors and Officers. ----------------------------------------- The Amended and Restated Certificate of Incorporation of the REIT (the "REIT Restated Charter") and Amended and Restated Certificate of Incorporation of the Operating Company (the "OpCo Restated Charter" and collectively with the REIT Restated Charter referred to hereinafter as the "Restated Charters") in conjunction with the Delaware General Corporation Law (the "DGCL"), eliminate a director's personal liability to the REIT or the Operating Company, as the case may be, or their respective stockholders for breach of fiduciary duty, except for liability (i) for any breach of the director's duty of loyalty to the REIT or the Operating Company, as the case may be, or their respective stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. The DGCL permits, but does not require, a corporation to indemnify its directors, officers, employees or agents and expressly provides that the indemnification provided for under the DGCL shall not be deemed exclusive of any indemnification right under any bylaw, vote of stockholders or disinterested directors, or otherwise. The DGCL permits indemnification against expenses and certain other liabilities arising out of legal actions brought or threatened against such persons for their conduct on behalf of the corporation, provided that each such person acted in good faith and in a manner that he or she reasonably believed was in or not opposed to the corporation's best interests and in the case of a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The DGCL does not allow indemnification of directors in the case of an action by or in the right of the corporation (including stockholder derivative suits) unless the directors successfully defend the action or indemnification is ordered by the court. The Amended and Restated Bylaws of the REIT (the "REIT Restated Bylaws") and the Amended and Restated Bylaws of the Operating Company (the "OpCo Restated Bylaws" and collectively with the REIT Restated Bylaws referred hereinafter as the "Restated Bylaws") provide for indemnification to the fullest extent authorized by the DGCL and, therefore, these statutory indemnification rights are available to the directors, officers, employees and agents of the REIT and the Operating Company. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors and officers of the REIT or the Operating Company pursuant to the foregoing provision or otherwise, the REIT and the Operating Company have been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and is therefore, unenforceable. The REIT and the Operating Company have purchased director and officer liability insurance for the purpose of providing a source of funds to pay any indemnification described above. 3 Item 7. Exemption from Registration Claimed. ----------------------------------- Not applicable. Item 8. Exhibits. -------- The following is a complete list of exhibits filed or incorporated by reference as part of this registration statement. Exhibits - -------- 4.1 Patriot American Hospitality, Inc./Patriot American Hospitality Operating Company 1995 Stock Option and Incentive Plan 4.2 Patriot American Hospitality, Inc./Patriot American Hospitality Operating Company Non-Employee Directors' Incentive Plan 4.3 Patriot American Hospitality, Inc. 1997 Incentive Plan 4.4 Patriot American Hospitality Operating Company 1997 Incentive Plan 4.5 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement (grant to William W. Evans, III) dated February 14, 1997 4.6 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Richard Holtzman) dated January 15, 1997 4.7 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Scott Lyon) dated January 15, 1997 4.8 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to David Beckham) dated January 15, 1997 4.9 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to William Nassikas) dated January 15, 1997 4.10 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Michael Surguine) dated January 15, 1997 4.11 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Del Goehring) dated January 15, 1997 4.12 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Bruce Campbell) dated January 15, 1997 4.13 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to William Gamble) dated January 15, 1997 4.14 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Richard Riess) dated January 15, 1997 4.15 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Charles F. Kercheval) dated January 15, 1997 4.16 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Michael J. Byrd) dated January 15, 1997 4.17 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Kenneth B. Humes) dated January 15, 1997 4.18 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Toni Dawson) dated January 15, 1997 4.19 Patriot American Hospitality Operating Company Executive Employment Agreement, (grant to Karim Alibhai) dated October 1, 1997 5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the securities being registered 23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1 hereto) 23.2 Consent of Deloitte & Touche LLP, San Francisco, California 23.3 Consent of Deloitte & Touche LLP, Houston, Texas 23.4 Consent of Ernst & Young LLP, Dallas, Texas 23.5 Consent of Ernst & Young LLP, Seattle, Washington 23.6 Consent of Ernst & Young LLP, Phoenix, Arizona 23.7 Consent of Ernst & Young LLP, San Juan, Puerto Rico 23.8 Consent of Ernst & Young LLP, Miami, Florida 23.9 Consent of Coopers & Lybrand, L.L.P., Fort Lauderdale, Florida 23.10 Consent of Coopers & Lybrand, L.L.P., Pittsburgh, Pennsylvania 4 23.11 Consent of Coopers & Lybrand, L.L.P., Dallas, Texas 23.12 Consent of Coopers & Lybrand, L.L.P., Phoenix, Arizona 23.13 Consent of Coopers & Lybrand, L.L.P., Newport Beach, California 23.14 Consent of Coopers & Lybrand, L.L.P., Tampa, Florida 23.15 Consent of Pannell Kerr Forster PC, Alexandria, Virginia 23.16 Consent of Price Waterhouse LLP, Miami, Florida 23.17 Consent of Arthur Andersen LLP, Dallas, Texas 24.1 Powers of Attorney (contained in signature pages on pages 8 and 10 of this Registration Statement) Item 9. Undertakings ------------ (a) Each undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectuses any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectuses filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Each undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be 5 deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit it to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 6 SIGNATURES ---------- Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on this 10th day of December, 1997. PATRIOT AMERICAN HOSPITALITY, INC. By: /s/ Paul A. Nussbaum ------------------------------------------ Paul A. Nussbaum President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of Patriot American Hospitality, Inc., hereby severally constitute Paul A. Nussbaum, as our true and lawful attorney with full power to sign for us and in our names in the capacities indicated below, the Registration Statement filed herewith and any and all amendments to said Registration Statement, and generally to do all such things in our names and in our capacities as officer and directors to enable Patriot American Hospitality, Inc. to comply with the provisions of the Securities Act of 1933, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney to said Registration Statement and any and all amendments thereto. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ Paul A. Nussbaum Chairman of the Board, President December 10, 1997 ------------------------------ and Chief Executive Officer Paul A. Nussbaum (Principal Executive Officer) /s/ Rex E. Stewart Chief Financial Officer, Treasurer and December 10, 1997 - ------------------------------- Secretary (Principal Financial Officer) Rex E. Stewart /s/ William W. Evans III Director December 10, 1997 - ------------------------------- William W. Evans III /s/ John H. Daniels Director December 10, 1997 - ------------------------------ John H. Daniels /s/ John C. Deterding Director December 10, 1997 - ----------------------------- John C. Deterding /s/ Gregory R. Dillon Director December 10, 1997 - ----------------------------- Gregory R. Dillon /s/ Thomas S. Foley Director December 10, 1997 - ----------------------------- Thomas S. Foley /s/ Arch K. Jacobson Director December 10, 1997 - ----------------------------- Arch K. Jacobson
SIGNATURES ---------- Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on this 10th day of December, 1997. PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY By: /s/ Paul A. Nussbaum ---------------------------- Paul A. Nussbaum Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of Patriot American Hospitality Operating Company, hereby severally constitute Paul A. Nussbaum, as our true and lawful attorney with full power to sign for us and in our names in the capacities indicated below, the Registration Statement filed herewith and any and all amendments to said Registration Statement, and generally to do all such things in our names and in our capacities as officer and directors to enable Patriot American Hospitality Operating Company to comply with the provisions of the Securities Act of 1933, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney to said Registration Statement and any and all amendments thereto. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ Paul A. Nussbaum Chairman of the Board and Chief December 10, 1997 - ------------------------------- Executive Officer (Principal Paul A. Nussbaum Executive Officer) /s/ Rex E. Stewart Chief Financial Officer, Treasurer December 10, 1997 - ------------------------------- and Secretary (Principal Financial Rex E. Stewart Officer) /s/ Leonard Boxer Director December 10, 1997 - ------------------------------- Leonard Boxer /s/ Russ Lyon, Jr. Director December 10, 1997 - ------------------------------- Russ Lyon, Jr. /s/ Burton C. Einspruch Director December 10, 1997 - ------------------------------- Burton C. Einspruch /s/ Arch K. Jacobson Director December 10, 1997 - ------------------------------- Arch K. Jacobson /s/ Karim Alibhai Director December 10, 1997 - ------------------------------- Karim Alibhai /s/ Sherwood M. Weiser Director December 10, 1997 - ------------------------------- Sherwood M. Weiser
INDEX TO EXHIBITS TO REGISTRATION STATEMENT ON FORM S-8
Exhibit Page - ------- ---- 4.1 Patriot American Hospitality, Inc. 1995 Stock Option and Incentive Plan 13 4.2 Patriot American Hospitality, Inc. Non-Employee Directors' Incentive Plan 30 4.3 Patriot American Hospitality, Inc. 1997 Incentive Plan 41 4.4 Patriot American Hospitality Operating Company 1997 Incentive Plan 63 4.5 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement (grant to William W. Evans, III) dated February 14, 1997 83 4.6 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Richard Holtzman) dated January 15, 1997 88 4.7 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Scott Lyon) dated January 15, 1997 95 4.8 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to David Beckham) dated January 15, 1997 102 4.9 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to William Nassikas) dated January 15, 1997 109 4.10 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Michael Surguine) dated January 15, 1997 116 4.11 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Del Goehring) dated January 15, 1997 123 4.12 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Bruce Campbell) dated January 15, 1997 130 4.13 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to William Gamble) dated January 15, 1997 137 4.14 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Richard Riess) dated January 15, 1997 144 4.15 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Charles F. Kercheval) dated January 15, 1997 151 4.16 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Michael J. Byrd) dated January 15, 1997 158 4.17 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Kenneth B. Humes) dated January 15, 1997 165 4.18 Patriot American Hospitality, Inc. Non-Qualified Stock Option Agreement, (grant to Toni Dawson) dated January 15, 1997 172 4.19 Patriot American Hospitality Operating Company Executive Employment Agreement, (grant to Karim Alibhai) dated October 1, 1997 179 5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the securities being registered 193 23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1 hereto) 193 23.2 Consent of Deloitte & Touche LLP, San Francisco, California 194 23.3 Consent of Deloitte & Touche LLP, Houston, Texas 195 23.4 Consent of Ernst & Young LLP, Dallas, Texas 196 23.5 Consent of Ernst & Young LLP, Seattle, Washington 197 23.6 Consent of Ernst & Young LLP, Phoenix, Arizona 198 23.7 Consent of Ernst & Young LLP, San Juan, Puerto Rico 199 23.8 Consent of Ernst & Young LLP, Miami, Florida 200 23.9 Consent of Coopers & Lybrand, L.L.P., Fort Lauderdale, Florida 201 23.10 Consent of Coopers & Lybrand, L.L.P., Pittsburgh, Pennsylvania 202
Page ---- 23.11 Consent of Coopers & Lybrand, L.L.P., Dallas, Texas 203 23.12 Consent of Coopers & Lybrand, L.L.P., Phoenix, Arizona 207 23.13 Consent of Coopers & Lybrand, L.L.P., Newport Beach, California 205 23.14 Consent of Coopers & Lybrand, L.L.P., Tampa, Florida 206 23.15 Consent of Pannell Kerr Forster PC, Alexandria, Virginia 207 23.16 Consent of Price Waterhouse LLP, Miami, Florida 208 23.17 Consent of Arthur Andersen LLP, Dallas, Texas 209 24.1 Powers of Attorney 8, 10
EX-4.1 2 1995 STOCK OPTION AND INCENTIVE PLAN Exhibit 4.1 PATRIOT AMERICAN HOSPITALITY, INC. 1995 INCENTIVE PLAN AS AMENDED AND RESTATED AS OF MARCH 24, 1997 PATRIOT AMERICAN HOSPITALITY, INC. 1995 INCENTIVE PLAN AS AMENDED AND RESTATED AS OF MARCH 24, 1997
TABLE OF CONTENTS Page ---- ARTICLE I - DEFINITIONS...................................................1 1.01 Administrator...........................................1 1.02 Affiliate...............................................1 1.03 Agreement...............................................1 1.04 Board...................................................1 1.05 Code....................................................1 1.06 Committee...............................................1 1.07 Common Stock............................................1 1.08 Company.................................................1 1.09 Deferred Stock Unit.....................................1 1.10 Dividend Equivalent Right...............................2 1.11 Exchange Act............................................2 1.12 Fair Market Value.......................................2 1.13 Option..................................................2 1.14 Participant.............................................2 1.15 Performance Shares......................................2 1.16 Plan....................................................2 1.17 Stock Award.............................................2 1.18 Ten Percent Shareholder.................................3 ARTICLE II - PURPOSES.....................................................3 ARTICLE III - ADMINISTRATION..............................................3 ARTICLE IV - ELIGIBILITY..................................................5 ARTICLE V - STOCK SUBJECT TO PLAN.........................................5 5.01 Shares Issued...........................................5 5.02 Aggregate Limit.........................................5 5.03 Reallocation of Shares..................................5 ARTICLE VI - OPTIONS......................................................6 6.01 Award...................................................6 6.02 Option Price............................................6 6.03 Maximum Option Period...................................7 6.04 Nontransferability......................................7 6.05 Transferable Options....................................7 6.06 Employee Status.........................................8 6.07 Exercise................................................8 6.08 Payment.................................................9 6.09 Shareholder Rights......................................9
(i)
Page ---- 6.10 Disposition of Stock.....................................9 ARTICLE VII - STOCK AWARDS................................................10 7.01 Award...................................................10 7.02 Vesting.................................................10 7.03 Performance Objectives..................................10 7.04 Employee Status.........................................11 7.05 Shareholder Rights......................................11 ARTICLE VIII - PERFORMANCE SHARE AWARDS...................................11 8.01 Award...................................................12 8.02 Earning the Award.......................................12 8.03 Payment.................................................12 8.04 Shareholder Rights......................................13 8.05 Nontransferability......................................13 8.06 Transferable Performance Shares.........................13 8.07 Employee Status.........................................14 ARTICLE IX - DEFERRED STOCK UNITS.........................................14 9.01 Elections to Receive Deferred Stock Units in Lieu of Compensation............................................14 9.02 Terms and Conditions....................................14 9.03 Form of Payment.........................................14 9.04 Shareholder Rights......................................15 9.05 Nontransferability......................................15 ARTICLE X - DIVIDEND EQUIVALENT RIGHTS....................................15 10.01 Awards..................................................15 10.02 Payment.................................................16 10.03 Shareholder Rights......................................16 10.04 Nontransferability......................................16 ARTICLE XI - CHANGE IN CONTROL PROVISIONS.................................17 ARTICLE XII - ADJUSTMENT UPON CHANGE IN COMMON STOCK......................19 12.01 Adjustments.............................................19 12.02 Mergers or Other Corporate Transaction..................20 ARTICLE XIII - COMPLIANCE WITH LAW........................................21 ARTICLE XIV - GENERAL PROVISIONS..........................................22 14.01 Effect on Employment and Service........................22 14.02 Unfunded Plan...........................................22 14.03 Rules of Construction...................................23 ARTICLE XV - AMENDMENT....................................................23 ARTICLE XVI - DURATION OF PLAN............................................23 ARTICLE XVII - EFFECTIVE DATE OF PLAN.....................................23
(ii) PATRIOT AMERICAN HOSPITALITY, INC. 1995 INCENTIVE PLAN AS AMENDED AND RESTATED AS OF MARCH 24, 1997 1. - DEFINITIONS ---------------- 1.01 Administrator means the Committee and any delegate of the ------------- Committee that is appointed in accordance with Article III. 1.02 Affiliate means any "subsidiary" or "parent" corporation (within --------- the meaning of Section 424 of the Code) of the Company. 1.03 Agreement means a written agreement (including any amendment or --------- supplement thereto) between the Company and a Participant specifying the terms and conditions of a Stock Award, an award of Performance Shares or an award of Deferred Stock Units, Options or Dividend Equivalent Right granted to such Participant. 1.04 Board means the Board of Directors of the Company. ----- 1.05 Code means the Internal Revenue Code of 1986, and any ---- amendments thereto. 1.06 Committee means the Compensation Committee of the Board. Each --------- member of the Committee shall be an "outside director" within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder and a "non-employee director" within the meaning of Rule 16b-3(b)(3)(i) promulgated under the Exchange Act. 1.07 Common Stock means the common stock of the Company. ------------ 1.08 Company means Patriot American Hospitality, Inc. ------- 1.09 Deferred Stock Unit means an award granted pursuant to Article IX ------------------- which entitles the holder to defer receipt of current cash compensation in exchange for a right to receive shares of Common Stock in the future at the price or prices set forth in the Agreement. 1.10 Dividend Equivalent Right means an award granted pursuant to ------------------------- Article X which entitles the holder to receive compensation based on cash dividends payable by the Company with respect to its Common Stock. 1 1.11 Exchange Act means the Securities Exchange Act of 1934, as amended ------------ and as in effect on the date of this Agreement. 1.12 Fair Market Value means, on any given date, the highest closing ----------------- price of a share of Common Stock reported on the New York Stock Exchange. In any case, if no sale of Common Stock is made on the New York Stock Exchange on that date, then Fair Market Value shall be determined as of the next preceding day on which there was a sale. 1.13 Option means a stock option that entitles the holder to purchase ------ from the Company a stated number of shares of Common Stock at the price set forth in an Agreement. 1.14 Participant means an employee of the Company or an Affiliate, a ----------- member of the Board, or an individual whose efforts contribute to the performance or success of the Company or an Affiliate, who satisfies the requirements of Article IV and is selected by the Administrator to receive a Stock Award, an Option, an award of Performance Shares, Dividend Equivalent Right or Deferred Stock Units or a combination thereof. 1.15 Performance Shares means an award, in the amount determined by the ------------------ Administrator and specified in an Agreement, stated with reference to a specified number of shares of Common Stock, that entitles the holder to receive a payment for each specified share equal to the Fair Market Value of Common Stock on the date of payment. 1.16 Plan means the Patriot American Hospitality, Inc. 1995 Incentive ---- Plan. 1.17 Stock Award means Common Stock awarded to a Participant under ----------- Article VII. 1.18 Ten Percent Shareholder means any individual owning more than ten ----------------------- percent (10%) of the total combined voting power of all classes of stock of the Company or of an Affiliate. An individual shall be considered to own any voting stock owned (directly or indirectly) by or for his brothers, sisters, spouse, ancestors or lineal descendants and shall be considered to own proportionately any voting stock owned (directly or indirectly) by or for a corporation, partnership, estate or trust of which such individual is a shareholder, partner or beneficiary. 2 2. - PURPOSES ------------- The Plan is intended to assist the Company and its Affiliates in recruiting and retaining individuals with ability and initiative by enabling such persons to participate in the future success of the Company and its Affiliates and to associate their interests with those of the Company and its shareholders. The Plan is intended to permit the grant of both Options qualifying under Section 422 of the Code ("incentive stock options") and Options not so qualifying, and the grant of Stock Awards, Performance Shares, Deferred Stock Units and Dividend Equivalent Rights. No Option that is intended to be an incentive stock option shall be invalid for failure to qualify as an incentive stock option. The proceeds received by the Company from the sale of Common Stock pursuant to this Plan shall be used for general corporate purposes. 3. - ADMINISTRATION ------------------- The Plan shall be administered by the Administrator. The Administrator shall have authority to grant Stock Awards, Performance Shares, Options, Deferred Stock Units and Dividend Equivalent Rights upon such terms (not inconsistent with the provisions of this Plan) as the Administrator may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the exercisability of all or any part of an Option or on the transferability or forfeitability of any award. Notwithstanding any such conditions, the Administrator may, in its discretion, accelerate the time at which any Option may be exercised, or the time at which a Stock Award may become transferable or nonforfeitable or the time at which Performance Shares, Deferred Stock Units and Dividend Equivalent Rights may be settled. In addition, the Administrator shall have complete authority to interpret all provisions of this Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant in the Plan of any specific power to the Administrator shall not be construed as limiting any power or authority of the Administrator. Any decision made, or action taken, by the Administrator or in connection with the administration of this Plan shall be final and conclusive. Neither the Administrator nor any member of the Committee shall be liable for any act done in good faith with respect to this Plan or any Agreement or award. All expenses of administering this Plan shall be borne by the Company. 3 The Committee, in its discretion, may delegate to one or more officers of the Company all or part of the Committee's authority and duties with respect to grants and awards to individuals who are not "covered employees" within the meaning of Section 162(m) of the Code or subject to the reporting and other provisions of Section 16 of the Exchange Act. The Committee may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Committee's delegate or delegates that were consistent with the terms of the Plan. 4. - ELIGIBILITY ---------------- Any employee of the Company or an Affiliate (including a corporation that becomes an Affiliate after the adoption of this Plan) or a person whose efforts contribute to the performance or success of the Company or an Affiliate (including a corporation that becomes an Affiliate after the adoption of this Plan) is eligible to participate in this Plan if the Administrator, in its sole discretion, determines that such person has contributed significantly or can be expected to contribute significantly to the profits or growth of the Company or an Affiliate. Directors of the Company are also eligible to participate in this Plan. 5. - STOCK SUBJECT TO PLAN -------------------------- 5.01 Shares Issued. Upon the award of shares of Common Stock pursuant ------------- to a Stock Award, the Company may issue shares of Common Stock from its authorized but unissued Common Stock. Upon the exercise of an Option, the Company may deliver to the Participant (or the Participant's broker if the Participant so directs), shares of Common Stock from its authorized but unissued Common Stock. 5.02 Aggregate Limit. The maximum aggregate number of shares of Common --------------- Stock that may be issued under this Plan is increased from 2,000,000 shares to 5,000,000 shares. The maximum aggregate number of shares that may be issued under this Plan shall be subject to adjustment as provided in Article XII. 5.03 Reallocation of Shares. If an Option is terminated, in whole or in ---------------------- part, for any reason other than its exercise, the number of shares of Common Stock allocated to the Option or portion thereof may be reallocated to other awards to be granted under this Plan. If an award of Deferred Stock Units is terminated, in whole or in part, for any reason other than its settlement, the number of shares of Common Stock underlying such award or portion thereof may be reallocated to other awards to be granted under this Plan. If an award 4 of Performance Shares or Stock Award is terminated, in whole or in part, the number of shares of Common Stock allocated to the Performance Share award, Stock Award or portion thereof may be reallocated to other awards to be granted under this Plan. 6. - OPTIONS ------------ 6.01 Award. In accordance with the provisions of Article IV, the ----- Administrator will designate each individual to whom an Option is to be granted and will specify the number of shares of Common Stock covered by such awards; provided, however, that no individual may be granted Options in any calendar year covering more than 2,600,000 shares of Common Stock. 6.02 Option Price. The price per share for Common Stock purchased on ------------ the exercise of an Option shall be determined by the Administrator on the date of grant; provided, however, that the price per share for Common Stock purchased on the exercise of any Option shall not be less than the Fair Market Value on the date of grant or, with respect to Options granted in connection with the initial employment of an individual following the effective date of the registration statement relating to the Company's initial public offering of Common Stock, eighty-five percent (85%) of the Fair Market Value on the date the Option is granted. Notwithstanding the preceding sentence, the price per share for Common Stock purchased on the exercise of any Option that is an incentive stock option shall not be less than the Fair Market Value on the date the Option is granted or, in the case of an incentive stock option granted to an individual who is a Ten Percent Shareholder on the date such option is granted, shall not be less than one hundred ten percent (110%) of the Fair Market Value on the date the Option is granted. 6.03 Maximum Option Period. The maximum period in which an Option may --------------------- be exercised shall be determined by the Administrator on the date of grant, except that no Option that is an incentive stock option shall be exercisable after the expiration of ten years from the date such Option was granted. In the case of an incentive stock option that is granted to a Participant who is a Ten Percent Shareholder on the date of grant, such option shall not be exercisable after the expiration of five years from the date of grant. The terms of any Option that is an incentive stock option may provide that it is exercisable for a period less than such maximum period. 5 6.04 Nontransferability. Except as provided in Section 6.05, each ------------------ Option granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. During the lifetime of the Participant to whom the Option is granted, the Option may be exercised only by the Participant. No right or interest of a Participant in any Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 6.05 Transferable Options. Section 6.04 to the contrary -------------------- notwithstanding, if the Agreement provides, an Option that is not an incentive stock option may be transferred by a Participant to the Participant's children, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners or a charitable organization; provided, however, that the Participant may not receive any consideration for the transfer. In addition to transfers described in the preceding sentence the Administrator may grant Options that are not incentive stock options that are transferable on other terms and conditions as may be permitted under Securities Exchange Commission Rule 16b-3 as in effect from time to time. The holder of an Option transferred pursuant to this section shall be bound by the same terms and conditions that governed the Option during the period that it was held by the Participant. 6.06 Employee Status. For purposes of determining the applicability of --------------- Section 422 of the Code (relating to incentive stock options), or in the event that the terms of any Option provide that it may be exercised only during employment or within a specified period of time after termination of employment, the Administrator may decide to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment. 6.07 Exercise. Subject to the provisions of this Plan and the -------- applicable Agreement, an Option may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the Administrator shall determine; provided, however, that incentive stock options (granted under the Plan and all plans of the Company and its Affiliates) may not be first exercisable in a calendar year for stock having a Fair Market Value (determined as of the date an Option is granted) exceeding $100,000. An Option granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the Option could be exercised. A partial exercise of an Option shall not affect the right 6 to exercise the Option from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the Option. 6.08 Payment. Unless otherwise provided by the Agreement, payment of ------- the Option price shall be made in cash or a cash equivalent acceptable to the Administrator. If the Agreement provides, payment of all or part of the option price may be made by surrendering shares of Common Stock to the Company that are not then subject to restrictions under any Company plan and that have been beneficially owned by the Participant for at least six months. If Common Stock is used to pay all or part of the Option price, the sum of the cash and cash equivalent and the Fair Market Value (determined as of the day preceding the date of exercise) of the shares surrendered must not be less than the option price of the shares for which the Option is being exercised. If the Agreement provides, payment of all or part of the option price may be made by the Participant delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure. 6.09 Shareholder Rights. No Participant shall have any rights as a ------------------ shareholder with respect to shares subject to his Option until the date of exercise of such Option. 6.10 Disposition of Stock. A Participant shall notify the Company of -------------------- any sale or other disposition of Common Stock acquired pursuant to an Option that was an incentive stock option if such sale or disposition occurs (i) within two years of the grant of an Option or (ii) within one year of the issuance of the Common Stock to the Participant. Such notice shall be in writing and directed to the Secretary of the Company. 7. - STOCK AWARDS ----------------- 7.01 Award. In accordance with the provisions of Article IV, the ----- Administrator will designate each individual to whom a Stock Award is to be made and will specify the number of shares of Common Stock covered by such awards. 7 7.02 Vesting. The Administrator, on the date of the award, may ------- prescribe that a Participant's rights in the Stock Award shall be forfeitable or otherwise restricted for a period of time or subject to such conditions as may be set forth in the Agreement. If imposed, the period of restriction shall be at least three years; provided, however, that the minimum period of restriction shall be at least one year in the case of a Stock Award that will become transferable and nonforfeitable on account of the satisfaction of performance objectives prescribed by the Administrator. The Administrator may also provide in the Agreement that a Stock Award is not subject to any restrictions. 7.03 Performance Objectives. In accordance with Section 7.02, the ---------------------- Administrator may prescribe that Stock Awards will become vested or transferable or both based on objectives stated with respect to the Company's, an Affiliate's or an operating unit's return on equity, funds from operations, cash available for distribution, earnings per share, total earnings, earnings growth, return on capital, return on assets, or Fair Market Value of the Common Stock. If the Administrator, on the date of award, prescribes that a Stock Award shall become nonforfeitable and transferable only upon the attainment of performance objectives stated with respect to one or more of the foregoing criteria, the shares subject to such Stock Award shall become nonforfeitable and transferable only to the extent that the Administrator certifies that such objectives have been achieved. 7.04 Employee Status. In the event that the terms of any Stock Award --------------- provide that shares may become transferable and nonforfeitable thereunder only after completion of a specified period of employment, the Administrator may decide in each case to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment. 7.05 Shareholder Rights. Prior to their forfeiture (in accordance with ------------------ the applicable Agreement and while the shares of Common Stock granted pursuant to the Stock Award may be forfeited or are nontransferable), a Participant will have all rights of a shareholder with respect to a Stock Award, including the right to receive dividends and vote the shares; provided, however, that during such period (i) a Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to a Stock Award, (ii) the Company shall retain custody of the certificates evidencing shares of 8 Common Stock granted pursuant to a Stock Award, and (iii) the Participant will deliver to the Company a stock power, endorsed in blank, with respect to each Stock Award. The limitations set forth in the preceding sentence shall not apply after the shares of Common Stock granted under the Stock Award are transferable and are no longer forfeitable. 8. - PERFORMANCE SHARE AWARDS ----------------------------- 8.01 Award. In accordance with the provisions of Article IV, the ----- Administrator will designate each individual to whom an award of Performance Shares is to be made and will specify the number of shares of Common Stock covered by such awards. 8.02 Earning the Award. The Administrator, on the date of the grant of ----------------- an award, may prescribe that the Performance Shares, or portion thereof, will be earned, and the Participant will be entitled to receive payment pursuant to the award of Performance Shares only upon the satisfaction of certain requirements or the attainment of certain objectives. By way of example and not of limitation, the restrictions may provide that Performance Shares will be forfeited without payment if the Participant separates from the service of the Company and its Related Entities before the expiration of a stated term or unless the Company, an Affiliate or an operating unit achieves objectives stated with reference to the Company's an Affiliate's or an operating unit's return on equity, funds from operations, cash available for distribution, earnings per share, total earnings, earnings growth, return on capital, return on assets or Fair Market Value of the Common Stock. If the Administrator, on the date of award, prescribes that no payments will be made with respect to Performance Shares unless performance objectives stated with respect to the foregoing criteria are attained, no such payment will be made unless, and then only to the extent that, the Administrator certifies that such objectives have been achieved. 8.03 Payment. In the discretion of the Administrator, the amount ------- payable when an award of Performance Shares is earned may be settled in cash, by the issuance of Common Stock or a combination of cash and Common Stock. A fractional share shall not be deliverable when an award of Performance Shares is earned, but a cash payment will be made in lieu thereof. 9 8.04 Shareholder Rights. No Participant shall, as a result of receiving ------------------ an award of Performance Shares, have any rights as a shareholder until and to the extent that the award of Performance Shares is earned and settled by the issuance of Common Stock. After an award of Performance Shares is earned, if settled completely or partially in Common Stock, a Participant will have all the rights of a shareholder with respect to such Common Stock. 8.05 Nontransferability. Except as provided in Section 8.06, ------------------ Performance Shares granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Performance Shares shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 8.06 Transferable Performance Shares. Section 8.05 to the contrary ------------------------------- notwithstanding, if the Agreement provides, an award of Performance Shares may be transferred by a Participant to the Participant's children, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners or a charitable organization; provided, however, that the Participant may not receive any consideration for the transfer. In addition to transfers described in the preceding sentence the Administrator may grant Performance Shares that are transferable on other terms and conditions as may be permitted under Securities Exchange Commission Rule 16b-3 as in effect from time to time. The holder of Performance Shares transferred pursuant to this section shall be bound by the same terms and conditions that governed the Performance Shares during the period that they were held by the Participant. 8.07 Employee Status. In the event that the terms of any Performance --------------- Share award provides that no payment will be made unless the Participant completes a stated period of employment, the Administrator may decide to what extent leaves of absence for government or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment. 9. - DEFERRED STOCK UNITS ------------------------- 9.01 Elections to Receive Deferred Stock Units in Lieu of Compensation. ----------------------------------------------------------------- Upon the request of a Participant and with the consent of the Administrator, each such Participant may, pursuant to an advance written election delivered to the Company no later than the date specified by the Administrator, elect to defer receipt 10 of all or a portion of the cash compensation otherwise due to such Participant. The amount of the deferred compensation shall be converted to Deferred Stock Units at the Fair Market Value of the Common Stock (or such other lower price determined by the Administrator) on the date the cash compensation would otherwise be paid. 9.02 Terms and Conditions. At the time the Participant makes a deferred -------------------- compensation election, the Administrator shall direct the Company to enter into an Agreement with the Participant which sets forth the terms and conditions of deferral, including the timing of payment and any vesting schedule. During the term of deferral, the Participant's Deferred Stock Units will be credited with Dividend Equivalent Rights. 9.03 Form of Payment. Deferred Stock Units shall be settled in shares --------------- of Common Stock, in a single installment or installments. A fractional share of Deferred Stock Unit shall be settled in cash. 9.04 Shareholder Rights. No Participant shall, as a result of receiving ------------------ Deferred Stock Units, have any rights as a shareholder until and to the extent that the Deferred Stock Units are settled by the issuance of Common Stock. After the Deferred Stock Units are settled in Common Stock, a Participant will have all the rights of a shareholder with respect to such Common Stock. 9.05 Nontransferability. Deferred Stock Units shall be nontransferable ------------------ except by will or by the laws of descent and distribution. No right or interest of a Participant in any Deferred Stock Units shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 10. - DIVIDEND EQUIVALENT RIGHTS -------------------------------- 10.01 Awards. In accordance with the provisions of Article IV, the ------ Administrator will designate each individual to whom an award of Dividend Equivalent Rights is to be made. A Dividend Equivalent Right is an Award entitling the recipient to receive credits based on cash dividends that would be paid on the shares of Common Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares were held by the recipient. A Dividend Equivalent Right may be granted hereunder to any Participant as a component of another award or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the grant. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Common Stock, which 11 may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. A Dividend Equivalent Right granted as a component of another award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other award. A Dividend Equivalent Right granted as a component of another award may also contain terms and conditions different from such other award. 10.02 Payment. In the discretion of the Administrator and as provided ------- in the Agreement, Dividend Equivalent Rights may be settled in cash or shares of Common Stock or a combination thereof, in a single installment or installments. 10.03 Shareholder Rights. No Participant shall, as a result of ------------------ receiving an award of Dividend Equivalent Rights, have any rights as a shareholder until and to the extent that the award of Dividend Equivalent Rights is earned and settled by the issuance of Common Stock. After an award of Dividend Equivalent Rights is earned, if settled completely or partially in Common Stock, a Participant will have all the rights of a shareholder with respect to such Common Stock. 10.04 Nontransferability. Unless otherwise provided in the Agreement, ------------------ Dividend Equivalent Rights granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Dividend Equivalent Right shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 11. - CHANGE IN CONTROL PROVISIONS ---------------------------------- (a) A "Change in Control" with respect to the Company shall be deemed to have taken place if any of the following events occurs: (i) Any person, as that term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act, becomes, is discovered to be or files a report on Schedule 13D or 14D-1 (or any successor schedule, form or report) disclosing that such person is, a beneficial owner (as defined in Rule 13d-3 under the Exchange Act or any successor rule or regulation), directly or indirectly, of securities of the Company 12 representing 20% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors (unless such person is known to be already such a beneficial owner on October 25, 1996); (ii) Individuals who, as of October 25, 1996, constitute the Board of Directors of the Company cease for any reason to constitute at least a majority of the Board of Directors of the Company, unless any such change is approved by a unanimous vote of the members of the Board of Directors of the Company in office immediately prior to such cessation; (iii) The Company is merged, consolidated or reorganized into or with another corporation or other legal person, or securities of the Company are exchanged for securities of another corporation or other legal person, and immediately after such merger, consolidation, reorganization or exchange less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held, directly or indirectly, in the aggregate by the holders of securities entitled to vote generally in the election of directors of the Company immediately prior to such transaction; (iv) The Company in any transaction or series of related transactions, sells all or substantially all of its assets to any other corporation or other legal person and less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such sale or sales are held, directly or indirectly, in the aggregate by the holders of securities entitled to vote generally in the election of directors of the Company immediately prior to such sale; (v) The Company and its affiliates shall sell or dispose of (in a single transaction or series of related transactions) business operations that generated two-thirds of the consolidation revenues (determined on the basis of the Company's four most recently completed fiscal quarters for which reports have been filed under the Exchange Act) of the Company and its subsidiaries immediately prior thereto; (vi) The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any 13 successor schedule, form or report or item therein) that a change in control of the Company has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction; or (vii) Any other transaction or series of related transactions occur that have substantially the effect of the transactions specified in any of the preceding clauses in this sentence. Notwithstanding the provisions of Section (a)(i) or (a)(iv) hereof, unless otherwise determined in a specific case by majority vote of the Board of Directors of the Company, a Change in Control shall not be deemed to have occurred for purposes of this Plan solely because (i) the Company, (ii) an entity in which the Company directly or indirectly beneficially owns 50% or more of the voting securities or (iii) any Company- sponsored employee stock ownership plan, or any other employee benefit plan of the Company, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D, Form 8-K or Schedule 14A (or any successor schedule, form or report or item thereon) under the Exchange Act, disclosing beneficial ownership by it of shares of stock of the Company, or because the Company reports that a Change in Control of the Company has or may have occurred or will or may occur in the future by reason of such beneficial ownership. (b) Upon the occurrence of a Change in Control, unless otherwise provided in the applicable Agreement, each Participant shall have immediate vesting of, and the immediate right to, exercise all outstanding Options, and any risk of forfeiture included in any Stock Award, Dividend Equivalent Rights and Deferred Stock Units shall lapse. 12. - ADJUSTMENT UPON CHANGE IN COMMON STOCK -------------------------------------------- 12.01 Adjustments. The maximum number of shares as to which awards may ----------- be granted under this Plan, the terms of outstanding awards and the per individual limitations on the number of shares for which Options, Stock Awards and Performance Shares may be granted, shall be adjusted as the Committee shall determine to be equitably required in the event that (a) the Company (i) effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or (ii) engages in a transaction to which Section 424 of the Code applies or (b) there occurs any other event which, in the judgment of the Committee necessitates such action. Any determination made under this Article XII by the Committee shall be final and conclusive. 14 The issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the maximum number of shares as to which awards may be granted, the per individual limitations on the number of shares for which Options, Stock Awards and Performance Shares may be granted or the terms of outstanding awards. The Committee may grant awards in substitution for performance shares, phantom shares, stock awards, stock options, stock appreciation rights, or similar awards held by an individual who becomes an employee of the Company or an Affiliate in connection with a transaction described in the first paragraph of this Section 12.01. Notwithstanding any provision of the Plan (other than the limitation of Section 5.02), the terms of such substituted award shall be as the Committee, in its discretion, determines is appropriate. 12.02 Mergers or Other Corporate Transaction. Upon consummation of a -------------------------------------- consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to outstanding Options: (i) provide that such Options shall be assumed or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the optionees, provide that all unexercised Options will terminate immediately prior to the consummation of the Transaction unless exercised by the optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the optionees equal to the difference between (A) the value (as determined by the Committee) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of 15 Common Stock subject to such outstanding Options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding Options in exchange for the termination of such Options. In the event Options will terminate upon the consummation of the Transaction, each optionee shall be permitted, within a specified period determined by the Committee, to exercise all non-vested Options, subject to the consummation of the Transaction. 13. - COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES --------------------------------- No Option shall be exercisable, no Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement to which the Company is a party, and the rules of all domestic stock exchanges on which the Company's shares may be listed. The Company shall have the right to rely on an opinion of its counsel as to such compliance. Any share certificate issued to evidence Common Stock when a Stock Award is granted or for which an Option is exercised or a Performance Share settled may bear such legends and statements as the Administrator may deem advisable to assure compliance with federal and state laws and regulations. No Option shall be exercisable, no Stock Award shall be granted, no Common Stock shall be issued, no certificate for shares shall be delivered, and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Administrator may deem advisable from regulatory bodies having jurisdiction over such matters. 14. - GENERAL PROVISIONS ------------------------ 14.01 Effect on Employment and Service. Neither the adoption of this -------------------------------- Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof) shall confer upon any individual any right to continue in the employ or service of the Company or an Affiliate or in any way affect any right and power of the Company or an Affiliate to terminate the employment or service of any individual at any time with or without assigning a reason therefor. 14.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall ------------- be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by grants under this 16 Plan. Any liability of the Company to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. 14.03 Rules of Construction. Headings are given to the articles and --------------------- sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law. 15. - AMENDMENT --------------- The Board may amend or terminate this Plan from time to time; provided, however, that no amendment may become effective until shareholder approval is obtained if (i) the amendment increases the aggregate number of shares of Common Stock that may be issued under the Plan, (ii) the amendment changes the class of individuals eligible to become Participants or (iii) the amendment materially increases the benefits that may be provided under the Plan. No amendment shall, without a Participant's consent, adversely affect any rights of such Participant under any award outstanding at the time such amendment is made. 16. - DURATION OF PLAN ---------------------- No award may be granted under this Plan with respect to the reserved shares of Common Stock added to the Plan as a result of the amendment and restatement of this Plan more than ten years after the date this amended and restated Plan is adopted by the Board. Awards granted before that date shall remain valid in accordance with their terms. 17. - EFFECTIVE DATE OF PLAN ---------------------------- Options, Deferred Stock Units, Dividend Equivalent Rights and Performance Share Awards may be granted under this amended and restated Plan upon its adoption by the Board, provided that no such award shall be effective or exercisable unless this Plan is approved by the holders of a majority of the votes present or represented and entitled to be cast by the Company's shareholders, voting either in person or by proxy, at a duly held shareholders' meeting. Stock Awards may be granted under this Plan upon the later of its adoption by the Board or its approval by shareholders in accordance with the preceding sentence. 17 EX-4.2 3 NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN Exhibit 4.2 PATRIOT AMERICAN HOSPITALITY, INC. NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN 1. DEFINITIONS ----------- 1.01 Date means the date of the first Board meeting after each annual ---- meeting of the Company's shareholders beginning with the annual meeting of shareholders in 1996. 1.02 Board means the Board of Trustees of the Company. ----- 1.03 Committee means the committee appointed by the Board to administer --------- the Plan. 1.04 Common Stock means the common stock of the Company. ------ 1.05 Company means Patriot American Hospitality, Inc. ------- 1.06 Fair Market Value means, on any given date, the current fair market ----------------- value of a share of Common Stock as determined pursuant to subsection (a) or (b) below. (a) The Fair Market Value on the First Award Date for Founding Directors shall be the initial public offering price of the Common Stock. (b) Except as provided in subsection (a), Fair Market Value shall be determined as follows: if the Common Stock is not listed on an established stock exchange, Fair Market Value shall be the average of the final bid and asked quotations on the over-the-counter market in which the Common Stock is traded or, if applicable, the reported "closing" price of a share of Common Stock in the New York over-the-counter market as reported by the National Association of Securities Dealers, Inc. If the Common Stock is listed on an established stock exchange or exchanges, Fair Market Value shall be deemed to be the highest closing price of a share of Common Stock reported on that stock exchange or exchanges. In any case, if no sale of Common Stock is made on any stock exchange or over-the-counter market on that date, then Fair Market Value shall be determined as of the next preceding day on which there was a sale. 1.07 First Award Date means (i) with respect to Founding Directors, the ---------------- date that the registration statement relating to the Company's initial public offering of Common Stock is declared effective by the Securities and Exchange Commission, and (ii) with respect to Non-Founding Directors, the date of the meeting of the Company's shareholders at which the Non-Founding Director is first elected to the Board or the date of the Board meeting at which a Non- Founding Director is first elected to the Board to fill a vacancy on the Board. 1.08 Founding Director means a Participant who is a member of the Board ----------------- on the date that the registration statement relating to the Company's initial public offering of Common Stock is declared effective by the Securities and Exchange Commission. 1.09 Non-Founding Director means a Participant who is not a Founding --------------------- Director. 1.10 Option means a stock option that entitles the holder to purchase ------ shares of Common Stock from the Company on the terms set forth in Article IV of this Plan. 1.11 Participant means a member of the Board who, on the First Award Date ----------- or applicable Award Date, is not an employee or officer of the Company or any "subsidiary" or "parent" corporation of the Company within the meaning of Section 424 of the Internal Revenue Code and who is not a member of the Committee. 1.12 Plan means the Patriot American Hospitality, Inc. Non-Employee ---- Director's Incentive Plan. 2. PURPOSES -------- The Plan is intended to (i) assist the Company in recruiting and retaining non-employee directors and (ii) promote a greater identity of interest between Participants and shareholders by enabling Participants to participate in the Company's future success. 3. ADMINISTRATION -------------- The Plan shall be administered by the Committee. The Committee shall have authority to grant Options and award shares of Common Stock upon such terms (not inconsistent with the provisions of the Plan) as the Committee may consider appropriate. In addition, the Committee shall have complete authority to interpret all provisions of the Plan; to adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan and to make all other determinations necessary or advisable for the administration of the Plan. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. Any decision made, or action taken, by the Committee in connection with the administration of the Plan shall be final and conclusive. No member of the Committee shall be liable for any 2 act done in good faith with respect to the Plan. All expenses of administering the Plan shall be borne by the Company. 4. OPTIONS ------- 4.01 Grant of Options. Each Participant shall be granted an Option for ---------------- 7,500 shares of Common Stock on the applicable First Award Date. Each Participant shall be granted an Option for 2,500 shares on each Award Date. Notwithstanding the preceding sentences, no Participant may be granted Options under this Plan for more than 17,500 shares of Common Stock. All Options shall be evidenced by Agreements that shall be subject to the applicable provisions of this Plan and to such other provisions as the Committee may adopt. 4.02 Exercise of Options. Subject to the provisions of Article VI, all ------------------- Options granted under the Plan shall be immediately exercisable as of the date of grant for all or part of the shares of Common Stock subject to the Option. Options granted under the plan may be exercised after the Participant's death by the Participant's estate or the person or persons or entity or entities that succeed to Participant's rights under the Option by will or the laws of descent and distribution. 4.03 Option Price. The price per share of Common Stock purchased on the ------------ exercise of an Option shall be the Fair Market Value on the date that the Option is granted. 4.04 Maximum Option Period. The maximum period during which an Option may --------------------- be exercised shall be ten years from the date of grant. 4.05 Payment of Option Price. Payment of the Option price shall be made ----------------------- in cash, cash equivalent acceptable to the Committee, by the surrender of shares of Common Stock, or a combination thereof. If shares of Common Stock are surrendered in payment of the Option price, the shares surrendered must have an aggregate Fair Market Value (determined as of the day preceding the exercise date) that, together with any cash or cash equivalent paid, is not less than the Option price for the number of shares of Common Stock for which this Option is being exercised. 4.06 Nontransferability. Each Option granted under this Plan shall be ------------------ nontransferable except by will or by the laws of descent and distribution. During the lifetime of the Participant to whom an Option is 3 granted, the Option may be exercised only by the Participant. No right or interest of a Participant in any Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 4.07 Shareholder Rights. No Participant shall have any rights as a ------------------ shareholder with respect to shares of Common Stock subject to his or her Option until the date of exercise of such Option. 4.08 Shares Subject to Options. Upon the exercise of any Option, the ------------------------- Company may deliver to the Participant (or the Participant's broker if the Participant so directs), shares of Common Stock from its previously authorized but unissued Common Stock. 5. SHARE AWARDS ------------ 5.01 Eligibility. Each Participant will be awarded shuts of Common Stock ----------- on each Award Date. The number of shares of Common Stock issued to each Participant in accordance with the preceding sentence will be the number of whole shares that has an aggregate Fair market Value on the Award Date that as nearly as possible equals $6,250. Shares of Common Stock will be awarded to each Founding Director (on the date that the registration statement relating to the Company's initial public offering of Common Stock is declared effective by the Securities and Exchange Commission) and to each member of the Board (i) who is not an employee of the Company or any "subsidiary" or "parent" corporation of the Company within the meaning of Section 424 of the Internal Revenue Code, (ii) who is not a member of the Committee and (iii) who is first elected to the Board to fill a vacancy on the Board other than at the regularly scheduled annual meeting of the Company's shareholders (on the date that he becomes a member of the Board). The number of shares issued in accordance with the preceding sentence will be the number of whole shares that have an aggregate Fair Market Value on the date of award that as nearly as possible equals the product of $6,250 and a fraction, the numerator of which is the number of full months preceding the next Award Date and the denominator of which is twelve. 5.02 Vesting. Shares of Common Stock issued under Section 5.1 shall be ------- immediately and fully vested. 4 5.03 Shareholder Rights. A member of the Board who is issued shares of ------------------ Common Stock under Section 5.1. will have the right to vote all such shares and to receive all dividends thereon and shall have all the rights of a shareholder of the Company with respect to such shares. 5.04 Shares Subject to Awards. Upon the award of shares of Common Stock ------------------------ in accordance with this Article V, the Company may issue shares from its previously authorized but unissued shares. 6. ADJUSTMENT UPON CHANGE IN COMMON STOCK -------------------------------------- The provisions of this Plan and the terms of outstanding Options shall be revised as the Committee shall determine to be equitably required in the event that (a) the Company (i) effects one or more stock dividends, stock split-ups, subdivisions or consolidation of shares or (ii) engages in a transaction described in Section 424(a) of the Internal Revenue Code or (b) there occurs any other event which, in the judgment of the Committee, necessitates such action. Any determination made under this Article VI by the Committee shall be final and conclusive. The issuance by the Company of shares of any class, or securities convertible into shares of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares of obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the provisions of this Plan or the terms of outstanding Options. 7. COMPLIANCE WITH LAW AND ----------------------- APPROVAL OF REGULATORY BODIES ----------------------------- No Common Stock shall be issued and no certificates for shares of Common Stock shall be delivered under the Plan except in compliance with all applicable federal and state laws and regulations, any listing agreement to which the Company is a party, and the rules of all domestic stock exchanges on which the Company's Common Stock may be listed. The Company shall have the right to rely on an opinion of its counsel as to such compliance. Any certificate issued to evidence Common Stock issued upon the exercise of an Option granted under the Plan may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Common Stock shall be issued and no certificate for shares of Common Stock shall be delivered upon the exercise of an Option granted under the Plan 5 until the Company has obtained such consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters. 8. GENERAL PROVISIONS ------------------ 8.01 Unfunded Plan. The Plan, insofar as it provides for awards, shall be ------------- unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by awards under the Plan. Any liability of the Company to any person with respect to any award to be made under the Plan shall be based solely upon any contractual obligations that may be created pursuant to the Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. 8.02 Rules of Construction. Headings are given to the articles and --------------------- sections of the Plan solely as a convenience to facilitate reference. The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law. 9. AMENDMENT --------- The Board may amend from time to time or terminate the Plan at any time; provided, however, that no amendment may become effective until shareholder approval is obtained if the amendment materially (i) increases the aggregate number of shares of Common Stock that may be issued under this Plan (other than an adjustment authorized under Article VI), (ii) increases the benefits to be awarded under the Plan or (iii) changes the class of individuals eligible to become Participants. The preceding sentence to the contrary notwithstanding, the Plan may not be amended more than once every six months other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act of 1974, or the rules thereunder. An amendment or termination of the Plan shall not affect a Participant's rights under awards made prior to such action. 10. DURATION OF PLAN ---------------- No Options may be granted under the Plan after December 31, 2005. Options granted before that date shall remain valid in accordance with their terms. No shares of Common Stock may be awarded pursuant to Article V after the Award Date that occurs in 2005. 6 11. EFFECTIVE DATE OF PLAN ---------------------- Options may be granted under the Plan on the First Award Date, provided that, the Plan has been approved (at a duly held shareholders' meeting at which a quorum is present) by a majority of the votes cast by the Company's shareholders, voting either in person or by proxy, or by unanimous consent of the Company's shareholders. 7 EX-4.3 4 1997 INCENTIVE PLAN Exhibit 4.3 PATRIOT AMERICAN HOSPITALITY, INC. 1997 INCENTIVE PLAN PATRIOT AMERICAN HOSPITALITY, INC. 1997 INCENTIVE PLAN TABLE OF CONTENTS -----------------
Page ---- ARTICLE I - DEFINITIONS........................................................1 1.01 Affiliate....................................................1 1.02 Agreement....................................................1 1.03 Award or Awards..............................................2 1.04 Board........................................................2 1.05 Code.........................................................2 1.06 Committee....................................................2 1.07 Deferred Paired Unit Award...................................2 1.08 Dividend Equivalent Rights...................................2 1.09 Effective Date...............................................2 1.10 Exchange Act.................................................2 1.11 Fair Market Value............................................2 1.12 Independent Director.........................................3 1.13 Operating Company............................................3 1.14 Operating Company Common Stock...............................3 1.15 Paired Share Award...........................................3 1.16 Pairing Agreement............................................3
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Page ---- 1.17 Participant..................................................3 1.18 Plan.........................................................3 1.19 REIT.........................................................3 1.20 REIT Common Stock............................................3 1.21 Restricted Paired Unit Award.................................4 ARTICLE II - PURPOSES..........................................................4 ARTICLE III - ADMINISTRATION...................................................5 ARTICLE IV - ELIGIBILITY.......................................................6 ARTICLE V - PAIRED SHARES SUBJECT TO PLAN......................................7 5.01 Paired Shares Issued.........................................7 5.02 Substitute Awards............................................8 ARTICLE VI - PAIRED OPTIONS....................................................8 6.01 Award........................................................8 6.02 Paired Option Price..........................................8 6.03 Stock Options Granted to Independent Directors...............9 6.04 Maximum Paired Option Period.................................9 6.05 Nontransferability...........................................9 6.06 Transferable Paired Options.................................10 6.07 Employee Status.............................................10 6.08 Exercise....................................................10
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Page ---- 6.09 Payment...............................................................11 6.10 Shareholder Rights....................................................12 ARTICLE VII - PAIRED SHARE AWARDS.......................................................12 ARTICLE VIII - RESTRICTED PAIRED UNIT AWARDS............................................12 8.01 Award.................................................................12 8.02 Vesting...............................................................12 8.03 Performance Objectives................................................13 8.04 Employee Status.......................................................13 8.05 Shareholder Rights....................................................14 8.06 Nontransferability....................................................14 ARTICLE IX - DEFERRED PAIRED UNIT AWARDS................................................14 9.01 Elections to Receive Deferred Paired Unit Awards in Lieu of Compensation..........................................................14 9.02 Terms and Conditions..................................................14 9.03 Form of Payment.......................................................15 9.04 Shareholder Rights....................................................15 9.05 Nontransferability....................................................15 ARTICLE X - DIVIDEND EQUIVALENT RIGHTS..................................................15 10.01 Awards................................................................15 10.02 Payment...............................................................16 10.03 Shareholder Rights....................................................16
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Page ---- 10.04 Nontransferability.........................................17 ARTICLE XI - CHANGE IN CONTROL PROVISIONS....................................17 ARTICLE XII - ADJUSTMENT UPON CHANGE IN PAIRED SHARES........................18 12.01 Adjustments................................................18 12.02 Mergers or Other Corporate Transactions....................19 ARTICLE XIII - COMPLIANCE WITH LAW...........................................20 ARTICLE XIV - GENERAL PROVISIONS.............................................21 14.01 Effect on Employment and Service...........................21 14.02 Unfunded Plan..............................................21 14.03 Rules of Construction......................................22 ARTICLE XV - AMENDMENT.......................................................22 ARTICLE XVI - TERMINATION OF PAIRING AGREEMENT...............................22 ARTICLE XVII - EFFECTIVE DATE OF PLAN........................................23 ARTICLE XVIII - GOVERNING LAW................................................23
(iv) PATRIOT AMERICAN HOSPITALITY, INC. 1997 INCENTIVE PLAN The name of the plan is the Patriot American Hospitality, Inc. 1997 Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers, employees, Independent Directors and other key persons (including consultants) of Patriot American Hospitality, Inc. (the "REIT") and its Affiliates upon whose judgment, initiative and efforts the REIT largely depends for the successful conduct of its business to acquire a proprietary interest in the REIT. It is anticipated that providing such persons with a direct stake in the REIT's welfare will assure a closer identification of their interests with those of the REIT, thereby stimulating their efforts on the REIT's behalf and strengthening their desire to remain with the REIT. 12. - DEFINITIONS ----------------- 12.01 Affiliate means any "subsidiary" or "parent" corporation (within --------- the meaning of Section 424 of the Code) of the REIT or means any corporation or other entity (other than the REIT) in any unbroken chain of corporations or other entities beginning with the REIT if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50 percent or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain. 12.02 Agreement means a written agreement (including any amendment or --------- supplement thereto) between the REIT and a Participant specifying the terms and conditions of an Award. 12.03 Award or Awards, except when referring to a particular category ----- ------ of grant under the Plan, shall include Paired Options, Paired Share Awards, Restricted Paired Unit Awards, Deferred Paired Unit Awards, or awards of Dividend Equivalent Rights. 12.04 Board means the Board of Directors of the REIT. ----- 12.05 Code means the Internal Revenue Code of 1986, and any amendments ---- thereto. 12.06 Committee means the Compensation Committee of the Board. Each --------- member of the Committee shall be an "outside director" within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder and a "non-employee director" within the meaning of Rule 16b-3(b)(3)(i) promulgated under the Exchange Act. 12.07 Deferred Paired Unit Award means an award granted pursuant to -------------------------- Article IX which entitles the holder to defer receipt of current cash compensation in exchange for a right to receive Paired Shares in the future at the price or prices set forth in the Agreement. 12.08 Dividend Equivalent Rights means an award granted pursuant to -------------------------- Article X which entitles the holder to receive compensation based on cash dividends and distributions payable with respect to the Paired Shares. 12.09 Effective Date means the date on which the Plan is approved by -------------- shareholders as set forth in Article XVII. 12.10 Exchange Act means the Securities Exchange Act of 1934, as ------------ amended and as in effect on the date of this Agreement. 12.11 Fair Market Value means, on any given date, the closing price of ----------------- a Paired Share, as reported on the New York Stock Exchange. In any case, if no sale of Paired Shares is made on the New York Stock Exchange on that date, then Fair Market Value shall be determined as of the next preceding day on which there was a sale of such security. 12.12 Independent Director means a member of the Board who is not also -------------------- an employee of the REIT or any Affiliate. 12.13 Operating Company means Patriot American Hospitality Operating ----------------- Company. 12.14 Operating Company Common Stock means the common stock of the ------------------------------ Operating Company. 12.15 Paired Share Award means Paired Shares awarded to a Participant ------------------ under Article VII as incentive compensation or in lieu of current cash compensation. 12.16 Pairing Agreement means the agreement entered into in February, ----------------- 1983, as amended, between the REIT (formerly named Bay Meadows Realty Enterprises, Inc.) and Operating Company (formerly named Bay Meadows Operating Company), which provides that all outstanding shares of REIT Common Stock and 2 Operating Company Common Stock are paired on a one-for-one basis and trade as units consisting of one share of REIT Common Stock and one share of Operating Company Common Stock. 12.17 Participant means an employee of the REIT or an Affiliate, a ----------- member of the Board, or an individual whose efforts contribute to the performance or success of the REIT or an Affiliate, who satisfies the requirements of Article IV and is selected by the Committee to receive an Award under the Plan. 12.18 Plan means the Patriot American Hospitality, Inc. 1997 Incentive ---- Plan. 12.19 REIT means Patriot American Hospitality, Inc. ---- 12.20 REIT Common Stock means the common stock of the REIT. ----------------- 12.21 Restricted Paired Unit Award means an Award granted pursuant to ---------------------------- Article VIII which entities the holder to receive a payment of Paired Shares upon the satisfaction of the vesting restriction period or performance goals. 13. - PURPOSES -------------- The Plan is intended to assist the REIT and its Affiliates in recruiting and retaining individuals with ability and initiative by enabling such persons to participate in the future success of the REIT and its Affiliates, and to associate their interests with those of the REIT and its shareholders. Pursuant to the Pairing Agreement, all outstanding REIT Common Stock and Operating Company Common Stock are paired on a one-for-one basis and trade as units consisting of one share of REIT Common Stock and one share of Operating Company Common Stock ("Paired Shares"). Accordingly, each option to purchase shares of REIT Common Stock ("REIT Option") shall be paired with an option to purchase an equal number of shares of Operating Company Common Stock (an "Operating Company Option" and each such paired REIT Option and Operating Company Option is herein referred to as a "Paired Option"); similarly, each other Award of shares of REIT Common Stock shall be paired with an Award of an equal number of shares of Operating Company Common Stock. The Plan is intended to permit the grant of Paired Options which do not qualify under Section 422 of the Code as incentive stock options. The Plan is also intended to permit the grant of Paired Share Awards, Restricted Paired Unit Awards, Deferred Paired Unit Awards and Dividend Equivalent Rights. The proceeds received by the REIT from the sale of Paired Shares pursuant to this Plan shall be used for general corporate 3 purposes. Each Paired Option or other Award may be exercised, terminated, canceled, forfeited, transferred or otherwise disposed of only in units consisting of Paired Shares. Accordingly, a REIT Option, or a portion thereof, or a share of REIT Common Stock, may be exercised, terminated, canceled, forfeited, transferred or otherwise disposed of only in connection with, and to the same extent as, the exercise, termination, cancellation, forfeiture, transfer or other disposition of an Operating Company Option, or a share of Operating Company Common Stock, as the case may be. 14. - ADMINISTRATION -------------------- The Plan shall be administered by the Committee. The Committee shall have authority to grant any Awards upon such terms (not inconsistent with the provisions of this Plan) as the Committee may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the exercisability of all or any part of a Paired Option or on the transferability or forfeitability of any Award. The Committee may in connection with the death, disability or other termination of employment of a Participant or a Change in Control of the REIT accelerate the time at which any Paired Option may be exercised or, the time at which a Restricted Paired Unit Award may become transferable or nonforfeitable. In addition, the Committee shall have complete authority to interpret all provisions of this Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. Any decision made, or action taken, by the Committee or in connection with the administration of this Plan shall be final and conclusive. No member of the Committee shall be liable for any act done in good faith with respect to this Plan or any Agreement or Award. All expenses of administering this Plan shall be borne by the REIT. The Committee, in its discretion, may delegate to one or more officers of the REIT all or part of the Committee's authority and duties with respect to grants and awards to individuals who are not "covered employees" within the meaning of Section 162(m) of the Code or subject to the reporting and other provisions of Section 16 of the Exchange Act. Any such delegation by the Committee shall include a limitation as to the amount of Awards that may be granted during the period of the delegation and shall contain guidelines as to the 4 determination of the exercise price of any Option, the conversion ratio or price of other Awards and the vesting criteria. The Committee may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Committee's delegate or delegates that were consistent with the terms of the Plan. 15. - ELIGIBILITY ----------------- Any employee of the REIT or an Affiliate (including a corporation or other entity that becomes an Affiliate after the adoption of this Plan) or a person whose efforts contribute to the performance or success of the REIT or an Affiliate (including a corporation or other entity that becomes an Affiliate after the adoption of this Plan), including a consultant, is eligible to participate in this Plan if the Committee, in its sole discretion, determines that such person has contributed significantly or can be expected to contribute significantly to the profits or growth of the REIT or an Affiliate. Independent Directors of the REIT are also eligible to participate in this Plan. 16. - PAIRED SHARES SUBJECT TO PLAN ----------------------------------- 16.01 Paired Shares Issued. Subject to adjustment as provided in -------------------- Section 13.01, the aggregate number of Paired Shares available from time to time for all Awards under this Plan and the Operating Company's 1997 Stock Incentive Plan (the "Operating Company Plan") shall be such aggregate number of shares as does not exceed the sum of (i) 3,000,000 shares; plus (ii) as of the beginning of each calendar quarter, beginning with October 1, 1997, 10 percent of any net increase since the beginning of the preceding calendar quarter in the total number of Paired Shares actually outstanding (assuming all units of partnership interest in the Patriot American Hospitality Partnership, L.P. and the Patriot American Hospitality Operating Partnership, L.P. that are subject to redemption rights are converted into Paired Shares); reduced by (iii) the aggregate number of Paired Shares subject to Awards under this Plan and the Operating Company Plan. For purposes of this limitation, if any portion of an Award is forfeited, canceled, reacquired by the REIT, satisfied without the issuance of Stock or otherwise terminated, the Paired Shares underlying such portion of the Award shall be added back to the Paired Shares available for issuance under the Plan. Notwithstanding the foregoing, the maximum number of Paired Shares for which Restricted Paired Unit Awards, Paired Share Awards and 5 Deferred Paired Unit Awards may be granted under this Plan and the Operating Company Plan during the term of the Plans shall not exceed forty percent (40%) of the Paired Shares issuable under the Plans, and the maximum number of Paired Shares with respect to which Awards may be granted during any calendar year period to any Participant shall not exceed 1,500,000 shares, subject to adjustment as provided in Section 12.01. Paired Shares to be delivered under the Plan shall be made available (A) by the REIT from authorized and unissued shares of REIT Common Stock issued by the REIT directly to the holder and (B) by the Operating Company from authorized and unissued shares of Operating Company Common Stock issued by the Operating Company directly to the holder. 16.02 Substitute Awards. The Committee may grant Awards under the Plan ----------------- in substitute for stock and stock-based awards held by employees of another employer who become employees of the REIT or an Affiliate as the result of a merger or consolidation of the employer with the REIT or an Affiliate, the acquisition by the REIT or an Affiliate of property or stock of the employer, or as a result of a transfer of employment or directorship from the Operating Company (or affiliate thereof) to the REIT or an Affiliate. The Administrator may direct that the substitute awards be granted on such terms and conditions as the Administrator consider appropriate in the circumstances whether or not specifically authorized under the Plan. Unless otherwise provided by the Administrator, any grants of Paired Shares under this Section 5.02 shall not count against the Paired Shares available for issuance under the Plan under Section 5.01. 17. - PAIRED OPTIONS -------------------- 17.01 Award. In accordance with the provisions of Article IV, the ----- Committee will designate each individual to whom a Paired Option is to be granted and will specify the number of Paired Shares covered by such awards. 17.02 Paired Option Price. The price per Paired Share purchased on the ------------------- exercise of a Paired Option shall be determined by the Committee on the date of grant; provided, however, that the price per Paired Share purchased on the exercise of any Paired Option shall not be less than one hundred percent (100%) of the Fair Market Value of a Paired Share on the date of grant of such Paired Option. Except as provided in Section 12.01, the Paired Option price may not be reduced after the date of grant. 6 17.03 Stock Options Granted to Independent Directors. Each Independent ---------------------------------------------- Director who is serving as Director of the Company on each annual meeting of shareholders, beginning with the 1997 annual meeting, shall automatically be granted on such day a non-qualified stock option to acquire 10,000 Paired Shares, subject to adjustments as provided in Section 12.01. The exercise price per Paired Share covered by a Paired Option granted under this Section 6.03 shall be equal to the Fair Market Value of a Paired Share on the date of grant. The Committee, in its discretion, may grant additional Paired Options to Independent Directors. Any such grant may vary among individual Independent Directors. Unless otherwise determined by the Committee, an Option granted under Section 6.03 shall be exercisable in full as of the grant date. 17.04 Maximum Paired Option Period. The maximum period in which a ---------------------------- Paired Option may be exercised shall be determined by the Committee on the date of grant and may not exceed ten years from the date such Paired Option was granted. 17.05 Nontransferability. Except as provided in Section 6.06, each ------------------ Paired Option granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. During the lifetime of the Participant to whom the Paired Option is granted, the Paired Option may be exercised only by the Participant. No right or interest of a Participant in any Paired Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 17.06 Transferable Paired Options. Section 6.05 to the contrary --------------------------- notwithstanding, the Committee may provide in an Agreement regarding a given Paired Option that a Paired Option that is not an incentive stock option may be transferred by a Participant to the Participant's children, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners; provided, however, that the Participant may not receive any consideration for the transfer. The holder of a Paired Option transferred pursuant to this section shall be bound by the same terms and conditions that governed the Paired Option during the period that it was held by the Participant. 17.07 Employee Status. In the event that the terms of any Paired Option --------------- provide that it may be exercised only during employment or within a specified period of time after termination of employment, the 7 Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment. 17.08 Exercise. Subject to the provisions of this Plan and the -------- applicable Agreement, a Paired Option may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the Committee shall determine. A Paired Option granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the Paired Option could be exercised. A partial exercise of a Paired Option shall not affect the right to exercise the Paired Option from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the Paired Option. 17.09 Payment. Unless otherwise provided by the Agreement, payment of ------- the Paired Option price shall be made in cash or a cash equivalent acceptable to the Committee. If the Agreement provides, payment of all or part of the option price may be made by surrendering to the REIT previously owned whole Paired Shares (which the Participant has held for at least six months prior to the delivery of such Paired Shares or which the Participant purchased on the open market and for which the Participant has good title, free and clear of all liens and encumbrances). If Paired Shares are used to pay all or part of the Paired Option price, the sum of the cash, cash equivalent, and the Fair Market Value (determined as of the day preceding the date of exercise) of the Paired Shares surrendered must not be less than the option price of the Paired Shares for which the Paired Option is being exercised. If the Agreement provides, payment of all or part of the option price may be made by the Participant delivering to the REIT a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the REIT cash or a check payable and acceptable to the REIT to pay the purchase price; provided that in the event the Participant chooses to pay the purchase price as so provided, the Participant and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure. If the Agreement provides and if the Board has authorized the loan of funds to the Participant for the purpose of enabling or assisting the Participant to exercise his Paired Option, payment of the option price may be made 8 by the Participant with a promissory note, provided that at least so much of the exercise price as represents the par value of the Paired Shares shall be paid other than with a promissory note. 17.10 Shareholder Rights. No Participant shall have any rights as a ------------------ shareholder with respect to Paired Shares subject to his Paired Option until the date of exercise of such Paired Option. 18. - PAIRED SHARE AWARDS ------------------------- In accordance with the provisions of Article IV, the Committee will designate each individual to whom a Paired Share Award is to be made and will specify the number of Paired Shares covered by such award. A Paired Share Award shall be granted as incentive compensation or in lieu of current cash compensation otherwise payable to a Participant and shall be free of any vesting restrictions. The REIT shall issue or cause to be issued Paired Shares to a Participant who receives a Paired Share Award. 19. - RESTRICTED PAIRED UNIT AWARDS ----------------------------------- 19.01 Award. In accordance with the provisions of Article IV, the ----- Committee will designate each individual to whom a Restricted Paired Unit Award is to be made and will specify the number of Paired Shares covered by such award. Such an award shall entitle the Participant to receive a payment of Paired Shares upon the satisfaction of the vesting restriction period or satisfaction of performance objectives; provided, however, that the Committee may permit a Participant to elect, pursuant to an advance written election delivered to the REIT no later than the date prescribed to the Committee, to defer receipt of some or all of the Paired Shares. 19.02 Vesting. The Committee, on the date of the award, shall prescribe ------- that a Participant's rights in the Restricted Paired Unit Award shall be forfeitable or otherwise restricted for a period of time or subject to such conditions as may be set forth in the Agreement. The period of restriction shall be at least three years; provided, however, that the minimum period of restriction shall be at least one year in the case of a Restricted Paired Unit Award that will become transferable and nonforfeitable on account of the satisfaction of performance objectives prescribed by the Committee. During the restriction period, the Committee may provide that the Participant's Restricted Paired Unit Award be credited with Dividend Equivalent Rights. 19.03 Performance Objectives. In accordance with Section 8.02, the ---------------------- Committee may prescribe that Restricted Paired Unit Awards will become vested, transferable, or both, based on objectives stated with respect 9 to the REIT's, an Affiliate's, or an operating unit's return on equity, funds from operations, cash available for distribution, earnings per share, total earnings, earnings growth, return on capital, return on assets, or Fair Market Value of the Paired Shares. If the Committee, on the date of the award, prescribes that a Restricted Paired Unit Award shall become nonforfeitable and transferable only upon the attainment of performance objectives stated with respect to one or more of the foregoing criteria, the Paired Shares subject to such Restricted Paired Unit Award shall become nonforfeitable and transferable only to the extent that the Committee certifies that such objectives have been achieved. 19.04 Employee Status. In the event that the terms of any Restricted --------------- Paired Unit Award provide that Paired Shares may become transferable and nonforfeitable thereunder only after completion of a specified period of employment, the Committee may decide in each case to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment. 19.05 Shareholder Rights. No Participant shall, as a result of ------------------ receiving a Restricted Paired Unit Award, have any rights as a shareholder until and to the extent that the Restricted Paired Unit Award is settled by the issuance of Paired Shares. After the Restricted Paired Unit Award is settled in Paired Shares, a Participant will have all the rights of a shareholder with respect to such Paired Shares. The REIT shall issue, or cause to be issued, Paired Shares to the Participant. 19.06 Nontransferability. A Restricted Paired Unit Award shall be ------------------ nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Restricted Paired Unit Award shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 20. - DEFERRED PAIRED UNIT AWARDS --------------------------------- 20.01 Elections to Receive Deferred Paired Unit Awards in Lieu of ----------------------------------------------------------- Compensation. The Committee may, in its sole discretion, permit a Participant to - ------------ elect, pursuant to an advance written election delivered to the REIT no later than the date specified by the Committee, to defer receipt of all or a portion of the cash compensation otherwise due to such Participant. The amount of the deferred compensation shall be converted 10 to a Deferred Paired Unit Award using the Fair Market Value of the Paired Shares on the date immediately prior to the date the cash compensation would otherwise be paid. 20.02 Terms and Conditions. At the time the Participant makes a -------------------- deferred compensation election, the Committee shall direct the REIT to enter into an Agreement with the Participant which sets forth the terms and conditions of deferral, including the timing of payment and any vesting schedule. During the term of deferral, the Participant's Deferred Paired Unit Award will be credited with Dividend Equivalent Rights. 20.03 Form of Payment. Deferred Paired Unit Award shall be settled in --------------- Paired Shares, in a single installment or installments. A fractional share of a Deferred Paired Unit shall be settled in cash. The REIT shall issue, or cause to be issued, Paired Shares to the Participant. 20.04 Shareholder Rights. No Participant shall, as a result of ------------------ receiving a Deferred Paired Unit Award, have any rights as a shareholder until and to the extent that the Deferred Paired Unit Award is settled by the issuance of Paired Shares. After the Deferred Paired Unit Award is settled in Paired Shares, a Participant will have all the rights of a shareholder with respect to such Paired Shares. 20.05 Nontransferability. A Deferred Paired Unit Award shall be ------------------ nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Deferred Paired Unit Award shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 21. - DIVIDEND EQUIVALENT RIGHTS -------------------------------- 21.01 Awards. In accordance with the provisions of Article IV, the ------ Committee will designate each individual to whom an award of Dividend Equivalent Rights is to be made. An award of Dividend Equivalent Rights entitles the recipient to receive credits based on cash dividends that would have been paid on the Paired Shares specified in the award of Dividend Equivalent Rights (or other award to which it relates) if such shares had been issued to and held by the recipient. An award of Dividend Equivalent Rights may be granted hereunder to any Participant as a component of another award or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the Agreement. Dividend equivalents credited to the holder of a Dividend Equivalent Rights may be paid currently or may be deemed to be reinvested in additional Paired Shares, which may thereafter accrue additional equivalents. Any such reinvestment shall be 11 at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the REIT, if any. Dividend Equivalent Rights granted as a component of another award may provide that such Dividend Equivalent Rights shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Rights shall expire or be forfeited or annulled under the same conditions as such other award. Dividend Equivalent Rights granted as a component of another award may also contain terms and conditions different from such other award. 21.02 Payment. In the discretion of the Committee and as provided in ------- the Agreement, Dividend Equivalent Rights may be settled in cash, Paired Shares, or a combination thereof, in a single installment or installments. 21.03 Shareholder Rights. No Participant shall, as a result of ------------------ receiving an award of Dividend Equivalent Rights, have any rights as a shareholder until and to the extent that the award of Dividend Equivalent Rights is earned and settled by the issuance of Paired Shares. After an award of Dividend Equivalent Rights is earned, if settled completely or partially in Paired Shares, a Participant will have all the rights of a shareholder with respect to such Paired Shares. The REIT shall issue, or cause to be issued, Paired Shares to the Participant. 21.04 Nontransferability. Unless otherwise provided in the Agreement, ------------------ Dividend Equivalent Rights granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Dividend Equivalent Rights shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 22. - CHANGE IN CONTROL PROVISIONS ---------------------------------- (a) A "Change in Control" with respect to the REIT shall be deemed to have taken place if any of the following events occurs: (i) Any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than an Affiliate, a trustee or other fiduciary holding securities under an employee benefit plan of the REIT, is or becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of 12 the REIT representing 25% or more of the combined voting power of the REIT's then outstanding securities; or (ii) individuals who, as of July 2, 1997, constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the REIT to effect a transaction described in clauses (i) or (iii) of this paragraph) whose election by the Board or nomination for election by the REIT's shareholders was approved by a vote of at least eighty percent (80%) of the directors then still in office who either were directors as of July 2, 1997 or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (iii) the shareholders of the REIT approve a merger or consolidation of the REIT with or into any other corporation, other than a merger or consolidation which would result in the voting securities of the REIT outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least sixty percent (60%) of the combined voting power of the voting securities of the REIT or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the REIT approve a plan of complete liquidation of the REIT or an agreement for the sale or disposition by the REIT of all or substantially all the REIT's assets. Notwithstanding the above provisions, the merger of Wyndham Hotel Corporation with the REIT shall not be deemed to result in a Change in Control of the REIT. (b) Upon the occurrence of a Change in Control, unless otherwise provided in an Agreement, each Participant shall have immediate vesting of, and the immediate right to, exercise all outstanding Paired Options, and any risk of forfeiture included in any Restricted Paired Unit Award and Dividend Equivalent Rights shall lapse. 23. - ADJUSTMENT UPON CHANGE IN PAIRED SHARES --------------------------------------------- 23.01 Adjustments. The maximum number of Paired Shares as to which ----------- awards may be granted under this Plan, the terms of outstanding awards and the per individual limitations on the number of Paired Shares for which Paired Options or other Awards may be granted, shall be adjusted as the Committee shall determine to be equitably required in the event that (a) the REIT (i) effects one or more stock dividends, stock 13 split-ups, subdivisions or consolidations of shares or (ii) engages in a transaction to which Section 424 of the Code applies or (b) there occurs any other event which, in the judgment of the Committee, necessitates such action. Any determination made under this Article XII by the Committee shall be final and conclusive. Any adjustment made pursuant to this Section 12.01 shall also be made in the Operating Company Plan. 23.02 Mergers or Other Corporate Transactions. Upon consummation of a --------------------------------------- consolidation, merger, or sale of all or substantially all of the assets of the REIT in which outstanding Paired Shares are exchanged for securities, cash, or other property of an unrelated corporation or business entity, or in the event of a liquidation of the REIT (in each case, a "Transaction"), the Board, or the board of directors of any corporation assuming the obligations of the REIT, may, in its discretion, take any one or more of the following actions, as to outstanding Awards: (i) provide that such Awards shall be assumed or equivalent awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Participants, provide that all Awards will terminate immediately prior to the consummation of the Transaction. In the event that, pursuant to clause (ii) above, Awards will terminate immediately prior to the consummation of the Transaction, all Awards, other than Paired Options, shall be fully settled in cash or in kind at such appropriate consideration as determined by the Committee in its sole discretion after taking into account the consideration payable per Paired Share pursuant to the business combination (the "Merger Price") and all Paired Options shall be fully settled, in cash or in kind, in an amount equal to the difference between (A) the Merger Price times the number of Paired Shares subject to such outstanding Paired Options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding Paired Options; provided, however, that each Participant shall be permitted, within a specified period determined by the Committee prior to the consummation of the Transaction, to exercise all outstanding Paired Options, including those that are not then exercisable, subject to the consummation of the Transaction. 24. - COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES --------------------------------- No Paired Option shall be exercisable, no Paired Shares shall be issued, no certificates for Paired Shares shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), 14 any listing agreement to which the REIT is a party, and the rules of all domestic stock exchanges on which the Paired Shares may be listed. The REIT shall have the right to rely on an opinion of its counsel as to such compliance. Any share certificate issued to evidence a Paired Share when a Paired Share Award is granted, or for which a Paired Option is exercised or a Restricted Paired Unit Award or Deferred Paired Unit Award settled, may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Paired Option shall be exercisable, no Paired Share Award shall be granted, no Paired Share shall be issued, no certificate for Paired Shares shall be delivered, and no payment shall be made under this Plan until the REIT has obtained such consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters. Notwithstanding any other provision hereunder, no Paired Option shall be exercisable, no Paired Shares shall be issued, no certificates for Paired Shares shall be delivered, and no payment shall be made under this Plan if and to the extent that to do so would (i) result in the failure of the REIT to satisfy the Code requirements pertaining to real estate investment trusts (which such Code requirements include, but are not limited to, qualification of the REIT as a real estate investment trust and retention of the REIT's status as grandfathered under Section 132(c)(3) of the Deficit Reduction Act of 1984) or (ii) violate (or cause any person to violate) the restrictions on ownership and transfer of equity stock set forth in Article IV of the Amended and Restated Certificate of Incorporation of Patriot American Hospitality, Inc. (as amended or any successor thereto) or in Article IV of the Amended and Restated Certificate of Incorporation of Patriot American Hospitality Operating Company (as amended or any successor thereto). 25. - GENERAL PROVISIONS ------------------------ 25.01 Effect on Employment and Service. Neither the adoption of this -------------------------------- Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof) shall confer upon any individual any right to continue in the employ or service of the REIT or an Affiliate or in any way affect any right and power of the REIT or an Affiliate to terminate the employment or service of any individual at any time with or without assigning a reason therefor. 15 25.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall ------------- be unfunded, and the REIT shall not be required to segregate any assets that may at any time be represented by grants under this Plan. Any liability of the REIT to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the REIT shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the REIT. 25.03 Rules of Construction. Headings are given to the articles and --------------------- sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law. 26. - AMENDMENT --------------- The Board may amend or terminate this Plan from time to time; provided, however, that no amendment may become effective until shareholder approval is obtained if (i) the amendment increases the aggregate number of Paired Shares that may be issued under the Plan, (ii) the amendment changes the class of individuals eligible to become Participants or (iii) the amendment materially increases the benefits that may be provided under the Plan. No amendment shall, without a Participant's consent, adversely affect any rights of such Participant under any award outstanding at the time such amendment is made. Nothing in this Article XV shall limit the Board's authority to take any action pursuant to Section 12.02. 27. - TERMINATION OF PAIRING AGREEMENT -------------------------------------- Notwithstanding anything herein to the contrary, if at any time the Pairing Agreement is terminated for any reason and, as a result of such termination, shares of REIT Common Stock and Operating Company Common Stock are no longer required to be transferred as a single unit, then as of the date of such termination: Paired Options shall no longer be granted hereunder; Paired Share Awards shall no longer be made hereunder with respect to Paired Shares; Deferred Paired Unit Awards and Restricted Paired Unit Awards shall no longer be paid hereunder in the form of Paired Shares; and Dividend Equivalent Rights shall no longer be granted hereunder with respect to shares of Operating Company Common Stock. Furthermore, as of the date of such termination: only REIT Options, Awards of REIT Common Stock and Restricted Unit Awards relating to shares of REIT Common Stock may be granted hereunder; elections may be made hereunder only as to Deferred 16 Paired Units Awards based on REIT Common Stock; and Dividend Equivalent Rights shall be granted hereunder only with respect to shares of REIT Common Stock. 28. - EFFECTIVE DATE OF PLAN ---------------------------- Paired Options, Restricted Paired Unit Awards, Deferred Paired Unit Awards and Dividend Equivalent Rights may be granted under this Plan upon its adoption by the Board, provided that no such Award shall be effective or exercisable unless this Plan is approved by the holders of a majority of the votes present or represented and entitled to be cast by the REIT's shareholders, voting either in person or by proxy, at a duly held shareholders' meeting. Paired Share Awards may be granted under this Plan upon the later of its adoption by the Board or its approval by shareholders in accordance with the preceding sentence. 29. - GOVERNING LAW ------------------- The Plan and all Awards and action taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles. 17 EX-4.4 5 P. A. HOSPITALITY OPERATING CO. 1997 INCENTIVE PLAN Exhibit 4.4 PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY 1997 INCENTIVE PLAN PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY 1997 INCENTIVE PLAN TABLE OF CONTENTS -----------------
Page ---- ARTICLE I - DEFINITIONS.....................................................1 1.01 Affiliate....................................................1 1.02 Agreement....................................................1 1.03 Award or Awards..............................................2 1.04 Board........................................................2 1.05 Code.........................................................2 1.06 Committee....................................................2 1.07 Deferred Paired Unit Award...................................2 1.08 Dividend Equivalent Rights...................................2 1.09 Effective Date...............................................2 1.10 Exchange Act.................................................2 1.11 Fair Market Value............................................2 1.12 Independent Director.........................................3 1.13 Operating Company............................................3 1.14 Operating Company Common Stock...............................3 1.15 Paired Share Award...........................................3 1.16 Pairing Agreement............................................3 1.17 Participant..................................................3 1.18 Plan.........................................................3 1.19 REIT.........................................................3 1.20 REIT Common Stock............................................4 1.21 Restricted Paired Unit Award.................................4 ARTICLE II - PURPOSES.......................................................4 ARTICLE III - ADMINISTRATION................................................5 ARTICLE IV - ELIGIBILITY....................................................6 ARTICLE V - PAIRED SHARES SUBJECT TO PLAN...................................7 5.01 Paired Shares Issued.........................................7 5.02 Substitute Awards............................................8 ARTICLE VI - PAIRED OPTIONS.................................................8 6.01 Award........................................................8 6.02 Paired Option Price..........................................9 6.03 Stock Options Granted to Independent Directors...............9 6.04 Maximum Paired Option Period.................................9 6.05 Nontransferability...........................................9 6.06 Transferable Paired Options.................................10 6.07 Employee Status.............................................10 6.08 Exercise....................................................10 6.09 Payment.....................................................11
(i)
Page ---- 6.10 Shareholder Rights..........................................12 ARTICLE VII - PAIRED SHARE AWARDS.........................................12 ARTICLE VIII - RESTRICTED PAIRED UNIT AWARDS...............................12 8.01 Award.......................................................12 8.02 Vesting.....................................................13 8.03 Performance Objectives......................................13 8.04 Employee Status.............................................13 8.05 Shareholder Rights..........................................14 8.06 Nontransferability..........................................14 ARTICLE IX - DEFERRED PAIRED UNIT AWARDS...................................14 9.01 Elections to Receive Deferred Paired Unit Awards in Lieu of Compensation.....................................14 9.02 Terms and Conditions........................................15 9.03 Form of Payment.............................................15 9.04 Shareholder Rights..........................................15 9.05 Nontransferability..........................................15 ARTICLE X - DIVIDEND EQUIVALENT RIGHTS.....................................15 10.01 Awards......................................................15 10.02 Payment.....................................................16 10.03 Shareholder Rights..........................................16 10.04 Nontransferability..........................................17 ARTICLE XI - CHANGE IN CONTROL PROVISIONS..................................17 ARTICLE XII - ADJUSTMENT UPON CHANGE IN PAIRED SHARES......................18 12.01 Adjustments.................................................18 12.02 Mergers or Other Corporate Transactions.....................19 ARTICLE XIII - COMPLIANCE WITH LAW.........................................20 ARTICLE XIV - GENERAL PROVISIONS...........................................21 14.01 Effect on Employment and Service............................21 14.02 Unfunded Plan...............................................22 14.03 Rules of Construction.......................................22 ARTICLE XV - AMENDMENT.....................................................22 ARTICLE XVI - TERMINATION OF PAIRING AGREEMENT.............................22 ARTICLE XVII - EFFECTIVE DATE OF PLAN......................................23 ARTICLE XVIII - GOVERNING LAW..............................................24
(ii) PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY 1997 INCENTIVE PLAN The name of the plan is the Patriot American Hospitality Operating Company 1997 Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers, employees, Independent Directors and other key persons (including consultants) of Patriot American Hospitality Operating Company (the "Operating Company") and its Affiliates upon whose judgment, initiative and efforts the Operating Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Operating Company. It is anticipated that providing such persons with a direct stake in the Operating Company's welfare will assure a closer identification of their interests with those of the Operating Company, thereby stimulating their efforts on the Operating Company's behalf and strengthening their desire to remain with the Operating Company. 30. - DEFINITIONS ----------------- 30.01 Affiliate means any "subsidiary" or "parent" corporation --------- (within the meaning of Section 424 of the Code) of the Operating Company or means any corporation or other entity (other than the Operating Company) in any unbroken chain of corporations or other entities beginning with the Operating Company if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50 percent or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain. 30.02 Agreement means a written agreement (including any amendment --------- or supplement thereto) between the Operating Company and a Participant specifying the terms and conditions of an Award. 30.03 Award or Awards, except when referring to a particular ----- ------ category of grant under the Plan, shall include Paired Options, Paired Share Awards, Restricted Paired Unit Awards, Deferred Paired Unit Awards, or awards of Dividend Equivalent Rights. 30.04 Board means the Board of Directors of the Operating Company. ----- 30.05 Code means the Internal Revenue Code of 1986, and any ---- amendments thereto. 30.06 Committee means the Compensation Committee of the Board. Each --------- member of the Committee shall be an "outside director" within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder and a "non-employee director" within the meaning of Rule 16b-3(b)(3)(i) promulgated under the Exchange Act. 30.07 Deferred Paired Unit Award means an award granted pursuant to -------------------------- Article IX which entitles the holder to defer receipt of current cash compensation in exchange for a right to receive Paired Shares in the future at the price or prices set forth in the Agreement. 30.08 Dividend Equivalent Rights means an award granted pursuant to -------------------------- Article X which entitles the holder to receive compensation based on cash dividends and distributions payable with respect to the Paired Shares. 30.09 Effective Date means the date on which the Plan is approved by -------------- shareholders as set forth in Article XVII. 30.10 Exchange Act means the Securities Exchange Act of 1934, as ------------ amended and as in effect on the date of this Agreement. 30.11 Fair Market Value means, on any given date, the closing price ----------------- of a Paired Share, as reported on the New York Stock Exchange. In any case, if no sale of Paired Shares is made on the New York Stock Exchange on that date, then Fair Market Value shall be determined as of the next preceding day on which there was a sale of such security. 30.12 Independent Director means a member of the Board who is not -------------------- also an employee of the Operating Company or any Affiliate. 30.13 Operating Company means Patriot American Hospitality Operating ----------------- Company. 30.14 Operating Company Common Stock means the common stock of the ------------------------------ Operating Company. 30.15 Paired Share Award means Paired Shares awarded to a ------------------ Participant under Article VII as incentive compensation or in lieu of current cash compensation. 30.16 Pairing Agreement means the agreement entered into in ----------------- February, 1983, as amended, between Operating Company (formerly named Bay Meadows Operating Company) and the REIT (formerly named Bay Meadows Realty Enterprises, Inc.), which provides that all outstanding shares of Operating Company Common 2 Stock and REIT Common Stock are paired on a one-for-one basis and trade as units consisting of one share of Operating Company Common Stock and one share of REIT Common Stock. 30.17 Participant means an employee of the Operating Company or an ----------- Affiliate, a member of the Board, or an individual whose efforts contribute to the performance or success of the Operating Company or an Affiliate, who satisfies the requirements of Article IV and is selected by the Committee to receive an Award under the Plan. 30.18 Plan means the Patriot American Hospitality Operating Company ---- 1997 Incentive Plan. 30.19 REIT means Patriot American Hospitality, Inc. ---- 30.20 REIT Common Stock means the common stock of the REIT. ----------------- 30.21 Restricted Paired Unit Award means an Award granted pursuant ---------------------------- to Article VIII which entities the holder to receive a payment of Paired Shares upon the satisfaction of the vesting restriction period or performance goals. 31. - PURPOSES -------------- The Plan is intended to assist the Operating Company and its Affiliates in recruiting and retaining individuals with ability and initiative by enabling such persons to participate in the future success of the Operating Company and its Affiliates, and to associate their interests with those of the Operating Company and its shareholders. Pursuant to the Pairing Agreement, all outstanding Operating Company Common Stock and REIT Common Stock are paired on a one-for-one basis and trade as units consisting of one share of Operating Company Common Stock and one share of REIT Common Stock ("Paired Shares"). Accordingly, each option to purchase shares of Operating Company Common Stock (an "Operating Company Option") shall be paired with an option to purchase an equal number of shares of REIT Common Stock (a "REIT Option" and each such paired Operating Company Option and REIT Option is herein referred to as a "Paired Option"); similarly, each other Award of shares of Operating Company Common Stock shall be paired with an Award of an equal number of shares of REIT Common Stock. The Plan is intended to permit the grant of Paired Options which do not qualify under Section 422 of the Code as incentive stock options. The Plan is also intended to permit the grant of Paired Share Awards, 3 Restricted Paired Unit Awards, Deferred Paired Unit Awards and Dividend Equivalent Rights. The proceeds received by the Operating Company from the sale of Paired Shares pursuant to this Plan shall be used for general corporate purposes. Each Paired Option or other Award may be exercised, terminated, canceled, forfeited, transferred or otherwise disposed of only in units consisting of Paired Shares. Accordingly, an Operating Company Option, or a portion thereof, or a share of Operating Company Common Stock, may be exercised, terminated, canceled, forfeited, transferred or otherwise disposed of only in connection with, and to the same extent as, the exercise, termination, cancellation, forfeiture, transfer or other disposition of a REIT Option, or a share of REIT Common Stock, as the case may be. 32. - ADMINISTRATION -------------------- The Plan shall be administered by the Committee. The Committee shall have authority to grant any Awards upon such terms (not inconsistent with the provisions of this Plan) as the Committee may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the exercisability of all or any part of a Paired Option or on the transferability or forfeitability of any Award. The Committee may in connection with the death, disability or other termination of employment of a Participant or a Change in Control of the Operating Company accelerate the time at which any Paired Option may be exercised or, the time at which a Restricted Paired Unit Award may become transferable or nonforfeitable. In addition, the Committee shall have complete authority to interpret all provisions of this Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. Any decision made, or action taken, by the Committee or in connection with the administration of this Plan shall be final and conclusive. No member of the Committee shall be liable for any act done in good faith with respect to this Plan or any Agreement or Award. All expenses of administering this Plan shall be borne by the Operating Company. The Committee, in its discretion, may delegate to one or more officers of the Operating Company all or part of the Committee's authority and duties with respect to grants and awards to individuals who are not 4 "covered employees" within the meaning of Section 162(m) of the Code or subject to the reporting and other provisions of Section 16 of the Exchange Act. Any such delegation by the Committee shall include a limitation as to the amount of Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price of any Option, the conversion ratio or price of other Awards and the vesting criteria. The Committee may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Committee's delegate or delegates that were consistent with the terms of the Plan. 33. - ELIGIBILITY ----------------- Any employee of the Operating Company or an Affiliate (including a corporation or other entity that becomes an Affiliate after the adoption of this Plan) or a person whose efforts contribute to the performance or success of the Operating Company or an Affiliate (including a corporation or other entity that becomes an Affiliate after the adoption of this Plan), including a consultant, is eligible to participate in this Plan if the Committee, in its sole discretion, determines that such person has contributed significantly or can be expected to contribute significantly to the profits or growth of the Operating Company or an Affiliate. Independent Directors of the Operating Company are also eligible to participate in this Plan. 34. - PAIRED SHARES SUBJECT TO PLAN ----------------------------------- 34.01 Paired Shares Issued. Subject to adjustment as provided in -------------------- Section 13.01, the aggregate number of Paired Shares available from time to time for all Awards under this Plan and the REIT's 1997 Stock Incentive Plan (the "REIT Plan") shall be such aggregate number of shares as does not exceed the sum of (i) 3,000,000 shares; plus (ii) as of the beginning of each calendar quarter, beginning with October 1, 1997, 10 percent of any net increase since the beginning of the preceding calendar quarter in the total number of Paired Shares actually outstanding (assuming all units of partnership interest in the Patriot American Hospitality Operating Partnership, L.P. and the Patriot American Hospitality Partnership, L.P. that are subject to redemption rights are converted into Paired Shares); reduced by (iii) the aggregate number of Paired Shares subject to Awards under this Plan and the REIT Plan. For purposes of this limitation, if any portion of an Award is forfeited, canceled, reacquired by the Operating Company, satisfied without the issuance of Stock or 5 otherwise terminated, the Paired Shares underlying such portion of the Award shall be added back to the Paired Shares available for issuance under the Plan. Notwithstanding the foregoing, the maximum number of Paired Shares for which Restricted Paired Unit Awards, Paired Share Awards and Deferred Paired Unit Awards may be granted under this Plan and the REIT Plan during the term of the Plans shall not exceed forty percent (40%) of the Paired Shares issuable under the Plans, and the maximum number of Paired Shares with respect to which Awards may be granted during any calendar year period to any Participant shall not exceed 1,500,000 shares, subject to adjustment as provided in Section 12.01. Paired Shares to be delivered under the Plan shall be made available (A) by the Operating Company from authorized and unissued shares of Operating Company Common Stock issued by the Operating Company directly to the holder and (B) by the REIT from authorized and unissued shares of REIT Common Stock issued by the REIT directly to the holder. 34.02 Substitute Awards. The Committee may grant Awards under the ----------------- Plan in substitute for stock and stock-based awards held by employees of another employer who become employees of the Operating Company or an Affiliate as the result of a merger or consolidation of the employer with the Operating Company or an Affiliate, the acquisition by the Operating Company or an Affiliate of property or stock of the employer, or as a result of a transfer of employment or directorship from the REIT (or affiliate thereof) to the Operating Company or an Affiliate. The Administrator may direct that the substitute awards be granted on such terms and conditions as the Administrator consider appropriate in the circumstances whether or not specifically authorized under the Plan. Unless otherwise provided by the Administrator, any grants of Paired Shares under this Section 5.02 shall not count against the Paired Shares available for issuance under the Plan under Section 5.01. 35. - PAIRED OPTIONS -------------------- 35.01 Award. In accordance with the provisions of Article IV, the ----- Committee will designate each individual to whom a Paired Option is to be granted and will specify the number of Paired Shares covered by such awards. 35.02 Paired Option Price. The price per Paired Share purchased on ------------------- the exercise of a Paired Option shall be determined by the Committee on the date of grant; provided, however, that the price per Paired Share 6 purchased on the exercise of any Paired Option shall not be less than one hundred percent (100%) of the Fair Market Value of a Paired Share on the date of grant of such Paired Option. Except as provided in Section 12.01, the Paired Option price may not be reduced after the date of grant. 35.03 Stock Options Granted to Independent Directors. Each ---------------------------------------------- Independent Director who is serving as Director of the Company on each annual meeting of shareholders, beginning with the 1997 annual meeting, shall automatically be granted on such day a non-qualified stock option to acquire 10,000 Paired Shares, subject to adjustments as provided in Section 12.01. The exercise price per Paired Share covered by a Paired Option granted under this Section 6.03 shall be equal to the Fair Market Value of a Paired Share on the date of grant. The Committee, in its discretion, may grant additional Paired Options to Independent Directors. Any such grant may vary among individual Independent Directors. Unless otherwise determined by the Committee, an Option granted under Section 6.03 shall be exercisable in full as of the grant date. 35.04 Maximum Paired Option Period. The maximum period in which a ---------------------------- Paired Option may be exercised shall be determined by the Committee on the date of grant and may not exceed ten years from the date such Paired Option was granted. 35.05 Nontransferability. Except as provided in Section 6.06, each ------------------ Paired Option granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. During the lifetime of the Participant to whom the Paired Option is granted, the Paired Option may be exercised only by the Participant. No right or interest of a Participant in any Paired Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 35.06 Transferable Paired Options. Section 6.05 to the contrary --------------------------- notwithstanding, the Committee may provide in an Agreement regarding a given Paired Option that a Paired Option that is not an incentive stock option may be transferred by a Participant to the Participant's children, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners; provided, however, that the Participant may not receive any consideration for the transfer. The holder of a Paired Option transferred pursuant to this section shall be bound by the same terms and conditions that governed the Paired Option during the period that it was held by the Participant. 7 35.07 Employee Status. In the event that the terms of any Paired --------------- Option provide that it may be exercised only during employment or within a specified period of time after termination of employment, the Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment. 35.08 Exercise. Subject to the provisions of this Plan and the -------- applicable Agreement, a Paired Option may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the Committee shall determine. A Paired Option granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the Paired Option could be exercised. A partial exercise of a Paired Option shall not affect the right to exercise the Paired Option from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the Paired Option. 35.09 Payment. Unless otherwise provided by the Agreement, payment ------- of the Paired Option price shall be made in cash or a cash equivalent acceptable to the Committee. If the Agreement provides, payment of all or part of the option price may be made by surrendering to the Operating Company previously owned whole Paired Shares (which the Participant has held for at least six months prior to the delivery of such Paired Shares or which the Participant purchased on the open market and for which the Participant has good title, free and clear of all liens and encumbrances). If Paired Shares are used to pay all or part of the Paired Option price, the sum of the cash, cash equivalent, and the Fair Market Value (determined as of the day preceding the date of exercise) of the Paired Shares surrendered must not be less than the option price of the Paired Shares for which the Paired Option is being exercised. If the Agreement provides, payment of all or part of the option price may be made by the Participant delivering to the Operating Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Operating Company cash or a check payable and acceptable to the Operating Company to pay the purchase price; provided that in the event the Participant chooses to pay the purchase price as so provided, the Participant and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure. If the Agreement provides and if the Board has authorized 8 the loan of funds to the Participant for the purpose of enabling or assisting the Participant to exercise his Paired Option, payment of the option price may be made by the Participant with a promissory note, provided that at least so much of the exercise price as represents the par value of the Paired Shares shall be paid other than with a promissory note. 35.10 Shareholder Rights. No Participant shall have any rights as a ------------------ shareholder with respect to Paired Shares subject to his Paired Option until the date of exercise of such Paired Option. 36. - PAIRED SHARE AWARDS ------------------------- In accordance with the provisions of Article IV, the Committee will designate each individual to whom a Paired Share Award is to be made and will specify the number of Paired Shares covered by such award. A Paired Share Award shall be granted as incentive compensation or in lieu of current cash compensation otherwise payable to a Participant and shall be free of any vesting restrictions. The Operating Company shall issue or cause to be issued Paired Shares to a Participant who receives a Paired Share Award. 37. - RESTRICTED PAIRED UNIT AWARDS ----------------------------------- 37.01 Award. In accordance with the provisions of Article IV, the ----- Committee will designate each individual to whom a Restricted Paired Unit Award is to be made and will specify the number of Paired Shares covered by such award. Such an award shall entitle the Participant to receive a payment of Paired Shares upon the satisfaction of the vesting restriction period or satisfaction of performance objectives; provided, however, that the Committee may permit a Participant to elect, pursuant to an advance written election delivered to the Operating Company no later than the date prescribed to the Committee, to defer receipt of some or all of the Paired Shares. 37.02 Vesting. The Committee, on the date of the award, shall prescribe ------- that a Participant's rights in the Restricted Paired Unit Award shall be forfeitable or otherwise restricted for a period of time or subject to such conditions as may be set forth in the Agreement. The period of restriction shall be at least three years; provided, however, that the minimum period of restriction shall be at least one year in the case of a Restricted Paired Unit Award that will become transferable and nonforfeitable on account of the satisfaction of 9 performance objectives prescribed by the Committee. During the restriction period, the Committee may provide that the Participant's Restricted Paired Unit Award be credited with Dividend Equivalent Rights. 37.03 Performance Objectives. In accordance with Section 8.02, the ---------------------- Committee may prescribe that Restricted Paired Unit Awards will become vested, transferable, or both, based on objectives stated with respect to the Operating Company's, an Affiliate's, or an operating unit's return on equity, funds from operations, cash available for distribution, earnings per share, total earnings, earnings growth, return on capital, return on assets, or Fair Market Value of the Paired Shares. If the Committee, on the date of the award, prescribes that a Restricted Paired Unit Award shall become nonforfeitable and transferable only upon the attainment of performance objectives stated with respect to one or more of the foregoing criteria, the Paired Shares subject to such Restricted Paired Unit Award shall become nonforfeitable and transferable only to the extent that the Committee certifies that such objectives have been achieved. 37.04 Employee Status. In the event that the terms of any Restricted --------------- Paired Unit Award provide that Paired Shares may become transferable and nonforfeitable thereunder only after completion of a specified period of employment, the Committee may decide in each case to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment. 37.05 Shareholder Rights. No Participant shall, as a result of receiving ------------------ a Restricted Paired Unit Award, have any rights as a shareholder until and to the extent that the Restricted Paired Unit Award is settled by the issuance of Paired Shares. After the Restricted Paired Unit Award is settled in Paired Shares, a Participant will have all the rights of a shareholder with respect to such Paired Shares. The Operating Company shall issue, or cause to be issued, Paired Shares to the Participant. 37.06 Nontransferability. A Restricted Paired Unit Award shall be ------------------ nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Restricted Paired Unit Award shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 10 38. - DEFERRED PAIRED UNIT AWARDS --------------------------------- 38.01 Elections to Receive Deferred Paired Unit Awards in Lieu of ----------------------------------------------------------- Compensation. The Committee may, in its sole discretion, permit a Participant to - ------------ elect, pursuant to an advance written election delivered to the Operating Company no later than the date specified by the Committee, to defer receipt of all or a portion of the cash compensation otherwise due to such Participant. The amount of the deferred compensation shall be converted to a Deferred Paired Unit Award using the Fair Market Value of the Paired Shares on the date immediately prior to the date the cash compensation would otherwise be paid. 38.02 Terms and Conditions. At the time the Participant makes a deferred -------------------- compensation election, the Committee shall direct the Operating Company to enter into an Agreement with the Participant which sets forth the terms and conditions of deferral, including the timing of payment and any vesting schedule. During the term of deferral, the Participant's Deferred Paired Unit Award will be credited with Dividend Equivalent Rights. 38.03 Form of Payment. Deferred Paired Unit Award shall be settled in --------------- Paired Shares, in a single installment or installments. A fractional share of a Deferred Paired Unit shall be settled in cash. The Operating Company shall issue, or cause to be issued, Paired Shares to the Participant. 38.04 Shareholder Rights. No Participant shall, as a result of receiving ------------------ a Deferred Paired Unit Award, have any rights as a shareholder until and to the extent that the Deferred Paired Unit Award is settled by the issuance of Paired Shares. After the Deferred Paired Unit Award is settled in Paired Shares, a Participant will have all the rights of a shareholder with respect to such Paired Shares. 38.05 Nontransferability. A Deferred Paired Unit Award shall be ------------------ nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Deferred Paired Unit Award shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 39. - DIVIDEND EQUIVALENT RIGHTS -------------------------------- 39.01 Awards. In accordance with the provisions of Article IV, the ------ Committee will designate each individual to whom an award of Dividend Equivalent Rights is to be made. An award of Dividend Equivalent Rights entitles the recipient to receive credits based on cash dividends that would have been paid on the Paired 11 Shares specified in the award of Dividend Equivalent Rights (or other award to which it relates) if such shares had been issued to and held by the recipient. An award of Dividend Equivalent Rights may be granted hereunder to any Participant as a component of another award or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the Agreement. Dividend equivalents credited to the holder of a Dividend Equivalent Rights may be paid currently or may be deemed to be reinvested in additional Paired Shares, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Operating Company, if any. Dividend Equivalent Rights granted as a component of another award may provide that such Dividend Equivalent Rights shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Rights shall expire or be forfeited or annulled under the same conditions as such other award. Dividend Equivalent Rights granted as a component of another award may also contain terms and conditions different from such other award. 39.02 Payment. In the discretion of the Committee and as provided in ------- the Agreement, Dividend Equivalent Rights may be settled in cash, Paired Shares, or a combination thereof, in a single installment or installments. 39.03 Shareholder Rights. No Participant shall, as a result of receiving ------------------ an award of Dividend Equivalent Rights, have any rights as a shareholder until and to the extent that the award of Dividend Equivalent Rights is earned and settled by the issuance of Paired Shares. After an award of Dividend Equivalent Rights is earned, if settled completely or partially in Paired Shares, a Participant will have all the rights of a shareholder with respect to such Paired Shares. The Operating Company shall issue, or cause to be issued, Paired Shares to the Participant. 39.04 Nontransferability. Unless otherwise provided in the Agreement, ------------------ Dividend Equivalent Rights granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Dividend Equivalent Rights shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 12 40. - CHANGE IN CONTROL PROVISIONS ---------------------------------- (a) A "Change in Control" with respect to the Operating Company shall be deemed to have taken place if any of the following events occurs: (i) Any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than an Affiliate, a trustee or other fiduciary holding securities under an employee benefit plan of the Operating Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Operating Company representing 25% or more of the combined voting power of the Operating Company's then outstanding securities; or (ii) individuals who, as of July 2, 1997, constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Operating Company to effect a transaction described in clauses (i) or (iii) of this paragraph) whose election by the Board or nomination for election by the Operating Company's shareholders was approved by a vote of at least eighty percent (80%) of the directors then still in office who either were directors as of July 2, 1997 or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (iii) the shareholders of the Operating Company approve a merger or consolidation of the Operating Company with or into any other corporation, other than a merger or consolidation which would result in the voting securities of the Operating Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least sixty percent (60%) of the combined voting power of the voting securities of the Operating Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Operating Company approve a plan of complete liquidation of the Operating Company or an agreement for the sale or disposition by the Operating Company of all or substantially all the Operating Company's assets. (b) Upon the occurrence of a Change in Control, unless otherwise provided in an Agreement, each Participant shall have immediate vesting of, and the immediate right to, exercise all outstanding Paired Options, 13 and any risk of forfeiture included in any Restricted Paired Unit Award and Dividend Equivalent Rights shall lapse. 41. - ADJUSTMENT UPON CHANGE IN PAIRED SHARES --------------------------------------------- 41.01 Adjustments. The maximum number of Paired Shares as to which ----------- awards may be granted under this Plan, the terms of outstanding awards and the per individual limitations on the number of Paired Shares for which Paired Options or other Awards may be granted, shall be adjusted as the Committee shall determine to be equitably required in the event that (a) the Operating Company (i) effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or (ii) engages in a transaction to which Section 424 of the Code applies or (b) there occurs any other event which, in the judgment of the Committee, necessitates such action. Any determination made under this Article XII by the Committee shall be final and conclusive. Any adjustment made pursuant to this Section 12.01 shall also be made in the REIT Plan. 41.02 Mergers or Other Corporate Transactions. Upon consummation of a --------------------------------------- consolidation, merger, or sale of all or substantially all of the assets of the Operating Company in which outstanding Paired Shares are exchanged for securities, cash, or other property of an unrelated corporation or business entity, or in the event of a liquidation of the Operating Company (in each case, a "Transaction"), the Board, or the board of directors of any corporation assuming the obligations of the Operating Company, may, in its discretion, take any one or more of the following actions, as to outstanding Awards: (i) provide that such Awards shall be assumed or equivalent awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Participants, provide that all Awards will terminate immediately prior to the consummation of the Transaction. In the event that, pursuant to clause (ii) above, Awards will terminate immediately prior to the consummation of the Transaction, all Awards, other than Paired Options, shall be fully settled in cash or in kind at such appropriate consideration as determined by the Committee in its sole discretion after taking into account the consideration payable per Paired Share pursuant to the business combination (the "Merger Price") and all Paired Options shall be fully settled, in cash or in kind, in an amount equal to the difference between (A) the Merger Price times the number of Paired Shares subject to such outstanding Paired Options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate 14 exercise price of all such outstanding Paired Options; provided, however, that each Participant shall be permitted, within a specified period determined by the Committee prior to the consummation of the Transaction, to exercise all outstanding Paired Options, including those that are not then exercisable, subject to the consummation of the Transaction. 42. - COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES --------------------------------- No Paired Option shall be exercisable, no Paired Shares shall be issued, no certificates for Paired Shares shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement to which the Operating Company is a party, and the rules of all domestic stock exchanges on which the Paired Shares may be listed. The Operating Company shall have the right to rely on an opinion of its counsel as to such compliance. Any share certificate issued to evidence a Paired Share when a Paired Share Award is granted, or for which a Paired Option is exercised or a Restricted Paired Unit Award or Deferred Paired Unit Award settled, may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Paired Option shall be exercisable, no Paired Share Award shall be granted, no Paired Share shall be issued, no certificate for Paired Shares shall be delivered, and no payment shall be made under this Plan until the Operating Company has obtained such consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters. Notwithstanding any other provision hereunder, no Paired Option shall be exercisable, no Paired Shares shall be issued, no certificates for Paired Shares shall be delivered, and no payment shall be made under this Plan if and to the extent that to do so would (i) result in the failure of the REIT to satisfy the Code requirements pertaining to real estate investment trusts (which such Code requirements include, but are not limited to, qualification of the REIT as a real estate investment trust and retention of the REIT's status as grandfathered under Section 132(c)(3) of the Deficit Reduction Act of 1984) or (ii) violate (or cause any person to violate) the restrictions on ownership and transfer of equity stock set forth in Article IV of the Amended and Restated Certificate of Incorporation of Patriot American Hospitality Operating Company (as amended or any successor 15 thereto) or in Article IV of the Amended and Restated Certificate of Incorporation of Patriot American Hospitality, Inc. (as amended or any successor thereto). 43. - GENERAL PROVISIONS ------------------------ 43.01 Effect on Employment and Service. Neither the adoption of this -------------------------------- Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof) shall confer upon any individual any right to continue in the employ or service of the Operating Company or an Affiliate or in any way affect any right and power of the Operating Company or an Affiliate to terminate the employment or service of any individual at any time with or without assigning a reason therefor. 43.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall ------------- be unfunded, and the Operating Company shall not be required to segregate any assets that may at any time be represented by grants under this Plan. Any liability of the Operating Company to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the Operating Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Operating Company. 43.03 Rules of Construction. Headings are given to the articles and --------------------- sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law. 44. - AMENDMENT --------------- The Board may amend or terminate this Plan from time to time; provided, however, that no amendment may become effective until shareholder approval is obtained if (i) the amendment increases the aggregate number of Paired Shares that may be issued under the Plan, (ii) the amendment changes the class of individuals eligible to become Participants or (iii) the amendment materially increases the benefits that may be provided under the Plan. No amendment shall, without a Participant's consent, adversely affect any rights of such Participant under any award outstanding at the time such amendment is made. Nothing in this Article XV shall limit the Board's authority to take any action pursuant to Section 12.02. 45. - TERMINATION OF PAIRING AGREEMENT -------------------------------------- 16 Notwithstanding anything herein to the contrary, if at any time the Pairing Agreement is terminated for any reason and, as a result of such termination, shares of Operating Company Common Stock and REIT Common Stock are no longer required to be transferred as a single unit, then as of the date of such termination: Paired Options shall no longer be granted hereunder; Paired Share Awards shall no longer be made hereunder with respect to Paired Shares; Deferred Paired Unit Awards and Restricted Paired Unit Awards shall no longer be paid hereunder in the form of Paired Shares; and Dividend Equivalent Rights shall no longer be granted hereunder with respect to shares of REIT Common Stock. Furthermore, as of the date of such termination: only Operating Company Options, Awards of Operating Company Common Stock and Restricted Unit Awards relating to shares of Operating Company Common Stock may be granted hereunder; elections may be made hereunder only as to Deferred Paired Units Awards based on Operating Company Common Stock; and Dividend Equivalent Rights shall be granted hereunder only with respect to shares of Operating Company Common Stock. 46. - EFFECTIVE DATE OF PLAN ---------------------------- Paired Options, Restricted Paired Unit Awards, Deferred Paired Unit Awards and Dividend Equivalent Rights may be granted under this Plan upon its adoption by the Board, provided that no such Award shall be effective or exercisable unless this Plan is approved by the holders of a majority of the votes present or represented and entitled to be cast by the Operating Company's shareholders, voting either in person or by proxy, at a duly held shareholders' meeting. Paired Share Awards may be granted under this Plan upon the later of its adoption by the Board or its approval by shareholders in accordance with the preceding sentence. 47. - GOVERNING LAW ------------------- The Plan and all Awards and action taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles. 17 EX-4.5 6 NON-QUALIFIED STOCK OPTION (W.W. EVANS) 2/14/97 Exhibit 4.5 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of February 14, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to William W. Evans, III, an executive officer of the Company (the "Optionee"), as of February 14, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 280,000 shares of Common Stock, at the price of $48.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after February 14, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with the ------- Company continues through such date, the Option shall become exercisable as to 23,334 shares of Common Stock on April 1, 1997, with respect to an additional 23,334 shares of Common Stock on the first day of the next ten calendar quarters thereafter and with respect to the remaining shares of Common Stock subject to this Option on January 1, 2000 and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or Constructive Termination. If ----------------------------------------------------- the Optionee's employment is terminated by the Company other than for "Cause," or if the Optionee's employment by the Company is terminated by the Optionee in a "Constructive Termination," in each case as defined below, the Optionee shall become fully vested in the Option and the Optionee may exercise the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as provided ---------------------------------------- in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by the Company is terminated by the Company for "Cause" or the Optionee's employment by the Company is terminated by Optionee in circumstances other than a "Constructive Termination," the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time prior to the Expiration Date. The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of the Company, this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option during the remainder of the period preceding the Expiration Date. (e) Exercise in the Event of Disability. In the event the ----------------------------------- Optionee becomes disabled within the meaning of Section 14 of the Employment Agreement before the Expiration Date and while employed by the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option during the remainder of the period preceding the Expiration Date. (f) Definitions. ----------- (i) "Cause" shall mean the termination of the Optionee's employment by act of the Board of Directors of the Company (the "Board") in accordance with Section 15(a) of the Employment Agreement. (ii) "Constructive Termination" shall mean the termination of the Optionee's employment with the Company by the Optionee in one or more circumstances described in Section 16(b) of the Employment Agreement. (iii) "Employment Agreement" means the Agreement of the same name entered into as of February 14, 1997 by and between the Company and the Optionee. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. Subject to the limitations set forth in this ------------------ Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably 2 request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. 2.4 Termination of Option. In no event may the Option be exercised --------------------- after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3, on the Expiration Date. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction, this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any 3 combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price for a share of Common Stock under the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not --------------------------------------- be entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to --------------------- the expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the Commonwealth of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 4.07 Further Assurances. The Company and the Optionee shall execute ------------------ and deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. /s/ Paul A. Nussbaum ------------------------------------------- By: Paul A. Nussbaum Its: Chairman and Chief Executive Officer Accepted this 14th day of February, 1997 /s/ William W. Evans, III - -------------------------------------- William W. Evans, III "Optionee" 5 EX-4.6 7 NON-QUALIFIED STOCK OPTION AGREEMENT (R. HOLTZMAN) Exhibit 4.6 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Richard Holtzman, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 85,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. In ------------------------------------------------------- the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall --------------------------------------- not be entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee ------------------------------- thereof) shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to --------------------- the expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is ----------------------------------------- hereby designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to ---------- the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications ------- provided for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all ------------- determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two ------------ counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute ------------------ and deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ---------------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Richard Holtzman - ----------------------------------------- Richard Holtzman "Optionee" 7 EX-4.7 8 NON-QUALIFIED STOCK OPTION AGREEMENT (S. LYON) Exhibit 4.7 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Scott Lyon, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 85,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall --------------------------------------- not be entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy --------------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Scott Lyon - ---------------------------------------- Scott Lyon "Optionee" 7 EX-4.8 9 NON-QUALIFIED STOCK AGREEMENT (D. BECKHAM) Exhibit 4.8 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to David Beckham, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 85,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy --------------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ David Beckham - ---------------------------------------- David Beckham "Optionee" 7 EX-4.9 10 NON-QUALIFIED STOCK OPTION AGREEMENT (W. NASSIKAS) Exhibit 4.9 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to William Nassikas, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 45,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as otherwise -------------------------------------- provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the Option --------------------- Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in whole ------------------------ or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided for ------- in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ------------------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ William Nassikas - ---------------------------------------- William Nassikas "Optionee" 7 EX-4.10 11 NON-QUALIFIED STOCK OPTION AGREEMENT (M. SURGUINE) Exhibit 4.10 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Michael Surguine, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 45,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, in ---------------------- whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as provided ---------------------------------------- in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee dies ------------------------------ before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. In ------------------------------------------------------- the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as otherwise -------------------------------------- provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the Option --------------------- Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in whole ------------------------ or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided for ------- in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ------------------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Michael Surguine - ----------------------------------------- Michael Surguine "Optionee" 7 EX-4.11 12 NON-QUALIFIED STOCK OPTION AGREEMENT (D. GOEHRING) Exhibit 4.11 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Del Goehring, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 20,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be ---------------------- exercised, in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall --------------------------------------- not be entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ------------------------------------ Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Del Goehring - ---------------------------------------- Del Goehring "Optionee" 7 EX-4.12 13 NON-QUALIFIED STOCK OPTION AGREEMENT (B. CAMPBELL) Exhibit 4.12 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Bruce Campbell, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 5,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ----------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Bruce Campbell - -------------------------------------- Bruce Campbell "Optionee" 7 EX-4.13 14 NON-QUALIFIED STOCK OPTION AGREEMENT (W. GAMBLE) Exhibit 4.13 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to William Gamble, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 5,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall --------------------------------------- not be entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee ------------------------------- thereof) shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to --------------------- the expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is ----------------------------------------- hereby designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to ---------- the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications ------- provided for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all ------------- determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two ------------ counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute ------------------ and deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ------------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ William Gamble - ----------------------------------------- William Gamble "Optionee" 7 EX-4.14 15 NON-QUALIFIED STOCK OPTION AGREEMENT (R. RIESS) Exhibit 4.14 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Richard Riess, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 3,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall --------------------------------------- not be entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee ------------------------------- thereof) shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to --------------------- the expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is ----------------------------------------- hereby designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to ---------- the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications ------- provided for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all ------------- determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two ------------ counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute ------------------ and deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ------------------------------ Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Richard Riess - ----------------------------------------- Richard Riess "Optionee" 7 EX-4.15 16 NON-QUALIFIED STOCK OPTION AGREEMENT (C. KERCHEVAL Exhibit 4.15 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Charles F. Kercheval, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 3,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. In ------------------------------------------------------- the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ------------------ (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ---------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Charles F. Kercheval - ------------------------------------- Charles F. Kercheval "Optionee" 7 EX-4.16 17 NON-QUALIFIED STOCK OPTION AGREEMENT (M. BYRD) Exhibit 4.16 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Michael J. Byrd, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 3,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the ------------ Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy ----------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Michael J. Byrd - --------------------------------- Michael J. Byrd "Optionee" 7 EX-4.17 18 NON-QUALIFIED STOCK OPTION AGREEMENT (K. HUMES) Exhibit 4.17 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Kenneth B. Humes, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 3,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be exercised, ---------------------- in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total Disability. ------------------------------------------------------- In the event the Optionee becomes permanently and totally disabled within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy -------------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Kenneth B. Humes - ----------------------------------------- Kenneth B. Humes "Optionee" 7 EX-4.18 19 NON-QUALIFIED STOCK AGREEMENT (T. DAWSON) Exhibit 4.18 PATRIOT AMERICAN HOSPITALITY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of January 15, 1997 Patriot American Hospitality, Inc., a corporation organized under the laws of Virginia (the "Company"), hereby grants to Toni Dawson, an individual serving as a consultant to the Company (the "Optionee"), as of January 15, 1997 (the "Option Date"), a non-qualified option (the "Option") to purchase from the Company 3,000 shares of Common Stock, at the price of $38.25 per share, subject to the terms and conditions set forth below. The Option is not being granted under the Patriot American Hospitality, Inc. 1995 Incentive Plan (the "Plan"); however, capitalized terms not defined herein shall have the meanings specified in the Plan. 1. Option Subject to Acceptance of Agreement. ----------------------------------------- The Option may not be exercised unless the Optionee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- 2.01 Maximum Term of Option. In no event may the Option be ---------------------- exercised, in whole or in part, after January 15, 2007 (the "Expiration Date"). 2.02 Exercise of Option. ------------------ (a) General. Provided the Optionee's employment with Resorts ------- Services, Inc. (or any successor thereof) ("Resorts") or the Company continues through such date, the Option shall become exercisable as to one-fourth of the number of shares of Common Stock subject to the Option on each anniversary of the Option Date, commencing with the first anniversary occurring in 1998, and otherwise as provided below in this Section 2.2. (b) Termination Not For Cause or For Good Reason. If the -------------------------------------------- Optionee's employment is terminated by Resorts or the Company other than for "Cause," or if the Optionee's employment by Resorts or the Company is terminated by the Optionee for "Good Reason," in each case as defined below, the Optionee shall continue to vest in the Option pursuant to the provision of Section 2.2(a) and the Optionee may exercise the vested portion of the Option at any time before the Expiration Date. (c) Exercise After Termination of Employment. Except as ---------------------------------------- provided in paragraphs 2.2(d) and 2.2(e), if the Optionee's employment by Resorts or the Company is terminated by Resorts or the Company for "Cause" or the Optionee's employment by Resorts or the Company is terminated by Optionee without "Good Reason", the Optionee may exercise this Option only to the extent that it is exercisable on the effective date of his termination of employment. Such exercise may be made at any time within three months of the date of such termination (but in any event prior to the Expiration Date). The portion of the Option that is not exercisable on the effective date of the termination of employment shall expire immediately on such date. (d) Exercise in the Event of Death. In the event the Optionee ------------------------------ dies before the Expiration Date while in the employ of Resorts or the Company or during the one year period described in Section 2.2(e), this Option shall become fully exercisable and may be exercised by the Optionee's estate or by the person or persons to whom his rights under this Option shall pass by will or the laws of descent and distribution. The Optionee's estate or such persons may exercise this Option with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the Optionee's death or during the remainder of the period preceding the Expiration Date, whichever is shorter. (e) Exercise in the Event of Permanent and Total -------------------------------------------- Disability. In the event the Optionee becomes permanently and totally disabled - ---------- within the meaning of Section 22(e)(3) of the Code ("Permanently and Totally Disabled") before the Expiration Date and while employed by Resorts or the Company, this Option shall become fully exercisable and may be exercised by the Optionee with respect to all or part of the shares of Common Stock that remain subject to this Option within one year of the date he ceases to be employed by Resorts or the Company as a result of his becoming Permanently and Totally Disabled or during the remainder of the period preceding the Expiration Date, whichever is shorter. (f) Definitions. ----------- (i) "Cause shall mean the termination of the Optionee's employment by act of the Board of Directors of Resorts or the Company (in either case, the "Board") for any of the following reasons: (A) Willful misconduct of the Optionee in connection with the performance of any of his duties, including, without limitation, misappropriation of funds or property of Resorts, the Company or the affiliates of either of them or without the prior approval of the Board, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of Resorts, the Company or the affiliates of either of them; (B) Conduct by the Optionee that would result in material injury to the reputation of Resorts or the Company if he were to be retained in his position, including, without limitation, conviction of a felony involving moral turpitude, bankruptcy, insolvency or general assignment for the benefit of his creditors; or (C) The Optionee's willful and continued failure substantially to perform the Optionee's duties with Resorts or the Company (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from a resignation by the Optionee for Good Reason) after a written demand for substantial performance is delivered to the Optionee by the Board, which demand specifically identifies the manner in which the Board believes that the Optionee has not substantially performed the Optionee's duties, and which performance is not substantially corrected by the Optionee within ten (10) days of receipt of such demand. For purposes of the previous sentence, no act or failure to act on the Optionee's part shall be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee's action or omission was in the best interest of Resorts or the Company. Notwithstanding the foregoing, the Optionee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Optionee a copy of a resolution duly adopted by affirmative vote of not less than the majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Optionee and an opportunity for the Optionee, together with the Optionee's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Optionee was guilty of conduct set forth above in clause (A), (B) or (C) of this subsection and specifying the particulars thereof in detail. (ii) "Good Reason" shall mean a resignation of the Optionee's employment prior to the Expiration Date as a result of any of the following: 2 (A) A meaningful and detrimental alteration of the Optionee's position, the Optionee's titles, or the nature or status of the Optionee's responsibilities from those in effect immediately prior to the Option Date; (B) A meaningful reduction by Resorts or the Company in the Optionee's annual base salary as in effect immediately prior to the Option Date or as the same may be increased from time to time thereafter; or (C) The relocation of the corporate headquarters of Resorts to a location which is outside the Phoenix, Arizona metropolitan area. (g) Mergers or Other Corporate Transaction. Except as -------------------------------------- otherwise provided in Section 3.1(c), upon consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a "Transaction"), the Board or the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to the Option: (i) provide that such Option shall be assumed or an equivalent option shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Optionee, provide that the unexercised portion of the Option will terminate immediately prior to the consummation of the Transaction unless exercised by the Optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the Optionee equal to the difference between (A) the value (as determined by the Board of the Company) of the consideration payable per share of Common Stock pursuant to the business combination (the "Merger Price") times the number of shares of Common Stock subject to the Option (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of the outstanding Option in exchange for the termination of such Option. In the event the Option will terminate upon the consummation of the Transaction, the Optionee shall be permitted, within a specified period determined by the Board of the Company, to exercise the non-vested portion of the Option, subject to the consummation of the Transaction. 2.3 Method of Exercise. ------------------ (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request. The Board or a committee thereof shall have sole discretion to disapprove of an election pursuant to either clause (ii) or (iii). Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the full purchase price therefor has been paid. (b) Notwithstanding anything to the contrary in this Agreement, upon receipt of any notice of option exercise by the Optionee, in lieu of issuing shares of Common Stock to the Optionee with respect to 3 the Option exercise, the Company, in its sole discretion, may elect to satisfy such obligation by making a cash payment to the Optionee in an amount equal to the Fair Market Value (on the date of exercise) of the shares of Common Stock that would otherwise be issuable upon such Option exercise less the requisite option price and the amount of the Required Tax Payment (as defined in Section 3.2) (the "Cash Settlement Payment"). Within 24 hours of the Company's receipt of notice from the Optionee pursuant to Section 2.3(a), the Company shall give notice to the Optionee specifying whether the Company elects to satisfy the Company's obligations with respect to the Optionee's notice by making the Cash Settlement Payment in lieu of issuing shares of Common Stock; provided, however, that in the event the Company fails to provide the Optionee with timely notice of the Optionee's election, the Company shall be deemed to have elected to satisfy the Company's obligations by making the Cash Settlement Payment. 2.4 Termination of Option. --------------------- (a) In no event may the Option be exercised after it terminates as set forth in this Section 2.4. The Option shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier terminated pursuant to Section 2.2, on the Expiration Date. (b) In the event that rights to purchase all or a portion of the shares of Common Stock subject to the Option expire or are exercised, canceled or forfeited, the Optionee shall promptly return this Agreement to the Company for full or partial cancellation, as the case may be. Such cancellation shall be effective regardless of whether the Optionee returns this Agreement. If the Optionee continues to have rights to purchase shares of Common Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of this Agreement to the Company, either (i) mark this Agreement to indicate the extent to which the Option has expired or been exercised, canceled or forfeited or (ii) issue to the Optionee a substitute option agreement applicable to such rights, which agreement shall otherwise be identical to this Agreement in form and substance. 3. Additional Terms and Conditions of Option. ----------------------------------------- 3.01 Limited Transferability of Option. --------------------------------- (a) Except as provided in the next succeeding sentence, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. The Option (or any part thereof) may be transferred to the Optionee's children, grandchildren, spouse, one or more trusts for the benefit of such family members or one or more partnerships in which such family members are the only partners, provided that the Optionee may not receive any consideration for such transfer, and provided further that the rights of any such transferee with respect to the Option shall be subject to the terms and conditions of this Agreement. (b) Except as permitted by Section 3.1(a), during the Optionee's lifetime the Option shall be exercisable only by the Optionee or the Optionee's Legal Representative. Except as permitted by Section 3.1(a), the Option may not be sold, transferred, assigned, pledged, hypothecated, voluntarily encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. (c) On and after the closing of the California Jockey Club and Bay Meadows Operating Company transaction (the "Merger"), this Option shall be converted on an equitable basis to an option to acquire the stapled interest in each of the paired entities. 4 3.02 Withholding Taxes. ----------------- (a) As a condition precedent to the delivery of shares of Common Stock upon exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company, in addition to the purchase price of the shares of Common Stock, such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Required Tax Payments") with respect to such exercise of the Option. If the Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Optionee. (b) The Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company pursuant to Section 3.2(a), (2) delivery to the Company of previously owned whole shares of Common Stock (which the Optionee has held for at least six months prior to the delivery of such shares of Common Stock or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), equal to the Required Tax Payments, (3) a cash payment by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise, or (4) any combination of (1) and (2). The Board shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4). Shares of Common Stock to be delivered may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any fraction of a share of Common Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. 3.03 Adjustment. In the event of any stock split, stock dividend, ---------- recapitalization, reorganization, combination, exchange of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of shares of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately and equitably adjusted by the Board without an increase in the aggregate purchase price. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay the Optionee, in connection with the first exercise of the Option, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value of a share of Common Stock on the exercise date over (B) the exercise price of the Option. 3.04 Registration; Listing. Prior to the first anniversary of the --------------------- Option Date, the Company shall (i) file, and continue in effect, registration statements on Form S-8 with respect to the shares covered by the Option, and (ii) cause the shares covered by the Option to be listed on the New York Stock Exchange and/or on such other securities exchange on which such shares are then listed and traded. 3.05 Delivery of Certificates. Upon the exercise of the Option, in ------------------------ whole or in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of shares of Common Stock purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.2. 3.06 Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to shares of Common Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of 5 record with respect to such delivered shares of Common Stock; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares of Common Stock not so purchased and delivered. 3.07 Decisions of Board or Committee. The Board (or Committee thereof) ------------------------------- shall have the right to resolve all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Board (or Committee thereof) regarding this Agreement shall be final, binding and conclusive. 3.08 Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of Common Stock, the full number of shares of Common Stock subject to the Option from time to time. 4. Miscellaneous Provisions. ------------------------ 4.01 Designation as Non-qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended. This Agreement shall be interpreted and treated consistently with such designation. 4.02 Meaning of Certain Terms. As used herein, the term "Legal ------------------------ Representative" shall include an executor, administrator, legal representative, beneficiary or similar person and the term "Permitted Transferee" shall include any transferee (i) pursuant to a transfer permitted under Section 3.1(a) hereof or (ii) designated pursuant to beneficiary designation procedures which may be approved by the Company. 4.03 Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. 4.04 Notices. All notices, requests or other communications provided ------- for in this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. 4.05 Governing Law. The Option, this Agreement, and all determinations ------------- made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance therewith without giving effect to principles of conflicts of laws. 4.06 Counterparts. This Agreement may be executed in two counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute one and the same instrument. 6 4.07 Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. PATRIOT AMERICAN HOSPITALITY, INC. By /s/ Michael Murphy -------------------------------- Michael Murphy Vice President Accepted this 16th day of January, 1997 /s/ Toni Dawson - ----------------------------------------- Toni Dawson "Optionee" 7 EX-4.19 20 EXECUTIVE EMPLOYMENT AGREEMENT (K. ALIBHAI) Exhibit 4.19 EXECUTIVE EMPLOYMENT AGREEMENT This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of the first day of October, 1997, between Patriot American Hospitality Operating Company, a Delaware corporation (the "Company"), and Karim Alibhai ("Executive"). WHEREAS, Gencom Lessee, L.P. a Delaware limited partnership has entered into a Contribution Agreement with Patriot American Hospitality Operating Company Partnership, a Delaware limited partnership (the "Operating Company") which provides, upon the terms and subject to the conditions thereof, for the contribution of its interests in GAH-II, L.P., a Delaware limited partnership, to the Operating Partnership; WHEREAS, the Company is desirous of engaging Executive to serve as the President and Chief Operating Officer of the Company effective upon the closing of the Contribution Agreement; and WHEREAS, Executive is desirous of committing to serve the Company on the terms herein provided. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Employment. The initial term of this Agreement shall begin on the effective closing date of the Contribution Agreement (the "Commencement Date") and end on the third anniversary of the Commencement Date. On or before the second anniversary of the Commencement Date (and each even anniversary thereof), the term of this Agreement shall be extended for an additional two (2) years unless either the Company or Executive provides written notice of its or his intent not to extend the Agreement at least forty-five (45) days prior to such anniversary date in which event this Agreement shall expire in accordance with its terms. The term of this Agreement shall be subject to termination as provided in Paragraph 6 and may be referred to herein as the "Period of Employment." 2. Position and Duties. During the Period of Employment, Executive shall serve as President and Chief Operating Officer of the Company, reporting solely to the Chairman of the Board of the Company (the "Chairman"), shall have supervision and control over and responsibility for the day-to-day business and affairs of those functions and operations of the Company described on Schedule I attached hereto and made a part hereof by this reference and shall have such other powers and duties as may from time to time be prescribed by the Chairman, provided that such duties are consistent with Executive's position or other positions that he may hold from time to time. The Company shall take such action as necessary to elect Executive as a Class II Director with an initial term expiring at the 1998 annual meeting. Executive shall serve as a member of the Transactions Committee and the Cooperation Committee when such committees are formed. Executive shall devote substantially his full working time and efforts to the business and affairs of the Company. Notwithstanding the foregoing, Executive may serve on other boards of directors, engage in religious, charitable or other community activities and oversee personal investments and family business as long as such services and activities do not materially interfere with Executive's performance of his duties to the Company as provided in this Agreement. 3. Compensation and Related Matters. (a) Base Salary. Initially, Executive shall receive an annual base salary ("Base Salary") of Three Hundred Fifty Thousand Dollars and xx/100 Cents ($350,000.00). Thereafter, Executive's Base Salary shall be redetermined at least thirty (30) days before each annual compensation determination date established by the Company during the Period of Employment in an amount to be fixed by the Board, but may never be decreased except in connection with across- the-board salary reductions similarly affecting all executives of the Company and the Affiliated Company (as defined below). The Base Salary, as redetermined, may be referred to herein as "Adjusted Base Salary." The Base Salary or Adjusted Base Salary shall be payable in substantially equal bi-weekly installments and shall in no way limit or reduce the obligations of the Company hereunder. (b) Incentive Compensation. In addition to Base Salary or Adjusted Base Salary, Executive shall be eligible to receive, on or about the annual compensation determination date established by the Company of each year, during the Period of Employment, cash incentive compensation in an amount determined by the Compensation Committee of the Board based on individual performance, performance by the Company and total return to shareholders. Such performance criteria will be established by mutual agreement of Executive and the Company on an annual basis. The incentive compensation potential shall be up to eighty percent (80%) of Base Salary or Adjusted Base Salary; provided in no event will such incentive compensation be less then $75,000 paid for each full year of employment. Executive will also participate in such incentive compensation plans as the Board of Directors of the Company ("Board") shall determine. (c) Expenses. Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him (in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers) in performing services hereunder during the Period of Employment, provided that Executive properly accounts therefor in accordance with Company policy. (d) Option Grant. On the Commencement Date, the Company shall issue to Executive a non-qualified stock option (the "Option") to acquire 280,000 shares of the paired common stock ("Paired Shares") of the Company and Patriot American Hospitality, Inc. ("Affiliated Company"). The Option shall vest and become exercisable with respect to 8% of the number of Paired Shares underlying the Option quarterly on the first day of each calendar quarter thereafter, such that all the Paired Shares underlying the Option have vested and are exercisable on or before the third anniversary of the Commencement Date. The 2 exercise price per Paired Share for the Option shall be the quoted closing price per Paired Share on the New York Stock Exchange on the Commencement Date. (e) Other Benefits. During the Period of Employment, Executive shall be entitled to continue to participate in or receive benefits under all of the Company's Employee Benefit Plans in effect on the date hereof, or under plans or arrangements that provide Executive with at least substantially equivalent benefits to those provided under such Employee Benefit Plans. As used herein, "Employee Benefit Plans" include, without limitation, each pension and retirement plan; supplemental pension, retirement and deferred compensation plan; savings and profit-sharing plan; stock ownership plan; stock purchase plan; stock option plan; life insurance plan; medical insurance plan; disability plan; and health and accident plan or arrangement established and maintained by the Company on the date hereof for employees of the same status within the hierarchy of the Company. To the extent that the scope or nature of benefits described in this section are determined under the policies of the Company based in whole or in part on the seniority or tenure of an employee's service, Executive shall be deemed to have a tenure with the Company equal to the actual time of Executive's service with Company plus the actual service by Executive with GAH-II, L.P. (the "Previous Employer"). During the Period of Employment, Executive shall be entitled to receive all perquisites and fringe benefits available to the President of Affiliated Company. During the Period of Employment, Executive shall also be entitled to participate in or receive benefits under any employee benefit plan or arrangement which may, in the future, be made available by the Company to its executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plan or arrangement. Nothing paid to Executive under the Employee Benefit Plans presently in effect or any employee benefit plan or arrangement which may be made available in the future shall be deemed to be in lieu of compensation payable to Executive under Subparagraphs 3(a) and 3(b). Any payments or benefits payable to Executive under a plan or arrangement referred to in this Subparagraph 3(e) in respect of any calendar year during which Executive is employed by the Company for less than the whole of such year shall, unless otherwise provided in the applicable plan or arrangement, be prorated in accordance with the number of days in such calendar year during which he is so employed. Should any such payments or benefits accrue on a fiscal (rather than calendar) year, then the proration in the preceding sentence shall be on the basis of a fiscal year rather than calendar year. (f) Life Insurance. The Company shall pay the premiums on, and maintain in effect throughout the Period of Employment, a life insurance policy on the life of Executive in an amount not less than the sum of the amount of Executive's then current Base Salary or Adjusted Base Salary plus the mid-point of his bonus range. Executive shall have the right to designate the beneficiary under such policy. (g) Vacations. Executive shall be entitled to the number of paid vacation days in each calendar year determined by the Company from time to time for its senior executive officers. Executive shall also be entitled to all paid holidays given by the Company to its senior executive officers. To the extent that the scope or nature of benefits described in this 3 section are determined under the policies of the Company based in whole or in part on the seniority or tenure of an employee's service, Executive shall be deemed to have a tenure with the Company equal to the actual time of Executive's service with Company plus the actual service by Executive to the Previous Employer. (h) Disability Insurance. The Company shall pay the premiums on, and maintain in effect throughout the Period of Employment, long-term disability insurance providing for payment of benefits at rates not less than 60% of Executive's current Base Salary or Adjusted Base Salary. (i) Indemnification and Directors' and Officers' Insurance. During Executive's employment, Executive shall receive the maximum indemnification protection from the Company as permitted by applicable law and shall receive directors' and officers' insurance coverage provided to any other director or officer of the Company or the Affiliated Company. 4. Unauthorized Disclosure. (a) Confidential Information. Executive acknowledges that in the course of his employment with the Previous Employer or the Company (and, if applicable, the predecessors of either of them), he has been allowed to become, and will continue to be allowed to become, acquainted with the Company's and Affiliated Company's business affairs, information, trade secrets, and other matters which are of a proprietary or confidential nature, including but not limited to the Company's and Affiliated Company's and their respective predecessors' operations, business opportunities, price and cost information, finance, customer information, business plans, various sales techniques, manuals, letters, notebooks, procedures, reports, products, processes, services, and other confidential information and knowledge (collectively the "Confidential Information") concerning the Company's, Affiliated Company's and their respective predecessors' business. The Company agrees to provide on an ongoing basis such Confidential Information as the Company deems necessary or desirable to aid Executive in the performance of his duties. Executive understands and acknowledges that such Confidential Information is confidential, and he agrees not to disclose such Confidential Information to anyone outside the Company or the Affiliated Company except to the extent that Executive deems such disclosure or use reasonably necessary or appropriate in connection with performing his duties on behalf of the Company. Executive further agrees that he will not during employment and/or at any time thereafter use such Confidential Information (to the extent it has not become public) in competing, directly or indirectly, with the Company or the Affiliated Company. At such time as Executive shall cease to be employed by the Company, he will immediately turn over to the Company all Confidential Information, including papers, documents, writings, electronically stored information, other property, and all copies of them provided to or created by him during the course of his employment with the Company (or, if applicable, Previous Employer). 4 (b) Heirs, successors, and legal representatives. The foregoing provisions of this Paragraph 4 shall be binding upon Executive's heirs, successors, and legal representatives. The provisions of this Paragraph 4 shall survive the termination of this Agreement for any reason. 5. Covenant Not to Compete. The provisions of this Paragraph 5 shall apply during Executive's employment with the Company and for a period of twenty-four (24) months or such longer period for which severance is payable under Paragraph 7 commencing when the employment relationship has ended for any reason other than death; provided, however, that the prohibition set forth in the second sentence of this Paragraph 5 shall not apply in the case of termination of employment solely as a result of the expiration of the Period of Employment without extension. In consideration for Executive's employment by the Company under the terms provided in this Agreement and as a means to aid in the performance and enforcement of the terms of the Unauthorized Disclosure provisions of Paragraph 4, Executive agrees that Executive will not, directly or indirectly, as an owner, director, principal, agent, officer, employee, partner, consultant, servant, or otherwise, carry on, operate, manage, control, or become involved in any manner with any business, operation, corporation, partnership, association, agency, or other person or entity which is in the business of owning, operating, managing or granting franchise rights with respect to hotels, motels or other lodging facilities in any area or territory in which the Company or Affiliated Company conducts operations; provided, however, that the foregoing does not prohibit Executive from owning up to one percent (1%) of the outstanding stock of a publicly held corporation engaged in the hospitality business; and provided, further, that the foregoing does not prohibit activities in the hotel industry by Executive's family partnerships in which Executive does not have a management role. Executive also agrees that Executive will not, directly or indirectly, either for himself or for any other business, operation, corporation, partnership, association, agency, or other person or entity, call upon, compete for, solicit, divert, or take away, or attempt to divert or take away any of the customers of the Company or Affiliated Company in any of the areas or territories in which the Company or Affiliated Company conducts operations. Further, Executive will not directly or indirectly solicit or induce any present or future employee of the Company or Affiliated Company to accept employment with Executive or with any business, operation, corporation, partnership, association, agency, or other person or entity with which Executive may be associated, and Executive will not employ or cause any business, operation, corporation, partnership, association, agency, or other person or entity with which Executive may be associated to employ any present or future employee of the Company or Affiliated Company without providing the Company or Affiliated Company with ten (10) days' prior written notice of such proposed employment. Should Executive violate the provisions of this Paragraph, then in addition to all other rights and remedies available to the Company or Affiliated Company at law or in equity, the duration of this covenant shall automatically be extended for the period of time from which Executive began such violation until he permanently ceases such violation. Notwithstanding the foregoing, Executive shall be permitted to continue to engage in activities that would otherwise be prohibited by this Paragraph 5 with respect to the interests he currently owns and which are described in Schedule II attached hereto and made a part hereof by this reference and to engage in such activities with respect to any other hotel, motel or lodging facility that would be immaterial to 5 the operations of the Company in the area or territory in question. Immateriality, for purposes of the foregoing sentence, shall be determined in the sole discretion of the Board of Directors in good faith. Notwithstanding anything to the contrary contained herein, Executive's acceptance of a position with the Gencom Group of companies or affiliates, including any of the family- owned business or establishment of his own business after his termination of employment shall not be deemed to be a violation of the foregoing non-compete provisions so long as Executive does not become an employee of or become affiliated with a hospitality company that owns a brand that competes in any of the business tiers of the Company. By way of illustration solely, as of the Commencement Date, Executive would be deemed to violate the non-compete provisions if he should become an employee of Promus, Hyatt or Starwood/Westin, but Executive would not be deemed to violate the non-compete provisions if he should become an employee of American General, Interstate or Microtel. 6. Termination. Executive's employment hereunder may be terminated without any breach of this Agreement under the following circumstances: (a) Death. Executive's employment hereunder shall terminate upon his death. (b) Disability. If, as a result of Executive's incapacity due to physical or mental illness, Executive shall have been absent from his duties hereunder on a full-time basis for one hundred eighty (180) calendar days in the aggregate in any twelve (12) month period, the Company may terminate Executive's employment hereunder. (c) Termination by Company For Cause. At any time during the Period of Employment, the Company may terminate Executive's employment hereunder for Cause if such termination is approved by a majority of the Board at a meeting of the Board called and held for such purpose. For purposes of this Agreement "Cause" shall mean: (A) conduct by Executive constituting a material act of willful misconduct in connection with the performance of his duties, including, without limitation, misappropriation of funds or property of the Company or any of its affiliates other than the occasional, customary and de minimis use of Company property for personal purposes; (B) criminal or civil conviction or conduct by Executive that would reasonably be expected to result in material injury to the reputation of the Company if he were retained in his position with the Company, including, without limitation, conviction of a felony involving moral turpitude; (C) continued, willful and deliberate non-performance by Executive of his material duties hereunder (other than by reason of Executive's physical or mental illness, incapacity or disability) and such non-performance has continued for more than thirty (30) days following written notice of such non-performance from the Board; or (D) a breach by Executive of any of the provisions contained in Paragraphs 4 and 5 of this Agreement. (d) Termination by Company for Performance Reasons. At any time during the Period of Employment, the Company may terminate Executive's employment if (i) such termination is approved by a majority of the Board at a meeting of the Board called and held for such purpose; and (ii) Executive has materially failed to perform his material duties 6 hereunder or has violated, in material respects, the material policies and procedures of the Company and such failure or violation has continued for more than ninety (90) days following written notice of such violation from the Board. (e) Termination Without Cause. At any time during the Period of Employment, the Company may terminate Executive's employment hereunder without Cause if such termination is approved by a majority of the Board at a meeting of the Board called and held for such purpose. Any termination by the Company of Executive's employment under this Agreement which does not constitute a termination for Cause under Subparagraph 6(c), termination for performance under Subparagraph 6(d), or result from the death or disability of the Executive under Subparagraph 6(a) or (b) shall be deemed a termination without Cause. (f) Termination by Executive. At any time during the Period of Employment, Executive may terminate his employment hereunder for any reason, including but not limited to Good Reason. For purposes of this Agreement, "Good Reason" shall mean that Executive has complied with the "Good Reason Process" (hereinafter defined) following the occurrence of any of the following events: (A) a significant adverse change, not consented to in writing by Executive, in the nature or scope of Executive's responsibilities, status, authorities, powers, functions or duties from the responsibilities, status, authorities, powers, functions or duties exercised by Executive immediately prior to the Commencement Date; (B) any removal, during the Period of Employment, of Executive from or, any failure by management to nominate, or, if nominated, any failure by the Board to re-elect, Executive to any of the positions indicated in Paragraph 2, except in connection with a termination of Executive's employment; (C) an involuntary reduction in Executive's Base Salary or Adjusted Base Salary or involuntary reduction in cash incentive compensation plan (but not reduction in incentive compensation appropriate for level of performance) except for across- the-board salary reductions similarly affecting all or substantially all management employees; (D) a breach by the Company of any of its other material obligations under this Agreement and the failure of the Company to cure such breach within thirty (30) days after written notice thereof by Executive; (E) if Paul A. Nussbaum ceases to serve as Chairman of the Affiliated Company and James D. Carreker ceases to be Chairman of the Company; or (F) the relocation of the Company's offices at which Executive is principally employed or the relocation of the offices of Executive's primary workgroup to a location more than thirty (30) miles from such offices, or the requirement by the Company for Executive to be based anywhere other than the Company's offices at such location on an extended basis, except for required travel on the Company's business to an extent substantially consistent with Executive's business travel obligations; provided however, that this clause (F) shall not apply to the initial relocation from Houston, Texas to Dallas, Texas. "Good Reason Process" shall mean that (i) the Executive reasonably determines in good faith that a "Good Reason" event has occurred; (ii) Executive notifies the Company in writing of the occurrence of the Good Reason event; (iii) Executive cooperates in good faith with the Company's efforts, for a period not less than sixty (60) days following such notice, to modify Executive's employment situation in a manner acceptable to Executive and Company; and (iv) notwithstanding such efforts, one or more of the Good 7 Reason events continues to exist and has not been modified in a manner acceptable to Executive. (g) Notice of Termination. Except for termination as specified in Subparagraph 6(a), any termination of Executive's employment by the Company or any such termination by Executive shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon. (h) Date of Termination. "Date of Termination" shall mean: (A) if Executive's employment is terminated by his death, the date of his death; (B) if Executive's employment is terminated on account of disability under Subparagraph 6(b), the date on which Notice of Termination is given; (C) if Executive's employment is terminated by the Company under Subparagraph 6(c), (d) or (e), thirty (30) days after the date on which a Notice of Termination is given; and (D) if Executive's employment is terminated by Executive under Subparagraph 6(f), thirty (30) days after the date on which a Notice of Termination is given. 7. Compensation Upon Termination or During Disability. (a) If Executive's employment terminates by reason of his death, the Company shall, within ninety (90) days of death, pay in a lump sum amount to such person as Executive shall designate in a notice filed with the Company or, if no such person is designated, to Executive's estate, Executive's accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary, to the date of his death, plus his accrued and unpaid incentive compensation under Subparagraph 3(b). All unvested stock options and stock-based grants shall immediately vest in Executive's estate or other legal representatives and become exercisable, and Executive's estate or other legal representatives shall have one (1) year from the Date of Termination, or remaining option term, if earlier, to exercise the stock options. For a period of one (1) year following the Date of Termination, the Company shall pay such health insurance premiums as may be necessary to allow Executive's spouse and dependents to receive health insurance coverage substantially similar to coverage they received prior to the Date of Termination. In addition to the foregoing, any payments to which Executive's spouse, beneficiaries, or estate may be entitled under any employee benefit plan shall also be paid in accordance with the terms of such plan or arrangement. Such payments, in the aggregate, shall fully discharge the Company's obligations hereunder. (b) During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness, Executive shall continue to receive his accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary and accrued and unpaid incentive compensation payments under Subparagraph 3(b), until Executive's employment is terminated due to disability in accordance with Subparagraph 6(b) or until Executive terminates his employment in accordance with Subparagraph 6(f), whichever first occurs. All unvested stock options and stock-based grants shall immediately vest and become exercisable and Executive shall have one (1) year from the Date of Termination, or remaining 8 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 9 partial fiscal years as Executive may have been employed by the Company. For purposes of this Agreement, "Average Incentive Compensation" shall mean the average of the annual incentive compensation under Subparagraph 3(b) received by Executive for the three (3) immediately preceding fiscal years or such fewer number of complete or partial fiscal years as Executive may have been employed by the Company. Notwithstanding the foregoing, in the event Executive terminates his employment for Good Reason as provided in Subparagraph 6(f), he shall be entitled to the Severance Amount or the Minimum Severance Amount only if he provides the Notice of Termination provided for in Subparagraph 6(g) within sixty (60) days after the occurrence of the event or events which constitute such Good Reason as specified in clauses (A), (B), (C), (D) and (E) of Subparagraph 6(f); (ii) in addition to any other benefits to which Executive may be entitled in accordance with the Company's then existing severance policies, the Company shall: (a) for a period of six (6) months commencing on the Date of Termination, pay for the cost of executive outplacement services selected by Executive for use in connection with obtaining alternate employment; and (b) for a period of one (1) year commencing on the Date of Termination, pay such health insurance premiums as may be necessary to allow Executive, Executive's spouse and dependents to continue to receive health insurance coverage substantially similar to the coverage they received prior to his termination of employment; and (iii) Executive shall receive all the rights and benefits granted or in effect with respect to Executive under the Company's employee stock option or incentive plans and agreements with Executive pursuant thereto. In addition to the foregoing, all stock options and other stock-based awards in which Executive otherwise would have vested if he would have remained employed for a period of twenty-four (24) months or the remaining term of the Agreement, if longer, shall immediately accelerate and become exercisable or nonforfeitable as of the Date of Termination. (e) If Executive's employment is terminated by the Company for Cause as provided in Subparagraph 6(c) or for performance as provided in Subparagraph 6(d), then the Company shall, through the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary at the rate in effect at the time Notice of Termination is given and in case of termination for performance as provided by Subparagraph 6(d), his accrued and unpaid incentive compensation under Subparagraph 3(b). Thereafter, the Company shall have no further obligations to Executive except as otherwise expressly provided under this Agreement, provided any such termination shall not adversely affect or alter Executive's rights under any employee benefit plan of the Company in which Executive, at the Date of Termination, has a vested interest, unless otherwise provided in such employee benefit plan or any agreement or other instrument attendant thereto. Notwithstanding the foregoing 10 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 11 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 12 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. 13 "Parachute Amount" shall mean an amount equal to the greater of the Severance Amount or the Minimum Severance Amount provided for in Subparagraph 7(d)(i). "Voluntary Resignation" shall mean any termination of Executive's employment by his own act, unless such termination is for Good Reason. 9. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows: if to the Executive: At his home address as shown in the Company's personnel records; if to the Company: Patriot American Hospitality Operating Company 3030 LBJ Freeway, Suite 1500 Dallas, TX 75234 Attn.: General Counsel or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 10. Miscellaneous. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Executive and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, unless specifically referred to herein, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Texas (without regard to principles of conflicts of laws). 11. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. The invalid portion of this Agreement, 14 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/ Paul A. Nussbaum ------------------------- Its: Chairman and Chief Executive Officer ------------------------- /s/ Karim Alibhai ------------------------- Karim Alibhai 16 SCHEDULE I TO EXECUTIVE EMPLOYMENT AGREEMENT Title: President and Chief Operating Officer Reports directly to Chairman and Chief Executive Officer Location: Dallas, Texas Responsibilities: The Chief Financial Officer of the Company and the GAH Division will report to Executive. The group overseeing asset management function for the Company will report directly to Executive or at the election of Executive, to the Chief Financial Officer of the Company. 17 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 Stevens Point Stevens Point Wisconsin Key Biscayne Grand Bay Key Biscayne Florida Marriott Residence Houston Texas Park Plaza Grand Bay Toronto Canada Philadelphia Grand Bay Philadelphia Pennsylvania Radisson Astrodome Houston Texas Ramada Astrodome Houston Texas Sheraton Acapulco Acapulco Mexico Sheraton Astrodome Houston Texas The Inn at Maingate Orlando Florida
18 EX-5.1 21 OPINION OF GOODWIN, PROCTER & HOAR Exhibit 5.1 December 10, 1997 Patriot American Hospitality, Inc. Patriot American Hospitality Operating Company 1950 Stemmons Freeway, Suite 6001 Dallas, Texas 75207 Ladies and Gentleman: We are familiar with the proceedings taken by Patriot American Hospitality, Inc. ("REIT"), a Delaware corporation, and Patriot American Hospitality Operating Company ("OpCo"), a Delaware corporation (collectively REIT and OpCo are hereinafter referred to as the "Companies"), with respect to (i) 4,051,663 shares of Common Stock, par value $.01 per share, of each of REIT and OpCo ("Paired Shares") offered and sold pursuant to the Companies' 1995 Incentive Plan ("1995 Plan Shares"); (ii) 120,000 Paired Shares offered and sold pursuant to the Companies Non-Employee Directors' Plan (the "Directors' Plan Shares"); (iii) 1,620,017 Paired Shares offered and sold pursuant to various Non-Qualified Option Agreements ("NQO Shares"); (iv) 3,000,000 Paired Shares to be offered and sold from time to time pursuant to the REIT 1997 Incentive Plan (the "REIT Plan Shares"); and (v) 3,000,000 Paired Shares to be offered and sold from time to time pursuant to the OpCo 1997 Incentive Plan (the "OpCo Plan Shares"). As counsel for the Companies, we have assisted in the preparation of a Registration Statement on Form S-8 (the "Registration Statement") to be filed by the Companies with the Securities and Exchange Commission (the "Commission") to effect the registration of the 1995 Plan Shares, the Directors' Plan Shares, the NQO Shares, the REIT Plan Shares and the OpCo Plan Shares under the Securities Act of 1933, as amended (the "Securities Act"). In connection with rendering this opinion, we have examined the REIT Amended and Restated Certificate of Incorporation, the OpCo Amended and Restated Certificate of Incorporation, the REIT Amended and Restated Bylaws, the OpCo Amended and Restated Bylaws, such records of the corporate proceedings of the Companies as we deemed material, the Registration Statement, the Patriot American Hospitality, Inc./Patriot American Hospitality Operating Company 1995 Incentive Plan, the Patriot American Hospitality, Inc./Patriot American Hospitality Operating Company Non-Employee Directors' Incentive Plan, the Patriot American Hospitality, Inc. 1997 Incentive Plan, the Patriot American Hospitality Operating Company 1997 Incentive Plan and the various Non-Qualified Option Agreements (together, the "Plans"), and such other certificates, receipts, records and documents as we considered necessary for the purposes of this opinion. Based upon the foregoing, we are of the opinion that when the Paired Shares have been issued and paid for in accordance with the terms of the Plans and Registration Statement, the Shares will be legally issued, fully paid and nonassessable Paired Shares. We are attorneys admitted to practice in the Commonwealth of Massachusetts. We express no opinion concerning the laws of any jurisdictions other than the laws of the United States of America and the Commonwealth of Massachusetts. This opinion is intended solely for your use in the above-described transaction and may not be reproduced, filed publicly or relied upon by any other person for any purpose without the express written consent of the undersigned. The foregoing assumes that all requisite steps will be taken to comply with the requirements if the Securities Act and applicable requirements of state laws regulating the offer and sale of securities. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ GOODWIN, PROCTER & HOAR LLP EX-23.2 22 CONSENT OF DELOITTE & TOUCHE LLP, SAN FRANCISCO, CA Exhibit 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company of our report dated March 28, 1997 (which expresses an unqualified opinion and includes an explanatory paragraph relating to a proposed merger and certain disagreements between the Companies), appearing in the Annual Report on Form 10-K of Bay Meadows Operating Company and of California Jockey Club for the year ended December 31, 1996. /s/ DELOITTE & TOUCHE LLP San Francisco, California December 5, 1997 EX-23.3 23 CONSENT OF DELOITTE & TOUCHE LLP, HOUSTON, TX Exhibit 23.3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Joint Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company of our report dated September 30, 1997 (relating to the financial statements of Partnerships of Acquired Hotels as of December 31, 1996 and 1995 and for each of the two years in the period ended December 31, 1996) appearing in the report on Form 8-K/A No. 1 dated September 30, 1997 Patriot American Hospitality, Inc. and of Patriot American Hospitality Operating Company. /s/ DELOITTE & TOUCHE LLP Houston, Texas December 5, 1997 EX-23.4 24 CONSENT OF ERNST & YOUNG, DALLAS, TX Exhibit 23.4 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Joint Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company of our reports (a) dated January 31, 1997 (except for Note 14, as to which the date is March 18, 1997) with respect to the Consolidated Financial Statements and financial statement schedules of Patriot American Hospitality, Inc. included in its 1996 Annual Report on Form 10-K and included in the Joint Current Report on Form 8-K of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company dated July 1, 1997; (b) dated February 16, 1996, with respect to the Combined Financial Statements of the Initial Hotels (which is based in part on the reports of Coopers & Lybrand L.L.P., independent accountants, as set forth in their reports on Certain of the Initial Hotels and Troy Hotel Investors) included in Patriot American Hospitality, Inc.'s 1996 Annual Report on Form 10-K; (c) dated March 5, 1996, with respect to the Financial Statements of Buckhead Hospitality Joint Venture included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated April 2, 1996, as amended; (d) dated March 1, 1996 (except for Note 7, as to which the date is April 2, 1996) with respect to the Combined Financial Statements of Gateway Hotel Limited Partnership and Wenatchee Hotel Limited Partnership included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated April 2, 1996, as amended; (e) dated February 28, 1996 (except for Note 5, as to which the date is April 2, 1996) with respect to the Statement of Direct Revenue and Direct Operating Expenses of Plaza Park Suites Hotel included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated April 2, 1996, as amended; (f) dated February 26, 1996 (except for Note 5, as to which the date is April 2, 1996) with respect to the Statement of Direct Revenue and Direct Operating Expenses of Roosevelt Hotel included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated April 2, 1996, as amended; (g) dated April 10, 1996 with respect to the Statement of Direct Revenue and Direct Operating Expenses of Marriott WindWatch Hotel for the year ended December 29, 1995 included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated December 5, 1996; (h) dated August 30, 1996 with respect to the Financial Statements of Concord O'Hare Limited Partnership for the year ended December 29, 1995 included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated December 5, 1996; (i) dated September 10, 1996 with respect to the Statement of Direct Revenue and Direct Operating Expenses of the Mayfair Suites Hotel for the year ended December 31, 1995 included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated December 5, 1996; and (j) dated January 23, 1997 (except for Note 8, as to which the date is September 30, 1997) with respect to the Consolidated Financial Statements of GAH-II, L.P. for the years ended December 31, 1996 and 1995, included in the Joint Current Report on Form 8-K of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company dated September 30, 1997, as amended, all filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP Dallas, Texas December 5, 1997 EX-23.5 25 CONSENT OF ERNST & YOUNG LLP, SEATTLE, WA Exhibit 23.5 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Joint Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company of our report dated March 5, 1997 with respect to the Financial Statements of NorthCoast Hotels, L.L.C. included in Patriot American Hospitality, Inc.'s 1996 Annual Report on Form 10-K filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP Seattle, Washington December 5, 1997 EX-23.6 26 CONSENT OF ERNST & YOUNG LLP, PHOENIX, AZ Exhibit 23.6 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Joint Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company of our reports (a) dated March 14, 1997 with respect to the Consolidated Financial Statements of Resorts Limited Partnership included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated January 16, 1997, as amended; (b) dated February 13, 1997, with respect to the Financial Statements of CV Ranch Limited Partnership included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated January 16, 1997, as amended; and (c) dated February 12, 1997 with respect to the Financial Statements of Telluride Resort and Spa Limited Partnership included in the Current Report on Form 8-K of Patriot American Hospitality, Inc., dated January 16, 1997, as amended, all filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP Phoenix, Arizona December 5, 1997 EX-23.7 27 CONSENT OF ERNST & YOUNG LLP, SAN JUAN, PUERTO RICO Exhibit 23.7 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by refernce in the Joint Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company of our reports (a) dated August 7, 1997 (except for Note 18, as to which the date is September 17, 1997) with respect to the Consolidated Financial Statements of WHG Resorts & Casinos Inc. and related financial statement schedule; (b) dated August 7, 1997 with respect to the financial statements of Posadas de San Juan Associates and related financial statement schedule; (c) dated August 11, 1997 with respect to the financial statements of WKA El Con Associates; and (d) dated May 2, 1997 with respect to the financial statements of E1 Conquistador Partnership L.P.; all of which are included in the Joint Current Report on Form 8-K of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company, dated December 10, 1997, all filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG L.L.P. San Juan, Puerto Rico December 5, 1997 EX-23.8 28 CONSENT OF ERNST & YOUNG LLP, MIAMI, FL Exhibit 23.8 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the Joint Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company of our reports (a) dated March 13, 1997 (except for the third paragraph of Note 7, as to which the date is April 2, 1997) with respect to the Financial Statements of G.B.H. Joint Venture (d/b/a Grand Bay Hotel) for the years ended December 31, 1995 and 1996; (b) dated September 23, 1997 with respect to the Financial Statements of River House Associates (d/b/a Sheraton Gateway Hotel) for the years ended December 31, 1995 and 1996; and (c) dated September 19, 1997 with respect to the Financial Statements of W-L Tampa, Ltd. (the Sheraton Grand Hotel) for the years ended December 31, 1995 and 1996; all of which are included in the Joint Current Report on Form 8-K/A No. 1 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company, dated September 30, 1997, as amended, all filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG L.L.P. Miami, Florida December 5, 1997 EX-23.9 29 CONSENT OF COOPERS & LYBRAND LLP, FORT LAUDERDALE Exhibit 23.9 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the reference to our firm under the caption "Experts" and to the incorporation by reference in the Registration Statement of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8 of our report dated January 15, 1996, on our audit of the financial statements of Certain of the Initial Hotels. /s/ COOPERS & LYBRAND L.L.P. Fort Lauderdale, Florida December 8, 1997 EX-23.10 30 CONSENT OF COOPERS & LYBRAND LLP, PITTSBURGH, PA Exhibit 23.10 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the reference to our firm under the caption "Experts" and to the incorporation by reference in the Registration Statement of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8 of our reports (i) dated February 12, 1997, except for Note 21, Note 22 and the last paragraph of Note 2, as to which the date is December 1, 1997, of our audit of the consolidated financial statements of Interstate Hotels Company, (ii) dated January 17, 1996, on our audit of the financial statements of Troy Hotel Investors and (iii) dated February 7, 1995, on our audit of the financial statements of Troy Park Associates. /s/ COOPERS & LYBRAND L.L.P. Pittsburgh, Pennsylvania December 8, 1997 EX-23.11 31 CONSENT OF COOPERS & LYBRAND LLP, DALLAS, TX Exhibit 23.11 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the reference to our firm under the caption "Experts" and to the incorporation by reference in the Registration Statement Prospectus of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8 of our reports (i) dated October 15, 1996, on our audit of the statements of Direct Revenue and Direct Operating Expenses of the Holiday Inn Miami Airport; (ii) dated February 19, 1997, on our audits of the consolidated financial statements of Wyndham Hotel Corporation as of December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994, (iii) dated May 12, 1997 on our audit of the Combined Financial Statements of the Minneapolis Hotels as of and for the year ended December 31, 1996, (iv) dated June 27, 1997 on our audit of the Combined Statement of Direct Revenue and Direct Operating Expenses of the Met Life Hotels for the year ended December 31, 1996, and (v) dated September 8, 1997 on our audit of the Combined Financial Statements of the Snavely Hotels as of and for the year ended December 31, 1996. /s/ COOPERS & LYBRAND L.L.P. Dallas, Texas December 8, 1997 EX-23.12 32 CONSENT OF COOPERS & LYBRAND LLP, PHOENIX, AZ Exhibit 23.12 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the reference to our firm under the caption "Experts" and to the incorporation by reference in the Registration Statement of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8 of our report (i) dated March 7, 1997, except for note 12 as to which the date is October 7, 1997, on our audits of the Financial Statements of SCP (Buttes), Inc., as of and for the year ended December 31, 1996. /s/ COOPERS & LYBRAND L.L.P. Phoenix, Arizona December 8, 1997 EX-23.13 33 CONSENT OF COOPERS & LYBRAND LLP, NEWPORT BEACH Exhibit 23.13 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the reference to our firm under the caption "Experts" and to the incorporation by reference in the Registration Statement of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8 of our report dated March 8, 1996 related to the financial statements of Newporter Beach Hotel Investments L.L.C. as of December 31, 1995, and for the period from March 10, 1995 through December 31, 1995. /s/ COOPERS & LYBRAND L.L.P. Newport Beach, California December 8, 1997 EX-23.14 34 CONSENT OF COOPERS & LYBRAND LLP, TAMPA, FL Exhibit 23.14 CONSENT OF INDEPENDENT ACCOUNTS We consent to the reference to our firm under the caption "Experts" and to the incorporation by reference in the Registration Statement of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company on Form S-8 of our report dated January 17, 1997, except for Note 7, as to which the date is November 25, 1997, on our audit of the financial statements of Royal Palace Hotel Associates. /s/ COOPERS & LYBRAND L.L.P. Tampa, Florida December 9, 1997 EX-23.15 35 CONSENT OF PANNELL KERR FORSTER PC, ALEXANDRIA, VA Exhibit 23.15 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Registration Statement on Form S-8 of Patriot American Hospitality Operating Company and Patriot American Hospitality, Inc. of our report dated March 1, 1996 on the financial statements of Historic Hotel Partners of Birmingham, Limited Partnership, our reports dated October 8, 1997 and February 28, 1997 on the Financial Statements of Historic Hotel Partners of Chicago Limited Partnership, and our reports dated October 8, 1997 and February 21, 1997 on the financial statements of Historic Hotel Partners of Nashville Limited Partnership. /s/ PANNELL KERR FORSTER PC Alexandria, Virginia December 9, 1997 EX-23.16 36 CONSENT OF PRICE WATERHOUSE LLP, MIAMI, FL Exhibit 23.16 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company of our reports (a) dated October 3, 1997 relating to the financial statements of CHC International Inc. Hospitality Division as of and for the years ended November 30, 1995 and 1996, which appears in the Current Report on Form 8-K of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company; and (b) dated February 13, 1997, except as to Note 4, which is as of March 18, 1997, relating to the financial statements of CHC Lease Partners for the year ended December 31, 1996 and the period inception (October 2, 1995) through December 31, 1995 which appears in the Current Report on Form 8-K of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company dated July 1, 1997. /s/ PRICE WATERHOUSE LLP Miami, Florida December 5, 1997 EX-23.17 37 CONSENT OF ARTHUR ANDERSEN LLP, DALLAS, TX Exhibit 23.17 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report dated September 17, 1997, on the combined financial statements of the Crow Family Hotel Partnerships (and to all references to our Firm) included in or made part of this Joint Registration Statement on Form S-8 of Patriot American Hospitality, Inc. and Patriot American Hospitality Operating Company. /s/ ARTHUR ANDERSEN LLP Dallas, Texas December 5, 1997 -----END PRIVACY-ENHANCED MESSAGE-----