IBC Bonus Agreement

 

InnSuites Hospitality Trust (the “Company” or “IHT”) has approved the payment of
bonuses (“IBC Bonuses”) to Pamela Barnhill, Adam Remis, and Marc Berg in
connection with the consummation of a liquidity event for IBC, a division of
IHT. This Agreement sets forth the terms and conditions of the IBC Bonuses for
Barnhill, Remis and Berg (collectively “Executives”), including the requirements
that Executives must meet to receive their IBC Bonus.

 

Recitals

 

  1. Certain Executives have assisted in creating and developing IBC, a division
of IHT.         2. Certain Executives have increased the initial value of IBC
from $3,000,000 (“Starting Value”) to its current business value of $10,350,000
as determined by the “IBC Online” business valuation prepared by Business
Valuation Center, Inc. as of December 31, 2016 (the “2016 Valuation”).        
3. IHT desires a partial or full sale of IBC to a third party, an infusion of
capital, or a liquidity event involving substantially all the stock and/or
assets of IBC on or before January 31, 2019.         4. IHT desires to recognize
Barnhill’s, Berg’s and Remis’ contributions to IBC’s development and success
through agreed upon IBC Bonus eligibility as set forth herein.         5. On
January 24, 2017, the IHT Compensation Committee recommended to the IHT Board of
Trustees and the Board adopted a Board Resolution agreeing to the basic terms of
this Agreement.

 

Agreement

 

NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, the Parties agree as follows:

 

  1. The above Recitals are incorporated herein by this reference.         2.
Eligibility:

 

  a. Subject to the terms of this Agreement, Executives will be entitled to
receive IBC Bonuses if Executives (i) remain in the continuous employ of the
Company until the date of consummation of a sale, capital infusion and/or
liquidity event (“Closing Date”) and (ii) such sale, capital infusion and/or
liquidity event occurs prior to the IBC Bonus Program Termination Date of
January 31, 2019. If Executive’s employment with Company terminates without
cause prior to the IBC Closing Date and/or a sale or liquidity event does not
occur before the IBC Bonus Program Termination Date, Executive will not be
entitled to receive an IBC Bonus, this Agreement shall immediately terminate and
the Company shall have no liability to Executives hereunder.

 

  i. “Termination Without Cause” means termination by the Company other than
because of:

 

  1. willful refusal by you to follow lawful directives of the President the
Company or the Board which are consistent with the scope and nature of your
duties and responsibilities; if an isolated, insubstantial or inadvertent action
or failure which is remedied by you within 10 days after written notice from the
President;         2. your conviction of, or plea of guilty or nolo contendere
to, a felony or of any crime involving moral turpitude, fraud or embezzlement  
      3. any gross negligence or willful misconduct by you resulting in a
material loss to the Company or any of its subsidiaries, or material damage to
the reputation of the Company or any of its subsidiaries;         4. any
material breach by you of any one or more of the covenants contained in any
proprietary interest protection, confidentiality, non-competition or
non-solicitation agreement between you and the Company; or         5. any
violation of any statutory or common law duty of loyalty to the Company or any
of its subsidiaries.

 

 

 

 

  b. Subject to the provisions of this Agreement, Executive’s IBC Bonus shall be
subject to a clawback if Executive fails to disclose any prior business dealings
or relationships with the acquiring entity of IBC. This provision shall act to
prevent Executives from self-dealing or undermining the value of IBC.

 

  3. Amount of IBC Bonus:

 

  a. Barnhill’s IBC Bonus will be an amount equal to 10% of the gross sale or
transfer price over and above the Starting Value ($3M currently) or 10% of the
capital raised. For example, if IBC sells for $10 million cash and the Starting
Value remains $3 million, the increase is $7 million and Barnhill’s IBC Bonus
would be $700,000 ($7M x .10).         b. The IBC Bonuses to Remis and Berg will
be based on the IBC Bonus earned by Barnhill and such IBC Bonuses will be paid
by IHT, not from a reduction of Barnhill’s IBC Bonus.

 

  i. Remis will receive an IBC Bonus of 25% of the amount paid to Barnhill or
similar amount. For example, if Barnhill’s IBC Bonus is $700,000, Remis’ IBC
Bonus will be $175,000. The Compensation Committee expressly reserves the right
to award Remis an amount in the range of 20% to 40% of the amount paid to
Barnhill.         ii. Berg will receive an IBC Bonus of 10% of the amount paid
to Barnhill. For example, if Barnhill’s IBC Bonus is $700,000, Berg’s IBC Bonus
will be $70,000.

 

  4. Additional IBC Bonus for Barnhill. If Barnhill procures the purchaser or
investor for IBC or otherwise is a key contributor in the sale of IBC, Barnhill
will receive an Additional IBC Bonus of 3% of the gross sale. Barnhill must
identify in writing to James Wirth those purchasers she induces to make an offer
to IBC prior to Due Diligence. For those purchasers or investors for whom
Barnhill asserts she is a key contributor, Barnhill must similarly state in
writing to James Wirth prior to Closing Date that she is a key contributor.    
    5. Payment of IBC Bonuses.

 

  a. Cash transactions result in IBC Bonuses that are due and payable to
Executives in a cash lump sum within 7 days of the Closing Date.         b. IBC
Bonuses shall be due and payable in stock if the sale is an exchange for stock
within 14 days of the Closing Date.         c. IBC Bonuses shall be due and
payable as a combination of cash and stock in the event of a sale or liquidity
event involving both cash and stock, with the configuration of such combination
to be in the reasonable discretion of Barnhill (with Barnhill deciding for all
Executives). The IBC Bonuses shall be made within 7 days if cash and 14-days if
stock of the Closing Date.         d. Additional IBC Bonuses are due and payable
on the same terms as IBC Bonuses.         e. Nothing in this Agreement precludes
Executives from earning more than one IBC Bonus.

 

  6. Unfunded Status. All rights of Executives to IBC Bonuses under this
Agreement are unfunded obligations of the Company. IBC Bonuses shall be paid
from the general assets of the Company, and each Executive shall have the status
of an unsecured general creditor of the Company.

 

 

 

 

  7. Tax Withholding. The Company may withhold from IBC Bonuses all federal,
state, city or other taxes that may be required to be withheld pursuant to any
law or governmental regulation or ruling. Notwithstanding any other provision of
this letter agreement, the Company shall not be obligated to guarantee any
particular tax result for Executives with respect to any payment provided
hereunder, and Executives shall be responsible for any taxes imposed with
respect to any such payment. Company will however work in good faith with
Executives to limit tax liabilities to Executives.         8. Successors and
Assigns. This Agreement shall inure to the benefit of, and shall be binding
upon, the Parties hereto and their respective heirs, personal representatives,
successor and assigns. This Agreement, however, is not intended to confer any
rights or benefits upon any person or entity other than the parties hereto and
their respective heirs, personal representatives, successors and assigns.      
  9. Other Benefits; No Right to Employment. No payments hereunder shall count
toward, be substituted in lieu of, or be considered in determining payments or
benefits due to Executives under applicable law or under any other plan, program
or agreement of the Company. Nothing in this Agreement shall be deemed to give
any Executive the right to remain employed by the Company or to limit, in any
way, the right of the Company to terminate, or to change the terms of, an
Executive’s employment at any time.         10. Discretionary Authority. The
Compensation Committee may, from time to time prior, amend or terminate this
Agreement, provided that any resulting reduction in an Executive’s right to
payments under a previously granted Award shall be compensated for by a
replacement plan or arrangement of comparable or greater value to the affected
Executive. The determination of whether a replacement agreement or arrangement
is of comparable or greater value shall be made by the Compensation Committee in
its sole discretion, acting in good faith and based upon the facts and
circumstances existing at the time of the Committee’s determination.         11.
Mediation and Binding Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be submitted for
mediation and if needed, binding arbitration by an arbitrator the parties
mutually agree upon. If the parties are unable to reach agreement on an
arbitrator, the parties shall each submit three names of proposed arbitrators
and draw the arbitrator by random lot.         12. Governing Law. This Agreement
shall be governed by the law of the State of Arizona.

 

InnSuites Hospitality Trust, Inc.

 

/s/ James Wirth   

James Wirth

 

Accepted and Agreed to:   Accepted and Agreed to:   Accepted and Agreed to:    
      /s/ Pamela Barnhill    /s/ Adam Remis    /s/ Marc Berg  Pamela Barnhill  
Adam Remis   Marc Berg