Exhibit 10.2

EMPLOYMENT AGREEMENT FOR RICHARD SZYMANSKI
AMENDMENT NO. 1

This Amendment No. 1 to the Employment Agreement for Richard Szymanski
(“Amendment No. 1”) is made, effective as of December 31, 2008, by and between
Morgans Hotel Group Co., a Delaware corporation (the “Company”), and Richard
Szymanski (“Executive”).

Recitals:

WHEREAS, Executive and the Company previously entered into an Employment
Agreement, effective as of October 1, 2007; and

WHEREAS, Executive and the Company desire to further amend the Employment
Agreement to comply with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended.

Agreement:

NOW, THEREFORE, in consideration of the agreements contained herein and of such
other good and valuable consideration, the sufficiency of which Executive
acknowledges, the Company and Executive, intending to be legally bound, agree as
follows:

1. Section 3(c) of the Employment Agreement is hereby amended to read as
follows:

“(c) Termination by Employee with Good Reason.

(i) 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
Annual Bonus, if any, for the current calendar year through the date of his
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 (4) continue paying for Employee’s
health insurance benefits for a period of twenty-four (24) months after such
termination.

 

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(ii) The term Good Reason shall mean, subject to the conditions described in
Section 3(a)(iii), the occurrence of one or more of the following without
Employee’s written consent: (i) any material failure by the Company to comply
with any of the provisions of paragraph 2 of this Agreement, other than
insubstantial and 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 material
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.

(iii) For an act or omission described in Section 3(c)(ii) to constitute Good
Reason, (i) Employee must notify the Company in writing within sixty (60) days
after Employee has knowledge that an event constituting Good Reason has
occurred; (ii) such act or omission must be capable of being cured and continue
after Employee has given the Company notice thereof beyond thirty (30) days
following Company’s receipt of the required notice; and (iii) Employee actually
terminates employment within thirty (30) days of the end of the 30-day cure
period.”

2. Section 3(h) of the Employment Agreement is hereby amended to read as
follows:

“(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, to the extent that such payments or benefits are conditioned
upon the execution and delivery by the Executive of a release of claims, the
Executive shall forfeit all rights to such payments and benefits unless such
release is signed and delivered (and no longer subject to revocation). Within
three (3) days of such a termination, the Company shall provide a general
customary release to Employee, which Employee must sign within thirty (30) days
following the termination.”

3. Section 7 of the Employment Agreement is hereby amended by adding the
following paragraphs as a new Section 7(c):

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“(c) To the extent that any benefits to be provided during the six month period
commencing on a separation from service (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.

In addition, other provisions of this Agreement or any other such plan
notwithstanding, the Company shall have no right to accelerate any such payment
or to make any such payment as the result of any specific event except to the
extent permitted under Section 409A.

For purposes of Section 409A, each payment made after termination of employment,
including COBRA continuation reimbursement payment, will be considered one of a
series of separate payments.

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.”

Any amount that Executive is entitled to be reimbursed under this Agreement that
may be treated as taxable compensation, including any gross-up payment, 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.

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.

Any annual bonus that is earned pursuant to Section 2 shall be paid, whether is
cash or equity as provided above, between January 1 and March 15 of the year
following the year for which such annual bonus was earned; provided, however,
that if the Board shall determine that it is administratively impracticable,
which may include inability of the Company to gain certification of its
financial statements, to make such annual bonus payment by March 15, any such
payment shall be made as soon as reasonably practicable after such period and in
no event later than December 31 of the year following the year for which such
annual bonus was earned.

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Whenever a payment under this Agreement specifies a payment period with
reference to a number of days (e.g., “payment shall be made within thirty
(30) days following the date of termination”), the actual date of payment within
the specified period shall be within the sole discretion of the Company.

Unless this Agreement provides a specified and objectively determinable payment
schedule to the contrary, to the extent that any payment of base salary or other
compensation is to be paid for a specified continuing period of time beyond the
date of termination of Executive’s employment in accordance with the Company’s
payroll practices (or other similar term), the payments of such base salary or
other compensation shall be made on a monthly basis.”

4. The provisions of this Amendment No. 1 may be amended and waived only with
the prior written consent of the parties hereto. This Amendment No. 1 may be
executed and delivered in one or more counterparts, each of which shall be
deemed an original and together shall constitute one and the same instrument.

5. Except as set forth in this Amendment No. 1, the Employment Agreement shall
remain unchanged and shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment No. 1 on the date first written above.

MORGANS HOTEL GROUP CO.

By: /s/ Fred J. Kleisner            
Name: Fred J. Kleisner
Title: Chief Executive Officer

EXECUTIVE

/s/ Richard Szymanski          
Richard Szymanski

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