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EXHIBIT A
HOTEL INVESTORS TRUST
INCENTIVE AND NON-QUALIFIED SHARE OPTION PLAN (1986)
I.
PURPOSES OF THIS PLAN
This Incentive and Non-Qualified Share Option Plan (1986) (this “Plan”) of Hotel Investors
Trust (the “Trust”) is intended to promote the interests of the Trust by providing to part icipating
trustees, officers and employees of the Trust incentives and rewards which will encourage t hem
to acquire an ownership interest or add to their ownership interest in the Trust and to c ontinue to
render services to the Trust. This Plan seeks to accomplish these purposes by providing a mea ns
whereby such trustees, officers and employees may, pursuant to the grant under this Plan of
either “incentive share options” (“ISO’s”) or “non-qualified share options” (“Non-ISO’s”),
purchase shares of the Shares of Beneficial Interest, par value $1.00 per share, of Hotel Invest ors
Trust (the “Trust Shares”). ISO’s and Non-ISO’s are collectively referred to as “Options.”
It is intended that the ISO’s granted under this Plan qualify as “incentive stock options” (as
defined by Section 422A of the Internal Revenue Code, as amended or superseded (together wit h
the regulations thereunder, the “Code”)).
This Plan is being adopted by the Board of Trustees of the Trust concurrently with the
adoption of the Corporation Stock Non-Qualified Stock Option Plan (1986) of the Trust (the
“Corporation Stock Plan”). Except as provided in Paragraph XV of each of this Plan and the
Corporation Stock Plan, both Plans provide for the concurrent grant by the Trust of options under
each Plan, so that optionees receive options representing the right to purchase from the Trust an
equal number of Trust Shares and shares of the Common Stock par value $.10 per share, of the
Corporation (“Corporation Shares”).
II.
ADMINISTRATION OF THE PLAN
(a) This Plan shall be administered by the Board of Trustees of the Trust (the “Board” ).
The Board may, however, at any time appoint a Share Option Committee (the “C ommittee”)
consisting of not less than two members of the Board and delegate to such Committee any or all
of the administrative powers allocated to the Board under the provisions of this Plan, e xcept
those described in Paragraphs IV(c), VII and VIII, and including (without limitation) the power
to grant Options, to select recipients from the class of eligible employees (or in the case of Non-
ISO’s, other eligible persons), and to determine the terms and conditions of the share option
agreements which evidence Options (the “Agreements”), including the number of shares subject
to each Option: provided, however, that only the Board may grant Options to members of the
Committee. The Board may designate the Compensation Committee of the Trust (i f any) as the
Share Option Committee if the Compensation Committee has not less than two m embers.
Members of the Committee shall serve for such terms as the Board may determine a nd shall be
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subject to removal by the Board at any time. The Board may also at any time terminate the
functions of the Committee and assume all powers and authority previously delegated to t he
Committee. Each reference to “the Board” in a provision of this Plan, except for the references in
Paragraphs II(b), IV(c), VII and VIII. shall mean the Committee if the Committee is at the time
responsible for the administration of either this Plan or such provision of this Plan.
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(b) The Board or the Committee, as the case may be, is authorized to establish all rules,
regulations and procedures as it may deem appropriate for the proper administration of thi s Plan
and to make all determinations under, and issue all interpretations of, this Plan and any Options
as it may deem necessary or advisable. Decisions of the Board shall be final, binding a nd
conclusive on all parties who have an interest in this Plan or any Option. Decisions of the
Committee shall also be final, binding and conclusive upon all interested parties, unless the
Board shall make a contrary determination.
III.
ELIGIBILITY FOR OPTION GRANTS
(a) The persons who shall be eligible to receive ISO’s shall be such employees of the Trust
or its subsidiaries (whether or not they are trustees), and such other persons as may be pe rmitted
by the Code from time to time to receive “incentive stock options,” as the Boa rd shall select from
time to time. The individuals who from time to time hold ISO’s are referred t o as the “ISO
Optionees.” Trustees and officers who are not employees of the Trust or a subsidiary of the T rust
shall not be eligible to receive ISO’s.
(b) The persons who shall be eligible to receive Non-ISO’s shall be such trustees, officers
and employees of the Trust or its subsidiaries as the Board shall select from tim e to time. The
individuals who from time to time hold such options are referred to as the “Non-ISO Optionee s.”
Non-ISO Optionees and ISO Optionees are sometimes collectively referred to as “Optionees.”
(c) Notwithstanding any contrary provision hereof, unless otherwise permitted by the Code
at the time of grant, the aggregate fair market value (determined pursuant to Paragraph V(a) (3)
as of the time of grant) of the Trust Shares for which any ISO Optionee may be granted ISO’s
(the “Optioned Shares”) in any calendar year (under all plans of the Trust and i ts subsidiaries)
shall not exceed such amount as the Code may specify plus any “unused limit carry-over” to
such year (as defined by Section 422A (c) (4) of the Code).
(d) Notwithstanding any contrary provision hereof, if at the time of grant the Code so
requires, the aggregate fair market value (determined pursuant to Paragraph V (a) (3) as of the
time of grant) of the Trust Shares which may first become purchasable by any ISO Optionee
pursuant to ISO’s in any calendar year shall not exceed such amount as the Code shall specify.
(e) Notwithstanding any contrary provision hereof, unless otherwise provided at the time
of grant by the Code, no employee shall be granted an Option if prior to or after the grant of such
Option such employee owns (or is considered to own pursuant to the rules set forth in Sections
856(d) (5) and 318(a) of the Code) 10% or more of the total combined voting power of all
classes of shares of beneficial interest of the Trust entitled to vote, or 10% or more of the total
number of shares of all classes of shares of beneficial interest of the Trust.
(f) Notwithstanding any contrary provision hereof, and except as provided in Paragraph
XV, no Option shall be granted under this Plan to an Optionee unless an option is concurrently
granted by the Trust under the Corporation Stock Plan to such Optionee to acquire an i dentical
number of Corporation Shares. An Optionee’s option granted under the Corporation Stock Plan
concurrently with such Optionee’s Option is referred to as the “Corresponding Corporation Stock
Option.”
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(g) For purposes hereof, the term “subsidiary” shall mean, at the time of the grant of an
Option, any entity which is a corporation or which is taxable as a real estate inve stment trust
within the meaning of Section 856 of the Code (other than the Trust) in an unbroken chain of
such entities beginning with the Trust if, at the time of such grant, each of such entities other
than the last entity in the unbroken chain owns stock or shares of beneficial intere st possessing
50% or more of the total combined voting power of all classes of stock or shares of beneficia l
interest, as the case may be, in one of the other entities in such chain.
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IV.
SHARES SUBJECT TO THIS PLAN
(a) The shares issuable under this Plan shall be Trust Shares, which are without special
preference, preemptire, appraisal, conversion or exchange rights of any kind. The aggregate
number of Trust Shares issuable under this Plan shall not exceed 350,000 (subject to adjustment
as provided in Paragraph IV(b)). Should any Option be terminated for any reason without being
exercised in full, or be canceled in whole or in part, (i) the Trust Shares subject to the portion of
the Option not so exercised or which is canceled shall be available for subsequent grant s under
this Plan; and (ii) except as provided in Paragraph XV, the Corresponding Corporation Stock
Option shall be deemed concurrently terminated or canceled.
(b) In the event of any change in the number of, or nature of, outstanding Trust Shares by
reason of merger, consolidation, reorganization, recapitalization, share split, reverse share split,
share dividend, combination of shares, exchange of shares, or any other change in trust structure
effected without receipt of consideration (other than changes occurring on account of a share
issuance upon exercise of options, rights or warrants or the conversion of convertible securities),
then unless such change results in the termination of all Options pursuant to the provisions of
Paragraph IV(c), the Board (either before or after such event) shall make appropriate adjustm ents
to the number and/or class of shares and the exercise price of each outstanding Option and to the
maximum number and/or class of shares issuable under this Plan, all in order to prevent the
dilution of benefits under such Options and this Plan and to provide to the extent practic able after
such event benefits identical to those provided under such Options and this Plan prior to suc h
event; provided that, notwithstanding the foregoing, in the case of ISO’s, any and all such
adjustments shall in each case comply with Sections 422A and 425 of the Code. The adj ustments
determined by the Board shall be final, binding and conclusive; provided, however, that if the
Board fails to consider whether an adjustment is appropriate, then until such time, if any, as the
Board may undertake such consideration, the number and/or class of shares and the exercise
price of each outstanding Option and the maximum number and/or class or shares issuable unde r
this Plan shall be deemed adjusted in the most reasonable manner so as to prevent di lution of
benefits under such Options and this Plan and to provide to the extent practicable benefi ts after
such event identical to those provided under such Options and this Plan prior to such event.
(c) In the event the Trust enters into any agreement to merge or consolidate the Trust with
and into one or more other entities pursuant to a statutory merger in which the Trust is not the
surviving entity (the “Merger”), then either (i) the terms of the agreement of merge r for the
Merger shall require as a prerequisite for the consummation thereof that each Option wil l be
assumed by a successor entity (or parent thereof), or will be replaced with a comparable
substitute option to purchase shares of capital stock (or beneficial interest) of a succ essor entity
(or parent thereof), provided that the assumption of an ISO or replacement of such ISO with a
comparable substitute shall in each and every case comply with Sections 422A and 425 of the
Code; or, (ii) if the terms of the agreement of merger do not so provide, to the extent not
otherwise exercisable pursuant to the provisions of the Agreements pursuant to which the
Options were issued, each such Option shall become exercisable during such period prior to t he
scheduled consummation of the Merger as determined by resolution of the Board (subject to suc h
further terms and conditions as may be set forth in any of the Agreements); provided, however,
that if the Board does not determine by resolution such period of exercise, then each such Option
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shall be exercisable between the 30th and 15th days immediately prior to the scheduled
consummation of the Merger.
Determination of comparability in the case of the replacement of an Option with a substitute
option of a successor entity (or parent thereof) shall be made by the Board, and such
determination shall be final, binding and conclusive. Upon the consummation of the Merger, all
Options shall terminate and cease to be exercisable, unless assumed by such successor e ntity (or
parent thereof).
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Any exercise of an Option during the exercise period determined under this Paragraph IV(c)
shall be conditioned upon the consummation of the Merger and shall be effective only
concurrently with the consummation of the Merger, and in the event the Merger is not
consummated all exercises of Options made pursuant to this Paragraph IV(c) shall be of no
further force or effect; unless, with respect to any such Option. such Option was otherwise
exercisable pursuant to the terms of the applicable Agreement without regard to this Paragraph
IV(c) and the Optionee exercising such Option indicates in writing that such exercise is not
conditioned on the consummation of the Merger.
In the event the Trust enters into any agreement to dispose of all or substantially all of the
assets of the Trust by sale, exchange, dissolution or liquidation (a “Disposition Event”), then the
Board may, at its sole discretion, provide for the assumption and/or replacement of the Opti ons
as if such Disposition Event were a Merger, or may accelerate the exercisabilit y of each Option
as if such Disposition Event were a Merger, or may do neither; provided however, that if the
Board fails to consider the matter prior to the consummation of the Disposition Event, all
Options shall terminate and expire, subject to and conditioned on the consummation of the
Disposition Event, on the 15th day prior to the date scheduled for such consummation.
(d) In the event that the Trust acquires an interest in another entity in a reorga nization or
other transaction defined in Section 425(a) of the Code, then subject to the approval of the
Board, options of such other entity may be assumed, or options of the Trust under this Plan,
together with options of the Corporation under the Corporation Stock Plan, may be substitute d
therefor. In the event that ISO’s are assumed or substituted for options of another entity, such
assumption or substitution shall be in full compliance with Sections 422A and 425 of the Code
and the regulations thereunder.
(e) The grant of options shall in no way affect the right of the Trust to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or assets.
V,
TERMS AND CONDITIONS OF OPTIONS
Each Option shall be authorized by action of the Board and shall be evidenced by a se parate
Agreement in such form and containing such terms, conditions and restrictions as the Boa rd shall
from time to time approve, and, with respect to ISO’s, such terms as are required by Secti on
422A of the Code. Each grant to an Optionee shall be subject to and conditioned upon the
execution by the Trust and such Optionee of an Agreement reflecting the terms and conditi ons of
such grant, and such Optionee shall have no rights under such grant unless such Agreement is so
executed (i) in the case of an Optionee who is a trustee and/or an officer but is not an employee,
prior to his resignation or removal or the expiration of his term of office of all such posit ions;
and (ii) in the case of an employee, prior to the termination of his employment. Upon t he
execution of such Agreement the Option shall be deemed granted as of the date the B oard took
the necessary action to grant such Option.
Notwithstanding the generality of the foregoing, unless stated otherwise, each Option shall
comply with and incorporate the following terms, conditions and restrictions:
(a)Exercise Price.
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(1) The exercise price per share under each ISO shall be fixed by and at the discretion of
the Board, but in no event shall the exercise price per share for any ISO be less than 100% of the
“Fair Market Value” of a Trust Share (determined as provided in Paragraph V(a) (3)) on the dat e
of the grant of such ISO; provided, however, that if permitted by the Code, the exercise price for
an ISO may be less than 100% of the Fair Market Value of a Trust Share (but in no event shall it
be less than 50% of the fair market value of a Trust Share). The exercise price per share under
each Non-ISO shall be fixed by and at the discretion of the Board, but in no event shall the
exercise price per share for any Non-
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ISO granted hereunder be less than 50% of the Fair Market Value of a Trust Share on the date of
grant. The exercise price per share shall be subject to adjustment as provided in Paragraph IV(b).
(2) The exercise price for the Trust Shares to be purchased upon exercise of an Option shall
be immediately due upon exercise of such Option and shall be payable as follows:
(i) full payment in cash or check;
(ii) full payment in Trust Shares having a Fair Market Value on the “Exercise Date”
equal to the exercise price of such Option; or
(iii) a combination of the consideration described in clauses (i) and (ii) above.
provided, however, that the Optionee may pay the exercise price in Trust Shares only if the
Optionee is paying the purchase price for the Corporation Shares being concurrently purchased
pursuant to the Corresponding Corporation Stock Option by tendering the appropriate number of
Corporation Shares pursuant to Paragraph V(a)(2) of the Corporation Stock Plan.
For purposes of this Paragraph V(a)(2), the “Exercise Date” shall be the date on which the
Trust receives written notice of the exercise of the Option, together with payment of t he exercise
price for the purchased shares.
(3) The “Fair Market Value” of a Trust Share on any date shall be equal to that port ion of
the fair market value (as determined herein) of a Trust Share and a Corporation Share (traded
together as a unit and referred to as a “Paired Share”) which the Board has dete rmined to be
attributable to the Trust Share. The fair market value of a Paired Share shall be equal to the
closing price of a Paired Share on the date in question on the principal securities exchange on
which the Paired Shares are then listed or admitted to trading, as such price is officially reported
by the composite tape of transactions on such exchange. If there is no reported sales of the Paired
Shares on the principal exchange on such date, then the closing price on such exchange on t he
immediately preceding day for which there exists such reported sales shall be determ inative of
fair market value. If the Paired Shares are not then listed or admitted to t rading on any such
exchange, the fair market value of a share of the Paired Shares on any relevant date shall be the
average of the closing bid and asked prices as furnished by the National Association of Securi ties
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer reporting
such information. In the event the fair market value cannot be so determined, then the fair market
value shall be determined by the Board under any method deemed by it to be appropriate.
(b) Term and Exercise. Each Option shall be exercisable at such time or times and for such
number of shares as shall be determined by the Board, provided, however, (i) that no Option
shall have a term in excess of 10 years from the grant date; (ii) except as provide d in Paragraph
XV, no Option may be exercised by an Optionee unless such Optionee concurrently exercises his
option to purchase a like number of Corporation Shares under the Corresponding Corporation
Stock Option; (iii) an Option may not be exercised until a registration statement under the
Securities Act of 1933 has been filed and is effective with respect to the Trust Sha res subject to
such Option unless, in the opinion of the Trust’s counsel, such registration is not required; and
(iv) no Option may be exercised until this Plan has been approved by the shareholders of t he
Trust. During the lifetime of the Optionee, his Option shall be exercisable only by the Optionee
or by the Optionee’s guardian or legal representative, and shall not be assignable or transfera ble
by the Optionee; provided, however, that his Option shall be transferable by will or by the laws
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of descent and distribution if an option granted under the Corresponding Corporation Stock
Option is concurrently so transferred to the same beneficiary.
(c)Restrictions on Transferability. Each Agreement may contain such restrictions on the
transferability of the Trust Shares issuable upon exercise of an Option, or rights of the Trust to
purchase such Trust Shares from the Optionee or his transferees, as shall be determined by the
Board.
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(d)Effect of Termination of Employment.
(1) Except as otherwise provided by the applicable Agreement, should an ISO Optionee
cease to be an employee of the Trust or its subsidiaries for any reason (other than by rea son of
disability or death) at any time during the term of his ISO’s, or should a Non-ISO Optionee ce ase
to be a trustee, officer or employee of the Trust or its subsidiaries for any reason (other than by
reason of disability or death) at any time during the term of his Non-ISO’s (and not otherwise
become or remain as a trustee, employee or officer of the Trust or a director, offic er or employee
of the Corporation), such Optionee shall have the right to exercise any and all Opti ons which are
exercisable on the date of such termination of employment pursuant to the Agreement
evidencing such Options, subject to any restrictions on such exercise provided in such
Agreement, and (except as provided in Paragraph XV) subject to the condition that such
Optionee concurrently exercises his option to purchase a like number of Corporation Shares
pursuant to the Corresponding Corporation Stock Option. Any such Option shall terminate and
cease to be exercisable upon the earlier of (i) the expiration of 90 days from the da te of such
termination of employment, or (ii) the expiration of the term of such Option.
(2) Should an Optionee die at any time during the term of his Option, the executors or
administrators of such Optionee’s estate or the person or persons to whom such Option is
transferred pursuant to such Optionee’s will or by the laws of descent and distribution (as the
case may be) shall have the right to exercise such Option to the extent it is exercisable on the
date of such death pursuant to the Agreement evidencing such Option, subject to any rest rictions
on such exercise provided in such Agreement, and (except as provided in Paragraph XV)
provided that such executors or administrators concurrently exercise an option to purchase a l ike
number of Corporation Shares under the Corresponding Corporation Stock Option. Any such
Option shall terminate and cease to be exercisable upon the earlier of (i) the expiration of one
year from the date of such death, or (ii) the expiration of the term of such Option.
(3) Should an ISO Optionee cease to be an employee of the Trust or its subsidiaries by
reason of disability at any time during the term of his ISO, or should a Non-ISO Optionee cease
to be a trustee, officer or employee (and not otherwise become or remain as a trust ee, officer or
employee) of the Trust or its subsidiaries, by reason of disability, at any time during the term of
his Option, such Optionee (or his legal guardian, unless the exercise by such guardian would
disqualify such ISO as an incentive stock option) shall have the right to exercise a ny and all
Options granted to such Optionee which are exercisable on the date of such cessation of
employment pursuant to the Agreement evidencing such options subject to any restrictions on
such exercise provided in such Agreement; provided, however, that (except as provided in
Paragraph XV) such Optionee concurrently exercise options to purchase a like number of
Corporation Shares pursuant to the Corresponding Corporation Stock Option. Any such Option
shall terminate and cease to be exercisable upon the earlier of (i) the expira tion of one year from
the date of such cessation of employment, or (ii) the expiration of the term of such Opt ion. For
these purposes, the “disability” of an Optionee shall be determined as defined by Secti on
422A(c)(9) of the Code.
(e) Prior Outstanding Options. Notwithstanding any contrary provision hereof. to the
extent required by the Code at the time of exercise of an ISO, an Optionee may not exercise such
ISO while there is outstanding (within the meaning of Section 422A(c)(7) of the Code) any ISO
which was granted to such Optionee on an earlier date to purchase Trust Shares or shares i n an
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entity which (at the time of granting of the option) is a parent or subsidiary of the Trust, or is a
predecessor of any of such entities, as provided by Section 422A(b)(7) of the Code.
(f)Issuance of Shares. No Trust Shares shall be issued or delivered upon the exercise of an
Option unless and until (except as provided in Paragraph XV) the exercise price for such Trust
Shares and the same number of shares of Corporation Stock (pursuant to the concurrent exercise
of the Corresponding Corporation Stock Option) is paid in full.
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VI.
CANCELLATION OR EXCHANGE AND NEW GRANT OF OPTIONS
The Board shall have the authority to effect, at any time and from time to time, with the
consent of the affected Optionees, the cancellation of any or all outstanding Opti ons and to grant
in substitution therefor new Options covering the same or different numbers of Trust Shares,
provided that any substitute ISO granted hereunder shall have an exercise price per share not less
than 100% of the fair market value of such shares on the date such substitute Option is grante d,
as determined under and subject to Paragraphs III(c) and V(a), and (except as provided in
Paragraph XV) provided that the same action is taken with respect to options granted unde r the
Corresponding Corporation Stock Option.
VII.
AMENDMENT OF THE PLAN
(a) Except as set forth herein, the Board shall have complete and exclusive power a nd
authority to amend, suspend or modify this Plan in any or all respects and at any time; provided,
however, that no such amendment or modification shall adversely affect rights and obligations
with respect to outstanding Options without the consent of the affected Optionees. No Option
may be granted during any suspension of this Plan or after the termination of this Plan.
(b) Subject to Paragraph VII(a), the Board hereby expressly reserves the right, in its sole
determination, to amend or modify the terms and provisions of this Plan and of any outstanding
Options to the extent necessary to qualify any or all Options for such favorable federal incom e
tax treatment (including deferral of taxation upon exercise) as may be afforded empl oyee stock
options under amendments to the Code or other statutes or regulations which become effect ive
after the effective date of this Plan.
(c) Notwithstanding the foregoing provisions of this Paragraph VII, the Board shall not,
without obtaining all necessary regulatory, governmental and shareholder approvals (if any) at
the time required by law or by the stock exchanges on which the Trust Securities are then listed
or admitted to trading, (i) increase the maximum number of Trust Shares issuable under t his
Plan, except for permissible adjustments under Paragraph IV(b), (ii) increase the maximum term
of Options provided hereunder, (iii) change any provision of this Plan which would adversely
affect the qualification of ISO’s granted hereunder as “incentive stock options” within t he
meaning of Section 422A of the Code, or (iv) modify the eligibility requirements for the grant of
Options under this Plan.
VIII.
EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan shall be effective as of the date it is approved by the Board, but no Option
shall become exercisable until this Plan has been approved by the shareholders of the Trust. The
Plan shall terminate and any Options shall expire upon the first anniversary of the approval of
this Plan by the Board unless the shareholders’ approval of this Plan is obtained by such date.
(b) Unless earlier terminated by resolution of the Board in connection with a Merger or a
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Disposition Event (as defined in Paragraph IV(c)), this Plan shall terminate upon the earlier of (i)
the date on which all shares available for issuance under this Plan have been issued pursua nt to
the valid exercise of Options, or (ii) 10 years from the adoption of this Plan by the Board.
Options outstanding on the date of the termination of this Plan may be exercised after the
termination of this Plan, unless otherwise provided in the Agreement evidencing such Options.
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IX.
USE OF PROCEEDS
The proceeds received by the Trust from the sale of Trust Shares pursuant to Options shall
be used for general trust purposes.
X.
SHAREHOLDER RIGHTS
No Optionee shall have any of the rights of a shareholder with respect to any shares covered
by any Option until such shares have been issued to such Optionee by the Trust pursuant to the
valid exercise of such Option and the full payment by such Optionee of the exercise price
therefor.
XI.
CONTINUATION OF EMPLOYMENT
Nothing contained in this Plan (or in any Agreement) shall obligate the Trust to empl oy or
continue to employ any Optionee for any period or interfere in any way with the right of t he
Trust to modify or amend the compensation or other terms of employment of any Optionee.
XII.
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND RELATED MATTERS
(a) The Board may require any Optionee who will be executing an Agreement providing
for the grant of an Option to represent and agree for himself and his transferees by will or t he
laws of descent and distribution that, unless a Registration Statement under the Se curities Act of
1933 is in effect as to the Trust Shares that may be received upon exercise of such Option, any
and all Trust Shares so received shall be acquired for his own account and not for resale or for
distribution, and each notice of the exercise of any portion of such Option shall be ac companied
by a representation and warranty in writing, signed by the person entitled to exercise t he same,
that such Trust Shares are being so acquired in good faith for his own account and not for resal e
or distribution, and such other representations and warranties as may be required by the Boa rd or
the applicable Agreement.
(b) No Trust Shares shall be issued or delivered upon the exercise of an Option unless and
until there has been full compliance with all then applicable requirements of all regulatory
agencies having jurisdiction and all then applicable requirements of any securities exchange
upon which the Trust Shares are then listed. The Trust may, in its sole discretion, take all
reasonable actions to protect against any sale or distribution by an Optionee which does not
comply with this Plan or any federal or state securities laws, including affixing appropria te
legends on the certificates representing the shares issued to such Optionee pursuant to any
Option. At any time that an Optionee contemplates the disposition (whether by sale, e xchange,
gift or other form of transfer) of any Trust Shares acquired pursuant to an Option, and if so
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required by the policy of the Trust at the time, he shall first notify the Trust in writing of such
proposed disposition and shall thereafter cooperate with the Trust in complying with al l
applicable requirements of law which, in the judgment of the Trust, must be satisfied prior to the
making of such disposition. Before consummating such disposition, the Trust may require such
Optionee to provide to the Trust an opinion of such Optionee’s counsel, of which both such
opinion and such counsel shall be satisfactory to the Trust, that such disposition will not re sult in
a violation of any state or federal securities laws or regulations.
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XIII.
TAXES AND WITHHOLDING
The obligation of the Trust to deliver shares upon the exercise of an Option shall be subject
to the completion of appropriate arrangements which, in the judgment of the Board, are required
for the satisfaction of any federal, state or local income tax withholding requireme nts and any
federal social security or other employment tax requirements applicable to such exe rcise (if any),
and such other agreements and acknowledgments of the Optionee as the Board deems nece ssary
or appropriate.
XIV.
EXCULPATION AND INDEMNIFICATION
(a) To the extent permitted by applicable law in effect from time to tim e, no member of the
Board or the Committee shall be liable for any action or omission of any other m ember of the
Board or the Committee, nor for any act or omission of any member’s own part. The Trust a nd
its subsidiaries shall pay all expenses incurred by, and satisfy any judgment or fine rendere d or
levied against, a present or former trustee or member of the Committee in any action brought by
a third party against such person to impose a liability or penalty on such person while a trustee or
member of the Committee arising with respect to this Plan or the administrat ion thereof or out of
membership on the Committee; provided, however, that the Board first determines in good faith
that such trustee or member was acting in good faith and within what such trustee or member
reasonably believed to be the scope of his duties or authority and for a purpose which he
reasonably believed to be in the best interests of the Trust or its shareholders. Payments
authorized hereunder shall include amounts paid and expenses incurred in settling any such
action or threatened action.
(b) For purposes of this Article XIV, the terms “trustee” and “member of the Board or the
Committee” shall include the estate, executor, administrator, heirs, legat ees and devices of such
persons.
(c) The provisions of this Paragraph XIV are in addition to and shall not limit any other
rights which a trustee or member of the Committee may have under any provision of the
Declaration of Trust of the Trust, the Trustee’s Regulations, any contract or applicable law.
XV.
TERMINATION OF PAIRING AGREEMENT
Notwithstanding anything in this Plan to the contrary, if at any time the Agreement dated June
25, 1980, by and between the Trust and Hotel Investors Corporation, pursuant to which the Trust
Shares and Corporation Shares are paired on a share-for-share basis (the “Pairing Agreement”),
is terminated (whether pursuant to Paragraph 10 thereof or otherwise) and as a result of such
termination the Trust Shares and the Corporation Shares no longer are required to be transferred
together, then concurrently with such termination (i) Options may thereafter be granted and
transferred without the grant or transfer of Corporation Trust Share Options; (ii) Options and
Corresponding Corporation Stock Options shall no longer be required to be exercised or
PAIRING§5.107
February 1988 5-185
terminated together; (iii) Trust Shares thereafter may be issued upon exercise of Options without
the issuance of Corporation Shares pursuant to the Corresponding Corporation Stock Options;
(iv) Options and options granted under the Corporation Share Plan thereafter shall be wholly
separate and independent securities; and (v) the “Fair Market Value” and the “closing price” of
the Paired Shares as used herein shall thereafter be deemed to refer, respectively, to the fair
market value and the closing price of a Trust Share, determined in the manner provided herein.
