Exhibit 10.4
This
EMPLOYMENT AGREEMENT (this “Agreement”), dated on March 20, 2011, between
Morgans Hotel
Group Co., a Delaware corporation (the “
Company”), and Xxxx Xxxx (the “
Executive”) shall become
effective as of March 23, 2011 (the “
Effective Date”).
The Company hereby employs the Executive, and the Executive hereby accepts employment with
the Company, on the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of the Effective Date (the “Employment Period”),
subject to the provisions for early termination or extension as hereinafter provided. The Company
(but not the Executive) will have the right to offer (the “Extension Offer”) to extend the
Employment Period by six (6) months (the “Extension Period”) by giving notice to Executive of such
offer no less than seventy-five (75) days prior to the end of the initial Employment Period.
During any Extension Period, the Executive shall receive compensation on substantially the same
terms as being provided at the end of the initial Employment Period and will receive a cash bonus,
payable on the last day of the Extension Period, in an amount equal to one-half of the Annual Bonus
paid to the Executive with respect to the 2013 fiscal year. In the event that the parties
hereafter agree to extend Executive’s employment beyond the end of the Extension Period the amount
of the pro-rated cash bonuses paid by the Company with respect to the Extension Period and the
period from January 1, 2014 to the third anniversary of the Effective Date will be taken into
account and be credited against any cash bonus that may become payable to Executive for fiscal
2014. The Executive shall have the right to accept or reject the Extension Offer; if the Executive
rejects the Extension Offer and terminates employment, such termination will be deemed to be a
termination due to non-renewal of the Agreement by the Company for purposes of Section 4(d) below
and shall not be considered a termination under Section 4(c) below.
(i) During the Employment Period, the Executive shall serve as Chief Development
Officer of the Company with the customary and usual authority, duties and responsibilities
attendant to such position and any other duties that may reasonably be assigned by the Chief
Executive Officer and the Company’s Board of Directors (the “Board”) consistent with his
position as Chief Development Officer. In such capacity, it is understood that the
Executive shall perform services for Morgans Group LLC (the “Operating Company”) as well the
Company. The Executive shall report to the Chief Executive Officer. A termination of the
Executive’s employment shall mean a termination of services of both the Company and the
Operating Company.
(ii) During the Employment Period, and excluding any periods of vacation and sick leave
to which the Executive is entitled, the Executive agrees to devote
substantially all of the Executive’s business time, attention and energies to the
performance of the duties assigned to the Executive so that Executive can fulfill those
duties, and to perform such duties faithfully, diligently and to the best of the Executive’s
abilities and subject to such laws, rules, regulations and policies from time to time
applicable to the Company’s executives. Notwithstanding the above, Executive shall be
entitled to attend to personal and family affairs and investments, be involved in not for
profit, charitable and professional activities and, with the Board’s prior consent, serve on
boards of other organizations, provided that all of the foregoing does not, in the
aggregate, materially interfere with Executive’s responsibilities hereunder.
(i)
Annual Base Salary. During the Employment Period, the Executive shall
receive an annual base salary (“
Annual Base Salary”) equal to $600,000 (payable
semi-monthly), which shall be subject to annual performance reviews and may be increased at
the discretion of the Board or the Compensation Committee of the Board (the “
Compensation
Committee”), in accordance with the standard practice of the Company. The term “Annual Base
Salary” as utilized in this Agreement shall refer to Annual Base Salary as so increased.
Annual Base Salary shall not be less than $600,000 without the prior written consent of the
Executive.
(ii)
Annual Bonus. The Executive will be eligible for an annual cash bonus for
each of the Company’s 2011, 2012, and 2013 fiscal years (“
Annual Bonus”) with a target
payout of 100% of Annual Base Salary. The target payout for the 2011 Annual Bonus shall be
pro rated, based on the number of days in the fiscal year from and including the Effective
Date to and including December 31, 2011, 50% of which shall be guaranteed. The remaining
50% of the 2011 Annual Bonus shall depend on following performance metrics: 40% on EBITDA
and 10% on the RevPAR Index, both as established by the Compensation Committee of the Board
of Directors. For 2012 and 2013, the Annual Bonus will range from 50% up to 150% of target.
The actual Annual Bonus for each fiscal year shall be determined after consultation with
the Executive in good faith by the Compensation Committee based upon actual corporate and
individual performance for such year and shall be payable in accordance with the procedures
specified by the Compensation Committee. The Executive’s Annual Bonus will be paid no later
than seventy-five (75) days after the end of the applicable bonus period (or, if earlier, as
provided in Section 4 below). Except as provided in Section 3 of this Agreement
, Employee
must be employed by the Company on the date bonuses are paid to Company employees in order
to be entitled to receive a bonus. To the extent the Annual Bonus exceeds 100% of Annual
Base Salary, the Compensation Committee may in its discretion, and subject to applicable
law, cause the Company to pay such excess in the form of fully vested equity compensation
awards under one of Company’s equity compensation plans (which award may be subject to other
conditions that the Compensation Committee may determine).
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(iii)
Stock Option Award. On the Effective Date, the Company shall grant to
the Executive a non-qualified option to purchase 200,000 shares of the Company’s common
stock (the “
Stock Option”
) under the
Morgans Hotel Group Co. Amended and
Restated 2007 Omnibus Incentive Plan (the “
Incentive Plan”). Except as otherwise
provided in Section 4 upon certain events of termination, subject to the Executive’s
continued employment with the Company, the Stock Option shall vest and become exercisable
with respect to 33-1/3% of the shares subject thereto on each of the first, second, and
third anniversaries of the Effective Date. Consistent with the foregoing, the terms and
conditions of the Stock Option shall be set forth in an award agreement (the “
Stock Option
Agreement”) in the form attached as
Exhibit A hereto, to be entered into by the
Company and the Executive concurrently herewith and which shall evidence the grant of the
Stock Option. The Company shall determine whether future awards will be awarded to the
Executive in its good faith discretion.
(iv)
Outperformance Award. On the Effective Date, the Company shall grant to
the Executive a performance incentive award entitling the Executive to 10% of the “Total
Outperformance Pool,” as such term is defined in the Outperformance Award Agreement attached
as
Exhibit B hereto, subject to the terms and conditions of such award agreement.
(v)
Additional Performance Incentive Award. On the Effective Date, the Company
shall grant to the Executive an additional performance incentive award entitling the
Executive to 10% of the “Promoted Interest Pool,” as such term is defined in the Promoted
Interest Pool Award Agreement attached as
Exhibit C hereto, subject to the terms and
conditions of such award agreement.
(vi)
Signing Bonus. The Executive shall receive a signing bonus equal to
$100,000 within 10 days of the Effective Date of this Agreement.
(vii)
Equity Award. On the Effective Date, the Company shall grant to the
Executive 65,250 restricted stock units (the “
RSUs”) as an inducement award. Subject to the
Executive’s continued employment with the Company, the RSUs shall vest and become
exercisable with respect to 33-1/3% of the shares subject thereto on each of the first,
second, and third anniversaries of the Effective Date. Consistent with the foregoing, the
terms and conditions of such award shall be set forth in an award agreement (the “
RSU
Agreement”) in the form attached as
Exhibit D hereto, to be entered into by the
Company and the Executive concurrently herewith and which shall evidence the grant of the
RSUs.
(i)
Employee Benefits. During the Employment Period, the Executive shall be
entitled to participate in all employee benefit and other plans, practices, policies and
programs and fringe benefits and perquisites on a basis no less favorable than that provided
to other senior executives of the Company.
(ii)
Vacations. The Executive shall be eligible for up to five weeks of annual
vacation to be accrued in accordance with the Company’s policy for its other senior
executives.
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(a)
Death or Disability. The Executive’s employment shall terminate automatically upon
the Executive’s death during the Employment Period. If the Executive becomes Disabled during the
Employment Period, the Company upon such event shall give to the Executive written notice of its
intention to terminate the Executive’s employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 30th day after receipt of such notice by the Executive
(the “
Disability Effective Date”), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s duties. For purposes
of this Agreement, “
Disability” or becoming “
Disabled” shall mean the inability of the Executive to
perform the Executive’s duties with the Company on a full-time basis for 180 business days during
any consecutive twelve month period as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the Company and acceptable
to the Executive or the Executive’s legal representative.
(b)
Cause. The Company may terminate the Executive’s employment during the Employment
Period with or without Cause. For purposes of this Agreement, “
Cause” shall mean the occurrence of
any one or more of the following events unless the Executive has commenced and is diligently
pursuing steps to correct the circumstances constituting Cause (in those instances where such
circumstances can be corrected) within fifteen (15) business days after receipt of the Notice of
Termination and cures in all material respects such circumstances within forty-five (45) business
days after receipt of the Notice of Termination (as defined below):
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(i) |
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the Executive’s willful and continued failure to substantially perform his
duties with the Company as contemplated by Section 2(a)(i) (other than any such failure
resulting from the Executive’s incapacity due to physical or mental illness or any such
failure after his issuance of a Notice of Termination for Good Reason), after a written
demand for substantial performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board believes that the
Executive has not substantially performed his duties; |
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(ii) |
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a material breach by Executive of his obligations under this Agreement
resulting in substantial economic or financial injury to the Company; |
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(iii) |
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the Executive’s willful commission of an act of fraud, theft or dishonesty
resulting in substantial economic or financial injury to the Company; |
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(iv) |
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the Executive’s conviction of, or entry by the Executive of a guilty or no
contest plea to, the commission of a felony; or |
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(v) |
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the Executive willfully engages in misconduct that is materially injurious to
the Company. |
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For purposes of this provision, no act or omission on the part of the Executive shall be considered
“willful” unless it is done or omitted in bad faith or without reasonable belief that the act or
omission was in the best interests of the Company. Any act or omission that was directed or
authorized by the Board, or approved, consented to, or acquiesced to by the Board, or based
on advice of counsel for the Company shall be conclusively presumed to have been done or omitted in
good faith and in the best interests of the Company. The cessation of employment of the Executive
shall not be deemed to be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by at least 66 2/3% of the Board (excluding the
Executive and the Executive Chairman, to the extent either of them are members of the Board) at a
meeting of the Board called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct
giving rise to Cause for termination, and specifying the particulars thereof in detail.
(c)
Good Reason. The Executive’s employment may be terminated by the Executive with or
without Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any
of the following events without the written consent of the Executive:
(i) any change in the Executive’s title or the assignment to the Executive of duties
materially inconsistent with the Executive’s title, position, status, reporting
relationships, authority, duties or responsibilities as contemplated by Section 2(a)(i), or
any other action by the Company which results in a material diminution or material adverse
change in the Executive’s title, position, status, reporting relationships, authority,
duties or responsibilities, other than insubstantial or inadvertent actions not taken in bad
faith which are remedied by the Company within fifteen (15) business days after receipt of
notice thereof given by the Executive;
(ii) any material failure by the Company to comply with any of the provisions of this
Agreement or any Related Agreement (as defined below), other than insubstantial or
inadvertent failures not in bad faith which are remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) any failure by the Company to comply with and satisfy Section 10(c); or
(iv) any requirement that the Executive’s principal place of employment be at a
location more than 50 miles from his principal place of employment on the date of this
Agreement, resulting in a material increase in distance from the Executive’s residence to
his new place of employment
provided that the Executive’s resignation shall only constitute a resignation for Good Reason
hereunder if (x) the Executive provides the Company with a Notice of Termination (as defined below)
within 90 days after the initial existence of the facts or circumstances constituting Good Reason,
(y) the Company has failed to cure such facts or circumstances within 30 days after receipt of the
Notice of Termination, and (z) subject to the last sentence of Section 4(e), the Date of
Termination (as defined below) occurs no later than 120 days after the initial occurrence of the
facts or circumstances constituting Good Reason.
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(d)
Notice of Termination. Any termination by the Company or by the Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a
“
Notice of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies the Date of Termination.
The failure by the Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.
(e)
Date of Termination. “
Date of Termination” means (i) if the Executive’s employment
is terminated by the Company other than for Disability, the date of receipt of the Notice of
Termination or any later date specified therein within 30 days of such notice, (ii) if the
Executive’s employment is terminated by the Executive, 30 days after receipt of the Notice of
Termination (provided, that, the Company may accelerate the Date of Termination to an earlier date
by providing the Executive with notice of such action, or, alternatively, the Company may place the
Executive on paid leave during such period), (iii) if the Executive’s employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be, and (iv) if the Executive’s employment is
terminated due to the non-renewal of the Agreement at the end of the Employment Period, the Date of
Termination shall be the last day of the Employment Period. Notwithstanding the foregoing, if
within thirty (30) days after any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists concerning the termination, the Date
of Termination shall be the date on which the dispute is finally determined, either by mutual
written agreement of the parties, by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
(f)
Resignation from Certain Offices and Directorships. Unless the Company agrees in
writing to waive this requirement, upon the termination of the Executive’s employment for Cause,
the Executive shall be deemed to have resigned from (i) office as a director of the Company, any
subsidiary or affiliate of the Company or any other entity to which the Company appoints the
Executive to serve as a director, (ii) from all offices held by the Executive in any or all of such
entities in clause (i) above, and (iii) all fiduciary positions (including as trustee) held by the
Executive with respect to any pension plans or trusts established by any such entities in clause
(i) above. The Executive shall take all actions reasonably requested by the Company to effectuate
the foregoing.
(a)
Other Than for Cause or For Good Reason. If, during the Employment Period, the
Company terminates the Executive’s employment other than for Cause or Disability or the Executive
terminates his employment for Good Reason (each, a “
Qualifying Termination”):
(i) The Company shall pay to the Executive an amount in a single lump sum within 10
days after the end of the revocation period for the Release Agreement provided in Section
4(e) below, (provided, however, that the amounts payable pursuant to
subparagraph (C) below, if any, will be paid at the same time the bonuses for the year
in which the Date of Termination occurs are paid), equal to the sum of —
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(A) an amount equal to the Executive’s Annual Base Salary (at the rate then
being paid to Executive) accruing through the Date of Termination to the extent
theretofore unpaid (the “Accrued Base Salary”) plus
(B) the amount of any Annual Bonus that, had he remained employed, would
otherwise have been paid to the Executive pursuant to Section 2 (b)(ii) above for any
fiscal year of the Company that ends on or before the Date of Termination to the
extent not previously paid (the “Prior Year Bonus”), plus
(C) (without duplication of the amount in clause (B)) a pro rata portion of the
Annual Bonus for the partial fiscal year in which the Date of Termination occurs in
an amount equal to the product of (A) the Annual Bonus calculated as of the Date of
Termination based on the extent to which the financial performance targets applicable
to such Annual Bonus (pro rated based on the number of days in such fiscal year
through the Date of Termination) are actually achieved for the year, and (B) a
fraction, the numerator of which is the number of days in the year of termination
through the Date of Termination and the denominator of which is 365 (the “Pro-Rated
Annual Bonus”) plus
(D) an amount equal to two (2) times the Annual Base Salary.
(ii) During the period commencing on the Date of Termination and ending on the date 12
months after the Date of Termination (the “COBRA Period”), provided that the Executive
properly elects to receive group health insurance continuation coverage under Section 4980B
of the Code and the regulations thereunder (“COBRA”), the Company shall pay directly or
reimburse the Executive for premiums for such coverage ; provided, however, that if the
Executive becomes re-employed with another employer and is eligible to receive group health
insurance coverage under another employer’s plans, the Company’s obligations under this
Section 4(a)(ii) shall be reduced to the extent comparable coverage is actually provided to
the Executive and the Executive’s eligible family members, and any such coverage shall be
reported by the Executive to the Company. Notwithstanding the foregoing, (A) if any plan
pursuant to which the Company is providing such coverage is not, or ceases prior to the
expiration of the period of continuation coverage to be, exempt from the application of Code
Section 409A under Treasury Regulation Section 1.409A-1(a)(5), or (B) the Company is
otherwise unable to continue to cover the Executive under its group health plans, then, in
either case, an amount equal to the monthly plan premium payment shall thereafter be paid to
the Executive as currently taxable compensation in substantially equal monthly installments
over the COBRA Period (or the remaining portion thereof).
All Company equity awards and other performance incentive awards, other than awards provided
pursuant to Sections 2(b)(iv) and (v), (which shall vest as set forth in the applicable award
agreement), shall fully vest on the Date of Termination to the extent not vested. The Executive
shall retain any vested equity awards, which may not be revoked or annulled by the Company.
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Each vested award (to the extent subject to exercise) shall be exercisable until the later of (A)
the twelve month anniversary of the Date of Termination and (B) the four year anniversary of the
date such award was granted. Notwithstanding this Section 4(a), in the event that the Executive is
terminated other than for Cause or the Executive terminates employment for Good Reason following a
Transactional Change in Control (as defined in the Outperformance Award Agreement) and where the
Common Share Price (as defined in the Outperformance Award Agreement) does not represent at least
4.5% compound annual growth rate since the Effective Date, the amount payable by the Company
pursuant to Section 4(a)(i)(D) shall equal one (1) times the Annual Base Salary.
(b)
Death; Disability. If, during the Employment Period, the Executive’s employment
shall terminate on account of death (other than via death after delivery of a valid Notice of
Termination for Good Reason or without Cause) or Disability, the Company shall have no further
obligations to the Executive other than to pay to or provide the Executive (or his estate) the
following:
(i) The Company shall pay to or provide the Executive (or his estate) the following
within 10 business days after the Executive’s death or the date on which the Executive
becomes Disabled: (A) the Accrued Base Salary through the Date of Termination to the extent
theretofore unpaid, (B) the Prior Year Bonus to the extent theretofore unpaid, (C) the Pro
Rated Annual Bonus (if any), and (D) an amount equal to one (1) times the Annual Base Salary
within 10 days after the Date of Termination.
(ii) During the COBRA Period, provided that the Executive’s estate or beneficiaries or
the Executive, as applicable, properly elects to receive group health insurance continuation
coverage under COBRA, the Company shall pay directly or reimburse the Executive’s estate or
beneficiaries or the Executive, as applicable, for premiums for such coverage; provided,
however, that if the Executive becomes re-employed with another employer and is eligible to
receive group health insurance coverage under another employer’s plans, the Company’s
obligations under this Section 4(b)(ii) shall be reduced to the extent comparable coverage
is actually provided to the Executive and the Executive’s eligible family members, and any
such coverage shall be reported by the Executive to the Company. Notwithstanding the
foregoing, (A) if any plan pursuant to which the Company is providing such coverage is not,
or ceases prior to the expiration of the period of continuation coverage to be, exempt from
the application of Code Section 409A under Treasury Regulation Section 1.409A-1(a)(5), or
(B) the Company is otherwise unable to continue to cover the Executive under its group
health plans, then, in either case, an amount equal to the monthly plan premium payment
shall thereafter be paid to the Executive as currently taxable compensation in substantially
equal monthly installments over the COBRA Period (or the remaining portion thereof).
All Company equity awards and other performance incentive awards, other than awards provided
pursuant to Sections 2(b)(iv) and (v), (which shall vest as set forth in the applicable award
agreement) shall fully vest on the Date of Termination to the extent not vested. The Executive
shall retain any vested equity awards, which may not be revoked or annulled by the Company. Each
vested award (to the extent subject to exercise) shall be exercisable until the later of (A) the
twelve month anniversary of the Date of Termination and (B) the four year anniversary of the date
such award was granted.
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(c)
For Cause; Other than For Good Reason. If, during the Employment Period, the
Company shall terminate the Executive’s employment for Cause or the Executive terminates his
employment without Good Reason (including the failure by the Executive to renew the Agreement at
the end of the Employment Period after the Company offers to do so no less than seventy-five (75)
days prior to the end of the Employment Period, as it may be extended pursuant to an
employment
agreement with at least a three year term, aggregate cash and equity-and performance-based
compensation at least as favorable as the same provided for hereunder and otherwise on terms no
less favorable to the Executive as those set forth herein) (any such non-renewal, an “
Executive
Non-Renewal”) the Company shall pay to or provide the Executive (or his estate) the following
within 10 business days after the Date of Termination: (A) the Accrued Base Salary through the
Date of Termination to the extent theretofore unpaid, and (B) in the event of an Executive
Non-Renewal, the Prior Year Bonus, to the extent theretofore unpaid. The Executive shall retain
any vested equity awards, which may not be revoked or annulled by the Company. Each vested award
(to the extent subject to exercise) shall be exercisable (i) in the event of an Executive
Non-Renewal, until the later of (A) the twelve month anniversary of the Date of Termination and (B)
the four year anniversary of the date such award was granted, or (ii) in the event of the
termination of Executive’s employment for Cause or without Good Reason other than an Executive
Non-Renewal), within ninety (90) days after the Date of Termination.
(i) the Accrued Base Salary through the Date of Termination to the extent theretofore
unpaid;
(ii) the Prior Year Bonus to the extent theretofore unpaid;
(iii) Subject to execution of the Release Agreement provided in Section 4(e) below, the
Company shall pay to the Executive an amount equal to one (1) times the Annual Base Salary
in a single lump sum within 10 days after the end of the revocation period for the Release
Agreement;
(iv) During the COBRA Period, provided that the Executive’s estate or beneficiaries or
the Executive, as applicable, properly elects to receive group health insurance continuation
coverage under COBRA, the Company shall pay directly or reimburse the Executive’s estate or
beneficiaries or the Executive, as applicable, for premiums for such coverage; provided,
however, that if the Executive becomes re-employed with another employer and is eligible to
receive group health insurance coverage under another employer’s plans, the Company’s
obligations under this Section 4(d)(iv) shall be reduced to the extent comparable coverage
is actually provided to the Executive and the Executive’s eligible family members, and any
such coverage shall be
reported by the Executive to the Company. Notwithstanding the foregoing, (A) if any
plan pursuant to which the Company is providing such coverage is not, or ceases prior to the
expiration of the period of continuation coverage to be, exempt from the application of Code
Section 409A under Treasury Regulation Section 1.409A-1(a)(5), or (B) the Company is
otherwise unable to continue to cover the Executive under its group health plans, then, in
either case, an amount equal to the monthly plan premium payment shall thereafter be paid to
the Executive as currently taxable compensation in substantially equal monthly installments
over the COBRA Period (or the remaining portion thereof).
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All Company equity awards and other performance incentive awards, other than awards provided
pursuant to Sections 2(b)(iv) and (v), (which shall vest as set forth in the applicable award
agreement) shall fully vest on the Date of Termination to the extent not vested. The Executive
shall retain any vested equity awards, which may not be revoked or annulled by the Company. Each
vested award (to the extent subject to exercise) shall be exercisable until the later of (A) the
twelve month anniversary of the Date of Termination and (B) the four year anniversary of the date
such award was granted.
(e)
Release Agreement. The Company shall not be required to make the payments and
provide the benefits specified in this Section 4 (other than the payment of any Accrued Base
Salary) unless the Executive (or his estate, as applicable) executes and delivers to the Company an
agreement releasing the Company, its affiliates and its officers, directors and employees from all
liability (other than the payments and benefits under this Agreement) in the form attached hereto
as
Exhibit E (the “
Release Agreement”) within thirty (30) days after the Date of
Termination and the period for revocation of such Release Agreement shall have lapsed, which
Release Agreement shall also provide that the Company shall release the Executive from all
liability; provided, that in all events, subject to Executive’s execution and delivery of the
Release Agreement, the payments and benefits specified in this Section 4 will be made or provided
before March 15 following the end of Executive’s first taxable year in which his right to such
payment is no longer subject to a substantial risk of forfeiture.
(a) If any compensation or benefits provided by this Agreement may result in the application
of Section 409A of the Code, the Company shall, in consultation with the Executive, modify the
Agreement in the least restrictive manner necessary in order to, where applicable, (i) exclude such
compensation from the definition of “deferred compensation” within the meaning of such Section 409A
or (ii) comply with the provisions of Section 409A, other applicable provision(s) of the Code
and/or any rules, regulations or other regulatory guidance issued under such statutory provisions
and to make such modifications, in each case, without any diminution in the value of the payments
to the Executive.
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(b) Anything in this Agreement to the contrary notwithstanding, if (A) on the date of
termination of Executive’s employment with the Company or a subsidiary, any of the Company’s stock
is publicly traded on an established securities market or otherwise (within the meaning of Section
409A(a)(2)(B)(i) of the Internal Revenue Code, as amended (the “Code”)), (B) Executive is
determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B), (C) the
payments exceed the amounts permitted to be paid pursuant to Treasury
Regulations section 1.409A-1(b)(9)(iii), and (D) such delay is required to avoid the
imposition of the tax set forth in Section 409A(a)(1), as a result of such termination, the
Executive would receive any payment that, absent the application of this Section 5(b), would be
subject to interest and additional tax imposed pursuant to Section 409A(a) as a result of the
application of Section 409A(2)(B)(i), then no such payment shall be payable prior to the date that
is the earliest of (1) six (6) months and one day after the Executive’s termination date, (2) the
Executive’s death or (3) such other date (the “Delay Period”) as will cause such payment not to be
subject to such interest and additional tax (with a catch-up payment equal to the sum of all
amounts that have been delayed to be made as of the date of the initial payment). In particular,
with respect to any lump sum payment otherwise required hereunder, in the event of any delay in the
payment date as a result of Section 409A(a)(2)(A)(i) and (B)(i), the Company will adjust the
payments to reflect the deferred payment date by crediting interest thereon at the prime rate in
effect at the time such amount first becomes payable, as quoted by the Company’s principal bank.
(c) To the extent that the provision of health insurance following the Date of Termination is
so delayed, the Executive shall be entitled to COBRA continuation coverage under Section 4980B of
the Code (“COBRA Coverage”) during such period of delay, and the Company shall reimburse the
Executive for any Company portions of such COBRA Coverage in the seventh month following the Date
of Termination.
(d) To the extent that any benefits to be provided during the Delay Period are considered
deferred compensation under Code Section 409A provided on account of a “separation from service,”
and such benefits are not otherwise exempt from Section 409A, the Executive shall pay the cost of
such benefits during the Delay Period, and the Company shall reimburse the Executive, to the extent
that such costs would otherwise have been paid by the Company or to the extent that such benefits
would otherwise have been provided by the Company at no cost to the Executive, the Company’s share
of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall
be reimbursed or provided by the Company in accordance with the procedures specified herein.
(e) Any provisions of this Agreement or any other compensation plan notwithstanding, the
Company shall have no right to accelerate any such payment hereunder or thereunder except to the
extent permitted under Section 409A.
(f) For purposes of Section 409A, each payment made after termination of employment, including
COBRA continuation reimbursement payments, will be considered one of a series of separate payments.
(g) A termination of employment shall not be deemed to have occurred for purposes of any
provision of this Agreement providing for the payment of any amounts or benefits upon or following
a termination of employment unless such termination is also a “separation from service” within the
meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a
“termination,” “termination of employment” or like terms shall mean “separation from service.”
11
(h) Any amount that Executive is entitled to be reimbursed under this Agreement that may be
treated as taxable compensation, will be reimbursed to Executive as promptly as practical
and in any event not later than sixty (60) days after the end of the calendar year in which
the expenses are incurred; provided that Executive shall have provided a reimbursement request to
the Company no later than thirty (30) days prior to the date the reimbursement is due. The amount
of the expenses eligible for reimbursement during any calendar year will not affect the amount of
expenses for reimbursement in any other calendar year, except as may be required pursuant to an
arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code.
(i) The Company shall not be obligated to reimburse Executive for any tax penalty or interest
or provide a gross-up in connection with any tax liability of Executive under Section 409A.
Notwithstanding any other provision of this Agreement or of any other agreement, contract, or
understanding heretofore or hereafter entered into by the Executive and the Company or any of the
Company’s affiliates, except an agreement, contract, or understanding hereafter entered into that
expressly modifies or excludes application of this Section 6 (the “Other Agreements”), and
notwithstanding any formal or informal plan or other arrangement heretofore or hereafter adopted by
the Company or any of the Company’s affiliates for the direct or indirect compensation of the
Executive (including groups or classes of participants or beneficiaries of which the Executive is a
member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit
to or for the Executive (a “Benefit Arrangement”), if the Executive is a “disqualified individual,”
as defined in Section 280G(c) of the Code, any right to receive any payment or other benefit under
this Agreement shall not become exercisable or vested (i) to the extent that such right to
exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits
to or for Executive under the Agreement, all Other Agreements, and all Benefit Arrangements, would
cause any payment or benefit to the Executive under this Agreement to be considered a “parachute
payment” within the meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute
Payment”) and (ii) if, as a result of receiving a Parachute Payment, the aggregate
after-tax amounts received by the Executive from the Company or any of the Company’s affiliates
under this Agreement, all Other Agreements, and all Benefit Arrangements would be less than the
maximum after-tax amount that could be received by Executive without causing any such payment or
benefit to be considered a Parachute Payment. In the event that the receipt of any such right to
exercise, vesting, payment, or benefit under this Agreement, in conjunction with all other rights,
payments, or benefits to or for the Executive under the Agreement, any Other Agreement or any
Benefit Arrangement would cause the Executive to be considered to have received a Parachute Payment
under this Agreement that would have the effect of decreasing the after-tax amount received by the
Executive as described in clause (ii) of the preceding sentence, then the Executive shall have the
right, in the Executive’s sole discretion, to designate those rights, payments, or benefits under
this Agreement, any Other Agreements, and any Benefit Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Executive under this Agreement be
deemed to be a Parachute Payment; provided, however, that, to the extent any payment or benefit
constitutes deferred compensation under Section 409A, in order to comply with Section 409A, the
reduction or elimination will be performed in the following order: (A) reduction of cash payments;
(B) reduction of COBRA benefits; (C) cancellation of acceleration of vesting on any equity awards
for which the exercise price exceeds the then fair market value of the underlying equity; and
(D) cancellation of acceleration of vesting of equity awards not covered under (C) above; provided,
however that in the event that acceleration of vesting of equity awards is to be cancelled, such
acceleration of vesting shall be cancelled in the reverse order of the date of grant of such equity
awards, that is, later granted equity awards shall be canceled before earlier granted equity
awards.
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(a)
Non-Competition. Executive acknowledges that the services to be rendered by him to
the Company are of a special and unique character. In consideration of his employment hereunder,
Executive agrees that, during the term of Executive’s employment with the Company and for a
six-month period after the date the Executive’s employment is terminated for any reason, provided
in connection with a termination of employment pursuant to Sections 4(a) or (d), the Company is not
in material breach in the performance of its obligations to the Executive pursuant to those
Sections, the Executive shall not directly or indirectly (without the prior written consent of the
Company) engage, directly or indirectly, whether as principal, agent, representative, consultant,
employee, partner, stockholder, limited partner, other investor or otherwise (other than a passive
investment of not more than two and one-half percent (2.5%) of the stock, equity or other ownership
interest of any corporation, partnership or other entity) in any business entity primarily engaged,
directly or indirectly through subsidiaries, and the Executive shall not be personally engaged,
directly or indirectly, in the business of hotel management within the United States of America or
Western Europe. The Executive shall not pursue any prospects listed on a deal pipeline list
prepared by the Company and the Executive for a one-year period following the Date of Termination.
(b)
Non-Solicitation. During the term of his employment with the Company pursuant to
this Agreement and for a one-year period after the Executive’s employment is terminated pursuant to
this Agreement for any reason, provided the Company is not in material breach in the performance of
its obligations to the Executive as of the Date of Termination and is performing all of its
obligations under Section 4 of this Agreement upon and following the Date of Termination, the
Executive shall not, in any manner, directly or indirectly (without the prior written consent of
the Company), solicit, induce, or encourage any employee, consultant or agent of the Company or any
of its subsidiaries to terminate their employment, agency, or other such business relationship with
the Company and its subsidiaries or to cease to render services to the Company and its subsidiaries
and the Executive shall not initiate discussions with any such person for any such purpose or
authorize or knowingly cooperate with or encourage the taking of any such actions by any other
individual or entity; provided, however, that this paragraph shall not preclude the hiring or
retention of any such person by any other individual or entity who (i) responds to a general
employment advertisement by newspaper or similar advertisement, or (ii) is referred to another
individual or entity by an employment agency or other similar entity, provided that Executive did
not identify the person or the Company as a potential source of employees to such agency or similar
entity. During the term of Executive’s employment pursuant to this Agreement and for a six (6)
month period after the Executive’s employment is terminated pursuant to this Agreement for any
reason, provided the Company is not in material breach in the performance of its obligations to the
Executive as of the Date of Termination and is performing all of its obligations under Section 4 of
this Agreement upon and following the Date
of Termination, the Executive shall not, in any manner (without the prior written consent of
the Company), solicit, induce or encourage any customer, vendor, or other party doing business with
the Company to terminate their business relationship with the Company and its subsidiaries or to
transfer their business from the Company or any of its subsidiaries, and the Executive shall not
initiate discussions with any such person for any such purpose or authorize or knowingly cooperate
with or encourage the taking of any such actions by any other individual or entity.
13
(c)
Treatment of Confidential Information. As a Company executive, Executive will
acquire Confidential Information (as defined below) in the course of Executive’s employment.
Executive agrees that, in consideration of employment with the Company, Executive will treat such
Confidential Information as strictly confidential. Executive will not, directly or indirectly, at
any time during employment with the Company or any time thereafter, and without regard to when or
for what reason, if any, such employment shall terminate, use or cause to be used any such
Confidential Information, in connection with any activity or business except in the normal course
of performing his designated duties for the Company. Executive shall not disclose or cause to be
disclosed any such Confidential Information to any third parties unless such disclosure is in
accordance with the disclosure policies adopted by the Board or has been authorized in writing by
the Board or except as may be required by law or legal process after providing the Company with
prior written notice and an opportunity to respond to such disclosure (unless such notice is
prohibited by law). For purposes of this Agreement, “
Confidential Information” shall mean
confidential or proprietary information, knowledge or data concerning the Company and its
subsidiary companies’ businesses, strategies, operations, financial affairs, organizational
matters, personnel matters, budgets, business plans, marketing plans, studies, policies,
procedures, products, ideas, processes, software systems, trade secrets and technical know-how.
Notwithstanding the foregoing, Confidential Information shall not include information which (i) is
or becomes generally available to the public or is, at the time in question, in the public domain
other than as a result of a disclosure by Executive not permitted hereunder, (ii) was available to
Executive on a non-confidential basis prior to the date of this Agreement, or (iii) becomes
available to Executive from a source other than the Company, its agents or representatives (or
former agents or representatives).
(d)
Standstill. During the term of his employment and for a period of six months
after the date the Executive’s employment is terminated, Executive shall not, directly or
indirectly or in concert with any other person, engage in any of the following:
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purchase, offer to purchase, or agree to purchase or otherwise acquire, by
means of a purchase, tender or exchange offer, business combination or in any other
manner (including rights or options to acquire such ownership), (x) beneficial
ownership of any common stock of the Company (“Common Stock”), or securities
convertible into or exchangeable for Common Stock of the Company, that would result in
the Executive, the Executive’s affiliates, and the members of any “group” of persons
with which the Executive or his affiliates are acting in concert beneficially owning,
in the aggregate (taking into account shares of Common Stock issuable upon conversion
or exchange of any securities held by such the Executive and such other persons), more
than 14.9% of the voting power of the outstanding Common Stock, or (y) material
beneficial ownership of any debt obligations on hotel properties owned by the Company
or any of its
consolidated subsidiaries or any material assets owned by the Company or any of its
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seek or propose to influence, advise, change or control the management, Board,
governing instruments or policies or affairs of the Company or any of its affiliates,
including, without limitation, by means of a solicitation of proxies or seeking to
influence, advise or direct the vote of any holder of voting securities of the Company;
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be employed by any person that, directly or through its affiliates, engages in
any of the foregoing. |
Exercise of options, conversion of LTIP Units, vesting and delivery of shares of Common
Stock pursuant to equity or other awards, plans and arrangements and any other Common Stock
received or otherwise acquired by the Executive in connection with or as a result of the
Executive’s employment with the Company or service on its Board are not prohibited by this
Section 7(d). In addition, if persons with whom the Executive has in no way participated,
assisted or cooperated with have taken actions that would be prohibited by Sections 7(d)
above such that the Company would be considered to be in “play” through no act of the
Executive, the Executive will no longer be subject to the limitations of Sections 7(d).
(e)
Survival. Any termination of the Executive’s employment or of this Agreement (or
breach of this Agreement by the Executive or the Company) shall have no effect on the continuing
effectiveness of this Section 7, Sections 4, 5, 6 and 8 or any other provision hereof that by the
nature of its terms is contemplated to survive any such termination.
(f)
Validity. The terms and provisions of this Section 7 are intended to be separate
and divisible provisions and if, for any reason, any one or more of them is held to be invalid or
unenforceable, neither the validity nor the enforceability of any other provision of this Agreement
shall thereby be affected. The parties hereto acknowledge that the potential restrictions on the
Executive’s future employment imposed by this Section 7 are reasonable in both duration and
geographic scope and in all other respects. If for any reason any court of competent jurisdiction
shall find any provisions of this Section 7 unreasonable in duration or geographic scope or
otherwise, the Executive and the Company agree that the restrictions and prohibitions contained
herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction.
(g)
Consideration. The parties acknowledge that this Agreement would not have been
entered into and the benefits described in Section 2, 4 or 6 would not have been promised in the
absence of the Executive’s promises under this Section 7.
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(a) If the Executive is made a party, is threatened to be made a party, or reasonably
anticipates being made a party, to any Proceeding (as defined below) by reason of the fact that he
is or was a director, officer, executive, agent, manager, trustee, consultant or representative of
the Company or any of its affiliates or is or was serving at the request of the Company or any of
its
affiliates, or in connection with his service hereunder, as a director, officer, member,
executive, agent, manager, trustee, consultant or representative of another person or entity, or if
any Claim (as defined below) is made, is threatened to be made, or is reasonably anticipated to be
made, that arises out of or relates to the Executive’s service in any of the foregoing capacities,
then the Executive shall promptly be indemnified and held harmless to the fullest extent permitted
or authorized by the Certificate of Incorporation or Bylaws of the Company, or if greater, by
applicable law, against any and all costs, expenses, liabilities and losses (including, without
limitation, attorneys’ and other professional fees, judgments, interest, expenses of investigation,
penalties, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
incurred or suffered by the Executive in connection therewith or in connection with seeking to
enforce his rights under this Section 8, and such indemnification shall continue as to the
Executive even if he has ceased to be a director, officer, member, executive, agent, manager,
trustee, consultant or representative of the Company or other person or entity and shall inure to
the benefit of the Executive’s heirs, executors and administrators. The Executive shall be entitled
to prompt advancement of any and all costs and expenses (including, without limitation, attorneys’
and other professional fees and other charges) incurred by him in connection with any such
Proceeding or Claim, or in connection with seeking to enforce his rights under this Section 8, any
such advancement to be made within 15 days after he gives written notice, supported by reasonable
documentation, requesting such advancement. Such notice shall include, to the extent required by
applicable law, an undertaking by the Executive to repay the amount advanced if he is ultimately
determined not to be entitled to indemnification against such costs and expenses. Nothing in this
Agreement shall operate to limit or extinguish any right to indemnification, advancement of
expenses, or contribution that the Executive would otherwise have (including, without limitation,
by agreement or under applicable law). For purposes of this Agreement, “Claim” shall include,
without limitation, any claim, demand, request, investigation, dispute, controversy, threat,
discovery request, or request for testimony or information and “Proceeding” shall include, without
limitation, any actual, threatened, or reasonably anticipated, action, suit or proceeding, whether
civil, criminal, administrative, investigative, appellate, formal, informal or other.
(b) A directors’ and officers’ liability insurance policy (or policies) shall be kept in
place, during the Employment Period and thereafter until the later of (x) the sixth anniversary of
the date on which the Executive’s employment with the Company terminates and (y) the date on which
all claims against the Executive that would otherwise be covered by the policy (or policies) would
become fully time barred, providing coverage to the Executive that is no less favorable to him in
any respect (including, without limitation, with respect to scope, exclusions, amounts, and
deductibles) than the coverage then being provided to any other present or former senior executive
or director of the Company.
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(a) The Executive represents and warrants that the execution and delivery of this Agreement
and the performance of his duties and responsibilities in Section 2(a)(i) will not result in a
breach of or conflict with any obligations owed by Executive to his former employer.
(b) The Company acknowledges that Executive has knowledge of confidential information
regarding the business and affairs of his former employer. The Company hereby
instructs and authorizes Executive not to disclose any such confidential information to any
officer, director, employee, adviser, or other representative of the Company and not to make any
use of such confidential information in the performance of Executive’s duties on behalf of the
Company and such non-disclosure shall not constitute “Cause” or otherwise constitute a violation of
this Agreement.
(a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns, provided that the Company may not assign this Agreement other than as
described in Section 10(c) below.
(c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid.
(a) Mandatory Arbitration. Subject to the provisions of this Section 11, any
controversy or claim between the Executive and the Company arising out of or relating to or
concerning this Agreement (including the covenants contained in Section 7) or any aspect of the
Executive’s employment with the Company or the termination of that employment (together, an
“
Employment Matter”) will be finally settled by arbitration in the County of
New York administered
by the American Arbitration Association (the “
AAA”) under its Commercial Arbitration Rules then in
effect. However, the AAA’s Commercial Arbitration Rules will be modified in the following ways:
(i) notwithstanding any provision of the AAA rules to the contrary, the arbitration shall be heard
by a panel of three neutral arbitrators, with each party appointing one arbitrator, who shall
jointly appoint a third, (ii) each arbitrator will agree to treat as confidential evidence and
other information presented to them, (iii) there will be no authority to award punitive damages
(and the Executive and the Company agree not to request any such award), (iv) the optional Rules
for Emergency Measures of Protections will apply, (v) there will be no authority to amend or modify
the terms of this Agreement except as provided in Section 12(a) (and the Executive and the Company
agree not to request any such amendment or modification) and (vi) a decision must be rendered
within ten business days of the parties’ closing statements or submission of post-hearing briefs.
The Executive and the Company agree that, to the extent permitted by law, a decision made by the
arbitration panel with respect to any Employment Matter will be conclusive and binding on the
Executive and the Company.
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(b)
Injunctions and Enforcement of Arbitration Awards. The Executive or the
Company may bring an action or special proceeding in a state or federal court of competent
jurisdiction sitting in the County of
New York to enforce any arbitration award under Section
11(a). Also, the Company may bring such an action or proceeding, in addition to its rights under
Section 11(a) and whether or not an arbitration proceeding has been or is ever initiated, to
temporarily, preliminarily or permanently enforce any part of Section 7. The Executive agrees that
(i) violating any part of Section 7 would cause damage to the Company that cannot be measured or
repaired, (ii) the Company therefore is entitled to seek an injunction, restraining order or other
equitable relief restraining any actual or threatened violation of Section 7, (iii) no bond will
need to be posted for the Company to receive such an injunction, order or other relief and (iv) no
proof will be required that monetary damages for violations of Section 7 would be difficult to
calculate and that remedies at law would be inadequate.
(c)
Jurisdiction and Choice of Forum. The Executive and the Company irrevocably submit
to the exclusive jurisdiction of any state or federal court located in the County of
New York over
any Employment Matter that is not otherwise arbitrated or resolved according to Section 11(a).
This includes any action or proceeding to compel arbitration or to enforce an arbitration award.
Both the Executive and the Company (i) acknowledge that the forum stated in this Section 11(c) has
a reasonable relation to this Agreement and to the relationship between the Executive and the
Company and that the submission to the forum will apply even if the forum chooses to apply
non-forum law, (ii) waive, to the extent permitted by law, any objection to personal jurisdiction
or to the laying of venue of any action or proceeding covered by this Section 11(c) in the forum
stated in this Section 11(c), (iii) agree not to commence any such action or proceeding in any
forum other than the forum stated in this Section 11(c) and (iv) agree that, to the extent
permitted by law, a final and non-appealable judgment in any such action or proceeding in any such
court will be conclusive and binding on the Executive and the Company. However, nothing in this
Agreement precludes the Executive or the Company from bringing any action or proceeding in any
court for the purpose of enforcing the provisions of Section 11(a) and this Section 11(c).
(d)
Waiver of Jury Trial. To the extent permitted by law, the Executive and the
Company waive any and all rights to a jury trial with respect to any Employment Matter.
(e)
Costs. The Company will reimburse as incurred any reasonable expenses, including
reasonable attorney’s fees, the Executive incurs as a result of any Employment Matter, provided
that if the Executive is not the prevailing party on at least one material issue in the Employment
Matter, the Executive shall promptly return any such reimbursements. In addition, if the
Executive is not the prevailing party on at least one material issue in the Employment Matter, the
Executive shall promptly reimburse the Company any reasonable expenses, including reasonable
attorney’s fees, the Company has incurred as a result of the Employment Matter, provided that such
reimbursement shall not exceed fifty percent (50%) of the expenses, including attorney’s fees,
incurred by the Executive.
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(a)
Amendment; Waiver. This Agreement may not be amended or modified, or any provision
hereof waived, other than by a written agreement executed by the parties hereto or any of their
respective successors and assigns.
(b)
Notices. All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by overnight courier or registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
at the Executive’s primary residential address
as shown on the records of the Company
If to the Company:
or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee
provided that any notice made by hand delivery shall be deemed to have been received on
the date it is actually delivered, any notice made by overnight courier shall be deemed to have
been received on the date after such notice was so sent and any notice made by registered or
certified mail, return receipt shall be deemed to have been received on the date that is five (5)
business days after such notice was so sent.
(c)
Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d)
Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(e)
Full Settlement. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. The Executive shall not be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, and such amounts shall not be reduced whether or not the
Executive obtains other employment.
(f)
Governing Law. This Agreement will be governed by and construed in accordance with
the law of the State of
New York applicable to contracts made and to be performed entirely within
that State.
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(g)
No Waiver. The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any right the Executive
or the Company may have hereunder, including, without limitation, the right of the Executive
to terminate employment for Good Reason (subject to the proviso at the end of Section 3(c)) or the
Company’s right to terminate the Executive for Cause (subject to the limitation in the last
sentence of Section 3(b)), shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(h)
Entire Agreement; Conflict. This Agreement, together with the Stock Option
Agreement, RSU Agreement, Outperformance Award Agreement, and Promoted Interest Pool Award
Agreement (collectively, the “
Related Agreements”), constitutes the final, complete and exclusive
agreement between the Executive and the Company with respect to the subject matter hereof and
replaces and supersedes any and all other agreements, offers or promises, whether oral or written,
between the parties concerning the subject matter hereof. In the event of any conflict or
inconsistency between the provisions of, or definitions contained in, this Agreement, on the one
hand, and any Related Agreement or any other agreement or instrument related to the Executive’s
employment to which he is subject, on the other hand, the provisions or definitions, as the case
may be, the terms of the Related Agreements shall govern (notwithstanding the termination hereof)
but this Agreement shall govern if in conflict with any plan document or other document or
instrument related thereto (other than a Related Agreement).
(i)
Section References. Any reference to a Section herein is a reference to a section
of this Agreement unless otherwise stated.
(j)
Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the same document.
THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.
SIGNATURES APPEAR ON THE NEXT PAGE.
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EMPLOYER: |
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EXECUTIVE: |
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MORGANS HOTEL GROUP CO. |
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By: |
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/s/ Xxxxx Xxxxx |
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/s/ Xxxx Xxxx |
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Name:
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Xxxxx Xxxxx
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Xxxx Xxxx |
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Title:
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Executive Vice President |
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and General Counsel |
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Exhibit A
Stock Option Agreement
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Option No.: _______
XXXXXX HOTELS GROUP CO.
NON-QUALIFIED STOCK OPTION AGREEMENT
Xxxxxx Hotels Group Co. (the “Company”), hereby grants an option to purchase shares of its common
stock (the “Stock”) to the individual named below as the optionee, subject to the vesting
conditions set forth in the attachment.
Grant Date: March 23, 2011
Name of Optionee: Xxxx Xxxx
Optionee’s Employee Identification Number: ____-___-_____
Number of Shares Covered by Option: 200,000
Option Price per Share: $______ (At least 100% of Fair Market Value)
Vesting Start Date: March 23, 2011
By signing this cover sheet, you agree to all of the terms and conditions described in this
Agreement.
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Optionee: |
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/s/ Xxxx Xxxx |
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(Signature) |
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Company: |
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/s/ Xxxxx Xxxxx |
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(Signature) |
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Title:
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Executive Vice President and General Counsel |
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This is not a stock certificate or a negotiable instrument.
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Non-Qualified Stock Option
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This option is not intended to be
an incentive stock option under
Section 422 of the Internal Revenue
Code and will be interpreted
accordingly. |
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Vesting
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This option is only exercisable
before it expires and then only
with respect to the vested portion
of the option. Subject to the
preceding sentence, you may
exercise this option, in whole or
in part, to purchase a whole number
of vested shares not less than 100
shares, unless the number of shares
purchased is the total number
available for purchase under the
option, by following the procedures
set forth below in this Agreement. |
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Your right to the Stock under this
Agreement vests as to thirty three
and one-third percent
(331/3%) of the total
number of shares of Stock covered
by this grant, as shown on the
cover sheet, each year on each of
the first three one-year
anniversaries of the Vesting Start
Date. The resulting aggregate
number of vested shares will be
rounded down to the nearest whole
number, and you cannot vest in more
than the number of shares covered
by this option. |
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Except as otherwise provided in the
employment agreement between you
and the Company, no additional
shares of Stock will vest after
your Service has terminated for any
reason. |
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“Service” means service as a
Service Provider to the Company or
an Affiliate. Your change in
position or duties shall not result
in interrupted or terminated
Service, so long as you continue to
be a Service Provider to the
Company or an Affiliate. Subject to
the preceding sentence, whether a
termination of Service shall have
occurred shall be determined by the
Compensation Committee of the Board
of Directors (the “Board”), which
determination shall be final,
binding and conclusive. |
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“Service Provider” means an
employee, officer or director of
the Company or an Affiliate, or a
consultant or adviser currently
providing services to the Company
or an Affiliate. |
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“Affiliate” means, with respect to
the Company, any company or other
trade or business that controls, is
controlled by or is under common
control with the Company within the
meaning of Rule 405 of Regulation C
under the Securities Act of 1933,
as now in effect or hereafter
amended, including, without
limitation, any Subsidiary. For
purposes of granting stock options
or stock appreciation rights, an
entity may not be considered an
Affiliate unless the Company holds
a “controlling interest” in such
entity, where the term “controlling
interest” has the same meaning as
provided in Treasury Regulation
1.414(c)-2(b)(2)(i), provided that
the language “at least 50 percent”
is used instead of “at least 80
percent” and, provided further,
that where granting of stock
options or stock appreciation
rights is based upon a legitimate
business criteria, the language “at
least 20 percent” is used instead
of “at least 80 percent” each place
it appears in Treasury Regulation
1.414(c)-2(b)(2)(i)
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“Subsidiary” means any “subsidiary
corporation” of the Company within
the meaning of Section 424(f) of
Internal Revenue Code of 1986, as
amended (the “Code”). |
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Term
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Your option will expire in any
event at the close of business at
Company headquarters on the day
before the 10th anniversary of the
Grant Date, as shown on the cover
sheet. Your option will expire
earlier if your Service terminates,
as described below. |
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Except as otherwise provided in the
employment agreement between you
and the Company, if your Service
terminates for any reason, your
option will expire at the close of
business at Company headquarters on
the 90th day after your termination
date. |
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Notice of Exercise
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When you wish to exercise this
option, you must notify the Company
by filing the proper “Notice of
Exercise” form at the address given
on the form. Your notice must
specify how many shares you wish to
purchase (in a parcel of at least
100 shares generally). Your notice
must also specify how your shares
of Stock should be registered (e.g.
in your name only or in your and
your spouse’s names as joint
tenants with right of
survivorship). The notice will be
effective when it is received by
the Company. |
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If someone else wants to exercise
this option after your death, that
person must prove to the Company’s
satisfaction that he or she is
entitled to do so. |
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Form of Payment
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When you submit your notice of
exercise, you must include payment
of the option price for the shares
you are purchasing. Payment may be
made in one (or a combination) of
the following forms: |
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• Cash, your personal
check, a cashier’s check, a money
order or another cash equivalent
acceptable to the Company. |
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• Shares of Stock which
have already been owned by you and
which are surrendered to the
Company. The value of the shares,
determined as of the effective date
of the option exercise, will be
applied to the option price. |
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• By delivery (on a form
prescribed by the Company) of an
irrevocable direction to a licensed
securities broker acceptable to the
Company to sell Stock and to
deliver all or part of the sale
proceeds to the Company in payment
of the aggregate option price and
any withholding taxes. |
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Withholding Taxes
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You will not be allowed to exercise
this option unless you make
acceptable arrangements to pay any
withholding or other taxes that may
be due as a result of the option
exercise or sale of Stock acquired
under this option. In the event
that the Company determines that
any federal, state, local or
foreign tax or withholding payment
is required relating to the
exercise or sale of shares arising
from this grant, the Company shall
have the right to require such
payments from you, or withhold such
amounts from other payments due to
you from the Company or any
Affiliate. Subject to the prior
approval of the Company, which may
be withheld by the Company, in its
sole discretion, you may elect to
satisfy this withholding
obligation, in whole or in part, by
causing the Company to withhold
shares of Stock otherwise issuable
to you or by delivering to the
Company shares of Stock already
owned by you. The shares of Stock
so delivered or withheld must have
an aggregate Fair Market Value
equal to the withholding obligation
and may not be subject to any
repurchase, forfeiture, unfulfilled
vesting, or other similar
requirements. |
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“Fair Market Value” with respect to
a share of Stock means the value of
a share of such Stock determined as
follows: if on the determination
date the Stock is listed on an
established national or regional
stock exchange, is admitted to
quotation on The NASDAQ Stock
Market, Inc. or is publicly traded
on an established securities
market, the Fair Market Value of a
share of Stock shall be the closing
price of the Stock on such exchange
or in such market (if there is more
than one such exchange or market
the Compensation Committee of the
Board shall determine the
appropriate exchange or market) on
the determination date (or if there
is no such reported closing price,
the Fair Market Value shall be the
mean between the highest bid and
lowest asked prices or between the
high and low sale prices on such
trading day) or, if no sale of
Stock is reported for such trading
day, on the next preceding day on
which any sale shall have been
reported. If the Stock is not
listed on such an exchange, quoted
on such system or traded on such a
market, Fair Market Value of the
share of Stock shall be the value
of the Stock as determined by the
Compensation Committee of the Board
by the reasonable valuation method,
in a manner consistent with Section
409A of the Code. “Fair Market
Value” with respect to an award
means the value of the award as
determined by the Compensation
Committee in good faith, taking
into consideration applicable tax
and accounting rules and
regulations. |
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Corporate Transaction
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Notwithstanding the vesting
schedule set forth above, upon the
consummation of a Corporate
Transaction, this option will
become 100% vested if it is not
assumed, or equivalent options are
not substituted for the options, by
the Company or its successor.
Notwithstanding any other provision
in this Agreement but subject to
the employment agreement between
you and the Company, if assumed or
substituted for, the option will
expire one year after the date of
termination of Service. |
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“Corporate Transaction” shall be
deemed to have occurred if (i) any
person or group of persons (as
defined in Section 13(d) and 14(d)
of the Exchange Act of 1934, as now
in effect or hereafter amended (the
“Exchange Act”)) together with its
affiliates, excluding employee
benefit plans of the Company, is or
becomes, directly or indirectly,
the “beneficial owner” (as defined
in Rule 13d-3 of the Exchange Act)
of securities of the Company
representing 40% or more of the
combined voting power of the
Company’s then outstanding
securities; or (ii) individuals who
at the beginning of any two-year
period constitute the Board, plus
new directors of the Company whose
election or nomination for election
by the Company’s shareholders is
approved by a vote of at least
two-thirds of the directors of the
Company still in office who were
directors of the Company at the
beginning of such two-year period,
cease for any reason during such
two-year period to constitute at
least two-thirds of the members of
the Board; or (iii) a merger or
consolidation of the Company with
any other corporation or entity is
consummated regardless of which
entity is the survivor, other than
a merger of consolidation which
would result in the voting
securities of the Company
outstanding immediately prior
thereto continuing to represent
(either by remaining outstanding or
being converted into voting
securities of the surviving entity)
at least 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 Company is completely
liquidated or all or substantially
all of the Company’s assets are
sold. |
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Transfer of Option
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During your lifetime, only you (or,
in the event of your legal
incapacity or incompetency, your
guardian or legal representative)
may exercise the option. You
cannot transfer or assign this
option. For instance, you may not
sell this option or use it as
security for a loan. If you
attempt to do any of these things,
this option will immediately become
invalid. You may, however, dispose
of this option in your will or it
may be transferred upon your death
by the laws of descent and
distribution. |
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Regardless of any marital property
settlement agreement, the Company
is not obligated to honor a notice
of exercise from your spouse, nor
is the Company obligated to
recognize your spouse’s interest in
your option in any other way. |
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Retention Rights
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This Agreement does not give you
the right to be retained or
employed by the Company (or any
Affiliates) in any capacity. The
Company (and any Affiliate) reserve
the right to terminate your Service
at any time and for any reason,
subject to the employment agreement
between you and the Company. |
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Shareholder Rights
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You, or your estate or heirs, have
no rights as a shareholder of the
Company until a certificate for
your option’s shares has been
issued (or an appropriate book
entry has been made). No
adjustments are made for dividends
or other rights if the applicable
record date occurs before your
stock certificate is issued (or an
appropriate book entry has been
made). |
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Adjustments
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In the event of a stock split, a
stock dividend or a similar change
in the Stock, the number of shares
covered by this option and the
option price per share shall be
adjusted (and rounded down to the
nearest whole number). |
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Applicable Law
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This Agreement will be interpreted
and enforced under the laws of the
State of New York, other than any
conflicts or choice of law rule or
principle that might otherwise
refer construction or
interpretation of this Agreement to
the substantive law of another
jurisdiction. |
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Data Privacy
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The Company may process personal
data about you. Such data includes
but is not limited to the
information provided in this
Agreement and any changes thereto,
other appropriate personal and
financial data about you such as
home address and business addresses
and other contact information,
payroll information and any other
information that might be deemed
appropriate by the Company to
facilitate the administration of
this Agreement. |
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By accepting this option, you give
explicit consent to the Company to
process any such personal data.
You also give explicit consent to
the Company to transfer any such
personal data outside the country
in which you work or are employed,
including, with respect to non-U.S.
resident Optionees, to the United
States, to transferees who shall
include the Company and other
persons who are designated by the
Company to facilitate the
administration of this Agreement. |
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The Company may choose to deliver
certain statutory materials
relating to this Agreement in
electronic form. If at any time
you would prefer to receive paper
copies of any documents, as you are
entitled to receive, the Company
would be pleased to provide copies. |
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Electronic Signature
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All references to signatures and
delivery of documents in this
Agreement can be satisfied by
procedures the Company has
established or may establish for an
electronic signature system for
delivery and acceptance of any such
documents, including this
Agreement. Your electronic
signature is the same as, and shall
have the same force and effect as,
your manual signature. Any such
procedures and delivery may be
effected by a third party engaged
by the Company to provide
administrative services related to
this Agreement. |
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Scope of Agreement
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This Agreement constitutes the
entire understanding between you
and the Company regarding this
option. Any prior agreements,
commitments or negotiations
concerning this grant are
superseded. |
By
signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above.
Exhibit B
Outperformance Award Agreement
2011 OUTPERFORMANCE PLAN AWARD AGREEMENT made as of the date set forth on
Schedule A hereto by and among
MORGANS HOTEL GROUP CO., a Delaware corporation
(the “
Company”), MORGANS GROUP LLC, a Delaware limited liability company (the
“
Operating Company”), and the party listed on
Schedule A (the
“
Grantee”).
A. The Grantee is a senior management employee of the Company and provides services
to the Operating Company.
B. The Compensation Committee (the “Committee”) of the Board of Directors of the
Company (the “Board”) approved this and other 2011 outperformance plan (“2011 OPP”)
awards pursuant to the Company’s Amended and Restated 2007 Omnibus Incentive Plan (the
“Incentive Plan”) to provide certain senior management employees of the Company, including
the Grantee, in connection with their employment with the incentive compensation described in this
Award Agreement (this “Agreement”) and thereby provide additional incentive for them to
promote the progress and success of the business of the Company and its Affiliates. 2011 OPP awards
were approved by the Committee pursuant to authority delegated to it by the Board, including
authority to make grants of stock-based performance incentive awards. This Agreement evidences one
award (this “Award”) in a series of 2011 OPP awards and is subject to the terms and
conditions set forth herein.
C. The Committee, effective as of the grant date specified in Schedule A hereto,
awarded to the Grantee the 2011 OPP participation percentage in the Total Outperformance Pool (as
defined herein), as set forth in Schedule A.
NOW, THEREFORE, the Company, the Operating Company, and the Grantee agree as follows:
1. Administration.
This Award and all other 2011 OPP awards shall be administered by the Committee, which in the
administration of the 2011 OPP awards and this Award shall have all the powers and authority it has
in the administration of the Incentive Plan as set forth in the Incentive Plan, but subject to this
Agreement ; provided that all powers of the Committee hereunder can be exercised by the
full Board if the Board so elects. The Committee, in its sole and absolute discretion, may provide
for lapse of forfeiture restrictions and/or accelerated vesting under this Agreement of some or all
of the Grantee’s unvested Award Participation that has not previously been forfeited.
2. Definitions.
Capitalized terms used herein shall have the meanings set forth below:
“Accelerated Payment Change of Control” means a Transactional Change of Control or a
Change of Control within the meaning of subparagraph (iv) or (v) thereof.
“Additional Share Baseline Value” means, with respect to each Additional Share, the
gross proceeds received by the Company or the Operating Company upon the issuance of such
Additional
Share, which amount shall be deemed to equal, as applicable:
(A) if such Additional Share is issued for cash in a public offering or private placement,
the gross price to the public or to the purchaser(s);
(B) if such Additional Share is issued in exchange for assets or securities of another
Person or upon the acquisition of another Person, the cash value imputed to such Additional
Share for purposes of such transaction by the parties thereto, as determined in good faith by
the Committee, or, if no such value was imputed, the mean between the high and low sale prices
of a Common Share on the national securities exchange or established securities market on which
the Common Shares are listed on the date of issuance of such Additional Share, or, if no sale
of Common Shares is reported on such date, on the next preceding day on which any sale shall
have been reported; and
(C) if such Additional Share is issued upon conversion or exchange of equity or debt
securities of the Company, the Operating Company or any other Subsidiary of the Company, which
securities were not previously counted as either Initial Shares or Additional Shares, the
conversion or exchange price in effect as of the date of conversion or exchange pursuant to the
terms of the security being exchanged or converted.
“Additional Shares” means, as of a particular date of determination, the number of
Common Shares, other than those held by the Company, to the extent such Common Shares are issued
after the Effective Date and on or before such date of determination in a capital raising
transaction, in exchange for assets or securities or upon the acquisition of another Person, upon
conversion or exchange of equity or debt securities of the Company or any Subsidiary of the
Company, which securities were not previously counted as either Initial Shares or Additional
Shares, or through the reinvestment of dividends or other distributions.
For the avoidance of doubt, “Additional Shares” shall exclude, without limitation:
(i) Common Shares issued after the Effective Date upon exercise of stock options or
upon the exchange (directly or indirectly) of LTIP Units or other Units issued to employees,
non-employee directors, consultants, advisors or other persons or entities as incentive or
other compensation,
(ii) Common Shares awarded after the Effective Date to employees, non-employee
directors, consultants, advisors or other persons or entities as incentive or other
compensation for services provided or to be provided to the Company or any of its
Affiliates,
(iii) LTIP Units or other Units awarded after the Effective Date to employees,
non-employee directors, consultants, advisors or other persons or entities as incentive or
other compensation, and
(iv) any securities included in “Initial Shares.”
“Affiliate” means, with respect to the Company, any company or other trade or
business that controls, is controlled by or is under common control with the Company within
the meaning of Rule 405 of Regulation C under the Securities Act, including, without
limitation, any Subsidiary.
“Award Common Units” means the units of membership interests in the Operating Company
referred to as “Membership Units” in the LLC Agreement into which the Award LTIP Units may be
converted in accordance with the terms of the LLC Agreement.
“Award LTIP Units” means a series of LTIP Units established by the Operating Company,
with the rights, privileges, and preferences set forth in the designations thereof included in an
amendment to the LLC Agreement that may be adopted hereafter by the Managing Member of the
Operating Company in accordance with Section 8(a), which designations shall be in the form
set forth on Exhibit A attached hereto.
“Award Participation” has the meaning set forth in Section 3.
“Baseline Value” means $8.87.
“Buyback Shares” means (without double-counting), as of a particular date of
determination, (A) Common Shares or (B) the Shares Amount for Units (assuming that such Units
were converted, exercised, exchanged or redeemed for Membership Units as of such date at the
applicable conversion, exercise, exchange or redemption rate (or rate deemed applicable by the
Committee if there is no such stated rate) and such Common Units were then tendered to the
Operating Company for redemption pursuant to Section 4.2(e)(1) of the LLC Agreement as of such
date), other than Units held by the Company, in the case of each (A) and (B), to the extent
repurchased by the Company after the Effective Date and on or before such date of determination
in a stock buyback transaction or in a redemption of Units for cash pursuant to Section
4.2(e)(1) of the LLC Agreement.
“Cause” means: (A) if the Grantee is or was a party to a Service Agreement prior
to such termination and “Cause” is defined therein, then “Cause” shall have the meaning set
forth in such definition, or (B) if the Grantee is not and was not party to a Service
Agreement prior to such termination or the Grantee’s Service Agreement does not define “Cause”
or a substantially equivalent term, then “Cause” shall mean:
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the Grantee’s willful and continued failure to substantially perform his duties
with the Company (other than any such failure resulting from the Grantee’s incapacity
due to physical or mental illness or any such failure after his issuance of a notice of
termination for Good Reason), after a written demand for substantial performance is
delivered to the Grantee by the Board, which demand specifically identifies the manner
in which the Board believes that the Grantee has not substantially performed his
duties; |
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a material breach by Grantee of his Service Agreement; |
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(iii) |
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the Grantee’s willful commission of an act of fraud, theft or dishonesty
resulting in economic, financial or material reputational injury to the Company; |
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(iv) |
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the Grantee’s conviction of, or entry by the Grantee of a guilty or no contest
plea to, the commission of a felony; or |
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the Grantee willfully engages in other misconduct materially injurious to the
Company. |
For purposes of this provision, no act or omission on the part of the Grantee shall be
considered “willful” unless it is done or omitted in bad faith or without reasonable belief that
the act or omission
was in the best interests of the Company. Any act or omission based upon a resolution duly
adopted by the Board or advice of counsel for the Company shall be conclusively presumed to have
been done or omitted in good faith and in the best interests of the Company. The cessation of
employment of the Grantee shall not be deemed to be for Cause unless and until there shall have
been delivered to the Grantee a copy of a resolution duly adopted by the majority of the Board
(excluding the Grantee, if the Grantee is then a member of the Board) at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the Grantee and the
Grantee is given an opportunity, together with counsel, to be heard before the Board) finding that,
in the good faith opinion of the Board, the Grantee is guilty of the conduct giving rise to Cause
for termination, and specifying the particulars thereof in detail.
“Change of Control” means:
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individuals who, on the Effective Date, constitute the Board (the
“Incumbent Directors”) cease for any reason to constitute at least a majority
of the Board, provided that any person becoming a director subsequent to the
Effective Date whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person is named
as a nominee for director, without objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or
nominated as a director of the Company as a result of an actual or threatened election
contest with respect to directors or as a result of any other actual or threatened
solicitation of proxies by or on behalf of any person other than the Board shall be an
Incumbent Director; or |
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any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after
the Effective Date, a “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company’s then outstanding securities eligible to vote
for the election of the Board (the “Company Voting Securities”);
provided, however, that an event described in this paragraph (ii) shall
not be deemed to be a Change of Control if any of following becomes such a beneficial
owner: (A) the Company or any majority-owned subsidiary of the Company
(provided that this exclusion applies solely to the ownership levels of the
Company or the majority-owned subsidiary), (B) any tax-qualified, broad-based employee
benefit plan sponsored or maintained by the Company or any such majority-owned
subsidiary, or (C) any underwriter temporarily holding securities pursuant to an
offering of such securities; or |
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the consummation of a merger, consolidation, share exchange or similar form of
transaction involving the Company or any of its subsidiaries, or the sale of all or
substantially all of the Company’s assets (a “Business Transaction”), unless
immediately following such Business Transaction (A) more than 50% of the total voting
power of the entity resulting from such Business Transaction or the entity acquiring
the Company’s assets in such Business Transaction (the “Surviving Corporation”)
is beneficially owned, directly or indirectly, by the Company’s shareholders
immediately prior to any such Business Transaction, and (B) no person (other than the
persons set forth in clauses (A), (B), or (C) of paragraph (ii) above or any
tax-qualified, broad-based employee benefit plan of the Surviving Corporation or its
affiliates) beneficially
owns, directly or indirectly, 30% or more of the total voting power of the Surviving
Corporation; or |
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Board approval of a liquidation or dissolution of the Company, unless the
voting common equity interests of an ongoing entity (other than a liquidating trust)
are beneficially owned, directly or indirectly, by the Company’s shareholders in
substantially the same proportions as such shareholders owned the Company’s outstanding
voting common equity interests immediately prior to such liquidation and such ongoing
entity assumes all existing obligations of the Company to the Grantee under this
Agreement; or |
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Approval by the shareholders of the Company or the Managing Member and/or
Non-Managing Members of the Operating Company of a dissolution or liquidation of the
Operating Company and satisfaction or effective waiver of all material contingencies to
such liquidation or dissolution. |
“CoC Fraction” means, for application pursuant to the proviso clause in
the definition of “Final Baseline,” the number of calendar days that have elapsed since the
Effective Date to and including the date as of which a Change of Control is consummated (or,
with respect to a Transactional Change of Control, the date of the Public Announcement of such
Transactional Change of Control), divided by 1,096.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Shares” means shares of the Company’s common stock, par value $0.01 per share.
“Common Share Price” means, as of a particular date, the average of the Fair Market
Value of one Common Share over the thirty (30) consecutive trading days ending on, and including,
such date (or, if such date is not a trading day, the most recent trading day immediately preceding
such date); provided, however, that if such date is the date of the Public
Announcement of a Transactional Change of Control, the Common Share Price as of such date shall be
equal to the fair market value, as determined by the Committee, of the total consideration payable
in the transaction that ultimately results in the Transactional Change of Control for one Common
Share.
“Continuous Service” means the continuous service, without interruption or
termination, as a an employee or director of Company or an Affiliate. Continuous Service shall
not be considered interrupted in the case of (among other things) —
(A) any approved leave of absence,
(B) transfers among the Company and any Affiliate, or any successor, in any capacity of
director or employee, or
(C) any change in status as long as the individual remains in the service of the Company or
any Affiliate of the Company in the capacity of employee or director.
An approved leave of absence shall include sick leave, military leave, or any other authorized
personal leave.
“Disability” means:
(A) if the Grantee is or was a party to a Service Agreement prior to the applicable event, and
“Disability” is defined therein, then “Disability” shall have the meaning set forth in such
definition, or
(B) if the Grantee is not and was not a party to a Service Agreement prior to such event or
the Grantee’s Service Agreement does not define “Disability” or a substantially equivalent term,
then “Disability” shall mean a disability which renders the Grantee incapable of performing all of
his or her material duties for 180 business days during any consecutive twelve month period as a
result of incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company and acceptable to the Grantee or the Grantee’s
legal representative or by the insurance company which insures the Company’s long-term disability
plan in which the Grantee is eligible to participate.
“Effective Date” means March 20, 2011.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“
Fair Market Value” means, as of any given date, the fair market value of a security
determined by the Committee using any reasonable method and in good faith (such determination will
be made in a manner that satisfies Section 409A of the Code and in good-faith as required by
Section 422(c)(1) of the Code);
provided that, with respect to a Common Share, “Fair Market
Value” means the value of such Common Share determined as follows: (A) if on the determination date
the Common Shares are listed on the
New York Stock Exchange, The NASDAQ Stock Market, Inc. or
another national securities exchange or is publicly traded on an established securities market, the
Fair Market Value of a Common Share shall be the closing price of the Common Shares on such
exchange or in such market (if there is more than one such exchange or market, the Committee shall
determine the appropriate exchange or market) on the determination date (or if there is no such
reported closing price, the Fair Market Value shall be the mean between the high and low sale
prices on such trading day) or, if no sale of Common Shares is reported for such trading day, on
the next preceding day on which any sale shall have been reported; or (B) if the Common Shares are
not listed on such an exchange, quoted on such system or traded on such a market, Fair Market Value
of the Common Share shall be the value of the Common Shares as determined by the Committee in good
faith in a manner consistent with Section 409A of the Code.
“Family Member” means a person who is a spouse, former spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive
relationships, of the Grantee, any person sharing the Grantee’s household (other than a tenant or
employee), a trust in which any one or more of these persons have more than fifty percent of the
beneficial interest, a foundation in which any one or more of these persons (or the Grantee)
control the management of assets, and any other entity in which one or more of these persons (or
the Grantee) own more than fifty percent of the voting interests.
“Final Baseline” means, as of the Final Valuation Date, an amount representing
(without double-counting) the sum of:
(A) the Baseline Value multiplied by:
(i) the difference between (x) the Initial Shares and (y) all Buyback Shares
repurchased or redeemed between the Effective Date and the Final Valuation Date,
and then multiplied by
(ii) the sum of one hundred percent (100%) plus the Target Return
Percentage; plus
(B) with respect to each Additional Share issued after the Effective Date, the
Additional Share Baseline Value of such Additional Share, multiplied by the sum of
(i) one hundred percent (100%) plus (ii) the product of the Target Return Percentage
multiplied by a fraction (x) the numerator of which is the number of days from the
issuance of such Additional Share to and including the Final Valuation Date and (y) the
denominator of which is the number of days from and including the Effective Date to and
including the Final Valuation Date; plus
(C) with respect to each Buyback Share repurchased or redeemed after the Effective
Date, the Baseline Value, multiplied by the sum of (i) one hundred percent (100%)
plus (ii) the product of the Target Return Percentage multiplied by a
fraction (x) the numerator of which is the number of days from the Effective Date to and
including the date such Buyback Share was repurchased or redeemed and (y) the denominator of
which is the number of days from and including the Effective Date to and including the Final
Valuation Date;
provided that if the Final Valuation Date occurs prior to the third anniversary of the
Effective Date as a result of an Accelerated Payment Change of Control, then for purposes of this
definition in connection with the calculation of the Total Outperformance Pool as of the Final
Valuation Date, then the Target Return Percentage to be used in such calculation shall be reduced
to a percentage equal to thirty percent (30%) multiplied by the CoC Fraction. If the
Company consummates multiple issuances of Additional Shares and/or repurchases of Buyback Shares
during any one monthly or quarterly period, such that it would be impractical to track the precise
issuance date and issuance price of each individual Additional Share and/or repurchase or
redemption date of each individual Buyback Share, the Committee may in its good faith discretion
approve timing and calculation conventions (such as net-at-end-of-period or
average-during-the-period) reasonably designed to simplify the administration of this Award.
“
Final Valuation Date” means the earliest of: (A) the third anniversary of the
Effective Date; or (B) in the event of an Accelerated Payment Change of Control that is not
a Transactional Change of Control, the date on which such Change of Control shall occur; or
(C) in the event of a Transactional Change of Control and subject to the consummation of
such Transactional Change of Control, the date of the Public Announcement of such
Transactional Change of Control; provided that if the Public Announcement occurs after 4pm
New York City time or otherwise so late in the trading day that the market cannot
meaningfully react on such day, then the Final Valuation Date shall mean the following
trading day.
“Good Reason” means: (A) if the Grantee is or was a party to a Service
Agreement prior to such termination, and “Good Reason” is defined therein, then “Good
Reason” shall have the meaning set forth in such Service Agreement, or (B) if the Grantee
is not and was not party to a Service Agreement prior to such termination or the Grantee’s
Service Agreement does not define “Good Reason” or a substantially equivalent term, so long
as the Grantee terminates his or her employment within thirty (30) days after the Grantee
has actual knowledge of the occurrence, without the written consent of the Grantee, of one
of the
following events that has not been cured within thirty (30) days after written notice
thereof has been given by Grantee to the Company, then “Good Reason” shall mean:
(i) the assignment to the Grantee of duties materially inconsistent with the Grantee’s
title, position, status, reporting relationships, authority, duties or responsibilities as
contemplated in his Service Agreement, or any other action by the Company which results in a
material diminution in the Grantee’s title, position, status, reporting relationships,
authority, duties or responsibilities, other than insubstantial or inadvertent actions not
taken in bad faith which are remedied by the Company within fifteen (15) business days after
receipt of notice thereof given by the Grantee;
(ii) any material failure by the Company to comply with any of the provisions of the
Service Agreement, other than insubstantial or inadvertent failures not in bad faith which
are remedied by the Company promptly after receipt of notice thereof given by the Grantee;
(iii) any failure by the Company to obtain the assumption of his Service Agreement by a
successor to all or substantially all of the business or assets of the Company; or
(iv) if his Service Agreement provides that the Executive will be nominated for
election as a director of the Company, any failure by the Board to nominate the Executive
for election as a director of the Company in accordance with the Service Agreement, or any
failure of the Executive to be elected to be a member of the Board; or
(v) any requirement that the Grantee’s principal place of employment be at a location
more than 50 miles from his principal place of employment on the date of this Agreement,
resulting in a material increase in distance from the Grantee’s residence to his new place
of employment;
“Initial Shares” means 32,642,795 Common Shares, which includes: (A)
30,311,503 Common Shares outstanding as of the Effective Date (other than currently
unvested restricted Common Shares previously granted to employees or other persons or
entities in exchange for services provided to the Company); plus (B) 954,065 Common
Shares representing the Shares Amount for all of the Membership Units (other than LTIP
Units and excluding Membership Units held by the Company) outstanding as of the Effective
Date assuming that all of such Membership Units were tendered to the Operating Company for
redemption pursuant to Section 4.2(e) of the LLC Agreement as of such date; plus
(C) 1,377,227 Common Shares representing the Shares Amount for all of the Membership Units
into which all LTIP Units outstanding as of the Effective Date could be converted without
regard to the book capital account associated with them (but only to the extent such LTIP
Units are currently vested), assuming that all of such Membership Units were tendered to
the Operating Company for redemption pursuant to Section 4.2(e) of the LLC Agreement as of
such date.
For the avoidance of doubt, Initial Shares (i) includes (x) currently vested
Common Shares and (y) currently vested LTIP Units previously granted to employees or other
persons or entities in exchange for services provided to the Company, and (ii)
excludes (x) all Common Shares issuable upon exercise of stock options or upon the
exchange (directly or indirectly) of unvested LTIP Units or other unvested Units issued to
employees, non-employee directors, consultants, advisors or other persons or entities as
incentive compensation, and (y) currently unvested restricted Common Shares previously
granted to employees, non-employee directors,
consultants, advisors or other persons or entities in exchange for services provided
to the Company.
“LLC Agreement” means the Amended and Restated Limited Liability Company
Agreement of the Operating Company, dated as of February 17, 2006, among the Company, as
managing member, and the non-managing members who are parties thereto, as amended from time
to time.
“LTIP Units” means LTIP Units, as such term is defined in the LLC Agreement.
“Membership Units” has the meaning set forth in the LLC Agreement.
“Partial Service Factor” means a factor carried out to the sixth decimal to be
used in calculating the Grantee’s adjusted Participation Amount pursuant to Section
4(b)(ii) hereof in the event of a Qualified Termination of the Grantee’s Continuous
Service prior to the Final Valuation Date or pursuant to Section 4(e) in the event
of a termination of the Grantee’s Continuous Service by reason of death or Disability prior
to the Final Valuation Date, determined as follows:
the number of calendar days that have elapsed since the Effective Date to and
including the effective date of such Qualified Termination or the date of death or
Disability, divided by 1,096; provided, however, that if,
after the effective date of such Qualified Termination or the date of death or
Disability and before the third anniversary of the Effective Date, an Accelerated
Payment Change of Control occurs, then there shall be subtracted from the foregoing
denominator (1,096) a number of days equal to the days that would elapse between the
date as of which the Accelerated Payment Change of Control is consummated (or, with
respect to a Transactional Change of Control, the date of the Public Announcement of
the Transactional Change of Control) and the third anniversary of the Effective
Date.
“Participation Amount” has the meaning set forth in Section 3.
“Participation Percentage” means the percentage (of the Total Outperformance
Pool) set forth opposite such term on Schedule A hereto
“Person” means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization, other entity or
“group” (as defined in the Exchange Act).
“Public Announcement” means, with respect to a Transactional Change of
Control, the earliest press release, filing with the SEC or other publicly available or
widely disseminated communication issued by the Company or another Person who is a party to
such transaction which discloses the consideration payable in and other material terms of
the transaction that ultimately results in the Transactional Change of Control;
provided, however, that if such consideration is subsequently increased or
decreased, then the term “Public Announcement” shall be deemed to refer to the most recent
such press release, filing or communication disclosing a change in consideration whereby
the final consideration and material terms of the transaction that ultimately results in
the Transactional Change of Control are announced. For the avoidance of doubt, the
foregoing definition is intended to provide the Committee in the application of the proviso
clause in the definition of “Common Share Price” with the
information required to determine the fair market value of the consideration payable
in the transaction that ultimately results in the Transactional Change of Control as of the
earliest time when such information is publicly disseminated, particularly if the
transaction consists of an unsolicited tender offer or a contested business combination
where the terms of the transaction change over time.
“Qualified Termination” has the meaning set forth in Section 4.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Service Agreement” means, as of a particular date, any employment, consulting
or similar service agreement then in effect between the Grantee, on the one hand, and the
Company or one of its Affiliates, on the other hand, as amended or supplemented through
such date, provided that, if no such agreement is then in effect, “Service
Agreement” shall mean any employment, consulting or similar service agreement most recently
in effect (on or after the Effective Date) prior to such date, as amended or supplemented,
between the Grantee, on the one hand, and the Company or one of its Affiliates, on the
other hand.
“Shares Amount” has the meaning set forth in the LLC Agreement.
“Subsidiary” means any “subsidiary corporation” of the Company within the
meaning of Section 424(f) of the Code.
“Target Return Percentage” means thirty percent (30%), representing a compound
annual growth rate of approximately nine percent (9%) per annum over a three-year period,
using annual compounding, except as otherwise defined for purposes of the definition of
Final Baseline in certain circumstances, as described in the proviso clause of such
definition.
“Total Outperformance Pool” means, as of the Final Valuation Date, a dollar
amount calculated as follows: (A) subtract the Final Baseline from the Total Return, in
each case as of the Final Valuation Date and (B) multiply the resulting amount by ten
percent (10%); provided that if the resulting amount is a negative number, then the Total
Outperformance Pool shall be zero.
“Total Return” means (without double-counting), as of the Final Valuation Date, an
amount equal to the sum of (A) the Total Shares as of such date of determination multiplied by the
Common Share Price as of such date, plus (B) an amount equal to the sum of the total
dividends and other distributions actually declared between the Effective Date and the Final
Valuation Date (excluding dividends and distributions paid in the form of additional Common Shares)
so long as the “ex-dividend” date with respect thereto falls prior to the Final Valuation Date, in
respect of Common Shares (it being understood, for the avoidance of doubt, that such total
dividends and distributions shall be calculated by multiplying the amount of each per share
dividend or distribution declared by the actual number of securities outstanding as of each record
date with respect to the applicable dividend or distribution payment date).
“Total Shares” means (without double-counting), as of the Final Valuation
Date, the sum of: (A) the Initial Shares, minus (B) all Buyback Shares repurchased
or redeemed between the Effective Date and the Final Valuation Date, plus (C) all
Additional Shares issued between
the Effective Date and the Final Valuation Date.
“Transactional Change of Control” means (A) a Change of Control described in
clause (ii) of the definition thereof where the “person” or “group” makes a tender offer
for Common Shares, or (B) a Change of Control described in clause (iii) of the definition
thereof; provided that if the applicable definition of “Change of Control” (or
similar term) in the applicable Service Agreement does not track such clauses (ii) or
(iii), then the term “Transactional Change of Control” shall mean a Change of Control
meeting the substantive criteria set forth in such clauses, as reasonably determined in
good faith by the Committee.
“Transfer” has the meaning set forth in Section 6.
“Units” means all Membership Units that are eligible for the Redemption Right
(as defined in the LLC Agreement) and any other Membership Units, including LTIP Units,
with economic attributes substantially similar to such Membership Units as determined by
the Committee that are outstanding or are issuable upon the conversion, exercise, exchange
or redemption of any securities of any kind convertible, exercisable, exchangeable or
redeemable for Membership Units.
(a) The Operating Company hereby grants to the Grantee this Award consisting of the
Participation Percentage set forth on Schedule A hereto (the “Award
Participation”), which (A) will be subject to forfeiture to the extent provided in this
Section 3 and (B) will be subject to vesting as provided below in this Section 3(a)
and in Section 3(d) and Section 4. The Award will be made in the form of Award LTIP Units
as provided in Section 8, subject to the Company having received confirmation that it is
permitted under applicable stock exchange listing rules to issue Award LTIP Units, on the terms
contemplated herein, under the Incentive Plan. The Company will use commercially reasonable
efforts to obtain such confirmation within 90 days following the Effective Date. If the Company
does not receive such confirmation within 90 days following the Effective Date, the Company and the
Operating Company shall amend this Award Agreement to provide for an Award that is settled by a
cash payment by the Operating Company to Grantee equal to his Participation Amount within 45 days
following the Final Valuation Date. In the event Grantee receives Award LTIP Units pursuant
hereto, references herein to Grantee’s Award Participation shall refer to Grantee’s Award LTIP
Units and the provisions of Section 8 shall apply in lieu of specified provisions of this
Award Agreement. At any time prior to the Final Valuation Date, the Committee may grant additional
2011 OPP awards with such Participation Percentages (up to a total of 100% for all 2011
Participation Percentages granted or reserved) set forth therein as the Committee may determine, in
its sole discretion, The Award Participation shall vest (i) on the Final Valuation Date if the
Continuous Service of the Grantee continues to that date or (ii) in accordance with Section
3(d), 4(b) and 4(d) hereof.
(b) As soon as practicable following the Final Valuation Date, but as of the Final Valuation
Date, the Committee will:
(i) determine the Total Outperformance Pool (if any);
(ii) multiply (x) the Total Outperformance Pool calculated as of the Final
Valuation Date by (y) the Grantee’s Participation Percentage as of the Final Valuation Date;
and
(iii) if applicable (without double-counting), multiply the amount determined in clause
(ii) by the Partial Service Factor or the CoC Fraction.
The resulting amount is hereafter referred to as the “Participation Amount.” The Committee
will notify Grantee of his Participation Amount (if any) promptly following the determination
thereof. If Grantee has received his Award in the form of Award LTIP Units, Section 8(b)
will apply in lieu of the remainder of this Section 3(b). If this Award Agreement has been
amended, as provided in Section 3(a), to provide for a payment in cash such notice will
state whether the Committee has elected to cause the Company to pay the Participation Amount in
cash or through the issuance of fully vested shares under one of the Company’s equity incentive
compensation plans, subject to compliance with applicable laws and stock exchange listing
requirements, or through a combination of cash and shares. If the Participation Amount is to be
paid using shares, the shares will be valued at the Common Share Price as of the Final Valuation
Date and will be issued under the Incentive Plan and be registered on a Form S-8. The Company
shall pay Grantee’s Participation Amount within 45days following the Final Valuation Date.
(c) Any Award Participation that does not become vested pursuant to Section 3(a),
Section 3(d), or Section 4 hereof shall, without payment of any consideration by
the Company, automatically and without notice be forfeited and be and become null and void upon the
termination of the Continuous Service of Grantee prior to the Final Valuation Date (other than by
reason of a Qualified Termination, death or Disability), and neither the Grantee nor any of his or
her successors, heirs, assigns, or personal representatives will thereafter have any further rights
or interests in such unvested Award Participation.
(d) If there is a Change of Control, Grantee’s Award Participation shall vest immediately and
automatically upon the occurrence of such Change of Control.
(e) In the event of a Change of Control, the Committee will make any determinations and
certifications required by this Agreement and any provisions necessary with respect to the lapse of
forfeiture restrictions and/or acceleration of vesting of this Award within a period of time that
enables the Company to take any action or make any deliveries or payments it is obligated to make
hereunder not later than the date of consummation of the Change of Control. For avoidance of doubt,
in the event of a Change of Control, the performance of all calculations and actions pursuant to
Section 3(b) hereof shall be conditioned upon the final consummation of such Change of
Control.
(a) If the Grantee is or was a party to a Service Agreement and his or her Continuous Service
terminates, the provisions of Sections 4(b), 4(c), 4(d), and 4(e),
hereof shall govern the treatment of the Grantee’s Award Participation exclusively, unless the
Service Agreement contains provisions that expressly refer to this Section 4(a) and
provides that those provisions of the Service Agreement shall instead govern the treatment of the
Grantee’s Award Participation upon such termination. The foregoing sentence will be deemed an
amendment to any applicable Service Agreement to the extent required to apply its terms
consistently with this Section 4, such that, by way of illustration, any provisions of the
Service Agreement with respect to accelerated vesting or payout or the lapse of forfeiture
restrictions relating to the Grantee’s incentive or other compensation awards in the event of
certain types of termination of the Grantee’s Continuous Service with the Company (such as, for
example, termination at the end of the term, termination without Cause by the employer or
termination for Good Reason by the employee) shall not be interpreted as requiring that any
calculations set forth in Section 3 hereof be performed, or vesting occur with respect to
this Award other than as specifically provided in this Section 4.
(b) In the event of termination of the Grantee’s Continuous Service by (A) the Company without
Cause or (B) the Grantee for Good Reason (each a “Qualified Termination”) prior to the
Final Valuation Date, then the Grantee will not forfeit the Award Participation upon such
termination, but the following provisions of this Section 4(b) shall modify the
calculations required to determine the Participation Amount and/or the vesting of the Award
Participation, as applicable, with respect to the Grantee only:
(i) the calculations provided in Section 3(b) hereof shall be performed as of
the Final Valuation Date, as if the Qualified Termination had not occurred;
(ii) the Participation Amount calculated pursuant to Section 3(b) shall be
multiplied by the applicable Partial Service Factor; and
(iii) the Grantee’s Participation Amount as adjusted pursuant to Section
4(b)(ii) above shall no longer be subject to forfeiture pursuant to Section 3(c)
hereof; provided that, notwithstanding that no Continuous Service requirement
pursuant to Section 3(c) hereof will apply to the Grantee after the effective date
of a Qualified Termination, the Grantee will not have the right to Transfer (as defined in
Section 6 hereof) his or her Award Participation or request the redemption of any
Award Common Units until such dates as of which his or her Participation Amount, as adjusted
pursuant to Section 4(b)(ii) above, would have become vested pursuant to Section
3(a) hereof absent a Qualified Termination. For the avoidance of doubt, the purpose of
this Section 4 (b)(iii) is to prevent a situation where grantees of 2011 OPP awards
who have had a Qualified Termination would be able to realize the value of their Award
Participation or any Award Common Units (through Transfer) before other grantees of 2011 OPP
awards whose Continuous Service continues through the Final Valuation Date and the date for
payment of the Participation Amount.
(c) Notwithstanding the foregoing, in the event any payment to be made hereunder after giving
effect to this Section 4 is determined to constitute “nonqualified deferred compensation”
subject to Section 409A of the Code, then, to the extent the Grantee is a “specified employee”
under Section 409A of the Code subject to the six-month delay thereunder, any such payments to be
made during the six-month period commencing on the Grantee’s “separation from service” (as defined
in Section 409A of the Code) shall be delayed until the expiration of such six-month period.
(d) In the event of a termination of the Grantee’s Continuous Service as a result of his or
her death or Disability prior to the Final Valuation Date, the Grantee will not forfeit the Award
Participation, but the following provisions of this Section 4(d) shall apply:
(i) the calculations provided in Section 3(b) hereof shall be performed as of
the Final Valuation Date, as if the Grantee’s death or Disability had not occurred; and
(ii) the Participation Amount calculated pursuant to Section 3(b) shall be
multiplied by the applicable Partial Service Factor, and such adjusted amount shall be
deemed the Grantee’s Participation Amount for all purposes under this Agreement; and
(iii) 100% of the Grantee’s Participation Amount as adjusted pursuant to Section
4(d)(ii) above shall no longer be subject to forfeiture pursuant to Section 3(c)
hereof and shall automatically and immediately vest as of the Final Valuation Date.
(e)n the event of a termination of the Grantee’s Continuous Service prior to the Final
Valuation Date (other than (1) a Qualified Termination or (2) by reason of death or Disability or
(3) following a Change of Control), the Award Participation, unless it shall, as of the date of
such termination, both (i) have ceased to be subject to forfeiture pursuant to Section
3(c) hereof, and (ii) have vested pursuant to Section 3(a) hereof, shall,
without payment of any consideration by the Company, automatically and without notice terminate, be
forfeited and be and become null and void, and neither the Grantee nor any of his or her
successors, heirs, assigns, or personal representatives will thereafter have any further rights or
interests in such Award Participation.
No amount shall be payable to the Company by the Grantee at any time in respect of this
Agreement. The Grantee shall have no rights with respect to this Agreement (and the Award evidenced
hereby) unless he or she shall have accepted this Agreement by signing and delivering to the
Company a copy of this Agreement. Upon acceptance of this Agreement by the Grantee, the Grantee’s
Award Participation shall constitute and shall be treated for all purposes as the property of the
Grantee, subject to the terms of this Agreement.
Except as otherwise permitted by the Committee, no portion of the Award Participation or Award
LTIP Units granted hereunder shall be sold, assigned, transferred, pledged, hypothecated, given
away or in any other manner disposed of, encumbered, whether voluntarily or by operation of law
(each such action a “Transfer”), provided that vested Award Participation or vested
Award LTIP Units may be Transferred to (i) the Grantee’s Family Members by gift or pursuant to
domestic relations order in settlement of marital property rights or (ii) to an entity in which
fifty percent (50%) or more of the voting interests are owned by Family Members (or the Grantee) in
exchange for an interest in such entity, provided that the transferee agrees in writing
with the Company to be bound by all the terms and conditions of this Agreement and that subsequent
Transfers shall be prohibited except those in accordance with this Section 6. All
Transfers of the Award Participation or any interest therein or Award LTIP Units must be in
compliance with all applicable securities laws (including, without limitation, the Securities Act)
and, in the case of the Award LTIP Units, the LLC Agreement. Any attempted Transfer of an Award
Participation or Award LTIP Unit not in accordance with the terms and conditions of this
Section 6 shall be null and void, and the Company shall not reflect on its records any
change in record ownership of any Award Participation or Award LTIP Units as a result of any such
Transfer, shall otherwise refuse to recognize any such Transfer and shall not in any way give
effect to any such Transfer of any Award Participation or Award LTIP Units. Except as provided
expressly in this Section 6, this Agreement is personal to the Grantee, is non-assignable
and is not transferable in any manner, by operation of law or otherwise, other than by will or the
laws of descent and distribution.
If (i) the Company shall at any time be involved in a merger, consolidation, dissolution,
liquidation, reorganization, exchange of shares, sale of all or substantially all of the assets or
stock of
the Company or other transaction similar thereto, (ii) any stock dividend, stock split,
reverse stock split, stock combination, reclassification, recapitalization, significant repurchases
of stock, or other similar change in the capital stock of the Company shall occur, (iii) any
extraordinary dividend or other distribution to holders of Common Shares shall be declared and paid
other than in the ordinary course, or (iv) any other event shall occur that in each case in the
good faith judgment of the Committee necessitates action by way of appropriate equitable or
proportionate adjustment in the terms of this Award or this Agreement to avoid distortion in the
value of this Award, then the Committee shall take such action as it deems necessary to maintain
the Grantee’s rights hereunder so that they are substantially proportionate to the rights existing
under this Award prior to such event, including, without limitation: (A) interpretations of or
modifications to any defined term in this Agreement; (B) adjustments in any calculations provided
for in this Agreement, and (C) substitution of other awards or otherwise.
(a)
Issuance of Award LTIP Units. In the event that, following the Effective Date,
the Company determines, in its sole discretion, that the applicable stock exchange listing rules
permit the Company to issue Award LTIP Units, the Company shall promptly notify Grantee of such
determination and shall issue to Grantee the number of Award LTIP Units set forth on
Schedule
A hereto. The issuance of such Award LTIP Units shall be conditioned upon the Grantee, unless
the Grantee is already a Non-Managing Member (as defined in the LLC Agreement), signing, as a
Non-Managing Member, and delivering to the Operating Company a counterpart signature page to the
LLC Agreement in the form provided by the Company. Upon execution and delivery of such counterpart
signature page by the Grantee, the LLC Agreement shall be amended, at such time as set forth in the
notice from the Company, to establish the designations of the Award LTIP Units and to make other
necessary and appropriate amendments related to the creation of the series of Award LTIP Units, and
to reflect the issuance to the Grantee of the Award LTIP Units and admission of Grantee as a
Non-Managing Member of the Operating Company. Thereupon, the Grantee shall have all the rights of a
Non-Managing Member of the Operating Company with respect to the number of Award LTIP Units
specified on
Schedule A hereto, as set forth in the LLC Agreement (as so amended), subject,
however, to the restrictions, obligations and conditions specified herein. Award LTIP Units
constitute and shall be treated for all purposes as the property of the Grantee, subject to the
terms of this Agreement and the LLC Agreement.
(b)
Post-Final Valuation Date Adjustments. If Grantee’s Award is made in the form of
Award LTIP Units, then following determination of Grantee’s Participation Amount pursuant to
Section 3(b), the Committee shall divide the resulting dollar amount by the Common Share
Price calculated as of the Final Valuation Date (appropriately adjusted to the extent that the
“Unit Adjustment Factor” (as defined in the LLC Agreement) is greater or less than 1.0). The
resulting number is hereafter referred to as the “
Total OPP Unit Equivalent.” If the Total
OPP Unit Equivalent is smaller than the number of Award LTIP Units previously issued to the
Grantee, then the Grantee, as of the Final Valuation Date, shall forfeit a number of Award LTIP
Units equal to the difference without payment of any consideration by the Operating Company.
Thereafter, the term Award LTIP Units will refer only to the Award LTIP Units that were not so
forfeited and neither the Grantee nor any of his or her successors, heirs, assigns, or personal
representatives will thereafter have any further rights or interests in the Award LTIP Units that
were so forfeited. If the Total OPP Unit Equivalent is greater than the number of Award LTIP Units
previously issued to the Grantee, then, upon the performance of the calculations set forth in this
Section 8(b): (A) the Company shall cause the Operating Company to issue to the Grantee, as
of the Final Valuation Date, a number of additional
Award LTIP Units equal to the difference; (B) such additional Award LTIP Units shall be added to
the Award LTIP Units previously issued, if any, and thereby become part of this Award; (C) the
Company and the Operating Company shall take such corporate and limited liability company action as
is necessary to accomplish the grant of such additional Award LTIP Units; and (D) thereafter the
term Award LTIP Units will refer collectively to the Award LTIP Units, if any, issued prior to such
additional grant plus such additional Award LTIP Units;
provided that such issuance will be
subject to the Grantee executing and delivering such documents, comparable to the documents
executed and delivered in connection with the original issuance of Award LTIP Units, as the Company
or the Operating Company reasonably request in order to comply with all applicable legal
requirements, including, without limitation, federal and state securities laws. If the Total OPP
Unit Equivalent is the same as the number of Award LTIP Units previously issued to the Grantee,
then there will be no change to the number of Award LTIP Units under this Award pursuant to this
Section 8(b).
(c)
Vesting and Forfeiture. The Award LTIP Units shall vest and be subject
to forfeiture on the same terms and conditions as the Award Participation, as set forth in
Sections 3(a),
3(c),
3(d) and
4.
(d)
Distributions. The holder of the Award LTIP Units shall be entitled to receive
distributions with respect to such Award LTIP Units to the extent provided for in the LLC Agreement
(as amended in accordance with
Section 8(a)). The 2011 Award LTIP Unit Distribution
Participation Date (as defined in the designation of rights and preferences of such Award LTIP
Units, attached hereto as
Exhibit A) with respect to Award LTIP Units in an aggregate
number equal to the Total OPP Unit Equivalent will be the Valuation Date.
(a)
Amendments. This Agreement may be amended or modified only with the consent of the
Company acting through the Committee; provided that any such amendment or modification materially
or adversely affecting the rights of the Grantee hereunder must be consented to by the Grantee to
be effective as against him. Notwithstanding the foregoing, this Agreement may be amended in
writing signed only by the Company to correct any errors or ambiguities in this Agreement and/or to
make such changes that do not materially or adversely affect the Grantee’s rights hereunder. This
grant shall in no way affect the Grantee’s participation or benefits under any other plan or
benefit program maintained or provided by the Company.
(b)
Committee Determinations. The Committee will in good faith make the determinations
and certifications required by this Award as promptly as reasonably practicable following the
occurrence of the event or events necessitating such determinations or certifications.
(c)
Status of the Award and Award LTIP Units; Incentive Plan Matters. This Award and
the other 2011 OPP awards constitute other stock-based incentive compensation awards by the Company
under the Incentive Plan and incentive compensation awards by the Operating Company. The Award
LTIP Units are equity interests in the Operating Company. Any Award LTIP Units issued pursuant to
Section 8 may, but need not, be issued as equity securities under the Incentive Plan
insofar as the 2011 OPP has been established as an incentive program of the Operating Company. The
Company may, under certain circumstances, have the right, as set forth in the LLC Agreement, to
issue shares of Common Stock in exchange for Award Common Units into which Award LTIP Units may
have been converted pursuant to the LLC Agreement, subject to certain limitations set forth in the
LLC Agreement, and such shares of Common Stock may be issued under the Incentive Plan if the
Committee so determines, to the extent such issuance is permitted under applicable stock exchange
listing rules, as determined by the Committee in its sole and absolute discretion. The Committee
may, in its sole and absolute discretion, determine whether and when Award LTIP Units issued
pursuant to
Section 3 become part of the Incentive Plan, and upon and to the extent of such
determination this Award will be considered an award under the Incentive Plan. The Grantee
acknowledges that the Grantee will have no right to approve or disapprove such determination by the
Committee.
(i) The Grantee hereby represents and warrants that (A) he or she understands that he or
she is responsible for consulting his or her own tax advisor with respect to the application
of the U.S. federal income tax laws, and the tax laws of any state, local or other taxing
jurisdiction to which the Grantee is or by reason of this Award may become subject, to his or
her particular situation; (B) the Grantee has not received or relied upon business or tax
advice from the Company, the Operating Company or any of their respective employees, agents,
consultants or advisors, in their capacity as such; (C) the Grantee provides services to the
Operating Company on a regular basis and in such capacity has access to such information, and
has such experience of and involvement in the business and operations of the Operating
Company, as the Grantee believes to be necessary and appropriate to make an informed decision
to accept this Award; (D) Award LTIP Units are subject to substantial risks; (E) the Grantee
has been furnished with, and has reviewed and understands, information relating to this
Award; (F) the Grantee has been afforded the opportunity to obtain such additional
information as he or she deemed necessary before accepting this Award; and (G) the Grantee
has had an opportunity to ask questions of representatives of the Operating Company and the
Company, or persons acting on their behalf, concerning this Award.
(ii) The Grantee hereby acknowledges that: (A) there is no public market for Award LTIP
Units or Award Common Units and neither the Operating Company nor the Company has any
obligation or intention to create such a market; (B) sales of Award LTIP Units and Award
Common Units are subject to restrictions under the Securities Act and applicable state
securities laws; (C) because of the restrictions on transfer or assignment of Award LTIP
Units and Award Common Units set forth in the LLC Agreement and in this Agreement, the
Grantee may have to bear the economic risk of his or her ownership of the LTIP Units covered
by this Award for an indefinite period of time; (D) shares of Common Stock issued under the
Incentive Plan in exchange for Award Common Units, if any, will be covered by a Registration
Statement on Form S-8 (or a successor form under applicable rules and regulations of the
Securities and Exchange Commission) under the Securities Act, to the extent that the Grantee
is eligible to receive such shares under the Incentive Plan at the time of such issuance and
such Registration Statement is then effective under the Securities Act; (E) resales of
shares of Common Stock issued under the Incentive Plan in exchange for Award Common Units,
if any, shall only be made in compliance with all applicable restrictions (including in
certain cases “blackout periods” forbidding sales of Company securities) set forth in the
then applicable Company employee manual or xxxxxxx xxxxxxx policy and in compliance with the
registration requirements of the Securities Act or pursuant to an applicable exemption
therefrom.
(e)
Section 83(b) Election. In connection with each separate issuance of Award LTIP
Units under this Award pursuant to
Section 8, the Grantee hereby agrees to make an election
to include in gross income in the year of transfer the applicable Award LTIP Units pursuant to
Section 83(b) of the Code substantially in the form attached hereto as
Exhibit B and to
supply the necessary information in accordance with the regulations promulgated thereunder. The
Grantee agrees to file such election (or to
permit the Operating Company to file such election on the Grantee’s behalf) within thirty (30) days
after the issuance of the Award LTIP Units with the IRS Service Center where the Grantee files his
or her personal income tax returns, and to file a copy of such election with the Grantee’s U.S.
federal income tax return for the taxable year in which the Award LTIP Units are awarded to the
Grantee. So long as the Grantee holds any Award LTIP Units, the Grantee shall disclose to the
Operating Company in writing such information as may be reasonably requested with respect to
ownership of Award LTIP Units as the Operating Company may deem reasonably necessary to ascertain
and to establish compliance with provisions of the Code applicable to the Operating Company or to
comply with requirements of any other appropriate taxing authority.
(f)
Severability. If, for any reason, any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not so held invalid, and
each such other provision shall to the full extent consistent with law continue in full force and
effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in
no way affect the rest of such provision not held so invalid, and the rest of such provision,
together with all other provisions of this Agreement, shall to the full extent consistent with law
continue in full force and effect.
(g)
Governing Law. This Agreement is made under, and will be construed in accordance
with, the laws of State of
New York, without giving effect to the principles of conflict of laws of
such State.
(h)
No Obligation to Continue Position as an Employee. Neither the Company nor any
Affiliate is obligated by or as a result of this Agreement to continue to have the Grantee as an
employee, consultant or advisor and this Agreement shall not interfere in any way with the right of
the Company or any Affiliate to terminate the Grantee’s Continuous Service at any time.
(i)
Notices. Any notice to be given to the Company shall be addressed to the Secretary
of the Company at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and any notice to be given the Grantee
shall be addressed to the Grantee at the Grantee’s address as it appears on the employment records
of the Company, or at such other address as the Company or the Grantee may hereafter designate in
writing to the other.
(j)
Withholding and Taxes. No later than the date as of which an amount first becomes
includible in the gross income of the Grantee for income tax purposes or subject to the Federal
Insurance Contributions Act withholding with respect to this Award, the Grantee will pay to the
Company or, if appropriate, any of its Affiliates, or make arrangements satisfactory to the
Committee regarding the payment of, any United States federal, state or local or foreign taxes of
any kind required by law to be withheld with respect to such amount. The obligations of the Company
under this Agreement will be conditional on such payment or arrangements, and the Company and its
Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Grantee.
(k)
Headings. The headings of paragraphs hereof are included solely for convenience of
reference and shall not control the meaning or interpretation of any of the provisions of this
Agreement.
(l)
Counterparts. This Agreement may be executed in multiple counterparts with the
same effect as if each of the signing parties had signed the same document. All counterparts shall
be construed together and constitute the same instrument.
(m)
Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and any successors to the Company and the Operating Company, on the
one hand, and any successors to the Grantee, on the other hand, by will or the laws of descent and
distribution, but this Agreement shall not otherwise be assignable or otherwise subject to
hypothecation by the Grantee.
(n)
Section 409A. This Agreement shall be construed, administered and interpreted in
accordance with a good faith interpretation of Section 409A of the Code. Any provision of this
Agreement that is inconsistent with Section 409A of the Code, or that may result in penalties under
Section 409A of the Code, shall be amended, with the reasonable cooperation of the Grantee, the
Company and the Operating Company, to the extent necessary to exempt it from, or bring it into
compliance with Section 409A of the Code.
(o)
Entire Agreement; Conflict. This Agreement (including the Incentive Plan and the
LLC Agreement to which it relates) constitutes the final, complete and exclusive agreement between
the Grantee and the Company with respect to the subject matter hereof and replaces and supersedes
any and all other agreements, offers or promises, whether oral or written, between the parties
concerning the subject matter hereof. Except as expressly provided otherwise herein, in the event
of any conflict or inconsistency between the provisions of, or definitions contained in, this
Agreement (including the LLC Agreement to which it relates), on the one hand, and Grantee’s Service
Agreement, on the other hand, the terms of the this Agreement ((including the LLC Agreement to
which it relates) shall govern.
[signature page follows]
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MORGANS HOTEL GROUP CO.
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By: |
/s/ Xxxxx Xxxxx
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Name: |
Xxxxx Xxxxx |
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Title: |
Executive Vice President and General Counsel |
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MORGANS GROUP LLC
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By: |
/s/ Xxxxx Xxxxx
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Name: |
Xxxxx Xxxxx |
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Title: |
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SCHEDULE A TO 2011 OUTPERFORMANCE PLAN AWARD AGREEMENT
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Date of Award Agreement: |
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March 23, 2011 |
Name of Grantee: |
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Xxxx Xxxx |
Participation Percentage: |
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10% |
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Grant Date: |
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March 23, 2011 |
Initial Grant of Award LTIP Units (if applicable) |
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157,500 |
Initials of Company representative: /s/DS Initials of Grantee: /s/YG
EXHIBIT A
MORGANS GROUP LLC
MEMBERSHIP UNIT DESIGNATION — 2011 OPP UNITS
The following are the terms of the 2011 OPP Units. Section references in this Exhibit
A refer to sections of the LLC Agreement and capitalized terms are used as defined therein,
unless stated otherwise.
1.
LTIP Equivalence. Except as otherwise expressly provided in this Membership Unit
Designation, 2011 OPP Units shall be treated as LTIP Units, and shall have the rights,
privileges, restrictions, powers and duties applicable to LTIP Units under the LLC Agreement,
including without limitation the provisions of
Section 4.5.
(a)
2011 OPP Unit Distributions. Commencing from the Distribution
Participation Date (as defined below) established for any 2011 OPP Units in the applicable
award agreement, Holders of 2011 OPP Units shall be entitled to receive, if, when and as
authorized by the Managing Member, any distributions otherwise payable with respect to LTIP
Units and shall be treated as outstanding LTIP Units for purposes of the distribution
provisions of the LLC Agreement. For the avoidance of doubt, for purposes of the first
distribution to occur after the Distribution Participation Date, 2011 OPP Units that become
fully earned and vested in accordance with the applicable Award Agreement on or before the
first day of the relevant quarterly period shall be treated as having been outstanding for
the full period. Prior to the Distribution Participation Date, 2011 OPP Units shall be
entitled to any distributions by the Operating Company (i) in connection with an Adjustment
Event as provided in
Section 4.5(b), treating the 2011 OPP Units as outstanding LTIP
Units, and (ii) if, when and as authorized by the Managing Member out of funds or other
property legally available for the payment of distributions, distributions representing
proceeds of a sale or other disposition of all or substantially all of the assets of the
Operating Company in an amount per unit equal to the amount of any such distributions
payable on the Membership Units, provided that the amount of distributions to any Holder of
2011 OPP Units under this clause (ii) shall not exceed the positive balances of the Capital
Account of the Holder of such 2011 OPP Units to the extent attributable to the ownership of
such 2011 OPP Units.
(b)
Distribution Participation Date. The “
Distribution Participation
Date” for each 2011 OPP Unit will be either (i) with respect to 2011 OPP Units granted
pursuant to the Managing Member’s 2011 Outperformance Plan, as it may be amended or
supplemented from time to time or any successor plan under which additional 2011 OPP Units
may be issued (the “
Plan”), the applicable Final Valuation Date (as defined in the
Award Agreement of each Person granted 2011 OPP Units under the Plan) or (ii) with respect
to other 2011 OPP Units, such date as may be specified in the Award Agreement or other
documentation pursuant to which such 2011 OPP Units are issued.
(a)
Allocations of Net Income and Net Loss. Commencing with the portion of the
taxable year of the Operating Company that begins on the Distribution Participation Date
established for any 2011 OPP Units, such 2011 OPP Units shall be allocated Net Income and
Net Loss under
Sections 6.1 and
6.2 in amounts per 2011 OPP Unit equal to
the amounts allocated per Membership Unit (adjusted to the extent required by
Sections
6.3(b) through
6.3(g)). The Managing Member is authorized in its discretion to
delay or accelerate the participation of the 2011 OPP Units in allocations of Net Income and
Net Loss, or to adjust the allocations made after the Distribution Participation Date, so
that the ratio of (i) the total amount of Net Income or Net Loss allocated under
Sections 6.1 and
6.2 with respect to each 2011 OPP Unit in the taxable year
in which that 2011 OPP Unit’s Distribution Participation Date falls, to (ii) the total
amount distributed to that 2011 OPP Unit with respect to such period, is more nearly equal
to such ratio as computed for the Membership Units held by the Managing Member.
(b)
Special Allocations. 2011 OPP Units shall be treated as outstanding LTIP
Units (and the Holders thereof treated as Holders of LTIP Units) for all purposes of
Section 6.3(a).
(a) The Redemption Right provided to Non-Managing Members under Section 4.2(e)(1)
shall not apply with respect to 2011 OPP Units or Membership Units into which they may
be converted pursuant to the LLC Agreement until the date that is one year and six months
after the Final Valuation Date, after which date the Redemption Right shall be available on
the terms and conditions set forth in the LLC Agreement.
(b) During the period beginning on the Final Valuation Date (as defined in the
applicable Award Agreement) and ending on the Business Day immediately preceding the six
month anniversary of the Final Valuation Date, the Operating Company shall be entitled to
redeem some or all of the 2011 OPP Units (or Membership Units into which they were converted
by the Holder) at a redemption price per 2011 OPP Unit or Membership Unit, payable in cash,
equal to the Common Share Price (as defined in the Applicable Award Agreement) as of the
Final Valuation Date (as defined in the applicable Award Agreement). From and after the one
year anniversary of the Final Valuation Date, for a period of six months, a Holder of 2011
OPP Units (or Membership Units into which they were converted by the Holder) shall have the
right to cause the Operating Company to redeem, some or all of the 2011 OPP Units (or
Membership Units into which they were converted by the Holder), at a redemption price per
2011 OPP Unit or Membership Unit, payable in cash, equal to the greater of (x) the Common
Share Price (as defined in the Applicable Award Agreement) as of the Final Valuation Date
(as defined in the applicable Award Agreement) and (y) the Cash Amount determined as of the
date of the notice of redemption. The Operating Company may exercise its redemption right
under this Section 4(b) by sending a notice to each Holder of 2011 OPP Units (or
Membership Units into which they were converted by the Holder) setting forth the redemption
date, which shall be no less than five (5) Business Days after the date of such notice, and
the number of 2011 OPP Units (or Membership Units into which they were converted by the
Holder) being redeemed and the procedure to be followed by Holders of 2011 OPP Units or
Membership Units that are being redeemed. The Holder may exercise its
redemption right under this Section 4(b) by sending a notice to the Operating
Company setting forth the redemption date, which shall be no less than ten (10) Business
Days after receipt of such notice by the Managing Member, and the number of 2011 OPP Units
(or Membership Units into which they were converted by the Holder to be redeemed). The
Managing Member shall be entitled to acquire 2011 OPP Units (or Membership Units into which
they were converted by the Holder) pursuant to any exercise by the Operating Company or the
Holder of the foregoing redemption rights (under this Section 4.2(b) or under
Section 4.2(a)) in exchange for issuance of a number of Common Shares, which will be
issued under the Incentive Plan and be registered on a Form S-8, with an aggregate value,
based on the Value of the Common Shares as of the date of the redemption notice, equal to
the applicable redemption price, provided that the Managing Member has determined, in its
sole discretion, that it is permitted to do so under applicable stock exchange listing
rules.
(a)
Voting with LTIP Units. Except as otherwise provided herein, 2011 OPP Units
and Non-Managing Members who hold 2011 OPP Units shall be treated as LTIP Units and LTIP
Unitholders, respectively, for all purposes of
Section 14.3.
(b)
Special Approval Rights. So long as any 2011 OPP Units remain outstanding,
the Operating Company shall not, without the affirmative vote of the Non-Managing Members
who hold at least two-thirds of the 2011 OPP Units outstanding at the time, given in person
or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter
or repeal, whether by merger, consolidation or otherwise, the provisions of the LLC
Agreement applicable to 2011 OPP Units so as to materially and adversely affect any right,
privilege or voting power of the 2011 OPP Units or the Non-Managing Members who hold 2011
OPP Units as such, unless such amendment, alteration or repeal affects equally, ratably and
proportionately the rights, privileges and powers of the holders of LTIP Units; but subject,
in any case, to the following provisions:
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(i) |
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Any difference in effect between the LTIP Units and the 2011 OPP Units
that is required or reasonably desirable to implement the difference in the
distribution or redemption rights with respect to LTIP Units and 2011 OPP Units
shall not be deemed to have an effect that is not equal, ratable or proportionate to
the effect on the holders of LTIP Units; |
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(ii) |
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Any creation or issuance of any Membership Units or of any class or
series of Membership Interest, whether ranking senior to, junior to, or on a parity
with the 2011 OPP Units with respect to distributions and the distribution of assets
upon liquidation, dissolution or winding up shall not be deemed to have an effect
that is not equal, ratable or proportionate to the effect on the holders of LTIP
Units; and |
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any waiver by the Operating Company of restrictions or limitations
applicable to any outstanding LTIP Units or 2011 OPP Units with respect to any LTIP
Unitholder or Unitholders or Holders of 2011 OPP Unit shall not be deemed to
materially and adversely alter, change, modify or amend the rights, powers or
privileges of the LTIP Units or 2011 OPP Units with respect to other Unitholders or
Holders. |
EXHIBIT B
ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF
TRANSFER OF PROPERTY PURSUANT TO SECTION 83(B)
OF THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the Internal
Revenue Code with respect to the property described below and supplies the following
information in accordance with the regulations promulgated thereunder:
1. The name, address and taxpayer identification number of the undersigned are:
Name: (the “Taxpayer”)
Address:
Social Security No./Taxpayer Identification No.:
2. Description of property with respect to which the election is being made:
The election is being made with respect to
_____
Award LTIP Units in Morgans
Group LLC (the “Operating Company”).
3. The date on which the Award LTIP Units were transferred is
_______ _____, 2011. The taxable
year to which this election relates is calendar year 2011.
4. Nature of restrictions to which the Award LTIP Units are subject:
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With limited exceptions, until the Award LTIP Units vest, the
Taxpayer may not transfer in any manner any portion of the Award LTIP Units
without the consent of the Operating Company. |
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(b) |
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The Taxpayer’s Award LTIP Units vest in accordance with the
vesting provisions described in Annex 1 attached hereto. Unvested Award
LTIP Units are forfeited in accordance with the vesting provisions described in
Annex 1 attached hereto. |
5. The fair market value at time of transfer (determined without regard to any restrictions
other than restrictions which by their terms will never lapse) of the Award LTIP Units with respect
to which this election is being made was $________ per Award LTIP Unit.
6. The amount paid by the Taxpayer for the Award LTIP Units was $0 per Award LTIP Unit.
ANNEX 1
The Award LTIP Units are subject to time-based and performance-based vesting with the final
vesting percentage equaling the product of the time-based vesting percentage and the
performance-based vesting percentage. Performance-based vesting will be from 0% to 100% based on
Xxxxxx Hotel Group Co.’s (the “Company’s”) per-share total return to shareholders for the
period from [_____], 2011 to [_____], 2014 (or earlier in certain circumstances). Under the
time-based vesting provisions, one hundred percent (100%) of the Award LTIP Units will vest on the
last day of the performance period, provided that the Taxpayer remains an employee of the Company
or any of its affiliates through such date, subject to acceleration in the event of certain
extraordinary transactions or termination of the Taxpayer’s service relationship with the Company
under specified circumstances. Unvested Award LTIP Units are subject to forfeiture in the event of
failure to vest based on the passage of time (subject to above-mentioned acceleration) or the
determination of the performance-based percentage.
Exhibit C
Promoted Interest Pool Award Agreement
2011 EXECUTIVE PROMOTED INTEREST BONUS POOL AWARD AGREEMENT made as of the date set forth on
Schedule A hereto by and among
MORGANS HOTEL GROUP CO., a Delaware corporation (the
“
Company”), MORGANS GROUP LLC, a Delaware limited liability company (the “
Operating
Company”), and the party listed on Schedule A (the “
Grantee”).
A. The Grantee is a senior management employee of the Company and provides services to the
Operating Company.
B. The Compensation Committee (the “Committee”) of the Board of Directors of the
Company (the “Board”) approved this and other 2011 long-term bonus pool awards (“2011
Bonus Pool Awards”) to provide certain senior management employees of the Company, including
the Grantee, in connection with their employment with the incentive compensation described in this
Award Agreement (this “Agreement” or this “Award Agreement”) and thereby provide
additional incentive for them to promote the progress and success of the business of the Company
and its Affiliates. 2011 Bonus Pool Awards were approved by the Committee pursuant to authority
delegated to it by the Board. This Agreement evidences one award (this “Award”) in a series
of substantially identical 2011 Bonus Pool Awards and is subject to the terms and conditions set
forth herein.
C. The Committee, effective as of the grant date specified in Schedule A hereto,
awarded to the Grantee the participation percentage in the promoted interest bonus pool provided
herein, as set forth in Schedule A.
NOW, THEREFORE, the Company, the Operating Company, and the Grantee agree as follows:
1. Administration
This Award and all other 2011 Bonus Pool Awards shall be administered by the Committee;
provided that all powers of the Committee hereunder can be exercised by the full Board if
the Board so elects. The Committee, in its sole and absolute discretion, may make at any time any
provision for lapse of forfeiture restrictions and/or accelerated vesting under this Agreement of
some or all of the Grantee’s unvested Award Participation that has not previously been forfeited.
2. Definitions
Capitalized terms used herein shall have the meanings set forth below:
“Affiliate” means, with respect to the Company, any company or other trade or
business that controls, is controlled by or is under common control with the Company within
the meaning of Rule 405 of Regulation C under the Securities Act, including, without
limitation, any Subsidiary.
“Award Participation” has the meaning set forth in Section 3.
“Award Period” means the period from and after the date of Grantee’s admission as an
Employee Member and to and including the earlier to occur of (i) the third anniversary of the
Effective Date and (ii) the termination of Grantee’s Continuing Service.
“Baseline Value” means $8.87.
“Bonus Pool Unit” means a unit of membership interest in Promote Pool LLC. The
Bonus Pool Units shall be issued in different series, with each series corresponding to a
separate Eligible Promoted Interest held by Promote Pool LLC or a wholly-owned subsidiary
thereof.
“Cause” means: (A) if the Grantee is or was a party to a Service Agreement prior
to such termination, and “Cause” is defined therein, then “Cause” shall have the meaning set
forth in such definition, or (B) if the Grantee is not and was not party to a Service
Agreement prior to such termination or the Grantee’s Service Agreement does not define “Cause”
or a substantially equivalent term, then “Cause” shall mean:
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the Grantee’s willful and continued failure to substantially perform his duties
with the Company (other than any such failure resulting from the Grantee’s incapacity
due to physical or mental illness or any such failure after his issuance of a notice of
termination for Good Reason), after a written demand for substantial performance is
delivered to the Grantee by the Board, which demand specifically identifies the manner
in which the Board believes that the Grantee has not substantially performed his
duties; |
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(ii) |
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a material breach by Grantee of his Service Agreement; |
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(iii) |
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the Grantee’s willful commission of an act of fraud, theft or dishonesty
resulting in economic, financial or material reputational injury to the Company; |
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(iv) |
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the Grantee’s conviction of, or entry by the Grantee of a guilty or no contest
plea to, the commission of a felony; or |
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the Grantee willfully engages in other misconduct materially injurious to the
Company. |
For purposes of this provision, no act or omission on the part of the Grantee shall be
considered “willful” unless it is done or omitted in bad faith or without reasonable belief that
the act or omission was in the best interests of the Company. Any act or omission based upon a
resolution duly adopted by the Board or advice of counsel for the Company shall be conclusively
presumed to have been done or omitted in good faith and in the best interests of the Company. The
cessation of employment of the Grantee shall not be deemed to be for Cause unless and until there
shall have been delivered to the Grantee a copy of a resolution duly adopted by the majority of the
Board (excluding the Grantee, if the Grantee is then a member of the Board) at a meeting of the
Board called and held for such purpose (after reasonable notice is provided to the Grantee and the
Grantee is given an opportunity, together with counsel, to be heard before the Board) finding that,
in the good faith opinion of the Board, the Grantee is guilty of the conduct giving rise to Cause
for termination, and specifying the particulars thereof in detail.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Share” means a share of the Company’s common stock, par value $0.01 per share.
“Common Share Price” means, as of a particular date, the average of the Fair Market
Value of one Common Share over the thirty (30) consecutive trading days ending on, and including,
such date (or, if such date is not a trading day, the most recent trading day immediately preceding
such date).
“Common Share Return Condition” shall be deemed to be satisfied as of any date of
determination if the Common Share Price, as of such date, shall be at least equal to (x) the
Baseline Value multiplied by (y) an amount equal to (i) the sum of one plus the Target
Return raised to (ii) the n/365th power, where “n” equals the number of days that has
elapsed from and including the Effective Date to but excluding the date of determination.
“Continuous Service” means the continuous service, without interruption or
termination, as a an employee or director of Company or an Affiliate. Continuous Service shall
not be considered interrupted in the case of (among other things)—
(A) any approved leave of absence,
(B) transfers among the Company and any Affiliate, or any successor, in any capacity of
director or employee, or
(C) any change in status as long as the individual remains in the service of the Company or
any Affiliate of the Company in the capacity of employee or director.
An approved leave of absence shall include sick leave, military leave, or any other authorized
personal leave.
“Designated Participation Percentage” means, with respect to any series of Employee
Units, the lesser of 50% or the percentage determined by the Independent Committee at the time it
approves the contribution of the applicable Eligible Promoted Interest in Promote Pool LLC, if such
Eligible Promoted Interest did not satisfy the Safe Harbor Requirements as of the applicable
Initial Closing.
“Disability” means:
(A) if the Grantee is or was a party to a Service Agreement prior to the applicable event, and
“Disability” is defined therein, then “Disability” shall have the meaning set forth in such
definition, or
(B) if the Grantee is not and was not a party to a Service Agreement prior to such event or
the Grantee’s Service Agreement does not define “Disability” or a substantially equivalent term,
then “Disability” shall mean a disability which renders the Grantee incapable of performing all of
his or her material duties for 180 business days during any consecutive twelve month period as a
result of incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company and acceptable to the Grantee or the Grantee’s
legal representative or by the insurance company which insures the Company’s long-term disability
plan in which the Grantee is eligible to participate.
“Effective Date” means March 20, 2011.
“Eligible Promoted Interest” means a Promoted Interest that the Company or any entity
through which the Company directly or indirectly acquires or has the right to acquire, or is
created, in a transaction as to which the Initial Closing occurs during the Award Period and that
satisfies either of the following requirements as of the Initial Closing:
(i) The Investment Committee (with the affirmative vote of its independent member)
shall have determined in good faith that the applicable Promoted Interest satisfies the Safe
Harbor Requirements; or
(ii) The terms of the hotel acquisition or development transaction, including the
contribution of the applicable Promoted Interest to Promote Pool LLC, shall have been
approved in good faith by the Independent Committee.
The determination as to whether a Promoted Interest that does not satisfy the Safe Harbor
Requirements shall be deemed to be an Eligible Promoted Interest, and the Designated Participation
Percentage with respect to such Eligible Promoted Interest, shall be made in good faith by the
Independent Committee and shall be conclusive.
In the case of an Eligible Promoted Interest that the Company, the Operating Company, Promote
Pool LLC, or a wholly owned subsidiary of the Company acquires or has the right to acquire, the
Eligible Promoted Interest will consist of the entire applicable Promoted Interest. In the case of
an Eligible Promoted Interest that any other entity in which the Company or the Operating Company
has a direct or indirect equity interest acquires, or has the right to acquire, the “Eligible
Promoted Interest” will, at the election of the Managing Member, consist of either (x) an
assignment of the proceeds received by the Company, the Operating Company, or a wholly owned
subsidiary of the Company with respect to the applicable Promoted Interest, or (y) a special
allocation of the portion of such direct or indirect interest in the Eligible Promoted Interest
that is owned by the Company, the Operating Company, or a wholly owned subsidiary that represents
their respective direct or indirect interest in the Promoted Interest owned by such other entity.
An Eligible Promoted Interest can consist of either an equity interest in a Hotel Investment
Entity or a contractual right to share in some or all of the profits, losses, or gains of a Hotel
Investment Entity (a “Contractual Right”) or one or more hotel properties owned by a Hotel
Investment Entity.
For the avoidance of doubt, an incentive management fee or other amount measured by a
percentage of gross revenues, gross operating profit, net house profit, or similar performance
measure and payable to the Company, or any entity through which the Company, directly or
indirectly, holds an equity interest or a Contractual Right, as compensation for the performance of
management services shall not be an Eligible Promoted Interest.
For the further avoidance of doubt, no Promoted Interest as to which the Initial Closing
occurs after the Award Period shall be deemed to be an “Eligible Promoted Interest.”
“Employee Member” means a member of Promote Pool LLC other than the Managing Member or
any other subsidiary of the Company.
“Employee Unit” means any Bonus Pool Unit that is held by an Employee Member or a
permitted transferee thereof (other than Managing Member or any other subsidiary of the Company).
“
Fair Market Value” means, as of any given date, the fair market value of a security,
an Eligible Promoted Interest, or other property determined by the Committee using any reasonable
method and in good faith (such determination will be made in a manner that satisfies Section 409A
of the Code and in good-faith as required by Section 422(c)(1) of the Code);
provided that,
with respect to a Common Share, “Fair Market Value” means the value of such Common Share determined
as follows: (A) if on the determination date the Common Shares are listed on the
New York Stock
Exchange, The NASDAQ Stock Market, Inc. or another national securities exchange or is publicly
traded on an established securities market, the Fair Market Value of a Common Share shall be the
closing price of the Common Shares on such exchange or in such market (if there is more than one
such exchange or market, the Committee shall determine the appropriate exchange or market) on the
determination date (or if there is no such reported closing price, the Fair Market Value shall be
the mean between the high and low sale prices on such trading day) or, if no sale of Common Shares
is reported for such trading day, on the next preceding day on which any sale shall have been
reported; or (B) if the Common Shares are not listed on such an exchange, quoted on such system or
traded on such a market, Fair Market Value of the Common Share shall be the value of the Common
Shares as determined by the Committee in good faith in a manner consistent with Section 409A of the
Code.
“Good Reason” means: (A) if the Grantee is or was a party to a Service
Agreement prior to such termination, and “Good Reason” is defined therein, then “Good
Reason” shall have the meaning set forth in such Service Agreement, or (B) if the Grantee
is not and was not party to a Service Agreement prior to such termination or the Grantee’s
Service Agreement does not define “Good Reason” or a substantially equivalent term, so long
as the Grantee terminates his or her employment within thirty (30) days after the Grantee
has actual knowledge of the occurrence, without the written consent of the Grantee, of one
of the following events that has not been cured within thirty (30) days after written
notice thereof has been given by Grantee to the Company, then “Good Reason” shall mean:
(iii) the assignment to the Grantee of duties materially inconsistent with the
Grantee’s title, position, status, reporting relationships, authority, duties or
responsibilities as contemplated in his Service Agreement, or any other action by the
Company which results in a material diminution in the Grantee’s title, position, status,
reporting relationships, authority, duties or responsibilities, other than insubstantial or
inadvertent actions not taken in bad faith which are remedied by the Company within fifteen
(15) business days after receipt of notice thereof given by the Grantee;
(iv) any material failure by the Company to comply with any of the provisions of the
Service Agreement, other than insubstantial or inadvertent failures not in bad faith which
are remedied by the Company promptly after receipt of notice thereof given by the Grantee;
(v) any failure by the Company to obtain the assumption of his Service Agreement by a
successor to all or substantially all of the business or assets of the Company; or
(vi) if his Service Agreement provides that the Executive will be nominated for
election as a director of the Company, any failure by the Board to nominate the Executive
for election as a director of the Company in accordance with the Service Agreement, or any
failure of the Executive to be elected to be a member of the Board; or
(vii) any requirement that the Grantee’s principal place of employment be at a location
more than 50 miles from his principal place of employment on the date of this Agreement,
resulting in a material increase in distance from the Grantee’s residence to his new place
of employment;
“Hotel Investment Entity” means a limited liability company, limited partnership,
corporation, or other form of business entity that owns, directly or indirectly, or proposes to
acquire or develop, one
or more hotels or other hospitality-related properties. Neither the Company nor any
consolidated subsidiary of the Company shall be deemed to be a Hotel Investment Entity.
“Independent Committee” means a committee (either standing or ad hoc) of the Board
that has the responsibility and authority for determining whether a Promoted Interest that does not
satisfy the Safe Harbor Requirements will nonetheless be contributed to Promote Pool LLC and, if
so, what the Designated Participation Percentage with respect to such Promoted Interest will be.
“Initial Closing” means, with respect to any Eligible Promoted Interest, the date of
the closing of the transaction as the result of which the Company, a consolidated subsidiary
thereof, Promote Pool LLC, or any entity through which such Eligible Promoted Interest is held, and
one or more unaffiliated persons become equity owners of the Hotel Investment Entity (or obtains a
Contractual Right) related to such Eligible Promoted Interest. The independent member of the
Investment Committee shall determine, in good faith, when the Initial Closing occurs with respect
to any Eligible Promoted Interest.
“Investment Committee” means a management committee, established by the Board that
includes at least one independent director that is delegated authority, among other things, to
approve the terms of investments in Hotel Investment Entities and determine whether Promoted
Interests in Hotel Investment Entities satisfy the Safe Harbor Requirements.
“LLC Agreement” means the limited liability company agreement of Promote Pool LLC, as
it may be amended from time to time in accordance with its terms, that the Managing Member will
enter in accordance with Section 7(a). The LLC Agreement will contain the provisions set
forth on Exhibit A attached hereto and such other terms and conditions as the Committee
shall in good faith determine are necessary or appropriate for implementing the provisions and
accomplishing the objectives of this Award Agreement and the Award Agreements of other recipients
of 2011 Bonus Pool Awards.
“Managing Member” means the Operating Company, or a wholly-owned subsidiary thereof,
in its capacity as managing member of Promote Pool LLC.
“Member” means a member of Promote Pool LLC, which shall be either the Managing Member
or an Employee Member.
“Opening” means, with respect to any Eligible Promoted Interest, the date on or after
the Initial Closing on which all construction, development, and major renovation work is completed
and substantially all of the rooms and other facilities in the applicable hotel are open for
business. If the applicable hotel is operating as of the Initial Closing and the business plan
relating to the hotel does not contemplate a substantial renovation or redevelopment of the hotel
that will result in material disruption of the operations of the hotel for an extended period, the
Opening shall be deemed to occur at the same time as the Initial Closing. If the business plan for
such hotel contemplates such renovation or redevelopment, the Opening shall be deemed to occur
following the completion of such renovation or redevelopment and substantially all of the rooms and
other facilities in the applicable hotel are open for business. With respect to an Eligible
Promoted Interest in a Hotel Investment Entity that owns direct or indirect interests in more than
one hotel property, an Opening shall be deemed to occur with respect to any such hotel property
when such hotel property meets the foregoing requirements. The independent member of the
Investment Committee shall in good faith determine when an Opening occurs with respect to any
Eligible Promoted Interest.
“Partial Sale Event” means, with respect to any Eligible Promoted Interest, the date
on which (x) the applicable Hotel Investment Entity’s direct or indirect ownership interest in the
applicable hotel property is reduced by reason of a disposition of an interest in such property to
a third party; or (y) Promote Pool LLC’s direct or indirect ownership interest in such Eligible
Promoted Interest is reduced by reason of a disposition of an interest in such Eligible Promoted
Interest to a third party. With respect to an Eligible Promoted Interest in a Hotel Investment
Entity that owns direct or indirect interests in more than one hotel property, a Partial Sale Event
described in clause (x) above with respect to any such hotel property shall be deemed to occur when
the Hotel Investment Entity’s direct or indirect ownership interest in such hotel property is
reduced. The independent member of the Investment Committee shall in good faith determine when a
Partial Sales Event occurs with respect to any Eligible Promoted Interest.
“Participation Amount” has the meaning set forth in Section 3.
“Participation Percentage” means, as of any date of determination, the
percentage set forth opposite such term on Schedule A hereto.
“Person” means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization, other entity or
“group” (as defined in the Exchange Act).
“Promoted Interest” means an interest in a Hotel Investment Entity, or other
Contractual Right, that represents a right to participate in profits, losses, and gains of the
Hotel Investment Entity in excess of amounts attributable to the percentage of capital
contributions made by the Company and its subsidiaries in the Hotel Investment Entity. For the
avoidance of doubt, an incentive management fee or other amount measured by a percentage of gross
revenues, gross operating profit, net house profit, or similar performance measure and payable to
the Company or any entity holding such Interests as compensation for the performance of management
services shall not be a Promoted Interest .
“Promoted Interest Proceeds” means, with respect to any Eligible Promoted
Interest, the amount of any cash (or cash equivalent) distributions or dividends received
by Promote Pool LLC with respect to such Eligible Promoted Interest or, if Promote Pool LLC
receives any other property in exchange for or as a distribution with respect to an
Eligible Promoted Interest, any cash (or cash equivalents) received as a distribution or
dividend with respect to or upon the sale or disposition of such other property. In the
case of the removal by the Company of the designation of an Eligible Promoted Interest as
part of the Promoted Interest Bonus Pool, such removal shall be treated as a disposition of
the Eligible Promoted Interest for an amount of cash equal to its Fair Market Value and an
amount equal to such Fair Market Value shall be deemed to be Promoted Interest Proceeds
hereunder.
“Promote Pool LLC” means MHG Employee Promoted Interest LLC, a to-be-formed
Delaware limited liability company, or its successor.
“Qualified Management Agreement” means a hotel management agreement under
which the Company or a consolidated subsidiary of the Company is the manager that contains
terms that satisfy the requirements set forth in that certain letter delivered by the
Company to Grantee concurrently with the execution of this Award, as determined by the
Investment Committee in good faith.
“Qualified Termination” has the meaning set forth in Section 4.
“Safe Harbor Requirements” means, with respect to any Eligible Promoted Interest, the
following requirements:
(i) The Company or one of its consolidated subsidiaries is manager of the hotel
properties owned, directly or indirectly, by the Hotel Investment Entity pursuant to a
Qualified Management Agreement;
(ii) The percentage interest acquired by the Company or any of its consolidated
subsidiaries in the applicable Hotel Investment Entity does not exceed twenty percent (20%),
without taking into account the applicable Promoted Interest;
(iii) The value of the aggregate capital contribution or capital commitment of the
Company and its consolidated subsidiaries does not exceed $20 million; and
(iv) The equity investment by the Company and its consolidated subsidiaries must be on
no less favorable terms, in any material respect, than the equity investment to the other
investors in the Hotel Investment Entity (without taking into account the applicable
Promoted Interest) or, if the equity investment by the other investors was made more than
one year before the Initial Closing with respect to such Eligible Promoted Interest is
anticipated to occur, the equity investment by the Company and its consolidated subsidiaries
must be made based on the Fair Market Value of the interests acquired in the Hotel
Investment Entity.
The determination by the Investment Committee as to whether a Promoted Interest satisfies the Safe
Harbor Requirements shall be made in good faith and shall be conclusive.
“Sale Event” means, with respect to any Eligible Promoted Interest, the earlier of the
date on which (x) the applicable Hotel Investment Entity no longer holds a direct or indirect
ownership interest in the applicable hotel property or (ii) Promote Pool LLC no longer holds,
directly or indirectly, such Eligible Promoted Interest. With respect to an Eligible Promoted
Interest in a Hotel Investment Entity that owns direct or indirect interests in more than one hotel
property, a Sale Event described in clause (x) above with respect to any such hotel property shall
be deemed to occur when the Hotel Investment Entity no longer owns a direct or indirect ownership
interest in such hotel property. The independent member of the Investment Committee shall in good
faith determine when a Sales Event occurs with respect to any Eligible Promoted Interest.
“Securities Act” means the Securities Act of 1933, as amended.
“Service Agreement” means, as of a particular date, any employment, consulting
or similar service agreement then in effect between the Grantee, on the one hand, and the
Company or one of its Affiliates, on the other hand, as amended or supplemented through
such date; provided that, if no such agreement is then in effect, “Service
Agreement” shall mean any employment, consulting or similar service agreement most recently
in effect (on or after the Effective Date) prior to such date, as amended or supplemented,
between the Grantee, on the one hand, and the Company or one of its Affiliates, on the
other hand.
“Subsidiary” means any “subsidiary corporation” of the Company within the
meaning of Section 424(f) of the Code.
“Target Return” shall be equal to nine percent (9%) per annum, compounded
annually.
“Transfer” has the meaning set forth in Section 6.
(a) The Operating Company hereby grants to Grantee this Award consisting of the right, subject
to the terms and conditions of this Award Agreement, to be admitted as an Employee Member of
Promote Pool LLC and to receive the Participation Percentage of each series of the Employee Units
issued by Promote Pool LLC during the Award Period (the “Award Participation”). The Award
Participation (A) will be subject to forfeiture as provided in Section 3(c) and in
Section 4 and (B) will be subject to vesting as provided below in Section 3(b) and
in Section 4. At any time, the Committee may grant additional 2011 Bonus Pool Awards with
such Participation Percentages set forth therein as the Committee may determine, in its sole
discretion, provided that the total Participation Percentages of all 2011 Bonus Pool Awards
(including this Award) outstanding at any time shall not exceed 100%.
(b) The interest of Grantee in each series of Employee Units issued to Grantee during the
Award Period shall be eligible for vesting based on a combination of (i) the satisfaction of the
vesting conditions relating to the hotel properties applicable to the Eligible Promoted Interest
related to such series of Employee Units, as set forth below in this Section 3(b) and (ii)
the passage of time (three years or a shorter period in certain circumstances as provided in
Section 4) as provided in this Section 3(b). The Grantee’s interest in a series of
Employee Units shall become vested in the following amounts, at the following times, and upon the
following conditions, provided that the Continuous Service of the Grantee continues through
and on the applicable vesting date described below or the accelerated vesting date provided in
Section 4 hereof, as applicable:
|
(i) |
|
one-third of Grantee’s interest in such series of Employee Units shall become
vested on the later to occur of — |
|
(A) |
|
the third anniversary of the Effective Date (or any accelerated
vesting date provided in Section 4 hereof, if applicable ) and |
|
(B) |
|
the Initial Closing with respect to the applicable Eligible
Promoted Interest; and |
|
(ii) |
|
one-third of Grantee’s interest in such series of Employee Units shall become
vested on the later of to occur of — |
|
(A) |
|
the third anniversary of the Effective Date (or any accelerated
vesting date provided in Section 4 hereof, if applicable ) and |
|
(B) |
|
the Opening with respect to the applicable Eligible Promoted
Interest; |
provided that, in the case of an Eligible Promoted Interest in Hotel
Investment Entity that owns direct or indirect interests in more than one hotel
property, a percentage of Grantee’s interest in such series of Employee Units equal
to (I) one-third divided by (II) the number of such
hotel properties shall
become vested on the later of to occur of (x) the date specified in paragraph (A)
above and (y) the Opening of any such hotel property; and
|
(iii) |
|
one-third of Grantee’s interest in such series of Employee Units shall become
vested on the later of to occur of — |
|
(A) |
|
the third anniversary of the Effective Date and |
|
(B) |
|
the Sale Event with respect to the applicable Eligible Promoted
Interest. |
provided that, in the case of an Eligible Promoted Interest in a Hotel
Investment Entity that owns direct or indirect interests in more than one hotel
property, a percentage of Grantee’s interest in such series of Employee Units equal
to (I) one-third divided by (II) the number of such hotel properties, shall
become vested on the later to occur of (x) the date specified in paragraph (A) above
and (y) the Sale Event with respect to any such hotel property; and
provided further that, in the event a Partial Sale Event occurs with respect
to an Eligible Promoted Interest, a percentage of Grantee’s interest in such series
of Employee Units equal to (I) one-third multiplied by (II) the percentage of
the Fair Market Value of the direct or indirect interest in the applicable Hotel
Investment Entity or hotel property that was disposed of in such Partial Sale Event,
as determined in good faith by the Investment Committee, shall become vested on the
later to occur of (x) the date specified in paragraph (A) above and (y) the Partial
Sale Event with respect to any such hotel property; and
provided further that, in the event a Partial Sale Event occurs with respect
to a particular hotel property in the case of a Hotel Investment Entity that holds
more than one property, a percentage of Grantee’s interest in such series of Employee
Units equal to (I) one-third multiplied by (II) the percentage of the Fair
Market Value of the direct or indirect interest in the applicable hotel property that
was disposed of in such Partial Sale Event, as determined in good faith by the
Investment Committee, divided by (III) the number of such hotel properties
owned by such Hotel Investment Entity, shall become vested on the later of to occur
of (x) the date specified in paragraph (A) above and (y) the Partial Sale Event with
respect to any such hotel property; and
provided further that, in the event a Sale Event occurs with respect to an
Eligible Promoted Interest (or with respect to a particular hotel property in the
case of a Hotel Investment Entity that holds more than one property) without an
Opening having occurred with respect thereto, then such Sale Event shall also be
deemed to constitute the Opening with respect to such Eligible Promoted Interest for
purpose of Section 3(b)(ii).
(c) Any portion of Grantee’s interest in any series of Employee Units that has not become
vested pursuant to Section 3(b) and Grantee’s Award Participation shall, without payment of
any consideration by the Company or Promote Pool LLC, automatically and without notice be forfeited
and be and become null and void upon the termination of the Continuous Service of Grantee (other
than by reason of a Qualified Termination, death or Disability), and neither the Grantee nor any of
his or her successors, heirs, assigns, or personal representatives will thereafter have any further
rights or interests in such unvested portion of the Grantee’s Employee Units and in future
issuances of Employee Units by Promote Pool LLC.
(d) In the event that a Hotel Investment Entity with respect to which Promote Pool LLC holds
an Eligible Promoted Interest receives a new hotel property in exchange for another hotel property,
with the result that Promote Pool LLC thereafter holds an Eligible Promoted Interest in such new
hotel property, the vesting percentage that applied to the applicable series of Employee Units
immediately prior to such exchange shall remain in effect with respect to such series following the
exchange.
(a) If the Grantee is or was a party to a Service Agreement and his or her Continuous Service
terminates, the applicable provisions of this Section 4 shall govern the treatment of the
Grantee’s Award Participation, unless the Service Agreement contains provisions that expressly
refer to this Section 4(a) and provides that those provisions of the Service Agreement
shall instead govern the treatment of the Grantee’s Award Participation upon such termination. The
foregoing sentence will be deemed an amendment to any applicable Service Agreement to the extent
required to apply its terms consistently with this Section 4, such that, by way of
illustration, any provisions of the Service Agreement with respect to accelerated vesting or payout
or the lapse of forfeiture restrictions relating to the Grantee’s incentive or other compensation
awards in the event of certain types of termination of the Grantee’s Continuous Service with the
Company (such as, for example, termination at the end of the term, termination without Cause by the
employer or termination for Good Reason by the employee) shall not be interpreted as requiring that
vesting occur with respect to this Award other than as specifically provided in Section
3(b) and this Section 4.
(b) In the event of termination of the Grantee’s Continuous Service by (A) the Company without
Cause, (B) the Grantee for Good Reason, or (C) by reason of the death or Disability of Grantee
(each of the events described in (A), (B) and (C), a “Qualified Termination”), then the
Award Participation shall terminate with respect to any future issuances of Employee Units and the
Award Period shall terminate, each effective upon termination of Grantee’s Continuing Service, but
the following provisions of this Section 4(b) shall modify the vesting of each series of
Employee Units then held by Grantee:
(iv) the vesting conditions set forth in Sections 3(b)(i)(A) and
3(b)(ii)(A) (but not under Section 3(b)(iii)(A)) shall be deemed to have
been satisfied with respect to each series of Employee Units held by Grantee as of the
effective date of such Qualified Termination; and
(v) the Grantee’s interest in each series of Employee Units then held by Grantee shall
vest under Sections 3(b)(i) and 3(b)(ii), to the extent provided in such
sections, upon the satisfaction of the vesting conditions set forth in Sections
3(b)(i)(B) and 3(b)(ii)(B), as applicable (to the extent that any such condition
shall not previously have been satisfied), as if such Qualified Termination had not
occurred.
Upon the occurrence of a Qualified Termination, the unvested portion of Grantee’s interest in each
series of Employee Units then held by Grantee that is subject to vesting upon the conditions set
forth in Section 3(b)(iii) shall be forfeited, with the consequences set forth in the LLC
Agreement.
(c) In the event of a termination of the Grantee’s Continuous Service other than a Qualified
Termination, the Award Participation shall terminate with respect to any future issuances of
Employee Units and the Award Period shall terminate, each effective upon termination of Grantee’s
Continuing Service, and Grantee’s unvested interest in each series of Employee Units then held by
Grantee shall be forfeited, with the consequences set forth in the LLC Agreement as described in
Exhibit A, and
shall no longer be subject to future vesting pursuant to Section 3(b)(i), 3(b)(ii),
or 3(b)(iii), without payment of any consideration by the Company or Promote Pool LLC,
automatically and without notice, and neither the Grantee nor any of his or her successors, heirs,
assigns, or personal representatives will thereafter have any further rights or interests in such
Award Participation or such unvested interest in any series of Employee Units, other than with
respect to any interest in any series of Employee Units that may have vested pursuant to
Section 3(b)(i), 3(b)(ii), or 3(b)(iii) prior to such termination of
Grantee’s Continuous Service.
(a)
Formation of Promote Pool LLC. Prior to the Initial Closing of the first
transaction in which the Company or any entity will receive an Eligible Promoted Interest after the
Effective Date, the Company will organize Promote Pool LLC and enter into the LLC Agreement.
(b)
Contribution of Eligible Promoted Interests. At the Initial Closing with respect
to any Eligible Promoted Interest, Promote Pool LLC (or a wholly owned subsidiary thereof) will
become a member or partner in, or acquire a Contractual Right with respect to, the applicable Hotel
Investment Entity and, in that capacity, will acquire the Eligible Promoted Interest, or the
Operating Company (or a subsidiary thereof) shall contribute the Eligible Promoted Interest to
Promote Pool LLC.
(c)
Issuance of Employee Units. Concurrently with the Initial Closing with respect to
any Eligible Promoted Interest, the Managing Member shall amend the LLC Agreement to create a new
series of Bonus Pool Units relating to the Eligible Promoted Interest. The portion of the Bonus
Pool Units issued to Employee Members concurrently with the Initial Closing shall, as of such date,
represent an aggregate interest in the applicable Eligible Promoted Interest equal to the
Designated Participation Percentage with respect to such series of Bonus Pool Units. If the
Initial Closing with respect to such Eligible Promoted Interest occurs during the Award Period,
Promote Pool LLC shall issue to Grantee, concurrently with such Initial Closing, a percentage of
the applicable series of Employee Units equal to the product of (i) his or her Participation
Percentage as of such date
times (ii) the Designated Participation Percentage with respect
to such series of Bonus Pool Units.
(d)
Distributions. Following the receipt by Promote Pool LLC or any of its
wholly-owned subsidiaries of any Promoted Interest Proceeds, Promote Pool LLC shall distribute such
Promoted Interest Proceeds to the Members in accordance with the terms and conditions of the LLC
Agreement. The LLC Agreement will include provisions relating to distributions in substantially
the form set forth on
Exhibit A attached hereto.
Subject to the next sentence, no portion of the Award Participation granted hereunder shall be
sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of,
encumbered, whether voluntarily or by operation of law (each such action a “Transfer”).
This Agreement is personal to the Grantee, is non-assignable and is not transferable in any manner,
by operation of law or otherwise, other than by will or the laws of descent and distribution.
Notwithstanding the foregoing, in the event Managing Member elects to sell or otherwise dispose of
all or any portion of its interest in any series of interests in Promote Pool LLC to an
unaffiliated third party, Managing Member shall ensure that such third party offers to acquire all
or the comparable percentage (as the case may be) of the Employee Units in such Series held by each
holder of such series of Employee Units, on the same terms and conditions as such unaffiliated
third-party is
acquiring the interests of the Managing Member, in accordance with such procedures for such
offer and purchase as the Managing Member shall reasonably establish for such purpose.
(a)
Amendments. This Agreement may be amended or modified only with the consent of the
Company acting through the Committee; provided that any such amendment or modification materially
and adversely affecting the rights or obligations of the Grantee hereunder must be consented to by
the Grantee to be effective as against him. Notwithstanding the foregoing, this Agreement may be
amended in writing signed only by the Company to correct any errors or ambiguities in this
Agreement and/or to make such changes that do not materially adversely affect the Grantee’s rights
or obligations hereunder. This grant shall in no way affect the Grantee’s participation or benefits
under any other plan or benefit program maintained or provided by the Company.
(b)
Committee Determinations. The Committee will make the determinations and
certifications required by this Award as promptly as reasonably practicable following the
occurrence of the event or events necessitating such determinations or certifications.
(i) The Grantee hereby represents and warrants that (A) he or she understands that he
or she is responsible for consulting his or her own tax advisor with respect to the
application of the U.S. federal income tax laws, and the tax laws of any state, local or
other taxing jurisdiction to which the Grantee is or by reason of this Award may become
subject, to his or her particular situation; (B) the Grantee has not received or relied upon
business or tax advice from the Company, the Operating Company or any of their respective
employees, agents, consultants or advisors, in their capacity as such; (C) the Grantee
provides services to the Operating Company on a regular basis and in such capacity has
access to such information, and has such experience of and involvement in the business and
operations of the Operating Company, as the Grantee believes to be necessary and appropriate
to make an informed decision to accept this Award; (D) Bonus Pool Units are subject to
substantial risks; (E) the Grantee has been furnished with, and has reviewed and
understands, information relating to this Award; (F) the Grantee has been afforded the
opportunity to obtain such additional information as he or she deemed necessary before
accepting this Award; (G) the Grantee has had an opportunity to ask questions of
representatives of the Operating Company and the Company, or persons acting on their behalf,
concerning this Award; and (H) the Grantee will provide services to Promote Pool LLC.
(ii) The Grantee hereby acknowledges that: (A) there will be no public market for Bonus
Pool Units and neither the Operating Company nor the Company has any obligation or intention
to create such a market; (B) transfers sales of Bonus Pool Units are subject to restrictions
under the Securities Act and applicable state securities laws, in addition to the
restrictions set forth herein and in the LLC Agreement; and (C) because of the restrictions
on transfer or assignment of Bonus Pool Units set forth in the LLC Agreement and in this
Agreement, the Grantee may have to bear the economic risk of his or her ownership of any
Bonus Pool Units issued as a result of this Award for an indefinite period of time.
(d)
Section 83(b) Election. In connection with each separate issuance of Bonus Pool
Units under this Award, the Grantee hereby agrees to make an election to include in gross income in
the year
of transfer the applicable Bonus Pool Units pursuant to Section 83(b) of the Code substantially in
the form attached hereto as
Exhibit B and to supply the necessary information in accordance
with the regulations promulgated thereunder. The Grantee agrees to file such election (or to permit
Promote Pool LLC to file such election on the Grantee’s behalf) within thirty (30) days after the
issuance of the Bonus Pool Units with the IRS Service Center where the Grantee files his or her
personal income tax returns, and to file a copy of such election with the Grantee’s U.S. federal
income tax return for the taxable year in which the Bonus Pool Units are awarded to the Grantee. So
long as the Grantee holds any Bonus Pool Units, the Grantee shall disclose to Promote Pool LLC in
writing such information as may be reasonably requested with respect to ownership of Bonus Pool
Units as Promote Pool LLC may deem reasonably necessary to ascertain and to establish compliance
with provisions of the Code applicable to Promote Pool LLC or to comply with requirements of any
other appropriate taxing authority.
(e)
Severability. If, for any reason, any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not so held invalid, and
each such other provision shall to the full extent consistent with law continue in full force and
effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in
no way affect the rest of such provision not held so invalid, and the rest of such provision,
together with all other provisions of this Agreement, shall to the full extent consistent with law
continue in full force and effect.
(f)
Governing Law. This Agreement is made under, and will be construed in accordance
with, the laws of State of
New York, without giving effect to the principles of conflict of laws of
such State.
(g)
No Obligation to Continue Position as an Employee. Neither the Company nor any
Affiliate is obligated by or as a result of this Agreement to continue to have the Grantee as an
employee, consultant or advisor and this Agreement shall not interfere in any way with the right of
the Company or any Affiliate to terminate the Grantee’s Continuous Service at any time.
(h)
Notices. Any notice to be given to the Company shall be addressed to the Secretary
of the Company at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and any notice to be given the Grantee
shall be addressed to the Grantee at the Grantee’s address as it appears on the employment records
of the Company, or at such other address as the Company or the Grantee may hereafter designate in
writing to the other.
(i)
Withholding and Taxes. No later than the date as of which an amount first becomes
includible in the gross income of the Grantee for income tax purposes or subject to the Federal
Insurance Contributions Act withholding with respect to this Award, the Grantee will pay to the
Company or, if appropriate, any of its Affiliates, or make arrangements satisfactory to the
Committee regarding the payment of, any United States federal, state or local or foreign taxes of
any kind required by law to be withheld with respect to such amount. The obligations of the Company
under this Agreement will be conditional on such payment or arrangements, and the Company and its
Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Grantee.
(j)
Headings. The headings of paragraphs hereof are included solely for convenience of
reference and shall not control the meaning or interpretation of any of the provisions of this
Agreement.
(k)
Counterparts. This Agreement may be executed in multiple counterparts with the
same effect as if each of the signing parties had signed the same document. All counterparts shall
be construed together and constitute the same instrument.
(l)
Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and any successors to the Company, on the one hand, and any
successors to the Grantee, on the other hand, by will or the laws of descent and distribution, but
this Agreement shall not otherwise be assignable or otherwise subject to hypothecation by the
Grantee.
(m)
Section 409A. This Agreement shall be construed, administered and interpreted in
accordance with a good faith interpretation of Section 409A of the Code. Any provision of this
Agreement that is inconsistent with Section 409A of the Code, or that may result in penalties under
Section 409A of the Code, shall be amended, with the reasonable cooperation of the Grantee the
Company, to the extent necessary to exempt it from, or bring it into compliance with Section 409A
of the Code.
[signature page follows]
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MORGANS HOTEL GROUP CO.
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By: |
/s/ Xxxxx Xxxxx
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Name: |
Xxxxx Xxxxx |
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Title: |
Executive Vice President and General Counsel |
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MORGANS GROUP LLC
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By: |
/s/ Xxxxxxx Xxxxxxxxx
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Name: |
Xxxxxxx Xxxxxxxxx |
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Title: |
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SCHEDULE A TO 2011 PROMOTED INTEREST BONUS POOL
AWARD AGREEMENT
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Date of Award Agreement: |
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March 23, 2011 |
Name of Grantee: |
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Xxxx Xxxx |
Participation Percentage: |
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10% |
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Grant Date: |
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March 23, 2011 |
Initials of Company representative: /s/DS Initials of Grantee: /s/YG
EXHIBIT A
CERTAIN PROVISIONS OF THE LLC AGREEMENT
The LLC Agreement will include the following provisions in substantially the form set forth
below (capitalized terms shall have the meanings set forth in the Award Agreement to which this
Exhibit A is attached, if defined therein, or in Section 8 hereof, and Section
numbers shall refer to sections of this Exhibit A, unless otherwise stated ):
(a) Promptly following the receipt by Promote Pool LLC or any of its wholly owned subsidiaries
of any Promoted Interest Proceeds, including the receipt of any proceeds assigned to Grantee in
respect of any Eligible Promoted Interest, Promote Pool LLC shall distribute such Promoted Interest
Proceeds (with respect to any distribution, the “Aggregate Proceeds”) to the Members on the
following terms and conditions:
(i) If the Employee Unit Distribution Conditions are satisfied as of the date of
receipt of such Promoted Interest Proceeds by Promote Pool LLC or any of its wholly owned
subsidiaries, an amount equal to the product of (x) the Aggregate Employee Participation
Percentage then outstanding in the series of Bonus Pool Units related to the Eligible
Promoted Interest with respect to which the Promoted Interest Proceeds were received
times (y) the Aggregate Proceeds shall be paid, or set aside for future payment, in
accordance with Section 1(b) or 1(c); and
(ii) The remainder of such Aggregate Proceeds shall be paid to the Managing Member.
(b) All amounts referred to in Section 1(a)(i) (with respect to any distribution, the
“Employee Member Share”) shall be applied as follows:
(i) An amount equal to the product of (x) each Employee Member’s Vested Participation
Percentage at such time in such series of Bonus Pool Units times (y) the Aggregate
Proceeds shall be paid to such Employee Member ;and
(ii) The remainder of the Employee Member Share shall be set aside and held by Promote
Pool LLC for future payment in accordance with Section 1(c).
(c) All amounts referred to in Section 1(b)(ii) shall be applied as follows:
(i) At such time as any Employee Member’s Vested Participation Percentage in the
applicable series of Bonus Pool Units increases after the initial distribution of the
applicable Aggregate Proceeds under Section 1(b), an amount equal to (x) the product of (I)
such Employee Member’s Vested Participation Percentage (after such increase) in such series
of Bonus Pool Units times (II) the Aggregate Proceeds minus (y) the
aggregate amount of such Aggregate Proceeds that previously paid to such Employee Member
under Section 1(b)(i) or this Section 1(c)(i).
(ii) At such time as any Employee Member’s unvested Bonus Pool Units in the applicable
series are forfeited pursuant to Section 4 of such Employee’s Award Agreement, an amount
equal to the product of (x) a fraction, the numerator of which is the number of unvested
Bonus Pool Units in the applicable series so forfeited and the denominator of which is the
aggregate number of outstanding Bonus Pool Units in such series times (y) the
applicable Aggregate Proceeds.
2.
Management of the LLC. Except as otherwise provided in the LLC Agreement or by law,
management of Promote Pool LLC is reserved to and shall be vested solely and exclusively in the
Managing Member. The rights and authority of the Managing Member shall include, without
limitation, the right and authority, in its sole discretion, to —
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(a) |
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exercise all consent and voting rights with respect to the
Eligible Promoted Interests, |
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(b) |
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sell, transfer, or otherwise dispose of the interest of Promote
Pool LLC in any Eligible Promoted Interest, subject to compliance with the
provisions of Section 7 below, and |
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(c) |
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issue additional Employee Units to persons granted 2011 Bonus
Pool Awards, subject to the proviso at the end of Section 3(a) of the
Award Agreements. |
3.
Amendments. The LLC Agreement, or any term or provision thereof, may be amended, waived,
modified or supplemented from time to time by the Managing Member in its sole discretion;
provided that any amendment to the provisions relating to the distribution of Promoted
Interest Proceeds or the defined terms used therein that would materially adversely affect the
rights or obligations of the holders of Employee Units granted hereunder shall require the consent
of each Employee Member adversely affected thereby.
4.
Transfer of Employee Units. No Employee Member may Transfer all or any part of his or her
Employee Units, or any interest therein, directly or indirectly, without the consent of the
Managing Member, which consent may be withheld in the Managing Member’s sole discretion. No
Transfer of Employee Units, or any interest therein, in violation of this Agreement shall be made
or recorded on the books of Promote Pool LLC and any such Transfer shall be null and void,
ab
initio. An Employee Member shall have no right to grant an assignee of his or her Employee Units,
or any interest therein, the right to become a substituted member in Promote Pool LLC. As used
herein, “
Transfer” means the sale, encumbrance, mortgage, hypothecation, assignment,
pledge, exchange or other disposition or transfer (including by operation of law), directly or
indirectly, of all or any portion of an Interest. For the avoidance of doubt, any indirect
Transfer by an Employee Member or the Company through the transfer or issuance of any equity
interest in any entity formed for the purpose of holding Employee Units or Managing Member Units,
respectively, or any interest therein, shall constitute a Transfer.
5.
Effect of Forfeiture of Unvested Units. At such time as any unvested Employee Units of any
Employee Member in any series are forfeited pursuant to Section 4 of the such Employee Member’s
award agreement, such unvested Employee Units shall be cancelled and the Manager Percentage
Interest shall be increased by a percentage equal to the product of (x) the Unit Percentage
Interest with respect to such series in effect immediately prior to such forfeiture
times
(y) the number of Employee Units in such series that were then forfeited.
6.
Issuance of Additional Employee Units. The Managing Member, in its sole discretion, shall
be entitled to issue additional Employee Units in any series at any time, which additional Employee
Units may be accompanied by a reduction in the Manager Percentage Interest with respect to such
series and a corresponding increase in the Aggregate Employee Participation Percentage for such
series, or may represent the issuance of additional Employee Units without a change in the
Aggregate Employee Participation Percentage, subject to the proviso at the end of [
Section
3(a)] of the Award Agreements.
7.
Ownership and Control of Eligible Promoted Interests. If the Managing Member elects to
Transfer an Eligible Promoted Interest prior to the occurrence of the Sale Event with respect to
such Eligible Promoted Interest (or the Sale Events with respect to all hotel properties related to
such Eligible Promoted Interest), the vesting conditions set forth in
Sections 3(b)(i)(B),
3(b)(ii)(B) and
3(b)(iii)(B) of the Award Agreements with respect to such Eligible
Promoted Interest will be deemed to have been satisfied (to the extent that any such condition
shall not previously have been satisfied) and the net proceeds received by Promote Pool LLC in
connection with such Transfer shall be deemed to constitute Promoted Interest Proceeds, and shall
be distributable in accordance with Section 1, subject to satisfaction of the Payment Conditions
and subject to satisfaction of the vesting conditions set forth in
Sections 3(b)(i)(A),
3(b)(ii)(A) and
3(b)(iii)(A) of the Award Agreements with respect to individual
Employee Members (to the extent that such condition shall not previously have been satisfied). Any
Transfer of an Eligible Promoted Interest to the Company or a subsidiary of the Company shall be
made for an amount of cash equal to its Fair Market Value.
8.
Certain Defined Terms. Capitalized terms defined in the Award Agreement to which this
Exhibit A is attached shall have the meanings ascribed therein to such terms. The
following capitalized terms used in this
Exhibit A shall have the meanings set forth below:
(a) “Aggregate Employee Participation Percentage” means, with respect to any series of
Bonus Pool Units and as of any date of determination, a percentage equal to (i) one hundred percent
(100%) minus (ii) the Manager Percentage Interest with respect to such series then in
effect.
(b) “Award Agreement” means, with respect to any Employee Member, the award agreement
pursuant to which such Employee Member was granted a 2011 Bonus Pool Award.
(c) “Employee Unit Distribution Conditions” means, as of the date of any receipt by
Promote Pool LLC or any of its wholly-owned subsidiaries of any Promoted Interest Proceeds, the
following:
(i) the Common Share Return Condition shall be satisfied; and
(ii) the Company or a consolidated subsidiary of the Company continues to manage the
applicable hotel property immediately following the applicable event giving rise to the
Promoted Interest Proceeds.
(d) “Manager Percentage Interest” means, with respect to any series of Bonus Pool
Units and as of any date of determination, a percentage equal to (i) one hundred percent (100%)
minus (ii) the Designated Participation Percentage with respect to such series plus
(iii) the aggregate increases in the Manager Percentage Interest with respect to such series
pursuant to Section 5 minus (iv) the aggregate decreases in the Manager Percentage
Interest with respect to such series pursuant to Section 6 in connection with the issuances
of additional Employee Units with respect to such series.
(e) “Unit Percentage Interest” means, with respect to a single Employee Unit of any
series as of the date of determination, a fraction (expressed as a percentage) equal to (i) the
Aggregate Employee Participation Percentage with respect to such series as of such date divided
by (ii) the aggregate number of Employee Units in such series then outstanding.
(f) “Vested Participation Percentage” means, with respect to any Employee Member and
any series of Bonus Pool Units and as of any date of determination, a fraction, (x) the numerator
of which is the aggregate number of Employee Units in such series held by such Employee Member that
have vested in accordance with Section 3(b) of such Employee’s Award Agreement and (y) the
denominator of which is the aggregate number of Employee Units in such series then outstanding.
EXHIBIT B
ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF
TRANSFER OF PROPERTY PURSUANT TO SECTION 83(B)
OF THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the Internal
Revenue Code with respect to the property described below and supplies the following
information in accordance with the regulations promulgated thereunder:
1. The name, address and taxpayer identification number of the undersigned are:
Name: (the “Taxpayer”)
Address:
Social Security No./Taxpayer Identification No.:
2. Description of property with respect to which the election is being made:
The election is being made with respect to Bonus Pool Units (Series
[_____]) (the “Bonus Pool Units”) in MHG Employee Promoted Interest LLC (the
“Company”).
3. The date on which the Bonus Pool Units were transferred is
_____, 20_. The taxable
year to which this election relates is calendar year 20_.
4. Nature of restrictions to which the Bonus Pool Units are subject:
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With limited exceptions, until the Bonus Pool Units vest, the
Taxpayer may not transfer in any manner any portion of the Bonus Pool Units
without the consent of the Company. |
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The Taxpayer’s Bonus Pool Units (vest in accordance with the
vesting provisions described in Annex 1 attached hereto. Unvested Bonus
Pool Units are forfeited in accordance with the vesting provisions described in
Annex 1 attached hereto. |
5. The fair market value at time of transfer (determined without regard to any restrictions
other than restrictions which by their terms will never lapse) of the Bonus Pool Units with respect
to which this election is being made was $ per Bonus Pool Unit .
6. The amount paid by the Taxpayer for the Award LTIP Units was $0 per Bonus Pool Unit.
7. A copy of this statement has been furnished to the Company and Morgans Group LLC.
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Dated: , 20_____
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Signature |
ANNEX 1
Vesting Provisions of Bonus Pool Units
The Bonus Pool Units are subject to time-based and performance-based vesting with the final
vesting percentage equaling the product of the time-based vesting percentage and the
performance-based vesting percentage. Performance-based vesting will be from 0% to 100% based on
the achievement of certain goals relating to hotel properties in which Morgans Group LLC or a
subsidiary acquires an equity interest and becomes the hotel manager. Under the time-based vesting
provisions, one hundred percent (100%) of the Bonus Pool Units will vest on the last day of the
performance period, provided that the Taxpayer remains an employee of the Company or any of its
affiliates through such date, subject to acceleration in the event of certain extraordinary
transactions or termination of the Taxpayer’s service relationship with the Company under specified
circumstances. Unvested Bonus Pool Units are subject to forfeiture in the event of failure to vest
based on the passage of time or the determination of the performance-based percentage. The right to
receive any payments with respect to vested Bonus Pool Units depends on a specified Xxxxxx Hotel
Group Co.’s (the “Company’s”) per-share total return to shareholders of Morgans Hotel Group
Co. for the period from [_____], 2011, to the proposed payment date.
MORGANS HOTEL GROUP CO.
RESTRICTED STOCK UNIT AGREEMENT
Morgans Hotel Group Co. (the “Company”), hereby grants restricted stock units relating to
shares of its common stock (the “Stock”), to the individual named below as the Grantee, subject to
the vesting conditions set forth in the attachment.
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Grant Date: March 23, 2011 |
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Name of Grantee: Xxxx Xxxx
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State of Residence: |
Grantee’s Social Security Number: ____-___-_____
Number of Restricted Stock Units (RSUs) Covered by Grant: 65,250
Vesting Start Date: March 23, 2011
Vesting Schedule:
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Number of RSUs that vest, as |
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a percentage of the number of |
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Vesting Date |
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RSUs granted |
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The 1 year anniversary of the Vesting Start Date |
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33 |
1/3 |
The 2 year anniversary of the Vesting Start Date |
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33 |
1/3 |
The 3 year anniversary of the Vesting Start Date |
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33 |
1/3 |
By signing this cover sheet, you agree to all of the terms and conditions described in this
Agreement.
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Grantee: |
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/s/ Xxxx Xxxx |
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(Signature) |
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Company: |
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/s/ Xxxxx Xxxxx |
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(Signature) |
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Title:
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Executive Vice President and General Counsel |
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This is not a stock certificate or a negotiable instrument.
MORGANS HOTEL GROUP CO.
RESTRICTED STOCK UNIT AGREEMENT
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Restricted Stock Unit Transferability
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This grant is an award of stock
units in the number of units set
forth on the cover sheet,
subject to the vesting
conditions described below
(“Restricted Stock Units”).
Your Restricted Stock Units may
not be transferred in any manner
other than by will or by laws of
descent and distribution. These
terms shall be binding upon your
executors, administrators,
successors and assigns. |
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Vesting
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Your Restricted Stock Unit grant
vests as to the number of Stock
Units indicated in the vesting
schedule on the cover sheet, on
the Vesting Dates shown on the
cover sheet, provided you are in
Service on the Vesting Date and
meet the applicable vesting
requirements set forth on the
cover sheet. Except as
otherwise provided in the
employment agreement between you
and the Company, no additional
Stock Units will vest after your
Service has terminated for any
reason. |
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“Stock Units” means a
bookkeeping entry representing
the equivalent of one share of
Stock awarded to you pursuant to
this Agreement. |
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“Service” means service as a
Service Provider to the Company
or an Affiliate. Your change in
position or duties shall not
result in interrupted or
terminated Service, so long as
you continue to be a Service
Provider to the Company or an
Affiliate. Subject to the
preceding sentence, whether a
termination of Service shall
have occurred shall be
determined by the Compensation
Committee of the Board of
Directors (the “Board”), which
determination shall be final,
binding and conclusive. |
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“Service Provider” means an
employee, officer or director of
the Company or an Affiliate, or
a consultant or adviser
currently providing services to
the Company or an Affiliate |
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“Affiliate” means, with respect
to the Company, any company or
other trade or business that
controls, is controlled by or is
under common control with the
Company within the meaning of
Rule 405 of Regulation C under
the Securities Act of 1933, as
now in effect or hereafter
amended, including, without
limitation, any Subsidiary. For
purposes of granting stock
options or stock appreciation
rights, an entity may not be
considered an Affiliate unless
the Company holds a “controlling
interest” in such entity, where
the term “controlling interest”
has the same meaning as provided
in Treasury Regulation
1.414(c)-2(b)(2)(i), provided
that the language “at least 50
percent” is used instead of “at
least 80 percent” and, provided
further, that where granting of
stock options or stock
appreciation rights is based
upon a legitimate business
criteria, the language “at least
20 percent” is used instead of
“at least 80 percent” each place
it appears in Treasury
Regulation 1.414(c)-2(b)(2)(i) |
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“Subsidiary” means any
“subsidiary corporation” of the
Company within the meaning of
Section 424(f) of Internal
Revenue Code of 1986, as amended
(the “Code”). |
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A book entry for the vested
shares of Stock represented by
the Restricted Stock Units will
be made for you and the shares
will be credited to your account
by the Company within three (3)
days of the applicable
anniversary of the Vesting Date;
provided, that, if such Vesting
Date occurs during a period in
which you are (i) subject to a
lock-up agreement restricting
your ability to sell Stock in
the open market or (ii) are
restricted from selling Stock in
the open market because a
trading window is not available,
transfer of such vested shares
will be delayed until the date
immediately following the
expiration of the lock-up
agreement or the opening of a
trading window but in no event
beyond 21/2 months after the end
of the calendar year in which
the shares would have been
otherwise transferred. |
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Except as otherwise provided in
the employment agreement between
you and the Company, in the
event that your Service
terminates for any reason, you
will forfeit to the Company all
of the Restricted Stock Units
that have not yet vested or with
respect to which all applicable
restrictions and conditions have
not lapsed. |
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Withholding Taxes
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You agree, as a condition of
this grant, that you will make
acceptable arrangements, which
must be consistent with and
permitted by the rules and
regulations established by the
Company, to pay any withholding
or other taxes that may be due
as a result of vesting in
Restricted Stock Units or your
acquisition of Stock under this
grant. In the event that the
Company determines that any
federal, state, local or foreign
tax or withholding payment is
required relating to this grant,
the Company will have the right
to: (i) require that you arrange
such payments to the Company, or
(ii) cause an immediate
forfeiture of shares of Stock
subject to the Restricted Stock
Units granted pursuant to this
Agreement in an amount equal to
the withholding or other taxes
due. In addition, in the
Company’s sole discretion and
consistent with the Company’s
rules and regulations, the
Company may permit you to pay
the withholding or other taxes
due as a result of the vesting
of your Restricted Stock Units
by delivery (on a form
acceptable to the Board) of an
irrevocable direction to a
licensed securities broker
selected by the Company to sell
shares of Stock and to deliver
all or part of the sales
proceeds to the Company in
payment of the withholding
taxes. |
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Corporate Transaction
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Notwithstanding the vesting
schedule set forth above, upon
the consummation of a Corporate
Transaction, this award will
become 100% vested if it is not
assumed, or equivalent awards
are not substituted for the
award, by the Company or its
successor. |
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“Corporate Transaction” shall be
deemed to have occurred if (i)
any person or group of persons
(as defined in Section 13(d) and
14(d) of the Exchange Act of
1934, as now in effect or
hereafter amended (the “Exchange
Act”)) together with its
affiliates, excluding employee
benefit plans of the Company, is
or becomes, directly or
indirectly, the “beneficial
owner” (as defined in Rule 13d-3
of the Exchange Act) of
securities of the Company
representing 40% or more of the
combined voting power of the
Company’s then outstanding
securities; or (ii) individuals
who at the beginning of any
two-year period constitute the
Board, plus new directors of the
Company whose election or
nomination for election by the
Company’s shareholders is
approved by a vote of at least
two-thirds of the directors of
the Company still in office who
were directors of the Company at
the beginning of such two-year
period, cease for any reason
during such two-year period to
constitute at least two-thirds
of the members of the Board; or
(iii) a merger or consolidation
of the Company with any other
corporation or entity is
consummated regardless of which
entity is the survivor, other
than a merger of consolidation
which would result in the voting
securities of the Company
outstanding immediately prior
thereto continuing to represent
(either by remaining outstanding
or being converted into voting
securities of the surviving
entity) at least 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 Company is completely
liquidated or all or
substantially all of the
Company’s assets are sold. |
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Retention Rights
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This Agreement does not give you
the right to be retained or
employed by the Company (or any
Affiliates) in any capacity.
The Company (and any Affiliate)
reserve the right to terminate
your Service at any time and for
any reason, subject to the
employment agreement between you
and the Company. |
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Shareholder Rights
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You do not have any of the
rights of a shareholder with
respect to the Restricted Stock
Units unless and until the Stock
relating to the Restricted Stock
Units has been transferred to
you. In the event of a cash
dividend on outstanding Stock,
you will be entitled to receive
a cash payment for each
Restricted Stock Unit. The
Company may in its sole
discretion require that
dividends will be reinvested in
additional stock units at Fair
Market Value on the dividend
payment date, subject to vesting
and delivered at the same time
as the Restricted Stock Unit. |
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“Fair Market Value” with respect
to a share of Stock means the
value of a share of such Stock
determined as follows: if on the
determination date the Stock is
listed on an established
national or regional stock
exchange, is admitted to
quotation on The NASDAQ Stock
Market, Inc. or is publicly
traded on an established
securities market, the Fair
Market Value of a share of Stock
shall be the closing price of
the Stock on such exchange or in
such market (if there is more
than one such exchange or market
the Compensation Committee of
the Board shall determine the
appropriate exchange or market)
on the determination date (or if
there is no such reported
closing price, the Fair Market
Value shall be the mean between
the highest bid and lowest asked
prices or between the high and
low sale prices on such trading
day) or, if no sale of Stock is
reported for such trading day,
on the next preceding day on
which any sale shall have been
reported. If the Stock is not
listed on such an exchange,
quoted on such system or traded
on such a market, Fair Market
Value of the share of Stock
shall be the value of the Stock
as determined by the
Compensation Committee of the
Board by the reasonable
valuation method, in a manner
consistent with Section 409A of
the Code. “Fair Market Value”
with respect to an award means
the value of the award as
determined by the Compensation
Committee in good faith, taking
into consideration applicable
tax and accounting rules and
regulations. |
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Adjustments
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In the event of a stock split, a
stock dividend or a similar
change in the Company stock, the
number of Restricted Stock Units
covered by this grant will be
adjusted (and rounded down to
the nearest whole number). |
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Applicable Law
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This Agreement will be
interpreted and enforced under
the laws of the State of New
York, other than any conflicts
or choice of law rule or
principle that might otherwise
refer construction or
interpretation of this Agreement
to the substantive law of
another jurisdiction. |
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Data Privacy
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The Company may process personal
data about you. Such data
includes, but is not limited to
the information provided in this
Agreement and any changes
thereto, other appropriate
personal and financial data
about you such as home address
and business addresses and other
contact information, payroll
information and any other
information that might be deemed
appropriate by the Company to
facilitate the administration of
this Agreement. |
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By accepting these Restricted
Stock Units, you give explicit
consent to the Company to
process any such personal data.
You also give explicit consent
to the Company to transfer any
such personal data outside the
country in which you are
employed, including, with
respect to non-U.S. resident
grantees, to the United States,
to transferees who shall include
the Company and other persons
who are designated by the
Company to administer this
Agreement. |
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The Company may choose to
deliver certain statutory
materials relating to this
Agreement in electronic form.
If at any time you would prefer
to receive paper copies of any
documents, as you are entitled
to receive, the Company would be
pleased to provide copies. |
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Electronic Signature
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All references to signatures and
delivery of documents in this
Agreement can be satisfied by
procedures the Company has
established or may establish for
an electronic signature system
for delivery and acceptance of
any such documents, including
this Agreement. Your electronic
signature is the same as, and
shall have the same force and
effect as, your manual
signature. Any such procedures
and delivery may be effected by
a third party engaged by the
Company to provide
administrative services related
to this Agreement. |
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Scope of Agreement
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This Agreement constitutes the
entire understanding between you
and the Company regarding this
grant of Restricted Stock Units.
Any prior agreements,
commitments or negotiations
concerning this grant are
superseded. |
Exhibit E
Release Agreement
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (this “Release”) is entered into as of [ ] (the “Effective
Date”), by (“Executive”) in consideration of severance pay and other
benefits (the “Severance Payment”) provided to Executive by Morgans Hotel Group Co., a Delaware
corporation (the “Company”), pursuant to Section 4 of the Employment Agreement by and between the
Company and Executive (the “Employment Agreement”).
1. Release. Subject to the last sentence of the first paragraph of this Section 1,
Executive, on his own behalf and on behalf of his heirs, executors, administrators, attorneys and
assigns, hereby unconditionally and irrevocably releases, waives and forever discharges the Company
and each of its affiliates, parents, successors, predecessors, and the subsidiaries, directors,
owners, members, shareholders, officers, agents, and employees of the Company and its affiliates,
parents, successors, predecessors, and subsidiaries (collectively, all of the foregoing are
referred to as the “Employer”), from any and all causes of action, claims and damages, including
attorneys’ fees, whether known or unknown, foreseen or unforeseen, presently asserted or otherwise
arising through the date of his signing of this Release, concerning his employment or separation
from employment. Subject to the last sentence of the first paragraph of this Section 1, this
Release includes, but is not limited to, any payments, benefits or damages arising under any
federal law (including, but not limited to, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Employee Retirement Income Security Act of 1974, the
Americans with Disabilities Act, Executive Order 11246, the Family and Medical Leave Act, and the
Worker Adjustment and Retraining Notification Act, each as amended); any claim arising under any
state or local laws, ordinances or regulations (including, but not limited to, any state or local
laws, ordinances or regulations requiring that advance notice be given of certain workforce
reductions); and any claim arising under any common law principle or public policy, including, but
not limited to, all suits in tort or contract, such as wrongful termination, defamation, emotional
distress, invasion of privacy or loss of consortium. Notwithstanding any other provision of this
Release to the contrary, this Release does not encompass, and Executive does not release, waive or
discharge, the obligations of the Company (a) to make the payments and provide the other benefits
contemplated by the Employment Agreement or any other Agreement with Executive, or (b) under any
restricted stock unit agreement, option agreement or other agreement pertaining to Executive’s
equity ownership or other awards, or (c) under any indemnification or similar agreement with
Executive, or (d) under this Release.
Executive understands that by signing this Release, he is not waiving any claims or
administrative charges which cannot be waived by law. He is waiving, however, any right to
monetary recovery or individual relief should any federal, state or local agency (including the
Equal Employment Opportunity Commission) pursue any claim on his behalf arising out of or related
to his employment with and/or separation from employment with the Company (other than with respect
to those matters described in clauses (a), (b), (c) and (d) above.
Executive further agrees without any reservation whatsoever, never to xxx the Employer or
become a party to a lawsuit on the basis of any and all claims of any type lawfully and validly
released in this Release.
2. Acknowledgments. Executive is signing this Release knowingly and voluntarily. He
acknowledges that:
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(a) |
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He is hereby advised in writing to consult an
attorney before signing this Release; |
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(b) |
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He has relied solely on his own judgment and/or
that of his attorney regarding the consideration for and the terms of
this Release and is signing this Release knowingly and voluntarily of
his own free will; |
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(c) |
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He is not entitled to the Severance Payment
unless he agrees to and honors the terms of this Release; |
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(d) |
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He has been given at least twenty-one (21)
calendar days to consider this Release, or he expressly waives his
right to have at least twenty-one (21) days to consider this Release; |
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(e) |
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He may revoke this Release within seven (7)
calendar days after signing it by submitting a written notice of
revocation to the Employer. He further understands that this Release
is not effective or enforceable until after the seven (7) day period of
revocation has expired without revocation, and that if he revokes this
Release within the seven (7) day revocation period, he will not receive
the Severance Payment; |
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(f) |
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He has read and understands the Release and
further understands that, subject to the limitations contained herein,
it includes a general release of any and all known and unknown,
foreseen or unforeseen claims presently asserted or otherwise arising
through the date of his signing of this Release that he may have
against the Employer; and |
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(g) |
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No statements made or conduct by the Employer
has in any way coerced or unduly influenced him or her to execute this
Release. |
3. No Admission of Liability. This Release does not constitute an admission of
liability or wrongdoing on the part of the Employer, the Employer does not admit there has been any
wrongdoing whatsoever against the Executive, and the Employer expressly denies that any wrongdoing
has occurred.
4. Entire Agreement. There are no other agreements of any nature between the Employer
and Executive with respect to the matters discussed in this Release, except as expressly stated
herein, and in signing this Release, Executive is not relying on any agreements or representations,
except those expressly contained in this Release.
5. Execution. It is not necessary that the Employer sign this Release following
Executive’s full and complete execution of it for it to become fully effective and
enforceable.
6. Severability. If any provision of this Release is found, held or deemed by a court
of competent jurisdiction to be void, unlawful or unenforceable under any applicable statute or
controlling law, the remainder of this Release shall continue in full force and effect.
7. Governing Law. This Release shall be governed by the laws of the State of New
York, excluding the choice of law rules thereof.
8. Headings. Section and subsection headings contained in this Release are inserted
for the convenience of reference only. Section and subsection headings shall not be deemed to be a
part of this Release for any purpose, and they shall not in any way define or affect the meaning,
construction or scope of any of the provisions hereof.
EXECUTIVE: