Exhibit 10.1

MORGANS HOTEL GROUP

 

May 18, 2016

Dear Chadi:

 

This letter agreement hereby amends and restates in full all of your prior
employment offer letters, consisting of the employment offer letters dated
January 14, 2016, September 25, 2015, and October  11, 2011 as amended
(collectively, the “Prior Agreements”).

 

The terms of your continued employment are as follows:

 

Title: SVP, Chief Revenue Officer and Interim Chief Operating Officer

 

Effective Date: February 29, 2016

 

Base Salary:

Your annual base salary effective April 1, 2016 will be $325,000.00, ($6,250.00
per week) less applicable withholdings and deductions, and will be reviewed in
accordance with the Company’s standard practices.

 

Annual Discretionary Bonus:

For 2016, you will be eligible for an annual discretionary bonus based on
individual and company performance with a target bonus of 50% of your base
salary, but with the actual amount of the bonus, if any, to be determined by the
Company in its sole discretion.  You must be actively employed by the Company on
the date bonuses are paid to Company employees to be eligible to receive any
bonus.  Future year eligibility will be determined by the CEO and/or the
Compensation Committee of the Board of Directors.

Paid Time-Off:

You will continue to be eligible to accrue five (5) weeks vacation per
year.  Vacation time is accrued on a calendar year basis.  

 

You will continue to accrue six (6) paid sick days and three (3)  paid personal
days per calendar year.

 

If you do not use the granted paid time-off in a given year, you will forfeit
all accrued and unused vacation, sick and personal days and no balance will roll
over to the next year. Any vacation, sick or personal days already taken this
year under the Prior Agreements will be deducted from the annual allotments set
forth here in for the balance of 2016.

 

Termination of Employment:  The Company may terminate your employment at any
time, with or without Cause.  In the event that your employment is terminated by
the Company without Cause (and not as a result of your Disability)

____ Initial

--------------------------------------------------------------------------------

 

you shall be eligible to receive (i) accrued but unpaid base salary through the
date of termination of employment, to be paid in accordance with the Company’s
normal payroll practice; (ii) up to four (4) weeks of accrued unused vacation
time, to be paid in accordance with the Company’s normal payroll practice; (iii)
any unreimbursed business expenses incurred prior to the date of termination, to
be paid in accordance with the Company’s normal expense reimbursement
polices;  (iv) all compensation and benefits payable to you under the terms of
the employee benefit plans in which you participated prior to the date of
termination of employment, in accordance with the terms of such employee benefit
plans; (v) twelve (12) months of salary continuance at the same rate as the base
salary at the time of termination, less applicable withholdings and
deductions;  (vi) a one-time lump sum payment in an amount equivalent to twelve
(12) times the amount that the Company contributes to the health insurance
premiums for you per month at the time of your termination, less applicable
withholdings and deductions; (vii) accelerated vesting of a pro rata portion of
any outstanding equity awards that are subject to solely time-based vesting
conditions and are held by you at the time of termination, determined by
multiplying the number of shares of Company common stock subject to each such
equity award by a fraction, the numerator of which is the number of days elapsed
since the beginning of the vesting period through the date  of termination and
the denominator of which is the number of total days in the vesting
period;  (viii) an amount equal to a pro rata share of  your annual bonus for
the year of termination determined by multiplying the annual bonus by a
fraction, the numerator of which is the number of days elapsed in the year
through the effective date of termination and the denominator of which is 365,
and based upon application of the performance metrics determined by the Company
in its sole discretion with respect to such bonus, and otherwise payable at the
same time that annual bonuses in respect of the applicable calendar year are
otherwise paid to employees of the Company; and (ix) in the event that the
effective date of  termination occurs after the end of a calendar year worked
and prior to payment of bonuses for that calendar year, the Company will pay you
your bonus for such calendar year (if any) calculated based upon application of
the performance metrics determined by the Company in its sole discretion with
respect to such bonus. (collectively, the “Severance Benefit”).  

2

____ Initial

 

--------------------------------------------------------------------------------

 

 

Any obligation of the Company to provide you the Severance Benefit is
conditioned, however, on you executing (without revoking) and returning in a
timely manner the separation and release agreement that will be provided to you
by the Company at or about (and in all events no later than 30 days following)
the time your employment ends (which agreement may include, without limitation,
a general release of claims; and restrictions on post-employment competition and
on solicitation of customers, business partners and employees and requirements
of post-employment confidentiality, cooperation and non-disparagement, provided
such restrictions and requirements shall be no more restrictive than the
corresponding covenants and agreements agreed to herein) (the “Separation
Agreement”) and on your continued compliance with the terms and conditions of
such Separation Agreement. The Separation Agreement must become effective, if at
all, by the deadline specified therein (and in all events by the 60th day
following the date your employment is terminated).  Any base salary to which you
are entitled will be provided in the form of salary continuation, payable in
accordance with the normal payroll practices of the Company.  The first payment
will be made on the Company’s next regular payday following the expiration of 7
days from the effective date of the Separation Agreement; but that first payment
shall be retroactive to the date of termination.  Notwithstanding the foregoing,
if the time period to consider and revoke the Separation Agreement covers two of
your taxable years, any portion of the Severance Benefit that constitutes
deferred compensation subject to the requirements of Section 409A of the
Internal Revenue Code, as amended (“Section 409A”) that is payable during the
period to consider and revoke the Separation Agreement shall be paid in the
later taxable year.

 

As used herein:

“Cause” shall mean: (i)  any act or omission constituting a material breach by
you of any provision of this letter agreement; (ii) willful failure by you to
perform your duties hereunder (other than any such failure resulting from the
your Disability), after demand for performance is delivered by the Company that
identifies in reasonable detail the manner in which the Company believes you
have not performed your duties, if, within 20 days of such demand, you fail to
cure any such failure that is capable of being cured; (iii) any misconduct by
you that is materially injurious to any member of the Company or any of its
subsidiaries or affiliates or properties, financial or otherwise, or any act of
misappropriation, fraud (including with respect to any member of the Company or
any of its subsidiaries’, affiliate’s or properties’ accounting and financial
statements), embezzlement or conversion by you of the property of

3

____ Initial

 

--------------------------------------------------------------------------------

 

any of the Company or its subsidiaries or affiliates; (iv) the commission (or
plea of no contest) of you for any felony or misdemeanor involving moral
turpitude; (v) your gross negligence, gross neglect of duties or gross
insubordination; (vi) your commission of any violation of any antifraud
provision of federal or state securities laws; (vii) your  alcohol or
prescription or other drug abuse substantially affecting work performance;
(viii) your violation of the Company’s policies regarding harassment or
discrimination; or  (ix) your material violation of company policies or this
letter agreement.

“Disability” shall mean: (i) your incapacity due to physical or mental illness
that results in your failure to substantially perform the essential functions of
your position, with reasonable accommodation, on a full-time basis for 90
consecutive days; or (ii) you become eligible to receive benefits under the
Company’s applicable long-term disability plan.  If you do not agree with the
Company’s determination of your Disability, such question will be subject to the
certification of a qualified medical doctor selected by the Company to which you
have no reasonable objection.  The costs of such qualified medical doctor will
be paid by the Company.

 

Change of Control:

If the Company terminates your employment without cause within twelve (12)
months following a Change of Control (as defined below), then the Company will,
subject to your continuing full and faithful compliance with the Executive
Covenants set forth below and as full liquidated damages, pay you the Severance
Benefit and the Company thereafter shall have no further obligations to you
hereunder. Notwithstanding the foregoing or anything else contained in this
letter to the contrary, prior to the payment by the Company of the termination
payments and benefits provided for above, and as a condition to such payments,
you shall, comply with the provisions relating to the execution and delivery of
the Separation Agreement as set forth under “Termination of Employment”  above.

 

As used herein, “Change of Control” shall mean the occurrence of a “change in
control event” (within the meaning of Section 409A and the Regulations
thereunder) with respect to Morgans Hotel Group Co.

Notwithstanding anything to the contrary in this letter agreement, if at the
time your employment terminates, you are a “specified employee,” as defined
below, any and all amounts payable under this letter agreement on account of
such separation from service that would (but for this provision) be payable
within six (6) months following the date of termination, shall instead be paid
on the next

4

____ Initial

 

--------------------------------------------------------------------------------

 

business day following the expiration of such six (6) month period or, if
earlier, upon your death; except (A) to the extent of amounts that do not
constitute a deferral of compensation within the meaning of Treasury regulation
Section 1.409A-1(b) (including without limitation by reason of the safe harbor
set forth in Section 1.409A-1(b)(9)(iii), as determined by the Company in its
reasonable good faith discretion); (B) benefits which qualify as excepted
welfare benefits pursuant to Treasury regulation Section 1.409A-1(a)(5); or (C)
other amounts or benefits that are not subject to the requirements of Section
409A of the Internal Revenue Code of 1986, as amended.  For purposes of this
letter agreement, all references to “termination of employment” and correlative
phrases shall be construed to require a “separation from service” (as defined in
Section 1.409A-1(h) of the Treasury regulations after giving effect to the
presumptions contained therein), and the term “specified employee” means an
individual determined by the Company to be a specified employee under Treasury
regulation Section 1.409A-1(i).  Each payment made under this letter agreement
shall be treated as a separate payment and the right to a series of installment
payments under this letter agreement is to be treated as a right to a series of
separate payments.  In no event shall the Company have any liability relating to
the failure or alleged failure of any payment or benefit under this letter
agreement to comply with, or be exempt from, the requirements of Section 409A.

As a Company employee, you will acquire Confidential Information in the course
of your employment.  You agree that in consideration of your employment with the
Company, you will treat such Confidential Information as strictly
confidential.  You will not, directly or indirectly, at any time during your
employment with the Company or any time thereafter, and without regard to when
and for what reason, if any, your employment shall terminate, disclose, use, or
cause to be used any such Confidential Information, except as it is absolutely
necessary in the normal course of performing your designated duties for the
Company, if authorized in writing by the Company or as may be required by a
court or other governmental body, provided that in the event of disclosure
required by a court or other governmental body you shall provide the Company as
much advance notice as possible (consistent with applicable law) prior to making
such disclosure.  “Confidential Information” includes any information of the
Company or its subsidiaries or affiliates not generally known to the public,
including but not limited to trade secrets, mailing lists, financial
information, business plans and/or policies methods of operations, customer
lists and information, information concerning or received from business
partners, sales and marketing plans, research and development plans, strategic
plans, and any other information acquired by you in the course if your
employment with the Company that is not readily available to the public (other
than through a breach of this letter agreement).  

 

During the period that you are employed by the Company, and for a period of six
months thereafter (the “Non-Compete Period”), in the event you are terminated by
the Company with or without Cause in accordance with the terms hereof, you will
not, whether alone or jointly, or as an employee, officer, agent, partner,
member, stockholder (except of not more than 2% of the outstanding stock of any
listed company), investor, consultant, advisor, or independent contractor,
directly, indirectly or beneficially, irrespective of whether compensation or
other remuneration is provided, for your own account or for the benefit of any
other period or entity, engage in any business or entity that is engaged in the
ownership, management or operation of a hotel or chain of hotels, or is engaged
in any food, beverage or other night-life related business, in any instance,
anywhere in the world. In the event the Company agrees in its sole discretion to
waive all or any portion of the Non-Compete Period upon your request, the
Company will have no obligation to

5

____ Initial

 

--------------------------------------------------------------------------------

 

provide you with the any Severance Benefit to which you would otherwise be
entitled for the portion of the Non-Compete Period so waived.

 

During the period that you are employed by the Company, and for a period of one
year thereafter (the “Non-Solicit Period”), regardless of the reason your
employment with the Company terminates, you will not, directly or indirectly,
either individually or through any entity or other person with which you may
become associated, (1) hire or solicit for hiring or engagement any employee of
the Company or any of its subsidiaries or affiliates, or encourage or otherwise
induce any such employee to terminate his or her employment or other contractual
relationship with the Company or any of its subsidiaries or affiliates, (2)
induce or attempt to induce any person or entity that is a supplier,
distributor, guest, travel agent, vendor, customer or otherwise a contracting
party of the Company or any of its subsidiaries or affiliates at any time during
the applicable Non-Solicit Period (a “Covered Person”) to terminate or modify
any written or oral agreement or understanding with the Company or any of its
subsidiaries or affiliates, or (c) induce or attempt to induce a Covered Person
(other than a consultant or independent contractor) to engage in a business
relationship with a third party that it could instead engage in with the Company
or any of its subsidiaries or affiliates.  During the period that you are
employed by the Company, and for a period of six months thereafter, regardless
of the reason your employment with the Company terminates, you will not,
directly or indirectly, either individually or through any entity or other
person with which you may become associated, hire or solicit for hiring or
engagement any consultant or independent contractor of the Company or any of its
subsidiaries or affiliates, or encourage or otherwise induce any such consultant
or independent contractor to terminate his or her contractual relationship with
the Company or any of its subsidiaries or affiliates.   For purpose of this
letter agreement, an employee, consultant or independent contractor is any
person who was such at any time within the preceding 6 months.

 

At no time during or after your employment will you utter, issue or circulate
publicly any false or disparaging or otherwise critical statements, remarks or
rumors about the Company or its subsidiaries or affiliates and/or any of their
respective businesses, or any of their respective officers, employees,
directors, agents or representatives.  

 

You shall promptly and fully disclose all Intellectual Property to the
Company.  You hereby assign and agree to assign to the Company (or as otherwise
directed by the Company) your full right, title and interest in and to all
Intellectual Property.  You agree to execute any and all applications for
domestic and foreign patents, copyrights or other proprietary rights and to do
such other acts (including without limitation the execution and delivery of
instruments of further assurance or confirmation) requested by the Company to
assign the Intellectual Property to the Company (or as otherwise directed by the
Company) and to permit the Company to enforce any patents, copyrights or other
proprietary rights to the Intellectual Property.  You will not charge the
Company for time spent in complying with these obligations.  All copyrightable
works that constitute Intellectual Property that you create during your
employment shall be considered “work made for hire” and shall, upon creation, be
owned exclusively by the Company.  For purposes of this letter agreement,
“Intellectual Property” means inventions, discoveries, developments, methods,
processes, compositions, works, concepts and ideas (whether or not patentable or
copyrightable or constituting trade secrets) conceived, made, created, developed
or reduced to practice by you (whether alone or with others, whether or not
during normal business hours or on or off the Company’s premises) during your
employment, including both any period of employment

6

____ Initial

 

--------------------------------------------------------------------------------

 

predating this letter agreement as well as any period of employment from and
after the date of this letter agreement, and during the period of thirty days
immediately following termination of your employment that relate either to the
business of the Company or any of its subsidiaries or affiliates or to any
prospective activity of the Company or any of its subsidiaries or affiliates or
that result from any work performed by you for the Company or any of its
subsidiaries or affiliates or that make use of Confidential Information or any
of the equipment or facilities of the Company or any of its subsidiaries or
affiliates.  

 

You agree without reservation that the restraints imposed on you pursuant to
this letter agreement are necessary for the reasonable and proper protection of
the Company and its subsidiaries and affiliates, and that each and every one of
the restraints is reasonable in respect to subject matter, length of time and
geographic area.  You further agree that, were you to breach any of the
covenants contained in this letter agreement, the damage to the Company and its
subsidiaries and affiliates would be irreparable.  You therefore agree that the
Company, in addition to any other remedies available to it, shall be entitled to
preliminary and permanent injunctive relief against any breach or threatened
breach by you of any of those covenants, without having to post bond, together
with an award of its reasonable attorney’s fees incurred in enforcing its rights
hereunder.  You and the Company further agree that, in the event that any
provision of this letter agreement is determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, that
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.  Finally, no claimed breach of this letter
agreement or other violation of law attributed to the Company, or any change in
the circumstances or nature of your employment relationship with the Company,
shall operate to excuse you from the performance of your obligations under this
letter agreement with respect to confidentiality, non-competition,
non-solicitation and/or assignment of intellectual property.

 

All information contained in this letter agreement is confidential.  This letter
agreement describes, in full, the offer that has been extended to you and
supersedes any previous verbal offer that may have been made and also supersedes
the Prior Agreements, each and all of which shall be of no further effect and
under which it is agreed you have no further rights and the Company has no
further obligations. This letter agreement is subject to change at any time by
mutual agreement, which agreement to be binding must have been signed by you and
by the Company’s Chief Executive Officer. This is a New York contract and shall
be governed and construed in accordance with the laws of the State of New York,
without regard to any conflict of laws principles that would result in the
application of the laws of any other jurisdiction.  

 

Please indicate your acceptance of this offer by signing below and returning
this letter agreement to me within seven (7) business days after date of issue.

 

 

Very truly yours,

 

 

/s/ Richard Szymanski

Rich Szymanski

Chief Financial Officer

7

____ Initial

 

--------------------------------------------------------------------------------

 

 

 

AGREED AND ACCEPTED BY:

/s/ Chadi Farhat

 

 

DATE:

 

May 18, 2016

8

____ Initial