Exhibit 10.22


 


MORGANS
HOTEL GROUP CO.


 


2006
OMNIBUS STOCK INCENTIVE PLAN


 

















 


SECTION 1.                                          GENERAL PURPOSE OF PLAN.


 


The name of this plan is the Morgans Hotel Group Co. 2006 Omnibus Stock
Incentive Plan (the “Plan”).  The purpose
of the Plan is to enable the Company to attract and retain highly qualified
personnel who will contribute to the Company’s success and to provide
incentives to Participants (hereinafter defined) that are linked directly to
increases in stockholder value and will therefore inure to the benefit of all
stockholders of the Company.  To
accomplish the foregoing, the Plan provides that the Company may grant awards
of Stock, Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock and Other Awards (each as hereinafter
defined).


 


SECTION 2.                                          DEFINITIONS.


 


For purposes of the Plan, the following terms shall be defined as set
forth below:


 


(a)           “Administrator” means the Board, or
if and to the extent the Board does not administer the Plan, the Committee in
accordance with Section 3 below.


 


(b)           “Affiliate” means any entity other
than the Company and its Subsidiaries that is designated by the Board as a
participating employer under the Plan, provided that the Company directly or
indirectly owns at least 20% of the combined voting power of all classes of
stock of such entity or at least 20% of the ownership interests in such entity.


 


(c)           “Automatic Non-Employee Director
Stock Awards” has the meaning set forth in Section 10 hereof.


 


(d)           “Award” means an award of Incentive
Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock, Stock or Other Awards under the Plan.


 


(e)           “Beneficial Owner” shall have the
meaning set forth in Rule 13d-3 under the Exchange Act.


 


(f)            “Board” means the Board of Directors
of the Company.


 

















 


(g)           “Book Value” means, as of any given
date, on a per share basis (i) the shareholders’ equity in the Company as
of the end of the immediately preceding fiscal year as reflected in the Company’s
consolidated balance sheet, subject to such adjustments as the Administrator
shall specify at or after grant, divided by (ii) the number of then
outstanding shares of Stock as of such year-end date (as adjusted by the
Administrator for subsequent events).


 


(h)           “Change in Control” means the
occurrence of any one of the following events:


 


(i)            individuals who, on the Effective
Date, constitute the Board (the “Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board, provided that any person becoming
a director subsequent to the Effective Date, whose election or nomination for
election was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or nominated
as a director of the Company as a result of an actual or threatened election
contest with respect to directors or as a result of any other actual or
threatened solicitation of proxies by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director;


 


(ii)           any Person is or becomes a Beneficial
Owner, directly or indirectly, of securities of the Company representing 35% or
more of the combined voting power of the Company’s then outstanding securities
eligible to vote for the election of the Board (the “Company Voting Securities”);
provided, however, that the event described in this paragraph (ii) shall
not be deemed to be a Change in Control by virtue of any of the following
acquisitions:  (A) by the Company or
any Subsidiary, (B) by 


 


2

















 


any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Subsidiary, (C) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) pursuant to a
Non-Qualifying Transaction (as defined in paragraph (iii)), (E) pursuant
to any acquisition by a Participant or any group of persons including a
Participant (or any entity controlled by a Participant or any group of persons
including a Participant); (F) a transaction (other than one described in (iii) below)
in which Company Voting Securities are acquired from the Company, if a majority
of the Incumbent Directors approve a resolution providing expressly that the
acquisition pursuant to this clause (F) does not constitute a Change in
Control under this paragraph (ii); or (G) by NCIC or NorthStar
Partnership, L.P. or any of their majority-owned or controlled subsidiaries,
partnerships or affiliates;


 


(iii)          the consummation of a merger,
consolidation, statutory share exchange or similar form of corporate
transaction involving the Company or any of its Subsidiaries that requires the
approval of the Company’s stockholders, whether for such transaction or the
issuance of securities in the transaction (a “Business Combination”), unless
immediately following such Business Combination:  (A) at least 50% of the total voting
power of (x) the corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of at least 80% of the voting
securities eligible to elect directors of the Surviving Corporation (the “Parent
Corporation”), is represented by Company Voting Securities that were
outstanding immediately prior to such Business Combination (or, if applicable,
is represented by shares into which such Company Voting Securities were
converted pursuant to such Business Combination), and such voting power among
the holders thereof is in substantially the same proportion as the voting power
of such 


 


3

















 


Company
Voting Securities among the holders thereof immediately prior to the Business
Combination, (B) no person (other than NCIC or NorthStar Partnership, L.P.
or any of their majority-owned or controlled subsidiaries, partnerships or
affiliates or any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Corporation or the Parent Corporation), is or
becomes the beneficial owner, directly or indirectly, of 35% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least half of the members of the board
of directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board’s approval of the
execution of the initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified in (A), (B) and
(C) above shall be deemed to be a “Non-Qualifying Transaction”); or


 


(iv)          the stockholders of the Company
approve a plan of complete liquidation or dissolution of the Company or the
consummation of a sale of all or substantially all of the Company’s assets.


 


(i)            “Code” means the Internal Revenue
Code of 1986, as amended from time to time, or any successor thereto.


 


(j)            “Committee” means any committee the
Board may appoint to administer the Plan. 
To the extent necessary and desirable, the Committee shall be composed
entirely of individuals who meet the qualifications referred to in Section 162(m)
of the Code and Rule 16b-3 under the Exchange Act.  If at any time or to any extent the Board
shall not administer the Plan, then the functions of the Board specified in the
Plan shall be exercised by the Committee.


 


4

















 


(k)           “Company” means Morgans Hotel Group
Co., a Delaware corporation (or any successor corporation).


 


(l)            “Effective Date” has the meaning set
forth in Section 15 hereof.


 


(m)          “Eligible Recipient” means an officer,
director (including a Non-Employee Director), employee, co-employee, consultant
or advisor of the Company or of any Parent or Subsidiary who provide services
to the Company.


 


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


 


(o)           “Fair Market Value” means, as of any
given date, the fair market value of a share of Stock as determined by the
Administrator using any reasonable method and in good faith (such determination
will be made in a manner that satisfies Section 409A of the Code and in
good-faith as required by Section 422(c)(1) of the Code); provided
that (i) if shares of Stock are admitted to trading on a national
securities exchange, the fair market value of a share of Stock on any date
shall be the closing sale price reported for such share on the exchange on such
date on which a sale was reported; (ii) if shares of Stock are admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System (“NASDAQ”) or a successor quotation system and has been designated as a
National Market System (“NMS”) security, fair market value of a share of Stock
on any date shall be the closing sale price reported for such share on the
system on such date on which a sale was reported; and (iii) if shares of
Stock are admitted to quotation on the NASDAQ but have not been designated as
an NMS security, fair market value of a share of Stock on any such date shall
be the average of the highest bid and lowest asked prices for such share of
Stock on the system on such date on which both the bid and asked prices were
reported.


 


(p)           “Free Standing Rights” has the
meaning set forth in Section 8 hereof.


 


(q)           “Free Standing Stock Appreciation
Rights” has the meaning set forth in Section 8 hereof.


 


5

















 


(r)            “Immediate Family” means any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or
sister-in-law, and shall include adoptive relationships of the Participant and
family limited partnerships, trusts or similar entities which are primarily for
the benefit of the Participant and his or her Immediate Family.


 


(s)           “Incentive Stock Option” means any
Stock Option intended to be designated as an “incentive stock option” within
the meaning of Section 422 of the Code.


 


(t)            “Initial Offering Price” means the “Price
to Public” of the shares of Stock that the Company issues and sells to the IPO
Underwriters pursuant to the underwriting agreement, as set forth on the cover page of
the IPO Prospectus.


 


(u)           “Initial Public Offering” means the
initial underwritten public offering of Stock pursuant to the IPO Prospectus.


 


(v)           “IPO Prospectus” means the Company’s
prospectus relating to the Initial Public Offering as filed with the Securities
and Exchange Commission pursuant to Rule 424(b) under the Securities
Act and deemed a part of the Company’s registration statement on Form S-1
(No. 333-129277) at the time such registration statement is declared
effective by the Securities and Exchange Commission.


 


(w)          “IPO Underwriters” means the
underwriters of the Initial Public Offering.


 


(x)            “LLC Unit” or “LLC Units” means a
membership interest or membership interests in Morgans Group LLC, a Delaware
limited liability company and the entity through which the Company conducts a
significant portion of its business.


 


(y)           “Non-Employee Director” means a
director of the Company who is not an employee of the Company.


 


6

















 


(z)            “Non-Qualified Stock Option” means
any Stock Option that is not an Incentive Stock Option, including any Stock
Option that provides (as of the time such Stock Option is granted) that it will
not be treated as an Incentive Stock Option.


 


(aa)         “NCIC” means NorthStar Capital
Investment Corp., a Maryland corporation.


 


(bb)         “Other Awards” means an award granted
pursuant to Section 11 hereof.


 


(cc)         “Overallotment IPO Shares” means any
shares of Stock that the Company issues and sells to the IPO Underwriters as a
result of any exercise of the overallotment option granted by the Company to
the IPO Underwriters pursuant to the underwriting agreement relating to the
Initial Public Offering.


 


(dd)         “Parent” means any corporation (other
than the Company) in an unbroken chain of corporations ending with the Company,
if each of the corporations in the chain (other than the Company) owns stock
possessing 50% or more of the combined voting power of all classes of stock in
one of the other corporations in the chain.


 


(ee)         “Participant” means any Eligible
Recipient selected by the Administrator, pursuant to the Administrator’s
authority in Section 3 below, to receive an Award.


 


(ff)           “Person” means an individual,
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization, other entity or “group” (as
defined in the Exchange Act).


 


(gg)         “Plan” has the meaning set forth to it
in Section 1 hereof.


 


(hh)         “Related Rights” has the meaning set
forth in Section 8 hereof.


 


(ii)           “Related Stock Appreciation Rights”
has the meaning set forth in Section 8 hereof.


 


(jj)           “Restricted Period” has the meaning
set forth in Section 9 hereof.


 


7

















 


(kk)         “Reserved Shares” has the meaning set
forth in Section 4 hereof.


 


(ll)           “Restricted Stock” means shares of
Stock subject to certain restrictions granted pursuant to Section 9 below.


 


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


 


(nn)         “Stock” means the common stock, par
value $0.01 per share, of the Company.


 


(oo)         “Stock Appreciation Right” means the
right pursuant to an award granted under Section 8 below to receive an
amount equal to the excess, if any, of (A) the Fair Market Value, as of
the date such Stock Appreciation Right or portion thereof is surrendered, of
the shares of Stock covered by such right or such portion thereof, over (B) the
aggregate exercise price of the shares of Stock covered by such right or such
portion thereof.


 


(pp)         “Stock Option” means an option to
purchase shares of Stock granted pursuant to Section 7 below.


 


(qq)         “Subsidiary” means any corporation or
other entity (other than the Company) in which the Company has a controlling
interest, either directly or indirectly.


 


SECTION 3.                                          ADMINISTRATION.


 


(a)           The Plan shall be administered in
accordance with the requirements of Section 162(m) of the Code (but only
to the extent necessary and desirable to maintain qualification of Awards under
the Plan under Section 162(m) of the Code) and, to the extent applicable, Rule 16b-3
under the Exchange Act by the Board or, at the Board’s sole discretion, by the
Committee, which shall be appointed by the Board, and which shall serve at the
pleasure of the Board.


 


(b)           The Administrator shall have the
power and authority to grant Stock Options, Stock Appreciation Rights,
Restricted Stock, Stock, Other Awards or any 


 


8

















 


combination of the foregoing hereunder to Eligible Recipients pursuant
to the terms of the Plan.  In particular,
but without limitation, the Administrator shall have the authority:


 


(i)            to select those Eligible Recipients
who shall be Participants;


 


(ii)           to determine whether and to what
extent Awards are to be granted hereunder to Participants;


 


(iii)          to determine the number of shares of
Stock to be covered by each Award granted hereunder;


 


(iv)          to determine the terms and conditions,
not inconsistent with the terms of the Plan, of each Award granted hereunder,
including the waiver or modification of any such terms or conditions;


 


(v)           to determine the terms and conditions,
not inconsistent with the terms of the Plan, which shall govern all written
instruments evidencing Awards granted hereunder, including the waiver or
modification of any such terms or conditions;


 


(vi)          to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable; and


 


(vii)         to construe, interpret and implement
the terms and provisions of the Plan and any Award issued under the Plan (and
any award agreements relating thereto) and to otherwise supervise the
administration of the Plan.


 


(c)           The Administrator may, in its
absolute discretion, without amendment to the Plan, (i) accelerate the
date on which any Stock Option granted under the Plan becomes exercisable,
waive or amend the operation of Plan provisions respecting exercise after
termination of employment or otherwise adjust any of the terms of such Stock
Option, and (ii) accelerate the lapse of restrictions, or waive any
condition imposed 


 


9

















 


hereunder, with respect to any share of Restricted Stock or otherwise
adjust any of the terms applicable to any such Award; provided, however, that
no action under this Section 3(c) shall adversely affect any
outstanding Award without the consent of the holder thereof.


 


(d)           All decisions made by the
Administrator pursuant to the provisions of the Plan shall be final, conclusive
and binding on all persons, including the Company and the Participants.  No member of the Board or the Committee, nor
any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.


 


SECTION 4.                                          SHARES RESERVED FOR ISSUANCE UNDER THE PLAN.


 


(a)           The total number of shares of Stock
reserved and available for issuance under the Plan (the “Reserved Shares”)
shall initially be 3,500,000 shares of Stock. 
The number of Reserved Shares shall be automatically increased (without
any further action by the Board or the stockholders of the Company) by the
number of shares of Stock that is equal to ten percent (10%) of any
Overallotment IPO Shares; provided, however, that the maximum number of
Reserved Shares shall not exceed 3,770,000, subject to adjustment as set forth
in Section 5 below.  Such shares of
Stock may consist, in whole or in part, of authorized and unissued shares of
Stock or treasury shares.


 


(b)           Subject to the provisions of Section 162(m)
of the Code, as from time to time applicable, to the extent that (i) a
Stock Option expires or is otherwise cancelled or terminated without being
exercised, or (ii) any shares of Stock subject to any Awards granted
hereunder are cancelled, terminated, forfeited or withheld to pay taxes, such
shares of Stock shall again be available for issuance in connection with future
awards granted under the Plan.


 


10

















 


(c)           The aggregate number of shares of
Stock as to which Awards may be granted to any individual during any calendar
year may not, subject to adjustment as provided in Section 5, exceed 1,600,000.


 


(d)           The aggregate number of shares of
Stock that may be delivered pursuant to the exercise of Incentive Stock Options
may not, subject to adjustment as provided in Section 5, exceed 2,400,000.


 


SECTION 5.                                          EQUITABLE ADJUSTMENTS.


 


Upon the occurrence of any merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure
affecting the Stock or other corporate transaction, the Administrator shall
make appropriate equitable adjustments, which may include, without limitation,
adjustments to: (i) the aggregate number of shares of Stock reserved for
issuance under the Plan, (ii) the kind, number and exercise price of
outstanding Stock Options and Stock Appreciation Rights granted under the Plan
set forth in Sections 4(a), 4(c) and 4(d) of the Plan, and (iii) the
kind, number and purchase price of shares of Stock subject to outstanding
awards of Restricted Stock granted under the Plan, in each case as may be
determined by the Administrator, in its sole discretion.  Such other substitutions or adjustments shall
be made as may be determined by the Administrator, in its sole discretion.  In connection with any event described in
this paragraph, the Administrator may provide, in its sole discretion, for the
cancellation of any outstanding Awards in exchange for payment in cash or other
property equal to the Fair Market Value of the Stock covered by such Awards,
reduced by the option or exercise price, if any.


 


SECTION 6.                                          ELIGIBILITY.


 


Eligible Recipients shall be eligible to be granted Stock Options,
Stock Appreciation Rights, Restricted Stock, Stock, Other Awards or any
combination of the foregoing hereunder. 
The Participants under the Plan shall be selected from time to time by
the Administrator, in its sole discretion, from among the Eligible Recipients,
and the 


 


11

















 


Administrator shall determine, in its sole discretion, the number of
shares of Stock covered by each such Award.


 


SECTION 7.                                          STOCK OPTIONS.


 


Stock Options may be granted alone or in addition to other Awards
granted under the Plan.  Any Stock Option
granted under the Plan shall be in such form as the Administrator may from time
to time approve, and the provisions of Stock Option awards need not be the same
with respect to each Participant. 
Participants who are granted Stock Options shall enter into an award
agreement with the Company, in such form as the Administrator shall determine,
which shall set forth, among other things, the option price of the Stock
Option, the term of the Stock Option and provisions regarding exercisability of
the Stock Option granted thereunder.


 


The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.


 


The Administrator shall have the authority to grant to any officer or
employee of the Company or of any Parent or Subsidiary (including directors who
are also officers of the Company) Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options (in each case with or without Stock
Appreciation Rights).  Directors who are
not also employees or officers of the Company or of any Parent or Subsidiary,
consultants or advisors to the Company or to any Parent or Subsidiary may only
be granted Non-Qualified Stock Options (with or without Stock Appreciation
Rights).  To the extent that any Stock
Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option. 
More than one Stock Option may be granted to the same Participant and be
outstanding concurrently hereunder.


 


Stock Options granted under the Plan shall be subject to the following
terms and conditions and to the award agreement evidencing each Award which
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Administrator shall deem desirable:


 


12

















 


(a)           Option Price.  The option price per share of Stock
purchasable under a Stock Option shall be determined by the Administrator in
its sole discretion at the time of grant but shall not, in the case of
Incentive Stock Options, be less than 100% of the Fair Market Value of the
Stock on such date (110% of the Fair Market Value per share on such date if, on
such date, the Eligible Recipient owns, or is deemed to own under the Code,
stock possessing more than ten percent (a “Ten Percent Owner”) of the total
combined voting power of all classes of Stock).


 


(b)           Option Term.  The term of each Stock Option shall be fixed
by the Administrator, but no Stock Option shall be exercisable more than ten
years after the date such Stock Option is granted; provided, however, that if
the Eligible Recipient is a Ten Percent Owner, an Incentive Stock Option may
not be exercisable after the expiration of five years from the date such
Incentive Stock Option is granted.


 


(c)           Exercisability.  Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Administrator at or after the time of grant; provided, however, that no
action following the time of grant shall adversely affect any outstanding Stock
Option without the consent of the holder thereof.  The Administrator may provide at the time of
grant, in its sole discretion, that any Stock Option shall be exercisable only
in installments, and the Administrator may waive such installment exercise
provisions at any time, in whole or in part, based on such factors as the
Administrator may determine, in its sole discretion, including but not limited
to in connection with any Change in Control of the Company.


 


(d)           Method of Exercise.  Subject to Section 7(c), Stock Options
may be exercised in whole or in part at any time during the option term, by
giving written notice of exercise to the Company specifying the number of
shares of Stock to be purchased, accompanied by payment in full of the purchase
price in cash or its equivalent, as determined by the Administrator.  As determined by the Administrator, in its
sole discretion, payment in whole or in part may also be made (i) in the
form of unrestricted Stock already owned by the Participant which, (x) in the
case of unrestricted Stock 


 


13

















 


acquired upon exercise of an option, have been owned by the Participant
for more than six months on the date of surrender, and (y) has a Fair Market
Value on the date of surrender equal to the aggregate option price of the Stock
as to which such Stock Option shall be exercised; (ii) in the case of the
exercise of a Non-Qualified Stock Option, in the form of Restricted Stock
subject to an award hereunder (based, in each case, on the Fair Market Value of
the Stock on the date the Stock Option is exercised); provided, however, that
in the case of an Incentive Stock Option, the right to make payment in the form
of already owned shares of Stock may be authorized only at the time of grant; (iii) any
other form of consideration approved by the Administrator and permitted by
applicable law; or (iv) any combination of the foregoing.  If payment of the option price of a
Non-Qualified Stock Option is made in whole or in part in the form of Restricted
Stock, the shares of Stock received upon the exercise of such Stock Option
shall be restricted in accordance with the original terms of the Restricted
Stock award in question, except that the Administrator may direct that such
restrictions shall apply only to that number of shares of Stock equal to the
number of shares surrendered upon the exercise of such Stock Option.


 


(e)           Rights as Stockholder.  Except as otherwise provided in an individual
award agreement, a Participant shall generally have the rights to dividends and
any other rights of a stockholder with respect to the Stock subject to the
Stock Option only after the Participant has given written notice of exercise,
has paid in full for such shares of Stock, and, if requested, has given the representation
described in paragraph (b) of Section 14 below.


 


(f)            Non-Transferability of Stock
Options.  Except as otherwise provided by
the Administrator or in a Participant’s award agreement, Stock Options may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will, by the laws of descent or distribution, by
instrument to an inter vivos or testamentary trust in which the Stock Options
are to be passed to beneficiaries upon the death of the Participant, or by gift
to Immediate Family, and may be exercised, during the lifetime of the
Participant, only by the Participant or the Participant’s legal representative.


 


14

















 


(g)           Termination of Employment or
Service.  In the event that a Participant
ceases to be employed by or to provide services to any of the Company, any
Parent or any Subsidiary, any outstanding Stock Options previously granted to
such Participant shall be exercisable at such time or times and subject to such
terms and conditions as set forth in the award agreement or any other agreement
governing such Awards.  Unless otherwise
provided in the award agreement, Stock Options granted to such Participant, to
the extent they were not vested and exercisable at the time of such
termination, shall expire on the date of such termination.


 


(h)           Annual Limit on Incentive Stock
Options.  In addition to the limitation
applicable to Stock Options in Section 4(c) above, to the extent that
the aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of shares of Stock with respect to which Incentive Stock
Options granted to a Participant under this Plan and all other option plans of
the Company or of any Parent or Subsidiary become exercisable for the first
time by the Participant during any calendar year exceeds $100,000 (as
determined in accordance with Section 422(d) of the Code), the
portion of such Incentive Stock Options in excess of $100,000 shall be treated
as Non-Qualified Stock Options.


 


SECTION 8.                                          STOCK APPRECIATION RIGHTS.


 


Stock Appreciation Rights may be granted either alone (“Free Standing
Rights”) or in conjunction with all or part of any Stock Option granted under
the Plan (“Related Rights”).  In the case
of a Non-Qualified Stock Option, Related Rights may be granted either at or
after the time of the grant of such Stock Option.  In the case of an Incentive Stock Option,
Related Rights may be granted only at the time of the grant of the Incentive
Stock Option.  The Administrator shall
determine the Eligible Recipients to whom, and the time or times at which,
grants of Stock Appreciation Rights shall be made, the number of shares of
Stock to be awarded, the exercise price, and all other conditions of Stock
Appreciation Rights.  The provisions of
Stock Appreciation Rights need not be the same with respect to each
Participant.


 


15

















 


Stock Appreciation Rights granted under the Plan shall be subject to
the following terms and conditions and to the award agreement evidencing such
Award which shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:


 


(a)           Awards. The prospective recipient of
a Stock Appreciation Right shall not have any rights with respect to such
Award, unless and until such recipient has executed an agreement evidencing the
award and delivered a fully executed copy thereof to the Company, within a
period of sixty days (or such other period as the Administrator may specify)
after the award date.  Participants who
are granted Stock Appreciation Rights shall have no rights as stockholders of
the Company with respect to the grant or exercise of such rights.


 


(b)           Exercisability.


 


(i)            Stock Appreciation Rights that are
Free Standing Rights (“Free Standing Stock Appreciation Rights”) shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Administrator at or after grant.


 


(ii)           Stock Appreciation Rights that are
Related Rights (“Related Stock Appreciation Rights”) shall be exercisable only
at such time or times and to the extent that the Stock Options to which they
relate shall be exercisable in accordance with the provisions of Section 7
above and this Section 8 of the Plan; provided, however, that a Related
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if and when the Fair Market Value of the Stock
subject to the Incentive Stock Option exceeds the option price of such Stock
Option.


 


16

















 


(c)           Payment Upon Exercise.


 


(i)            Upon the exercise of a Free Standing
Stock Appreciation Right, the Participant shall be entitled to receive up to,
but not more than, an amount in cash or that number of shares of Stock (or any
combination of cash and shares of Stock, as determined by the Administrator)
equal in value to the excess of the Fair Market Value of one share of Stock as
of the date of exercise over the price per share of Stock specified in the Free
Standing Stock Appreciation Right (which price shall be no less than 100% of
the Fair Market Value of the Stock on the date of grant) multiplied by the
number of shares of Stock in respect of which the Free Standing Stock
Appreciation Right is being exercised, with the Administrator having the right
to determine the form of payment.


 


(ii)           A Related Right may be exercised by a
Participant by surrendering the applicable portion of the related Stock
Option.  Upon such exercise and
surrender, the Participant shall be entitled to receive up to, but not more
than, an amount in cash or that number of shares of Stock (or any combination
of cash and shares of Stock) equal in value to the excess of the Fair Market Value
of one share of Stock as of the date of exercise over the option price per
share of Stock specified in the related Stock Option multiplied by the number
of shares of Stock in respect of which the Related Stock Appreciation Right is
being exercised, with the Administrator having the right to determine the form
of payment.  Stock Options which have
been so surrendered, in whole or in part, shall no longer be exercisable to the
extent the Related Rights have been so exercised.


 


(d)           Non-Transferability.


 


(i)            Free Standing Stock Appreciation
Rights shall be transferable only when and to the extent that a Stock Option
would be transferable under paragraph (f) of Section 7 of the Plan.


 


17

















 


(ii)           Related Stock Appreciation Rights
shall be transferable only when and to the extent that the underlying Stock
Option would be transferable under paragraph (f) of Section 7 of the
Plan.


 


(e)           Termination of Employment or Service.


 


(i)            In the event that a Participant
ceases to be employed by or to provide services to any of the Company, any
Parent or any Subsidiary, any outstanding Stock Appreciation Rights previously
granted to such Participant shall be exercisable at such time or times and
subject to such terms and conditions as set forth in the award agreement or any
other agreement governing such Awards. 
Unless otherwise provided in the award agreement, Stock Appreciation
Rights granted to such Participant, to the extent they were not vested and
exercisable at the time of such termination, shall expire on the date of such
termination.


 


(ii)           In the event of the termination of
employment or service of a Participant who has been granted one or more Related
Stock Appreciation Rights, such rights shall be exercisable at such time or
times and subject to such terms and conditions as applicable to the related
Stock Options.


 


(f)            Term.


 


(i)            The term of each Free Standing Stock
Appreciation Right shall be fixed by the Administrator, but no Free Standing
Stock Appreciation Right shall be exercisable more than ten years after the
date such right is granted.


 


(ii)           The term of each Related Stock
Appreciation Right shall be the term of the Stock Option to which it relates,
but no Related Stock Appreciation Right shall be exercisable more than ten
years after the date such right is granted.


 


18

















 


SECTION 9.                                          RESTRICTED STOCK.


 


Awards of Restricted Stock may be issued either alone or in addition to
other Awards granted under the Plan and shall be evidenced by an award
agreement.  The Administrator shall
determine the Eligible Recipients to whom, and the time or times at which,
Restricted Stock awards shall be made; the number of shares of Restricted Stock
to be awarded; the price, if any, to be paid by the Participant for the
acquisition of Restricted Stock; the Restricted Period (as defined in Section 9(c))
applicable to Restricted Stock awards; and all other conditions applicable to
Restricted Stock awards.  The provisions
of the awards of Restricted Stock need not be the same with respect to each
Participant.


 


(a)           Purchase Price. The price per share
of Restricted Stock, if any, that a Participant must pay for shares of
Restricted Stock purchasable under an award of Restricted Stock shall be
determined by the Administrator in its sole discretion at the time of grant.


 


(b)           Awards and Certificates. The
prospective recipient of a Restricted Stock award shall not have any rights
with respect to any such Award, unless and until such recipient has executed an
award agreement evidencing the Award and delivered a fully executed copy
thereof to the Company, within such period as the Administrator may specify
after the award date.  Each Participant
who is granted an award of Restricted Stock shall be issued a stock certificate
in respect of such shares of Restricted Stock, which certificate shall be
registered in the name of the Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to any such
Award; provided that the Company may require that the stock certificates
evidencing Restricted Stock granted hereunder be held in the custody of the
Company until the restrictions thereon shall have lapsed, and that, as a
condition of any Restricted Stock award, the Participant shall have delivered a
stock power, endorsed in blank, relating to the shares of Restricted Stock
covered by such Award.


 


19

















 


(c)           Nontransferability. The Restricted
Stock awards granted pursuant to this Section 9 shall be subject to the
restrictions on transferability set forth in this paragraph (c).  During such period as may be set by the
Administrator in the award agreement (the “Restricted Period”), the Participant
shall not be permitted to sell, transfer, pledge, hypothecate or assign shares
of Restricted Stock awarded under the Plan except by will or the laws of
descent and distribution; provided that the Administrator may, in its sole
discretion, provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions in whole or in part based on such factors
and such circumstances as the Administrator may determine in its sole
discretion.  The Administrator may also
impose such other restrictions and conditions, including the achievement of
pre-established corporate performance goals, on awarded Restricted Stock as it
deems appropriate.  Any attempt to
dispose of any Restricted Shares in contravention of any such restrictions
shall be null and void and without effect.


 


(d)           Rights as a Stockholder. Except as
provided in Section 9(b) or as otherwise provided in an award
agreement, the Participant shall possess all incidents of ownership with
respect to shares of Restricted Stock during the Restricted Period, including
the right to receive dividends with respect to such shares and to vote such
shares.  Certificates for unrestricted
shares shall be delivered to the Participant promptly after, and only after,
the Restricted Period shall expire without forfeiture in respect of such awards
of Restricted Stock except as the Administrator, in its sole discretion, shall
otherwise determine.


 


(e)           Termination of Employment. In the
event that a Participant ceases to be employed by or to provide services to any
of the Company, any Parent or any Subsidiary during the Restricted Period, any
rights pursuant to any Award of Restricted Stock previously granted to such
Participant shall be subject to such terms and conditions as set forth in the
award agreement or any other agreement governing such Awards.  Unless otherwise provided in the award
agreement or any such other agreement, the Restricted Stock awards granted to
such Participant, to the extent that restrictions have not lapsed or 


 


20

















 


applicable conditions have not been met at the time of such cessation
of employment or provision of services, shall expire on the date of such
termination.


 


SECTION 10.                                    AUTOMATIC GRANTS OF STOCK TO NON-EMPLOYEE
DIRECTORS.


 


The Company shall grant awards of Stock, Restricted Stock and Other
Awards to Non-Employee Directors as described in further detail below (the “Automatic
Non-Employee Director Awards”).  Such
grants shall be automatic and non-discretionary and otherwise subject to the
terms and conditions set forth in this Section 10 and the award agreement
evidencing such grant, as well as the terms of the Plan.


 


Each recipient of an Automatic Non-Employee Director Award shall enter
into an award agreement with the Company. 
The award agreement shall set forth such terms and conditions, not
inconsistent with the provisions of this Section 10, with respect to such
automatic grant as the Administrator may determine.


 


(a)           Initial Grant.  Each Non-Employee Director shall
automatically be granted an Other Award of restricted stock units having a
value as of the date of grant equal to approximately $100,000.  Each such Award shall be granted (i) on
the date of the IPO Prospectus or as soon as practicable thereafter, to each
Person who is a Non-Employee Director on the date of the IPO Prospectus, with
the calculation of the number of shares of 
Stock covered by the restricted stock units to be computed by dividing
$100,000 by the Initial Offering Price, rounding down to the nearest whole
number or (ii) to each Person who is not a Non-Employee Director on the
date of the IPO Prospectus, the date of the first Board meeting attended by
such Non-Employee Director, with the calculation of the number of shares
of  Stock covered by the restricted stock
units to be computed by dividing $100,000 by the Fair Market Value of the Stock
on the date of grant and rounding down to the nearest whole number.  Forfeiture conditions with respect to one-third
of each such Award shall lapse on the first anniversary of the date of the
grant and forfeiture conditions with respect to the remaining two-thirds of
each such award shall lapse on the last day of each month over the twenty-four
month period 


 


21

















 


thereafter, and, furthermore, the underlying shares of Stock which are
vested shall be delivered at the time the Non-Employee Director ceases to be a
member of the Board.  No fractional
shares of Restricted Stock shall be included in such Award.


 


(b)           Annual Grant.  On the first business day after the first
annual stockholders’ meeting of the Company, and on the first business day
after each such annual stockholders’ meeting of the Company thereafter during
the term of the Plan, each Non-Employee Director shall automatically be granted
an Other Award of restricted stock units having a value equal to approximately
$25,000 as of the date of the grant, provided, however, that each such Person
is then a Non-Employee Director of the Company. 
The number of shares of Stock covered by the restricted stock units
shall be computed by dividing $25,000 by the Fair Market Value of the Stock on
the date of grant and rounding down to the nearest whole number.  Such Awards shall be fully vested upon grant
and the underlying shares of Stock shall be delivered at the time the
Non-Employee Director ceases to be a member of the Board. No fractional shares
of Stock shall be included in such Award.


 


(c)           Stock Availability.  Notwithstanding any of the foregoing, in the
event that the number of shares of Stock available for grant under the Plan is
not sufficient to accommodate the Automatic Non-Employee Director Awards, then
the remaining shares of Stock available for such automatic awards shall be
granted to each Non-Employee Director, each of whom is to receive such an
award, on a pro-rata basis.  No further
grants shall be made until such time, if any, as additional shares of Stock
become available for grant under the Plan through action of the Board or the
stockholders of the Company to increase the number of shares of Stock that may
be issued under the Plan or through cancellation or expiration of Awards
previously granted hereunder.


 


SECTION 11.                                    OTHER AWARDS AND LLC UNITS.


 


(a)           Nature of Other Awards.  Other forms of Awards (“Other Awards”) that
may be granted under the Plan include Awards that are valued in whole or in
part by reference to, or are otherwise calculated by reference to or based on,
shares of Stock, 


 


22

















 


including without limitation, (i) LLC Units, (ii) convertible
preferred stock, convertible debentures and other convertible, exchangeable or
redeemable securities or equity interests (including LLC Units), (iii) membership
interests in a Subsidiary or operating partnership, (iv) Awards valued by
reference to Book Value, fair value or Subsidiary performance, and (v) any class of profits interest or limited
liability company membership interest created or issued pursuant to the terms
of a partnership agreement, limited liability company operating agreement or
otherwise by an Affiliate that has elected to be treated as a partnership for
federal income tax purposes and qualifies as a “profits interest” within the
meaning of Revenue Procedure 93-27 with respect to a Participant who is
rendering services to the issuing Affiliate.


 


(b)           For purposes of calculating the
number of shares of Stock underlying an Other Award relative to the total
number of shares of Stock reserved and available for issuance under Section 4(a),
the Administrator shall establish in good faith the maximum number of shares of
Stock to which a grantee of such Other Award may be entitled upon fulfillment
of all applicable conditions set forth in the relevant Award documentation,
including vesting, accretion factors, conversion ratios, exchange ratios and
the like.  If and when any such
conditions are no longer capable of being met, in whole or in part, the number
of shares of Stock underlying such Other Award shall be reduced accordingly by
the Administrator and the related shares of Stock shall be added back to the
shares of Stock available for issuance under the Plan.  Other Awards may be issued either alone or in
addition to other Awards granted under the Plan and shall be evidenced by an
award agreement.  The Administrator shall
determine the Eligible Recipients to whom, and the time or times at which,
Other Awards shall be made; the number of shares of Stock or LLC Units to be
awarded; the price, if any, to be paid by the Participant for the acquisition
of Other Awards; and the restrictions and conditions applicable to Other
Awards.  Conditions may be based on
continuing employment (or other service relationship), computation of financial
metrics and/or achievement of pre-established performance goals and
objectives.  The Administrator may
require that Other Awards be held through a limited partnership, or similar “look-through”
entity, and the 


 


23

















 


Administrator may require such limited partnership or similar entity to
impose restrictions on its partners or other beneficial owners that are not
inconsistent with the provisions of this Section 11.  The provisions of the grant of Other Awards
need not be the same with respect to each Participant.


 


(c)           Terms and Conditions.  Other Awards made pursuant to this Section 11
shall be subject to the following terms and conditions:


 


(i)            Termination of Employment or
Service.  In the event that a Participant
ceases to be employed by or to provide services to the Company, any Parent, or
any Subsidiary, any outstanding Other Awards previously granted to such
Participant shall be subject to such terms and conditions as set forth in the
award agreement or any other agreement governing such Other Awards.  Except as may otherwise be provided by the
Administrator either in the award agreement, such other agreement, or, subject
to Section 12 below, in writing after the award agreement is issued, a
Participant’s rights in all Other Awards that have not vested shall
automatically terminate upon the Participant’s termination of employment (or
cessation of service relationship) with the Company, its Parents and its
Subsidiaries for any reason.


 


(ii)           Subject to the provisions of this
Plan and the award agreement or such other agreement, shares of Stock subject
to awards made under this Section 11 may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the
shares are issued, or, if later, the date on which any applicable restriction,
performance or deferral period lapses.


 


(iii)          Subject to the provisions of this Plan
and the award agreement or such other agreement and unless otherwise determined
by the Administrator at grant, the recipient of an award under this Section 11
shall be entitled to receive, currently or on a deferred basis, interest or 


 


24

















 


dividends
or interest or dividend equivalents with respect to the number of shares of
Stock covered by the award, as determined at the time of the award by the
Administrator, in its sole discretion, and the Administrator may provide that
such amounts (if any) shall be deemed to have been reinvested in additional
shares of Stock or otherwise reinvested.


 


(iv)          Shares of Stock (including securities
convertible into shares of Stock) issued on a bonus basis under this Section 11
may be issued for no cash consideration.


 


SECTION 12.                                    AMENDMENT AND TERMINATION.


 


The Board may amend, alter, suspend or discontinue the Plan in whole or
in part, at any time, but no amendment, alteration, or discontinuation that
would impair the rights of a Participant under any Award theretofore granted
shall be made without such Participant’s consent.  Unless the Board determines otherwise, the
Board shall obtain approval of the Company’s stockholders for any amendment
that would require such approval in order to satisfy Sections 162(m) and 422 of
the Code, stock exchange rules or other applicable law or regulation.  The Administrator may amend the terms of any
award theretofore granted, prospectively or retroactively, but, subject to Section 5
of the Plan, no such amendment shall impair the rights of any Participant
without his or her consent.


 


SECTION 13.                                    UNFUNDED STATUS OF PLAN.


 


The Plan is intended to constitute an “unfunded” plan for incentive
compensation.  With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company.


 


SECTION 14.                                    GENERAL PROVISIONS.


 


(a)           Securities Laws Compliance.  Shares of Stock shall not be issued pursuant
to the exercise or settlement of any Award granted hereunder unless the
exercise or settlement of such Award and the issuance and delivery of such
shares of Stock pursuant 


 


25

















 


thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act and the requirements
of any stock exchange upon which the Stock may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.


 


(b)           Certificate Legends.  The Administrator may require each person
acquiring shares of Stock hereunder to represent to and agree with the Company
in writing that such person is acquiring the shares of Stock without a view to
distribution thereof.  The certificates
for such shares of Stock may include any legend which the Administrator deems
appropriate to reflect any restrictions on transfer.


 


All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, and any applicable federal or state securities
law, and the Administrator may cause a legend or legends to be placed on any
such certificates to make appropriate reference to such restrictions.


 


(c)           Company Actions; No Right to
Employment.  Nothing contained in the
Plan shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval, if such approval is necessary
and desirable; and such arrangements may be either generally applicable or
applicable only in specific cases.  The
adoption of the Plan shall not confer upon any Eligible Recipient any right to
continued employment or service with the Company or any Parent or Subsidiary,
as the case may be, nor shall it interfere in any way with the right of the
Company or any Parent or Subsidiary to terminate the employment or service of
any of its Eligible Recipients at any time.


 


(d)           Payment of Taxes.  Each Participant shall, no later than the
date as of which the value of an Award first becomes includible in the gross
income of the Participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Administrator regarding payment of,
any federal, state, or local taxes 


 


26

















 


of any kind required by law to be withheld with respect to such
Award.  The obligations of the Company
under the Plan shall be conditional on the making of such payments or
arrangements, and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
the Participant.


 


(e) Tax Notifications. Each Participant shall promptly notify the
Company of any election the Participant makes under Section 83(b) of
the Code or any disposition of shares of Stock delivered pursuant to the
exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of
the Code (relating to certain disqualifying dispositions).


 


(f) Section 409A. If any distribution or settlement of an
Award pursuant to the terms of this Plan or an Award agreement would subject a
Participant to tax under Section 409A of the Code, the Company shall
modify the Plan or applicable Award agreement in the least restrictive manner
necessary in order to comply with the provisions of Section 409A, other
applicable provision(s) of the Code and/or any rules, regulations or other
regulatory guidance issued under such statutory provisions and, in each case,
without any diminution in the value of the payments to an affected Participant.


 


SECTION 15.                                    EFFECTIVE DATE OF PLAN.


 


The Plan was adopted by the Board on February 9, 2006.  The Plan was approved by the stockholders of
the Company on February 9, 2006. The Plan shall become effective on the
day prior to the date of consummation of the Initial Public Offering (the “Effective
Date”). In the event that the date of consummation of the Initial Public
Offering has not occurred by July 1, 2006, the Plan shall expire and be
null an void without any force or effect.


 


SECTION 16.                                    TERM OF PLAN.


 


No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the Effective Date, but Awards theretofore granted may extend
beyond that date.


 


27

















 


SECTION 17.                                    GOVERNING LAW.


 


The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of New York, without giving effect
to the conflict of laws principles thereof.


 


28