Exhibit 10.66
FORM OF LTIP UNIT VESTING AGREEMENT
LTIP UNIT VESTING AGREEMENT
UNDER THE MORGANS HOTEL GROUP CO.
AMENDED AND RESTATED 2007 OMNIBUS INCENTIVE PLAN

     
Name of Grantee:
  (“Grantee”)
No. of LTIP Units:
   
Grant Date:
  (the “Grant Date”)
Final Acceptance Date:
  (the “Final Acceptance Date”)

Pursuant to the Morgans Hotel Group Co. Amended and Restated 2007 Omnibus
Incentive Plan (the “Plan”) and the Limited Liability Company Agreement (the
“LLC Agreement”) of Morgans Group LLC (the “LLC”), a Delaware limited liability
company, Morgans Hotel Group Co. (the “Company”), a Delaware corporation and the
managing member of the LLC, hereby grants to the Grantee named above an Other
Stock-Based Award (as defined in the Plan, referred to herein as an “Award”) in
the form of, and by causing the LLC to issue to the Grantee, the number of LTIP
Units (as defined in the LLC Agreement) set forth above (the “Award LTIP Units”)
having the rights, voting powers, restrictions, limitations as to distributions,
qualifications and terms and conditions of redemption and conversion set forth
herein and in the LLC Agreement. Upon the close of business on the Final
Acceptance Date, if this LTIP Unit Vesting Agreement (this “Agreement”) is
accepted, the Grantee shall receive the number of LTIP Units specified above,
subject to the restrictions and conditions set forth herein, in the Plan and in
the LLC Agreement. Unless otherwise indicated, capitalized terms used herein but
not defined shall have the meanings given to those terms in the Plan.
1. Acceptance of Agreement.
(a) Unless the Grantee is already a Member (as defined in the LLC Agreement),
Grantee must sign, as a Member, and deliver to the LLC a counterpart signature
page to the LLC Agreement (attached hereto as Exhibit A). Upon signing and
delivery of the signature page, to the extent required, the Grantee shall be
admitted as a Member of the LLC, as of the Grant Date, with beneficial ownership
of the number of LTIP Units specified above, the LLC Agreement shall be amended
to reflect the issuance to the Grantee of the Award LTIP Units and the LLC shall
deliver to the Grantee a certificate of the Company certifying the number of
LTIP Units then issued to the Grantee. Thereupon, the Grantee shall have all the
rights of a Member of the LLC with respect to the number of LTIP Units specified
above, as set forth in the LLC Agreement, subject, however, to the restrictions
and conditions specified herein and in the LLC Agreement.
(b) In order to confirm receipt of this Agreement, Grantee must sign and deliver
to the Company a copy of this Agreement.

 

 

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2. Vesting of LTIP Units.
[(a) Except as provided in Sections 2(b) and 2(c) below, the Award LTIP Units
shall vest one-third (1/3) each year on each of the first three one-year
anniversaries of the Grant Date, (each such date on which Award LTIP Units vest
is referred to herein as a “Vesting Date”)]; provided that upon termination of
Grantee’s employment with, cessation of consulting relationship with or
cessation of service to the Company and its Subsidiaries for any reason, the
LTIP Units that have not yet vested shall, without payment of any consideration
by the LLC, automatically and without notice terminate, be forfeited and be and
become null and void, and neither the Grantee nor any of his successors, heirs,
assigns, or personal representatives will thereafter have any further rights or
interests in such LTIP Units. In the event Grantee becomes a consultant, advisor
or Non-Employee Director, such change in status shall not be deemed a
termination of employment or service with the Company at the time of such change
in status or thereafter so long as the Grantee continues in one of such
positions.
(b) Notwithstanding any other term or provision of this Agreement, if a
Corporate Transaction occurs and the LTIP Units subject to this Agreement are
not assumed or substituted for, or if assumed or substituted for, upon the
Grantee’s Involuntary Termination within the 12 month period following the
Corporate Transaction, any restrictions and conditions on all LTIP Units subject
to this Agreement shall be deemed waived by the Company and all LTIP Units
granted hereby that have not previously been forfeited shall automatically
become fully vested. Notwithstanding any other provision in this Agreement, if
assumed or substituted for, the award will expire one year after the date of
termination.
“Involuntary Termination” means termination by reason of (i) the Grantee’s
involuntary dismissal by the Company or its successor for reasons other than
Cause; or (ii) the Grantee’s voluntary resignation for Good Reason as defined in
any applicable employment or severance agreement, plan, or arrangement between
the Grantee and the Company, or if none, then as set forth in the Plan following
(x) a substantial adverse alteration in the Grantee’s title or responsibilities
from those in effect immediately prior to the Corporate Transaction; (y) a
material reduction in the Grantee’s annual base salary as of immediately prior
to the Corporate Transaction (or as the same may be increased from time to time)
or a material reduction in the Grantee’s annual target bonus opportunity as of
immediately prior to the Corporate Transaction; or (z) the relocation of the
Grantee’s principal place of employment to a location more than 35 miles from
the Grantee’s principal place of employment as of the Corporate Transaction or
the Company’s requiring the Grantee to be based anywhere other than such
principal place of employment (or permitted relocation thereof) except for
required travel on the Company’s business to an extent substantially consistent
with the Grantee’s business travel obligations as of immediately prior to the
Corporate Transaction. To qualify as an “Involuntary Termination” the Grantee
must provide notice to the Company of any of the foregoing occurrences within
90 days of the initial occurrence and the Company shall have 30 days to remedy
such occurrence.
(c) Other Vesting Terms. Notwithstanding anything to the contrary in this
Section 2, to the extent the Grantee is a party to another agreement or
arrangement with the Company that provides accelerated vesting of the Award LTIP
Units in the event of certain types of employment terminations or any other
applicable vesting-related events or provides more favorable vesting provisions
than provided for in this Agreement, the more favorable vesting terms of such
other agreement or arrangement shall control.
3. Distributions. Distributions on the LTIP Units shall be paid currently to the
Grantee in accordance with the terms of the LLC Agreement.

 

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4. Rights with Respect to LTIP Units. If (i) the Company shall at any time be
involved in a merger, consolidation, dissolution, liquidation, reorganization,
exchange of shares, sale of all or substantially all of the assets or stock of
the Company or a transaction similar thereto, (ii) any stock dividend, stock
split, reverse stock split, stock combination, reclassification,
recapitalization, significant repurchases of stock or other similar change in
the capital structure of the Company, or any distribution to holders of Common
Stock other than regular cash dividends, shall occur or (iii) any other event
shall occur which in the judgment of the Administrator necessitates action by
way of adjusting the terms of the Agreement, then and in that event, the
Administrator shall take any such action as in its discretion shall be necessary
to maintain the Grantee’s rights hereunder so that they are substantially
proportionate to the rights existing under this Agreement prior to such event,
including but not limited to, adjustments in the number of LTIP Units then
subject to this Agreement.
5. Legend. The records of the LLC evidencing the Award LTIP Units shall bear an
appropriate legend, as determined by the LLC in its sole discretion, to the
effect that such LTIP Units are subject to restrictions as set forth herein, in
the Plan and in the LLC Agreement.
6. Restrictions on Transfer. None of the Award LTIP Units shall be sold,
assigned, transferred, pledged, hypothecated, given away or in any other manner
disposed of, encumbered, whether voluntarily or by operation of law (each such
action a “Transfer”), or converted into Membership Units in accordance with the
LLC Agreement (a) prior to vesting, or (b) unless such Transfer is in compliance
with all applicable securities laws (including, without limitation, the
Securities Act of 1933, as amended (the “Securities Act”)), and such Transfer is
in accordance with the applicable terms and conditions of the LLC Agreement;
provided that, upon the approval of, and subject to the terms and conditions
specified by, the Administrator, unvested Award LTIP Units may be Transferred to
members of the Grantee’s Immediate Family, which for purposes of this Agreement
shall include family limited partnerships and similar entities which are
primarily for the benefit of the Grantee and his or her Immediate Family,
provided that the transferee agrees in writing with the Company and the LLC to
be bound by all of the terms and conditions of this Agreement. In connection
with any Transfer of Award LTIP Units, the LLC may require the Grantee to
provide an opinion of counsel, satisfactory to the LLC, that such Transfer is in
compliance with all federal and state securities laws (including, without
limitation, the Securities Act). Any attempted Transfer of Award LTIP Units not
in accordance with the terms and conditions of this Section 6 shall be null and
void, and the LLC shall not reflect on its records any change in record
ownership of any LTIP Units as a result of any such Transfer, shall otherwise
refuse to recognize any such Transfer and shall not in any way give effect to
any such Transfer of any LTIP Units. This Agreement is personal to the Grantee,
is non-assignable and is not transferable in any manner, by operation of law or
otherwise, other than by will, the laws of descent and distribution or the
transfer provisions specified above in this Section 6.
7. Incorporation of Plan. The provisions of the Plan are hereby incorporated by
reference as if set forth herein. If and to the extent that any provision
contained in this Agreement is inconsistent with the Plan, this Agreement shall
govern.

 

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8. Investment Representation; Registration. The Grantee hereby makes the
covenants, representations and warranties set forth on Exhibit B attached hereto
as of the date of acceptance of this Agreement and each Vesting Date. All of
such covenants, warranties and representations shall survive the execution and
delivery of this Agreement by the Grantee. The Grantee shall immediately notify
the LLC upon discovering that any of the representations or warranties set forth
on Exhibit B were false when made or have, as a result of changes in
circumstances, become false. The LLC will have no obligation to register under
the Securities Act any LTIP Units or any other securities issued pursuant to
this Agreement or upon conversion or exchange of the LTIP Units.
9. Section 83(b) Election. The Grantee hereby agrees to make an election to
include in gross income in the year of transfer the Award LTIP Units pursuant to
Section 83(b) of the Code substantially in the form attached hereto as Exhibit C
and to supply the necessary information in accordance with the regulations
promulgated thereunder.
10. Amendment. The Grantee acknowledges that the Plan may be amended or
discontinued in accordance with Section 12 thereof and that this Agreement may
be amended or canceled by the Administrator of the Plan, on behalf of the LLC,
for the purpose of satisfying changes in law or for any other lawful purpose,
provided that no such action shall impair the Grantee’s rights under this
Agreement without the Grantee’s written consent.
11. Withholding and Taxes. No later than the date as of which an amount first
becomes includible in the gross income of the Grantee for income tax purposes or
subject to the Federal Insurance Contributions Act withholding with respect to
the Award LTIP Units, the Grantee will pay to the Company or, if appropriate,
any of its affiliates, or make arrangements satisfactory to the Administrator
regarding the payment of, any United States federal, state or local or foreign
taxes of any kind required by law to be withheld with respect to such amount.
The obligations of the Company under this Agreement will be conditional on such
payment or arrangements, and the Company and its affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the Grantee.
12. No Obligation to Continue Employment. Neither the Company, the LLC nor any
subsidiary of any of them is obligated by or as a result of the Plan or this
Agreement to continue to have the Grantee provide services to it or to continue
the Grantee in employment and neither the Plan nor this Agreement shall
interfere in any way with the right of the Company, the LLC or any subsidiary of
any of them to terminate its relationship with the Grantee or the employment of
the Grantee at any time.
13. Notices. Notices hereunder shall be mailed or delivered to the LLC at its
principal place of business and shall be mailed or delivered to the Grantee at
the address on file with the LLC or, in either case, at such other address as
one party may subsequently furnish to the other party in writing.

 

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14. Section 409A. If any compensation provided by this Agreement may result in
the application of Section 409A of the Code, the Company shall, in consultation
with the Executive, modify the Agreement in the least restrictive manner
necessary in order to, where applicable, (a) exclude such compensation from the
definition of “deferred compensation” within the meaning of such Section 409A or
(b) comply with the provisions of Section 409A, other applicable provision(s) of
the Code and/or any rules, regulations or other regulatory guidance issued under
such statutory provisions and to make such modifications, in each case, without
any diminution in the value of the payments to the Executive.
15. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, applied without regard to
conflict of law principles. The parties hereto agree that any action or
proceeding arising directly, indirectly or otherwise in connection with, out of,
related to or from this Agreement, any breach hereof or any action covered
hereby, shall be resolved within the State of New York and the parties hereto
consent and submit to the jurisdiction of the federal and state courts located
within the City of New York, New York. The parties hereto further agree that any
such action or proceeding brought by either party to enforce any right, assert
any claim, obtain any relief whatsoever in connection with this Agreement shall
be brought by such party exclusively in federal or state courts located within
the State of New York.
16. Electronic Signature. All references to signatures and delivery of documents
in this Agreement can be satisfied by procedures the Company has established or
may establish for an electronic signature system for delivery and acceptance of
any such documents, including this Agreement. The Grantee’s electronic signature
is the same as, and shall have the same force and effect as, Grantee’s manual
signature. Any such procedures and delivery may be effected by a third party
engaged by the Company to provide administrative services related to the Plan.
(Signature Page Follows)

 

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as
of the                      day of                     , 200_____.

            MORGANS HOTEL GROUP CO.
      By:           Name:           Title:           MORGANS GROUP LLC
      By:   Morgans Hotel Group Co.,         its managing member             
By:           Name:
 
        Title:
 
      GRANTEE             Name:         Address:
 
   

 

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EXHIBIT A
FORM OF MEMBER SIGNATURE PAGE
The Grantee, desiring to become one of the within named Members of Morgans Group
LLC, hereby accepts all of the terms and conditions of, and becomes a party to,
the Limited Liability Company Agreement of Morgans Group LLC (the “LLC
Agreement”). The Grantee agrees that this signature page may be attached to any
counterpart of the LLC Agreement.
Signature Line for Member:

                             
 
  Name:        
 
  Date:        
 
                    Address of Member:        

 

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EXHIBIT B
GRANTEE’S COVENANTS, REPRESENTATIONS AND WARRANTIES
The Grantee hereby represents, warrants and covenants as follows:
(a) The Grantee has received and had an opportunity to review the following
documents (the “Background Documents”):
(i) The Company’s latest Annual Report to Stockholders that has been provided to
stockholders after the Company’s initial public offering, if available;
(ii) The Company’s Proxy Statement for its most recent Annual Meeting of
Stockholders following the Company’s initial public offering, if available;
(iii) The Company’s Report on Form 10-K for the fiscal year most recently ended
following the Company’s initial public offering, if available;
(iv) If any of the documents described in clauses (i) — (iii) above or (v) or
(vi) below is not available, the Company’s Registration Statement on Form S-1
registering the Company’s initial public offering of its common stock;
(v) The Company’s Form 10-Q for the most recently ended quarter if one has been
filed by the Company with the Securities and Exchange Commission since the
filing of the Form 10-K described in clause (iii) above or, if a Form 10-K has
not been filed by the Company, since the filing of the Form S-1 described in
clause (iv) above;
(vi) Each of the Company’s Current Report(s) on Form 8-K, if any, filed since
the later of the end of the fiscal year most recently ended for which a Form
10-K has been filed by the Company or the filing of the Form S-1 described in
clause (iv) above;
(vii) The LLC Agreement;
(viii) The Plan; and
(ix) The Company’s Certificate of Incorporation, as amended.
The Grantee also acknowledges that any delivery of the Background Documents and
other information relating to the Company and the LLC prior to the determination
by the LLC of the suitability of the Grantee as a holder of LTIP Units shall not
constitute an offer of LTIP Units until such determination of suitability shall
be made.

 

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(b) The Grantee hereby represents and warrants that
(i) The Grantee either (A) is an “accredited investor” as defined in Rule 501(a)
under the Securities Act of 1933, as amended (the “Securities Act”), or (B) by
reason of the business and financial experience of the Grantee, together with
the business and financial experience of those persons, if any, retained by the
Grantee to represent or advise him, her or it with respect to the grant to him,
her or it of LTIP Units, the potential conversion of LTIP Units into common
units of the LLC (“Common Units”) and the potential redemption of such Common
Units for shares of common stock (“Shares”), has such knowledge, sophistication
and experience in financial and business matters and in making investment
decisions of this type that the Grantee (I) is capable of evaluating the merits
and risks of an investment in the LLC and potential investment in the Company
and of making an informed investment decision, (II) is capable of protecting
his, her or its own interest or has engaged representatives or advisors to
assist him, her or it in protecting his, her or its interests, and (III) is
capable of bearing the economic risk of such investment.
(ii) The Grantee understands that (A) the Grantee is responsible for consulting
his, her or its own tax advisors with respect to the application of the U.S.
federal income tax laws, and the tax laws of any state, local or other taxing
jurisdiction to which the Grantee is or by reason of the award of LTIP Units may
become subject, to his, her or its particular situation; (B) the Grantee has not
received or relied upon business or tax advice from the Company, the LLC or any
of their respective employees, agents, consultants or advisors, in their
capacity as such; (C) the Grantee provides or will provide services to the LLC
on a regular basis and in such capacity has access to such information, and has
such experience of and involvement in the business and operations of the LLC, as
the Grantee believes to be necessary and appropriate to make an informed
decision to accept this Award of LTIP Units; and (D) an investment in the LLC
and/or the Company involves substantial risks. The Grantee has been given the
opportunity to make a thorough investigation of matters relevant to the LTIP
Units and has been furnished with, and has reviewed and understands, materials
relating to the LLC and the Company and their respective activities (including,
but not limited to, the Background Documents). The Grantee has been afforded the
opportunity to obtain any additional information (including any exhibits to the
Background Documents) deemed necessary by the Grantee to verify the accuracy of
information conveyed to the Grantee. The Grantee confirms that all documents,
records, and books pertaining to his, her or its receipt of LTIP Units which
were requested by the Grantee have been made available or delivered to the
Grantee. The Grantee has had an opportunity to ask questions of and receive
answers from the LLC and the Company, or from a person or persons acting on
their behalf, concerning the terms and conditions of the LTIP Units. The Grantee
has relied upon, and is making its decision solely upon, the Background
Documents and other written information provided to the Grantee by the LLC or
the Company. The Grantee did not receive any tax, legal or financial advice from
the LLC or the Company and, to the extent it deemed necessary, has consulted
with its own advisors in connection with its evaluation of the Background
Documents and this Agreement and the Grantee’s receipt of LTIP Units.
(iii) The LTIP Units to be issued, the Common Units issuable upon conversion of
the LTIP Units and any Shares issued in connection with the redemption of any
such Common Units will be acquired for the account of the Grantee for investment
only and not with a current view to, or with any intention of, a distribution or
resale thereof, in whole or in part, or the grant of any participation therein,
without prejudice, however, to the Grantee’s right (subject to the terms of the
LTIP Units, the Plan and this Agreement) at all times to sell or otherwise
dispose of all or any part of his or her LTIP Units, Common Units or Shares in
compliance with the Securities Act, and applicable state securities laws, and
subject, nevertheless, to the disposition of his or her assets being at all
times within his or her control.

 

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(iv) The Grantee acknowledges that (A) neither the LTIP Units to be issued, nor
the Common Units issuable upon conversion of the LTIP Units, have been
registered under the Securities Act or state securities laws by reason of a
specific exemption or exemptions from registration under the Securities Act and
applicable state securities laws and, if such LTIP Units or Common Units are
represented by certificates, such certificates will bear a legend to such
effect, (B) the reliance by the LLC and the Company on such exemptions is
predicated in part on the accuracy and completeness of the representations and
warranties of the Grantee contained herein, (C) such LTIP Units, or Common
Units, therefore, cannot be resold unless registered under the Securities Act
and applicable state securities laws, or unless an exemption from registration
is available, (D) there is no public market for such LTIP Units and Common Units
and (E) neither the LLC nor the Company has any obligation or intention to
register such LTIP Units or the Common Units issuable upon conversion of the
LTIP Units under the Securities Act or any state securities laws or to take any
action that would make available any exemption from the registration
requirements of such laws, except, that, upon the redemption of the Common Units
for Shares, the Company currently intends to issue such Shares under the Plan
and pursuant to a Registration Statement on Form S-8 under the Securities Act,
to the extent that (I) the Grantee is eligible to receive such Shares under the
Plan at the time of such issuance, (II) the Company has filed an effective Form
S-8 Registration Statement with the Securities and Exchange Commission
registering the issuance of such Shares. The Grantee hereby acknowledges that
because of the restrictions on transfer or assignment of such LTIP Units
acquired hereby and the Common Units issuable upon conversion of the LTIP Units
which are set forth in the LLC Agreement or this Agreement, the Grantee may have
to bear the economic risk of his, her or its ownership of the LTIP Units
acquired hereby and the Common Units issuable upon conversion of the LTIP Units
for an indefinite period of time.
(v) The Grantee has determined that the LTIP Units are a suitable investment for
the Grantee.
(vi) No representations or warranties have been made to the Grantee by the LLC
or the Company, or any officer, director, shareholder, agent, or affiliate of
any of them, and the Grantee has received no information relating to an
investment in the LLC or the LTIP Units except the information specified in
Paragraph (b) above.
(c) So long as the Grantee holds any LTIP Units, the Grantee shall disclose to
the LLC in writing such information as may be reasonably requested with respect
to ownership of LTIP Units as the LLC may deem reasonably necessary to ascertain
and to establish compliance with provisions of the Internal Revenue Code of
1986, as amended (the “Code”), applicable to the LLC or to comply with
requirements of any other appropriate taxing authority.

 

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(d) The Grantee hereby agrees to make an election under Section 83(b) of the
Code with respect to the LTIP Units awarded hereunder, and has delivered with
this Agreement a completed, executed copy of the election form attached hereto
as Exhibit C. The Grantee agrees to file the election (or to permit the LLC to
file such election on the Grantee’s behalf) within thirty (30) days after the
Award of the LTIP Units hereunder with the IRS Service Center at which such
Grantee files his or her personal income tax returns, and to file a copy of such
election with the Grantee’s U.S. federal income tax return for the taxable year
in which the LTIP Units are awarded to the Grantee.
(e) The address set forth on the signature page of this Agreement is the address
of the Grantee’s principal residence, and the Grantee has no present intention
of becoming a resident of any country, state or jurisdiction other than the
country and state in which such residence is sited.
(f) The representations of the Grantee as set forth above are true and complete
to the best of the information and belief of the Grantee, and the LLC shall be
notified promptly of any changes in the foregoing representations.

 

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EXHIBIT C
ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF
TRANSFER OF PROPERTY PURSUANT TO SECTION 83(B)
OF THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the
Internal Revenue Code with respect to the property described below and supplies
the following information in accordance with the regulations promulgated
thereunder:

  1.   The name, address and taxpayer identification number of the undersigned
are:

         
 
  Name:   (the “Taxpayer”)
 
       
 
  Address:    

      Social Security No./Taxpayer Identification No.:

  2.   Description of property with respect to which the election is being made:
        The election is being made with respect to                      LTIP
Units in Morgans Group LLC (the “LLC”).     3.   The date on which the LTIP
Units were transferred is                     , 200  ___. The taxable year to
which this election relates is calendar year 200  ___.     4.   Nature of
restrictions to which the LTIP Units are subject:

  (a)   With limited exceptions, until the LTIP Units vest, the Taxpayer may not
transfer in any manner any portion of the LTIP Units without the consent of the
LLC.

  (b)   The Taxpayer’s LTIP Units vest in accordance with the vesting provisions
described in the Schedule attached hereto. Unvested LTIP Units are forfeited in
accordance with the vesting provisions described in the Schedule attached
hereto.

  5.   The fair market value at time of transfer (determined without regard to
any restrictions other than restrictions which by their terms will never lapse)
of the LTIP Units with respect to which this election is being made was $0 per
LTIP Unit.     6.   The amount paid by the Taxpayer for the LTIP Units was $0
per LTIP Unit.

  7.   A copy of this statement has been furnished to the LLC and to its
managing member, Morgans Hotel Group Co.

Dated:                     , 200__

                       
 
  Name:        

 

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Schedule to Section 83(b) Election -Vesting Provisions of LTIP Units
LTIP Units are subject to time-based vesting with one-third (1/3) vesting each
year on the first three one-year anniversaries of the date of grant, provided
that the Taxpayer remains an employee of Morgans Hotel Group Co. (the “Company”)
or its subsidiaries through such dates, subject to acceleration in the event of
certain extraordinary transactions. Unvested LTIP Units are subject to
forfeiture in the event of failure to vest based on the passage of time and
continued employment with the Company or its subsidiaries.

 

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