Document:

QEPR-2014 6.30.14 EX10.1

Exhibit 10.1

QEP RESOURCES, INC.

DEFERRED COMPENSATION PLAN FOR DIRECTORS

QEP RESOURCES, INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
    

ARTICLE 1
INTRODUCTION

1.1    Purpose.  QEP Resources, Inc., a Delaware corporation (the “Company”), hereby establishes this QEP Resources, Inc. Deferred Compensation Plan for Directors (the “Plan”) to provide Directors (as defined below) of the Company and its participating Affiliates (as defined below) with an opportunity to defer compensation paid to them for their services as Directors and to maintain a deferred compensation account until they cease to serve as Directors of the Company and its Affiliates.  
1.2    Status of Plan.  This Plan is intended to be an unfunded, nonqualified deferred compensation arrangement designed to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.  Notwithstanding any other provision herein, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

ARTICLE 2
DEFINITIONS

For purposes of the Plan, the following terms or phrases shall have the following indicated meanings, unless the context clearly requires otherwise:

2.1    “Account” or “Account Balance” means, for each Participant, the account established for his or her benefit under the Plan, which records the credit on the records of the Company and its Affiliates equal to the amounts set aside under the Plan and the actual or deemed earnings, if any, credited to such account. The Account Balance, and each other specified account or sub-account, shall be a bookkeeping entry only and shall be used solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.

2.2    “Affiliate” means any entity that is treated as the same employer as the Company under Sections 414(b), (c), (m), or (o) of the Code (defined below), any entity required to be aggregated with the Company pursuant to regulations adopted under Code Section 409A, or any entity otherwise designated as an Affiliate by the Company.

2.3    

2.4    “Beneficiary” means that person or persons who become entitled to receive a distribution of benefits under the Plan in the event of the death of a Participant prior to the distribution of all benefits to which he or she is entitled.

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

2.6    “Cash Compensation” means compensation payable to a Director in cash for serving as a Director, including attending Board and committee meetings as a Director, during a Plan Year, but excluding any expense reimbursements.

    
2.7    “Change in Control” shall be deemed to have occurred if:  (i) any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, is or becomes the beneficial owner (as such term is used in Rule 13d-3 under the Exchange Act) of securities of the Company representing 30 percent or more of the combined voting power of the Company; or (ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving:  individuals who, as of the Effective Date, constitute the Company’s Board of Directors and any new director (other than 

a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date, or whose appointment, election or nomination for election was previously so approved or recommended; or (iii) the consummation of a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60 percent of the combined voting power of the securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation, or a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 30 percent or more of the combined voting power of the Company’s then outstanding securities; or (iv) the Company’s stockholders approve a plan of complete liquidation or dissolution of the Company or there is consummated for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60 percent of the combined voting power of the voting securities of which are owned by the stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.  In addition, if a Change in Control constitutes a payment event with respect to any payment under the Plan which provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described in clauses (i), (ii), (iii) and (iv) with respect to such payment must also constitute a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A of the Code.
2.8    “Code” means the Internal Revenue Code of 1986, as amended.

2.9    “Common Stock” means the no par value common stock of the Company.

2.10    “Common Stock Option” means the investment option available under Section 5.3(b)(i) with respect to a Participant’s election to defer cash compensation that is deemed to invest in Common Stock as set forth therein.

2.11    “Company” means QEP Resources, Inc., a corporation organized and existing under the laws of the State of Delaware, or its successor or successors.

2.12    “Disability” means a condition that renders a Participant unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as described in Treas. Reg. Section 1.409A-3(i)(4)(i)(A).  A Participant shall not be considered to be disabled unless the Participant furnishes proof of the existence of such disability in such form and manner as may be required by regulations promulgated under, or applicable to, Code Section 409A.

2.13    “Director” means a member of the Board or the Board of Directors of any participating Affiliate who is not an employee (as defined in accordance with Section 3401(c) of the Code and the regulations and revenue rulings thereunder) of the Company or any of its Affiliates.

2.14    “Effective Date” shall have the meaning set forth in Section 1.3 hereof.

2.15    “Fair Market Value” means the closing benchmark price of the Company’s Common Stock as reported on the composite tape of the New York Stock Exchange for any given valuation date, or if the Common Stock shall not have been traded on such date, the closing price on the next preceding day on which a sale occurred.

2.16    “Participant” means any Director who has commenced participation in the Plan in accordance with Article 3.

2.17    “Phantom Stock” means an economic unit equal in value to one share of Common Stock, which is issued to a Director as compensation for services performed as a Director pursuant to this Plan and the QEP Resources, Inc. 2010 Long-Term Stock Incentive Plan, as amended or restated from time to time, based upon his or her election to receive such Phantom Stock in lieu of Restricted Stock pursuant to this Plan.

2.18    “Phantom Stock Agreement” means an agreement entered into between the Company and a Director evidencing the grant of shares of Phantom Stock to the Director.

2.19    “Plan” means this QEP Resources, Inc. Deferred Compensation Plan for Directors, as amended or restated from time to time.

2.20    “Plan Year” means the calendar year.

    

2.21    “Restricted Stock” means the restricted shares of Common Stock of the Company issued to a Director as compensation for services performed as a Director.

    

2.22    “Separation from Service” means a “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code and Treasury Regulation Section 1.409A-1(h).

2.23    “Unforeseeable Emergency” shall mean a severe financial hardship of the Participant resulting from: (i) an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B)); (ii) a loss of the Participant’s property due to casualty; or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, as described in Treas. Reg. Section 1.409A-3(i)(3)(i), in each case as determined in the sole discretion of the Board.

ARTICLE 3
ELIGIBILITY; PARTICIPATION

3.1    Eligibility.  Any Director who is entitled to receive compensation for service as a Director shall be eligible to participate in the Plan as of the first date the individual becomes a Director.  .

3.2    Enrollment and Commencement of Deferrals.  Each eligible Director who wishes to participate in the Plan for a Plan Year must make an irrevocable election as to the deferral of Cash Compensation and/or the receipt of Phantom Stock in lieu of Restricted Stock for the Plan Year by timely completing, executing and returning to the Company’s Human Resources department such election forms or other enrollment materials as the Board requires as follows:

(a) in the case of a Director who first becomes eligible to participate in the Plan as of the first day of a Plan Year, on or prior to December 31st of the prior Plan Year; and

(b) in the case of a Director who first becomes eligible to participate in the Plan after the first day of a Plan Year, within thirty (30) days after the date the Director first becomes eligible to participate.

If a Director fails to timely complete such election forms or other enrollment materials, the Director shall not participate in the Plan until the first day of the first Plan Year beginning after the date on which the Director timely completes, executes and returns such election forms or other enrollment materials to the Company’s Corporate Secretary.

3.3    Failure of Eligibility.  If the Board determines, in its sole and absolute discretion, that any Participant no longer meets the eligibility criteria of the Plan, the Participant shall cease to be an active Participant in the Plan and future contributions to the Plan made by or on behalf of the Participant shall cease as of the date of such determination by the Board.  The Board’s determination hereunder shall be final and binding on all persons. 

ARTICLE 4
ELECTIONS; AMOUNTS; MODIFICATIONS

4.1    First Year of Plan Participation.  In connection with a Participant’s enrollment in the Plan pursuant to Section 3.2, the Participant shall make an irrevocable election for the Plan Year in which the Participant commences participation (i) to defer (or not to defer) all, but not less than all, of his or her Cash Compensation, and/or (ii) to receive (or not to receive) Phantom Stock in lieu of the grant of Restricted Stock that the Participant would otherwise have received during such Plan Year.  The Participant’s initial deferral election under this Section 4.1 shall apply solely to compensation to be paid with respect to services performed on or after the date of the Participant’s enrollment in the Plan, and shall continue to apply for all succeeding Plan Years unless and until revoked or modified pursuant to Section 4.2, below.  If the Participant fails to timely complete, execute and return such election forms or other enrollment materials as required by the Board in accordance with Section 3.2, then the Participant shall not be permitted to make to defer any Cash Compensation or receive any Phantom Stock under the Plan for such Plan Year.

In connection with a Participant’s enrollment in the Plan pursuant to Section 3.2, the Participant shall also make an irrevocable election for the Plan Year as to the form of distribution (from the options available under Section 6.1 (b) below) of any deferrals (in the form of Cash Compensation and/or Phantom Stock) credited to his or her Account for such Plan Year (including earnings thereon).  If the Participant fails to make such election, or if such election does not meet the requirements of Code Section 409A and related Treasury guidance or regulations, the Participant shall be deemed to have elected to receive a lump sum distribution.  The Participant’s election (or deemed election) shall continue to apply for succeeding Plan Years unless and until the election is modified pursuant to Section 4.2, below.  Any such modification shall apply prospectively only and shall not apply to deferrals (in the form of Cash Compensation and/or Phantom Stock) previously credited under the Plan (or any earnings thereon).

    

4.2    Subsequent Plan Years.  For each succeeding Plan Year, the Participant may, prior to December 31st of the immediately preceding Plan Year (or such earlier deadline as is established by the Board in its sole discretion):
(i)    make an irrevocable election to modify or revoke the Participant’s existing election to (i) defer (or not to defer) all, but not less than all, of his or her Cash Compensation for succeeding Plan Years, and/or (ii) receive (or not to receive) Phantom Stock in lieu of the grant of Restricted Stock that the Participant would otherwise be entitled to receive for succeeding Plan Years.  Any such new election shall remain in effect for all succeeding Plan Years unless and until timely revoked or modified by the Participant in accordance with this Section.  Any such modification shall apply prospectively only and shall not apply to Cash Compensation previously credited under the Plan (or any earnings thereon) or Phantom Stock previously received in lieu of Restricted Stock.
(ii)    make an irrevocable election to modify his or her existing election as to the form of distribution of any deferrals (in the form of Cash Compensation and/or Phantom Stock) credited to his or her Account for succeeding Plan Years (including earnings thereon).  Such election shall be made in accordance with Section 6.1 (b) below, and shall remain in effect for all succeeding Plan Years unless and until timely modified by the Participant in accordance with this Section.  Any such modification shall apply prospectively only and shall not apply to Cash Compensation previously credited under the Plan (or any earnings thereon) or Phantom Stock previously received in lieu of Restricted Stock.
 

ARTICLE 5
ACCOUNTS; DEEMED INVESTMENTS

5.1    Accounts.  The Company shall establish an Account for each Participant with at least two sub-accounts - an Equity Compensation Sub-Account and a Cash Compensation Sub-Account - along with such additional sub-accounts as it deems necessary or desirable for the proper administration of the Plan.  The Equity Compensation Sub-Account shall reflect the value of Phantom Stock issued to the Participant in lieu of Restricted Stock for each Plan Year, together with any adjustments for income, gain or loss and any payments from such sub-account as provided herein.  Phantom Stock shall be credited to the Participant’s Equity Compensation Sub-Account and relevant sub-accounts (if any) as of the effective date set forth in the Participant’s Phantom Stock Agreement. The Cash Compensation Sub-Account shall reflect all deferrals of Cash Compensation made by the Participant for each Plan Year, together with any adjustments for income, gain or loss and any payments from such sub-account as provided herein.  Cash Compensation deferred by a Participant under this Plan shall be credited to the Participant’s Cash Compensation Account and relevant sub-accounts (if any) as soon as administratively practicable after the amounts would have otherwise been paid to the Participant.  

5.2    Status of Accounts.  Accounts and sub-accounts established hereunder shall be  record-keeping devices utilized for the sole purpose of determining benefits payable under this Plan, and will not constitute a separate fund of assets but shall continue for all purposes to be part of the general, unrestricted assets of the Company and its Affiliates, subject to the claims of their general creditors.

5.3    Deemed Investment of Amounts Deferred.  

(a)    Equity Compensation Sub-Account.  The Participant’s Equity Compensation Sub-Account shall hold shares of the Participant’s Phantom Stock and shall be credited with earnings and dividends as set forth in the Phantom Stock Agreement(s) between the Company and the Participant.  In the event the Participant forfeits shares of Phantom Stock in accordance with the terms of a Phantom Stock Agreement, the Participant’s Equity Compensation Sub-Account shall be debited for the number of shares of Phantom Stock forfeited along with any earnings and dividends related to such shares. 

(b)    Cash Compensation Sub-Account. In connection with a Participant’s election to defer compensation for a Plan Year pursuant to Article 4, a Participant may elect to have earnings, gains, or losses with respect to deferrals into his or her Cash Compensation Sub-Account for such Plan Year calculated based on either the Common Stock Option or the  Investment Option. The Participant’s actual or deemed investment election shall continue in effect for future Plan Years unless and until modified by the Participant.  Any such modification (i) shall apply prospectively only to amounts deferred in future Plan Years, and (ii) shall be made at the same time as modifications to deferral elections are made under Section 4.2 above.

(i)    Common Stock Option.  Any portion of the Cash Compensation Sub-Account deemed invested under this option (the “Common Stock Option”) shall be accounted for as if invested in shares of Common Stock purchased at Fair Market Value on the date on which a deferral of Cash Compensation is credited to the Participant’s Account.  All shares of Common Stock deemed held in the Participant’s Cash Compensation Sub-Account shall be credited on a quarterly basis with an amount equal to the dividends that would have become payable during the deferral period if actual purchases of Common Stock had been made, with such dividends accounted for as if invested in Common Stock as of the payable date for such dividends. Any credited shares treated as if they were purchased with dividends shall be deemed to have been purchased at Fair Market Value on the dividend payment date.  

                      (ii) Investment Option.  Any portion of the Cash Compensation Sub-Account deemed invested under this option (the “Investment Option”) shall be deemed invested in one or more of the investment options made available from time to time for Participants under the Plan. Each such deemed investment shall be credited or debited with earnings or losses as if the amount invested had been invested in the applicable investment fund made available by the Board.

  

ARTICLE 6
DISTRIBUTIONS

6.1    Permissible Times and Forms of Payments.  Subject to Article 7, below, A Participant may elect to receive his or her Account pursuant to an election form filed in accordance with Article 4 at the following times and in the following forms:
(a)    Time of Distribution.  A Participant may elect to receive a distribution as of the date of, or at a designated anniversary date following, the first to occur of the Participant’s Separation from Service or Disability or at a designated time or times specified by the Participant in his or her election forms, which shall not be earlier than 24 months from the date of deferral of the amount to be distributed. 

(b)    Form of Distribution.  A Participant may elect to receive a distribution of his or her Account in any of the following forms:

		
	(i)
	a single lump sum; 

		
	(ii)
	up to ten (10) annual installments; or

(iii)    in the case of an in-service distribution a single lump sum of the entire Account Balance made in one or more Plan Years, as designated by the Participant. 
 
(c)    Subsequent Deferrals. Notwithstanding an actual or deemed election as to the timing of the distribution of a Participant’s Account, at such times and in such manner as the Board may determine, a Participant may make an irrevocable election to delay the payment, or the commencement of payment, of his or her Account, but only if such election (i) is made not less than 12 months before the date the payment or commencement of installment payments is scheduled to be paid or to begin; (ii) shall not take effect until at least 12 months after the date the election is made; and (iii) relating to a payment not being made on account of death, Disability or an Unforeseeable Emergency, delays the payment or commencement of payments for a period of at least five years from the date the payment or series of payments was scheduled to be paid or begin.

6.2    Change in Control.  Notwithstanding any election made by the Participant, in the event of a Change in Control, all amounts then credited to the Participant’s Account shall be distributed to the Participant in a single lump sum within 60 days following the Change in Control.

6.3    Calculation of Distributions.

(a)    Lump Sum.  All lump sum distributions shall be based on the value of the Participant’s Account (or the portion thereof to be paid in a lump sum) as of the closest administratively feasible valuation date preceding the date distribution is made, in accordance with rules established by the Board.  

(b)    Installment Distributions.  Under an installment payout, the amount to be distributed in each installment payment shall be determined by dividing the value of the Participant’s Accounts being paid in installments as of the closest administratively feasible valuation date preceding the date of each distribution by the number of installment payments remaining to be made, in accordance with rules established by the Board.  In the event of the death of the Participant prior to the full payment of his Accounts being paid in installments, payments will continue to be made to his Beneficiary in the same manner as would have been payable to the Participant.

6.4    Method of Payment.  All payments under the Plan shall be made in cash.  

ARTICLE 7
WITHDRAWALS FOR UNFORESEEABLE EMERGENCIES

7.1    Petition.  If the Participant experiences an Unforeseeable Emergency, the Participant may petition the Board in writing to receive a partial or full payout from the Plan, subject to the provisions set forth below.  A Participant’s written petition for such a payment shall describe the circumstances which the Participant believes justify the payment and an estimate of the amount necessary to eliminate the Unforeseeable Emergency.

7.2    Amount of Withdrawal; Necessity. The payout, if any, from the Plan shall not exceed the lesser of:  (i) the Participant’s vested Account Balance, calculated as of the close of business on or around the date on which the amount becomes payable, as determined by the Board in its sole discretion; or (ii) the amount necessary to satisfy the Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local income taxes or penalties reasonably anticipated as a result of the distribution.  Notwithstanding the foregoing, a Participant may not receive a payout from the Plan to the extent that the Unforeseeable Emergency is or may be relieved (a) through reimbursement or compensation by insurance or otherwise, (b) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (c) by cessation of deferrals under this Plan.  

7.3    Payment; Cessation of Deferrals.  If the Board, in its sole discretion, approves a Participant’s petition for payout from the Plan, the Participant shall receive a payout in the form of a lump sum from the Plan within sixty (60) days of the date of such approval, and the Participant’s deferrals of Cash Compensation then in effect under the Plan shall be terminated as of the date of such approval.

7.4    409A.  Any payment as a result of an Unforeseeable Emergency shall be made in accordance with Code Section 409A(a)(2)(A)(vi) and the regulations thereunder.

ARTICLE 8
ACCOUNT STATEMENTS

Within 60 days after the end of the calendar year, a statement will be sent to each Participant listing the balance in his or her Account as of the last day of the Plan Year.

ARTICLE 9
ADMINISTRATION

The Board shall administer the Plan and shall have full authority to make such rules and regulations deemed necessary or desirable to administer the Plan and to interpret its provisions.  However, no member of the Board shall vote or act on any matter relating solely to himself or herself.  
9.1    Board to Administer and Interpret Plan.  The Board or its designee shall administer the Plan and shall have all discretion and power necessary for that purpose.  The Board shall have the discretion, authority, and power to (i) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and (ii) decide or resolve any and all questions that may arise in connection with this Plan, including interpretations of the Plan and determinations of eligibility to participate and to receive distributions under the Plan.  Any individual serving on the Board, or anyone delegated responsibilities by the Board, shall not vote or act on any matter relating solely to himself.  When making a determination or calculation, the Board 

shall be entitled to rely on information supplied by a Participant, Beneficiary, or the Employer, as the case may be.  The Board shall maintain all records of the Plan.
9.2    Agents.  In the administration of this Plan, the Board may, from time to time, employ agents (including officers and other employees of the Company) and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to the Company.
9.3    Binding Effect of Decisions.  The decision or action of the Board with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
9.4    Indemnity of Board.  The Company shall indemnify and hold harmless the members of the Board and any employee to whom duties of the Board may be delegated against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Board, any of its members, or any such employee.
9.5    Agent for Legal Process.  The Board shall be agent of the Plan for service of all legal process.

ARTICLE 10
AMENDMENT AND TERMINATION

The Plan may be amended, modified or terminated by the Board.  No amendment, modification, or termination shall adversely affect a Participant’s rights with respect to amounts vested in his or her Account.

ARTICLE 11
MISCELLANEOUS

11.1    Election Forms.  All elections shall be made on forms prepared by the Corporate Secretary and must be dated, signed, and filed with the Company’s Human Resources department in order to be valid.

11.2    Source of Payments.  The Company and each participating Affiliate will pay all benefits for its Directors arising under this Plan, and all costs, charges and expenses relating to such benefits, out of its general assets.  The right of a Participant to receive any unpaid portion of his or her Account shall be an unsecured claim against the general assets of the Company and its Affiliates and will be subordinated to the general obligations of the Company and its Affiliates.

11.3    No Assignment or Alienation.

(a)    General.  Except as provided in subsection (b) below, the benefits provided for in this Plan shall not be anticipated, assigned (either at law or in equity), alienated, or be subject to attachment, garnishment, levy, execution or other legal or equitable process.  Any attempt by any Participant or any Beneficiary to anticipate, assign or alienate any portion of the benefits provided for in this Plan shall be null and void.

(b)    Exception: DRO.  The restrictions of subsection (a) shall not apply to a distribution to an “alternate payee” (as defined in Code Section 414(p)) pursuant to a “domestic relations order” (“DRO”) within the meaning of Code Section 414(p)(1)(B).  The Board shall have the discretion, power, and authority to determine whether an order is a DRO.  Upon a determination that an order is a DRO, the Board shall cause the Company or the relevant Affiliate to make a distribution to the alternate payee or payees named in the DRO, as directed by the DRO.

11.4    Beneficiaries.  A Participant shall have the right, in accordance with forms and procedures established by the Board, to designate one or more Beneficiaries to receive some or all amounts payable under the Plan after the Participant’s death.  In the absence of an effective Beneficiary designation, all payments shall be made to the personal representative of the Participant’s estate.

11.5    No Creation of Rights.  Nothing in this Plan shall confer upon any Participant the right to continue as a Director.  The right of a Participant to receive a cash distribution shall be an unsecured claim against the general assets of the Company.  Nothing contained in this Plan or its component Programs nor any action taken hereunder shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Company and the Participants, Beneficiaries, or any other persons.  All 

Accounts under the Plan and its component Programs shall be maintained for bookkeeping purposes only and shall not represent a claim against specific assets of any Company.

11.6    Payments to Incompetents.  If the Board determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of his or her property, the Board may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person.  The Board may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit.  Any such payment shall be a payment for the account of the Participant and the Participant’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.

11.7    Court Order.  The Board is authorized to make any payments directed by court order in any action in which the Plan or the Board has been named as a party.  

11.8    Code Section 409A Savings Clause.  The payments and benefits provided under the Plan are intended to be compliant with the requirements of Section 409A of the Code.  Notwithstanding any provision of this Plan to the contrary, including, without limitation, Article 10 hereof, in the event that the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A of the Code, the Company shall have the right adopt such amendments to this Plan or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes thereunder; provided, however, that this Section 11.8 does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify any Participant for any failure to do so.

11.9    Attorney Fees; Interest.  The Company and its Affiliates agrees to pay as incurred, to the full extent permitted by law, and in accordance with Code Section 409A, all legal fees and expenses which a Participant may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Participant, or others following a Change in Control regarding the validity or enforceability of, or liability under, any provision of this Plan or any guarantee of performance thereof (including as a result of any contest by the Participant about the amount of any payment pursuant to this Plan), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.  The foregoing right to legal fees and expenses shall not apply to any contest brought by a Participant (or other party seeking payment under the Plan) that is found by a court of competent jurisdiction to be frivolous or vexatious.  To the extent that any payments or reimbursements provided to the Participant under this Section are deemed to constitute compensation to the Participant, such amounts shall be paid or reimbursed reasonably promptly, but not later than December 31 of the year following the year in which the expense was incurred.  The amount of any payments or expense reimbursements that constitute compensation in one year shall not affect the amount of payments or expense reimbursements constituting compensation that are eligible for payment or reimbursement in any subsequent year, and the Participant’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

11.10    Distribution in the Event of Taxation.  If, for any reason, all or any portion of a Participant’s benefits under this Plan becomes subject to federal income tax under Code Section 409A with respect to the Participant prior to receipt, a Participant may petition the Board for a distribution of that portion of his or her benefit that has become taxable.  Upon the grant of such a petition, which grant shall not be unreasonably withheld, the Company or the relevant Affiliate shall distribute to the Participant immediately available funds in an amount equal to the taxable portion of his or her benefit (which amount shall not exceed a Participant’s unpaid vested Account balances).  If the petition is granted, the tax liability distribution shall be made within 90 days of the date when the Participant’s petition is granted.  Such a distribution shall affect and reduce the benefits to be paid under this Plan.

11.11    Governing Law.  To the extent not preempted by federal law, this Plan shall be governed by the laws of the State of Colorado, without regard to conflicts of law principles.

    

[Signature Page Follows]

I hereby certify that this QEP Resources, Inc. Deferred Compensation Plan for Directors was duly amended by the Board of Directors of QEP Resources, Inc. on July 28, 2014.    
    
Executed on this 30th day of July, 2014.
                                            
	
	
	By: /s/ Richard J. Doleshek

	      Richard J. Doleshek

	      Executive Vice President and Chief Financial OfficerExhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT, effective as of May 28, 2014, between SUMMIT HOTEL PROPERTIES, INC., a Maryland corporation (the “Company”), and KERRY W. BOEKELHEIDE (the “Executive”), recites and provides as follows:

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, the Company desires to employ the Executive to devote sufficient amounts of the Executive’s business time, attention and efforts to the business of the Company as are required to perform the duties of Executive Chairman of the Board of the Company; and

 

WHEREAS, the Executive desires to be so employed on the terms and subject to the conditions hereinafter stated.

 

NOW, THEREFORE, in consideration of the premises and mutual obligations hereinafter set forth, the parties agree as follows:

 

1.                                      RECITALS.  The above recitals are incorporated by reference herein and made a part hereof as set forth verbatim.

 

2.                                      EMPLOYMENT.  The Company shall employ the Executive, and the Executive agrees to be so employed, in the capacity of the Company’s Executive Chairman of the Board to serve for the Term (as hereinafter defined) hereof, subject to earlier termination as hereinafter provided.

 

3.                                      TERM.  The Initial Term of the Executive’s employment hereunder (the “Initial Term”) shall be for a period of three (3) years commencing on May 28, 2014 (the “Effective Date”), and continuing until May 27, 2017.  If neither the Company nor the Executive has provided the other with written notice of an intention to terminate this Agreement at least thirty (30) days before the end of the Initial Term (or any subsequent renewal period), this Agreement will automatically renew for a twelve (12) month period.  For purposes of this Agreement, the word “Term” means the Initial Term and any renewal period pursuant to the preceding sentence and any extension pursuant to clause (ii) of the following sentence.  Notwithstanding the preceding sentences (i) this Agreement may be terminated earlier as provided herein and (ii) if a Control Change Date (as defined in Section 11 of this Agreement) occurs during the Term, then the Term shall not end before the first anniversary of the Control Change Date or the date this Agreement is terminated earlier as provided herein.

 

4.                                      SERVICES.  The Executive shall devote sufficient business time, attention and effort to the Company’s affairs as required for the performance of the Executive’s duties hereunder.  The Company further agrees that the Executive may engage in civic and community activities and endeavors and, to the extent approved by the Company’s Board of Directors (the “Board”) (by resolution, policy or other writing), may engage in personal business endeavors, provided that such civic and community activities and personal business endeavors do not interfere with the performance of the Executive’s duties hereunder.  The Executive shall

 

 

have full authority and responsibility for formulating policies and administering the Company in all respects, subject to the general direction, approval and control of the Board.

 

5.                                      COMPENSATION.

 

(a)                                 Base Salary.  During the first twelve (12) months of the Term, the Company shall pay the Executive an annual Base Salary equal to Four Hundred Thirty Six Thousand Dollars ($436,000).  Thereafter during the remainder of the Term, the Company shall pay the Executive an annual Base Salary as determined by the Board or its Compensation Committee (the “Committee”).  Such Base Salary shall be paid in accordance with the Company’s payroll schedule.  Any increase in Base Salary shall not serve to limit or reduce any other obligations to the Executive under this Agreement.

 

(b)                                 Annual Bonus.  In addition to the Executive’s annual Base Salary, for performance in each calendar year during the Term, the Executive shall have the opportunity to earn an Annual Bonus.  The Annual Bonus shall be earned and payable to the extent that predetermined individual and/or corporate goals established by the Committee are achieved and any other requirements prescribed by the Committee, at the time the performance goals are established, are satisfied.  Subject to the satisfaction of any requirements described in the preceding sentence, the Annual Bonus that will be earned on account of achieving a “target” level of performance (as established by the Committee) shall not be less than 125 percent (125%) of the Executive’s then current Base Salary.  Any Annual Bonus that is earned pursuant to the preceding sentence shall be paid in a single lump sum payment no later than March 15 following the calendar year in which the Annual Bonus is earned.

 

6.                                      BENEFITS.  The Company agrees to provide the Executive with the following benefits:

 

(a)                                 Vacation.  The Executive shall be entitled each calendar year to a vacation, during which time the Executive’ compensation shall be paid in full.  The time allotted for such vacation shall be an aggregate of four (4) weeks.  In the year the Executive terminates employment, the Executive shall be entitled to receive a prorated paid vacation based upon the amount of time that the Executive has worked during the year of termination.  In the event that the Executive has not taken all of the vacation time computed on a prorated basis, the Executive shall be paid, at the Executive’s regular rate of Base Salary, for unused vacation.  In the event Executive has taken more vacation time than allotted for the year of termination, there shall be no reduction in compensation otherwise payable hereunder.

 

(b)                                 Employee Benefits.  During the Term, the Executive and/or the Executive’s family, as the case may be, shall be eligible to participate in all Company employee benefit plans in which other executive level employees of the Company and/or the members of their families, as the case may be, are eligible to participate including, but not limited to, any retirement, pension, profit-sharing, insurance, or other plans which may now be in effect or which may hereafter be adopted by the Company.  Regarding life insurance, the Executive shall have the right to name the beneficiary of such life insurance policy.

 

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(c)                                  Equity Plan Participation.  The Executive shall be eligible to participate in the Company’s 2011 Equity Incentive Plan and any subsequent equity incentive plan established during the Term and shall receive awards, in such amounts and subject to such terms, as determined by the Committee.

 

7.                                      EXPENSES.  The Company recognizes that the Executive will have to incur certain out-of-pocket expenses related to the Executive’s services and the Company’s business, and the Company agrees to promptly reimburse the Executive for all reasonable expenses necessarily incurred by the Executive in the performance of the Executive’s duties to the Company upon presentation of a voucher or documentation indicating the amount and business purposes of any such expenses.  These expenses include, but are not limited to, travel, meals and entertainment.  Expenses that are reimbursable to the Executive under this Section 7 shall be paid to the Executive in accordance with the Company’s expense reimbursement policy but in no event later than March 15 following the calendar year in which the expense is incurred.

 

8.                                      TERMINATION.

 

(a)                                 Grounds.  This Agreement shall terminate in the event of the Executive’s death.  In the case of the Executive’s Disability, the Company may elect to terminate the Executive’s employment as a result of such Disability.  The Company also may terminate the Executive’s employment pursuant to a Termination With Cause or a Termination Without Cause.  Finally, the Executive may terminate the Executive’s employment with the Company pursuant to either a Voluntary Termination or a Voluntary Termination for Good Reason.  For purposes of this Agreement, the terms Disability, Voluntary Termination, Voluntary Termination for Good Reason, Termination With Cause and Termination Without Cause are defined in Section 11 of this Agreement.

 

(b)                                 Notice of Termination.  Any termination by the Company or the Executive (other than upon death) shall be communicated by Notice of Termination to the Executive or the Company, as applicable.  For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon and the specific ground for termination; (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination; and (iii) the date of termination in accordance with Section 8(c) below.

 

(c)                                  Date of Termination.  For the purposes of this Agreement, “Date of Termination” means (i) if the Company intends to treat the termination as a termination based upon the Executive’s Disability, the Executive’s employment with the Company shall terminate effective on the thirtieth day after the date of the Notice of Termination (which may not be given before the Executive has been absent from work on account of a physical or mental illness or physical injury for at least one hundred fifty (150) days) provided that, before such date, the Executive shall not have returned to the performance of the Executive’s duties with or without reasonable accommodation; (ii) if the Executive’s employment is terminated by reason of Death, the Date of Termination shall be the date of death of the Executive; (iii) if the Executive’s employment is terminated by reason of Voluntary Termination, the Date of Termination shall be thirty (30) days from the date of the Notice of Termination (and the Executive shall be deemed to have terminated employment by Voluntary Termination if the Executive voluntarily refuses to

 

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provide substantially all the services described in Section 4 hereof for a period greater than four (4) consecutive weeks, excluding periods in which the Executive is not performing services on account of vacation in accordance with Section 6(a) hereof and periods in which the Executive is not performing services on account of the Executive’s illness or injury or the illness or injury of a member of the Executive’s immediate family or an approved leave under the Family and Medical Leave Act, if applicable); in such event, the Date of Termination shall be the day after the last day of such four-week period; (iv) if the Company intends to treat the termination as a Termination With Cause, the Company shall provide the Executive written notice of such grounds for termination and the Executive shall have, to the extent provided in Section 11(i), the period specified in Section 11(i) to cure such cause to the reasonable satisfaction of the Board or the reasonable satisfaction of the Board’s Audit Committee, as applicable, failing which, the Date of Termination shall be the end of the applicable cure period; (v) if the Executive’s employment is terminated by reason of Voluntary Termination for Good Reason, the Date of Termination shall be thirty (30) days after the end of the thirty (30) day cure period or (vi) if the Executive’s employment is terminated by a Termination Without Cause, the Date of Termination shall be thirty (30) days from the Notice of Termination.

 

9.                                      COMPENSATION UPON TERMINATION WITH CAUSE, VOLUNTARY TERMINATION, DEATH OR DISABILITY.  This Section 9 applies in the event that the Executive’s employment ends upon a Termination With Cause, a Voluntary Termination, death or Disability or any reason other than a Termination Without Cause or a Voluntary Termination With Good Reason.  In any of those events, the Executive (or the Executive’s estate in the event of the Executive’s death) shall be entitled to receive the Standard Termination Benefits.  The Standard Termination Benefits are the benefits or amounts described in the following subsections (a) and (b):

 

(a)                                 The Executive shall be entitled to receive any compensation (including Base Salary and Annual Bonus and accrued but unused vacation) that is earned prior to the Date of Termination but that remains unpaid as of the Date of Termination, which shall be paid in a single cash payment within six (6) days of the Date of Termination.

 

(b)                                 The Executive shall be entitled to receive any benefits due the Executive under the terms of any employee benefit plan maintained by the Company and under the terms of any option, restricted stock or similar equity award; which benefits shall be paid in accordance with the terms of the applicable plan and any award agreement between the Executive and the Company.

 

Except for the Standard Termination Benefits, the Executive shall not be entitled to receive any compensation after the Date of Termination on account of a Termination With Cause, a Voluntary Termination, death, Disability or any reason other than a Termination Without Cause or a Voluntary Termination With Good Reason.

 

10.                               COMPENSATION UPON TERMINATION WITHOUT CAUSE OR VOLUNTARY TERMINATION WITH GOOD REASON.  This Section 10 applies in the event that the Executive’s employment ends upon a Termination Without Cause or a Voluntary Termination With Good Reason.  In either of those events but subject to the provisions of this

 

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Agreement, the Executive shall be entitled to receive the benefits and amounts described in the following subsections (a), (b), (c) and (d):

 

(a)                                 The Company shall pay or provide the Standard Termination Benefits as provided in Section 9 except that all outstanding options, shares of restricted stock and other equity awards, shall be vested and exercisable as of the Date of Termination and outstanding options, stock appreciation rights and similar equity awards shall remain exercisable thereafter until their stated expiration date as if the Executive’s employment had not terminated.

 

(b)                                 The Company shall pay an amount equal to three (3.0) times the Executive’s Base Salary at the rate in effect on the Date of Termination (or, in the case of a Voluntary Termination for Good Reason, at the rate in effect before a reduction in Base Salary that constitutes Good Reason for resignation), such amount to be paid in accordance with Section 10(g).

 

(c)                                  The Company shall pay an amount equal to three (3.0) times the Executive’s “target” Annual Bonus under Section 5(b) for the calendar year that includes the Date of Termination.  If the “target” Annual Bonus for such year has not been established by the Committee before the Date of Termination, then the amount payable under this Section 10(c) shall be three (3.0) times the amount equal to 125 percent (125%) of the Executive’s Base Salary (or, in the case of a Voluntary Termination for Good Reason, at the rate in effect before a reduction in Base Salary that constitutes Good Reason for resignation), such amount to be paid in accordance with Section 10(g).

 

(d)                                 The Company shall pay an amount equal to the product of (x) the Annual Bonus earned by the Executive for the fiscal year of the Company ended immediately before the Date of Termination and (y) a fraction, the numerator of which is the number of days the Executive was employed by the Company during the fiscal year that includes the Date of Termination and the denominator of which is 365, such amount to be paid in accordance with Section 10(g).

 

(e)                                  The Company shall reimburse the Executive for premiums paid by the Executive for COBRA coverage for the Executive and the Executive’s eligible dependents.  The Company shall reimburse the Executive for such premium payments for coverage during the twelve (12) months following the Date of Termination or until the termination of the right to coverage under COBRA, whichever occurs first.  Each reimbursement shall be paid within fifteen (15) days of the Executive’s premium payment or, if later, within fifteen (15) days after the Executive’s release and waiver of claims becomes effective in accordance with Section 10(f).

 

(f)                                   No benefits, other than the Standard Termination Benefits, will be paid or provided to, or on behalf of, the Executive under this Section 10 unless the Executive has signed and not revoked a release and waiver of claims in a form reasonably prescribed by the Company and furnished to the Executive within five (5) days after the Date of Termination, releasing the Company and its officers, directors and affiliates from all claims the Executive has or may have against such parties, and such release and waiver of claims has become binding and irrevocable on or before the sixtieth (60th) day after the date the Executive’s employment ends upon a Termination Without Cause or a Voluntary Termination for Good Reason.

 

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(g)                                  Subject to the requirements of Section 10(f) and the provisions of Sections 10(h) and 15(f), the total of the amounts described in Section 10(b), (c) and (d) (the “Cash Severance”) shall be payable as described in the applicable provisions of this Section 10(g).

 

(1)                                 If a Control Change Event and a Control Change Date have not occurred during the two (2) year period preceding the date of the Executive’s Separation from Service, then the Cash Severance shall be payable in accordance with Section 10(g)(1)(i) if the Executive is not a Specified Employee on the date of Executive’s Separation from Service and in accordance with Section 10(g)(1)(ii) if the Executive is a Specified Employee on the date of Executive’s Separation from Service.

 

(i)                                     If this Section 10(g)(1)(i) applies, then the Cash Severance shall be payable in thirty-six (36) equal or nearly equal monthly installments.  The first installment shall be payable on the sixtieth (60th) day after the Date of Termination or, if later, on the sixtieth (60th) day after the Executive’s Separation from Service.  The remaining installments shall be payable on the first day of the month beginning after the date on which the first installment is payable and on the first day of each month thereafter until all of the Cash Severance has been paid.

 

(ii)                                  If this Section 10(g)(1)(ii) applies, then the Cash Severance shall be payable as follows:

 

(x)                                  The lesser of (1) one-sixth of the total Cash Severance and (2) the maximum amount of the Cash Severance that can be exempt from Section 409A of the Code pursuant to Treasury Regulation §1.409A-1(b)(9)(iii) (the lesser of (1) and (2) being the “Exempt Amount”) shall be payable in six equal or nearly equal monthly installments.  The first installment shall be payable on the sixtieth (60th) day after the Date of Termination or, if later, on the sixtieth (60th) day after the Executive’s Separation from Service.

 

(y)                                  Any balance of the Cash Severance, i.e., the amount of the Cash Severance that exceeds the Exempt Amount, shall be payable in thirty (30) equal or nearly equal monthly installments.  The installments shall be payable on the first day of the seventh (7th) month beginning after the date of the Executive’s Separation from Service and on the first day of each month thereafter until all of the Cash Severance has been paid.

 

(2)                                 If a Control Change Date and a Control Change Event have occurred during the two (2) year period ending on the date of the Executive’s Separation from Service, then the Cash Severance shall be payable in accordance with Section 10(g)(2)(i) if the Executive is not a Specified Employee on the date of Executive’s Separation from Service and in accordance with Section 10(g)(2)(ii) if the Executive is a Specified Employee on the date of the Executive’s Separation from Service.

 

(i)                                     If this Section 10(g)(2)(i) applies, then the Cash Severance shall be payable in a single cash payment on the sixtieth (60th) day after the Date of Termination or, if later, on the sixtieth (60th) day after the Executive’s Separation from Service.

 

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(ii)                                  If this Section 10(g)(2)(ii) applies, then the Cash Severance shall be payable as follows:

 

(x)                                  The Exempt Amount shall be payable in a single cash payment on the sixtieth (60th) day after the Date of Termination or, if later, on the sixtieth (60th) day after the Executive’s Separation from Service.

 

(y)                                  Any balance of the Cash Severance, i.e., the amount of the Cash Severance that exceeds the Exempt Amount, shall be paid in a single cash payment on the first day of the seventh (7th) month beginning after the date of the Executive’s Separation from Service.

 

(h)                                 Notwithstanding any other provision of this Section 10, each payment of the Cash Severance, other than Cash Severance payable upon a termination of the Executive’s employment upon a Termination Without Cause, that is payable under Section 10(g)(1) and that becomes payable before a Control Change Date occurs shall be subject to reduction or offset by the amount of any compensation that the Executive earns for personal services (other than amounts payable by the Company) after the Date of Termination and during the period in which such Cash Severance is otherwise payable.  Following a termination of the Executive’s employment upon a Voluntary Termination for Good Reason the Executive agrees to promptly notify the Company of any employment or other services that the Executive provides during such period and the amount of compensation payable to the Executive for those services so that the Company can give effect to the offset described in this Section 10(h).

 

11.                               DEFINITIONS.  For the purposes of this Agreement, the following terms shall have the following definitions:

 

(a)                                 “COBRA” means continued group health plan coverage under Section 4980B of the Code.

 

(b)                                 “Code” means the Internal Revenue Code of 1986, as amended.

 

(c)                                  “Control Change Date” for purposes of this Agreement, has the same meaning as such term is defined in the Company’s 2011 Equity Incentive Plan.

 

(d)                                 “Control Change Event” has the same meaning as such term is defined under Treasury Regulation §1.409A-3(i)(5).

 

(e)                                  “Disability” means that the Executive is “disabled” within the meaning of Section 409A(a)(2)(C) of the Code.

 

(f)                                   “Material Weakness” has the meaning set forth in Auditing Standard No. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements, in effect on the Effective Date.

 

(g)                                  “Separation from Service” has the same meaning as such term is defined under Treasury Regulation §1.409A-1(h).

 

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(h)                                 “Specified Employee” has the same meaning as such term is defined under Treasury Regulation §1.409A-1(i).

 

(i)                                     “Termination With Cause” means the termination of the Executive’s employment by act of the Company’s Board of Directors on account of (i) the Executive’s failure to perform a material duty or the Executive’s material breach of an obligation set forth in this Agreement or a breach of a material and written Company policy other than by reason of mental or physical illness or injury, (ii) the Executive’s breach of Executive’s fiduciary duties to the Company, (iii) the Executive’s conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise; provided that, in the cases of the foregoing clauses (i)-(iii), that following written notice from the Board describing any such event, such event is not cured, to the reasonable satisfaction of the Board, within thirty (30) days after such notice is received by the Executive, or (iv) the Executive’s conviction of, or plea of guilty or nolo contendre to, a felony or crime involving moral turpitude or fraud or dishonesty involving assets of the Company or (v) the Material Weakness communicated to management and the Audit Committee of the Board by the Company’s independent registered public accounting firm before the Effective Date is not cured, to the reasonable satisfaction of the Audit Committee prior to the filing of the Company’s annual report on Form 10-K for the period ending December 31, 2014, (vi) the Company’s independent registered public accounting firm shall have communicated, in writing, to management and the Audit Committee a Material Weakness in the Company’s internal control over financial reporting for any reporting period ending after the Effective Date, or (vii) the Company is required to restate a previously filed financial statement for reasons other than a change in accounting policy or a change in accounting standards and which restatement reflects a material change from the previously filed financial statement.

 

(j)                                    “Termination Without Cause” means the termination of the Executive’s employment by act of the Board that does not constitute a Termination With Cause.  For the avoidance of doubt, termination of the Executive’s employment on account of death or Disability or Voluntary Termination is not a Termination Without Cause.

 

(k)                                 “Voluntary Termination” means the Executive’s voluntary termination of employment hereunder for any reason other than a Voluntary Termination for Good Reason.  For purposes of this Section 11, the term Voluntary Termination does not include a voluntary refusal to perform services on account of a vacation taken in accordance with Section 6(a) hereof, the Executive’s failure to perform services on account of the Executive’s illness or injury or the illness or injury of a member of the Executive’s immediate family, provided such illness is adequately substantiated at the reasonable request of the Company, or any other absence from service with the written consent of the Board.

 

(l)                                     Voluntary Termination for “Good Reason” means the Executive’s termination of employment hereunder on account of (i) the Company’s material breach of the terms of this Agreement or a direction from the Board that the Executive act or refrain from acting which in either case would be unlawful or contrary to a material and written Company policy, (ii) a material diminution in the Executive’s duties, functions and responsibilities to the Company and its affiliates without the Executive’s consent such that the Executive’s duties, functions and responsibilities are materially less than the duties, functions and responsibilities typically assigned to a non-employee chairman of the board of a publicly traded real estate

 

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investment trust or the Company preventing the Executive from fulfilling or exercising the Executive’s material duties, functions and responsibilities to the Company and its affiliates, as in effect from time to time, without the Executive’s consent other than on account of a failure of the Company’s shareholders to elect the Executive as a member of the Board, (iii) a material reduction in the Executive’s Annual Bonus opportunity or (iv) a requirement that the Executive relocate the Executive’s employment more than fifty (50) miles from the location of the Company’s principal office in Austin, Texas, without the consent of the Executive.  The Executive’s resignation shall not be deemed a “Voluntary Termination for Good Reason” unless the Executive gives the Board written notice (delivered within thirty (30) days after the Executive knows of the event, action, etc. that the Executive asserts constitutes Good Reason), the event, action, etc. that the Executive asserts constitutes Good Reason is not cured, to the reasonable satisfaction of the Executive, within thirty (30) days after such notice and the Executive resigns effective not later than thirty (30) days after the expiration of such cure period.

 

12.                               CODE SECTION 280G.  The benefits that the Executive may be entitled to receive under this Agreement and other benefits that the Executive is entitled to receive under other plans, agreements and arrangements (which, together with the benefits provided under this Agreement, are referred to as “Payments”), may constitute Parachute Payments that are subject to Sections 280G and 4999 of the Code.  As provided in this Section 12, the Parachute Payments will be reduced if, and only to the extent that, a reduction will allow the Executive to receive a greater Net After Tax Amount than the Executive would receive absent a reduction.

 

The Accounting Firm will first determine the amount of any Parachute Payments that are payable to the Executive.  The Accounting Firm also will determine the Net After Tax Amount attributable to the Executive’s total Parachute Payments.

 

The Accounting Firm will next determine the largest amount of Payments that may be made to the Executive without subjecting the Executive to tax under Section 4999 of the Code (the “Capped Payments”).  Thereafter, the Accounting Firm will determine the Net After Tax Amount attributable to the Capped Payments.

 

The Executive will receive the total Parachute Payments or the Capped Payments, whichever provides the Executive with the higher Net After Tax Amount.  If the Executive will receive the Capped Payments, the total Parachute Payments will be adjusted by first reducing the amount of any benefits under this Agreement or any other plan, agreement or arrangement that are not subject to Section 409A of the Code (with the source of the reduction to be directed by the Participant) and then by reducing the amount of any benefits under this Agreement or any other plan, agreement or arrangement that are subject to Section 409A of the Code (with the source of the reduction to be directed by the Participant).  The Accounting Firm will notify the Executive and the Company if it determines that the Parachute Payments must be reduced to the Capped Payments and will send the Executive and the Company a copy of its detailed calculations supporting that determination.

 

As a result of the uncertainty in the application of Sections 280G and 4999 of the Code at the time that the Accounting Firm makes its determinations under this Section 12, it is possible that amounts will have been paid or distributed to the Executive that should not have been paid or distributed under this Section 12 (“Overpayments”), or that additional amounts should be paid

 

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or distributed to the Executive under this Section 12 (“Underpayments”).  If the Accounting Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Company or the Executive, which assertion the Accounting Firm believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been made, the Executive must repay to the Company, without interest; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Executive to the Company unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Executive is subject to tax under Section 4999 of the Code or generate a refund of tax imposed under Section 4999 of the Code.  If the Accounting Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the Accounting Firm will notify the Executive and the Company of that determination and the amount of that Underpayment will be paid to the Executive promptly by the Company.

 

For purposes of this Section 12, the term “Accounting Firm” means the independent accounting firm engaged by the Company immediately before the Change in Control.  For purposes of this Section 12, the term “Net After Tax Amount” means the amount of any Parachute Payments or Capped Payments, as applicable, net of taxes imposed under Sections 1, 3101(b) and 4999 of the Code and any State or local income taxes applicable to the Executive on the date of payment.  The determination of the Net After Tax Amount shall be made using the highest combined effective rate imposed by the foregoing taxes on income of the same character as the Parachute Payments or Capped Payments, as applicable, in effect on the date of payment.  For purposes of this Section 12, the term “Parachute Payment” means a payment that is described in Section 280G(b)(2) of the Code, determined in accordance with Section 280G of the Code and the regulations promulgated or proposed thereunder.

 

13.                               CODE SECTION 409A.  This Agreement and the amounts payable and other benefits provided under this Agreement are intended to comply with, or otherwise be exempt from, Section 409A of the Code (“Section 409A”), after giving effect to the exemptions in Treasury Regulation section 1.409A-1(b)(3) through (b)(12).  This Agreement shall be administered, interpreted and construed in a manner consistent with Section 409A.  If any provision of this Agreement is found not to comply with, or otherwise not be exempt from, the provisions of Section 409A, it shall be modified and given effect, in the sole discretion of the Board and without requiring the Executive’s consent, in such manner as the Board determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A; provided, however, that in exercising its discretion under this Section 13, the Board shall modify this Agreement in the least restrictive manner necessary and without reducing any payment or benefit due under this Agreement.  Each payment under this Agreement shall be treated as a separate identified payment for purposes of Section 409A.

 

With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following limitations:  (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (ii) the reimbursement of an eligible expense shall be made as specified in this Agreement and in no event later than the

 

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end of the year after the year in which such expense was incurred and (iii) the right to reimbursement or in-kind benefit shall not be subject to liquidation or exchange for another benefit.

 

If a payment obligation under this Agreement arises on account of a Change in Control or the Executive’s termination of employment and such payment obligation constitutes “deferred compensation” (as defined under Treasury Regulation section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation section 1.409A-1(b)(3) through (b)(12)), it shall be payable only if the Change in Control constitutes a Control Change Event or after the Executive’s Separation from Service; provided, however, that if the Executive is a Specified Employee, any such payment that is scheduled to be paid within six months after such Separation from Service shall accrue without interest and shall be paid on the first day of the seventh month beginning after the date of the Executive’s Separation from Service or, if earlier, within fifteen days after the appointment of the personal representative or executor of the Executive’s estate following the Executive’s death.

 

14.                               TAX WITHHOLDING.  All payments to be made under this Agreement shall be reduced by applicable income and employment tax withholdings.

 

15.                               COVENANTS OF THE EXECUTIVE.

 

(a)                                 General Covenants of the Executive.  The Executive acknowledges that (i) the principal business of the Company is acquiring, owning, renovating and developing premium-branded select-service hotels in the upscale and upper midscale segments of the US lodging industry (such business, and any and all other businesses that after the date hereof, and from time to time during the Term, become material with respect to the Company’s then-overall business, herein being collectively referred to as the “Business”), (ii) the Company knows of a limited number of persons who have developed the Business; (iii) the Business is, in part, national in scope; (iv) the Executive’s work for the Company and its subsidiaries has given and will continue to give the Executive access to the confidential affairs, proprietary information and trade secrets of the Company; (v) the covenants and agreements of the Executive contained in this Section 15 are essential to the business and goodwill of the Company; and (vi) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 15.

 

(b)                                 Covenants Against Competition.  The covenant against competition herein described shall apply during the Executive’s employment with the Company and its subsidiaries and, if a Control Change Date has not occurred, following a termination of the Executive’s employment with the Company and its subsidiaries for any reason until the earlier of the first anniversary of such termination or a Control Change Date (the “Restriction Period”).  Except to the extent approved by the Board (by resolution, policy or other writing), during the Restriction Period the Executive shall not, directly or indirectly, own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated with, in an executive, senior management, strategic or professional capacity, whether as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, that is similar to an engagement in an executive, senior management, strategic or professional

 

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capacity although otherwise named in any business or venture engaged in the Business and that owns at least twenty-five (25) hotels, at least one of which is located within twenty-five (25) miles of any hotel acquired, owned, managed, developed or re-developed by the Company and its subsidiary, or within twenty-five (25) miles of any hotel the Company is pursuing to acquire, own, manage, develop or re-develop so long as the pursuit of such began prior to, and remained ongoing at the time of the termination of the Executive’s employment; provided, however, that, notwithstanding the foregoing, (i) the Executive may own or participate in the ownership of any entity which the Executive owned or managed or participated in the ownership or management on February 14, 2011, which ownership, management or participation has been disclosed to the Company or except to the extent approved by the Board (by resolution, policy or other writing); and (ii) the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System or equivalent non-U.S. securities exchange, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own one percent (1%) or more of any class of securities of such entity.  Notwithstanding the foregoing, this Section 15(b) shall not apply after the Executive’s Termination Without Cause or Voluntary Termination for Good Reason.

 

(c)                                  Confidentiality.  During and after the Executive’s employment with the Company and its affiliates, except in connection with the business and affairs of the Company and its affiliates: the Executive shall keep secret and retain in strictest confidence, and shall not use for the Executive’s benefit or the benefit of others, all confidential matters relating to the Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the Executive heretofore or hereafter directly or indirectly from the Company of any of its subsidiaries (or any predecessor of either) (the “Confidential Company Information”), including, without limitation, information with respect to the Business and any aspect thereof, profit or loss figures, and the Company’s or its affiliates’ (or any of their predecessors) properties, and shall not disclose such Confidential Company Information to anyone outside of the Company except with the Company’s express written consent and except for Confidential Company Information which (i) at the time of receipt or thereafter becomes publicly known through no wrongful act of the Executive; (ii) is clearly obtainable in the public domain; (iii) was not acquired by the Executive in connection with the Executive’s employment or affiliation with the Company; (iv) was not acquired by the Executive from the Company or its representatives or from a third-party who has an agreement with the Company not to disclose such information; (v) was legally in the possession of or developed by the Executive prior to February 14, 2011; or (vi) is required to be disclosed by rule of law or by order of a court or governmental body or agency.

 

(d)                                 Nonsolicitation.  During the Restriction Period, the Executive shall not, without the Company’s prior-written consent, directly or indirectly, (i) knowingly solicit or knowingly encourage to leave the employment or other service of the Company or any of its affiliates, any employee employed by the Company on the Date of Termination or knowingly hire (on behalf of the Executive or any other person or entity) any employee employed by the Company on the Date of Termination who has left the employment or other service of the Company or any of its affiliates (or any predecessor of either) within one (1) year of the termination of such employee’s or independent contractor’s employment or other service with

 

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the Company and its affiliates; or (ii) whether for the Executive’s own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the Company’s or any of its affiliates, relationship with, or endeavor to entice away from the Company or any of its affiliates, any person who during the Executive’s employment with the Company is or was a customer or client of the Company or any of its affiliates (or any predecessor of either).  Notwithstanding the above, nothing shall prevent the Executive from soliciting loans, investment capital, or the provision of management services from third parties engaged in the Business if the activities of the Executive facilitated thereby do not otherwise adversely interfere with the operations of the Business.

 

(e)                                  Company Property.  During and after the Executive’s employment with the Company and its affiliates, all memoranda, notes, lists, records, property and any other tangible product and documents (and all copies thereof) made, produced or compiled by the Executive or made available to the Executive during the Term concerning the Business of the Company and its affiliates shall be the Company’s property and shall be delivered to the Company at any time on request.  Notwithstanding the above, the Executive’s contacts and contact data base shall not be the Company’s property.  Notwithstanding the above, software, methods and material developed by the Executive prior to the Term of the Agreement shall not be the Company’s property.

 

(f)                                   Nondisparagement.  The Executive agrees that during and after the Executive’s employment with the Company and its affiliates the Executive will not make any negative comments or otherwise disparage the Company or its officers, the Board or individual directors, employees, shareholders or agents.  Similarly, the Company agrees that during and after the Term, Company officers, executives, members of the Board and members of management shall not make any negative comments or otherwise disparage the Executive.  The preceding sentences shall not be violated by (i) truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) or (ii) communications by the Executive to the Board or an officer of the Company or by the Board, members of the Board, Company officers, executives, or members of management that are made in the good faith performance of their duties.

 

(g)                                  Rights and Remedies upon Breach.  The Executive acknowledges and agrees that any breach by the Executive of any of the provisions of this section 15 (the “Covenants”) would result in irreparable injury and damage for which money damages, would not provide an adequate remedy.  Therefore, if the Executive breaches, or threatens to commit a breach of, any of the Covenants, the Company and its affiliates shall have the right and remedy to have the Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants.  This right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company and its affiliates under law or in equity (including, without limitation, the recovery of damages).  The existence of any claim or cause of action by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Covenants.  The Company has the right to cease making the

 

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payments of any Cash Severance installments that remains payable under Section 10(g)(1) or other benefits to the Executive in the event of a material breach of any of the Covenants that, if capable of cure and not willful, is not cured within thirty (30) days after receipt of notice thereof from the Company.

 

(h)                                 Severability.  The Executive acknowledges and agrees that the Executive has had an opportunity to seek advice of counsel in connection with this Agreement; and that the Covenants are reasonable in geographical and temporal scope and in all other respects.  If it is determined that any of the provisions of this Agreement, including, without limitation, any of the Covenants, or any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement shall not thereby be affected and shall be given full affect, without regard to the invalid portions.

 

(i)                                     Duration and Scope of Covenants.  If any court or other decision maker of competent jurisdiction determines that any of the Covenants, including, without or any part thereof are unenforceable because of the duration or geographical scope of such provision, then, after such determination has become final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced.

 

(j)                                    Enforceability of Restrictive Covenants; Jurisdictions.  The Company and the Executive intend to and hereby consent to jurisdiction to enforce the Covenants upon the courts of any jurisdiction within the geographical scope of the Covenants.  If the courts of any one or more of such jurisdictions hold the Covenants wholly unenforceable by reason of breadth of scope or otherwise it is the intention of the Company and the Executive that such determination not bar or in any way affect the Company’s right, or the right of any of its affiliates, to the relief provided above in the courts of any other jurisdiction within the geographical scope of such Covenants, as to breaches of such Covenants in such other respective jurisdictions, such Covenants as they relate to each jurisdiction’s being, for this purpose, severable, diverse and independent covenants, subject, where appropriate, to the doctrine of res judicata.

 

16.                               NOTICES.  All notices or deliveries authorized or required pursuant to this Agreement shall be deemed to have been given when in writing and personally delivered or three (3) days following the date when deposited in the U.S. mail, certified, return receipt requested, postage prepaid, addressed to the parties at the following addresses or to such other addresses as either may designate in writing to the other party:

 

To the Company:                                               Summit Hotel Properties, Inc.
 Attn:  Corporate Secretary
 12600 Hill Country Boulevard

Suite R-100
 Austin, Texas  78738

 

To the Executive:                                                Kerry W. Boekelheide

[Address]

 

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17.                               ENTIRE AGREEMENT.  This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and shall not be modified in any manner except by instrument in writing signed, by or on behalf of, the parties hereto.  This Agreement shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto.

 

18.                               ARBITRATION.  Any claim or controversy arising out of, or relating to, this Agreement or its breach or the Executive’s employment with the Company, other than a claim or controversy arising under Section 15, shall be settled by arbitration in Austin, Texas in accordance with the governing Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association.  Judgment upon the award rendered may be entered in any court of competent jurisdiction.  In the event one of the parties hereto requests an arbitration proceeding under this Agreement, such proceeding shall commence within 30 days from the date of such request.  The prevailing party shall be entitled to reasonable attorney’s fees and costs.

 

19.                               APPLICABLE LAW.  This Agreement shall be governed and construed in accordance with the laws of the State of Texas.

 

20.                               NO SETOFF.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by a setoff, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take other action by way of mitigation of the amounts payable to the Executive under the provisions of this Agreement.  The provisions of this Section 20 do not affect or detract from the Company’s rights under Section 10(h), Section 15 or Section 22.

 

21.                               ASSIGNMENT.  The Executive acknowledges that the Executive’s services are unique and personal.  Accordingly, the Executive may not assign the Executive’s rights or delegate the Executive’s duties or obligations under this Agreement.  The Executive’s rights and obligations under this Agreement shall insure to the benefit of and shall be binding upon the Executive’s successors and assigns.

 

22.                               RECOUPMENT.     The Executive acknowledges and agrees that any incentive compensation, whether payable in cash or equity (but excluding amounts that vest or become payable solely on account of continued employment or service) that is payable under this Agreement or under any other agreement or any plan or arrangement is subject to recoupment or repayment if such action is required under applicable law or the terms of any Company recoupment or “clawback” policy as in effect on the date that such compensation or benefit was paid.

 

23.                               HEADINGS.  Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the 28th day of May, 2014.

 

	
 
    	
SUMMIT   HOTEL PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Eng
    
	
 
    	
Title:
    	
Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Kerry W. Boekelheide
    
	
 
    	
KERRY   W. BOEKELHEIDE
    

 

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