Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made and entered into intending
to be effective on October 1, 2007 (the “Commencement Date”) by and between
Morgans Hotel Group Co., with a principal place of business at 475 Tenth Avenue,
New York, NY 10018 (the “Company” or “Employer”) and Richard Szymanski
(“Employee”).

WHEREAS, the Company desires to continue to employ Employee as the Chief
Financial Officer, and Employee desires to continue to be employed by the
Company on the terms and conditions stated below;

NOW, THEREFORE, the Parties agree as follows:

1. Employment.

a. Company hereby agrees to continue to employ Employee and Employee hereby
accepts such continued employment, upon the terms and conditions contained in
this Agreement.

b. Employee will perform the job duties of Chief Financial Officer, or such
other duties as the Company may assign Employee from time to time, in its sole
discretion, consistent with the duties and responsibilities of an executive at
Employee’s level. Employee agrees to continue to devote substantially his full
time, energies and best efforts to the performance of his duties for the
Company, to the exclusion of all other business or employment activities. In the
performance of his duties hereunder, Employee shall report to the Chief
Executive Officer.

2. Compensation.

The Company shall pay to the Employee, and the Employee hereby accepts, as
payment for the services Employee renders to the Company remuneration in the
following amounts and forms:

a. Salary. The Company will pay Employee a base salary equal to $450,000 per
year, ($18,750 semi-monthly), which may be increased at the Company’s sole
discretion from time to time (the “Base Salary”). The Company customarily
conducts annual performance reviews and at that time a reevaluation of
Employee’s Base Salary is usual, provided, however, that Employee’s Base Salary
shall not be less than $450,000 per year.

c. Bonus. Subject to Employee’s continued employment with the Company, the
Company shall pay Employee an annual bonus commensurate with the bonuses paid to
other similarly situated employees of the Company. The exact amount of
Employee’s bonus shall be determined in the Company’s sole discretion.
Employee’s bonus will be paid annually, usually within two months after the end
of the calendar year. 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.

 

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d. Expenses. During the term of this Agreement, Employee shall be entitled to
reimbursement of all reasonable and actual out-of-pocket expenses incurred by
him in the performance of his services to the Company consistent with corporate
policies, provided that the expenses are properly accounted for, on the same
basis as other, similarly situated employees.

e. Fringe Benefits. Employee will be eligible for benefits, including medical,
dental, life insurance and 401(k), paid vacation, and equity grants on the same
basis as other, similarly situated employees and in accordance with the terms of
the various plans governing these benefits.

  3.  
Term and Termination.

a. Term. This Agreement shall commence on the Commencement Date and may be
terminated by either party as provided below.

b. Termination by Employee without Good Reason. Employee may terminate this
Agreement by providing the Company with written notice of his intent to
terminate employment 30 days in advance of the date of such termination.

c. Termination by Employee with Good Reason. Employee may terminate this
Agreement for Good Reason, as defined below, by notifying the Company of his
intent to terminate his employment with Good Reason, and, thereafter, the
Employer shall: (1) pay Employee his pro-rata bonus, if any, for the current
calendar year through the date of termination; (2) continue to pay Employee his
Base Salary for twenty four (24) months after his date of termination; (3) pay
Employee a bonus equal to the greater of (i) the bonus he actually received for
the prior two years or (ii) twice his annual target bonus; and (3) continue
paying for Employee’s health insurance benefits for a period of twenty four
(24) months after such termination. Employee must notify the Company, in
writing, within sixty (60) days after Employee has knowledge that an event
constituting Good Reason has occurred, in order for such event to constitute
Good Reason. The term Good Reason shall mean the occurrence of one or more of
the following without Employee’s written consent: (i) any failure by the Company
to comply with any of the provisions of paragraph 2 of this 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 Employee;
(ii) the assignment to Employee, or the removal from Employee, of any duties or
responsibilities that result in a material diminution of Employee’s authority;
(iii) a material diminution of the budget over which Employee has
responsibility, other than for a bona fide business reason; (iv) any failure by
the Company to comply with and satisfy Section 8(c) of this Agreement; (v) the
imposition of any requirement that Employee relocate his office to a location
other than Manhattan; or (vi) a material breach by the Company of any written
agreement between the Company and Employee; provided, however, that no
termination for Good Reason shall be effective unless the acts or omissions
providing Good Reason to terminate continue after Employee has given the Company
notice thereof and 30 days in which to cure the same.

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d. Termination Upon Death or Disability. The Employee’s employment shall
terminate automatically upon the Employee’s death.  If the Company determines in
good faith that the Disability of the Employee, as defined below, has occurred
during the term of this Agreement, it may give to the Employee written notice of
its intention to terminate the Employee’s employment.  In such event, the
Employee’s employment with the Company shall terminate effective on the 30th day
after receipt of such notice to the Employee (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, the Employee shall not
have returned to full-time performance of the Employee’s duties.  For purposes
of this Agreement, “Disability” shall mean the inability of the Employee to
perform his essential duties for the Company on a full-time basis for
180 calendar days during any consecutive twelve month period as a result of
incapacity due to mental or physical illness. Upon termination as the result of
Disability, Employer shall have no further obligations to Employee.

e. Termination by the Company for Cause. The Company may terminate Employee’s
employment at any time during the term of this Agreement for Cause, as defined
below, and the Company shall have no obligations to Employee other than to pay
Employee’s Base Salary through the date of termination. As used in this
Agreement, “Cause” shall mean: (i) Employee’s repeated failure to perform his
duties commensurate with his position as determined in the sole discretion of
the Company; (ii) Employee’s refusal to follow the lawful policies and
directives of his supervisors; (iii) Employee’s material breach of the
provisions of this Agreement; (iv) Employee’s engagement in any act of
dishonesty, gross negligence or willful misconduct that may have an adverse
effect on the Company, its business operations, financial condition, assets,
prospects or reputation; (v) Employee’s breach of any fiduciary duty owed to the
Company or (vi) Employee’s knowing violation of any law, rule or regulation that
affects his performance of or ability to perform any of his duties or
responsibilities with the Company; provided, however, that no termination
pursuant to clause (i), (ii) or (iii) shall be effective unless the conduct
providing Cause to terminate continues after Employee has been given notice
thereof and 30 days in which to cure the same.

f. Termination by the Company without Cause. The Company may terminate
Employee’s employment at any time during the term of this Agreement without
Cause (as defined above) by notifying the Employee in writing of its intent to
terminate Employee’s employment, and, thereafter, the Employer shall: (1) pay
Employee his pro-rata bonus, if any, for the current calendar year through the
date of termination; (2) continue to pay Employee his Base Salary for twenty
four (24) months after his date of termination; (3) pay Employee a bonus equal
to the greater of (i) the bonus he actually received for the prior two years or
(ii) twice his annual target bonus; and (3) continue paying for Employee’s
health insurance benefits for a period of twenty four (24) months after such
termination.

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g. Termination as the Result of a Change in Control. If, at the time of or
during the one-year period following a Change in Control, the Company terminates
Employee’s employment or Employee resigns for Good Reason: (1) the Company shall
pay employee his pro-rata bonus, if any, for the current calendar year through
the date of termination; (2) the Company shall continue to pay Employee his Base
Salary for twenty four (24) months after his termination; (3) the Company shall
pay Employee a bonus equal to the greater of (i) the bonus he actually received
for the prior two years or (ii) twice his annual target bonus; (4) the Company
shall continue to pay his health insurance benefits for a period of Twenty Four
(24) months after the date of his termination; and (4) all equity awards granted
to Employee by the Employer and held by Employee on the closing date of the
Change in Control (the “Closing Date”), which have not previously vested, shall
become immediately vested and exercisable as of the Closing Date. As used in
this Agreement, a “Change in Control” shall mean a “Corporate Transaction” as
set forth in the Company’s 2007 Omnibus Incentive Plan, adopted by the Board of
Directors and approved by the Company’s stockholders on May 22, 2007.

h. Release of Claims. Notwithstanding the foregoing or anything else contained
in this Agreement to the contrary, prior to the payment by Employer of the
termination payments and benefits provided for in clause (c), (f) or (g) of this
paragraph 3, and as a condition to such payments, Employee shall sign a
customary general release of all potential claims he may have against the
Company. If Employee does not deliver such release, the Company shall have no
obligation to provide Employee with any of the payments or benefits set forth in
such clauses of this paragraph 3.

4. Treatment of Confidential Information.

As a Company employee, Employee will acquire Confidential Information in the
course of Employee’s employment. Employee agrees that, in consideration of
employment with the Company, Employee will treat such Confidential Information
as strictly confidential. Employee 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. Employee shall not disclose or cause to be disclosed any such
Confidential Information to any third parties unless such disclosure has been
authorized in writing by the Company or except as may be required by regulatory
body or governmental body. “Confidential Information” is any Company
confidential information 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, sales
and marketing plans, research and development plans, strategic plans, and any
other information Employee acquires in the course of employment with the Company
that is not readily available to the public.

5. Non-solicitation.

During the period that Employee is employed by the Company, and for a period of
two (2) years thereafter, regardless of the reason Employee’s employment with
the Company terminates, Employee will not directly or indirectly, either
individually or through any entity with which Employee may become associated,
cause, solicit, entice or induce any present or future employee of the Company
to leave the employ of the Company and/or directly hire or directly or
indirectly cause, solicit, entice or induce any present or future employee of
the Company to become employed or associated in any capacity with a competitor
of the Company.

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6. Remedies.

Employee acknowledges that the breach or threatened breach of this Agreement
will cause the Company irreparable harm to its business and good will, for which
there may be no adequate remedy at law. Consequently, in the event that Employee
breaches or threatens to breach the Agreement, the Company shall be entitled to
both: (i) the issuance by a court of competent jurisdiction of an injunction,
restraining order, or other equitable relief in favor of itself, without the
necessity of posting a bond, restraining Employee from committing or continuing
to commit any violation; and (ii) monetary damages insofar as they can be
determined. Any right to obtain an injunction, restraining order or other
equitable relief under this paragraph 6 shall not be deemed a waiver of any
right to assert any other remedy the Company may have at law or in equity.

7. Tax Liability

a. Anything in this Agreement to the contrary notwithstanding, if (A) on the
date of termination of Employee’s employment with the Company, 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 Code, (B) if it
is determined that Employee is a “specified employee” within the meaning of
Section 409A(a)(2)(B) of the Code, (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) of the Code as a result of such termination, Employee would
receive any payment that, absent the application of this Section 7, would be
subject to interest and additional tax imposed pursuant to Section 409A(a) of
the Code as a result of the application of Section 409A(2)(B)(i) of the Code,
then no such payment shall be payable prior to the date that is the earliest of
(1) 6 months after Employee’s termination date, (2) Employee’s death or (3) such
other date 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).

b. It is the intention of the parties that payments or benefits payable under
this Agreement not be subject to the additional tax imposed pursuant to
Section 409A of the Code. To the extent such potential payments or benefits
could become subject to such Section, the parties shall cooperate to amend this
Agreement with the goal of giving Employee the economic benefits described
herein in a manner that does not result in such tax being imposed.

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8. Successors.

a. This Agreement is personal to the Employee and without the prior written
consent of the Company shall not be assignable by the Employee otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Employee’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 8(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.

9. Indemnification.

a. If the Employee 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, employee, 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, employee, 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 Employee’s service in any of the foregoing capacities, then
the Employee 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 Employee in connection therewith or
in connection with seeking to enforce his rights under this paragraph 9, and
such indemnification shall continue as to the Employee even if he has ceased to
be a director, member, employee, agent, manager, trustee, consultant or
representative of the Company or other person or entity and shall inure to the
benefit of the Employee’s heirs, executors and administrators. The Employee
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 paragraph 9, 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
Employee 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 Employee 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.

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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 Employee’s employment with
the Company terminates and (y) the date on which all claims against the Employee
that would otherwise be covered by the policy (or policies) would become fully
time barred, providing coverage to the Employee 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.

10. Severability

If a court of competent jurisdiction holds any provision of this Agreement to be
illegal, invalid or unenforceable, the remainder of the provisions of this
Agreement shall continue in full force and effect. Further, if any court of
competent jurisdiction construes any portion of any of the covenants contained
in this Agreement to be unenforceable or unreasonable as to scope, the court may
and is requested by the Parties to modify and enforce the covenants to the
extent reasonable.

11. Entire Agreement; Amendment.

This Agreement expresses the entire and exclusive understanding of the parties
to this Agreement only with respect to the matters covered by this Agreement and
incorporates any and all prior agreements, understandings, negotiations and
discussions relating hereto, whether written or oral, all of which are hereby
terminated and canceled. This Agreement may be modified or amended only by a
written instrument manually signed by all parties to this Agreement.

12. Applicable Law.

This Agreement has been made under and shall be construed and enforced in
accordance with the laws of the State of New York, notwithstanding its choice of
law rules to the contrary.

13. Notice.

Any notice, statement or demand required to be given under this Agreement shall
be in writing and shall be sent by hand delivery against receipt, certified
mail, return receipt requested or by a nationally recognized overnight carrier
to the address of the parties first listed above.

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14. Waiver.

The failure of either party to insist upon strict performance of any of the
terms or provisions of this Agreement or to exercise any option, right or remedy
contained in this Agreement, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect. No waiver by
either party of any term or provision of this Agreement shall be deemed to have
been made unless expressed in writing and signed by such party.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.

     
EMPLOYER:
  EMPLOYEE:
 
   
MORGANS HOTEL GROUP CO.
   
 
   
 
   
By: /s/ Fred Kleisner                                  
  /s/ Richard Szymanski                             
       Fred Kleisner, Interim CEO
  Richard Szymanski

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