Document:

Exhibit

EXHIBIT 10.4

VECTOR GROUP LTD.
4400 Biscayne Blvd.
10th Floor
Miami, FL 33137

February 23, 2017

Mr. Marc N. Bell
[Address Redacted]

Dear Mr. Bell:

We are pleased to inform you that, effective on the date hereof, Vector Group Ltd. (the "Company") has granted you a nonqualified option (the "Option") to purchase 37,500 shares of the Company's common stock, par value $.10 per share (the "Common Stock"), at a purchase price of $22.80 per share, subject to adjustment, pursuant to the Company's 2014 Management Incentive Plan, as may be and is in effect and as amended from time to time (the "Plan").  This agreement is subject in all respects to the terms and provisions of the Plan, all of which terms and provisions are made a part of and incorporated in this agreement as if they were each expressly set forth herein. In the event of any conflict between the terms of this agreement and the terms of the Plan, the terms of the Plan shall control.
1.    The Option may be exercised on or prior to the tenth anniversary of the date of grant (after which date the Option will, to the extent not previously exercised, expire), provided the Option shall only vest and become exercisable as to all of the aggregate shares covered thereby on February 23, 2021.  However, the Option shall earlier vest and become immediately exercisable upon (i) the occurrence of a "Change in Control" as defined in Section 13.3 of the Plan or (ii) the termination of your employment with the Company, including by reason of death or disability or (iii) the termination of your employment with the Company by reason of retirement to the extent allowed by the Committee in accordance with Section 16 of the Plan.
 
2.    From and after the date it vests and becomes exercisable pursuant to Section 1 hereof, the Option may be exercised in whole or in part by delivering to the Company a written notice of exercise in the form attached hereto as Exhibit A, specifying the number of the Shares to be purchased and the purchase price therefor, together with payment of the purchase price of the Shares to be purchased.  The purchase price is to be paid in cash or by delivering shares of Common Stock already owned by you for at least six months having a fair market value on the date of exercise equal to the purchase price of the Option being exercised, or a combination of such shares and cash.

In addition, payment of the purchase price of the Shares to be purchased may also be made by delivering a properly executed notice to the Company, together with a copy of the irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds necessary to pay the purchase price, and, if required, the amount of any federal, state or local withholding taxes.
No Shares shall be issued until full payment therefor has been made.  You shall have all of the rights of a stockholder of the Company holding the Common Stock that is subject to the Option (including the right to vote the Shares and the right to receive dividends thereon), when you have given written notice of exercise, have paid in full for such Shares and, if requested, have given the certificate described in Section 14 hereof.
3.    In the event your employment with the Company is terminated for any reason, the Option shall forthwith terminate, provided that you may exercise any then unexercised portion of the Option then vested and exercisable pursuant to Section 1 hereof at any time prior to the earlier of one year from the date of termination or the expiration of the Option.  
4.    The Option is not transferable except (i) by will or the applicable laws of descent and distribution, (ii) pursuant to a domestic relations order in accordance with Section 23.4 of the Plan, or (iii) to your family members or trusts or other entities whose beneficial owners are your family members or any other entity affiliated with you approved by the Committee.  In the event of a transfer, all terms and conditions of the Option, including the provisions relating to termination of your employment with the Company shall continue to apply following a transfer.
5.    In the event of your death or disability, the Option may be exercised by your personal representative or representatives, or by the person or persons to whom your rights under the Option shall pass by will or by the applicable laws of descent and distribution, at any time prior to earlier of the one year following the date of termination due to death or disability or the expiration of the option.
6.    In the event of any change in capitalization affecting the Common Stock of the Company, including, without limitation, a stock dividend or other distribution, stock split, reverse stock split, recapitalization, consolidation, subdivision, split-up, spin-off, split-off, combination or exchange of shares or other form of reorganization or recapitalization, or any other change affecting the Common Stock, the Company shall make adjustments to the Option and/or provide for distributions, as appropriate, in accordance with the terms described in  Section 12 of the Plan.

7.    The grant of the Option does not confer on you any right to continue in the employ of the Company or any of its subsidiaries or affiliates or interfere in any way with the right of the Company or its subsidiaries or affiliates to terminate the term of your employment.
8.    Upon the exercise of any portion of the Option, the Company shall withhold shares of Common Stock having a Fair Market Value (as defined in the Plan) on the date the tax is to be determined equal to any federal state or local taxes required by law to be withheld as a result of such exercise.  
9.    You understand and acknowledge that Shares received upon exercise of the Option will be subject to the terms of the Company’s Equity Retention policy as in effect at the time of exercise.
10.    In the event of the payment of any dividends or other distributions (including distributions of securities of another issuer) in respect of the Common Stock beginning on or after the date hereof and continuing while you hold the Option,  you shall receive, within ten days of the payment of such dividend or distribution,  the amount of any such dividends or other distributions that would have been paid to you had you been, at the record date for such dividends or other distributions, a stockholder of the Shares issuable upon exercise of any then unexercised portion of the Option, whether vested or unvested (the "Dividend Equivalent").  In the event that the payment of such dividend or distribution occurs within the last ten days of a calendar year, the Dividend Equivalent shall be paid by the Company within the first ten days of the subsequent calendar year.  

11.    The Company represents and warrants to you as follows: (i) this letter agreement and the grant of the Option hereunder have been authorized by all necessary corporate action by the Company and this letter agreement is a valid and binding agreement of the Company enforceable against the Company in accordance with its terms; (ii) the grant of the Option to you on the terms set forth herein will be exempt from the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 16b-3(d) thereunder; (iii) the Company will obtain, at its expense, any regulatory approvals necessary or advisable in connection with the grant of the Option or the issuance of the Shares; and (iv) the Company currently has reserved and available, and will continue to have reserved and available during the term of the Option, sufficient authorized and issued shares of its Common Stock for issuance upon exercise of the Option.
12.    The Company shall use its best efforts to file and keep in effect a Registration Statement on Form S-8, Form S-3 or other applicable form to register under the Securities Act of 1933, as amended (the "Act"), the Shares issuable to you upon exercise of the Option and the resale thereof by you.
13.    Unless at the time of the exercise of any portion of the Option a registration statement under the Act is in effect as to the Shares, the Shares shall be acquired for investment and not for sale or distribution, and if the Company so requests, upon any exercise of the Option, in whole or in part, you agree to execute and deliver to the Company a reasonable certificate to such effect.
14.    You understand and acknowledge that: (i) any Shares purchased by you upon exercise of the Option may be required to be held indefinitely unless such Shares are subsequently registered under the Act or an exemption from such registration is available; (ii) any resales of such Shares made in reliance upon Rule 144 promulgated under the Act may be made only in accordance with the terms and conditions of that Rule (which, under certain circumstances, restrict the number of shares which may be sold and the manner in which shares may be sold); (iii) certificates for Shares to be issued to you hereunder shall bear a legend to the effect that the Shares have not been registered under the Act and that the Shares may not be sold, hypothecated or otherwise transferred in the absence of an effective registration statement under the Act relating thereto or an opinion of counsel satisfactory to the Company that such registration is not required; and (iv) the Company shall place an appropriate "stop transfer" order with its transfer agent with respect to such Shares.
15.    This letter agreement contains all the understandings between the Company and you pertaining to the matters referred to herein, and supercedes all undertakings and agreements, whether oral or in writing, previously entered into by the Company and you with respect hereto.  No provision of this letter agreement may be amended or waived unless such amendment or waiver is agreed to in writing signed by you and a duly authorized officer of the Company.  No waiver by the Company or you of any breach by the other party hereto of any condition or provision of this letter agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.  If any provision of this letter agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this letter agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law.  This letter agreement will be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflicts of laws principles.  This letter agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Would you kindly evidence your acceptance of the Option and your agreement to comply with the provisions hereof by executing this letter agreement in the space provided below.

Very truly yours,

VECTOR GROUP LTD.

By:    /s/ J. Bryant Kirkland III                    
J. Bryant Kirkland III
Senior Vice President, Treasurer and CFO

AGREED TO AND ACCEPTED:

/s/ Marc N. Bell                        
Marc N. Bell

EXHIBIT A
Vector Group Ltd.
4400 Biscayne Blvd
10th Floor
Miami, FL 33137

Gentlemen:

Notice is hereby given of my election to purchase _________ shares of Common Stock, $.10 par value (the "Shares"), of Vector Group Ltd., at a price of $______ per Share, pursuant to the provisions of the stock option granted to me on February 23, 2017. Payment for the Shares will be made as follows:

my check in the amount of $_________________which is enclosed.

______________ Shares having a total value of $______________, such value being based on the closing price(s) of the Shares on the date hereof.

pursuant to the attached irrevocable instructions, a broker will sell ____ Shares on my behalf and promptly deliver to you $________ in satisfaction of the exercise price and $ ____ in satisfaction of applicable tax withholding. 

The following information is supplied for use in issuing and registering the Shares purchased hereby:

Number of Certificates
   and Denominations            ___________________________

Name                    ___________________________

Address                ___________________________

___________________________

Social Security No.            ___________________________

Dated:
Very truly yours,

Marc N. Bellirt-ex103_449.htm

Exhibit 10.3

INDEPENDENCE REALTY TRUST, INC.

2017 Cash Bonus Award Grant Agreement

 

To:  [Name]

 

Attached as Appendix A hereto is the 2017 Annual Cash Bonus Plan (the “Annual Cash Bonus Plan”) as adopted pursuant to Article X of the Independence Realty Trust 2016 Long Term Incentive Plan (the “Plan”).  You have been granted a cash award (the “2017 Cash Bonus Award”) under the Annual Cash Bonus Plan.  This 2017 Cash Bonus Award Grant Agreement (the “Grant Agreement”) sets forth the terms and conditions related to such Cash Bonus Award.  The Award is contingent upon your acknowledgement and acceptance of the terms and conditions as set forth in this Grant Agreement and the Plan.

 

		
	
Grant Date:
	
February 28, 2017

 

	
Target Cash Bonus Amount:
	
[Dollar amount]

 

	
Cash Award Opportunity:
	
Subject to the terms and conditions set forth in this Grant Agreement and the Plan, the Company hereby notifies you that you have the opportunity to receive a Target Cash Bonus Award in an amount calculated with respect to your Target Cash Bonus Amount in the manner set forth in the Annual Cash Bonus Plan.  The actual amount of the Target Cash Bonus Award shall be determined according to the achievement or non-achievement of performance targets (the “Performance Targets”) established by the Committee on February 28, 2017 and set forth in in the Annual Cash Bonus Plan.  The Participant shall not be entitled to receive any portion of the 2017 Target Cash Bonus Award that does not become payable because of the failure to fully satisfy the Performance Targets. 

 

	
Tax Liability and Payment of Taxes:
	
You acknowledge and agree that any income or other taxes due from you with respect to the Target Cash Bonus Award issued pursuant to this Grant Agreement shall be your responsibility.  Upon payment of the Target Cash Bonus Award, the Company will withhold a portion of such Target Cash Bonus Award in order to satisfy your tax obligations.

 

	
Delivery:
	
The actual payment of the Target Cash Bonus Award, as adjusted pursuant to this Grant Agreement or the Plan, will be made as soon as practicable following the Committee’s determination of the achievement or nonachievement of the Performance Targets; provided, however, that, in order to comply with certain rules concerning the regulation of deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended, in no event will any such payment be made later than March 15, 2018.

 

	
Transferability:
	
You may not transfer or assign the Target Cash Bonus Award for any reason, other than under your will or as required by intestate laws.  Any attempted transfer or assignment will be null and void.

 

 

		
	
Savings:
	
Any amounts paid pursuant to this Target Cash Bonus Award are intended to be considered “qualified performance-based compensation” under section 162(m) of the Code and Article IX of the Plan   If any provision of this Grant Agreement with respect to such portion is determined to be inconsistent with the requirements of Internal Revenue Code Section 162(m)(4)(C) or such Article, such portion shall be deemed to be a Target Cash Bonus Award made solely under Article X of the Plan.

 

	
Clawback:
	
In addition to, and not in limitation of, the forfeiture of the Target Cash Bonus Award (or any portion thereof) as provided in this Grant Agreement or the Plan, the Company may recover amounts paid to you pursuant to this Target Cash Bonus Award to the extent that the Committee, following an appropriate investigation and consideration of all relevant circumstances, determines that you have engaged in fraud or willful misconduct that caused the requirement for a material accounting restatement of the Company’s financial statements due to material noncompliance with any financial reporting requirement (excluding any restatement due solely to a change in accounting rules).

 

	
Miscellaneous:
	
As a condition of the granting of this Target Cash Bonus Award, you agree, for yourself and your legal representatives and/or guardians, that this Grant Agreement shall be interpreted by the Committee and that any such interpretation of the terms of this Grant Agreement and any determination made by the Committee pursuant to this Grant Agreement shall be final, binding and conclusive.  This Grant Agreement may be executed in counterparts.  This Grant Agreement and the Target Cash Bonus Award granted hereunder shall be governed by Maryland Law.

 

This Grant Agreement and the Target Cash Bonus Award granted hereunder are granted under and governed by the terms and conditions of the Plan, the provisions of which are incorporated herein by reference.  Additional provisions regarding your Target Cash Bonus Award and definitions of capitalized terms used and not defined in this Grant Agreement can be found in the Plan.  Any inconsistency between this Grant Agreement and the Plan shall be resolved in favor of the Plan. You hereby acknowledges receipt of a copy of the Plan. The invalidity or unenforceability of any provisions of this Grant Agreement shall not affect the validity or enforceability of any other provision of this Grant Agreement, which shall remain in full force and effect.  In the event that any provision of this Grant Agreement or any word, phrase, clause, sentence, or other portion hereof (or omission thereof) should be held to be unenforceable or invalid for any reason, such provision or portion thereof shall be modified or deleted in such a manner so as to make this Grant Agreement as so modified legal and enforceable to the fullest extent permitted under applicable law.

 

BY SIGNING BELOW AND ACCEPTING THIS GRANT AGREEMENT AND THE TARGET CASH BONUS AWARD GRANTED HEREUNDER, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE PLAN.  YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN.

 

_______________________________________________________________

Authorized Officer[Name]

 

2

 

 

Appendix A

2017 ANNUAL CASH BONUS PLAN

 

2017 Cash Bonus Awards

 

Beginning with IRT’s 2017 fiscal year, the Compensation Committee is implementing the new Annual Cash Bonus Plan that it believes will incentivize the Eligible Officers to produce a high level of operational performance by explicitly linking the majority of their annual bonuses to certain objectives and formulaic metrics that the Compensation Committee believes are important drivers in the creation of shareholder value, while also rewarding more subjective elements of each Eligible Officer’s performance through a subjective component.  This new program will set forth a target cash bonus award level for each Eligible Officer participant composed of two components, as described below:  

 

	
 
	
•
	
“Objective/Formulaic Component” — the objective/formulaic component of the Annual Cash Bonus Award that may be earned by each Eligible Officer will be determined by IRT’s performance relative to specified objective performance criteria established by the Compensation Committee as described below.  

 

	
 
	
•
	
“Subjective Component” – the subjective component of the Annual Cash Bonus Award may be determined based on the Compensation Committee’s subjective evaluation of such participant’s performance.  

 

	
 
	
•
	
Allocation of Components and Calculation of the Annual Cash Bonus Award. For 2017, the 2017 Cash Bonus Awards are allocated 75% to the objective/formulaic component and 25% to the subjective component.   The amount of the 2017 Cash Bonus Award of any Eligible Officer will be calculated by: (a) determining the sum of the results of multiplying the 2017 weighting for each metric (described below) by the Relevant Percentage (described below) achieved with respect to each metric, (b) multiplying such sum by the objective criteria allocation of 75% to obtain a percentage referred to as the “Objective Criteria Bonus Earned”, (c) determining the result of multiplying the subjective criteria Relevant Percentage by the subjective criteria allocation of 25% to obtain to obtain a percentage referred to as the “Subjective Criteria Bonus Earned”, (d) multiplying the 2017 base salary of the relevant Eligible Officer by the sum the Objective Criteria Bonus Earned and the Subjective Criteria Bonus Earned.   The actual 2017 Annual Cash Bonus Award earned by a participant may range from 0% to each Eligible Officer’s maximum Relevant Percentage of base salary based on actual performance for the year.

 

The individual 2017 Cash Bonus Award ranges, as a percentage (each, a “Relevant Percentage”) of base salary for Threshold, Target and Maximum performance levels for each of the Eligible Officers as follows:  

 

					
	
 
	
 
	
2017 Cash Bonus Award Ranges

	
Executive 
	
2017 Base
Salary
	
Threshold
	
Target
	
Maximum

	
Scott F. Schaeffer 
	
$618,600
	
100%
	
164%
	
250%

	
Farrell M. Ender 
	
$308,600
	
57%
	
117%
	
177%

	
James J. Sebra 
	
$398,600
	
50%
	
100%
	
150%

 

				
	
 
	
2017 Cash Bonus Award

	
Executive
	
Threshold
	
Target
	
Maximum

	
Scott F. Schaeffer
	
$618,600
	
$1,015,000
	
$1,546,500

	
Farrell M. Ender
	
$176,000
	
$      361,000
	
$   546,000

	
James J. Sebra
	
$199,300
	
$   398,600
	
$   597,900

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Objective/Formulaic Criteria

 

The Compensation Committee has established the following objective performance metrics to be utilized in determining any payout with respect to the 2017 Cash Bonus Awards weighted based on these performance measurements with their 2017 relative weighting: 

 

		
	
Objective Performance Criteria
	
2017 Weighting

	
CORE FFO per share
	
40%

	
The increase in same store property net operating income as compared to the previous year
	
20%

	
Property net operating income margin
	
15%

	
General and Administrative expenses (excluding stock based compensation) as a percentage of revenues
	
15%

	
IRT’s ratio of net debt to Adjusted EBITDA
	
10%

 

All of these objective performance criteria shall be calculated in a manner consistent with how IRT discloses the metric in its public reporting; provided that the Compensation Committee will retain discretion to adjust the calculation of these metrics if it determines, due to unanticipated business developments, transactions or other factors affecting the calculation of such metrics, that such an adjustment would enhance incentivizing or rewarding actions in the best interests of IRT’s stockholders.  The actual 2017 Cash Bonus Award payment realized by an Eligible Officer with respect to each applicable metric will depend on IRT’s achievement of at least the “Threshold” level of performance established by the Compensation Committee with respect to that metric.  There will be no 2017 Cash Bonus Award payable for that metric in the event IRT achieves less than the Threshold level.   IRT’s achievement of the Threshold level for a designated metric will result in a payout of such Eligible Officer’s Relevant Percentage of the proportion of the 2017 Cash Bonus Award allocated to that metric; the achievement of the Target level for a designated metric will result in a payout of such Eligible Officer’s Relevant Percentage of the proportion of the 2017 Cash Bonus Award allocated to that metric; and the achievement of the Maximum level for a designated metric will result in a payout of such Eligible Officer’s Relevant Percentage of the proportion of the 2017 Cash Bonus Award allocated to that metric. If the calculated percentage is between Threshold and Target or between Target and Maximum for an annual performance period, then the earned percentage will be prorated.   See “Allocation of Components and Calculation of the Annual Cash Bonus Award” above for a description of how the 2017 Cash Bonus Awards will be calculated.  The threshold, target and maximum amounts of each objective performance criteria have been separately communicated to each Eligible Officer.

 

Subjective Criteria

 

The Subjective Bonus Award portion of each Eligible Officer’s Cash Bonus will be based on the Compensation Committee’s subjective evaluation of the Eligible Officer’s performance relative to achieving specified individual criteria established for 2017 for each participant, which the Compensation Committee has determined are also important elements of each Eligible Officer’s contribution to the creation of overall shareholder value.  These include the following elements; provided that the Compensation Committee will retain discretion to add or modify subjective criteria if it determines, due to unanticipated business developments, transactions or other factors affecting IRT, that such additions or modifications to the subjective criteria would enhance incentivizing or rewarding actions in the best interests of IRT’s stockholders:

 

		
	
oBroaden Company’s institutional shareholder base.

 

oPursue financial transactions to lower cost of capital, extend debt maturities and enhance liquidity profile
	
oIncrease analyst coverage of the Company

 

oComplete systems separation from RAIT Financial Trust (“RAIT”), including staffing and back office requirements in 2017.  

 

The Eligible Officer’s achievement of the Threshold level for subjective criteria will result in a payout of such Eligible Officer’s Relevant Percentage of the proportion of the 2017 Cash Bonus Award allocated to subjective criteria; the achievement of the Target level for subjective criteria will result in a payout of such Eligible Officer’s Relevant 

4

 

Percentage of the proportion of the 2017 Cash Bonus Award allocated to that metric; and the achievement of the Maximum level for subjective criteria will result in a payout of such Eligible Officer’s Relevant Percentage of the proportion of the 2017 Cash Bonus Award allocated to subjective criteria. If the calculated percentage is between Threshold and Target or between Target and Maximum for an annual performance period, then the earned percentage will be prorated. See “Allocation of Components and Calculation of the Annual Cash Bonus Award” above for a description of how the 2017 Cash Bonus Awards will be calculated.

 

Cash Bonus Award Payments

 

	
 
	
•
	
All Cash Bonus Award payments will be made in the year following the completion of the annual performance period to which the Cash Bonus Award payment relates.  The actual payment to each Eligible Officer will be made as soon as practical after final certification of the underlying performance results and approval of such payment by the Compensation Committee; provided, however, that, in order to comply with certain rules concerning the regulation of deferred compensation under the Internal Revenue Code of 1986, as amended, in no event will any such payment be made later than March 15 of such year.

 

	
 
	
•
	
An Eligible Officer who terminates employment with IRT prior to the conclusion of any applicable performance period with respect to which an applicable Cash Bonus Award payment relates will not receive a Cash Bonus Award payment, except that:

 

	
 
	
o
	
In the event of such participant’s death or disability (as defined in the relevant Eligible Employee’s employment agreement, or, if not so defined, determined in accordance with the 2016 Plan) (“Disability”) prior to the end of the annual performance period, an otherwise eligible participant may receive a Cash Bonus Award payment in the amount of such participant’s full Cash Bonus Award, as determined by the Compensation Committee, provided a Cash Bonus Award was approved for such participant for the applicable performance period.

 

	
 
	
o
	
In the event of the termination of such participant’s employment, other than voluntarily or for Cause (as defined in the relevant employment agreement for each Eligible Officer), following a Change of Control (as defined in the relevant Eligible Employee’s employment agreement, or, if not so defined, in the 2016 Plan) but prior to end of the annual performance period, an otherwise eligible participant may receive an Cash Bonus Award payment in the amount of such participant’s full Cash Bonus Award, as determined by the Compensation Committee, provided a Cash Bonus Award was approved for such participant for the applicable annual performance period.

 

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