Document:

Exhibit 10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of February 1, 2010 (the
“Effective Date”), by and between Fibrocell Science, Inc., a Delaware corporation (the “Company”)
having its principal place of business at 405 Eagleview Boulevard, Exton, PA 19341, and David
Pernock (“Executive”, and the Company and the Executive collectively referred to herein as the
“Parties”) having an address at 748 Canterbury Lane, Villanova, PA 19085.

W I T N E S S E T H:

WHEREAS, the Company desires to hire Executive and to employ him as the Chief Executive
Officer (“CEO”) commencing February 1, 2010, and the Parties desire to enter into this Agreement
embodying the terms of such employment;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises of the
Parties contained herein, the Parties, intending to be legally bound, hereby agree as follows:

1. Title and Job Duties.

(a) Subject to the terms and conditions set forth in this Agreement, the Company agrees to
employ Executive as CEO. Executive shall report directly to the Board of Directors of the Company
(the “Board”).

(b) Executive accepts such employment and agrees, during the term of his employment, to devote
his full business and professional time and energy to the Company, and agrees faithfully to perform
his duties and responsibilities in an efficient, trustworthy and business-like manner. Executive
also agrees that the Board shall determine from time to time such other duties as may be assigned
to him. Executive agrees to carry out and abide by such directions of the Board.

(c) Without limiting the generality of the foregoing, Executive shall not, without the written
approval of the Company, render services of a business or commercial nature on his own behalf or on
behalf of any other person, firm, or corporation, whether for compensation or otherwise, during his
employment hereunder.

2. Salary and Additional Compensation.

(a) Base Salary. The Company shall pay to Executive an annual base salary (“Base
Salary”) of $450,000, less applicable withholdings and deductions, in accordance with the Company’s
normal payroll procedures. Commencing on the execution of this Agreement, Executive shall no
longer be entitled to any cash payments for his services as Chairman of the Board.

 

 

 

(b) Bonus. Commencing with the year ended December 31, 2010, Executive is entitled to
receive an annual bonus (the “Annual Bonus”), payable each year subsequent to the issuance of final
audited financial statements, but in no case later than 120 days after the end of
the Company’s most recently completed fiscal year. The final determination on the amount of
the Annual Bonus will be made by the Board of Directors (or the Compensation Committee of the Board
of Directors, if such committee has been formed), based on criteria established by the Board of
Directors (or the Compensation Committee of the Board of Directors, if such committee has been
formed) within ninety (90) days of the beginning of such fiscal year. The Board of Directors (or
the Compensation Committee of the Board of Directors, if such committee has been formed) may also
consider other more subjective factors in making its determination. The targeted amount of the
Annual Bonus shall be 60% of the Executive’s Base Salary. The actual Annual Bonus for any given
period may be higher or lower than 60%. For any fiscal year in which Executive is employed for
less than the full year, Executive may receive a bonus which is prorated based on the number of
full months in the year which are worked.

(c) Payment for Prior Services. Executive will also receive a $100,000 payment for
payment of previously rendered services if and when the Company closes a financing in an amount of
greater than $3.0 million.

(d) Option Grant. Contemporaneous with the execution of this Agreement, Executive
will receive a grant (the “Stock Option Grant) of stock options (the “Stock Options”) to purchase
1,650,000 shares at an exercise price per share equal to the closing price of the Company’s common
stock on the date of execution of this Agreement. The Stock Options shall have a term of ten (10)
years and shall vest as follows:

(i) 250,000 shares upon execution of this Agreement;

(ii) 100,000 shares upon the closing of a strategic partnership or licensing deal with a major
partner that enables the Company to significantly improve and/or accelerate its capabilities in
such areas as research, production, marketing and/or sales and enable the Company to reach or
exceed its major business milestones within the Company’s strategic and operational plans, provided
Executive is the CEO on the closing date of such partnership or licensing deal. The determination
of whether any partnership or licensing deal meets the foregoing criteria will be made in good
faith by the Board upon the closing of such partnership or licensing deal; and

(iii) 1,300,000 shares in equal 1/36th installments (or 36,111 shares per
installment) monthly over a three-year period commencing March 1, 2010 (i.e. the first installment
shall vest on March 1, 2010), provided Executive is the CEO on each vesting date.

 

 

 

The vesting of all Stock Options set forth above shall accelerate upon a Change in Control,
provided Executive is employed by the Company within sixty (60) days prior to the date of such
Change in Control. Notwithstanding the foregoing, the Stock Options shall terminate one (1) year
following a termination of the Executive or upon the voluntary termination of service by the
Executive. For purposes of this Agreement, “Change In Control” means the occurrence of any of the
following events: (i) an acquisition (other than directly from the Company or its affiliates) of
any voting securities of the Company by any person or group of affiliated or related persons (as
such term is defined in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), immediately after which such person or group has beneficial
ownership (within the meaning of the Exchange Act) of more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding voting securities; provided that this
subsection shall not apply to an acquisition of voting securities by any employee benefit plan or
trust maintained by or for the benefit of the Company or its employees; (ii) a merger,
consolidation or reorganization involving the Company in which the holders of the Company’s voting
securities immediately prior to such event hold less than fifty percent (50%) of the voting
securities of the combined entity after such event; (iii) a complete liquidation or dissolution of
the Company; (iv) the sale or other disposition of all or substantially all of the Company’s assets
(it being understood that a sale of the Company’s Fibroblast technology will constitute a sale of
substantially all assets of the Company); or (v) any exclusive license covering at least the
territory of the United States to sell and manufacture the Company’s Fibroblast technology for all
current and future indications or applications.

3. Expenses. In accordance with Company policy, the Company shall reimburse Executive
for all reasonable business expenses properly and necessarily incurred and paid by Executive in the
performance of his duties under this Agreement upon his presentment of detailed receipts in the
form required by the Company’s policy.

4. Benefits.

(a) Vacation. Executive shall be entitled to four (4) weeks vacation per year, which
shall accrue at a rate of 1.67 days per month. Vacation must be taken in the year in which it
accrues.

(b) Health Insurance and Other Plans. Executive shall be eligible to participate in
the Company’s medical, dental and other employee benefit programs, if any, that are provided by the
Company for its employees at Executive’s level in accordance with the provisions of any such plans,
as the same may be in effect from time to time, provided that, should Executive elect to maintain
his GlaxoSmithKline benefits, the Company shall pay to Executive an amount equal to his portion of
the premium for such benefits.

5. Term. The term set forth in this Agreement will commence on the Effective Date
hereof and shall remain in effect for three (3) years and will automatically renew for subsequent
one (1) year periods (the “Term”) unless Executive or the Company is notified of non-renewal upon
no less than sixty (60) days’ written notice by the other Party.

6. Termination.

(a) Termination at the Company’s Election.

(i) For Cause. At the election of the Company, Executive’s employment may be
terminated for Cause (as defined below) upon written notice to Executive pursuant to Section 12 of
this Agreement. For purposes of this Agreement, “Cause” for termination shall mean that Executive:
(A) pleads “guilty” or “no contest” to or is convicted of an act which is defined as a felony under
federal or state law or the indictment of, or the bringing of formal charges against Executive on
charges involving criminal fraud or embezzlement; (B) in carrying out his duties, engages in
conduct that constitutes gross negligence or willful misconduct; (C) engages in any conduct that
may cause harm to the reputation of the Company; or (D) materially breaches any term of this
Agreement.

 

 

 

(ii) Upon Disability, Death or Without Cause. At the election of the Company,
Executive’s employment may be terminated without Cause: (A) should Executive become physically or
mentally unable to perform his duties for the Company hereunder and such incapacity has continued
for a total of ninety (90) consecutive days or any one hundred eighty (180) days in a period of
three hundred sixty-five (365) consecutive days (“Disability”); (B) upon Executive’s death; or (C)
upon ninety (90) days’ written notice for any other reason.

(b) Termination at Executive’s Election; Good Reason Termination. Notwithstanding
anything contained elsewhere in this Agreement to the contrary, Executive may terminate his
employment hereunder at any time and for any reason, upon ninety (90) days’ written notice pursuant
to Section 12 of this Agreement (“Voluntary Resignation”), provided that upon notice of
resignation, the Company may terminate Executive’s employment immediately and pay Executive ninety
(90) days’ pay in lieu of notice. Furthermore, the Executive may terminate this Agreement for
“Good Reason,” which shall be deemed to exist: (i) if the Company’s Board of Directors or that of
any successor entity of Company, fails to appoint or reappoint the Executive or removes the
Executive as the CEO of the Company; or (ii) if Executive is assigned any duties materially
inconsistent with the duties or responsibilities of the CEO of the Company as contemplated by this
Agreement or any other action by the Company that results in a material diminution in such
position, authority, duties, or responsibilities, excluding an isolated, insubstantial, and
inadvertent action not taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by Executive; provided that Executive shall act within 30 days of
any such diminution in the scope of his duties, responsibilities, authority or position.

7. Severance.

(a) If Executive’s employment is terminated, at the Company’s election at any time, for
reasons other than death, Disability, Cause or Voluntary Resignation, or by Executive for Good
Reason, Executive shall be entitled to receive severance payments equal to twelve (12) months of
Executive’s Base Salary and of the premiums associated with continuation of Executive’s benefits
pursuant to COBRA to the extent that he is eligible for them following the termination of his
employment; provided that if anytime within eighteen (18) months after a Change of Control either
(i) Executive is terminated, at the Company’s election at any time, for reasons other than death,
Disability, Cause or Voluntary Resignation, or (ii) Executive terminates this Agreement for “Good
Reason,” Executive shall be entitled to receive severance payments equal to: (i) two (2) years of
Executive’s Base Salary, (ii) Executive’s most recent Annual Bonus payment, and (iii) the premiums
associated with continuation of Executive’s benefits pursuant to COBRA to the extent that he is
eligible for them following the termination of his employment for a period of one (1) year after
termination. All severance payments shall be made in a lump sum within ten business days of
Executive’s execution and delivery of a general release of the Company, its parents, subsidiaries
and affiliates and each of its officers, directors, employees, agents, successors and assigns in a
form acceptable to the Company.

(b) Notwithstanding the foregoing, Executive agrees that in the event that all or a portion of
any payment described in Subparagraph (b) of this Section 7 constitutes nonqualified deferred
compensation within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and Executive is at such time a specified employee,
such payment or payments that constitute nonqualified deferred compensation within the meaning
of the Code shall not be made prior to the date which is six (6) months after the date Executive
separates from service (within the meaning of the Code).

 

 

 

8. Confidentiality Agreement.

(a) Executive understands that during the Term he may have access to unpublished and otherwise
confidential information both of a technical and non-technical nature, relating to the business of
the Company and any of its parents, subsidiaries, divisions, affiliates (collectively, “Affiliated
Entities”), or clients, including without limitation any of their actual or anticipated business,
research or development, any of their technology or the implementation or exploitation thereof,
including without limitation information Executive and others have collected, obtained or created,
information pertaining to clients, accounts, vendors, prices, costs, materials, processes, codes,
material results, technology, system designs, system specifications, materials of construction,
trade secrets and equipment designs, including information disclosed to the Company by others under
agreements to hold such information confidential (collectively, the “Confidential Information”).
Executive agrees to observe all Company policies and procedures concerning such Confidential
Information. Executive further agrees not to disclose or use, either during his employment or at
any time thereafter, any Confidential Information for any purpose, including without limitation any
competitive purpose, unless authorized to do so by the Company in writing, except that he may
disclose and use such information when necessary in the performance of his duties for the Company.
Executive’s obligations under this Agreement will continue with respect to Confidential
Information, whether or not his employment is terminated, until such information becomes generally
available from public sources through no fault of Executive. Notwithstanding the foregoing,
however, Executive shall be permitted to disclose Confidential Information as may be required by a
subpoena or other governmental order, provided that he first notifies the Company of such subpoena,
order or other requirement and allows the Company the opportunity to obtain a protective order or
other appropriate remedy.

(b) During Executive’s employment, upon the Company’s request, or upon the termination of his
employment for any reason, Executive will promptly deliver to the Company all documents, records,
files, notebooks, manuals, letters, notes, reports, customer and supplier lists, cost and profit
data, e-mail, apparatus, computers, blackberries or other PDAs, hardware, software, drawings,
blueprints, and any other material of the Company or any of its Affiliated Entities or clients,
including all materials pertaining to Confidential Information developed by Executive or others,
and all copies of such materials, whether of a technical, business or fiscal nature, whether on the
hard drive of a laptop or desktop computer, in hard copy, disk or any other format, which are in
his possession, custody or control.

(c) Executive will promptly disclose to the Company any idea, invention, discovery or
improvement, whether patentable or not (“Creations”), conceived or made by him alone or
with others at any time during his employment. Executive agrees that the Company owns any such
Creations, conceived or made by Executive alone or with others at any time during his employment,
and Executive hereby assigns and agrees to assign to the Company all rights he has or may acquire
therein and agrees to execute any and all applications, assignments and other instruments relating
thereto which the Company deems necessary or desirable. These
obligations shall continue beyond the termination of his employment with respect to Creations
and derivatives of such Creations conceived or made during his employment with the Company.
Executive understands that the obligation to assign Creations to the Company shall not apply to any
Creation which is developed entirely on his own time without using any of the Company’s equipment,
supplies, facilities, and/or Confidential Information unless such Creation (a) relates in any way
to the business or to the current or anticipated research or development of the Company or any of
its Affiliated Entities; or (b) results in any way from his work at the Company.

 

 

 

(d) Executive will not assert any rights to any invention, discovery, idea or improvement
relating to the business of the Company or any of its Affiliated Entities or to his duties
hereunder as having been made or acquired by Executive prior to his work for the Company, except
for the matters, if any, described in Appendix A to this Agreement.

(e) During the Term, if Executive incorporates into a product or process of the Company or any
of its Affiliated Entities anything listed or described in Appendix A, the Company is
hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, worldwide
license (with the right to grant and authorize sublicenses) to make, have made, modify, use, sell,
offer to sell, import, reproduce, distribute, publish, prepare derivative works of, display,
perform publicly and by means of digital audio transmission and otherwise exploit as part of or in
connection with any product, process or machine.

(f) Executive agrees to cooperate fully with the Company, both during and after his employment
with the Company, with respect to the procurement, maintenance and enforcement of copyrights,
patents, trademarks and other intellectual property rights (both in the United States and foreign
countries) relating to such Creations. Executive shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths, formal assignments,
assignments of priority rights and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Creations. Executive further agrees
that if the Company is unable, after reasonable effort, to secure Executive’s signature on any such
papers, any officer of the Company shall be entitled to execute such papers as his agent and
attorney-in-fact and Executive hereby irrevocably designates and appoints each officer of the
Company as his agent and attorney-in-fact to execute any such papers on his behalf and to take any
and all actions as the Company may deem necessary or desirable in order to protect its rights and
interests in any Creations, under the conditions described in this paragraph.

9. Non-solicitation; non-competition. (a) Executive agrees that, during the Term and,
if Executive is receiving severance payments pursuant to Section 7(a), until twelve (12) months
after the termination of his employment, Executive will not, directly or indirectly, including on
behalf of any person, firm or other entity, employ or solicit for employment any employee of the
Company or any of its Affiliated Entities, or anyone who was an employee of the Company or any of
its Affiliated Entities within the twelve (12) months prior to the termination of Executive’s
employment, or induce any such employee to terminate his or her employment with the Company or any
of its Affiliated Entities.

 

 

 

(b) Executive further agrees that, during the Term and, if Executive is receiving severance
payments pursuant to Section 7(a), until twelve (12) months after the termination of his
employment, Executive will not, directly or indirectly, including on behalf of any person, firm or
other entity, without the express written consent of an authorized representative of the Company,
(i) perform services within the Territory (as defined below) for any Competing Business (as defined
below), whether as an employee, consultant, agent, contractor or in any other capacity, (ii) hold
office as an officer or director or like position in any Competing Business, (iii) request any
present or future customers or suppliers of the Company or any of its Affiliated Entities to
curtail or cancel their business with the Company or any of its Affiliated Entities, and (iv)
accept business from such customers or suppliers of the Company or any of its Affiliated Entities.
These obligations will continue for the specified period regardless of whether the termination of
Executive’s employment was voluntary or involuntary or with or without Cause.

(c) “Competing Business” means any corporation, partnership or other entity or person (other
than the Company) which is engaged in the development, manufacture, marketing, distribution or sale
of, or research directed to the development, manufacture, marketing, distribution or sale of
cellular biologic products or any other business carried on or planned to be carried on by the
Company.

(d) “Territory” shall mean within any state or foreign jurisdiction in which the Company or
any subsidiary of the Company is then providing services or products or marketing its services or
products (or engaged in active discussions to provide such services).

(e) Executive agrees that in the event a court determines the length of time or the geographic
area or activities prohibited under this Section 9 are too restrictive to be enforceable, the court
may reduce the scope of the restriction to the extent necessary to make the restriction
enforceable. In furtherance and not in limitation of the foregoing, the Company and the Executive
each intend that the covenants contained in Section 9 shall be deemed to be a series of separate
covenants, one for each and every other state, territory or jurisdiction of the United States and
any foreign country set forth therein. If, in any judicial proceeding, a court shall refuse to
enforce any of such separate covenants, then such unenforceable covenants shall be deemed
eliminated from the provisions hereof for the purpose of such proceedings to the extent necessary
to permit the remaining separate covenants to be enforced in such proceedings.

10. Representation and Warranty. Executive represents and warrants to the Company
that he is not subject to any employment agreement, non-competition provision, confidentiality
agreement or any other agreement restricting his ability fully to act hereunder, and, that upon the
execution and delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of the Executive, enforceable in accordance with its terms. The Executive
hereby acknowledges and represents that he has consulted with legal counsel regarding his rights
and obligations under this Agreement and that he fully understands the terms and conditions
contained herein Executive hereby indemnifies and holds the Company harmless against any losses,
claims, expenses (including attorneys’ fees), damages or liabilities incurred by the Company as a
result of a breach of the foregoing representation and warranty. The Company hereby represents and
warrants to the Executive that upon the execution and delivery of this
Agreement by the Executive, this Agreement shall be the valid and binding obligation of the
Company, enforceable in accordance with its terms.

 

 

 

11. Injunctive Relief. Without limiting the remedies available to the Company,
Executive acknowledges that a breach of any of the covenants contained in Sections 8 and 9 above
may result in material irreparable injury to the Company for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Company shall be entitled, without the requirement to
post bond or other security, to obtain a temporary restraining order and/or injunction restraining
Executive from engaging in activities prohibited by this Agreement or such other relief as may be
required to specifically enforce any of the covenants in Sections 8 and 9 of this Agreement.

12. Notice. Any notice or other communication required or permitted to be given to
the Parties shall be deemed to have been given if personally delivered, if sent by nationally
recognized overnight courier or if mailed by certified or registered mail, return receipt
requested, first class postage prepaid, and addressed as follows:

	 	(a)	 	If to Executive, to:

David Pernock

748 Canterbury Lane

Villanova, PA 19085

	 	(b)	 	If to the Company, to:

Fibrocell Science, Inc.

405 Eagleview Boulevard

Exton, PA 19341

Attention: Declan Daly

with a copy to (which shall not constitute notice hereunder):

Cavas Pavri

Cozen O’Connor

1900 Market Street

Philadelphia, Pennsylvania 19103

13. Severability. If any provision of this Agreement is declared void or
unenforceable by a court of competent jurisdiction, all other provisions shall nonetheless remain
in full force and effect.

14. Indemnification. The Company will indemnify Executive and hold Executive harmless
to the fullest extent permitted by law with respect to Executive’s acts of service as an officer
and director of the Company. The Company further agrees that Executive will be covered by
“directors and officers” insurance policies with respect to Executive’s acts as an officer and
director.

 

 

 

15. Governing Law. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the Commonwealth of Pennsylvania, without regard to the conflict of
laws provisions thereof. This Agreement is intended to comply with the Internal Revenue Code, and
shall be construed in a manner consistent with that intent. Any action, suit or other legal
proceeding that is commenced to resolve any matter arising under or relating to any provision of
this Agreement shall be submitted to the exclusive jurisdiction of any state or federal court in
Chester County, Pennsylvania.

16. Waiver. The waiver by either Party of a breach of any provision of this Agreement
shall not be or be construed as a waiver of any subsequent breach. The failure of a Party to
insist upon strict adherence to any provision of this Agreement on one or more occasions shall not
be considered a waiver or deprive that Party of the right thereafter to insist upon strict
adherence to that provision or any other provision of this Agreement. Any waiver must be in
writing.

17. Assignment. This Agreement is a personal contract and Executive may not sell,
transfer, assign, pledge or hypothecate his rights, interests and obligations hereunder. Except as
otherwise herein expressly provided, this Agreement shall be binding upon and shall inure to the
benefit of Executive and his personal representatives and shall inure to the benefit of and be
binding upon the Company and its successors and assigns, including without limitation, any
corporation or other entity into which the Company is merged or which acquires all or substantially
all of the assets of the Company.

18. Entire Agreement. This Agreement (together with Appendix A hereto)
embodies all of the representations, warranties, and agreements between the Parties relating to
Executive’s employment with the Company. No other representations, warranties, covenants,
understandings, or agreements exist between the Parties relating to Executive’s employment. This
Agreement shall supersede all prior agreements, written or oral, relating to Executive’s
employment. This Agreement may not be amended or modified except by a writing signed by the
Parties.

[Signature page follows]

 

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered
on the date above.

	 	 	 	 	 
	 	FIBROCELL SCIENCE, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Declan Daly 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

Agreed to and Accepted:

	 	 	 
	 

David Pernock

	 	 

 

 

 

Appendix A

NONE.Exhibit 10.1

Exhibit 10.1

 

 

    MORGANS
    HOTEL GROUP CO.

 

    AMENDED
    AND RESTATED 2007 OMNIBUS INCENTIVE PLAN

 

 

 

    TABLE OF
    CONTENTS

 

	 	 	 	 	 
	
 
	
 
	
    Page
	
 

	 

	

    1. PURPOSE

	
 
	
 
	
    1
	
 

	

    2. DEFINITIONS

	
 
	
 
	
    1
	
 

	

    3. ADMINISTRATION OF THE PLAN

	
 
	
 
	
    4
	
 

	

    3.1. Board

	
 
	
 
	
    4
	
 

	

    3.2. Committee

	
 
	
 
	
    5
	
 

	

    3.3. Terms of Awards

	
 
	
 
	
    5
	
 

	

    3.4. Deferral Arrangement

	
 
	
 
	
    6
	
 

	

    3.5. No Liability

	
 
	
 
	
    6
	
 

	

    3.6. Share Issuance/Book-Entry

	
 
	
 
	
    6
	
 

	

    4. STOCK SUBJECT TO THE PLAN

	
 
	
 
	
    6
	
 

	

    5. EFFECTIVE DATE, DURATION AND AMENDMENTS

	
 
	
 
	
    7
	
 

	

    5.1. Effective Date

	
 
	
 
	
    7
	
 

	

    5.2. Term

	
 
	
 
	
    7
	
 

	

    5.3. Amendment and Termination of the Plan

	
 
	
 
	
    7
	
 

	

    6. AWARD ELIGIBILITY AND LIMITATIONS

	
 
	
 
	
    7
	
 

	

    6.1. Service Providers and Other Persons

	
 
	
 
	
    7
	
 

	

    6.2. Successive Awards and Substitute Awards

	
 
	
 
	
    7
	
 

	

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

	
 
	
 
	
    8
	
 

	

    7. AWARD AGREEMENT

	
 
	
 
	
    8
	
 

	

    8. TERMS AND CONDITIONS OF OPTIONS

	
 
	
 
	
    8
	
 

	

    8.1. Option Price

	
 
	
 
	
    8
	
 

	

    8.2. Vesting

	
 
	
 
	
    8
	
 

	

    8.3. Term

	
 
	
 
	
    8
	
 

	

    8.4. Termination of Service

	
 
	
 
	
    9
	
 

	

    8.5. Limitations on Exercise of Option

	
 
	
 
	
    9
	
 

	

    8.6. Method of Exercise

	
 
	
 
	
    9
	
 

	

    8.7. Rights of Holders of Options

	
 
	
 
	
    9
	
 

	

    8.8. Delivery of Stock Certificates

	
 
	
 
	
    9
	
 

	

    8.9. Transferability of Options

	
 
	
 
	
    9
	
 

	

    8.10. Family Transfers

	
 
	
 
	
    9
	
 

	

    8.11. Limitations on Incentive Stock Options

	
 
	
 
	
    10
	
 

	

    8.12. Notification of Disqualifying Disposition

	
 
	
 
	
    10
	
 

	

    9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

	
 
	
 
	
    10
	
 

	

    9.1. Right to Payment and Grant Price

	
 
	
 
	
    10
	
 

	

    9.2. Other Terms

	
 
	
 
	
    10
	
 

	

    9.3. Term

	
 
	
 
	
    10
	
 

	

    9.4. Transferability of SARS

	
 
	
 
	
    11
	
 

	

    9.5. Family Transfers

	
 
	
 
	
    11
	
 

	

    10. TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS

	
 
	
 
	
    11
	
 

	

    10.1. Grant of Restricted Stock

	
 
	
 
	
    11
	
 

	

    10.2. Restrictions

	
 
	
 
	
    11
	
 

	

    10.3. Restricted Stock Certificates

	
 
	
 
	
    11
	
 

	

    10.4. Rights of Holders of Restricted Stock

	
 
	
 
	
    12
	
 

	

    10.5. Rights of Holders of Stock Units

	
 
	
 
	
    12
	
 

	

    10.5.1. Voting and Dividend Rights

	
 
	
 
	
    12
	
 

	

    10.5.2. Creditor’s Rights

	
 
	
 
	
    12
	
 

	

    10.6. Termination of Service

	
 
	
 
	
    12
	
 

    

    i

 

	 	 	 	 	 
	
 
	
 
	
    Page
	
 

	 

	

    10.7. Purchase of Restricted Stock

	
 
	
 
	
    12
	
 

	

    10.8. Delivery of Stock

	
 
	
 
	
    12
	
 

	

    11. FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

	
 
	
 
	
    13
	
 

	

    11.1. General Rule

	
 
	
 
	
    13
	
 

	

    11.2. Surrender of Stock

	
 
	
 
	
    13
	
 

	

    11.3. Cashless Exercise

	
 
	
 
	
    13
	
 

	

    11.4. Other Forms of Payment

	
 
	
 
	
    13
	
 

	

    12. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

	
 
	
 
	
    13
	
 

	

    12.1. Dividend Equivalent Rights

	
 
	
 
	
    13
	
 

	

    12.2. Termination of Service

	
 
	
 
	
    13
	
 

	

    13. OTHER STOCK-BASED AWARDS AND LLC UNITS

	
 
	
 
	
    14
	
 

	

    14. TERMS AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE
    AWARDS

	
 
	
 
	
    14
	
 

	

    14.1. Performance Conditions

	
 
	
 
	
    14
	
 

	

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

	
 
	
 
	
    15
	
 

	

    14.2.1. Performance Goals Generally

	
 
	
 
	
    15
	
 

	

    14.2.2. Business Criteria

	
 
	
 
	
    15
	
 

	

    14.2.3. Timing For Establishing Performance Goals

	
 
	
 
	
    16
	
 

	

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

	
 
	
 
	
    16
	
 

	

    14.3. Written Determinations

	
 
	
 
	
    16
	
 

	

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

	
 
	
 
	
    16
	
 

	

    15. PARACHUTE LIMITATIONS

	
 
	
 
	
    16
	
 

	

    16. REQUIREMENTS OF LAW

	
 
	
 
	
    17
	
 

	

    16.1. General

	
 
	
 
	
    17
	
 

	

    16.2.
    Rule 16b-3

	
 
	
 
	
    17
	
 

	

    17. EFFECT OF CHANGES IN CAPITALIZATION

	
 
	
 
	
    18
	
 

	

    17.1. Changes in Stock

	
 
	
 
	
    18
	
 

	

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

	
 
	
 
	
    18
	
 

	

    17.3. Corporate Transaction

	
 
	
 
	
    18
	
 

	

    17.4. Adjustments

	
 
	
 
	
    19
	
 

	

    17.5. No Limitations on Company

	
 
	
 
	
    19
	
 

	

    18. GENERAL PROVISIONS

	
 
	
 
	
    19
	
 

	

    18.1. Disclaimer of Rights

	
 
	
 
	
    19
	
 

	

    18.2. Nonexclusivity of the Plan

	
 
	
 
	
    20
	
 

	

    18.3. Withholding Taxes

	
 
	
 
	
    20
	
 

	

    18.4. Captions

	
 
	
 
	
    20
	
 

	

    18.5. Other Provisions

	
 
	
 
	
    20
	
 

	

    18.6. Number and Gender

	
 
	
 
	
    20
	
 

	

    18.7. Severability

	
 
	
 
	
    21
	
 

	

    18.8. Governing Law

	
 
	
 
	
    21
	
 

	

    18.9. Code Section 409A

	
 
	
 
	
    21
	
 

   ii

 

    MORGANS
    HOTEL GROUP CO.

    

 

    AMENDED
    AND RESTATED 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 2007 Omnibus Incentive Plan in
    the form of this Amended and Restated 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 (including deferred 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, except that stock options granted to outside
    directors and any consultants or advisers providing services to
    the Company or an Affiliate shall in all cases be non-qualified
    stock options.

 

		
	
    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 unless the Company holds a “controlling
    interest” in such entity, where the term “controlling
    interest” has the same meaning as provided in Treasury
    Regulation 1.414(c)-2(b)(2)(i),
    provided that the language “at least 50 percent”
    is used instead of “at least 80 percent” and,
    provided further, that where granting of stock options or stock
    appreciation rights is based upon a legitimate business
    criteria, the language “at least 20 percent” is
    used instead of “at least 80 percent” each place
    it appears in Treasury
    Regulation 1.414(c)-2(b)(2)(i).

 

    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).

    

    1

 

    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 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 April 10,
    2008, the date this Amended and Restated 2007 Omnibus Incentive
    Plan was approved by the Board.

 

    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

    

   2

 

    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 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 by the reasonable valuation method, in a manner
    consistent with Internal Revenue Code Section 409A
    (“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.

 

    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.

    

 3

 

    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. Amended and Restated 2007 Omnibus Incentive Plan, an
    amendment and restatement of the Morgans Hotel group Co. 2007
    Omnibus 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 a 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 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 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.

    

4

 

    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,

 

    (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 Code 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.

    

5

 

    Furthermore, if the Company is required to prepare an accounting
    restatement due to the material noncompliance of the Company, as
    a result of misconduct, with any financial reporting requirement
    under the securities laws, the individuals subject to automatic
    forfeiture under Section 304 of the Sarbanes-Oxley Act of
    2002 and any Grantee who knowingly engaged in the misconduct,
    was grossly negligent in engaging in the misconduct, knowingly
    failed to prevent the misconduct or was grossly negligent in
    failing to prevent the misconduct, shall reimburse the Company
    the amount of any payment in settlement of an Award earned or
    accrued during the twelve-(12) month period following the first
    public issuance or filing with the United State Securities and
    Exchange Commission (whichever first occurred) of the financial
    document that contained such material noncompliance.

 

    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 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 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 eleven million six hundred ten thousand
11,610,000 all of which may be granted as Incentive Stock
    Options. 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
    and any shares underlying Options or SARs not purchased or
    forfeited shall be added back to the limit set forth above by
    1.7 times the number of shares of Stock subject to such Awards.
    The number of shares of Stock available for issuance under the
    Plan shall not be increased by (i) any shares of Stock
    tendered or withheld or Award surrendered in connection with the
    purchase of shares of Stock upon exercise of an Option, or
    (ii) any shares of Stock deducted or delivered from an
    Award payment in connection with the Company’s tax
    withholding obligations.

    

   6

 

    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).

 

		
	
    5.  
	
    EFFECTIVE
    DATE, DURATION AND AMENDMENTS

 

    5.1.  Effective
    Date.

 

    The amendment and restatement of the 2007 Omnibus 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. 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
    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 a 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; as modified by Code Section 409A and the
    regulations thereunder as Options that are non-qualified stock
    options and SARs.

    

7

 

    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.

 

		
	
    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. Except
    in the case of Substitute Awards, 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. If on the day preceding the date on which a
    Grantee’s Options would otherwise terminate, the Fair
    Market Value of shares of Stock underlying a Grantee’s
    Options is greater than the Option Price of such Options, the
    Company shall, prior to the termination of such Options and
    without any action being taken on the part of the Grantee,
    consider such Options to have been exercised by the Grantee. The

    

8

 

    Company shall deduct from the shares of Stock deliverable to the
    Grantee upon such exercise the number of shares of Stock
    necessary to satisfy payment of the Option Price and all
    withholding obligations.

 

    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.

 

    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

    

9

 

    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 a SAR that is
    granted subsequent to the Grant Date of a related Option must
    have a SAR Exercise Price that is no less than the Fair Market
    Value of one share of Stock on the SAR Grant Date.

 

    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 a 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 a 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. If on the
    day preceding the date on which a Grantee’s SAR would
    otherwise terminate, the Fair Market Value of shares of Stock
    underlying a Grantee’s SAR is greater than the SAR Exercise
    Price of such SAR, the Company shall, prior to the termination
    of such SAR and without any action being taken on the part of
    the

    

10

 

    Grantee, consider such SAR to have been exercised by the
    Grantee. The Company shall deduct from the shares of Stock
    deliverable to the Grantee upon such exercise the number of
    shares of Stock necessary to satisfy payment of the SAR Exercise
    Price and all withholding obligations

 

    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.

 

		
	
    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,

    

11

 

    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.

 

    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.

 

    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

    

12

 

    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 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

 

		
	
    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 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.

 

		
	
    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). The Committee also has the authority to
    provide for accelerated vesting of any Award based on the
    achievement of performance goals pursuant to the performance
    conditions set forth in this Section 14. 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

 

    In the event that applicable tax
    and/or
    securities laws change to permit Board discretion to alter the
    governing performance measures without obtaining shareholder
    approval of such changes, the Board shall have sole discretion
    to make such changes without obtaining shareholder approval
    provided the exercise of such discretion does not violate Code
    Section 409A. In addition, in the event that the Committee
    determines that it is advisable to grant Awards that shall not
    qualify as performance-based compensation, the Committee may
    make such grants without satisfying the requirements of Code
    Section 162(m) and base vesting on performance measures
    other than those set forth in this Section 14.

 

    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.

 

    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 as described
    in Accounting Principles Board Opinion No. 30
    and/or in
    management’s discussing and analysis of financial condition
    and results of operations appearing in the Company’s annual
    report to shareholders for the applicable year;
    (f) acquisitions or divestitures; and (g) foreign
    exchange gains and losses. To the extent such inclusions or
    exclusions affect Awards to Covered Employees, they shall be
    prescribed in a form that meets the requirements of Code
    Section 162(m) for deductibility.

    

  15

 

    14.2.3.  Timing
    For Establishing Performance Goals.

 

    Performance goals shall be established not later than the
    earlier of (i) 90 days after the beginning of any
    performance period applicable to such Performance or Annual
    Incentive Awards and (ii) the day on which 25% of any
    performance period applicable to such Awards has expired, 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.

 

    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 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

    

16

 

    (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; provided,
    however, that in order to comply with Code Section 409A,
    the reduction or elimination will be performed in the order in
    which each dollar of value subject to an Award reduces the
    Parachute Payment to the greatest extent.

 

		
	
    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 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

 

		
	
    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 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

    

18

 

    (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, 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. This
    Section 17 does not limit the Company’s ability
    to provide for alternative treatment of Awards outstanding under
    the Plan in the event of change of control events that are not
    Corporate Transactions.

 

    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.

 

		
	
    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

    

19

 

    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 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.

    

20

 

    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.  Code
    Section 409A

 

    The Committee intends to comply with Code Section 409A, or
    an exemption to Code Section 409A, with regard to Awards
    hereunder that constitute nonqualified deferred compensation
    within the meaning of Code 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 Code Section 409A as 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.

 

    * * *

 

    To record adoption of the Plan by the Board as of November 30,
2009, and approval of the Plan by the stockholders on January 28, 2010, the Company has caused its authorized officer
    to execute the Plan.

 

    MORGANS HOTEL GROUP CO.

 

    By: /s/ Richard Szymanski

    Title: Chief Financial Officer

 

 

 

 

 

    

21

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