ex10-1.htm


     

    Exhibit
10.1



    STRATEGIC
HOTELS & RESORTS, INC.

    AMENDED AND RESTATED 2004
INCENTIVE PLAN

    


    SECTION
1. PURPOSE

    


    The
purpose of this Strategic Hotels & Resorts, Inc. Amended and Restated
2004 Incentive Plan (the “Plan”) is to attract, retain
and motivate employees, officers, directors, consultants, agents, advisors and
independent contractors of Strategic Hotels & Resorts, Inc. (the “ Company ”) and its Related
Companies (individually or collectively, “ Employer ”) by providing them
the opportunity to acquire a proprietary interest in the Company or other
incentives and to align their interests and efforts to the interests of the
Company’s stockholders and to provide an added incentive to work towards the
Company’s growth and success.

    


    SECTION
2. DEFINITIONS

    


    Certain
terms used in this Plan have the meanings set forth in
Appendix I.

    


    SECTION
3. ELIGIBILITY

    


    An Award
may be granted to any employee, officer, director, consultant, agent, advisor or
independent contractor of the Company or a Related Company whom the Committee
from time to time selects.

    


    SECTION
4. SHARES SUBJECT TO THE PLAN

    


    4.1    Authorized
Number of Shares

    


    Subject
to adjustment from time to time as provided in Section 14.1, a maximum of
four million, two hundred thousand (4,200,000) shares of Common Stock or OP
Units shall be available for issuance under the Plan. Shares issued under the
Plan shall be drawn from authorized and unissued shares or shares now held or
subsequently acquired by the Company. An issuance of either a share of Common
Stock or an OP Unit shall count as a reduction of one against the maximum set
forth in this Section.

    


    4.2    Share
Usage

    


    (a)
Shares of Common Stock or OP Units covered by an Award shall not be counted as
used unless and until they are actually issued to a Participant. Subject to
Sections 6.7 and 9.3, if any Award lapses, expires, terminates or is canceled
prior to the issuance of shares of Common Stock or OP Units hereunder or if
shares of Common Stock or OP Units are issued under this Plan to a Participant
and thereafter are forfeited to or otherwise reacquired by the Company, the
shares of Common Stock or OP Units subject to such Awards and the forfeited or
reacquired shares of Common Stock or OP Units shall again be available for
issuance under the Plan. Any shares of Common Stock or OP Units
(i) tendered by a Participant or retained by the Company as full or partial
payment to the Company for the exercise of an Option, purchase price of an Award
or to satisfy tax withholding obligations in connection with an Award or
(ii) covered by an Award that is settled in cash or in a manner such that
some or all of the shares of Common Stock or OP Units covered by the Award are
not issued to a Participant shall be available for Awards under the Plan. The
number of shares of Common Stock or OP Units available for issuance under the
Plan shall not be reduced to reflect any dividends or dividend equivalents that
are reinvested into additional shares or credited as additional shares of Common
Stock or OP Units subject or paid with respect to an Award other than an Option
or Stock Appreciation Right.

     

    (b) The
Committee shall also, without limitation, have the authority to grant Awards as
an alternative to or as the form of payment for grants or rights earned or due
under other compensation plans or arrangements of the Employer.

    


    (c)
Notwithstanding anything in the Plan to the contrary, the Committee may grant
Substitute Awards under the Plan. Substitute Awards shall not reduce the number
of shares authorized for issuance under the Plan. In the event that an Acquired
Entity has shares available for awards or grants under one or more preexisting
plans not adopted in contemplation of such acquisition or combination, then, to
the extent determined by the Board or the Committee, the shares available for
grant pursuant to the terms of such preexisting plan (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine the consideration
payable to holders of common stock of the entities that are parties to such
acquisition or combination) may be used for Awards under the Plan and shall not
reduce the number of shares of Common Stock or OP Units authorized for issuance
under the Plan; provided, however, that Awards using such available shares shall
not be made after the date awards or grants could have been made under the terms
of such preexisting plans, absent the acquisition or combination, and shall only
be made to individuals who were not employees or nonemployee directors of the
Company or a Related Company prior to such acquisition or combination. In the
event that a written agreement between the Company and an Acquired Entity
pursuant to which a merger, consolidation or statutory share exchange is
completed is approved by the Board and said agreement sets forth the terms and
conditions of the substitution for or assumption of outstanding awards of the
Acquired Entity, said terms and conditions shall be deemed to be the action of
the Committee without any further action by the Committee, except as may be
required for compliance with Rule 16b-3 under the Exchange Act, and the
persons holding such awards shall be deemed to be Participants.

    


    (d) The
maximum number of shares that may be issued upon the exercise of Incentive Stock
Options shall equal the aggregate share number stated in Section 4.1,
subject to adjustment as provided in Section 14.1.

    


    SECTION
5. AWARDS

    


    5.1    Form,
Grant and Settlement of Awards

    


    The
Committee shall have the authority, in its sole discretion, to determine the
type or types of Awards to be granted under this Plan. Such Awards may be
granted either alone, in addition to, or in tandem with, any other type of
Award. Any Award settlement may be subject to such


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    conditions,
restrictions and contingencies, as the Committee shall determine.

    


    5.2    Evidence
of Awards

    


    Awards
granted under the Plan shall be evidenced by a written (including electronic)
notice or agreement that shall contain such terms, conditions, limitations and
restrictions as the Committee shall deem advisable and that are not inconsistent
with this Plan.

    


    5.3    Vesting
of Awards

    


    The
effect on the vesting of an Award of a Company-approved leave of absence or a
Participant’s working less than full-time shall be determined by the Company’s
chief executive officer or, with respect to directors or executive officers, the
Committee, whose determination shall be conclusive and binding.

    


    5.4    Deferrals

    


    The
Committee may permit or require a Participant to defer receipt of the payment of
any Award. If any such deferral election is permitted or required, the
Committee, in its sole discretion, shall establish rules and procedures for such
payment deferrals, which may include the grant of additional Awards or
provisions for the payment or crediting of interest or dividend equivalents or
converting such credits to deferred share unit equivalents; provided, however,
that the terms of any deferrals under this Section 5.4 are intended to
comply with the requirements of Section 409A of the Code and
Section 17.5 of this Plan.

    


    5.5    Dividends
and Distributions

    


    Participants
may, if the Committee so determines, be credited with dividends or dividend
equivalents paid with respect to shares underlying an Award other than an Option
or Stock Appreciation Right in a manner determined by the Committee in its sole
discretion. The Committee may apply any restrictions to the dividends or
dividend equivalents that the Committee deems appropriate. The Committee, in its
sole discretion, may determine the form of payment of dividends or dividend
equivalents, including cash, shares of Common Stock, Restricted Stock, Stock
Units or OP Units.

    


    SECTION
6. OPTIONS

    


    6.1    Grant
of Options

    


    The
Committee may grant Options designated as Incentive Stock Options or
Nonqualified Stock Options.

    


    6.2    Option
Exercise Price

    


    The
exercise price for shares purchased under an Option shall be as determined by
the Committee, but shall not be less than 100% of the Fair Market Value on the
Grant Date, except in the case of Substitute Awards.

    


    6.3    Term
of Options

    


    Subject
to earlier termination in accordance with the terms of the Plan and the Award
Agreement, the maximum term of a Nonqualified Stock Option shall be as
established for that Option by the Committee but not to exceed ten years from
the Grant Date or, if not so established, shall be ten years from the Grant
Date.

    


    6.4    Exercise
of Options

    


    The
Committee shall establish and set forth in each instrument that evidences an
Option the time at which, or the installments in which, the Option shall vest
and become exercisable, any of which provisions may be waived or modified by the
Committee at any time.

    


    To the
extent an Option has vested and become exercisable, the Option may be exercised
in whole or from time to time in part by delivery to or as directed or approved
by the Company of a properly executed stock option exercise agreement or notice,
in a form and in accordance with procedures established by the Committee,
setting forth the number of shares with respect to which the Option is being
exercised, the restrictions imposed on the shares purchased under such exercise
agreement, if any, and such representations and agreements as may be required by
the Committee, accompanied by payment in full as described in Sections 6.5 and
12. An Option may be exercised only for whole shares and may not be exercised
for less than a reasonable number of shares at any one time, as determined by
the Committee.

    


    6.5    Payment
of Exercise Price

    


    The
exercise price for shares purchased under an Option shall be paid in full to the
Company by delivery of consideration equal to the product of the Option exercise
price and the number of shares purchased. Such consideration must be paid before
the Company will issue the shares being purchased and must be in a form or a
combination of forms acceptable to the Committee for that purchase, which forms
may include:

    


    (a) cash,
check or wire transfer;

    


    (b)
having the Company withhold shares of Common Stock that would otherwise be
issued on exercise of the Option that have an aggregate Fair Market Value equal
to the aggregate exercise price of the shares being purchased under the
Option;


    
      
         


      

      
         


        
          

        

      

      
         


      

    


               
(c) tendering (either actually or, so long as the Common Stock is registered
under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of
Common Stock owned by the Participant;

    


    (d) so
long as the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, and to the extent permitted by law, delivery of a properly
executed exercise notice, together with irrevocable instructions to a brokerage
firm designated or approved by the Company to deliver promptly to the Company
the aggregate amount of proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise, all
in accordance with the regulations of the Federal Reserve Board; or

    


    (e) such
other consideration as the Committee may permit.

    


    6.6    Effect
of Termination of Service

    


    The
Committee shall establish and set forth in each Award Agreement that evidences
an Option whether the Option shall continue to be exercisable, and the terms and
conditions of such exercise, after a Termination of Service, any of which
provisions may be waived or modified by the Committee at any time. If not so
established in the Award Agreement, the Option shall be exercisable according to
the following terms and conditions, which may be waived or modified by the
Committee at any time:

    


    (a) Any
portion of an Option that is not vested and exercisable on the date of a
Participant’s Termination of Service shall expire on such date.

    


    (b) Any
portion of an Option that is vested and exercisable on the date of a
Participant’s Termination of Service shall expire on the earliest to occur
of:

    


    (i) if
the Participant’s Termination of Service occurs for reasons other than
Disability or death, the date that is ninety (90) days after such
Termination of Service;

    


    (ii) if
the Participant’s Termination of Service occurs by reason of Disability or
death, the date that is twelve months after such Termination of Service;
and

    


    (iii) the
last day of the Option Term (“Option Expiration
Date”).

    


    Notwithstanding
the foregoing, if a Participant dies after the Participant’s Termination of
Service but while an Option is otherwise exercisable, the portion of the Option
that is vested and exercisable on the date of such Termination of Service shall
expire upon the earlier to occur of (a) the Option Expiration Date and
(b) twelve months after the date of death, unless the Committee determines
otherwise. A Participant’s change in status from an employee to a consultant,
advisor or independent contractor shall not be considered a Termination of
Service for purposes of this Section 6.6.

    


    6.7    No
Repricing

    


    Other
than in connection with a change in the Company’s capitalization (as described
in Section 14), an Option may not be repriced without stockholder approval
(including canceling previously awarded Options and regranting them with a lower
exercise price or taking any other action with respect to an Option that would
be treated as a repricing under the rules and regulations of the principal
securities exchange on which the shares of Common Stock are
traded).

    


    SECTION
7. INCENTIVE STOCK OPTION LIMITATIONS

    


    Notwithstanding
any other provisions of the Plan, the terms and conditions of any Incentive
Stock Options shall in addition comply in all respects with Section 422 of
the Code, or any successor provision, and any applicable regulations thereunder,
including, to the extent required thereunder, the following:

    


    7.1    Dollar
Limitation

    


    To the
extent the aggregate Fair Market Value (determined as of the Grant Date) of
Common Stock with respect to which a Participant’s Incentive Stock Options
become exercisable for the first time during any calendar year (under the Plan
and all other stock option plans of the Company and its parent and subsidiary
corporations) exceeds $100,000, such portion in excess of $100,000 shall be
treated as a Nonqualified Stock Option. In the event the Participant holds two
or more such Options that become exercisable for the first time in the same
calendar year, such limitation shall be applied on the basis of the order in
which such Options are granted.

    


    7.2    Eligible
Employees

    


    Individuals
who are not employees of the Company or one of its parent or subsidiary
corporations may not be granted Incentive Stock Options.

    


    7.3
Exercise Price

    


    The
exercise price of an Incentive Stock Option shall be at least 100% of the Fair
Market Value of the Common Stock on the Grant Date, and in the case of an
Incentive Stock Option granted to a Participant who owns more than 10% of the
total combined voting power of all classes of the stock of the Company or of its
parent or subsidiary corporations (a  “Ten Percent
Stockholder” ), shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date. The determination of more than 10% ownership
shall be made in accordance with Section 422 of the Code.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    7.4    Option
Term

    


    Subject
to earlier termination in accordance with the terms of the Plan and the
instrument evidencing the Option, the maximum term of an Incentive Stock Option
shall not exceed ten years, and in the case of an Incentive Stock Option granted
to a Ten Percent Stockholder, shall not exceed five years.

    


    7.5    Exercisability

    


    An Option
designated as an Incentive Stock Option shall cease to qualify for favorable tax
treatment as an Incentive Stock Option to the extent it is exercised (if
permitted by the terms of the Option) (a) more than three months after the
date of a Participant’s Termination of Service if termination was for reasons
other than death or disability, (b) more than one year after the date of a
Participant’s Termination of Service if termination was by reason of disability,
or (c) after the Participant has been on leave of absence for more than 90
days, unless the Participant’s reemployment rights are guaranteed by statute or
contract.

    


    7.6    Taxation
of Incentive Stock Options

    


    In order
to obtain certain tax benefits afforded to Incentive Stock Options under
Section 422 of the Code, the Participant must hold the shares acquired upon
the exercise of an Incentive Stock Option for two years after the Grant Date and
one year after the date of exercise.

    


    A
Participant may be subject to the alternative minimum tax at the time of
exercise of an Incentive Stock Option. The Participant shall give the Company
prompt notice of any disposition of shares acquired on the exercise of an
Incentive Stock Option prior to the expiration of such holding
periods.

    


    7.7    Code
Definitions

    


    For the
purposes of this Section 7 “disability,” “parent corporation” and
“subsidiary corporation” shall have the meanings attributed to those terms for
purposes of Section 422 of the Code.

    


    SECTION
8. RESTRICTED STOCK, STOCK UNITS AND OP UNITS

    


    8.1    Grant
of Restricted Stock, Stock Units and OP Units

    


    The
Committee may grant Restricted Stock, Stock Units and OP Units on such terms and
conditions and subject to such repurchase or forfeiture restrictions, if any
(which may include, without limitation, restrictions based on continuous service
with the Employer or the achievement of performance criteria), as the Committee
shall determine in its sole discretion, which terms, conditions and restrictions
shall be set forth in the instrument evidencing the Award provided that except
as otherwise set forth in this Section, in no event shall the conditions or
restrictions on the grant or vesting of an Award of Restricted Stock, RSUs
or OP Units that are based on performance criteria be subject to a performance
period of less than one year and no condition or restriction that is based
solely upon continued employment or the passage of time (or a performance period
of less than one year) shall provide for vesting or settlement in full of an
Award of Restricted Stock, RSUs or OP Units over a period of less than three
years from the date as of which the Award is effective (or if earlier, the
performance period begins), in each case other than as a result of or upon the
death, disability or retirement of the Participant or a change in control of the
Company. Notwithstanding anything herein to the contrary, the limitations
contained in the preceding sentence shall not apply to Restricted Stock, RSUs
and OP Units that are granted in lieu of salary, earned cash bonus or other
earned cash compensation or with respect to Substitute Awards or which are
granted as ordinary compensation to Non-employee Directors; in each of these
situations there need not be restrictions or a minimum period for restrictions.
Any Awards of Restricted Stock, RSUs or OP Units to Non-employee Directors other
than as ordinary compensation to Non-employee Directors shall not be subject to
management discretion. In addition, notwithstanding anything herein to the
contrary, the Committee may (a) grant Awards of Restricted Stock, RSUs and
OP Units which fully vest prior to three years (including without limitation,
prior to one year in the case of Awards of Restricted Stock, RSUs or OP Units
whether or not subject to performance criteria) from the date of grant and
(b) waive vesting restrictions with respect to Awards of Restricted Stock,
RSUs and of OP Units (such awards under (a) and (b), “Shorter Vesting
Awards”) as determined by the Committee and evidenced in an Award Agreement or
amendment thereof provided that the aggregate number of shares of Common Stock
or OP Units underlying all such Shorter Vesting Awards under the Plan shall not
exceed 10% of the number set forth in Section 4.1 (including adjustments
pursuant to Section 14.1). Furthermore, nothing in this
Section 8.1 prohibits the Committee from granting Awards during the first
quarter of a calendar year which vest one-third at the end of such calendar year
or the first day of the succeeding calendar year and one-third on each
anniversary of such initial vesting date.

    


    8.2    Vesting
of Restricted Stock and Stock Units

    


    Upon the
satisfaction of any terms, conditions and restrictions prescribed with respect
to Restricted Stock or Stock Units, or upon a Participant’s release from any
terms, conditions and restrictions of Restricted Stock or Stock Units, as
determined by the Committee, and subject to the provisions of Section 12,
(a) the shares of Restricted Stock covered by each Award of Restricted
Stock shall become freely transferable by the Participant, and (b) Stock
Units shall be paid in shares of Common Stock or, if set forth in the instrument
evidencing the Awards, in cash or a combination of cash and shares of Common
Stock. Any fractional shares subject to such Awards shall be paid to the
Participant in cash.

    


    8.3    Waiver
of Restrictions

    


    Subject
to Section 17.5 and the limitations set forth in Section 8.1, the
Committee, in its sole discretion, may waive the repurchase or forfeiture period
and any other terms, conditions or restrictions on any Restricted Stock, Stock
Unit or OP Unit under such circumstances and subject to such terms and
conditions as the Committee shall deem appropriate.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SECTION
9. STOCK APPRECIATION RIGHTS

    


    9.1    Grant
of Stock Appreciation Rights

    


    The
Committee may grant Stock Appreciation Rights to Participants at any time on
such terms and conditions as the Committee shall determine in its sole
discretion, which terms and conditions shall be set forth in the instrument
evidencing the Award. The Committee shall determine in its sole discretion the
number of shares of Common Stock subject to Stock Appreciation Rights granted. A
Stock Appreciation Right may be granted in tandem with an Option or other Award
or alone (“freestanding”). The grant price of a tandem Stock Appreciation Right
shall be equal to the exercise price of the related Option, and the grant price
of a freestanding Stock Appreciation Right shall not be less than 100% of the
Fair Market Value on the Grant Date, except in the case of Substitute Awards. A
Stock Appreciation Right may be exercised upon such terms and conditions and for
such term as the Committee determines in its sole discretion; provided, however,
that, subject to earlier termination in accordance with the terms of the Plan
and the instrument evidencing the Stock Appreciation Right, the term of a
freestanding Stock Appreciation Right shall be as established for that Stock
Appreciation Right by the Committee but not to exceed ten years or, if not so
established, shall be ten years, and in the case of a tandem Stock Appreciation
Right, (a) the term shall not exceed the term of the related Option and
(b) the tandem Stock Appreciation Right may be exercised for all or part of
the shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option, except that the tandem
Stock Appreciation Right may be exercised only with respect to the shares for
which its related Option is then exercisable.

    


    9.2    Payment
of Stock Appreciation Rights Amount

    


    Upon the
exercise of a Stock Appreciation Right, a Participant shall be entitled to
receive payment in an amount determined by multiplying: (a) the difference
between the Fair Market Value of a share of the Common Stock for the date of
exercise over the grant price of the Stock Appreciation Right by (b) the
number of shares of Common Stock with respect to which the Stock Appreciation
Right is exercised. At the discretion of the Committee as set forth in the
instrument evidencing the Award, the payment upon exercise of a Stock
Appreciation Right may be in cash, in shares of Common Stock, in some
combination thereof or in any other manner approved by the Committee in its sole
discretion.

    


    9.3    No
Repricing

    


    Other
than in connection with a change in the Company’s capitalization (as described
in Section 14), a Stock Appreciation Right may not be repriced without
stockholder approval (including canceling previously awarded Stock Appreciation
Rights and regranting them with a lower grant price or taking any other action
with respect to a Stock Appreciation Right that would be treated as a repricing
under the rules and regulations of the principal securities exchange on which
the shares of Common Stock are traded).

    


    


    SECTION
10. OTHER STOCK OR CASH-BASED AWARDS

    


    Subject
to the terms of the Plan and subject to such terms and conditions as it deems
appropriate, the Committee may grant other incentives payable in cash or subject
to the limitations set forth in Section 8.1, in shares of Common Stock or OP
Units under the Plan as it determines.

    


    SECTION
11. ADMINISTRATION

    


    The Plan
shall be administered by the Committee. Notwithstanding the foregoing, the Board
may delegate responsibility for administering the Plan with respect to
designated classes of Eligible Persons to different committees consisting of two
or more members of the Board, subject to such limitations as the Board deems
appropriate. Members of any committee shall serve for such term as the Board may
determine, subject to removal by the Board at any time. To the extent consistent
with applicable law, the Board or Committee may authorize one or more senior
executive officers of the Company to grant Awards to designated classes of
Eligible Persons, within limits specifically prescribed by the Board; provided
however, that no such officer shall have or obtain authority to grant Awards to
himself or herself. All references in the Plan to the “Committee” shall be, as
applicable, to the Committee or any other committee or any officer to whom the
Board or the Committee has delegated authority to administer the
Plan.

    


    Except
for the terms and conditions explicitly set forth in the Plan, the Committee
shall have full power and exclusive authority, to the extent permitted by
applicable law, subject to such orders or resolutions not inconsistent with the
provisions of the Plan as may from time to time be adopted by the Board or a
Committee comprised of members of the Board, to (a) select the Eligible
Persons to whom Awards may from time to time be granted under the Plan;
(b) determine the type or types of Award to be granted to each Participant
under the Plan; (c) determine the number of shares of Common Stock to be
covered by each Award granted under the Plan; (d) determine the terms and
conditions of any Award granted under the Plan; (e) approve the forms of
notices or agreements for use under the Plan; (f) determine whether, to
what extent and under what circumstances Awards may be settled in cash, shares
of Common Stock or other property or canceled or suspended; (g) determine
whether, to what extent and under what circumstances cash, shares of Common
Stock, other property and other amounts payable with respect to an Award shall
be deferred either automatically or at the election of the Participant;
(h) interpret and administer the Plan and any instrument evidencing an
Award or agreement entered into under the Plan; (i) establish such rules
and regulations as it shall deem appropriate for the proper administration of
the Plan; and (j) make any other determination and take any other action
that the Committee deems necessary or desirable for administration of the
Plan.

    


    A
majority of the members of the Committee may determine its actions. To the
extent consistent with applicable law, the Committee in its sole discretion and
on such terms and conditions as it may provide may delegate all or any part of
its authority and power under the Plan to one or more directors or officers of
the Company. All determinations, decisions, interpretations and other actions by
the Committee shall be final, conclusive and binding on all
persons.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    SECTION
12. WITHHOLDING

    


    The Employer may require the
Participant to pay to the Employer the amount of (a) any taxes that the
Employer is required by applicable federal, state, local or foreign law to
withhold with respect to the grant, vesting or exercise of an Award (“tax
withholding obligations”) and (b) subject to the limitations of Section
17.5, any amounts due from the Participant to the Employer (“other
obligations”). The Company shall not be required to issue any shares of Common
Stock or otherwise settle an Award under the Plan until such tax withholding
obligations and other obligations are satisfied. 

    


    The
Committee may permit or require a Participant to satisfy all or part of the
Participant’s tax withholding obligations and other obligations by
(a) paying cash to the Employer, (b) having the Employer withhold an
amount from any cash amounts otherwise due or to become due from the Employer to
the Participant, (c) having the Employer withhold a number of shares of
Common Stock that would otherwise be issued to the Participant (or become vested
in the case of Restricted Stock) having a Fair Market Value equal to the tax
withholding obligations and other obligations, or (d) surrendering a number
of shares of Common Stock the Participant already owns having a value equal to
the tax withholding obligations and other obligations.

    


    SECTION
13. ASSIGNABILITY

    


    No Award
or interest in an Award may be sold, assigned, pledged (as collateral for a loan
or as security for the performance of an obligation or for any other purpose) or
transferred by a Participant or made subject to attachment or similar
proceedings otherwise than by will or by the applicable laws of descent and
distribution, except to the extent the Participant designates one or more
beneficiaries on a Company-approved form who may exercise the Award or receive
payment under the Award after the Participant’s death. During a Participant’s
lifetime, an Award may be exercised only by the Participant. Notwithstanding the
foregoing, the Committee, in its sole discretion, may permit a Participant to
assign or transfer an Award subject to such terms and conditions as the
Committee shall specify.

    


    SECTION
14. ADJUSTMENTS

    


    14.1    Adjustment
of Shares

    


    In the
event, at any time or from time to time, a stock dividend, stock split,
spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to stockholders other than a normal cash dividend,
or other change in the Company’s corporate or capital structure or similar
changes in the Operating Partnership results in (a) the outstanding shares
of Common Stock, or any securities exchanged therefor or received in their
place, being exchanged for a different number or kind of securities of the
Company or any other company or (b) new, different or additional securities
of the Company or any other company being received by the holders of shares of
Common Stock or OP Units, then the Committee shall make proportional adjustments
in (i) the maximum number and kind of securities available for issuance
under the Plan; and (ii) the number and kind of securities that are subject
to any outstanding Award and the per share price of such securities, without any
change in the aggregate price to be paid therefor. The determination by the
Committee as to the terms of any of the foregoing adjustments shall be
conclusive and binding.

    


    Notwithstanding
the foregoing, the issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services rendered 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, outstanding Awards.

    


    14.2    Effect
of Change of Control

    


    In the
event of any Change of Control, each Award that is at the time outstanding shall
automatically accelerate so that each such Award shall, immediately prior to the
consummation of the Change of Control, become 100% vested.

    


    Without
limitation on the foregoing, the Committee may, but shall not be obligated to,
make provision in connection with a Change of Control for a cash payment to
holders of Awards in consideration for the cancellation of such Awards which may
equal the excess, if any, of the value of the consideration to be paid in the
transaction to holders of the same number of shares of Common Stock subject to
such Awards (or if no consideration is paid in any such transaction, the fair
market value of shares of Common Stock subject to such Awards) over the
aggregate Option exercise price, if any, of such Awards.

    


    14.3    Further
Adjustment of Awards

    


    Subject
to Sections 14.2 and 16.3, the Committee shall have the discretion, exercisable
at any time before a sale, merger, consolidation, reorganization, liquidation,
dissolution or change in control of the Company, as defined by the Committee, to
take such further action as it determines to be necessary or advisable with
respect to Awards. Such authorized action may include (but shall not be limited
to) establishing, amending or waiving the type, terms, conditions or duration
of, or restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise, lifting restrictions and other modifications, and
the Committee may take such actions with respect to all Participants, to certain
categories of Participants or only to individual Participants. The Committee may
take such action before or after granting Awards to which the action relates and
before or after any public announcement with respect to such sale, merger,
consolidation, reorganization, liquidation, dissolution or change in control
that is the reason for such action.

    


    14.4    No
Limitations

    


    The grant
of Awards shall in no way affect the Company’s right 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.

    


    14.5    Fractional
Shares

    


    In the
event of any adjustment in the number of shares covered by any Award, each such
Award shall cover only the number of full shares resulting from such
adjustment.

    


    SECTION
15. MARKET STANDOFF

    


    In the
event of an underwritten public offering by the Company of its equity securities
pursuant to an effective registration statement filed under the Securities Act,
no person may sell, make any short sale of, loan, hypothecate, pledge, grant any
option for the purchase of, or otherwise dispose of or transfer for value or
otherwise agree to engage in any of the foregoing transactions with respect to
any shares issued pursuant to an Award granted under the Plan to the extent
requested by the underwriters. Such limitations shall be in effect for such
period of time as may be requested by such underwriters.

    


    In the
event of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the Company’s outstanding
Common Stock effected as a class without the Company’s receipt of consideration,
any new, substituted or additional securities distributed with respect to the
purchased shares shall be immediately subject to the provisions of this
Section 15, to the same extent the purchased shares are at such time
covered by such provisions.

    


    In order
to enforce the limitations of this Section 15, the Company may impose
stop-transfer instructions with respect to the purchased shares until the end of
the applicable standoff period.

    


    SECTION
16. AMENDMENT AND TERMINATION

    


    16.1    Amendment,
Suspension or Termination

    


    The Board
or the Committee may amend, suspend or terminate the Plan or any portion of the
Plan at any time and in such respects as it shall deem advisable; provided,
however, that, to the extent required by applicable law, regulation or stock
exchange rule, stockholder approval shall be required for any amendment to the
Plan. Notwithstanding the preceding sentence, the Board or Committee will not,
without stockholder approval, amend the Plan to:

    


    (a)
increase the total number of Shares or OP Units that may be awarded under the
Plan;

    


    (b)
reduce the exercise price of, or reprice, outstanding Options or Stock
Appreciation Rights as set forth in Section 6.7 or
Section 9.3;

    


    (c)
extend the duration of the Plan; or

    


    (d)
otherwise amend the Plan in any manner requiring stockholder approval by law or
under the New York Stock Exchange listing requirements.

    


    16.2    Term
of the Plan

    


    Unless
sooner terminated as provided herein, the Plan shall terminate ten years from
the Effective Date. After the Plan is terminated, no future Awards may be
granted, but Awards previously granted shall remain outstanding in accordance
with their applicable terms and conditions and the Plan’s terms and
conditions.

    


    16.3    Consent
of Participant

    


    Subject
to this Section 16.3 and Section 17.5, and the limitations within
Section 8.1, the Committee may amend the terms of any outstanding Award,
prospectively or retroactively. The amendment, suspension or termination of the
Plan or a portion thereof or the amendment of an outstanding Award shall not,
without the Participant’s consent, materially adversely affect any rights under
any Award theretofore granted to the Participant under the Plan. Notwithstanding
the foregoing, any adjustments made pursuant to Sections 14.1 or 14.2 shall not
be subject to these restrictions.

    


    SECTION
17. GENERAL

    


    17.1    No
Individual Rights

    


    No
individual or Participant shall have any claim to be granted any Award under the
Plan, and the Company has no obligation for uniformity of treatment of
Participants under the Plan.

    


    Furthermore,
nothing in the Plan or any Award granted under the Plan shall be deemed to
constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Employer or limit in any way the right of the Employer to
terminate a Participant’s employment or other relationship at any time, with or
without cause.

    


    17.2    Issuance
of Shares

    


    Notwithstanding
any other provision of the Plan, the Company shall have no obligation to issue
or deliver any shares of Common Stock under the Plan or make any other
distribution of benefits under the Plan unless, in the opinion of the Company’s
counsel, such issuance, delivery


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act or the laws of any state or
foreign jurisdiction) and the applicable requirements of any securities exchange
or similar entity.

    


    The
Company shall be under no obligation to any Participant to register for offering
or resale or to qualify for exemption under the Securities Act, or to register
or qualify under the laws of any state or foreign jurisdiction, any shares of
Common Stock, security or interest in a security paid or issued under, or
created by, the Plan, or to continue in effect any such registrations or
qualifications if made.

    


    As a
condition to the exercise of an Option or any other receipt of Common Stock
pursuant to an Award under the Plan, the Company may require (a) the
Participant to represent and warrant at the time of any such exercise or receipt
that such shares are being purchased or received only for the Participant’s own
account and without any present intention to sell or distribute such shares and
(b) such other action or agreement by the Participant as may from time to
time be necessary to comply with the federal, state and foreign securities laws.
At the option of the Company, a stop-transfer order against any such shares may
be placed on the official stock books and records of the Company, and a legend
indicating that such shares may not be pledged, sold or otherwise transferred,
unless an opinion of counsel is provided (concurred in by counsel for the
Company) stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on stock certificates to ensure exemption from
registration. The Committee may also require the Participant to execute and
deliver to the Company a purchase agreement or such other agreement as may be in
use by the Company at such time that describes certain terms and conditions
applicable to the shares.

    


    To the
extent the Plan or any instrument evidencing an Award provides for issuance of
stock certificates to reflect the issuance of shares of Common Stock, the
issuance may be effected on a noncertificated basis, to the extent not
prohibited by applicable law or the applicable rules of any stock
exchange.

    


    17.3    Indemnification

    


    Each
person who is or shall have been a member of the Board, or a committee appointed
by the Board or an officer of the Company to whom authority was delegated in
accordance with Section 11 shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit or proceeding to which such person may be
a party or in which such person may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
such person in settlement thereof, with the Company’s approval, or paid by such
person in satisfaction of any judgment in any such claim, action, suit or
proceeding against such person; provided, however, that such person shall give
the Company an opportunity, at its own expense, to handle and defend the same
before such person undertakes to handle and defend it on such person’s own
behalf, unless such loss, cost, liability or expense is a result of such
person’s own willful misconduct or except as expressly provided by
statute.

    


    The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such person may be entitled under the Company’s
certificate of incorporation or bylaws, as a matter of law, or otherwise, or of
any power that the Company may have to indemnify such person or hold such person
harmless.

    


    17.4    No
Rights as a Stockholder

    


    Unless
otherwise provided by the Committee or in the instrument evidencing the Award or
in a written employment, services or other agreement, no Award shall entitle the
Participant to any cash dividend, voting or other right of a stockholder unless
and until the date of issuance under the Plan of the shares that are the subject
of such Award.

    


    17.5    Legal
Requirements

    


    The
granting of Awards and the issuance of shares of Common Stock or OP Units under
the Plan is subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.

    


    Any Award
granted pursuant to the Plan is intended to comply with the requirements of
Section 409A of the Code, including any applicable regulations and guidance
issued thereunder, and including transition guidance, to the extent
Section 409A of the Code is applicable thereto, and the terms of the Plan
and any Award granted under the Plan shall be interpreted, operated and
administered in a manner consistent with this intention to the extent the
Committee deems necessary or advisable to comply with Section 409A of the
Code and any official guidance issued thereunder. Any payment or distribution
that is to be made under the Plan (or pursuant to an Award under the Plan) to a
Participant who is a “specified employee” of the Company within the meaning of
that term under Section 409A of the Code and as determined by the
Committee, on account of a “separation from service” within the meaning of that
term under Section 409A of the Code, may not be made before the date which
is six months after the date of such “separation from service,” unless the
payment or distribution is exempt from the application of Section 409A of
the Code by reason of the short-term deferral exemption or otherwise.
Notwithstanding any other provision in the Plan, the Committee, to the extent it
deems necessary or advisable in its sole discretion, reserves the right, but
shall not be required, to unilaterally amend or modify the Plan and any Award
granted under the Plan so that the Award qualifies for exemption from or
complies with Section 409A of the Code; provided, however, that neither the
Company nor the Committee makes any representations that Awards granted under
the Plan shall be exempt from or comply with Section 409A of the Code and
makes no undertaking to preclude Section 409A of the Code from applying to
Awards granted under the Plan.

    


    17.6    Participants
in Other Countries

    


    Without
amending the Plan, the Committee may grant Awards to Eligible Persons who are
foreign nationals on such terms and conditions different from those specified in
this Plan as may, in the judgement of the Committee, be necessary or desirable
to foster and promote achievement of the purposes of the Plan and shall have the
authority to adopt such modifications, procedures, subplans and the like as may
be necessary or desirable to comply with provisions of the laws or regulations
or conform to the requirements to operate the Plan in a tax advantageous manner
in other countries or jurisdictions in which the Company or any Related Company
may operate or have employees, to


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ensure
the viability of the benefits from Awards granted to Participants employed in
such countries or jurisdictions, to meet the requirements that permit the Plan
to operate in a qualified or tax-efficient manner and comply with applicable
foreign laws or regulations and to meet the objectives of the Plan.

    


    17.7    Effect
on Other Employee Benefit Plans

    


    The value
of Awards granted under the Plan shall not be included as compensation,
earnings, salaries or other similar terms used when calculating the
Participant’s benefits under any employee benefit plan sponsored by or
contributed to by the Employer except as such plan otherwise expressly
provides.

    


    17.8    No
Trust or Fund

    


    The Plan
is intended to constitute an “unfunded” plan. Nothing contained herein shall
require the Company to segregate any monies or other property, or shares of
Common Stock or OP Units, or to create any trusts, or to make any special
deposits for any immediate or deferred amounts payable to any Participant, and
no Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.

    


    17.9    Successors

    


    All
obligations of the Company under the Plan with respect to Awards shall be
binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all the business and/or assets of the
Company.

    


    17.10    Severability

    


    If any
provision of the Plan or any Award is determined to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws,
or, if it cannot be so construed or deemed amended without, in the Committee’s
determination, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or Award, and the
remainder of the Plan and any such Award shall remain in full force and
effect.

    


    17.11    Choice
of Law and Venue

    


    The Plan,
all Awards granted thereunder and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by the laws of the United
States, shall be governed by the laws of the State of Illinois without giving
effect to principles of conflicts of law.

    


    SECTION
18. EFFECTIVE DATE

    


    The
effective date of the Plan is June 21, 2004.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
I

     

    “Acquired Entity” means any
entity acquired by the Company or a Related Company or with which the Company or
a Related Company merges or combines.

     

    “Award” means any Option,
Restricted Stock, Stock Unit, OP Unit, Stock Appreciation Right, or other
incentive payable in cash or in shares of Common Stock as may be designated by
the Committee from time to time.

     

    “Award Agreement” means an
instrument evidencing an Award as set forth in Section 5.2.

     

    “Beneficial Ownership” means
beneficial ownership within the meaning of Rule 13d-3 promulgated under the
Exchange Act.

     

    “Board” means the Company’s
board of directors.

     

    “Cause” shall have the meaning
defined in the Award Agreement or otherwise shall have the meaning assigned to
such term in the Participant’s written employment, services or other
arrangements with the Employer or in the absence of a definition in the Award
Agreement or any such written employment arrangement shall mean dishonesty,
fraud, serious or willful misconduct, unauthorized use or disclosure of
confidential information or trade secrets, or conduct prohibited by law (except
minor violations), in each case as determined by the Company’s chief executive
officer or, in the case of directors and executive officers, the Committee,
whose determination shall be conclusive and binding.

     

    “Code” means the Internal
Revenue Code of 1986, as it may be amended from time to time.

     

    “Committee” means the Board or
a committee or committees (which term includes subcommittees) appointed by, and
consisting of, two or more members of the Board.

     

    “Common Stock” means the
common stock of the Company, or, in the event that the outstanding shares of
Common Stock are after the date this Plan is approved by the stockholders of the
Company, recapitalized, converted into or exchanged for different stock or
securities of the Company, such other stock or securities.

     

    “Company” means Strategic
Hotels & Resorts, Inc.

     

    “Change of Control” shall have
the meaning defined in the Award Agreement and if not defined in the Award
Agreement shall mean the occurrence of any of the following:

     

    (a)               Any
“Person” (having the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
“group” within the meaning of Section 13(d)(3)) has or acquires Beneficial
Ownership of twenty-five percent (25%) or more of the combined voting power
of the Company’s then outstanding voting securities entitled to vote generally
in the election of directors (“Voting Securities”); provided, however, that in
determining whether a Change in Control has occurred, Voting Securities which
are held or acquired by the following: (i) the Company or any of its
Related Companies or (ii) an employee benefit plan (or a trust forming a
part thereof) maintained by the Company or any of its Related Companies (the
persons or entities described in (i) and (ii) shall collectively be
referred to as the “Excluded Group”), shall not constitute a Change in
Control.

     

    (b)               The
individuals who are members of the Incumbent Board cease for any reason to
constitute more than fifty percent (50%) of the Board.

     

    (c)               Immediately
prior to a consummation of a merger, consolidation or reorganization or similar
event involving the Company, whether in a single transaction or in a series of
transactions (“Business Combination”), unless, following such Business
Combination:

     

    (i)               the
Persons with Beneficial Ownership of the Company, immediately before such
Business Combination, have Beneficial Ownership of more than fifty percent
(50%) of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of the
corporation (or in the election of a comparable governing body of any other type
of entity) resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or through one
or more subsidiaries) (the “Surviving Company”) in
substantially


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    the same
proportions as their Beneficial Ownership of the Voting Securities immediately
before such Business Combination;

     

    (ii)               the
individuals who were members of the Incumbent Board immediately prior to the
execution of the initial agreement providing for such Business Combination
constitute more than fifty percent (50%) of the members of the board of
directors (or comparable governing body of a noncorporate entity) of the
Surviving Company; and

     

    (iii)               no
Person (other than a member of the Excluded Group or any Person who immediately
prior to such Business Combination had Beneficial Ownership of twenty-five
percent (25%) or more of the then Voting Securities) has Beneficial
Ownership of twenty-five percent (25%) or more of the then combined voting
power of the Surviving Company’s then outstanding voting
securities.

     

    (d)               Immediately
prior to the assignment, sale, conveyance, transfer, lease or other disposition
of all or substantially all of the assets of the Company to any Person (other
than the Company, any Related Company or an employee benefit plan (or related
trust) sponsored or maintained by the Company or any Related Company) unless,
immediately following such disposition, the conditions set forth in paragraph
(c)(i), (ii) and (iii) above will be satisfied with respect to the
entity which acquires such assets.

     

    (e)               Immediately
prior to the occurrence of a liquidation or dissolution of the
Company.

     

    “Disability” shall have the
meaning defined in the Award Agreement or determined by the Committee and if not
so defined or determined shall mean disability as defined in the Company’s
long-term disability plan.

     

    “Effective Date” has the
meaning set forth in Section 18.

     

    “Eligible Person” means any
person eligible to receive an Award as set forth in Section 3.

     

    “Employer” means individually
or collectively the Company or its Related Companies.

     

    “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time.

     

    “Fair Market Value” means the
per share fair market value of the Common Stock as determined by the
Committee.

     

    “Good Reason” shall have the
meaning defined in the Award Agreement or otherwise shall have the meaning
assigned to such term in the Participant’s written employment, services or other
arrangements with the Employer or in the absence of a definition in the Award
Agreement or any such written employment arrangement shall mean (a) a
substantial diminution in the Participant’s position, authority, duties or
responsibilities, (b) a reduction of the Participant’s base salary or
(c) any relocation of Participant’s principal office more than fifty
(50) miles from its location on the date of the Award.

     

    “Grant Date” means the later
of (a) the date on which the Committee takes corporate action authorizing
the grant of an Award or such later date specified by the Committee or
(b) the date on which all conditions precedent to the Award have been
satisfied, provided that conditions to the exercisability or vesting of Awards
shall not defer the Grant Date.

     

    “Incumbent Board” means the
individuals who, as of the beginning of the period commencing two years prior to
the determination date, constitute the Board; provided, however, that for
purposes of this definition, any individual who becomes a member of the Board
subsequent to the beginning of such two-year period, whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of
at least two-thirds of those individuals who are members of the Board and who
were also members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member of the
Incumbent Board; and provided further, however, that any such individual whose
initial assumption of office occurs as a result of or in connection with an
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be considered a member of the Incumbent
Board.

     

    “Non-employee Director” means
a member of the Board who is not an employee of an Employer.

     

    “Operating Partnership” means
Strategic Hotel Funding, L.L.C., the Company’s operating
partnership.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    “Option” means a right to
purchase Common Stock granted under Section 6.

     

    “Option Expiration Date” has
the meaning set forth in Section 6.6.

     

    “Option Term” means the
maximum term of an Option as set forth in Section 6.3.

     

    “OP Unit” means an Award of a
unit of partnership interest in the Operating Partnership, granted under
Section 8.

     

    “Participant” means any
Eligible Person to whom an Award is granted.

     

    “Person” means any individual,
entity or group within the meaning of Section 13(d)(3) of the Exchange
Act.

     

    “Plan” means the Strategic
Hotels & Resorts, Inc. Amended and Restated 2004 Incentive
Plan.

     

    “Related Company” means any
entity that is directly or indirectly controlled by, in control of or under
common control with the Company.

     

    “Restricted Stock” means an
Award of shares of Common Stock granted under Section 8, the rights of
ownership of which may be subject to restrictions prescribed by the
Committee.

     

    “Securities Act” means the
Securities Act of 1933, as amended from time to time.

     

    “Stock Appreciation Right”
means a right granted under Section 9.1.

     

    “Stock Unit” means an Award
denominated in units of Common Stock granted under Section 8.

     

    “Substitute Awards” means
Awards granted or shares of Common Stock issued by the Company in substitution
or exchange for awards previously granted by an Acquired Entity.

     

    “Termination of Service” means
a termination of employment or service relationship with the Employer for any
reason, whether voluntary or involuntary, including by reason of death or
Disability. Any question as to whether and when there has been a Termination of
Service for the purposes of an Award and the cause of such Termination of
Service shall be determined by the Company’s chief executive officer or, in the
case of directors and executive officers, the Committee, whose determination
shall be conclusive and binding. Transfer of a Participant’s employment or
service relationship between the Company and any Related Company shall not be
considered a Termination of Service for purposes of an Award. Unless the
Committee determines otherwise, a Termination of Service shall be deemed to
occur if the Participant’s employment or service relationship is with an entity
that has ceased to be a Related Company.

     

    “Voting Securities” means the
Company’s voting securities entitled to vote generally in the election of
directors.