Exhibit 10.1


__________________________________________________________________


MORGANS HOTEL GROUP CO.


2007
OMNIBUS INCENTIVE PLAN


__________________________________________________________________


 


 


 


 


 


 


 


 


 


 
















TABLE OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
  PURPOSE

  	
   

  	
  1

  
	
  2.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  3.

  	
  ADMINISTRATION OF THE PLAN

  	
   

  	
  6

  
	
   

  	
  3.1.

  	
  Board

  	
   

  	
  6

  
	
   

  	
  3.2.

  	
  Committee

  	
   

  	
  7

  
	
   

  	
  3.3.

  	
  Terms of Awards

  	
   

  	
  7

  
	
   

  	
  3.4.

  	
  Deferral Arrangement

  	
   

  	
  8

  
	
   

  	
  3.5.

  	
  No Liability

  	
   

  	
  9

  
	
   

  	
  3.6.

  	
  Share Issuance/Book-Entry

  	
   

  	
  9

  
	
  4.

  	
  STOCK SUBJECT TO THE PLAN

  	
   

  	
  9

  
	
  5.

  	
  EFFECTIVE DATE, DURATION AND AMENDMENTS

  	
   

  	
  10

  
	
   

  	
  5.1.

  	
  Effective Date

  	
   

  	
  10

  
	
   

  	
  5.2.

  	
  Term

  	
   

  	
  10

  
	
   

  	
  5.3.

  	
  Amendment and Termination of the Plan

  	
   

  	
  10

  
	
   

  	
  5.4

  	
  Additional Provisions

  	
   

  	
  10

  
	
  6.

  	
  AWARD ELIGIBILITY AND LIMITATIONS

  	
   

  	
  10

  
	
   

  	
  6.1.

  	
  Service Providers and Other Persons

  	
   

  	
  10

  
	
   

  	
  6.2.

  	
  Successive Awards and Substitute Awards

  	
   

  	
  11

  
	
   

  	
  6.3.

  	
  Limitation on Shares of Stock Subject to Awards and
  Cash Awards

  	
   

  	
  11

  
	
  7.

  	
  AWARD AGREEMENT

  	
   

  	
  11

  
	
  8.

  	
  TERMS AND CONDITIONS OF OPTIONS

  	
   

  	
  12

  
	
   

  	
  8.1.

  	
  Option Price

  	
   

  	
  12

  
	
   

  	
  8.2.

  	
  Vesting

  	
   

  	
  12

  
	
   

  	
  8.3.

  	
  Term

  	
   

  	
  12

  
	
   

  	
  8.4.

  	
  Termination of Service

  	
   

  	
  12

  
	
   

  	
  8.5.

  	
  Limitations on Exercise of Option

  	
   

  	
  12

  
	
   

  	
  8.6.

  	
  Method of Exercise

  	
   

  	
  13

  
	
   

  	
  8.7.

  	
  Rights of Holders of Options

  	
   

  	
  13

  
	
   

  	
  8.8.

  	
  Delivery of Stock Certificates

  	
   

  	
  13

  
	
   

  	
  8.9.

  	
  Transferability of Options

  	
   

  	
  13

  
	
   

  	
  8.10.

  	
  Family Transfers

  	
   

  	
  13

  
	
   

  	
  8.11.

  	
  Limitations on Incentive Stock Options

  	
   

  	
  14

  
	
   

  	
  8.12.

  	
  Notification of Disqualifying Disposition

  	
   

  	
  14

  
	
  9.

  	
  TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

  	
   

  	
  14

  
	
   

  	
  9.1.

  	
  Right to Payment and Grant Price

  	
   

  	
  14

  
	
   

  	
  9.2.

  	
  Other Terms

  	
   

  	
  15

  
	
   

  	
  9.3.

  	
  Term

  	
   

  	
  15

  
	
   

  	
  9.4.

  	
  Transferability of SARS

  	
   

  	
  15

  



 



 i
 









 


	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5.

  	
  Family Transfers

  	
   

  	
  15

  
	
  10.

  	
  TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK
  UNITS

  	
   

  	
  16

  
	
   

  	
  10.1.

  	
  Grant of Restricted Stock

  	
   

  	
  16

  
	
   

  	
  10.2.

  	
  Restrictions

  	
   

  	
  16

  
	
   

  	
  10.3.

  	
  Restricted Stock Certificates

  	
   

  	
  16

  
	
   

  	
  10.4.

  	
  Rights of Holders of Restricted Stock

  	
   

  	
  17

  
	
   

  	
  10.5.

  	
  Rights of Holders of Stock Units

  	
   

  	
  17

  
	
   

  	
   

  	
  10.5.1.   Voting and Dividend Rights

  	
   

  	
  17

  
	
   

  	
   

  	
  10.5.2.   Creditor’s Rights

  	
   

  	
  17

  
	
   

  	
  10.6.

  	
  Termination of Service

  	
   

  	
  17

  
	
   

  	
  10.7.

  	
  Purchase of Restricted Stock

  	
   

  	
  18

  
	
   

  	
  10.8.

  	
  Delivery of Stock

  	
   

  	
  18

  
	
  11.

  	
  FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

  	
   

  	
  18

  
	
   

  	
  11.1.

  	
  General Rule

  	
   

  	
  18

  
	
   

  	
  11.2.

  	
  Surrender of Stock

  	
   

  	
  18

  
	
   

  	
  11.3.

  	
  Cashless Exercise

  	
   

  	
  18

  
	
   

  	
  11.4.

  	
  Other Forms of Payment

  	
   

  	
  19

  
	
  12.

  	
  TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

  	
   

  	
  19

  
	
   

  	
  12.1.

  	
  Dividend Equivalent Rights

  	
   

  	
  19

  
	
   

  	
  12.2.

  	
  Termination of Service

  	
   

  	
  19

  
	
  13.

  	
  OTHER STOCK-BASED AWARDS AND LLC UNITS

  	
   

  	
  19

  
	
  14.

  	
  TERMS AND CONDITIONS OF PERFORMANCE AND ANNUAL
  INCENTIVE AWARDS

  	
   

  	
  21

  
	
   

  	
  14.1.

  	
  Performance Conditions

  	
   

  	
  21

  
	
   

  	
  14.2.

  	
  Performance or Annual Incentive Awards Granted to
  Designated Covered Employees

  	
   

  	
  21

  
	
   

  	
   

  	
  14.2.1.   Performance Goals Generally

  	
   

  	
  21

  
	
   

  	
   

  	
  14.2.2.   Business Criteria

  	
   

  	
  22

  
	
   

  	
   

  	
  14.2.3.   Timing For Establishing Performance
  Goals

  	
   

  	
  22

  
	
   

  	
   

  	
  14.2.4.   Settlement of Performance or Annual
  Incentive Awards; Other Terms

  	
   

  	
  22

  
	
  14.3.

  	
   

  	
  Written Determinations

  	
   

  	
  23

  
	
  14.4.

  	
   

  	
  Status of Section 14.2 Awards Under Code Section
  162(m)

  	
   

  	
  23

  
	
  15.

  	
  PARACHUTE LIMITATIONS

  	
   

  	
  23

  
	
  16.

  	
  REQUIREMENTS OF LAW

  	
   

  	
  24

  
	
   

  	
  16.1.

  	
  General

  	
   

  	
  24

  
	
   

  	
  16.2.

  	
  Rule 16b-3

  	
   

  	
  25

  
	
  17.

  	
  EFFECT OF CHANGES IN CAPITALIZATION

  	
   

  	
  25

  
	
   

  	
  17.1.

  	
  Changes in Stock

  	
   

  	
  25

  



 



 ii
 









 


	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.2.

  	
  Reorganization in Which the Company Is the Surviving
  Entity Which does not Constitute a Corporate Transaction

  	
   

  	
  26

  
	
   

  	
  17.3.

  	
  Corporate Transaction

  	
   

  	
  26

  
	
   

  	
  17.4.

  	
  Adjustments

  	
   

  	
  27

  
	
   

  	
  17.5.

  	
  No Limitations on Company

  	
   

  	
  27

  
	
  18.

  	
  GENERAL PROVISIONS

  	
   

  	
  28

  
	
   

  	
  18.1.

  	
  Disclaimer of Rights

  	
   

  	
  28

  
	
   

  	
  18.2.

  	
  Nonexclusivity of the Plan

  	
   

  	
  28

  
	
   

  	
  18.3.

  	
  Withholding Taxes

  	
   

  	
  28

  
	
   

  	
  18.4.

  	
  Captions

  	
   

  	
  29

  
	
   

  	
  18.5.

  	
  Other Provisions

  	
   

  	
  29

  
	
   

  	
  18.6.

  	
  Number and Gender

  	
   

  	
  29

  
	
   

  	
  18.7.

  	
  Severability

  	
   

  	
  29

  
	
   

  	
  18.8.

  	
  Governing Law

  	
   

  	
  29

  
	
   

  	
  18.9.

  	
  Section 409A of the Code

  	
   

  	
  29

  



 



 iii















 


MORGANS HOTEL
GROUP CO.


2007
OMNIBUS INCENTIVE PLAN


Morgans
Hotel Group Co., a Delaware corporation (the “Company”), sets forth herein the
terms of the amendment and restatement of its 2006 Omnibus Stock Incentive Plan
in the form of this 2007 Omnibus Incentive Plan (the “Plan”), as follows:


1.   PURPOSE


The Plan is
intended to enhance the Company’s and its Affiliates’ (as defined herein)
ability to attract and retain highly qualified officers, outside directors, key
employees, and other persons, and to motivate such persons to serve the Company
and its Affiliates and to expend maximum effort to improve the business results
and earnings of the Company, by providing to such persons an opportunity to
acquire or increase a direct proprietary interest in the operations and future
success of the Company.  To this end, the Plan provides for the grant of
stock options, stock appreciation rights, restricted stock, stock units,
dividend equivalent rights, cash awards and any other stock-based award under
the Plan.  Any of these awards may, but
need not, be made as performance incentives to reward attainment of annual or
long-term performance goals in accordance with the terms hereof.  Stock options granted under the Plan may be
non-qualified stock options or incentive stock options, as provided herein.


2.   DEFINITIONS


For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:


2.1      “Affiliate”
means, with respect to the Company, any company or other trade or business that
controls, is controlled by or is under common control with the Company within
the meaning of Rule 405 of Regulation C under the Securities Act, including,
without limitation, any Subsidiary.  For
purposes of granting stock options or stock appreciation rights, an entity may
not be considered an Affiliate if it results in noncompliance with Code Section
409A.


2.2      “Annual Incentive Award” means
an Award made subject to attainment of performance goals (as described in Section 14) over a performance period of up to one year (the
Company’s fiscal year, unless otherwise specified by the Committee).


2.3      “Award” means a grant of an Option, Stock Appreciation
Right, Restricted Stock, Stock Unit, Dividend Equivalent Rights, cash award, or
any Other Stock-Based Award under the Plan.













 


2.4      “Award Agreement” means the written agreement between the
Company and a Grantee that evidences and sets out the terms and conditions of
an Award.  The Committee may provide for
the use of electronic, Internet, or other nonpaper Award Agreements, and the
use of electronic, Internet, or other nonpaper means for the acceptance thereof
and actions thereunder by a Grantee.


2.5      “Benefit Arrangement” shall have the meaning set forth in Section 15 hereof.


2.6      “Board” means the Board of Directors of the Company.


2.7      “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 Committee 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 Committee for subsequent events).


2.8      “Cause” means, with respect to any Grantee, the
meaning of such term as set forth in the employment agreement between the
Company (or any Affiliate) and the Grantee or, in the event there is no such
employment agreement (or if any such employment agreement does not contain such
a definition), such term shall mean (i) willful or gross misconduct or willful
or gross negligence in the performance of his or her duties for the Company or
any Affiliate, (ii) neglect of his or her duties for the Company or any
Affiliate after written notice and opportunity to cure, (iii) dishonesty,
fraud, theft, embezzlement or misappropriation of funds, properties or assets
of the Company or of any Affiliate, (iv) conviction of a felony or (v) a direct
or indirect material breach of the terms of any agreement with the Company or
any Affiliate.


2.9      “Code” means the Internal Revenue Code of 1986, as now in
effect or as hereafter amended.


2.10    “Committee” means a committee of, and designated from time
to time by resolution of, the Board, which shall be constituted as provided in Section 3.2.


2.11    “Company” means Morgans Hotel Group Co.


2.12    “Corporate Transaction” shall
be deemed to have occurred if (i) any person or group of persons (as defined in
Section 13(d) and 14(d) of the Exchange Act) together with its affiliates,
excluding employee benefit plans of the Company, is or becomes, directly or
indirectly, the “beneficial owner” (as defined in Rule 13d-3 of the Exchange
Act) of securities of the Company representing 40% or more of the combined
voting power of the Company’s then outstanding securities; or (ii) individuals
who at the beginning of any two-year period constitute the Board, plus new
directors of the Company whose election or nomination for election by the
Company’s shareholders is approved by a vote of at least two-thirds of the
directors of the Company still in office who were directors of the Company at
the beginning of



 2
 









such two-year period, cease for any reason
during such two-year period to constitute at least two-thirds of the members of
the Board; or (iii) a merger or consolidation of the Company with any other
corporation or entity is consummated regardless of which entity is the
survivor, other than a merger of consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted into voting
securities of the surviving entity) at least 60% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (iv) the Company is
completely liquidated or all or substantially all of the Company’s assets are
sold.


2.13     “Covered Employee” means a Grantee who is a covered
employee within the meaning of Section 162(m)(3) of the Code.


2.14    “Disability” means the Grantee is unable to perform each of
the essential duties of such Grantee’s position by reason of a medically
determinable physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period of not less
than 12 months; provided, however, that, with respect to rules regarding
expiration of an Incentive Stock Option following termination of the Grantee’s
Service, Disability shall mean the Grantee is unable to engage in any substantial
gainful activity by reason of a medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months.


2.15    “Dividend Equivalent Right” means a right, granted to a
Grantee under Section 12 hereof, to receive
cash, Stock, other Awards or other property equal in value to dividends paid
with respect to a specified number of shares of Stock, or other periodic
payments.


2.16    “Effective Date” means  February 14,
2006, the date the 2006 Omnibus Stock Incentive Plan was approved by the
shareholders.  The Effective Date of this
amendment and restatement of the 2006 Omnibus Stock Incentive Plan, in the form
of this 2007 Omnibus Incentive Plan means the date the shareholders approves
this plan as amended and restated.


2.17    “Exchange Act” means the Securities Exchange Act of 1934, as
now in effect or as hereafter amended.


2.18    “Fair Market Value” with respect to a share of Stock means the
value of a share of such Stock determined as follows:  if on the Grant Date or other determination
date the Stock is listed on an established national or regional stock exchange,
is admitted to quotation on The NASDAQ Stock Market, Inc. or is publicly traded
on an established securities market, the Fair Market Value of a share of Stock
shall be the closing price of the Stock on such exchange or in such market (if
there is more than one such exchange or market the Committee shall determine
the appropriate exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing price, the Fair
Market Value shall be the mean between the highest bid and lowest asked prices
or between the high and low sale prices on such trading day) or, if no sale of
Stock is reported


 



 3
 









 


for such trading
day, on the next preceding day on which any sale shall have been reported.  If the Stock is not listed on such an
exchange, quoted on such system or traded on such a market, Fair Market Value of
the share of Stock shall be the value of the Stock as determined by the
Committee in good faith in a manner consistent with Code Section 409A.  “Fair Market Value” with respect to an Award
means the value of the Award as determined by the Committee in good faith,
taking into consideration applicable tax and accounting rules and regulations.


2.19    “Family Member” means a person who
is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent,
grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including
adoptive relationships, of the Grantee, any person sharing the Grantee’s
household (other than a tenant or employee), a trust in which any
one or more of these persons have more than fifty percent of the beneficial
interest, a foundation in which any one or more of these persons (or the
Grantee) control the management of assets, and any other entity in which one or
more of these persons (or the Grantee) own
more than fifty percent of the voting interests.


2.20    “Good Reason” means (a) a substantial adverse alteration in the Grantee’s title or
responsibilities from those in effect immediately prior to the Corporate
Transaction; (b) a reduction in the Grantee’s annual base salary as of
immediately prior to the Corporate Transaction (or as the same may be increased
from time to time) or a material reduction in the Grantee’s annual target bonus
opportunity as of immediately prior to the Corporate Transaction; or (c) the
relocation of the Grantee ‘s principal place of employment to a location more
than 35 miles from the Grantee’s principal place of employment as of the
Corporate Transaction or the Company’s requiring the Grantee to be based
anywhere other than such principal place of employment (or permitted relocation
thereof) except for required travel on the Company’s business to an extent
substantially consistent with the Grantee’s 
business travel obligations as of immediately prior to the Corporate
Transaction.  The Grantee’s continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder, provided that
the Grantee provides the Company with a written notice of resignation within
ninety (90) days following the occurrence of the event constituting Good
Reason.


2.21    “Grant Date” means, as determined
by the Committee, the latest to occur of  (i)
the date as of which the Committee approves an Award, (ii) the date on which
the recipient of an Award first becomes eligible to receive an Award under Section 6
hereof, or (iii) such other date as may be specified by the Committee.


2.22    “Grantee” means a person who
receives or holds an Award under the Plan.


2.23    “Incentive Stock Option” means an “incentive
stock option” within the meaning of Section 422 of the Code, or the
corresponding provision of any subsequently enacted tax statute, as amended
from time to time.



 4
 









 


2.24    “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.


2.25    “Non-qualified Stock Option” means
an Option that is not an Incentive Stock Option.


2.26    “Option” means an option to
purchase one or more shares of Stock pursuant to the Plan.


2.27    “Option Price” means the exercise
price for each share of Stock subject to an Option.


2.28    “Other Agreement” shall have the
meaning set forth in Section 15
hereof.


2.29    “Other Stock-Based Award” 
shall mean any right granted under Section 13 of
the Plan.


2.30    “Outside Director” means a member
of the Board who is not an officer or employee of the Company.


2.31    “Performance Award” means an Award
made subject to the attainment of performance goals (as described in Section 14) over a performance period of up to ten (10)
years.


2.32    “Plan” means this Morgans Hotel
Group Co. 2007 Omnibus Incentive Plan, an amendment and restatement of the
Morgans Hotel group Co. 2006 Omnibus Stock Incentive Plan.


2.33    “Purchase Price” means
the purchase price for each share of Stock pursuant to a grant of Restricted
Stock or Other Stock-Based Award.


2.34    “Reporting Person” means a person
who is required to file reports under Section 16(a) of the Exchange Act.


2.35    “Restricted Stock” means shares of
Stock, awarded to a Grantee pursuant to Section 10
hereof.


2.36    “SAR Exercise Price”
means the per share exercise price of an SAR granted to a Grantee under Section 9 hereof.


2.37    “Securities Act” means the
Securities Act of 1933, as now in effect or as hereafter amended.


2.38    “Service” means
service as a Service Provider to the Company or an Affiliate.  Unless otherwise stated in the applicable
Award Agreement, a Grantee’s change



 5
 









 


in position or duties shall not result in interrupted
or terminated Service, so long as such Grantee continues to be a Service
Provider to the Company or an Affiliate. 
Subject to the preceding sentence, whether a termination of Service shall
have occurred for purposes of the Plan shall be determined by the Committee,
which determination shall be final, binding and conclusive.


2.39    “Service Provider” means an
employee, officer or director of the Company or an Affiliate, or a consultant
or adviser currently providing services to the Company or an Affiliate.


2.40    “Stock” means the common stock,
par value $.01 per share, of the Company.


2.41    “Stock Appreciation Right”
or “SAR” means a right granted to a
Grantee under Section 9 hereof.


2.42    “Stock Unit” means a bookkeeping
entry representing the equivalent of one share of Stock awarded to a Grantee
pursuant to Section 10 hereof.


2.43    “Subsidiary” means any “subsidiary
corporation” of the Company within the meaning of Section 424(f) of the Code.


2.44    “Substitute Awards” means Awards granted upon assumption of, or in
substitution
for, outstanding awards previously granted by a company or other entity
acquired by the Company or any Affiliate or with which the Company or any
Affiliate combines.


2.45    “Ten Percent Stockholder” means an individual who owns more
than ten percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company, its parent or any of its Subsidiaries.  In determining stock ownership, the
attribution rules of Section 424(d) of the Code shall be applied.


3.   ADMINISTRATION
OF THE PLAN


3.1.                            Board


The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s certificate of
incorporation and by-laws and applicable law. 
The Board shall have full power and authority to take all actions and to
make all determinations required or provided for under the Plan, any Award or
any Award Agreement, and shall have full power and authority to take all such
other actions and make all such other determinations not inconsistent with the
specific terms and provisions of the Plan that the Board deems to be necessary
or appropriate to the administration of the Plan, any Award or any Award
Agreement.  All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company’s



 6
 









 


certificate of incorporation and by-laws and applicable law.  The interpretation and construction by the
Board of any provision of the Plan, any Award or any Award Agreement shall be
final, binding  and conclusive.


3.2.                            Committee.


The
Board has delegated to the Committee the powers and authorities related to the
administration and implementation of the Plan, as set forth in Section 3.1 above and other applicable provisions,
consistent with the certificate of
incorporation and by-laws of the Company and applicable law.


(i)        Except as provided in Subsection (ii)
and except as the Board may otherwise determine, the Committee appointed by the
Board to administer the Plan shall consist of two or more Outside Directors of
the Company who: (a) qualify as “outside directors” within the meaning of
Section 162(m) of the Code and who (b) meet such other requirements as may be
established from time to time by the Securities and Exchange Commission for
plans intended to qualify for exemption under Rule 16b—3 (or its successor)
under the Exchange Act and (c) who comply with the independence requirements of
the stock exchange on which the Common Stock is listed.


(ii)       The Board may also appoint one or more
separate committees of the Board, each composed of one or more directors of the
Company who need not be Outside Directors, who may administer the Plan with
respect to employees or other Service Providers who are not executive officers
or directors of the Company, may grant Awards under the Plan to such employees
or other Service Providers, and may determine all terms of such Awards.


In the event that the
Plan, any Award or any Award Agreement entered into hereunder provides
for any action to be taken by or determination to be made by the Committee,
such action may be taken or such determination may be made by the Board.  Unless otherwise expressly determined by the
Board, any action or determination by the Committee shall be final, binding and
conclusive. 
To the extent permitted by law, the Committee may delegate its authority
under the Plan to a member of the Board.


3.3.                            Terms
of Awards.


Subject to the other terms and conditions of the Plan, the Committee
shall have full and final authority to:


(i)            designate Grantees,


(ii)           determine the type
or types of Awards to be made to a Grantee,


(iii)          determine the number
of shares of Stock to be subject to an Award,



 7
 









 


(iv)          establish the terms
and conditions of each Award (including, but not limited to, the exercise price
of any Option, the nature and duration of any restriction or condition (or
provision for lapse thereof ) relating to the vesting, exercise, transfer, or
forfeiture of an Award or the shares of Stock subject thereto, and any terms or
conditions that may be necessary to qualify Options as Incentive Stock
Options),


(v)           prescribe the form of
each Award Agreement evidencing an Award, and


(vi)          amend, modify, or
supplement the terms of any outstanding Award. 
Such authority specifically
includes the authority, in order to effectuate the purposes of the Plan but
without amending the Plan, to modify Awards to eligible individuals who are
foreign nationals or are individuals who are employed outside the
United States to recognize differences in local law, tax policy, or
custom.  Notwithstanding the foregoing,
no amendment, modification or supplement of any Award shall, without the
consent of the Grantee, impair the Grantee’s rights under such Award other than
amendments or modifications necessary to comply with Section 409A and
amendments pursuant to Section 5.3.


The Company may
retain the right in an Award Agreement to cause a forfeiture of the gain
realized by a Grantee on account of actions taken by the Grantee in violation
or breach of or in conflict with any employment agreement, non-competition
agreement, any agreement prohibiting solicitation of employees or clients of
the Company or any Affiliate  thereof or any
confidentiality obligation with respect to the Company or any Affiliate  thereof or otherwise in competition with the Company or any
Affiliate thereof, to the extent specified in such Award Agreement applicable
to the Grantee.  Furthermore, the Company
may annul an Award if the Grantee is an employee of the Company or an Affiliate
thereof and is terminated for Cause as defined in the applicable Award
Agreement or the Plan, as applicable.


Notwithstanding the foregoing, no amendment or
modification may be made to an outstanding Option or SAR, including without
limitation by replacement
of underwater Options or SARs with cash or other award type, that would be treated as a repricing under the
rules of the stock exchange on which the Stock is listed or result in
replacement of underwater Options or SARs with cash or other award with an
exercise price below the Fair Market Value as of the date of such replacement
award, in each case, without the approval of the stockholders of the Company,
provided, that, appropriate adjustments may be made to outstanding Options and
SARs pursuant to Section 17 or Section 5.3 and
may be made to make changes to achieve compliance with applicable law,
including Internal Revenue Code Section 409A.


3.4.                            Deferral
Arrangement.


The Committee may permit or require the deferral of
any award payment into a deferred compensation arrangement, subject to such
rules and procedures as it may establish, which may include provisions for the
payment or crediting of interest or dividend equivalents, including converting
such credits into deferred Stock equivalents, and



 8
 









restricting deferrals to comply with hardship
distribution rules affecting 401(k) plans. 
Any such deferrals shall be made in a manner that complies with Code
Section 409A.


3.5.                            No Liability.


No
member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award or Award
Agreement.


3.6.                            Share
Issuance/Book-Entry


Notwithstanding
any provision of this Plan to the contrary, the issuance of the Stock under the
Plan may be evidenced in such a manner as the Committee, in its discretion,
deems appropriate, including, without limitation, book-entry registration or
issuance of one or more Stock certificates.


4.   STOCK SUBJECT
TO THE PLAN


Subject
to adjustment as provided in Section 17
hereof, the number of shares of Stock available for issuance under the Plan
shall be six million seven hundred fifty thousand  shares
(6,750,000). Stock issued or to be issued under the Plan shall be authorized
but unissued shares; or, to the extent permitted by applicable law,
issued shares that have been reacquired by the Company.  If any
shares covered by an Award are not purchased or are forfeited, or if an Award
otherwise terminates without delivery of any Stock subject thereto, then the
number of shares of Stock counted against the aggregate number of shares
available under the Plan with respect to such Award shall, to the extent of any
such forfeiture or termination, again be available for making Awards under the
Plan.  The number of shares available for
issuance under the Plan shall be reduced by the number of shares subject to
Options and SARs.  Upon a grant of Awards
other than Awards of Options or SARs, the number of shares available for
issuance under the Plan shall be reduced by 1.7 times the number of shares of
Stock subject to such Awards.


The Committee shall have the right to substitute or assume Awards in
connection with mergers, reorganizations, separations, or other transactions to
which Section 424(a) of the Code applies. 
The number of shares of Stock reserved pursuant to Section 4
may be increased by the corresponding number of Awards assumed and, in the case
of a substitution, by the net increase in the number of shares of Stock subject
to Awards before and after the substitution.  The Committee may adopt reasonable counting
procedures to ensure appropriate counting, to avoid double counting (as, for
example, in the case of tandem or substitute awards) and to make adjustments if
the number of shares of Stock actually delivered differs from the number of
shares of Stock previously counted in connection with a Grant.


 



 9















5.                                      EFFECTIVE
DATE, DURATION AND AMENDMENTS


5.1.                            Effective
Date.


The
amendment and restatement of the 2006 Omnibus Stock Incentive Plan shall be
effective as of the Effective Date of the Plan, subject to approval of the Plan
by the Company’s stockholders within one year of the Effective Date.  Upon approval of the Plan by the stockholders
of the Company as set forth above, all Awards made under the Plan on or after
the Effective Date shall be fully effective as if the stockholders of the
Company had approved the Plan on the Effective Date.  If the stockholders fail to approve the Plan
within one year of the Effective Date of the Plan, any Awards made hereunder
shall be null and void and of no effect.


5.2.                            Term.


The
Plan shall terminate automatically ten (10) years after its adoption by the
Board and may be terminated on any earlier date as provided in Section 5.3.


5.3.                            Amendment
and Termination of the Plan


The
Board may, at any time and from time to time, amend, suspend, or terminate the
Plan as to any shares of Stock as to which Awards have not been made.  An amendment shall be contingent on approval
of the Company’s stockholders to the extent stated by the Board, required by
applicable law or required by applicable stock exchange listing
requirements.  In addition, an amendment
will be contingent on approval of the Company’s stockholders if the amendment
would:  (i) materially increase the
benefits accruing to participants under the Plan, (ii) materially increase the
aggregate number of shares of Stock that may be issued under the Plan, or (iii)
materially modify the requirements as to eligibility for participation in the
Plan.  No Awards shall be made after
termination of the Plan.  No amendment,
suspension, or termination of the Plan shall, without the consent of the
Grantee, impair rights or obligations under any Award theretofore awarded under
the Plan.


5.4          Additional Provisions


Any
provision of the Plan or any Award Agreement notwithstanding, the Committee may
cause any Award granted hereunder to be amended, modified or cancelled in
consideration of a cash payment, an alternative Award or both made to the
holder of such cancelled Award equal to or greater than the Fair Market Value
of such cancelled Award.


6.                                      AWARD
ELIGIBILITY AND LIMITATIONS


6.1.                            Service
Providers and Other Persons


Subject
to this Section 6, Awards may be made under the
Plan to: (i)  any Service Provider to the
Company or of any Affiliate, including any Service Provider who is an officer 



 10
 









or director of the Company, or of
any Affiliate, as the Committee shall determine and designate from time to time
and (ii) any other individual whose participation in the Plan is determined to
be in the best interests of the Company by the Committee.


6.2.                            Successive
Awards and Substitute Awards.


An
eligible person may receive more than one Award, subject to such restrictions
as are provided herein.  Notwithstanding Sections 8.1 and 9.1, the Option
Price of an Option or the grant price of an SAR that is a Substitute Award may
be less than 100% of the Fair Market Value of a share of Common Stock on the
original date of grant; provided, that, the Option Price or grant price is
determined in accordance with the principles of Code Section 424 and the
regulations thereunder.


6.3.                            Limitation
on Shares of Stock Subject to Awards and Cash Awards.


During
any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act:


(i)  the maximum number of shares of Stock subject
to Options or SARs that can be awarded under the Plan to any person eligible
for an Award under Section 6
hereof is 2,000,000  (two million)
shares per calendar year.


(ii)  the maximum number of shares that can be
awarded under the Plan, other than pursuant to an Option or SAR, to any person
eligible for an Award under Section 6
hereof is 2,000,000 (two million) shares per calendar year.


(iii)  the maximum amount that may be earned as an
Annual Incentive Award or other cash Award in any calendar year by any one
Grantee shall be $10,000,000  (ten million
dollars)  and the maximum amount that may be
earned as a Performance Award or other cash Award in respect of a performance
period of greater than one year by any one Grantee shall be $25,000,000 (twenty
five million dollars).


The preceding limitations
in this Section 6.3 are subject to adjustment as provided in Section 17 hereof.


7.                                      AWARD
AGREEMENT


Each
Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in
such form or forms as the Committee shall from time to time determine.  Award Agreements granted from time to time or
at the same time need not contain similar provisions but shall be consistent
with the terms of the Plan.  Each Award
Agreement evidencing an Award of Options shall specify whether such Options are
intended to be Non-qualified Stock Options or Incentive Stock Options, and in
the absence of such specification such options shall be deemed Non-qualified
Stock Options.



 11
 









 


8.                                      TERMS
AND CONDITIONS OF OPTIONS


8.1.                            Option
Price


The Option Price of each Option shall be fixed by the Committee and
stated in the Award Agreement evidencing such Option.  The Option Price of each Option shall be at
least  the Fair Market Value on the
Grant Date of a share of Stock; provided, however, that in the
event that a Grantee is a Ten Percent Stockholder, the Option Price of an
Option granted to such Grantee that is intended to be an Incentive Stock Option
shall be not less than 110 percent of the Fair Market Value of a share of Stock
on the Grant Date.   In no case shall the
Option Price of any Option be less than the par value of a share of Stock.


8.2.                            Vesting.


Subject to Sections 8.3 and 17.3
hereof, each Option granted under the Plan shall become exercisable at
such times and under such conditions as shall be determined by the Committee
and stated in the Award Agreement.  For
purposes of this Section 8.2, fractional
numbers of shares of Stock subject to an Option shall be rounded down to the
next nearest whole number.


8.3.                            Term.


Each
Option granted under the Plan shall terminate, and all rights to purchase shares
of Stock thereunder shall cease, upon the expiration of ten years from the date
such Option is granted, or under such circumstances and on such date prior
thereto as is set forth in the Plan or as may be fixed by the Committee and
stated in the Award Agreement relating to such Option; provided, however,
that in the event that the Grantee is a Ten Percent Stockholder, an Option
granted to such Grantee that is intended to be an Incentive Stock Option shall
not be exercisable after the expiration of five years from its Grant Date.


8.4.                            Termination
of Service.


Each Award
Agreement shall set forth the extent to which the Grantee shall have the right
to exercise the Option following termination of the Grantee’s Service.  Such provisions shall be determined in the
sole discretion of the Committee, need not be uniform among all Options issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of Service.


8.5.                            Limitations
on Exercise of Option.


Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, prior to the date the Plan is approved by the stockholders of
the Company as provided herein or after the occurrence of an event referred to
in Section 17 hereof which results in
termination of the Option.



 12
 









 


8.6.                            Method
of Exercise.


An
Option that is exercisable may be exercised by the Grantee’s delivery to the
Company of written notice of exercise on any business day, at the Company’s
principal office, on the form specified by the Company.  Such notice shall specify the number of
shares of Stock with respect to which the Option is being exercised and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised plus the amount (if any) of federal and/or other
taxes which the Company may, in its judgment, be required to withhold with
respect to an Award.  The minimum number
of shares of Stock with respect to which an Option may be exercised, in whole
or in part, at any time shall be the lesser of (i) 100 shares or such lesser
number set forth in the applicable Award Agreement and (ii) the maximum
number of shares available for purchase under the Option at the time of
exercise.


8.7.                            Rights
of Holders of Options


Unless
otherwise stated in the applicable Award Agreement, an individual holding or
exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him.  Except as
provided in Section 17 hereof, no
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date of such issuance.


8.8.                            Delivery
of Stock Certificates.


Promptly
after the exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing his or her ownership of the shares of
Stock subject to the Option. 
Notwithstanding any other provision of this Plan to the contrary, the
Company may elect to satisfy any requirement under this Plan for the delivery
of stock certificates through the use of book-entry.


8.9.                            Transferability
of Options


Except as provided
in Section 8.10, during the lifetime of a
Grantee, only the Grantee (or, in the event of legal incapacity or
incompetency, the Grantee’s guardian or legal representative) may exercise an
Option.  Except as provided in Section 8.10, no Option shall be assignable or transferable
by the Grantee to whom it is granted, other than by will or the laws of descent
and distribution.


8.10.                     Family
Transfers.


If authorized in the
applicable Award Agreement, a Grantee may transfer, not for value, all or part
of an Option which is not an Incentive Stock Option to any Family Member.  For the purpose of this Section 8.10,
a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital 


 



 13
 









property rights; or (iii)
a transfer to an entity in which more than fifty percent of the voting
interests are owned by Family Members (or the Grantee) in exchange for an
interest in that entity.  Following a
transfer under this Section 8.10,
any such Option shall continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer.  Subsequent transfers of transferred Options
are prohibited except to Family Members of the original Grantee in accordance
with this Section  8.10
or by will or the laws of descent and distribution.  The events of termination of Service of Section 8.4 hereof shall continue to be applied with respect
to the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods specified, in Section 8.4.


8.11.                     Limitations
on Incentive Stock Options.


An
Option shall constitute an Incentive Stock Option only (i) if the Grantee of
such Option is an employee of the Company or any Subsidiary of the Company;
(ii) to the extent specifically provided in the related Award Agreement; and
(iii) to the extent that the aggregate Fair Market Value (determined at the
time the Option is granted) of the shares of Stock with respect to which all
Incentive Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans of the
Grantee’s employer and its Affiliates) does not exceed $100,000.  This limitation shall be applied by taking
Options into account in the order in which they were granted.


8.12.                     Notification of
Disqualifying Disposition


If any Grantee shall make any disposition of Shares issued pursuant to
the exercise of an Incentive Stock Option under the circumstances described in
Code Section 421(b) (relating to certain disqualifying dispositions), such
Grantee shall notify the Company of such disposition within ten (10) days
thereof.


9.                                      TERMS
AND CONDITIONS OF Stock Appreciation Rights


9.1.                            Right
to Payment and Grant Price.


A SAR shall confer on the
Grantee to whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of Stock on the date of
exercise over (B) the grant price of the SAR as determined by the
Committee.  The Award Agreement for a SAR
shall specify the grant price of the SAR, which shall be at least the Fair
Market Value of a share of Stock on the date of grant.  SARs may be granted in conjunction with all or part of an Option granted
under the Plan or at any subsequent time during the term of such Option, in
conjunction with all or part of any other Award or without regard to any Option
or other Award; provided that an SAR that is granted subsequent to the Grant
Date of a related Option must have an SAR Price that is no less than the Fair
Market Value of one share of Stock on the SAR Grant Date.



 14
 









 


9.2.                            Other
Terms.


The Committee shall
determine at the date of grant or thereafter, the time or times at which and
the circumstances under which an SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or become
exercisable following termination of Service or upon other conditions, the
method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Grantees, whether or not an SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any
SAR.


9.3.                            Term.


Each SAR granted under the Plan shall terminate, and all
rights to purchase shares of Stock thereunder shall cease, upon the expiration
of ten years from the date such SAR is granted, or under such circumstances and
on such date prior thereto as is set forth in the Plan or as may be fixed by
the Committee and stated in the Award Agreement relating to such SAR.


9.4.                            Transferability of SARS


Except as provided in Section 9.5,
during the lifetime of a Grantee, only the Grantee (or, in the event of legal
incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise a SAR.  Except as provided in Section 9.5, no SAR shall be assignable or transferable by
the Grantee to whom it is granted, other than by will or the laws of descent
and distribution.


9.5.                            Family
Transfers.


If
authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of a SAR to any Family Member.  For the purpose of this Section 9.5,
a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital property rights; or
(iii) a transfer to an entity in which more than fifty percent of the voting
interests are owned by Family Members (or the Grantee) in exchange for an
interest in that entity.  Following a
transfer under this Section 9.5,
any such SAR shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer. 
Subsequent transfers of transferred SARs are prohibited except to Family
Members of the original Grantee in accordance with this Section 9.5 or
by will or the laws of descent and distribution.



 15
 









 


10.                               TERMS
AND CONDITIONS OF RESTRICTED STOCK and
stock units


10.1.                     Grant of
Restricted Stock.


Awards
of Restricted Stock or Stock Units may be made for no consideration (other than
par value of the shares which is deemed paid by Services already rendered).


10.2.                     Restrictions.


At the time a grant of Restricted Stock or Stock Units is made, the
Committee may, in its sole discretion, establish a period of time (a “restricted
period”) applicable to such Restricted Stock or Stock Units.  Each Award of Restricted Stock or Stock Units
may be subject to a different restricted period.  The Committee may, in its sole discretion, at
the time a grant of Restricted Stock or Stock Units is made, prescribe
restrictions in addition to or other than the expiration of the restricted period,
including the satisfaction of corporate or individual performance objectives,
which may be applicable to all or any portion of the Restricted Stock or Stock
Units in accordance with Section 14.1 and
14.2.   
Restricted Stock, Stock Units Awards or Other Stock-Based Awards may be granted
or sold as described in the preceding sentence in respect of past or future
services and other valid consideration, or in lieu of, or in addition to, any
cash compensation due to such Grantee.  Notwithstanding the foregoing, Restricted
Stock and Stock Units that vest solely by the passage of time shall not vest in
full in less than three (3) years from the Grant Date; provided, however, up to
ten percent of the shares reserved for issuance under this Plan may be granted
pursuant to this Section 10 or the other provisions of this Plan without being
subject to the foregoing restrictions. 
Restricted Stock and Stock Units for which vesting may be accelerated by
achieving performance targets shall not vest in full in less than one (1) year
from the Grant Date.  Neither Restricted
Stock nor Stock Units may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the restricted period or prior to the satisfaction
of any other restrictions prescribed by the Committee with respect to such
Restricted Stock or Stock Units.   The limitations stated in this Section 10.2 apply to Sections 13 and 14.


10.3.                     Restricted
Stock Certificates.


The
Company shall issue, in the name of each Grantee to whom Restricted Stock has
been granted, stock certificates representing the total number of shares of
Restricted Stock granted to the Grantee, as soon as reasonably practicable
after the Grant Date.  The Committee may
provide in an Award Agreement that either (i) 
the Secretary of the Company shall hold such certificates for the
Grantee’s benefit until such time as the Restricted Stock is forfeited to the
Company or the restrictions lapse, or (ii) 
such certificates shall be delivered to the Grantee, provided, however,
that such certificates shall bear a legend or legends that comply with the
applicable securities laws and regulations and makes appropriate reference to
the restrictions imposed under the Plan and the Award Agreement.  Notwithstanding any other provision of this
Plan to the contrary, the Company may elect to satisfy any requirement under
this Plan for the delivery of stock certificates through the use of book-entry.



 16
 









 


10.4.                     Rights of
Holders of Restricted Stock.


Unless
the Committee otherwise provides in an Award Agreement, holders of Restricted
Stock shall have the right to vote such Stock and the right to receive any
dividends declared or paid with respect to such Stock.  The Committee may provide that any dividends
paid on Restricted Stock must be reinvested in shares of Stock, which may or
may not be subject to the same vesting conditions and restrictions applicable
to such Restricted Stock.  All
distributions, if any, received by a Grantee with respect to Restricted Stock
as a result of any stock split, stock dividend, combination of shares, or other
similar transaction shall be subject to the restrictions applicable to the
original Grant.


10.5.                     Rights of
Holders of Stock Units.


10.5.1.             Voting and Dividend Rights.


Holders
of Stock Units shall have no rights as stockholders of the Company.  The Committee may provide in an Award
Agreement evidencing a grant of Stock Units that the holder of such Stock Units
shall be entitled to receive, upon the Company’s payment of a cash dividend on
its outstanding Stock, a cash payment for each Stock Unit held equal to the
per-share dividend paid on the Stock. 
Such Award Agreement may also provide that such cash payment will be
deemed reinvested in additional Stock Units at a price per unit equal to the
Fair Market Value of a share of Stock on the date that such dividend is paid.


10.5.2.             Creditor’s
Rights.


A
holder of Stock Units shall have no rights other than those of a general
creditor of the Company.  Stock Units
represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Award Agreement.


10.6.                     Termination
of Service.


Unless
the Committee otherwise provides in an Award Agreement or in writing
after the Award Agreement is issued, upon
the termination of a Grantee’s Service, any Restricted Stock or Stock Units
held by such Grantee that have not vested, or with respect to which all
applicable restrictions and conditions have not lapsed, shall immediately be
deemed forfeited.  Such provisions
shall be determined in the sole discretion of the Committee, need not be
uniform among all Restricted Stock and Stock Unit Awards issued pursuant to the
Plan, and may reflect distinctions based on the reasons for termination of
Service.  Upon forfeiture of Restricted Stock or Stock Units, the Grantee shall
have no further rights with respect to such Award, including but not limited to
any right to vote Restricted Stock or any right to receive dividends with
respect to shares of Restricted Stock or Stock Units.


 



 17















10.7.                     Purchase of
Restricted Stock.


The Grantee shall be required, to the extent required
by applicable law, to purchase the Restricted Stock from the Company at a
Purchase Price equal to the greater of (i) the aggregate par value of the
shares of Stock represented by such Restricted Stock or (ii) the Purchase
Price, if any, specified in the Award Agreement relating to such Restricted
Stock.  The Purchase Price shall be
payable in a form described in Section 11 or,
in the discretion of the Committee, in consideration for past or future
Services rendered to the Company or an Affiliate.


10.8.                     Delivery of
Stock.


Upon
the expiration or termination of any restricted period and the satisfaction of
any other conditions prescribed by the Committee, the restrictions applicable
to shares of Restricted Stock or Stock Units settled in Stock shall lapse, and,
unless otherwise provided in the Award Agreement, a stock certificate for such
shares shall be delivered, free of all such restrictions, to the Grantee or the
Grantee’s beneficiary or estate, as the case may be.  Neither the Grantee, nor the Grantee’s
beneficiary or estate, shall have any further rights with regard to a Stock
Unit once the share of Stock represented by the Stock Unit has been delivered.


11.                               FORM
OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK


11.1.                     General Rule.


Payment of the Option Price for the shares purchased
pursuant to the exercise of an Option or the Purchase Price for Restricted
Stock shall be made in cash or in cash equivalents acceptable to the Company.


11.2.                     Surrender of
Stock.


To the extent the Award Agreement so provides, payment
of the Option Price for shares purchased pursuant to the exercise of an Option
or the Purchase Price for Restricted Stock, if any, may be made all or in part
through the tender to the Company of shares of Stock, which shall be valued,
for purposes of determining the extent to which the Option Price or Purchase
Price has been paid thereby, at their Fair Market Value on the date of exercise
or surrender.


11.3.                     Cashless Exercise.


With respect to an Option only (and not with respect
to Restricted Stock), to the extent permitted by law and to the extent the
Award Agreement so provides, payment of the Option Price for shares purchased
pursuant to the exercise of an Option may be made all or in part by delivery
(on a form acceptable to the Committee) of an irrevocable direction



 18
 









to a licensed
securities broker acceptable to the Company to sell shares of Stock and to
deliver all or part of the sales proceeds to the Company in payment of the
Option Price and any withholding taxes described in Section 18.3.


11.4.                     Other Forms
of Payment.


To the extent the Award Agreement
so provides, payment of the Option Price for shares purchased pursuant to
exercise of an Option or the Purchase Price for Restricted Stock may be made in
any other form that is consistent with applicable laws, regulations and rules.


12.                               TERMS
AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS


12.1.                     Dividend
Equivalent Rights.


A
Dividend Equivalent Right is an Award entitling the recipient to receive
credits based on cash distributions that would have been paid on the shares of
Stock specified in the Dividend Equivalent Right (or other award to which it
relates) if such shares had been issued to and held by the recipient.  A Dividend Equivalent Right may be granted
hereunder to any Grantee.  The terms and
conditions of Dividend Equivalent Rights shall be specified in the grant.  Dividend equivalents credited to the holder
of a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue
additional equivalents.  Any such
reinvestment shall be at Fair Market Value on the date of reinvestment.  Dividend Equivalent Rights may be settled in
cash or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the Committee.  A Dividend Equivalent Right granted as a
component of another Award may provide that such Dividend Equivalent Right
shall be settled upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such Dividend Equivalent Right
shall expire or be forfeited or annulled under the same conditions as such
other award.  A Dividend Equivalent Right
granted as a component of another Award may also contain terms and conditions
different from such other award.


12.2.                     Termination
of Service.


Except as may
otherwise be provided by the Committee either in the Award Agreement or in
writing after the Award Agreement is issued, a Grantee’s rights in all Dividend
Equivalent Rights or interest equivalents shall automatically terminate upon
the Grantee’s termination of Service for any reason.


13.                               OTHER
STOCK-BASED AWARDS AND LLC UNITS


Other forms of Awards (“Other Stock-Based Awards)
that may be granted under the Plan include Awards that are valued in whole or
in part by reference to, or are otherwise



 19
 









calculated
by reference to or based on, shares of Stock, 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 the 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 Grantee who is rendering
services to the issuing Affiliate.


For purposes of calculating the number of shares of
Stock underlying an Other Stock-Based Award relative to the total number of
shares of Stock reserved and available for issuance under this Section, the
Committee shall establish in good faith the maximum number of shares of Stock
to which a Grantee of such Other Stock-Based 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 Stock-Based Award
shall be reduced accordingly by the Committee and the related shares of Stock
shall be added back to the shares of Stock available for issuance under the
Plan.  Other Stock-Based 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 Committee shall determine the Grantees to whom, and the time or
times at which, Other Stock-Based 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 Grantee
for the acquisition of Other Stock-Based Awards; and the restriction and
conditions applicable to Other Stock-Based 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 Committee may require that Other
Stock-Based Awards be held through a limited partnership or similar “look-through”
entity, and the Committee 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.  The provision of the grant of Other
Stock-Based Awards need not be the same with respect to each Grantee.


Subject to the provisions of this Plan and the award
agreement or such other agreement and unless otherwise determined by the
Committee at grant, the Grantee of an award under this Section shall be
entitled to receive, currently or on a deferred basis, interest or dividends or
interest equivalents or Dividend Equivalent Rights with respect to the number
of shares of Stock covered by the Award, as determined at the time of the Award
by the Committee, in its sole discretion, and the Committee may provide that
such amounts (if any) shall be deemed to have been reinvested in additional
shares of Stock or otherwise reinvested.


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



 20
 









 


14.                               TERMS
AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS


14.1.                     Performance
Conditions


The right of a
Grantee to exercise or receive a grant or settlement of any Award, and the
timing thereof, may be subject to such performance conditions as may be
specified by the Committee.  The
Committee may use such business criteria and other measures of performance as
it may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce the amounts payable under any Award subject
to performance conditions, except as limited under Sections
14.2 hereof in the case of a Performance Award or Annual Incentive
Award intended to qualify under Code Section 162(m).  If and to the extent required under Code
Section 162(m), any power or authority relating to a Performance Award or
Annual Incentive Award intended to qualify under Code Section 162(m), shall be
exercised by the Committee and not the Board.


14.2.                     Performance
or Annual Incentive Awards Granted to Designated Covered Employees


If and to the
extent that the Committee determines that a Performance or Annual Incentive
Award to be granted to a Grantee who is designated by the Committee as likely
to be a Covered Employee should qualify as “performance-based compensation” for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance or Annual Incentive Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this Section 14.2.


14.2.1.             Performance Goals Generally.


The performance goals for
such Performance or Annual Incentive Awards shall consist of one or more
business criteria and a targeted level or levels of performance with respect to
each of such criteria, as specified by the Committee consistent with this Section 14.2.  Performance goals shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being “substantially
uncertain.”  The Committee may determine
that such Performance or Annual Incentive Awards shall be granted, exercised
and/or settled upon achievement of any one performance goal or that two or more
of the performance goals must be achieved as a condition to grant, exercise
and/or settlement of such Performance or Annual Incentive Awards.  Performance goals may differ for Performance
or Annual Incentive Awards granted to any one Grantee or to different Grantees.



 21
 









 


14.2.2.             Business Criteria.


One or more of the
following business criteria for the Company, on a consolidated basis, and/or
specified subsidiaries or business units of the Company (except with respect to
the total stockholder return and earnings per share criteria), shall be used by
the Committee (and not by the Board) in establishing performance goals for such
Performance or Annual Incentive Awards: (1) total stockholder return; (2) such
total stockholder return as compared to total return (on a comparable basis) of
a publicly available index such as, but not limited to, the Standard & Poor’s
500 Stock Index; (3) net income; (4) pretax earnings; (5) earnings before
interest expense, taxes, depreciation and amortization, with or without
adjustments used from time to time by the Company in its publicly filed
financial statements; (6) pretax operating earnings after interest expense and
before bonuses, service fees, and extraordinary or special items; (7) operating
margin; (8) earnings per share; (9) return on equity; (10) return on capital;
(11) return on investment; (12) operating earnings; (13) working capital; (14)
ratio of debt to stockholders’ equity (15) revenue; (16)  brand awareness; (17) revenue per available
room; (18) number of rooms or units; (19) debt reduction; (20) customer
satisfaction; and (21) any other business criteria used in the Company’s
publicly announced guidance.  Business
criteria may be measured on an absolute basis or on a relative basis (i.e.,
performance relative to peer companies) and on a GAAP or non-GAAP basis.  The Committee may provide, in a manner that
meets the requirements of Code Section 162(m) that any evaluation of
performance may include or exclude any of the following events that occur
during the applicable performance period: (a) asset write-downs; (b) litigation
or claim judgments or settlements; (c) the effect of changes in tax laws,
accounting principles or other laws or provisions affecting reported results;
(d) any reorganization or restructuring programs; (e) extraordinary
nonrecurring items; (f) acquisitions or divestitures; and (g) foreign exchange
gains and losses.


14.2.3.                       Timing For
Establishing Performance Goals.


Performance goals shall
be established not later than 90 days after the beginning of any performance
period applicable to such Performance or Annual Incentive Awards, or at such
other date as may be required or permitted for “performance-based compensation”
under Code Section 162(m).


14.2.4.                       Settlement
of Performance or Annual Incentive Awards; Other Terms.


Settlement of such
Performance or Annual Incentive Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee.  The Committee may, in its discretion, reduce
the amount of a settlement otherwise to be made in connection with such Performance
or Annual Incentive Awards.  The
Committee shall specify the circumstances in which such Performance or Annual
Incentive Awards shall be paid or forfeited in the event of termination of
Service by the Grantee prior to the end of a performance period or settlement
of Performance Awards.



 22
 









 


14.3.                     Written
Determinations.


All
determinations by the Committee as to the establishment of performance goals,
the amount of any potential Performance Awards and as to the achievement of
performance goals relating to Performance Awards, and the amount of any
potential individual Annual Incentive Awards and the amount of final Annual
Incentive Awards, shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m).  To
the extent permitted by Section 162(m), the Committee may delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards.


14.4.                     Status of
Section 14.2 Awards Under Code Section 162(m)


It is the
intent of the Company that Performance Awards and Annual Incentive Awards under
Section 14.2 hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within
the meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute “qualified performance-based
compensation” within the meaning of Code Section 162(m) and regulations
thereunder.  Accordingly, the terms of Section 14.2, including the definitions of Covered Employee
and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. 
The foregoing notwithstanding, because the Committee cannot determine
with certainty whether a given Grantee will be a Covered Employee with respect
to a fiscal year that has not yet been completed, the term Covered Employee as
used herein shall mean only a person designated by the Committee, at the time
of grant of Performance Awards or an Annual Incentive Award, as likely to be a
Covered Employee with respect to that fiscal year.  If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards does not comply
or is inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.


15.                               PARACHUTE
LIMITATIONS


Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by a
Grantee with the Company or any Affiliate, except an agreement, contract, or
understanding that expressly addresses Section 280G or Section 4999 of the Code
(an “Other Agreement”), and notwithstanding any formal or informal plan or
other arrangement for the direct or indirect provision of compensation to the
Grantee (including groups or classes of Grantees or beneficiaries of which the
Grantee is a member), whether or not such compensation is deferred, is in cash,
or is in the form of a benefit to or for the Grantee (a “Benefit Arrangement”),
if the Grantee is a “disqualified individual,” as defined in
Section 280G(c) of the Code, any Option, Restricted Stock or Stock Unit
held by that Grantee and any right to receive any payment or other benefit
under this Plan shall not become exercisable or vested (i) to the extent
that such right to exercise, vesting, payment, or benefit, taking into account
all other rights, payments, or benefits to or for the Grantee under this Plan,
all Other Agreements, and all Benefit Arrangements, would 



 23
 









cause
any payment or benefit to the Grantee under this Plan to be considered a “parachute
payment” within the meaning of Section 280G(b)(2) of the Code as then in
effect (a “Parachute Payment”) and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts received by the
Grantee from the Company under this Plan, all Other Agreements, and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by the Grantee without causing any such payment or benefit to be
considered a Parachute Payment.  In the
event that the receipt of any such right to exercise, vesting, payment, or
benefit under this Plan, in conjunction with all other rights, payments, or
benefits to or for the Grantee under any Other Agreement or any Benefit
Arrangement would cause the Grantee to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Grantee as described in clause (ii) of
the preceding sentence, then the Grantee shall have the right, in the Grantee’s
sole discretion, to designate those rights, payments, or benefits under this
Plan, any Other Agreements, and any Benefit Arrangements that should be reduced
or eliminated so as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment.


16.                               REQUIREMENTS
OF LAW


16.1.                     General.


The Company shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares would constitute a
violation by the Grantee, any other individual exercising an Option, or the
Company of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations.  If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any securities exchange or
under any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the issuance or purchase of shares hereunder, no
shares of Stock may be issued or sold to the Grantee or any other individual
exercising an Option pursuant to such Award unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company, and any delay caused thereby shall in no way
affect the date of termination of the Award. 
Without limiting the generality of the foregoing, in connection with the
Securities Act, upon the exercise of any Option or any SAR that may be settled
in shares of Stock or the delivery of any shares of Stock underlying an Award,
unless a registration statement under such Act is in effect with respect to the
shares of Stock covered by such Award, the Company shall not be required to
sell or issue such shares unless the Committee has received evidence
satisfactory to it that the Grantee or any other individual exercising an
Option may acquire such shares  pursuant
to an exemption from registration under the Securities Act.  Any determination in this connection by the
Committee shall be final, binding, and conclusive.  The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act.  The Company shall not be obligated
to take any affirmative action in order to cause the exercise of an Option or a
SAR or the issuance of shares of Stock pursuant to the Plan to comply with any
law or regulation of any 



 24
 









governmental
authority.  As to any jurisdiction that
expressly imposes the requirement that an Option (or SAR that may be settled in
shares of Stock) shall not be exercisable until the shares of Stock covered by
such Option (or SAR) are registered or are exempt from registration, the
exercise of such Option (or SAR) (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.


16.2.                     Rule 16b-3.


During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the
Company that Awards pursuant to the Plan and the exercise of Options and SARs
granted hereunder will qualify for the exemption provided by Rule 16b-3 under
the Exchange Act.  To the extent that any
provision of the Plan or action by the Committee does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Committee, and shall not affect
the validity of the Plan.  In the event
that Rule 16b-3 is revised or replaced, the Committee may exercise its
discretion to modify this Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the revised exemption
or its replacement.


17.                               EFFECT
OF CHANGES IN CAPITALIZATION


17.1.                     Changes in
Stock.


If the number of outstanding shares of Stock is increased or decreased
or the shares of Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Company on account of any
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of consideration by the Company occurring after the Effective Date, the
number and kinds of shares for which grants of Options and other Awards may be
made under the Plan shall be adjusted proportionately and accordingly by the
Company.  In addition, the number and
kind of shares for which Awards are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the
Grantee immediately following such event shall, to the extent practicable, be
the same as immediately before such event. 
Any such adjustment in outstanding Options or SARs shall not change the
aggregate Option Price or SAR Exercise Price payable with respect to shares
that are subject to the unexercised portion of an outstanding Option or SAR, as
applicable, but shall include a corresponding proportionate adjustment in the
Option Price or SAR Exercise Price per share. 
The conversion of any convertible securities of the Company shall not be
treated as an increase in shares effected without receipt of
consideration.   Notwithstanding the
foregoing, in the event of any distribution to the Company’s stockholders of
securities of any other entity or other assets (including an
extraordinary dividend but excluding a non-extraordinary dividend of the
Company) without receipt of
consideration by the Company, the Company shall, in such manner as the Company
deems appropriate, adjust (i) the number and kind of shares subject



 25
 









to
outstanding Awards and/or (ii) the exercise price of outstanding Options and
Stock Appreciation Rights to reflect such distribution.


17.2.                     Reorganization
in Which the Company Is the Surviving Entity Which does not Constitute a
Corporate Transaction.


Subject to Section 17.3
hereof, if the Company shall be the surviving entity in any reorganization,
merger, or consolidation of the Company with one or more other entities which
does not constitute a Corporate Transaction, any Option or SAR theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option or SAR would
have been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the Option
Price or SAR Exercise Price per share so that the aggregate Option Price or SAR
Exercise Price thereafter shall be the same as the aggregate Option Price or
SAR Exercise Price of the shares remaining subject to the Option or SAR
immediately prior to such reorganization, merger, or consolidation.  Subject to any contrary language in an Award
Agreement evidencing an Award, any restrictions applicable to such Award shall apply
as well to any replacement shares received by the Grantee as a result of the
reorganization, merger or consolidation. 
In the event of a transaction described in this Section 17.2,
Stock Units shall be adjusted so as to apply to the securities that a holder of
the number of shares of Stock subject to the Stock Units would have been
entitled to receive immediately following such transaction.


17.3.                     Corporate
Transaction.


Subject
to the exceptions set forth in the last sentence of this Section 17.3
and the last sentence of Section 17.4,
upon the occurrence of a Corporate Transaction:


(i)  all outstanding shares of Restricted Stock
shall be deemed to have vested, and all Stock Units shall be deemed to have
vested and the shares of Stock subject thereto shall be delivered, immediately
prior to the occurrence of such Corporate Transaction, and


(ii)
either of the following two actions shall be taken:


(A)
fifteen days prior to the scheduled consummation of a Corporate Transaction,
all Options and SARs outstanding hereunder shall become immediately exercisable
and shall remain exercisable for a period of fifteen days, or


(B)
the Committee may elect, in its sole discretion, to cancel any outstanding
Awards of Options, Restricted Stock, Stock Units and/or SARs and pay or
deliver, or cause to be paid or delivered, to the holder thereof an amount in
cash or securities having a value (as determined by the Committee acting in
good faith), in the case of Restricted Stock or Stock Units, equal to the
formula or fixed price per share paid to holders of shares of Stock and, in the
case of Options or SARs, equal to the product of the number of shares of Stock
subject to the Option or SAR (the “Award Shares”) multiplied by the amount, 



 26
 









if any, by which (I) the formula
or fixed price per share paid to holders of shares of Stock pursuant to such
transaction exceeds (II) the Option Price or SAR Exercise Price applicable to
such Award Shares.


With
respect to the Company’s establishment of an exercise window, (i) any exercise
of an Option or SAR during such fifteen-day period shall be conditioned upon
the consummation of the event and shall be effective only immediately before
the consummation of the event, and (ii) upon consummation of any Corporate
Transaction the Plan, and all outstanding but unexercised Options and SARs
shall terminate.  The Committee shall
send written notice of an event that will result in such a termination to all
individuals who hold Options and SARs not later than the time at which the
Company gives notice thereof to its stockholders.  This Section 17.3
shall not apply to any Corporate Transaction to the extent that provision is
made in writing in connection with such Corporate Transaction for the
assumption or continuation of the Options, SARs, Stock Units and Restricted
Stock theretofore granted, or for the substitution for such Options, SARs,
Stock Units and Restricted Stock for new common stock options and stock
appreciation rights and new common stock units and restricted stock relating to
the stock of a successor entity, or a parent or subsidiary thereof, with
appropriate adjustments as to the number of shares (disregarding any
consideration that is not common stock) and option and stock appreciation right
exercise prices (an “Equivalent Award”), in which event the Plan, Options,
SARs, Stock Units and Restricted Stock theretofore granted shall continue in
the manner and under the terms so provided. If the Grantee receives an
Equivalent Award in connection with a Corporate Transaction and his employment
is terminated by the Company without Cause or by the employee with Good Reason
within one year following the Corporate Transaction involuntarily, the
Equivalent Award may be exercised in full beginning on the date of such
termination and for such period as the Committee shall determine.


17.4.                     Adjustments.


Adjustments
under this Section 17 related to shares
of Stock or securities of the Company shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.  No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share. The Committee shall determine the effect of a
Corporate Transaction upon Awards other than Options, SARs, Stock Units and
Restricted Stock, and such effect shall be set forth in the appropriate Award
Agreement.  The Committee may provide in
the Award Agreements at the time of grant, or any time thereafter with the
consent of the Grantee, for different provisions to apply to an Award in place
of those described in Sections 17.1, 17.2
and 17.3.


17.5.                     No
Limitations on Company.


The
making of Awards pursuant to the Plan shall not affect or limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.



 27















18.                               GENERAL
PROVISIONS


18.1.                     Disclaimer of
Rights


No
provision in the Plan or in any Award or Award Agreement shall be construed to
confer upon any individual the right to remain in the employ or service of the
Company or any Affiliate, or to interfere in any way with any contractual or
other right or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment or other relationship between any individual and the Company.  In addition, notwithstanding anything
contained in the Plan to the contrary, unless otherwise stated in the
applicable Award Agreement, no Award granted under the Plan shall be affected
by any change of duties or position of the Grantee, so long as such Grantee
continues to be a director, officer, consultant or employee of the Company or
an Affiliate.  The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein.  The Plan shall in no way be interpreted to
require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.


18.2.                     Nonexclusivity
of the Plan


Neither
the adoption of the Plan nor the submission of the Plan to the stockholders of
the Company for approval shall be construed as creating any limitations upon
the right and authority of the Committee to adopt such other incentive
compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Committee in its discretion
determines desirable, including, without limitation, the granting of equity
awards otherwise than under the Plan.


18.3.                     Withholding
Taxes


The
Company or an Affiliate, as the case may be, shall have the right to deduct
from payments of any kind otherwise due to a Grantee any federal, state, or
local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to an Award or upon the
issuance of any shares of Stock upon the exercise of an Option or pursuant to
an Award.  At the time of such vesting,
lapse, or exercise, the Grantee shall pay to the Company or the Affiliate, as
the case may be, any amount that the Company or the Affiliate may reasonably
determine to be necessary to satisfy such withholding obligation.  Subject to the prior approval of the Company
or the Affiliate, which may be withheld by the Company or the Affiliate, as the
case may be, in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company or the
Affiliate to withhold shares of Stock otherwise issuable to the Grantee or
(ii) by delivering to the Company or the Affiliate shares of Stock already
owned by the Grantee.  The shares of
Stock so delivered or withheld shall have an aggregate Fair Market Value equal
to such withholding obligations.  The
Fair Market Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Company or the Affiliate as of 



 28
 









 


the date that the amount of tax
to be withheld is to be determined.  A
Grantee who has made an election pursuant to this Section 18.3
may satisfy his or her withholding obligation only with shares of Stock that
are not subject to any repurchase, forfeiture, unfulfilled vesting, or other
similar requirements.  The maximum number
of shares of Stock that may be withheld from any Award to satisfy any federal,
state or local tax withholding requirements upon the exercise, vesting, lapse
of restrictions applicable to such Award or payment of shares pursuant to such
Award, as applicable, cannot exceed such number of shares having a Fair Market
Value equal to the minimum statutory amount required by the Company to be
withheld and paid to any such federal, state or local taxing authority with
respect to such exercise, vesting, lapse of restrictions or payment of shares.


18.4.                     Captions


The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.


18.5.                     Other
Provisions


Each
Award granted under the Plan may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Committee, in its sole
discretion.


18.6.                     Number and
Gender


With
respect to words used in this Plan, the singular form shall include the plural
form, the masculine gender shall include the feminine gender, etc., as the
context requires.


18.7.                     Severability


If
any provision of the Plan or any Award Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.


18.8.                     Governing Law


The validity and
construction of this Plan and the instruments evidencing the Awards hereunder
shall be governed by the laws of the State of Delaware, other than any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other jurisdiction.


18.9.                     Section 409A
of the Code


The Committee
intends to comply with Section 409A of the Code (“Section 409A”), or an
exemption to Section 409A, with regard to Awards hereunder that constitute
nonqualified deferred compensation within the meaning of Section 409A.  To the extent that the Committee determines
that a Grantee would be subject to the additional 20% tax imposed on certain
nonqualified deferred compensation plans pursuant to Section 409A as 



 29
 









 


a result of any
provision of any Award granted under this Plan, such provision may be deemed
amended to the minimum extent necessary to avoid application of such additional
tax.  The nature of any such amendment
shall be determined by the Committee.


*    *    *


 



 30
 









 


To record adoption of the Plan by the Board as of
April 23, 2007, and approval of the Plan by the stockholders on May 22, 2007,
the Company has caused its authorized officer to execute the Plan.


 


	
  

  	
   

  	
  MORGANS HOTEL GROUP CO.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Richard Szymanski

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Richard Szymanski

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Chief Financial Officer

  



 



 31