EXHIBIT 10(l)
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT, is made and entered into as
of October 23, 2001 by and between PRIME HOSPITALITY CORP., a corporation
organized and existing under the laws of the State of Delaware with its
principal place of business in Fairfield, New Jersey (the "Corporation") and X.
X. XXXXXXXXXX ("Optionee"), a resident of the State of New York (the
"Agreement").
W I T N E S S E T H:
WHEREAS, Optionee has agreed to serve as an officer of the Corporation;
and
WHEREAS, as a material inducement to Optionee to extend the term of the
Employment Agreement, dated as of September 14, 1998, by and between Optionee
and the Corporation (the "Employment Agreement") and serve the Corporation as an
officer, Corporation desires to grant to Optionee an option to purchase shares
of common stock of the Corporation, par value $.01 per share (the "Common
Stock"), on the terms and subject to the conditions set forth in this Agreement
and Optionee desires to accept such stock option award on such terms and
conditions; and
WHEREAS, capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Employment Agreement.
NOW, THEREFORE, in consideration of the premises set forth in the
Employment Agreement, the parties hereto agree as follows:
1. Grant of Stock Option. The Corporation hereby grants Optionee the
right, privilege and option to purchase 3,000,000 shares of common Stock (the
"Option Shares") at a price of $9.1150 per share ("Exercise Price"), in the
manner and subject to the terms and conditions contained herein. The grant of
this option shall be effective as of October 23,2001 ("Grant Date"). This option
is hereby designated as a "Nonqualified Option."
2. Option Term. This option shall terminate ten (10) years from the
grant Date ("Option Term"); however, this option is subject to earlier
expiration upon termination of Optionee's status as an employee of the
Corporation, as more fully described in Section 5 hereof.
3. Vesting of Option Shares. The Option Shares shall vest and become
exercisable in accordance with the following schedule: (a) 1,000,000 of the
shares of Common Stock on October 23, 2002, (b) 1,000,000 of the shares of
Common Stock on October 23, 2003, and (c) 1,000,000 of the shares of Common
Stock on October 23, 2004, provided further, that in each case, Optionee remains
an employee of the Corporation on the applicable vesting date. In addition, (x)
all Option Shares shall become immediately vested and fully exercisable upon a
"Change in Control," as defined in the change in Control Agreement between the
Corporation and Optionee, provided Optionee remains an employee of the
Corporation on the date of such Change in Control; and (y) all unvested Option
Shares shall become immediately and fully exercisable upon expiration of the
employment Agreement prior to October 23, 2004 as a result
of notice of non-renewal given by the Company pursuant to Section 2 of the
Employment Agreement. Optionee shall have the right hereunder to purchase only
those Option Shares which have become vested and exercisable as provided under
this Agreement.
4. Manner of Exercise of Options. To exercise the options granted
herein, Optionee shall give written notice to the Corporation at its principal
executive office, to the attention of the Secretary of the Corporation,
accompanied by a proper notice of exercise setting forth the number of Option
Shares with respect to which the option is to be exercised, and by payment of
the Exercise Price in one of the methods permitted by Section 9. Optionee
further agrees that in connection with any exercise of all or part of this
option, Optionee shall deliver to the Corporation such sum, if any, as the
Corporation deems necessary to satisfy any withholding and other tax obligations
resulting from such exercise. Optionee may elect to surrender to the Corporation
shares of Common Stock already owned by Optionee or shares that would otherwise
have been acquired upon exercise to fulfill any tax withholding obligation. The
date on which the Corporation receives written notice of any exercise hereunder
accompanied by payment of the Exercise Price will be considered the date this
option was exercised. Promptly, and in no event more than five (5) business days
after receipt of written notice of exercise of all or part of this option, the
Corporation shall deliver to Optionee or such other person a certificate or
certificates for the requisite number of Option Shares. Optionee or such other
person a certificate or certificates for the requisite number of Option Shares.
Optionee or a transferee of an option hereunder shall not have any privileges as
a stockholder of the Corporation with respect to any stock covered by this
option until the date of issuance of a stock certificate for such Option Shares.
5. Termination of Option Rights.
(a) If Optionee's employment with the Corporation shall
terminate voluntarily by Optionee, or by the Company for Cause, and immediately
after such termination Optionee shall not then be employed by the Corporation,
the option granted hereunder, to the extent not exercised prior to the date of
termination of employment, shall expire forthwith. In the event of Optionee's
voluntary termination of employment, the Corporation, in its sole discretion,
may consent to Optionee's exercise within three (3) months after termination of
the option granted hereunder, if the Corporation determines that it is in the
interest of the Corporation to permit such exercise, subject, however, to the
limitations of subparagraph (d) below.
(b) If the employment of Optionee with the Corporation shall
terminate other than (i) by reason of death, (ii) voluntarily by Optionee, or
(iii) by the Corporation for Cause, and immediately after such termination
Optionee shall not then be employed by the Corporation, the option granted
hereunder may be exercised at any time within three (3) months after such
termination, subject to the provisions of subparagraph (d) below. For purposes
of this Agreement, the retirement of Optionee either pursuant to a pension or
retirement plan adopted by the Corporation, on the normal retirement date
prescribed from time to time by the Corporation, and the termination of
employment as a result of Optionee's Disability, shall be deemed to be a
termination of Optionee's employment other than voluntarily by Optionee or for
Cause.
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(c) If an Optionee dies (i) while employed by the Corporation
or (ii) within three (3) months after the termination of his employment other
than as a result of (A) a voluntary termination by Optionee, or (B) a
termination by the Corporation for Cause, the option granted hereunder may be
exercised at any time within six (6) months after Optionee's death, subject to
the provisions of subparagraph (d) below.
(d) This option may not be exercised pursuant to this Section
5 except to the extent that Optionee was entitled to exercise the option at the
time of termination of employment or death, and in any event may not be
exercised after the expiration of ten (10) years from the Grant Date.
6. Changes in Capital Structure. If the capital stock of the
Corporation is changed by reason of a reorganization, merger, consolidation,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend or exchange of shares and the like, appropriate equitable adjustments
shall be made in (a) the number and class of shares of Common Stock subject to
this option, and (b) the Exercise Price of this option; provided, however, that
if fractions of a share would result from any such adjustment, the adjustment
shall be revised to the next lower whole number of shares and any adjustment in
the number of shares of Common Stock subject to this option shall apply
proportionately to only the unexercised portion of such option. Each such
adjustment shall be determined by the Board of Directors of the Corporation (the
"Board") in good faith, which determination shall be final and binding on all
persons. If the Corporation shall be reorganized, consolidated, or merged with
another corporation, or if all or substantially all of the assets of the
Corporation shall be sold or exchanged, Optionee shall at the time of issuance
of the stock under such corporate event be entitled to receive upon the exercise
of this option the same number and kind of shares of stock or the same amount of
property, cash or securities as he would have been entitled to receive upon the
occurrence of any such corporate event as if he had been, immediately prior to
such event, the holder of the number of shares covered by this option.
7. Authorized Shares. The Corporation agrees to take all necessary and
appropriate steps to ensure that there are at all times sufficient authorized
shares of capital stock available for issuance upon exercise of this option.
8. Transferability of Options. To the extent not prohibited by any
statute, rule or regulation applicable to the option or the registration of the
Option Shares with the Securities and Exchange Commission, all or a portion of
the option is transferable by Optionee, without consideration, to or for the
benefit of Immediate Family Members, including but not limited to a partnership
or trust with respect to which Immediate Family members are the sole partners or
beneficiaries, respectively. The right to transfer the option is personal to
Optionee and any transferee of the option shall not have the right to transfer
the option to any person other than by the laws of descent and distribution. As
used herein the phrase "Immediate Family members" shall mean Optionee's spouse,
children, grandchildren, parents and grandparents. Except with respect to
transfers to Immediate Family members as discussed above, this option shall not
be transferable, except by will or the laws of descent or distribution, and the
option may be exercised during the lifetime of Optionee only by him. This option
shall not be subject to execution, attachment or other process.
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9. Payment of Exercise Price. Except as provided below, payment of the
Exercise Price for the Option shares shall be made (a) in cash, (b) by certified
check or bank cashier's check payable to the order of the corporation in the
amount of such Exercise Price, (c) by delivery to the Corporation of shares of
Common Stock having a fair market value on the date of exercise equal to such
Exercise Price, (d) by irrevocable instructions to a broker to deliver promptly
to the Corporation the amount of sale or loan proceeds necessary to pay such
Exercise Price and to sell the shares of Common Stock to be issued upon exercise
of the option and deliver the net cash proceeds (less the Exercise Price
delivered to the Corporation and the commissions and brokerage fees) to the
Optionee or to deliver the remaining shares of Common Stock to the Optionee, or
(e) by any combination of the methods of payment described in (a) through (d)
above. Proceeds of any payment shall constitute general funds of the
Corporation. Before the option is exercised, the Board, in the exercise of its
absolute discretion, may authorize payment by acceptance of Optionee's full
recourse promissory note for some or all of the Exercise Price of the Option
Shares being acquired (except for the aggregate par value of the shares being
acquired, which must be paid in cash or other lawful consideration under
applicable law), payable on such terms and bearing such interest rate as
determined by the Board, and secured in such manner as the Board shall approve,
including, without limitation, by a security interest in shares of Common Stock
or other securities of the Corporation.
10. Governing Law. This Agreement shall be interpreted and construed
according to and governed by the laws of the State of New Jersey. Any disputes
or claims shall be resolved as provided in Section 11.5 of the Employment
Agreement.
11. Entire Agreement. This instrument, the Employment Agreement and the
Change in Control Agreement contain the entire agreement of the parties relating
to the option grant. To the extent that the terms and provisions of this
Agreement are in conflict with or inconsistent with the terms and provisions of
the Employment Agreement or Change in Control Agreement, then the Employment
Agreement or Change in Control Agreement, as applicable, shall be controlling
and shall govern the relationship between the parties. This Agreement may not be
changed orally, but may be changed only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought. The Nonqualified Stock Option Agreement dated October 14, 1998,
remains in full force and effect with respect to the options granted thereunder.
12. Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision of this Agreement.
13. Authority. The provisions of this Agreement required to be approved
by the Board have been so approved and authorized.
14. Benefit. This Agreement shall bind all parties, their respective
heirs, executors, administrators and assigns. Except as provided in Section 8
hereof, nothing contained herein shall be construed as an authorization or right
of any party to assign their respective rights or obligations hereunder and
Optionee shall have no right to assign the option herein granted to him and any
such attempted assignment shall be ineffective. The option, right and privilege
herein
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granted to Optionee to purchase Option Shares shall be binding upon the
Corporation and its successors or assigns.
15. Termination of Agreement. This Agreement shall terminate: (a) upon
the written agreement of all parties or (b) upon the terms and conditions set
forth in the Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this instrument
effective as of the day and year first above written.
PRIME HOSPITALITY CORP.
BY:
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XXXXXXX XXXXXX, XX. V.P.
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X. X. XXXXXXXXXX
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