Document:

EXHIBIT 10.1

 

Execution Copy

 

 

 

OMNIBUS AGREEMENT

 

BY AND AMONG

 

PETROLOGISTICS LP

 

PETROLOGISTICS GP LLC

 

PROPYLENE HOLDINGS LLC

 

PL MANUFACTURING LLC

 

AND

 

PL PROPYLENE LLC

 

DATED MAY 9, 2012

 

 

 

 

OMNIBUS AGREEMENT

 

This Omnibus Agreement, dated as of May 9, 2012 (this “Agreement”), is entered into by and among PetroLogistics LP, a Delaware limited partnership (the “Partnership”), PetroLogistics GP LLC, a Delaware limited liability company (the “General Partner”), Propylene Holdings LLC, a Delaware limited liability company (“Propylene Holdings”), PL Manufacturing LLC, a Delaware limited liability company (“PL Manufacturing”), and PL Propylene LLC, a Delaware limited liability company (“PL Propylene”).  The above-named entities are sometimes referred to herein as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, PL Propylene is a party to those certain swap transactions, dated October 7, 2011, with J. Aron & Company (together with its affiliates, successors and/or assigns, the “Hedge Counterparty”), which are intended to reduce PL Propylene’s exposure to propane prices for the years ending December 31, 2012 and 2013 (the “Hedging Arrangements”); and

 

WHEREAS, in connection with the closing of the initial public offering (the “Initial Offering”) of the Partnership, PL Propylene has been contributed to the Partnership pursuant to the terms of a Contribution, Conveyance and Assumption Agreement, dated March 30, 2012, by and among the Partnership, Propylene Holdings and PL Manufacturing; and

 

WHEREAS, the Parties desire to enter into this Omnibus Agreement in order for the Partnership to allocate the obligations and rights of PL Propylene under the Hedging Arrangements; and

 

WHEREAS, in connection with this Agreement, the owners of 100% of the issued and outstanding equity interests in PL Manufacturing (together the “PL Manufacturing Members”) will enter into a common unit pledge agreement (the “Pledge Agreement”), pursuant to which they will pledge to PL Manufacturing common units representing limited partner interests in the Partnership (“Common Units”), distributions on which shall be paid by PL Manufacturing to the General Partner as the primary means for funding any contributions that shall be made by the General Partner to the Partnership pursuant to this Agreement; and

 

WHEREAS, initially, each of the PL Manufacturing Members will pledge all of the Common Units that they own upon the closing of the Initial Offering (the “Initially Pledged Units”) to secure the obligations of PL Manufacturing, Propylene Holdings and the General Partner under this Agreement (any Initially Pledged Units that have not been liquidated pursuant to Section 1.5 or released and not recontributed pursuant to Section 1.9 of this Agreement are herein referred to as “Pledged Units”); and

 

WHEREAS, the Parties desire that all Common Units owned by PL Manufacturing immediately following the closing of the Initial Offering shall be subject to the provisions of this Agreement (the “Initial PL Manufacturing Units”) (any Initial PL Manufacturing Units that have not been liquidated pursuant to Section 1.5 or released and not recontributed pursuant to Section 1.9 of this Agreement are herein referred to as “PL Manufacturing Units”); and

 

 

WHEREAS, this Agreement amends the First Amended and Restated Limited Partnership Agreement of the Partnership (the “Partnership Agreement”) to the extent that this Agreement relates to contributions to the Partnership by the General Partner and distributions from the Partnership to the General Partner and the allocation of income, gains, deductions and losses arising from the Hedging Arrangements.

 

ARTICLE I

 

ALLOCATION OF RIGHTS AND OBLIGATIONS UNDER
 THE HEDGING ARRANGEMENTS

 

Section 1.1             Assumption of Obligations and Assignment Rights under Hedging Arrangements.  The Parties agree that, from and after the date of this Agreement, the General Partner assumes all of PL Propylene’s obligations arising under the Hedging Arrangements and shall be allocated all rights thereunder.

 

Section 1.2             Hedging Gains.  All payments received by PL Propylene under the Hedging Arrangements during any fiscal quarter shall be distributed (a “Special Distribution”) by the Partnership to the General Partner as soon as practicable following the date that the Partnership pays the quarterly distribution in respect of such fiscal quarter (the “Quarterly Distribution Date”) to the holders of its Common Units.  As soon as reasonably practicable following its receipt of a Special Distribution, the General Partner shall distribute such Special Distribution to Propylene Holdings, which shall distribute such amount to PL Manufacturing, which shall (1) distribute amounts attributable to the Pledged Units to each PL Manufacturing Member on a pro rata basis according to its respective percentage ownership of the Pledged Units at the time and (2) at the sole discretion of the board of directors of PL Manufacturing (the “Manufacturing Board’), either retain any cash attributable to the PL Manufacturing Units at PL Manufacturing or distribute such cash to the PL Manufacturing Members in accordance with PL Manufacturing’s limited liability company agreement.  For avoidance of doubt, the Special Distributions shall not be considered a distribution on Pledged Units or PL Manufacturing Units for purposes of this Agreement.

 

Section 1.3             Hedging Losses.  Promptly following the Quarterly Distribution Date in respect of any fiscal quarter in which PL Propylene is required to make net payments to the Hedge Counterparty (the amount of such payments, the “Quarterly Hedge Payment Obligation”), PL Manufacturing shall pay to the General Partner an amount equal to the Quarterly Hedge Payment Obligation in the manner set forth in Sections 1.4 and 1.5 of this Agreement, and the General Partner shall make, on behalf of the holders of the Pledged Units and the PL Manufacturing Units, a capital contribution to the Partnership in an amount equal to the Quarterly Hedge Payment Obligation (a “GP Capital Contribution”).

 

Section 1.4             Payment of Contributions to the General Partner.  PL Manufacturing, as Collateral Agent, shall use any distributions that it is entitled to receive on the Pledged Units and any distributions on any PL Manufacturing Units to (1) first, contribute to the General Partner an amount equal to any Quarterly Hedge Payment Obligation for the quarter in respect of which the quarterly distribution was paid, (2) second, establish and maintain a cash reserve in such amount as is reasonably necessary, which shall be calculated as the amount, if any, of the expected

 

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shortfall between the projected future quarterly distributions on the Pledged Units and PL Manufacturing Units at such time and the projected future Quarterly Hedge Payment Obligations at such time (the “Cash Reserve”), which may be increased above this reasonably necessary amount at the sole discretion of PL Manufacturing, and (3) third, distribute any excess cash attributable to the Pledged Units to the PL Manufacturing Members on a pro rata basis according to its respective percentage ownership of the Pledged Units at the time and (4) fourth, at the sole discretion of the Manufacturing Board, either retain any excess cash attributable to the PL Manufacturing Units at PL Manufacturing or distribute such cash to the PL Manufacturing Members in accordance with PL Manufacturing’s limited liability company agreement.

 

Section 1.5             Cash Contribution Option.  If the Quarterly Hedge Payment Obligation for any quarter exceeds the sum of (1) the total quarterly distribution that is paid on the Pledged Units in respect of such quarter and (2) the Cash Reserve, each of PL Manufacturing and the PL Manufacturing Members shall have the right to fund its pro rata share of the shortfall in cash, which PL Manufacturing shall pay to the General Partner to fund a portion of the GP Capital Contribution.  If PL Manufacturing or any PL Manufacturing Member fails to so fund its pro rata portion of any such shortfall, PL Manufacturing shall liquidate a number of Pledged Units or PL Manufacturing Units, as applicable, sufficient to cover PL Manufacturing’s or such PL Manufacturing Member’s, share of the shortfall, the proceeds of which liquidation shall be paid by PL Manufacturing to the General Partner, and any excess proceeds shall be retained by PL Manufacturing or distributed to such PL Manufacturing Member, as applicable.

 

Section 1.6             Limitation on Liability of each PL Manufacturing Member.  The liability of each PL Manufacturing Member shall be limited to the sum of (1) the quarterly distributions that are paid by the Partnership on such PL Manufacturing Member’s Pledged Units and not distributed to such PL Manufacturing Member in accordance with clause 3 of Section 1.4 of this Agreement and (2) the proceeds from the liquidation of such PL Manufacturing Member’s Pledged Units as contemplated in Section 1.5 of this Agreement. The PL Manufacturing Members shall not be required to contribute cash or additional Common Units to fund any shortfall other than as specifically contemplated hereby.

 

Section 1.7             Limitation on Liability of PL Manufacturing.  The liability of PL Manufacturing shall be limited to the sum of (1) the quarterly distributions that are paid by the Partnership on the PL Manufacturing Units and not distributed by PL Manufacturing in accordance with clause 4 of Section 1.4 by PL Manufacturing in accordance with the terms of this Agreement and (2) the proceeds from the liquidation of any PL Manufacturing Units as contemplated in Section 1.6 of this Agreement. PL Manufacturing shall not be required to contribute cash or additional Common Units to fund any shortfall other than as specifically contemplated hereby.

 

Section 1.8             Limitation on Liability of the General Partner.  The liability of the General Partner shall be limited to any cash that the General Partner has on hand at the time that such liability arises, excluding any cash of the Partnership or its subsidiaries.

 

Section 1.9             Minimum Number of Pledged Units.  From time to time, PL Manufacturing may release Pledged Units and PL Manufacturing Units (on a pro rata basis) from the Pledge Agreement, provided, however, that the market value of all Pledged Units and all PL

 

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Manufacturing Units must at all times be equal to or greater than ten (10) times the mark-to-market value of the Hedging Arrangements.  If, after PL Manufacturing has released Common Units pursuant to this Section 1.9, the mark-to-market value of the Hedging Arrangements exceeds 1/10th of the value of all then Pledged Units and PL Manufacturing Units, PL Manufacturing shall recontribute and shall require, pursuant to the terms of the Pledge Agreement, the PL Manufacturing Members to re- pledge a number of Common Units such that the market value of all Pledged Units and PL Manufacturing Units is equal to or greater than ten (10) times the mark-to-market value of the Hedging Arrangements, provided, however, that no PL Manufacturing Member shall be required to pledge a number of Common Units that exceeds its pro rata share of the Initially Pledged Units, and the number of PL Manufacturing Units that are subject to this Agreement shall not exceed the Initial PL Manufacturing Units.

 

Section 1.10           Capital Accounts.  Notwithstanding anything to the contrary contained in the Partnership Agreement, any items of income, gain, loss and deduction of the Partnership arising from or relating to the Hedging Arrangements shall be specially allocated (for purposes of maintaining the Capital Accounts (as defined in the Partnership Agreement), in determining the rights of the Partners (as defined in the Partnership Agreement) among themselves and for U.S. federal income tax purposes) 100% to the holders of the Pledged Units and the PL Manufacturing Units, pro rata in proportion to their ownership of such units in the aggregate.

 

ARTICLE II

 

MISCELLANEOUS

 

Section 2.1             Further Assurances.  In connection with this Agreement and all transactions contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

 

Section 2.2             Successors and Assigns. No Party may assign its rights or obligations hereunder without written consent of the other Parties; in the event of any assignment, an assigning PL Manufacturing Member shall continue to be bound by this agreement unless their obligations hereunder are expressly assumed by the assignee.

 

Section 2.3             No Third Party Rights.  The provisions of this Agreement are intended to bind the Parties as to each other and, other than as set forth in Section 2.4 hereof, are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.

 

Section 2.4             Severability.  If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement.  Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment

 

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shall be made and necessary provision added so as to give effect to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.

 

Section 2.5             Entire Agreement.  This Agreement constitutes the entire agreement of the Parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein; for the avoidance of doubt, this Agreement shall constitute an amendment to the Partnership Agreement to the extent that this Agreement relates to contributions to the Partnership by the General Partner on behalf of the holders of the Pledged Units and the PL Manufacturing Units and distributions from the Partnership to the General Partner for the benefit of the holders of the Pledged Units and the PL Manufacturing Units and allocations of items of income, gain, loss and deduction arising from or relating to the Hedging Arrangements.

 

Section 2.6             Amendment or Modification.  This Agreement may be amended or modified at any time or from time to time only by a written instrument, specifically stating that such written instrument is intended to amend or modify this Agreement, signed by each of the Parties.

 

Section 2.7             Amendment and Termination of Hedging Arrangements.  PL Propylene or the Partnership may terminate, amend or otherwise modify the Hedge Arrangements without the prior written consent of any of the Parties.

 

Section 2.8             Term.  This Agreement shall remain in force until the Hedging Arrangements expire or are terminated.  Upon the expiration or termination of the Hedging Arrangements, PL Manufacturing shall (1) retain and distribute the Cash Reserve, if any, on a pro rata basis to PL Manufacturing Members who own Pledged Units and (2) return all remaining Pledged Units to the respective PL Manufacturing Members.

 

Section 2.9             Applicable Law; Forum, Venue and Jurisdiction.  This Agreement shall be subject to and governed by the laws of the State of New York, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.

 

Section 2.10           Counterparts.  This Agreement may be executed in any number of counterparts with the same effect as if all Parties had signed the same document.  All counterparts shall be construed together and shall constitute one and the same instrument.  The delivery of an executed counterpart copy of this Agreement by facsimile or electronic transmission in PDF format shall be deemed to be the equivalent of delivery of the originally executed copy thereof.

 

 [Signature Pages Follow]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first written above.

 

	
 
    	
PL PROPYLENE LLC
    
	
 
    	
 
    
	
 
    	
By:   
    	
PetroLogistics   LP, its sole member
    
	
 
    	
 
    	
By:   
    	
PetroLogistics   GP LLC, its general Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Sharon Spurlin
    
	
 
    	
 
    	
 
    	
Name:   
    	
Sharon   Spurlin
    
	
 
    	
 
    	
 
    	
Title:   
    	
Senior   Vice President and
   Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PETROLOGISTICS LP
    
	
 
    	
 
    
	
 
    	
By:   
    	
PetroLogistics   GP LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Sharon Spurlin
    
	
 
    	
 
    	
Name:
    	
Sharon   Spurlin
    
	
 
    	
 
    	
Title:   
    	
Senior   Vice President and
   Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PETROLOGISTICS GP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Sharon Spurlin
    
	
 
    	
 
    	
Name:   
    	
Sharon   Spurlin
    
	
 
    	
 
    	
Title:   
    	
Senior   Vice President and
   Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PROPYLENE HOLDINGS LLC
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Sharon Spurlin
    
	
 
    	
 
    	
Name:   
    	
Sharon   Spurlin
    
	
 
    	
 
    	
Title:   
    	
Senior   Vice President and
   Chief Financial Officer
    
	
 
    	
 
    	
Title:   
    	
 
    
							

 

 

	
 
    	
PL MANUFACTURING LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Nathan Ticatch
    
	
 
    	
 
    	
Name:   
    	
Nathan   Ticatch
    
	
 
    	
 
    	
Title:   
    	
PresidentExhibit 10.1

 

HOSPITALITY PROPERTIES TRUST
 2012 EQUITY COMPENSATION PLAN

 

Hospitality Properties Trust (the “Company”) hereby adopts the Hospitality Properties Trust 2012 Equity Compensation Plan (the “Plan”); effective as of the Effective Date (as defined in Section VIII).

 

I.                                         PURPOSE

 

The Plan is intended to advance the interests of the Company and its subsidiaries by providing a means of rewarding selected officers and Trustees of the Company, employees of the Manager, and others rendering valuable services to the Company, its subsidiaries or to the Manager, through grants of the Company’s Shares.

 

II.                                     DEFINITIONS

 

Terms that are capitalized in the text of the Plan have the meanings set forth below:

 

(a)                                  “Board” means the Board of Trustees of the Company.

 

(b)                                 “Company” means Hospitality Properties Trust, a Maryland real estate investment trust.

 

(c)                                  “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(d)                                 “Key Person” means an employee, consultant, advisor, Trustee, officer or other person providing services to the Company, to a subsidiary of the Company, or to the Manager.

 

(e)                                  “Manager” means a person or entity providing management or administrative services to the Company.

 

(f)                                    “Participant” means a person to whom Shares have been granted, or any other person who becomes owner of the shares by reason of such person’s death or incapacity.

 

(g)                                 “Plan” means this Hospitality Properties Trust 2012 Equity Compensation Plan, as it may be amended from time to time.

 

(h)                                 “Securities Act” means the Securities Act of 1933, as amended.

 

(i)                                     “Share Agreement” means an agreement between the Company and a Participant regarding Shares issued to the Participant pursuant to the Plan.

 

(j)                                     “Shares” means the Company’s common shares of beneficial interest, par value $.01 per share.

 

(k)                                  “Trustee” means a member of the Board.

 

III.                                 SHARES SUBJECT TO THE PLAN

 

Subject to the provisions of Article VII, the maximum number of Shares which may be granted under the Plan following the Effective Date is 3,000,000, subject to adjustment as set forth herein.  If any Shares subject to an award under the Plan are forfeited, cancelled, repurchased or surrendered, the Shares with respect to such award shall, to the extent of any such forfeiture, cancellation, repurchase or surrender, again be available for awards under the Plan.

 

Subject to the terms of any Share Agreement, a holder of Shares granted under the Plan, whether or not vested, shall have all of the rights of a shareholder of the Company, including the right to vote the Shares and the right to receive any distributions, unless the Board shall otherwise determine.  Certificates representing Shares may be imprinted with a legend to the effect that the Shares represented may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with the terms of the Securities Act and the applicable Share Agreement, if any.  In addition, the Company may hold the certificates representing Shares pending lapse of any applicable vesting, forfeiture, repurchase, transfer or similar restrictions.

 

 

IV.                                 METHOD OF GRANTING SHARES

 

Grants of Shares to any Key Person shall be made by action of the Board, which shall have the sole discretion to select persons to whom Shares are to be granted, the amount and timing of each such grant, the extent, if any, to which vesting restrictions or other conditions (which may include repurchase rights) shall apply to the award and all other terms and conditions of any award (which terms and conditions need not be the same as between recipients or awards).  If a person to whom such a grant of Shares has been made fails to execute and deliver to the Company a Share Agreement within ten (10) days after it is submitted to him or her, the grant of Shares related to such Share Agreement may be cancelled by the Company, acting by the Board, at its option and in its discretion without further notice to the Participant.  No Trustee or officer of the Company may be granted more than 1,000,000 Shares under the Plan after the Effective Date.  Nothing in this Section IV shall prevent the Board from delegating its authority to make grants to a committee pursuant to Section V.

 

V.                                     ADMINISTRATION OF THE PLAN

 

The Plan shall be administered by the Board or, in the discretion of the Board, a committee designated by the Board and composed of at least two (2) members of the Board.  All references in the Plan to the Board shall be understood to refer to such committee or the Board, whichever shall be administering the Plan from time to time.  All questions of interpretation and application of the Plan and of grants of Shares shall be determined by the Board in its sole discretion and the Board shall have the authority to do all things necessary to carry out the purposes of the Plan, and its determinations shall be final and binding upon all persons, including the Company and all Participants.  Without limiting the generality of the foregoing, the Board is authorized to (i) adopt and approve from time to time the forms and, subject to the terms of the Plan, the terms and conditions of any Share Agreement; (ii) make adjustments to awards in response to changes in applicable laws, regulations, or accounting principles; and (iii) prescribe, amend and rescind rules and regulations relating to the Plan.  If it determines to do so, the Board may grant shares under this Plan which are not subject to vesting, forfeiture, repurchase and transfer restrictions.

 

For so long as Section 16 of the Exchange Act is applicable to the Company, each member of any committee designated to administer the Plan shall qualify as a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and, in the event that the Board determines to grant awards under the Plan which constitute “qualified performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), each member of any committee designated to administer the Plan shall qualify as an “outside director” within the meaning of Section 162 of the Code and the regulations thereunder.

 

With respect to persons subject to Section 16 of the Exchange Act (“Insiders”) with respect to the Company, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act.

 

VI.                                ELIGIBLE PERSONS

 

The persons eligible to receive grants of Shares shall be those persons selected by the Board in its discretion from among Key Persons who contribute to the business of the Company and its subsidiaries.

 

VII.                             CHANGES IN CAPITAL STRUCTURE

 

In the event of any stock dividend or other similar distribution (whether in the form of stock or other securities), stock split or combination of shares (including a reverse stock split), conversion, reorganization, consolidation, split-up, spin-off, combination, merger, exchange of stock, extraordinary cash dividend or other similar transaction or event, the Board shall make adjustments to the maximum number of Shares that may be issued under the Plan under Article III and Article IV and shall also make appropriate adjustments to the number and kind of shares of stock, securities or other property (including cash) subject to awards then outstanding under the Plan affected by such change and to the other terms and conditions of such awards. No fractional Shares shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole Share.

 

 

VIII.                         EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF PLAN; EFFECT ON PRIOR PLANS

 

The Plan shall be effective at the close of business on May 9, 2012 (the “Effective Date”), subject to its approval by the Company’s shareholders.  Shares may be granted under the Plan from time to time until the close of business on the tenth anniversary of the Effective Date.  Awards outstanding at Plan termination shall remain in effect according to their terms and the provisions of the Plan.  The Board hereafter may at any time amend or terminate the terms of an award or the Plan in any respect, provided that (without limiting Article VII hereof) the Board may not, without the affected Participant’s consent, amend or terminate the terms of an award or the Plan so as to affect adversely the Participant’s rights under an outstanding award.  Any amendments to the Plan shall be conditioned upon shareholder approval only to the extent, if any, such approval is required by applicable law or listing requirement.  Upon the approval of the Plan, no further awards shall be made under the Hospitality Properties Trust 2003 Incentive Share Award Plan or the Hospitality Properties Trust 1995 Incentive Share Award Plan (the “Prior Plans”).  Awards granted under the Prior Plans before the Effective Date shall continue to be governed by the terms of the Prior Plans and any applicable Share Agreement.

 

IX.                                MISCELLANEOUS

 

A.           Nonassignability of Shares.  Shares subject to a Share Agreement shall not be assignable or transferable by a Participant except in accordance with the terms of the applicable Share Agreement or as may be permitted by the Board.

 

B.             No Guarantee of Employment.  Neither the award of Shares nor a Share Agreement shall give any person the right to continue in the employment or service of, or to continue to act as an officer or, Trustee of, or to serve in any other capacity with, the Company, any subsidiary or the Manager.

 

C.             Tax Withholding; Section 409A.  To the extent required by law, the Company shall withhold or cause to be withheld income and other taxes incurred by a Participant by reason of a grant of Shares, and as a condition to the receipt of any grant such a Participant shall agree that if the amount payable to him by the Company in the ordinary course is insufficient to pay such taxes, he or she shall upon request of the Company pay to the Company an amount sufficient to satisfy its tax withholding obligations.  It is intended that awards granted under the Plan be exempt from the application Section 409A of the Internal Revenue Code of 1986 and the Plan and such awards shall be construed in accordance with that intention.

 

D.            Conditions to Issuance.  The issuance of Shares under the Plan is subject to compliance with (1) the laws, rules and regulations of all public agencies and authorities applicable to  the issuance and distribution of Shares and (2) the listing rules of any stock exchange or national market system on which the Shares are listed.

 

E.              No Fractional Shares.  No fractional Shares shall be issued or delivered pursuant to the Plan.  The Board shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

 

F.              Governing Law.  The Plan shall be governed by and construed and enforced in accordance with the laws of the State of Maryland applicable to contracts made and to be performed therein, without reference to the conflicts of law principles thereof.

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