Document:

Unassociated Document

 

Exhibit 10.3

STOCK OPTION AGREEMENT

 

STOCK OPTION AGREEMENT made this July 15, 2013, between Supertel Hospitality, Inc., a Virginia corporation (“Company”), and Jeffrey Dougan, an employee of the Company (“Holder”).

 

The Company is awarding this grant in connection with Employee’s commencement of employment with the Company to purchase its common shares as hereinafter provided.  This option is expressly designated not to be an Incentive Stock Option as defined in I.R.C. §422A.

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for good and valuable consideration, the parties hereto agree as follows:

 

1. Grant of Option.  The Company hereby irrevocably grants to the Holder, pursuant to and subject to the terms hereof, the right and option, hereinafter called the “Option,” to purchase all or any part of an aggregate of 25,000 shares of common stock (the “Common Shares”) of the Company (such number being subject to adjustment as provided in Paragraph 7 hereof) on the terms and conditions herein set forth.  The holder of the Option shall not have any of the rights of a stockholder with respect to the shares covered by the Option until one or more certificates for such shares shall be delivered to such holder upon the due exercise of the Option.  This Option is intended to be an equity award described in Rule 5635(c)(4) of the Marketplace Rules of the NASDAQ Stock Market, Inc. and is being made to the Employee as an inducement material to the Employee’s entering into employment with the Company.

 

2. Purchase Price.  The purchase price of the Common Shares covered by the Option shall be $1.01 per share.  The purchase price of the shares as to which the Option shall be exercised shall be paid in full in cash at the time of exercise or, with the approval of the Company’s Compensation Committee of the Board of Directors (the “Compensation Committee”), the purchase price may be paid (1) in common stock of the Employer already owned by the Holder valued at fair market value on the date of exercise (if such common stock has been owned by the Holder for at least six months) or (2) by the Holder remitting such amount by an appropriate reduction of the number of shares to be delivered to the Holder upon exercise (valued at fair market value on the date of exercise).

 

3. Term of Option.  The term of the Option shall be for a period of 4 years from the date hereof, subject to earlier termination as provided in Paragraphs 5 & 6 hereof.

 

4. Non-Transferability.  The Option shall not be transferable otherwise than by will or the laws of descent and distribution, and the Option may be exercised, during the lifetime of the Holder, only by such Holder.  More particularly (but without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as provided above),  pledged or hypothecated in any way, shall not be assignable by operation of law, and shall not be subject to execution, attachment or similar process.  Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof or the levy of any execution, attachment or similar process upon the Option shall be null and void and without effect.

 

5. Exercisability.  Subject to Paragraph 6, this Option shall vest and become exercisable in staggered one-third (1/3) increments, all with a period of exercisability commencing on the date of first exercisability and ending on July 15, 2017.  The following exercise table is applicable:

 

  

  

  

	
Shares Granted

	
Exercisable on or After

	  
	
1/3 of total grant

	
July 15, 2014

	  
	
1/3 of total grant

	
July 15, 2015

	  
	
1/3 of total grant

	
July 15, 2016

	  
	  	  	  

The Option may be exercised, at any time or from time to time, as to any part or all the shares exercisable; provided, however, that the Option may not be exercised as to less than one hundred (100) shares at any one time (or the remaining shares then purchasable under the Option, if less than one hundred (100) shares).  The Option may not be exercised unless at the date of exercise a Registration Statement under the Securities Act of 1933, as amended, relating to the shares covered by the Option shall be in effect or the Company shall have determined that an exemption from such registration is available.  Subject to the extension of the exercise periods set forth in Paragraph 6 hereof, the Option may not be exercised at any time unless the Holder shall have been in the continuous employ of the Company or a subsidiary from the time hereof to the date of the exercise of the Option.

 

6. Termination of Employment.  If holder is an employee, in the event that the employment of the Holder shall be terminated (other than by reason of death), the Option may, subject to the provisions of Paragraph 5 hereof, be exercised by the Holder (to the extent that the Holder shall have been entitled to do so at the termination of employment) at or prior to the time of such termination; provided, if the Holder is terminated by the Company without Cause, the Holder shall have ninety (90) days following such termination to exercise all options exercisable on the date of termination and if the employment of the Holder terminates by reason of the retirement of the Holder at or reaching age 55 and having completed five years of service, the Holder shall have one (1) year following such retirement to exercise all options exercisable on the date of such retirement.  In the event of such Holder’s death or total disability (using the definition of total disability of the Company’s long-term disability plan), the Option may, subject to the provisions of Paragraph 5 hereof, be exercised by the personal representative of the Holder’s estate (to the extent the Holder would have been entitled to do so as of the date of death) or the Holder in the case of disability at any time within ninety (90) days following the date of the Holder’s death or termination of employment due to total disability (but not more than the term of this Option).  So long as such Holder shall continue to be an employee of the Company, or an affiliate, or a subsidiary the Option shall not be affected by any change of duties or position.  Nothing in this Option Agreement shall confer upon a  Holder any right to continue in the employ of the Company or interfere in any way with the right of the Company to terminate his/her employment at any time.  The transfer of employment between any combination of the Company and any affiliate or subsidiary shall not be deemed a termination of employment.  For purposes of this Agreement, “Cause” shall have the meaning set forth in the Employment Agreement dated July 15, 2013 between Employee and Company.

 

7. Adjustment in Capitalization.  If any adjustment in the Company’s capitalization as described in Section 5.3 of the Supertel 2006 Stock Plan occurs, similar appropriate adjustments shall be made by the Compensation Committee to the number of shares and price per share of stock subject to this Option.

 

8. Method of Exercising Option.  Subject to the terms and conditions of the Option Agreement, the Option may be exercised by written notice to the Company, care of its Chief Financial Officer, 1800 West Pasewalk Avenue, Suite 200, Norfolk, Nebraska 68701.  Such notice shall state the election to execute the Option and the number of shares in respect of which it is being exercised, and shall be signed by the person or persons so exercising the Option.  Such notice shall either: (a) be accompanied by payment of the full purchase price of such shares, in which event the Company shall deliver a certificate or certificates representing such shares as soon as practicable after the notice shall be received; or (b) fix a date (not less than five (5) nor more than ten (10) business days from the date such notice shall be received by the Chief Financial Officer) for the payment of the full purchase price of such shares at the Company’s Transfer Agent Offices, against delivery of a certificate or certificates representing such shares.  Payment of such purchase price shall, in either case, be made by check payable to the order of the Company or, if applicable pursuant to Paragraph 2 hereof with the consent of the Compensation Committee, the transfer of the appropriate shares of stock or reduction of the appropriate number of shares to be delivered upon exercise of the Option.  The certificate or certificates for the shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so exercising the Option (or, if the Option shall be exercised by the Holder and if the Holder shall so request in the notice exercising the Option, shall be registered in the name of the Holder and another person jointly, with right of survivorship or in the name of the Holder’s spouse) and shall be delivered as provided above to or upon the written order of the person or persons exercising the Option.  All shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and non-assessable.

 

As a condition of the issuance of shares hereunder, the Holder agrees to remit to the Company at the time of any exercise of this Option any taxes required to be withheld by the Company under federal, state or local law as a result of exercise.  With the approval of the Committee, the Holder may remit such amount by an appropriate reduction of the number of shares to be delivered to the Holder upon exercise, or by the Holder delivering sufficient shares of common stock of the Employer valued at its fair market value (if such common stock has been owned by the Holder for at least six months).

 

The Common Shares issued upon exercise of the Option may not be transferred except in accordance with applicable federal or state securities laws. Any certificate representing such shares will bear a legend to the following effect:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR PLEDGED EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. AS A CONDITION TO THE TRANSFER OF THE SHARES, THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER APPLICABLE SECURITIES LAWS OR THAT SUCH TRANSFER HAS BEEN REGISTERED UNDER FEDERAL AND ALL APPLICABLE STATE SECURITIES LAWS.

 

9. General.  The Company shall at all times during the term of the Option reserve and keep available such number of Common Shares as will be sufficient to satisfy the requirements of this Option Agreement, shall pay all original issue and transfer taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith, and will use its best efforts to comply with all laws and regulations which shall be applicable thereto.

 

IN WITNESS WHEREOF, the Company and the Holder have signed this Option Agreement effective as of the day and year first above written.

 

 

 

	 	 Supertel Hospitality, Inc.
	
/s/ Jeffrey Dougan

	
By:  /s/ Kelly A. Walters

	
Employee

	
Kelly A. Walters, President and

 Chief Executive OfficerEX-10.23

 EXHIBIT 10.23 
 EXECUTION VERSION 
 THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT INDICATES THAT A
CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]. 
 STRICTLY CONFIDENTIAL 
 THIRD POINT LLC 

390 Park Avenue 

New York, NY 10022 

December 22, 2011 
 KEP TP
Holdings, L.P. 
 and KIA TP Holdings, L.P. 
 320 Park Avenue, 24th Floor 
 New York, NY 10022 

Attn: James J. Connors, II 
 Pine Brook LVR,
L.P. 
 60 East 42nd Street, 50th Floor 

New York, NY 10165 
 Attn: William Spiegel

 Third Point Advisors LLC 
 390 Park
Avenue 
 New York, NY 10022 
 Email:
JTargoff@thirdpoint.com 
 Attn: Joshua Targoff, Esq. 
 Third Point Reinsurance Ltd. 
 Chesney House 

1st Floor 
 96 Pitts Bay Road 

Pembroke HM 06 
 Bermuda 

Attn: General Counsel 

Project Hat Trick Letter Agreement 
 Ladies and Gentlemen: 
 Reference is made to (i) the Joint Venture and
Investment Management Agreement (the “JV/IMA”) entered into on the date hereof among Third Point Advisors LLC, a Delaware limited liability company, Third Point Reinsurance Company Ltd., a

 
Bermuda class 4 insurance company (the “Company”) and Third Point LLC, a Delaware limited liability company (“Third Point”) and (ii) the Agreement Among
Members (the “Agreement Among Members”) dated the date hereof among Third Point Reinsurance Ltd., a Bermuda corporation (“Holdco”) and the members party thereto. Capitalized terms used and not defined herein will
have the meaning set forth in the JV/IMA. 
 Simultaneously with the execution of this Letter Agreement, the Company shall enter
into the Transaction Documents to which it is a party with the other parties thereto, which will govern the investment of certain members in Holdco for the purposes of owning and operating the Company and Holdco (the “Transaction”);

 In consideration of the mutual promises and agreements set forth in this letter agreement (this “Letter
Agreement”), the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 
 1. Certain
Covenants of Third Point. For so long as Third Point or any of its Affiliates is acting as the investment manager pursuant to the JV/IMA or any successor agreement: 
 (a) Without the prior written consent of each of Kelso and Pine Brook, not to be unreasonably withheld, Third Point will not, and will cause its Affiliates not to, manage more than [***]% of the total
assets of a Competing Reinsurance Entity, provided that the foregoing will not prohibit Third Point or its Affiliates from accepting investments by a Competing Reinsurance Entity in any TP Comingled Fund in an amount that exceeds [***]% of
the total assets of such Competing Reinsurance Entity without the prior written consent of any of Kelso or Pine Brook. 
 For
purposes of clause (a) of this paragraph 1, the following terms will have the following meanings: 
 “Competing
Reinsurance Entity” means an offshore reinsurance company the principal business of which is property and casualty reinsurance. 
 “TP Comingled Fund” means a fund, managed account or other similar investment vehicle managed by Third Point or an Affiliate of Third Point, whether currently existing or newly-created
following the date hereof, in which multiple Persons hold equity interests. 
 (b) Third Point agrees that, following the date
hereof, neither Third Point nor any of its Affiliates will raise incremental capital in the Third Point Funds or in any newly-created funds or investment vehicles managed by Third Point (collectively, the “Existing and Future Third Point
Funds”) that pursue an investment strategy that is similar to the strategy described in the Guidelines, to the extent that, following the raising of such incremental capital, the value of the Net Asset will equal an amount that is less

  
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than the product of (i) the Applicable Percentage and (ii) an amount equal to the sum of (a) the value of the Net Assets and (b) the aggregate
value of the net assets of all the Existing and Future Third Point Funds. “Applicable Percentage” means (A) at any time prior to a Qualified Public Offering, a number equal to [***] multiplied by a fraction
(i) the numerator of which [***] and (ii) the denominator of which of which is [***] and (B) at any time following a Qualified Public Offering, a number equal to [***], provided that in each of case
(A) and (B), the Applicable Percentage shall in no event exceed [***]. 
 (c) In the event that, at the time
of the consummation of an Initial Public Offering, Third Point or any of its Affiliates is acting as the investment manager for the Managed Account pursuant to the JV/IMA, then from the time of the filing of the preliminary registration statement
for the Initial Public Offering with the United States Securities and Exchange Commission (the “Initial Filing”) and until the consummation of the Initial Public Offering, Third Point shall cause all of its existing hedge funds not
to accept any investments from existing or new investors, provided that such restriction on Third Point’s hedge funds shall no longer apply in the event that (i) the Initial Public Offering is not consummated within 3 months
following the Initial Filing or (ii) the Initial Public Offering is abandoned following the Initial Filing. 
 2.
Certain Covenants of Holdco. From the date hereof and until the date the JV/IMA is terminated in accordance with its terms, Holdco shall, and shall cause its subsidiaries that are formed before or after the date hereof to
(i) become a Participant or (ii) enter with Third Point into an agreement similar to the JV/IMA pursuant to which Third Point will act as the investment manager in respect of a percentage of such subsidiary’s investable
assets equal to the percentage of investable assets invested by TP Re with the Joint Venture. 
 3. Other Agreements.
Prior to an Initial Public Offering, each of Daniel S. Loeb, KEP TP Holdings, L.P., KIA TP Holdings, L.P. and Pine Brook LVR, L.P. will discuss in good faith, taking into account the views of the lead underwriters of the Initial Public Offering as
to the effect on the marketing of the Initial Public Offering, entering into a voting or other similar agreement intended to facilitate the consummation of any sale, winding-up or liquidation of Holdco initiated in accordance with Bye-law 79.1 of
the bye-laws of Holdco. 
 4. Indemnification. 
 (a) Indemnification by Holdco. To the fullest extent permitted by law, Holdco (the “Indemnifying Party”) shall indemnify, defend, and hold harmless each of KEP TP Holdings, L.P.,
KIA TP Holdings, L.P., Pine Brook LVR, L.P. and Third Point (together, the “Founders”) and their respective Affiliates, and the respective stockholders, members, managers, directors, officers, partners and employees, and agents of
each such Founder and/or its Affiliates from and against, and shall reimburse each indemnified Person for, any and all Losses that at any time are imposed on, incurred by, and/or 

  
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asserted against such indemnified Person arising out of, relating to, and/or in connection with, the Agreement Among Members, Holdco and/or Holdco’s assets, business, and/or affairs;
provided that such indemnified Person will not be entitled to indemnification for any Losses to the extent it is determined by a final and binding judgment of a court of competent jurisdiction that such Losses arise out of such indemnified
Person’s fraud, gross negligence, willful misconduct or a material breach of this Agreement or the Agreement Among Members. Any indemnification pursuant to this paragraph 3(a) will be made only out of the assets of Holdco and no member of
Holdco (including the Founders) or any other indemnified Person will have any personal liability on account of such indemnification. For purposes of this paragraph 3, “Losses” means all liabilities, obligations, losses, damages,
penalties, claims, counterclaims, demands, actions, suits, judgments, and/or settlements of any kind, whether absolute, accrued, contingent, or otherwise, whether known or unknown, whether due or to become due, whether arising in common law or
equity, whether created by law, and whether or not resulting from third-party claims, including interest and penalties and reasonable out-of-pocket expenses, and reasonable fees and expenses for attorneys, accountants, consultants, and experts
incurred in connection with any of the foregoing. 
 (b) Advancement of Expenses. Any Person entitled to indemnification
pursuant to paragraph 3(a) (each, an “Indemnified Person”) shall notify the Indemnifying Party in writing of the amount requested for advances of Indemnified Expenses (a “Notice of Advances”). The Indemnifying Party
will advance all reasonable Indemnified Expenses incurred by an Indemnified Person in connection with any claim (but not for any claim initiated or brought voluntarily by such Indemnified Person) in advance of the final disposition of such claim,
without regard to whether the Indemnified Person will ultimately be entitled to be indemnified for such Indemnified Expenses upon receipt of an undertaking by or on behalf of the Indemnified Person to repay amounts so advanced if it shall be
determined by a final and binding judgment of a court of competent jurisdiction that such Indemnified Person is not entitled to be indemnified by the Indemnifying Party as authorized by this Agreement. The Indemnifying Party shall not impose on any
Indemnified Person additional conditions to advancement or require from such Indemnified Person additional undertakings regarding repayment. “Indemnified Expenses” means all reasonable attorneys’ fees and expenses, retainers,
court, arbitration and mediation costs, transcript costs, fees of experts, bonds, witness fees, costs of collecting and producing documents, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service
fees and all other disbursements, costs or expenses of the types reasonably and customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, appealing or
otherwise participating in a proceeding. 
 (c) Exculpation. To the fullest extent permitted by applicable law, no
Indemnified Person shall be liable to Holdco or any Party for any act or omission by such 

  
 4 

 
Indemnified Person in connection with the conduct of the business of Holdco unless such act or omission constitutes Disabling Conduct on the part of such Indemnified Person. To the fullest extent
permitted by applicable law, no Indemnified Person acting under this Agreement or the Agreement Among Members shall be liable to Holdco or to any Party for breach of fiduciary duty or otherwise for its good faith reliance on the provisions of this
Agreement or the Agreement Among Members. “Disabling Conduct” means, with respect to any Person, such Peron’s fraud, willful misconduct, gross negligence or a material breach of this Agreement or the Agreement Among Members as
finally determined by a court of competent jurisdiction. 
 5. Third Party Beneficiaries. Except as provided in this
paragraph 4, nothing in this Letter Agreement shall confer any rights upon a Person or entity other than the parties and their respective heirs, successors and permitted assigns. Each Company Indemnitee, in relation to paragraph 3(a) is intended by
the parties to be a third party beneficiary under this Letter Agreement and, to the extent permitted by law, each such Company Indemnitee has the right to enforce directly the terms of such respective paragraphs. 

6. Entire Agreement. This Letter Agreement and the other Transaction Documents set forth the entire agreement among the parties
hereto with respect to the subject matter hereof and is intended to supersede all prior negotiations, understandings and agreements among such parties with respect to such matters. 

7. Jurisdiction; Service.  
 (a) The parties agree that any action or proceeding against a party arising out of or relating in any way to the terms of this Letter Agreement, or any person’s rights under this Letter Agreement,
shall be brought only in the United States District Court for the Southern District of New York unless no federal subject matter jurisdiction exists, in which case the action or proceeding shall be brought only in the courts of the State of New York
located in the Borough of Manhattan. 
 (b) Each party waives any objection to the exercise of jurisdiction by any of such
courts and to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court. 
 (c) Each party agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at its address referred to in paragraph 10 below, and agrees that nothing in this Letter Agreement shall affect the right to effect service of process in any other manner permitted by Law. 

(d) EACH PARTY, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO A JURY TRIAL IN RESPECT

  
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OF, ANY ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS LETTER AGREEMENT OR ANY DOCUMENT OR INSTRUMENT DELIVERED IN CONNECTION HEREWITH AND ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 
 8. Governing Law. This Letter Agreement shall be governed by and
construed in accordance with the laws of the State of New York. 
 9. Counterparts. This Letter Agreement may be executed
in any number of counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. 
 10. Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other
term or provision of this Letter Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. 
 11. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid to the addresses set forth in the notices section of the subscription agreement dated the date hereof between Holdco and the applicable subscriber party thereto (or such other address as a party shall
have specified by notice in writing to the other parties). 

  
 6 

 
			
	Sincerely,
	
	THIRD POINT LLC
		
	By:	 	 /s/ Josh Targoff

	Name:	 	Josh Targoff
	Title:	 	Chief Operating Officer and General Counsel

			
	 ACKNOWLEDGED AND AGREED

	 as of the date first above written:

	
	THIRD POINT REINSURANCE LTD.
		
	By:	 	 /s/ John Berger

	Name:	 	John Berger
	Title:	 	CEO

  
 8 

			
	PINE BROOK LVR, L.P.
		
	By:	 	PBRA (Cayman) Company
		 	its General Partner
		
	By:	 	 /s/ William Spiegel

	Name:	 	William Spiegel
	Title:	 	Director

  
 9 

			
	THIRD POINT ADVISORS LLC
		
	By:	 	 /s/ Josh Targoff

	Name:	 	
	Title:	 	

  
 10 

			
	KEP TP HOLDINGS, L.P.
	
	 By: KEP VI (Cayman) GP Ltd., its general partner

		
	 By:
	 	 /s/ James J. Connors, II

	 Name:
	 	James J. Connors, II
	 Title:
	 	Director

  
 11 

			
	KIA TP HOLDINGS, L.P.
	
	 By: Kelso GP VIII (Cayman), L.P., its general partner

	
	 By: Kelso GP VIII (Cayman) Ltd., its general partner

		
	By:	 	 /s/ James J. Connors, II

	Name:	 	James J. Connors, II
	Title:	 	Director

  
 12

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