Exhibit 10.23
HERSHA HOSPITALITY TRUST
OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
1.01. Administrator..................................................1
1.02. Affiliate......................................................1
1.03. Agreement......................................................1
1.04. Board..........................................................1
1.05. Code...........................................................1
1.06. Committee......................................................1
1.07. Common Shares..................................................1
1.08. Company........................................................2
1.09. Exchange Act...................................................2
1.10. Fair Market Value..............................................2
1.11. Option.........................................................3
1.12. Participant....................................................3
1.13. Plan...........................................................3
ARTICLE II PURPOSES...........................................................3
ARTICLE III ADMINISTRATION....................................................4
ARTICLE IV ELIGIBILITY........................................................5
ARTICLE V SHARES SUBJECT TO PLAN
5.01. Shares Issued..................................................5
5.02. Aggregate Limit................................................5
5.03. Reallocation of Shares.........................................6
ARTICLE VI OPTIONS............................................................6
6.01. Award..........................................................6
6.02. Option Price...................................................6
6.03. Maximum Option Period..........................................6
6.04. Nontransferability.............................................6
6.05. Transferable Options...........................................7
6.06. Employee Status................................................7
6.07. Exercise.......................................................7
6.08. Payment........................................................8
6.09. Shareholder Rights.............................................8
6.10. Disposition of Shares..........................................9
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ARTICLE VII ADJUSTMENT UPON CHANGE IN COMMON SHARES...........................9
ARTICLE VIII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES...........10
ARTICLE IX GENERAL PROVISIONS
9.01. Effect on Employment and Service..............................11
9.02. Unfunded Plan.................................................11
9.03. Rules of Construction.........................................11
ARTICLE X AMENDMENT..........................................................12
ARTICLE XI DURATION OF PLAN..................................................12
ARTICLE XII EFFECTIVE DATE OF PLAN...........................................12
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ARTICLE I
DEFINITIONS
1.01. Administrator
Administrator means (i) while the Company is a Non-Public Company
(as defined in Section 1.18), the Board, and (ii) while the Company is a
Public Company (as defined in Section 1.18), the Committee and any
delegate of the Committee that is appointed in accordance with Article III.
1.02. Affiliate
Affiliate means any "subsidiary" or "parent" corporation (within
the meaning of Section 424 of the Code) of the Company.
1.03. Agreement
Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an Option.
1.04. Board
Board means the Board of Trustees of the Company.
1.05. Code
Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.06. Committee
Committee means the Compensation Committee of the Board.
1.07. Common Shares
Common Shares means the common shares of the Company.
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1.08. Company
Company means Hersha Hospitality Trust.
1.09. Exchange Act
Exchange Act means the Securities Exchange Act of 1934, as amended.
1.10. Fair Market Value
Fair Market Value means, on any given date, the current fair market
value of a Common Share as determined pursuant to subsection (a), (b) or (c)
below.
(a) While the Company is a Non-Public Company, Fair Market Value shall
be determined by the Committee using any reasonable method in good faith.
(b) While the Company is a Public Company, Fair Market Value shall be
determined as follows: if the Common Shares are not listed on an established
stock exchange, Fair Market Value shall be the average of the final bid and
asked quotations on the over-the-counter market in which the Common Shares are
traded or, if applicable, the reported "closing" price of a Common Share in the
New York over-the-counter market as reported by the National Association of
Securities Dealers, Inc. If the Common Shares are listed on an established stock
exchange or exchanges, Fair Market Value shall be deemed to be the highest
closing price of a Common Share reported on that stock exchange or exchanges. In
any case, if no sale of Common Shares is made on any stock exchange or
over-the-counter market on that date, then Fair Market Value shall be determined
as of the next preceding day on which there was a sale. For purposes of this
definition, the term "Public Company" means an entity that has sold securities
pursuant to an effective registration statement on Form S-11 filed pursuant to
the Securities Act of 1933, as amended, and the term "Non-Public Company" means
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an entity that has never sold securities pursuant to an effective registration
statement on Form S-11 filed pursuant to the Securities Act of 1933, as amended.
(c) Notwithstanding the foregoing, Fair Market Value on the
effective date of the registration statement relating to the initial public
offering of the Company shall be the initial public offering price of the
Common Shares.
1.11. Option
Option means a share option that entitles the holder to purchase from
the Company a stated number of Common Shares at the price set forth in an
Agreement.
1.12. Participant
Participant means an employee of the Company or an Affiliate,
including an employee who is a member of the Board, who satisfies the
requirements of Article IV and is selected by the Administrator to receive
an Option.
1.13. Plan
Plan means the Hersha Hospitality Trust Option Plan.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company and its Affiliates in
recruiting and retaining individuals with ability and initiative by enabling
such persons to participate in the future success of the Company and its
Affiliates and to associate their interests with those of the Company and its
shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive share options") and Options
not so qualifying. No Option that is intended to be an incentive share option
shall be invalid for failure to qualify as an incentive share option. The
proceeds received by the Company from the sale of Common Shares pursuant to this
Plan shall be used for general corporate purposes.
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ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Options upon such terms (not inconsistent with the
provisions of this Plan), as the Administrator may consider appropriate. Such
terms may include conditions (in addition to those contained in this Plan), on
the exercisability of all or any part of an Option. Notwithstanding any such
conditions, the Administrator may, in its discretion, accelerate the time at
which any Option may be exercised. In addition, the Administrator shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any act done
in good faith with respect to this Plan or any Agreement or Option. All expenses
of administering this Plan shall be borne by the Company.
The Committee, in its discretion, may delegate to one or more officers
of the Company all or part of the Committee's authority and duties with respect
to grants and awards to individuals who are not subject to the reporting and
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other provisions of Section 16 of the Exchange Act. The Committee may revoke or
amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Committee's delegate or delegates that were consistent
with the terms of the Plan.
ARTICLE IV
ELIGIBILITY
Any employee of the Company or an Affiliate (including a corporation
that becomes an Affiliate after the adoption of this Plan), is eligible to
participate in this Plan if the Administrator, in its sole discretion,
determines that such person has contributed significantly or can be expected to
contribute significantly to the profits or growth of the Company or an
Affiliate. Trustees of the Company who are employees of the Company or an
Affiliate may be selected to participate in this Plan.
ARTICLE V
SHARES SUBJECT TO PLAN
5.01. Shares Issued
Upon the exercise of any Option, the Company may deliver to the
Participant (or the Participant's broker if the Participant so directs)
Common Shares from its authorized but unissued Common Shares.
5.02. Aggregate Limit
The maximum aggregate number of Common Shares that may be issued
under this Plan pursuant to the exercise of Options is 650,000 shares,
subject to adjustment as provided in Article VII.
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5.03. Reallocation of Shares
If an Option is terminated, in whole or in part, for any reason other
than its exercise, the number of Common Shares allocated to the Option or
portion thereof may be reallocated to other Options to be granted under this
Plan.
ARTICLE VI
OPTIONS
6.01. Award
In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom an Option is to be granted and will
specify the number of Common Shares covered by such awards; provided,
however, that no individual may be granted Options in any calendar year
covering more than [________] Common Shares.
6.02. Option Price
The price per share for Common Shares purchased on the exercise of an
Option shall be determined by the Administrator on the date of grant, but
shall not be less than the Fair Market Value on the date the Option is
granted.
6.03. Maximum Option Period
The maximum period in which an Option may be exercised shall be
determined by the Administrator on the date of grant, except that no Option
shall be exercisable after the expiration of five years from the date such
Option was granted.
6.04. Nontransferability
Except as provided in Section 6.05, each Option granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. During the lifetime of the Participant to whom the Option is
granted, the Option may be exercised only by the Participant. No right or
interest of a Participant in any
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Option shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.
6.05. Transferable Options
Section 6.04 to the contrary notwithstanding, if the Agreement
provides, an Option that is not an incentive share option may be transferred by
a Participant to the Participant's children, grandchildren, spouse, one or more
trusts for the benefit of such family members or a partnership in which such
family members are the only partners, on such terms and conditions as may be
permitted under Securities and Exchange Commission Rule 16b-3 as in effect from
time to time. The holder of an Option transferred pursuant to this section shall
be bound by the same terms and conditions that governed the Option during the
period that it was held by the Participant; provided, however, that such
transferee may not transfer the Option except by will or the laws of descent and
distribution.
6.06. Employee Status
For purposes of determining the applicability of Section 422 of the
Code (relating to incentive share options), or in the event that the terms of
any Option provide that it may be exercised only during employment or within
a specified period of time after termination of employment, the
Administrator may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not
be deemed interruptions of continuous employment.
6.07. Exercise
An Option granted under this Plan will be exercisable only if (i) the
Company obtains a per share closing price on the Common Shares of $9.00 or
higher for 20 consecutive trading days; and (ii) the closing price on the Common
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Shares for the prior trading day was $9.00 or higher. Subject to the preceding
sentence and the other provisions of this Plan and the applicable Agreement, an
Option may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Administrator shall
determine; provided, however, that incentive share options (granted under the
Plan and all plans of the Company and its Affiliates) may not be first
exercisable in a calendar year for shares having a Fair Market Value (determined
as of the date an Option is granted) exceeding the amount prescribed by the Code
(currently $100,000). An Option granted under this Plan may be exercised with
respect to any number of whole shares less than the full number for which the
Option could be exercised. A partial exercise of an Option shall not affect the
right to exercise the Option from time to time in accordance with this Plan and
the applicable Agreement with respect to the remaining shares subject to the
Option.
6.08. Payment
Unless otherwise provided by the Agreement, payment of the Option price
shall be made in cash or a cash equivalent acceptable to the Administrator, or
by the surrender to the Company or attestation of ownership of Common Shares. If
Common Shares are used to pay all or part of the Option price, the sum of the
cash and cash equivalent and the Fair Market Value (determined as of the day
preceding the date of exercise) of the shares that are surrendered or that are
the subject of attestation must not be less than the Option price of the shares
for which the Option is being exercised.
6.09. Shareholder Rights
No Participant shall have any rights as a shareholder with
respect to shares subject to his Option until the date of exercise of such
Option.
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6.10. Disposition of Shares
A Participant shall notify the Company of any sale or other disposition
of Common Shares acquired pursuant to an Option that was an incentive share
option if such sale or disposition occurs (i) within two years of the grant of
an Option or (ii) within one year of the issuance of the Common Shares to the
Participant. Such notice shall be in writing and directed to the Secretary of
the Company.
ARTICLE VII
ADJUSTMENT UPON CHANGE IN COMMON SHARES
The maximum number of shares as to which Options may be granted under
this Plan, the terms of outstanding Options and the per individual limitations
on the number of shares for which Options may be granted shall be adjusted as
the Committee shall determine to be equitably required in the event that (i) the
Company (a) effects one or more share dividends, share split-ups, subdivisions
or consolidations of shares or (b) engages in a transaction to which Section 424
of the Code applies or (ii) there occurs any other event which, in the judgment
of the Committee necessitates such action. Any determination made under this
Article VII by the Committee shall be final and conclusive.
The issuance by the Company of shares of any class, or securities
convertible into shares of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the maximum number
of shares as to which Options may be granted, the per individual limitations on
the number of shares for which Options may be granted or the terms of
outstanding Options.
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The Committee may grant Options in substitution for stock options or
similar awards held by an individual who becomes an employee of the Company or
an Affiliate in connection with a transaction described in the first paragraph
of this Article XII. Notwithstanding any provision of the Plan (other than the
limitation of Section 5.02), the terms of such substituted Option grants shall
be as the Committee, in its discretion, determines is appropriate.
ARTICLE VIII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Shares shall be issued, no
certificates for Common Shares shall be delivered, and no payment shall be made
under this Plan except in compliance with all applicable federal and state laws
and regulations (including, without limitation, withholding tax requirements),
any listing agreement to which the Company is a party, and the rules of all
domestic stock exchanges on which the Company's shares may be listed. The
Company shall have the right to rely on an opinion of its counsel as to such
compliance. Any share certificate issued to evidence Common Shares for which an
Option is exercised may bear such legends and statements as the Administrator
may deem advisable to assure compliance with federal and state laws and
regulations. No Option shall be exercisable, no certificate for shares shall be
delivered, and no payment shall be made under this Plan until the Company has
obtained such consent or approval as the Administrator may deem advisable from
regulatory bodies having jurisdiction over such matters.
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ARTICLE IX
GENERAL PROVISIONS
9.01. Effect on Employment and Service
Neither the adoption of this Plan, its operation, nor any documents
describing or referring to this Plan (or any part thereof), shall confer upon
any individual any right to continue in the employ or service of the Company
or an Affiliate or in any way affect any right and power of the Company or an
Affiliate to terminate the employment or service of any individual at any time
with or without assigning a reason therefor.
9.02. Unfunded Plan
The Plan, insofar as it provides for grants, shall be unfunded, and the
Company shall not be required to segregate any assets that may at any time be
represented by grants under this Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
9.03. Rules of Construction
Headings are given to the articles and sections of this Plan solely as
a convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.
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ARTICLE X
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if the amendment increases the aggregate number of Common Shares that
may be issued under the Plan. No amendment shall, without a Participant's
consent, adversely affect any rights of such Participant under any Option
outstanding at the time such amendment is made.
ARTICLE XI
DURATION OF PLAN
No Option may be granted under this Plan more than ten years after
the earlier of the date that the Plan is adopted by the Board or is approved by
the Company's shareholders as provided in Article XII. Options granted
before that date shall remain valid in accordance with their terms.
ARTICLE XII
EFFECTIVE DATE OF PLAN
Options may be granted under this Plan upon its adoption by the Board,
provided that no Option shall be effective or exercisable unless this Plan is
approved by a majority of the votes cast by the Company's shareholders, voting
either in person or by proxy, at a duly held shareholders' meeting at which a
quorum is present.