Document:

Choice Hotels International, Inc., 2006 Long-Term Incentive Plan

 Exhibit 10.1 
 CHOICE HOTELS INTERNATIONAL, INC. 
 2006 LONG-TERM INCENTIVE PLAN 
 ARTICLE I 
 PURPOSE AND EFFECTIVE
DATE 
 1.01. Purpose.    The purpose of the Choice Hotels International, Inc. 2006 Long-Term Incentive Plan
is to provide to eligible employees, officers and directors who are primarily responsible for the continued growth and success of Choice Hotels International, Inc. an opportunity to increase their (or acquire a) proprietary interest in the Company.
The Plan also enables the Company to continue to attract, retain and reward the best available talent for the Company’s continued profitable performance. 
 1.02. Effective Date and Duration of Plan.    Unless terminated earlier by the Board, this Plan is effective for a 10-year period beginning on the date on which the Plan is adopted by the
Board; provided that no Shares may be awarded prior to stockholder approval of the Plan and any other Awards granted prior thereto are expressly conditioned upon such approval. Any Awards that are made under the Plan prior to the termination date
shall continue in effect in accordance with the terms of the Agreement after that date. 
 ARTICLE II 
 DEFINITIONS 
 2.01. Affiliate
means any corporation, partnership, limited liability company, limited liability partnership, business trust, or other entity controlling, controlled by or under common control with the Company. Notwithstanding the preceding sentence, except as
otherwise provided by the Committee, this term shall not include any entity of which at least fifty percent (50%) of the combined voting power of the entity’s outstanding securities is owned, directly or indirectly, by the Bainum Family
Group. 
 2.02. Agreement means a written agreement (including any amendment or supplement thereto) between the Company and a
Participant specifying the terms and conditions of a Stock Award, an award of Phantom Shares or an Option granted to such Participant. 
 2.03. Award means any Stock Award, award of Phantom Shares or Option granted under the Plan. 
 2.04. Bainum Family
Group means (a) Stewart Bainum, his wife, their lineal descendants (and their spouses so long as they remain spouses) and the estate of any of the foregoing persons, and (b) any partnership, trust, corporation or other entity to the
extent any shares (or their equivalent) of such entity are considered to be beneficially owned by any person or estate referred to in subsection (a) above. 
 2.05. Board means the Board of Directors of the Company. 
 2.06. Cause means
(i) dishonesty; (ii) gross negligence or willful misconduct; (iii) fraudulent or unethical conduct; (iv) unreasonable neglect or refusal to perform the Participant’s duties; (v) Participant’s unauthorized use for
his or her own benefit or transfer to a third-party of any confidential or proprietary information of the Company or any Affiliate, (vi) a breach of the terms of Participant’s employment or other agreement with the Company (or any
Affiliate); (vii) a violation of the established policies of the Company (or any Affiliate); (viii) conduct constituting a felony or other crime involving moral turpitude; or (ix) willful or malicious conduct which causes injury to
the Company’s (or an Affiliate’s) business or reputation or otherwise adversely affects the interests of the Company or an Affiliate. 

 2.07. Change in Control means the earliest date on which: 
 (a) There shall be a change in the ownership or control of the Company effected through either the acquisition, directly or indirectly, by any person or
group of persons acting in concert (other than (i) the Company or any Affiliate, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate, or (iii) the Bainum Family Group)
of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of securities possessing more than fifty (50%) percent of the combined voting power of the Company’s outstanding securities pursuant to a
tender or exchange offer made directly to the Company’s stockholders or otherwise, who do not own fifty percent (50%) on the date this Plan is adopted; 
 (b) There is a consolidation or merger of the Company with another entity (other than an Affiliate) in which the Company’s shareholders (determined as of immediately prior to the consummation of the consolidation
or merger) own (directly or indirectly) less than fifty percent (50%) of the shares of the surviving entity; 
 (c) The complete
liquidation or dissolution of the Company; 
 (d) The sale or other disposition of all or substantially all of the assets of the Company to
another person or entity (other than an Affiliate); 
 (e) The date as of which less than fifty percent (50%) of the Company’s Board
is no longer made up of individuals who were, as of the date this Plan was approved by the stockholders, members of that Board (the “Incumbent Board”), provided, however, that if the election, or nomination for election by the
Company’s stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new Director shall, for purposes of the Plan, be considered as a member of the Incumbent Board (excluding any
such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf
of a person other than the Board); or 
 Notwithstanding the foregoing, in the event that the Bainum Family Group cease (in the aggregate) to own, directly
or indirectly, at least thirty-three percent (33%) of the combined voting power of the Company’s outstanding securities, “fifty percent (50%)” shall be replaced by “thirty-three percent (33%)” wherever it appears in
subsection (a) above. 
 2.08. Code means the Internal Revenue Code of 1986, as amended from time to time. 
 2.09. Committee means the Committee or Committees referred to in Section 4.01 of the Plan; provided, that the Board may, in its sole
discretion consistent with applicable law, act in the place of the Committee in making Awards or taking any other actions hereunder. If at any time no Committee shall be in office or exist, the functions of the Committee specified in the Plan shall
be exercised by the Board. 
 2.10. Company means Choice Hotels International, Inc., a Delaware corporation, or any successor
corporation. 
 2.11. Covered Employee means an employee who is a “covered employee” within the meaning of
Section 162(m) of the Code. 
 2.12. Director means a member of the Board or the board of directors (or other governing board) of
any Affiliate. 
 2.13. Disability means total and permanent disability as defined in Section 22(e)(3) of the Code. 

 

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 2.14. Employee means all persons employed as an employee by the Company or any Affiliate, whether
full-time or part-time. 
 2.15. Exchange Act means the Securities Exchange Act of 1934, as amended, and in effect. 
 2.16. Fair Market Value means, on any given date, the value of a Share as determined by the Committee in good faith. Unless otherwise determined
by the Committee, the Fair Market Value of a Share as of any date is the amount equal to the mean between the high and low prices reported on the New York Stock Exchange (or on any other national securities exchange, including the Nasdaq National
Market, on which the Stock is then listed) for that date or, if no Shares were traded on that date, the mean between the high and low prices as reported for the first day prior thereto in which Shares were traded. Notwithstanding the foregoing, the
Committee shall, to extent that Section 409A of the Code applies, use a valuation methodology that meets the requirements of Section 409A. 
 2.17. Grant Date means the date on which an Award is approved by the Committee or such later date as may be directed by the Committee. 
 2.18. Incentive Stock Option means any Option granted under this Plan that qualifies as an “incentive stock option” under
Section 422 of the Code. 
 2.19. Nonqualified Stock Option means any Option granted under this Plan that does not qualify as an
“incentive stock option” under Section 422 of the Code. 
 2.20. Option means an option that entitles the holder to
purchase from the Company a stated number of Shares at the Option Price set forth in an Agreement. 
 2.21. Option Price means the
per-Share price at which a Share may be purchased under an Option or, in the case of a SAR, the per-Share price specified in the SAR Agreement. 
 2.22. Participant means an Employee or Director who is selected by the Committee in accordance with Article V to receive a Stock Award, an award of Phantom Shares, an Option or a combination thereof. 
 2.23. Performance Goals means the written goals established by the Committee for a Performance Period as provided in Section 9.04.

 2.24. Performance Period means a period of time selected by the Committee over which the attainment of one or more Performance
Goals will be measured. 
 2.25. Phantom Shares means an award of either (a) Stock Units or (b) Stock Appreciation Rights
under Article VIII. 
 2.26. Plan means the Choice Hotels International, Inc. 2006 Long-Term Incentive Plan. 
 2.27. Qualified Performance-Based Awards means those Stock Awards and Stock Unit Awards intended to qualify as “performance-based
compensation” under Section 162(m) of the Code as provided in Article IX of the Plan. 
 2.28. Securities Act means the
Securities Act of 1933, as amended and in effect. 
 2.29. Share means one share of Stock, as adjusted in accordance with
Section 11.01. 
 2.30. Stock means the common stock of the Company. 
  

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 2.31. Stock Appreciation Right or SAR means a right to receive payment of the amount by which the
Fair Market Value of a Share on the last trading day preceding the date of exercise exceeds the Option Price. 
 2.32. Stock Award
means Stock awarded to a Participant under Article VII. 
 2.33. Stock Unit means a bookkeeping entry representing the equivalent
of one Share. 
 2.34. Stock Unit Award means Stock Units awarded to a Participant under Article VI. 
 2.35. Ten Percent Shareholder means an individual who owns more than ten percent of the total combined voting power of all classes of stock of the
Company or an Affiliate as provided in Section 422(b)(6) of the Code. 
 ARTICLE III 
 STOCK SUBJECT TO PLAN 
 3.01. Stock
Subject to Plan. 
 (a) Subject to the provisions of Section 11.01, the maximum number of Shares for which Options and Stock Awards
may be granted (or which may be issued in settlement of Phantom Shares) pursuant to this Plan is three million two hundred thousand 3,200,000) Shares. 
 (b) Subject to the provisions of Section 11.01, the maximum number of Shares that may be issued as Stock Awards or Stock Unit Awards is one million two hundred thousand (1,200,000) Shares. 
 (c) Subject to the provisions of Section 11.01, the maximum number of Shares for which Incentive Stock Options may be granted pursuant to this Plan
is three million two hundred thousand 3,200,000) Shares. 
 (d) The Shares that may be issued or delivered under the Plan may, as determined
by the Committee from time to time, be authorized but unissued Shares, reacquired Shares or both. 
 3.02. Reallocation and Share
Usage.    If (a) an Option or SAR is terminated, in whole or in part, for any reason other than its exercise or (b) any other Award is forfeited, in whole or in part, the number of Shares allocated to the terminated
or forfeited Award shall again be available for Awards under this Plan. Notwithstanding the anything herein to the contrary, Shares subject to an Award under the Plan may not again be made available for issuance under Awards if such shares are:
(i) shares that were subject to a Stock-settled Stock Appreciation Right or Option and that were not issued upon the net settlement or net exercise of such Stock Appreciation Right or Option, or (ii) shares delivered to or retained by the
Company to pay the Option Price or withholding taxes related to an Award. 
 ARTICLE IV 
 ADMINISTRATION 
 4.01.
Administration. 
 (a) The Plan shall be administered by the Compensation Committee of the Board (or other committee or subcommittee
designated by the Board from time to time in its sole discretion). Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Committee’s composition may
be structured so that (i) Awards to persons who are subject to Section 16 of the Exchange Act are exempt from liability under Section 16(b) of that Act and (ii) Awards to Covered Employees can be structured to qualify as
performance-based compensation as provided under Section 162(m) of the Code. 
  

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 (b) Notwithstanding subsection (a), the Board (i) shall be solely responsible for making any Awards
under the Plan to non-Employee Directors and (ii) may, at any time, otherwise exercise any of the powers and responsibilities assigned the Committee under the Plan, and when so acting, all applicable Plan provisions pertaining to the Committee
shall apply. 
 (c) The Committee shall have the authority to grant Stock Awards, Phantom Shares and Options upon such terms (not
inconsistent with the provisions of this Plan), as the Committee may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the exercisability of all or any part of an Option or on the
exercisability, transferability or forfeitability of a Stock Award or an award of Phantom Shares. Notwithstanding any such condition, the Committee may accelerate the time at which any Option may be exercised, or the time at which a Stock Award may
become transferable or nonforfeitable or the time at which an award of Phantom Shares may be exercised and/or settled. 
 (d) The Committee
shall hold its meetings at such times and places as may be determined by the Committee Chairman. A majority of the Committee shall constitute a quorum. All actions of the Committee shall be taken by a majority of the members at a meeting duly called
by its Chairman; provided, however, any action taken by a written document signed by a majority of the members of the Committee shall be as effective as action taken by the Committee at a meeting duly called and held. 
 (e) Subject to the express provisions of this Plan, the Committee shall have complete authority to (i) interpret all provisions of this Plan;
(ii) prescribe the terms of any Agreement (which need not be identical), (iii) adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan, (iv) amend any Agreement, (v) correct any defect, supply
any omission, or reconcile any inconsistency in the Plan or any Agreement, (vi) determine which persons are Participants, to which of such Participants, if any, Awards shall be granted hereunder and the timing of any such Awards,
(vii) grant Awards to Participants and determine the terms and conditions thereof, including the number of Shares subject to Awards and the Option Price for, or purchase price of, such Shares and the circumstances under which Awards become
exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain events, or other factors,
(viii) establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award, (ix) determine whether, and the extent to
which, adjustments are required pursuant to Section 11.01 and (x) make all other determinations necessary or advisable in administering this Plan. 
 (f) The Committee shall also have the discretion to determine the effect upon an Award and upon an individual’s status as an employee under the Plan (including whether a Participant shall be deemed to have
experienced a termination of employment or other change in status) and upon the vesting, expiration or forfeiture of an Award in the case of (i) any individual who is employed by an entity that ceases to be a Subsidiary of the Company,
(ii) any leave of absence approved by the Company or a Subsidiary, (iii) any transfer between locations of employment with the Company or a Subsidiary or between the Company and any Subsidiary or between any Subsidiaries, (iv) any
change in the Participant’s status from an employee to a consultant or member of the Board of Directors, or vice versa, and (v) at the request of the Company or a Subsidiary, any employee who becomes employed by any partnership, joint
venture, corporation or other entity not meeting the requirements of a Subsidiary. 
 (g) The express grant in the Plan of any specific power
to the Committee shall not be construed as limiting any power or authority of the Committee under the Plan. Any decision made, or action taken, by the Committee in connection with the administration of this Plan shall be final and conclusive on all
affected parties. The Committee shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any
officer or other employee of the Company and such attorneys, consultants and accountants as it may select. A Participant or other holder of an Award may contest a decision or action by the Committee with respect 

  

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to such person or Award only on the grounds that such decision or action was arbitrary or capricious or was unlawful, and any review of such decision or
action shall be limited to determining whether the Committee’s decision or action was arbitrary or capricious or was unlawful. Neither the Committee nor any Employee or Director shall be liable for any act done in good faith with respect to
this Plan or any Agreement, Option, Stock Award or award of Phantom Shares. 
 ARTICLE V 
 ELIGIBILITY FOR GRANTS AND AWARDS 
 5.01. Eligibility. Any Employee or Director is eligible to receive an Award under this Plan. The Committee shall have full discretionary authority to determine the persons to whom Awards will be made and the time or times at which
such grants will be made. 
 5.02. Grants and Awards. 
 (a) The Plan is intended to permit the grant of (i) both Incentive Stock Options and Nonqualified Stock Options, (ii) Stock Awards and (iii) Phantom Shares; provided, that Incentive Stock Options may
only be granted to Employees. 
 (b) The grant of an Award under this Plan shall be entirely in the discretion of the Committee and nothing
in the Plan shall be construed as giving any Employee, Director or other person any right receive any Award. 
 (c) The Committee may accept
the cancellation of outstanding Awards and grant a new Awards for the same or different number of shares (if applicable) and under the same or different terms and conditions. Notwithstanding the preceding sentence, except as otherwise provided in
Section 11.01, the Committee may not, without stockholder approval, either (i) reduce the Option Price of an Option or SAR, (ii) amend or cancel an Option or SAR for the purpose of repricing, replacing or regranting such Option or SAR
with an exercise price that is less than the original exercise price of such Option or SAR, or (iii) take any other action (whether in the form of an amendment, cancellation or replacement grant) that has the effect of repricing an Option or
SAR. 
 (d) Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of Shares to the
Corporation in payment of the exercise price and/or tax withholding obligation under any other employee stock option. 
 5.03. Grants to
Foreign Nationals.    The Committee may grant Options or make other awards under the Plan to eligible individuals who are foreign nationals on such additional or different terms and conditions as may, in the sole judgment of
the Committee, be necessary or appropriate to comply with the provisions of any applicable laws of a foreign country. 
 ARTICLE VI

 OPTIONS 
 6.01.
Award. 
 (a) In accordance with Article V, the Committee may (i) designate each individual to whom an Option is to be granted,
(ii) specify the type of Option being granted and the number of Shares covered by each such Award, and (iii) establish the Option Price and such other terms and conditions as it may deem appropriate for each Option consistent with the
Plan. The terms and conditions of any Option granted under the Plan shall be set forth in an Agreement. 
  

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 (b) Subject to adjustment under Section 11.01, in no event may the number of Shares covered by all
Option Awards granted to any one person in any calendar year exceed 250,000. 
 (c) No Option that is intended to be an Incentive Stock
Option shall be invalid for failure to qualify as such and the Company shall honor any such Option as a Nonqualified Stock Option. 
 6.02.
Share Price.    The Option Price shall be determined by the Committee, but shall not be less than the Fair Market Value of a Share as of the Grant Date; provided, however, that the Option Price with respect to an Option
that is granted in connection with a merger or other acquisition as a substitute or replacement award for options held by optionees of the acquired entity may be less than the Fair Market Value of the Shares on the date such Option is granted if
such Option Price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition. If an Incentive Stock Option is granted to an individual who is a
Ten Percent Shareholder on the Grant Date, the purchase price of the Shares subject to such Option shall not be less than 110% of the Fair Market Value as of the Grant Date. 
 6.03. Special Rules for Incentive Stock Options. 
 (a) The aggregate Fair Market Value (determined as of an Option’s Grant Date) for all Incentive Stock Options granted under the Plan (and all other plans of the Company and its Affiliates) that are first
exercisable by a Participant in a calendar year shall not exceed $100,000. 
 6.04. Vesting.    Except as
otherwise provided in this Plan or by the Committee, a Participant shall only be entitled to exercise an Option at such time or times as set forth in the applicable Agreement. Unless provided otherwise in the applicable Agreement, to the extent that
the Committee determines that an approved leave of absence or employment on a less than full-time basis is not a termination of employment, the vesting period and/or exercisability of an Option may be adjusted by the Committee during or to reflect
the effects of any period during which the Participant is on an approved leave of absence or is employed on a less than full-time basis. 
 6.05. Maximum Option Period.    The maximum period during which an Option may be exercised shall be determined by the Committee, except that no Incentive Stock Option shall be exercisable for a period of more than
ten years from the date such Option was granted; provided, that the maximum period in which an Option may be exercised shall be five years in the case of an Incentive Stock Option granted to an individual who on the Grant Date is a Ten Percent
Shareholder. 
 6.06. Nontransferability.    Except as provided in Section 13.08, each Option granted under
this Plan shall be nontransferable except by will or by the laws of descent and distribution and during the lifetime of the Participant to whom the Option is granted, the Option may be exercised only by the Participant (or the Participant’s
personal representative). No right or interest of a Participant in any Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 
 6.07. Termination of Employment. 
 (a) Except as provided in subsections (b) or (c) below,
in the event a Participant ceases to be an Employee or Director, the Participant may, to the extent he or she was otherwise entitled to exercise any Options at the date of termination, exercise any Options for a period of ninety (90) days (or
other period provided in the Agreement or by the Committee) following the date the Participant ceases to be such (but in no event later than the expiration date of such Option as set forth in the Agreement). To the extent that the Participant was
not entitled to exercise the Option as of the date he or she ceases to be an Employee or Director, the Option shall (except as otherwise provided in the Agreement or by the Committee) shall automatically terminate at that time. 
 (b) In the event a Participant ceases to be an Employee or Director due to Disability, the Participant may, to the extent he or she otherwise was
entitled to exercise any Options at the date of such termination, exercise the Option for a period of twelve (12) months (or other period provided in the Agreement or by the 

  

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Committee) following date he or she ceases to be such (but in no event later than the expiration date of such Option as set forth in the Agreement). To the
extent that the Participant was not entitled to exercise the Option at the date of his or her termination as an Employee or Director, the Option shall (except as otherwise provided in the Agreement or by the Committee) automatically terminate at
that time. 
 (c) In the event that a Participant dies while an Employee or Director, any Options held by the Participant at death may, to
the extent the Participant would have otherwise been entitled to exercise the Option at the date of death, be exercised by the Participant’s estate or by any person who acquired the right to exercise the Option by bequest or inheritance (the
“Option Beneficiary”) for a period of twelve (12) months (or other period provided in the Agreement or by the Committee) following date of death (but in no event later than the expiration date of such Option as set forth in the
Agreement). To the extent that, at the time of death, the Participant was not entitled to exercise the Option, the Option shall (except as otherwise provided in the Agreement or by the Committee) automatically terminate at that time. 
 6.08. Exercise.    Subject to the other provisions of this Plan and the applicable Agreement, an Option may be exercised in
whole at any time or in part from time to time at such times and in compliance with such requirements as may be set out in the Agreement or established by the Committee. An Option granted under this Plan may be exercised with respect to any number
of whole Shares less than the full number for which the Option could be exercised. A partial exercise of an Option shall not affect the right to exercise the Option from time to time in accordance with this Plan and the applicable Agreement with
respect to the remaining shares subject to the Option. 
 6.09. Payment. 
 (a) Except as otherwise provided in the Agreement or by the Committee, payment of the Option Price shall be made in cash or a cash equivalent acceptable
to the Committee. To the extent provided in the Agreement or permitted by the Committee, payment of all or part of the Option Price may be made by surrendering Stock to the Company or through withholding of Shares otherwise deliverable upon exercise
of the Option. If Stock is used to pay all or part of the Option Price, the sum of the cash (and cash equivalent) and the Fair Market Value (determined as of the last trading day preceding the date of surrender) of the surrendered Shares must not be
less than the total Option Price of the Shares for which the Option is being exercised. 
 (b) To the extent permitted in the Agreement or by
the Committee, an Option may, in accordance with such rules and procedures as may be established by the Committee, be exercised through a cashless exercise procedure involving a broker or dealer to pay the Option Price and/or to satisfy any
withholding tax obligations related to the Option. 
 6.10. Shareholder Rights.    No Participant shall have any
rights as a shareholder to Shares subject to an Option until the date the Shares for which an Option has been exercised have been issued to the Participant, except that the Committee may authorize dividend equivalent accruals with respect to such
Shares. 
 6.11. Disposition of Stock.    A Participant shall notify the Company of any sale or other disposition
of Shares acquired pursuant to an Incentive Stock Option if such sale or disposition occurs (i) within two years of the grant of an Option or (ii) within one year of the issuance of the Stock to the Participant. Such notice shall be in
writing and directed to the Secretary of the Company (or the Secretary’s designee). 
 ARTICLE VII 
 STOCK AWARDS 
 7.01. Award.

 (a) In accordance with Article V, the Committee may (i) designate each individual to whom a Stock Award is to be made,
(ii) specify the number of Shares covered by each such Award and (iii) establish such other 

  

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terms and conditions as it may deem appropriate for each Award. If, as a condition for a Stock Award, the Participant is required to make payment for the
awarded Shares, such purchase price shall be paid as provided in the Agreement. The terms and conditions of any Stock Award under the Plan shall be set forth in an Agreement. 
 (b) Subject to the provisions of Section 11.01, in no event may the number of Shares covered by all Stock Awards granted to any one person in any
calendar year exceed 250,000. 
 7.02. Vesting. 
 (a) Except as otherwise provided by the Committee, a Participant’s rights in a Stock Award shall be forfeitable or otherwise restricted for such period of time, until the satisfaction of such performance
conditions or until the satisfaction of such other conditions or requirements as may be set forth in the Agreement. 
 (b) Except as provided
in the Agreement or by the Committee, a nonvested Stock Award shall terminate and be forfeited as of the date the Participant ceases to be an Employee or Director. 
 7.03. Shareholder Rights.    Except as otherwise provided in the Agreement, during the period that the Shares granted pursuant to a Stock Award are forfeitable, a Participant shall have all
rights of a shareholder with respect to such Shares (unless and until forfeited), including the right to receive dividends and vote the Shares; provided, however, that during such period (i) a Participant may not (except as provided in
Section 13.08) sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of Shares granted pursuant to a Stock Award, (ii) the Company shall retain custody of the Shares granted pursuant to a Stock Award, and (iii) the
Participant shall deliver to the Company a stock power (endorsed in blank) or take such other actions as may be required by the Committee with respect to each Stock Award. The Committee will determine whether any dividends or distributions for such
Shares will be automatically reinvested in additional Shares and subject to the same restrictions on transferability as the Stock Award with respect to which they were distributed or whether such dividends or distributions will be paid in cash. The
preceding limitations shall cease to apply as of the date the Shares subject to the Stock Award become transferable and cease to be forfeitable. 
 ARTICLE VIII 
 PHANTOM SHARE AWARDS 
 8.01. Award. 
 (a) In accordance with the provisions of Article V, the Committee may
(i) designate each individual to whom an Award of Stock Units or SARs is to be made, (ii) specify the number of Shares covered by each such Award and (iii) establish such other terms and conditions as it may deem appropriate for each
Award. The terms and conditions of any such award under the Plan shall be set forth in an Agreement. 
 (b) Subject to the provisions of
Section 11.01, in no event may the number of Shares covered by all Phantom Share Awards granted to any one person in any calendar year exceed 250,000. 
 8.02. Provisions Applicable to SARs. 
 (a) SARs may be granted to Participants from time to time
either in tandem with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in conjunction with other Awards (“freestanding SARs”) and may, but need not, relate to a specific Option granted under
Section 6.01. Any SAR granted in tandem with an Award may be granted at the same time such Award is granted or at any time thereafter before exercise or expiration of such Award. All tandem SARs shall have the same Option Price, vesting,
exercisability, forfeiture and termination provisions as the Award to which they relate. 
  

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 (b) Subject to the other provisions of this Plan and the applicable Agreement, a freestanding SAR may be
exercised in whole at any time or in part from time to time at such times and in accordance with such requirements as may be set out in the Agreement or established by the Committee; provided that a freestanding SAR may only be exercised when the
value of a Share exceeds the per-Share Option Price. 
 (c) A freestanding SAR granted under this Plan may be exercised with respect to any
number of whole Shares less than the full number for which the freestanding SAR could be exercised. A partial exercise of a freestanding SAR shall not affect the right to exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the freestanding SAR. 
 (d) To the extent not previously exercised, all
vested freestanding SARs shall (except as otherwise provided in the Agreement) automatically be exercised on the last trading day prior to expiration, unless the Participant instructs the Company otherwise in writing before that date. 
 (e) In addition, all freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in
Sections 6.02, 6.05 and 6.07. 
 8.03. Payment.    The amount payable under a Phantom Share Award may be paid
or settled (i) by the Company by issuing Stock (in whole Shares) and cash for any fractional Share, (ii) in cash or (iii) in a combination thereof 
 8.04. Shareholder Rights.    No Participant shall, as a result of receiving an Award of Phantom Shares, have any rights as a shareholder until and to the extent the Shares are issued to a
Participant as payment of a Phantom Share award, except that the Committee may authorize dividend equivalent accruals with respect to such Awards. 
 8.05. Nontransferability.    Except as provided in Section 13.08, Phantom Shares granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. No right or
interest of a Participant in any Phantom Shares shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 
 8.06. Forfeiture of Stock Unit Awards.    Except as provided in the Agreement or by the Committee, a nonvested Stock Unit Award shall terminate and be forfeited as of the date the Participant ceases to be an
Employee or Director. 
 ARTICLE IX 
 QUALIFIED PERFORMANCE-BASED AWARDS 
 9.01. Scope and Purpose.    The purpose of this Article is
to enable the Committee to make Awards that are structured to qualify as “performance-based compensation” under Section 162(m)(4)(C) of the Code; provided, however, that the failure to designate an Award as a Qualified
Performance-Based Award shall not mean that such Award does not constitute “performance-based compensation” if the Award otherwise meets the requirements under Section 162(m) or any regulations thereunder. The Committee shall
establish such additional terms and conditions as it may deem appropriate for such an Award. Notwithstanding anything herein to the contrary, Awards that are not intended to be structured to qualify as “performance-based compensation”
under Section 162(m)(4)(C) of the Code may be subject to such performance-based vesting and other conditions as the Committee may determine in addition to or separate from those described in this Article. 
 9.02. Applicability.    Grants may be made under this Article to Covered Employees or to those Employees who the Committee
determines may become Covered Employees in the period covered by an Award. 
  

 10 

 9.03. Awards. 
 (a) The Committee shall establish the applicable Performance Period and Performance Goal(s) for each Award. The Committee may establish (i) different Performance Periods for different Participants and
(ii) concurrent or overlapping Performance Periods. 
 (b) A Participant will, as determined by the Committee, be entitled to the grant
made under a Qualified Performance-Based Award only if (and to the extent) the applicable Performance Goal(s) are achieved within the applicable Performance Period; provided that the Committee may reduce or eliminate a Qualified Performance-Based
Award to the extent it deems necessary or appropriate. 
 (c) The maximum Qualified Performance-Based Award payment to any one Participant
under the Plan for a Performance Period shall be the Share limit set forth in Sections 6.01(b), 7.01(b) or 8.01(b), whichever is applicable. 
 (d) No adjustment of any Qualified Performance-Based Award pursuant to Section 11.01 shall be made except on such basis, if any, as will not cause such Award to cease to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code. 
 9.04. Establishment of Performance Goals. 
 (a) All Performance Goals shall (i) be objective, (ii) be established not later than ninety (90) days after the beginning of any applicable
Performance Period (or at such other date as may be required or permitted for “performance-based compensation” under Section 162(m)) and (iii) otherwise meet the requirements of Section 162(m) of the Code, including the
requirement that the outcome of the Performance Goals be substantially uncertain at the time established. 
 (b) The Committee shall
establish the applicable Performance Goals for a Performance Period based upon the applicable performance criteria set forth in subsection (c) below. After the end of the applicable Performance Period, the Committee shall certify (in writing)
the extent to which any such Performance Goals have been satisfied, and the amount payable as a result thereof, prior to payment, settlement or vesting of any Award that is intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. Notwithstanding satisfaction of any Performance Goals, the number of Shares issued under or the amount paid under an award may be reduced by the Committee on the basis of such further
considerations as the Committee shall determine. 
 (c) For purposes of this Article, “performance criteria” shall mean any one or
more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee:
(i) operating income; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or revenue; (vii) expenses;
(viii) profit/loss or profit margin; (ix) working capital; (x) return on equity or capital; (xi) earnings per share; (xii) stock price; (xiii) price/earnings ratio; (xiv) debt or debt-to-equity; (xv) balance
sheet measurements; (xvi) cash or assets; (xvii) liquidity; (xviii) economic value added (“EVA”); (xix) operations; (xx) mergers and acquisitions or divestitures; and/or (xxi) franchisee operations and other
industry-specific factors (such as average daily room rates, room occupancy rates, room turnover, customer satisfaction, revenue and/or royalties per available room, executed franchise contracts, number of franchises and like factors). 

(d) To the extent consistent with Section 162(m) of the Code, the Committee (i) may appropriately establish performance criteria that
either disregards or takes into account the effects of charges for restructurings, 

  

 11 

 
discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or related to the
disposal of a segment of a business or related to a change in accounting principle all as determined in accordance with standards established by opinion No. 30 of the Accounting Principles Board or other applicable or successor accounting
provisions, as well as the cumulative effect of accounting changes, in each case as determined in accordance with generally accepted accounting principles or identified in the Company’s financial statements or notes to the financial statements,
and (ii) may appropriately establish performance criteria that either includes or excludes gains and losses related to any of the following events that occurs during a performance period: (A) the sale of assets, (B) litigation, claims, judgments or
settlements, (C) the effect of changes in tax law or other such laws or provisions affecting reported results, (D) accruals for reorganization and restructuring programs and (E) accruals of any amounts for payment under this Plan or any
other compensation arrangement maintained by the Company. 
 ARTICLE X 
 DEFERRAL OF PAYMENTS 
 10.01. Deferral
Elections.    To the extent permitted in the Agreement or by the Committee, a Participant may elect to defer all or any portion of an Award (other than an Option or SAR). Such election shall be made at such time and upon such
terms as the Committee may establish consistent with Section 409A of the Code. 
 10.02. Deferral
Account.    The deferred Awards shall be credited to a bookkeeping account maintained by the Company in the name of the Participant. Any dividends or other distributions on credited Shares also shall be credited to that
account. Such amounts may, as provided in the Agreement or determined by the Committee, be credited with a reasonable rate of interest or invested in additional deferred Shares. 
 10.03. Applicable Legal Requirements.    The deferral of any Award under this Article shall comply and be administered
consistent with Section 409A of the Code. Notwithstanding anything herein to the contrary, in no event will any deferral of the delivery of Shares or any other payment (or the acceleration of the delivery of deferred Shares or other deferred
payments) for any Award be allowed if the Committee determines that the deferral would result in a violation of the requirements of Section 409A for deferral elections and/or the timing of payments. Any Agreement may be reformed by the
Committee to the extent necessary or appropriate to comply with the requirements of Section 409A. 
 ARTICLE XI 
 ADJUSTMENTS 
 11.01. Adjustments for
Changes in Capital Structure.    The maximum number of Shares as to which Awards may be granted under this Plan, the annual Award limits and the terms of any outstanding Award may be proportionately (or otherwise equitably)
adjusted as the Committee shall determine in the event that (i) the Company (A) effects one or more dividends or distributions of securities, property or cash (other than regular, quarterly cash dividends), stock split-ups, subdivisions or
consolidations of Stock or (B) engages in a reorganization, reclassification or spin-off or (ii) there occurs any other event or transaction that affects the number or kind of Shares outstanding, which the Committee determines that such
adjustments are necessary or appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Any adjustments required hereunder for Options may be made in accordance with
Section 424(a) of the Code and/or Section 409A of the Code, or, except as otherwise expressly provided in this Plan, may be designed to treat the Shares available under the Plan and subject to Awards as if they were all outstanding on the
record date for such event or transaction or to increase the number of such Shares to reflect a deemed reinvestment in Shares of the amount distributed to the Company’s securityholders. 
  

 12 

 ARTICLE XII 
 CHANGE IN CONTROL 
 12.01. Change of Control. 
 (a) In the event of a Change of Control, the Committee may take any one or more of the following actions with respect to one or more of the outstanding
Awards: 
 (i) Provide that such Awards shall be assumed, or equivalent Awards shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), provided that any such Options substituted for Incentive Stock Options may be structured to satisfy, in the determination of the Committee, the requirements of Code section 424(a); 
 (ii) Provide that such Awards shall terminate upon consummation of the Change of Control and each Participant shall receive, in exchange
therefor, a payment in securities, cash or a combination of the two equal to: 
 (A) in the case of an Option, the Fair
Market Value of the Shares payable under such Option as of the last trading day preceding the date on which the Change in Control takes place (net of the Option Price); 
 (B) in the case of a SAR, the amount payable under the SAR as of the last trading day preceding the date on which the Change in Control
takes place; or 
 (C) in the case of any other Award, the Fair Market Value of the Shares subject to the Award as of the
last trading day preceding the date on which the Change in Control takes place. 
 (iii) vest Awards and require that any
Options or SARs be exercised at such time and upon such conditions as the Committee may determine (with any unexercised Awards terminating upon expiration of the time period for exercise). 
 Notwithstanding the foregoing, the time for payment of an Award shall not be accelerated under this Section to the extent such acceleration would be contrary to the
payment timing or other rules under Section 409A of the Code. 
 12.02. Vesting Upon a Change in Control. 
 (a) Notwithstanding any other provision of the Plan to the contrary, if a “Change of Control” occurs and the Participant’s employment with
the Company terminates as described in subsection (b) below, the following shall (except as otherwise provided by the Committee or in the Agreement) occur: 
 (i) All Options and SARs that are outstanding at the time the Participant’s employment with the Company terminates shall become fully
vested and exercisable in full; 
 (ii) All Stock and Stock Unit Awards (including any Qualified Performance-Based Awards)
that are outstanding at the time the Participant’s employment with the Company terminates shall become fully vested and any restrictions shall lapse, and; 
 (iii) for any Awards with performance-based requirements that are outstanding at the time the Participant’s employment with the
Company terminates, all uncompleted performance periods at the time of such Change of Control shall be deemed to have been completed, the maximum level of performance set forth under the Agreement shall be deemed to have been attained and each such
outstanding Award granted to each Participant for all outstanding Performance Periods shall become payable to each Participant. 
 Notwithstanding the
foregoing, the time for payment of an Award shall not be accelerated under this Section to the extent such acceleration would be contrary to the payment timing or other rules under Section 409A of the 

  

 13 

 
Code, and, in the case of a Participant to whom Section 409A(a)(2)(B)(i) applies, payment shall, to the extent required under that Section 409A, be
delayed for six months following the Participant’s termination as an Employee. 
 (b) This Section shall (except as otherwise provided
by the Committee or in the Agreement) apply in the event that the Participant’s employment terminates within two years of the Change of Control under either of the circumstances described below: 
 (i) The Participant’s employment as an Employee is terminated by the Company other than for Cause: or 
 (ii) The Participant terminates his or her employment as an Employee for good reason (as defined in subsection (c) below).

 (c) For purposes of this Section, “good reason” shall mean (i) a significant reduction in the scope of a Participant’s
authority, position, title, functions, duties or responsibilities, (ii) the relocation of a Participant’s office location to a location more than 25 miles from the Participant’s prior principal place of employment, (iii) any
reduction in a Participant’s base salary, (iv) a significant change in the Company’s annual bonus program adversely affecting the Participant, or (v) a significant reduction in the other employee benefits provided to a
Participant. 
 12.03. Gross-up Payment.    In the event of a Change of Control as defined under Section 280G
of the Code, if the vesting of Awards and/or payment of Awards under this Plan and/or payments of amounts under any other agreement with or plan of the Company (in the aggregate the “Total Payments”) subject all or any part of the Total
Payments to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed), the Company shall (except as otherwise provided by the Committee or in the Agreement) pay to the
Participant in cash an additional amount (the “Additional Payment”) such that the net amount retained by the Participant, after deduction of any Excise Tax imposed upon the Total Payments and any federal, state and local income tax and
Excise Tax upon the Additional Payment provided for by this Paragraph C, and any employment tax (including FICA and FUTA) upon such Additional Payment, shall be equal to the amount of Total Payments prior to such taxes. Such Additional Payment
shall be made by the Company to the Participant as soon as practicable but in no event later than two and one-half (2 1/2) months after the year in which such Excise Tax or other tax liability is incurred. The determination of whether any of the Total Payments to a Participant will be subject to the Excise Tax, the calculation of parachute value under
Section 280G of the Code of the Total Payments, and calculation of the Additional Payment, shall be made by a Certified Public Accounting firm jointly agreed to by the Company and the Participant. 
 ARTICLE XIII 
 OTHER PROVISIONS FOR
GRANTS AND AWARDS 
 13.01. Tax Withholding Requirements. 
 (a) To the extent required by applicable federal, state, local or foreign law, a Participant shall make arrangements satisfactory to the Company for the
satisfaction of any required statutory federal, state and/or local withholding tax obligations that arise by reason of an Option exercise or other Award prior to delivery of any Shares. The obligations of the Company under the Plan shall be
conditional on satisfaction of all such withholding obligations and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. 
 (b) To the extent provided in the Agreement or permitted by the Committee, the Participant may (to the extent permitted under Section 409A of the
Code) elect to have any such withholding obligations satisfied, in whole or in part, by having the Company’s withhold Shares subject to the Option or other Award, but not to exceed an amount equal to the minimum prescribed statutory withholding
amount. The value of any Shares so 

  

 14 

 
withheld shall be determined based on the Fair Market Value as of the last trading day preceding the date the Shares are withheld for this purpose.

 (c) Notwithstanding anything else herein to the contrary, in the event of a cashless exercise of an Option, the Fair Market Value for tax
withholding purposes shall be the per-Share price at which the Shares were sold by the broker in executing the cashless exercise. 
 13.02.
Withdrawal.    A Participant may at any time elect in writing to abandon an Award under the Plan. 
 13.03.
Forfeiture Upon Termination For Cause.    In the event that a Participant’s status as an Employee or Director is terminated for Cause, all of the Participant’s outstanding unexercised Options and unpaid Awards
shall (except as otherwise provided in the Agreement or by the Committee) automatically terminate as of the date he or she ceases to be an Employee or Director. 
 13.04. Registration, Listing and Qualification of Stock. 
 (a) No Option or SAR shall be exercisable,
no Stock shall be issued or delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement
to which the Company is a party, and the rules of all domestic stock exchanges on which the Shares may be listed. The Company shall have the right to rely on an opinion of its counsel as to such compliance. 
 (b) Any Shares issued pursuant to this Plan may bear such legends and statements as the Committee may deem advisable to assure compliance with federal
and state laws and regulations. No Awards shall be granted, Options or SARs shall be exercised, Shares shall be issued and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Committee may deem
advisable from regulatory bodies having jurisdiction over such matters. 
 (c) Any person exercising an Option or SAR or receiving Stock
under any other Award shall make such representations, warranties and agreements and furnish such information as the Committee or the Company may request to assure compliance with the foregoing or any other applicable legal requirements. 

13.05. Corporate Restrictions. 
 (a) Any Stock to be issued pursuant to an Award shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the Company. 
 (b) The Committee may provide that the Shares issued upon exercise of an Option or SAR or otherwise subject to or issued under an Award shall be subject
to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or SAR or the grant, vesting or settlement of such Award, including without limitation,
conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Shares issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Shares already owned by
the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any
Shares issued under an Award, including without limitation (i) restrictions under an insider trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant
and holders of other Company equity compensation arrangements, (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (iv) provisions requiring Shares to be sold on the open market or to the
Company in order to satisfy tax withholding or other obligations. 
  

 15 

 13.06. Investment Representations.    The Company shall be under no obligation
to issue any Shares pursuant to any Award unless the Shares have been effectively registered under the Securities Act of 1933 or the Participant shall have made such written representations to the Company (upon which the Company believes it may
reasonably rely) as the Company may deem necessary or appropriate for purposes of confirming that the issuance of such Shares will be exempt from the registration requirements of that Act and any applicable state securities laws and otherwise in
compliance with all applicable laws, rules and regulations. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such Shares as to which such requisite authority shall
not have been obtained. No Option shall be exercisable and no Shares shall be issued and/or transferable under any other Award unless a registration statement with respect to the Shares underlying such Option is effective and current or the Company
has determined that such registration is unnecessary. 
 13.07. Registration.    If the Company shall deem it
necessary or desirable to register under the Securities Act of 1933 or other applicable statutes any Stock issued or to be issued pursuant to an Award, or to qualify any such Stock for exemption from the Securities Act of 1933, as amended or other
applicable statutes, the Company shall take such action at its own expense. The Company may require from each Participant such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as
is reasonably necessary for that purpose. 
 13.08. Transferability of Options, Stock Awards and Phantom
Shares.    Notwithstanding any other provision of the Plan, the Committee may permit a Nonqualified Stock Option, Stock Award or Phantom Share Award to be transferred by a Participant to a family member (as defined in the
General Instructions for the Form S-8) as a gift (or otherwise without payment of any consideration) on such terms and conditions as may be permitted under applicable law (or otherwise established by the Committee). Except as otherwise established
by the Committee, the transferee shall be bound by the terms and conditions set forth in the Agreement for the transferred Award; provided, however that such transferee may not transfer Option or award except by will or the laws of descent and
distribution. 
 13.09. Applicable Legal Requirements.    All Awards shall, to extent applicable, comply and be
administered in accordance with the rules and requirements of Section 409A of the Code. To extent necessary to ensure such compliance, the Committee may reform any Agreement to the extent it determines that the Agreement does not comply with
Section 409A. 
 ARTICLE XIV 
 AMENDMENT AND TERMINATION 
 14.01. Amendment. 
 (a) The Board shall have the right to amend the Plan at any time and from time to time; provided, that no such amendment of the Plan shall, without
stockholder approval, be effective if stockholder approval of the amendment is required at such time to qualify for any exemption from Section 16 of the Exchange Act or by any other applicable law, regulation, rule or order. 
 (b) No amendment may be made that would cause an Option or other Award not to qualify for exemption under Section 16 of the Exchange Act.

 (c) Except as otherwise provided in the Plan or the Agreement, no amendment of the Plan shall, without the written consent of a
Participant adversely affect the rights of the Participant with respect to an Option or other Award prior to the date of the amendment or termination (except to the extent necessary to comply with any applicable law, regulation, rule or order).

 (d) Notwithstanding anything herein or in any Agreement to the contrary, the Board shall have the power to amend the Plan in any manner
deemed necessary or advisable for Options or any other Awards made under the Plan to qualify for any exemption provided under Section 16 of the Exchange Act and any such 

  

 16 

 
amendment shall, to the extent deemed necessary or advisable by the Board, be applicable to any outstanding Options or other Award previously issued under
the Plan. In the event of such an amendment to the Plan, the holder of any Option or other Award shall, upon request of the Board and as a condition for exercising of such Option, obtaining such other award, execute a conforming amendment in the
form prescribed by the Board to the Agreement within such reasonable period of time as the Board shall specify in such request. 
 14.02.
Termination.    The Board shall have the right to terminate the Plan at any time; provided, that no such termination shall, except as otherwise provided in any Agreement, terminate any outstanding Option or other award
previously granted under the Plan or adversely affect the rights of such Participant without his or her written consent. No new Awards may be granted under the Plan on or after the date of termination. 
 ARTICLE XV 
 GENERAL PROVISIONS

 15.01. Government Regulations.    The rights of Participants and the obligations of the Company hereunder
shall be subject to all applicable laws, rules, and regulations and to such approvals as may be required by any governmental agency. 
 15.02. Unfunded Plan.    The Plan, insofar as it provides for Awards, shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by grants under this Plan.
Any liability of the Company to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the Company shall be deemed to be secured by
any pledge of, or other encumbrance on, any property of the Company. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure payment of any grant under the Plan. 
 15.03. Effect on Employment and Service.    Neither the adoption of this Plan, its operation, nor the issuance of any Awards
hereunder shall confer upon any individual any right to continue as an Employee or Director of the Company or an Affiliate, or in any way affect any right and power of the Company or an Affiliate to terminate the employment or discontinue the
service of any individual at any time with or without assigning a reason therefor. 
 15.04. Costs and
Expenses.    Except as otherwise provided by the Board, all costs and expenses of administering the Plan shall be paid by the Company. 
 15.05. Proceeds from Sale of Stock.    Proceeds from the purchase of Shares by a Participant under the Plan may be used by the Company for any business purpose. 
 15.06. Governing Law.    This Plan shall be governed by and construed in accordance with the laws of the State of Delaware
(without regard to the conflicts of laws principles thereof). The Committee may provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration. Any
reference in this Plan or in the agreement evidencing any Award to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability. 
 15.07. Rules of Construction.    Headings are given to the articles and sections of this Plan solely as a convenience to
facilitate reference. The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law and any regulation, rule or other formal guidance thereunder. 

15.08. Invalidity.    If any provision of the Plan shall be held invalid or unlawful for any reason, such event shall not
affect or render invalid or unenforceable the remaining provisions of the Plan. 
  

 17Severance agreement between the Registrant and Angelo Santamaria

 Exhibit 10.1 
 AMERICAN SUPERCONDUCTOR CORPORATION 
 Executive Severance Agreement 
 THIS EXECUTIVE SEVERANCE AGREEMENT by and between American Superconductor Corporation, a Delaware corporation (the “Company”), and Angelo R.
Santamaria (the “Executive”) is made as of May 4, 2006 (the “Effective Date”). 
 WHEREAS, the Board of Directors of
the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued employment and dedication of the Executive and to minimize the distraction from the possibility of an unwarranted
termination of employment. 
 WHEREAS, the Company and the Executive acknowledge and agree that the benefits described in this Agreement are
not intended to, and shall not, constitute a severance plan, and shall confer no benefit on anyone other than the parties hereto. 
 NOW,
THEREFORE, as an inducement for and in consideration of the Executive remaining in its employ, the Company agrees that the Executive shall receive the severance benefits set forth in this Agreement in the event the Executive’s employment with
the Company is terminated under the specific circumstances described below. 
 1. Key Definitions. 
 As used herein, the following terms shall have the following respective meanings: 
 1.1 “Change in Control” means an event or occurrence set forth in any one or more of subsections (a) through
(c) below: 
 (a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, or (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or 
 (b) the Continuing Directors (as defined below) no longer constituting a majority of the
Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (i) who was a member of the Board on the date of the execution
of this Agreement or (ii) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (ii) any individual whose initial
assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the
Board; or 

 (c) the consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company in one or a series of related transactions (a “Business Combination”), other than a Business Combination
in which all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, immediately following such Business Combination, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of
directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively. 
 1.2 “Change in Control Date” means the first date during the Term (as defined in
Section 2) on which a Change in Control occurs. 
 1.3 “Cause” means: 
 (a) the Executive’s failure to perform his reasonable assigned duties to the standards reasonably required by the Company (other
than any such failure resulting from incapacity due to physical or mental illness), which failure is not cured within 30 days after a written notice is received by the Executive from the Company describing in reasonable detail the manner in which
the Board of Directors believes the Executive has not performed the Executive’s duties to the standards reasonably required by the Company; or 
 (b) the Executive’s willful engagement in illegal conduct or gross misconduct that is materially injurious to the Company. For purposes of this Section 1.3(b), no act or failure to act by the Executive shall
be considered “willful” unless it is done intentionally and without reasonable belief that the Executive’s action was in the best interests of the Company. 
 1.4 “Good Reason” means the occurrence, without the Executive’s written consent, of any of the events or
circumstances set forth in clauses (a) through (e) below. Notwithstanding the occurrence of any such event or circumstance, such occurrence shall not be deemed to constitute Good Reason if, prior to the Date of Termination specified in the
Notice of Termination (each as defined in Section 3.2(a)) given by the Executive in respect thereof, such event or circumstance has been fully corrected and the Executive has been reasonably compensated for any losses or damages resulting
therefrom (provided that such right of correction by the Company shall only apply to the first Notice of Termination for Good Reason given by the Executive). 
 (a) the assignment to the Executive of significant duties inconsistent in any material respect with the Executive’s position
(including status, offices, titles and reporting requirements), authority or responsibilities in effect immediately prior to the earliest to occur of (i) the Change in Control Date, (ii) the date of the execution by the Company of the
initial written agreement or instrument providing for the Change in Control or (iii) the date of the adoption by the Board of Directors of a resolution providing for the Change in Control (with the earliest to occur of such dates referred to
herein as the “Measurement Date”), or any other action or omission by the Company which results in a material diminution in such position, authority or responsibilities; or 
 (b) a reduction in the Executive’s annual base salary as in effect on the Measurement Date, as the same may be increased thereafter
from time to time; or 
  

 2 

 (c) the failure by the Company to (i) continue in effect any material compensation
or benefit plan or program (including without limitation any life insurance, medical, health and accident or disability plan and any vacation or automobile program or policy) (a “Benefit Plan”) in which the Executive participates or which
is applicable to the Executive immediately prior to the Measurement Date, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan or program or (ii) continue the
Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive’s participation relative to other
participants, than the basis existing immediately prior to the Measurement Date; or 
 (d) a change by the Company in the
location at which the Executive performs his principal duties for the Company to a new location that is more than 30 miles from the location at which the Executive performed his principal duties for the Company immediately prior to the Measurement
Date (unless such new location is closer to the Executive’s residence than the prior location); or 
 (e) any material
breach by the Company of this Agreement or any employment agreement with the Executive. 
 1.5 “Disability”
means the Executive’s absence from the full-time performance of the Executive’s duties with the Company for 180 consecutive calendar days as a result of incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative. 
 1.6 “Severance Period” shall mean the period of 12 months immediately following the Date of Termination (as defined in Section 3.2(a) below). 
 2. Term of Agreement. This Agreement, and all rights and obligations of the parties hereunder, shall take effect upon the Effective Date and shall
expire upon the first to occur of (a) the expiration of the Term (as defined below) if neither a termination of employment covered by Section 4.1(a) below nor a Change in Control occurred during the Term, or (b) the fulfillment by the
Company of all of its obligations under Section 4 following a termination of the Executive’s employment with the Company. “Term” shall mean the period commencing as of the Effective Date and continuing in effect through
March 31, 2009; provided, however, that commencing on April 1, 2006 and each April 1 thereafter (each hereinafter referred to as a “Renewal Date”), the Term shall be automatically extended for one additional year so
as to terminate four years from such Renewal Date, unless at least 90 days prior to such Renewal Date, the Company shall have given the Executive written notice that the Term will not be extended. 
 3. Employment Status; Termination Following Change in Control. 
 3.1 Not an Employment Contract. The Executive acknowledges that this Agreement does not constitute a contract of employment or
impose on the Company any obligation to retain the Executive as an employee and that this Agreement does not prevent the Company or the Executive from terminating his employment at any time, before or after a Change in Control. 
 3.2 Termination of Employment. 
 (a) Any termination of the Executive’s employment by the Company at any time during the Term or at any time after the Change in Control Date, or by the Executive within 12 months following the Change in Control
Date (other than due to the death of the Executive) shall be communicated by a written notice to the other party hereto (the “Notice of Termination”), given in accordance with Section 6.2. Any Notice of Termination shall:
(i) indicate (in the case of a termination by the Company) whether such termination is for Cause and (in the case of a termination by the Executive within 12 months following the Change in Control Date) whether such termination is for Good
Reason, (ii) to the extent applicable, set forth in reasonable detail 

  

 3 

 
the facts and circumstances claimed to provide a basis for termination of the Executive’s employment for Cause or for Good Reason and (iii) specify
the Date of Termination (as defined below). The effective date of an employment termination (the “Date of Termination”) shall be the close of business on the date specified in the Notice of Termination (which date may not be less than 15
days or more than 120 days after the date of delivery of such Notice of Termination), in the case of a termination other than one due to the Executive’s death, or the date of the Executive’s death, as the case may be. 
 (b) The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting any such fact or circumstance in enforcing the Executive’s
or the Company’s rights hereunder. 
 (c) Any Notice of Termination for Cause given by the Company must be given within
90 days of the occurrence of the event(s) or circumstance(s) that constitute(s) Cause. 
 (d) Any Notice of Termination for
Good Reason given by the Executive must be given within 90 days of the occurrence of the event(s) or circumstance(s) that constitute(s) Good Reason. 
 4. Benefits to Executive. 
 4.1 Termination Prior to Change in Control Date.

 (a) Termination Without Cause. If, prior to a Change in Control Date (including a situation in which a Change in
Control Date never occurs), the Company terminates the Executive’s employment other than for Cause, Disability or death, then the Executive shall be entitled to the following benefits: 
 (i) the Company shall pay to the Executive, in a lump sum in cash on the Date of Termination, the sum of the following amounts:
(1) the Executive’s base salary through the Date of Termination, (2) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and (3) any accrued vacation pay, in each case to
the extent not previously paid (the sum of the amounts described in clauses (1) through (3) shall be hereinafter referred to as the “Accrued Obligations”); 
 (ii) during the Severance Period, the Company shall continue to pay to the Executive, in accordance with the Company’s regular
payroll practices, the Executive’s highest annual base salary during the two-year period prior to the Date of Termination; and 
 (iii) during the Severance Period, the Company shall continue to provide to the Executive and the Executive’s family those benefits which would have been provided to them if the Executive’s employment had
not been terminated, in accordance with the applicable Benefit Plans in effect on the Date of Termination (to the extent such benefits can be provided to non-employees, or to the extent such health insurance benefits cannot be provided to
non-employees, then the cash equivalent thereof, based on the cost thereof to the Company); provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive a particular type of benefits (e.g.,
health insurance benefits) from such employer on terms at least as favorable to the Executive and his family as those being provided by the Company, then the Company shall no longer be required to provide those particular benefits to the Executive
and his family. 
  

 4 

 (b) Other Termination. If, prior to the Change in Control Date, the
Executive’s employment with the Company is terminated other than under the circumstances described in Section 4.1(a), then the Company shall (i) pay the Executive (or his estate, if applicable), in a lump sum in cash on the Date of
Termination, the Accrued Obligations and (ii) to the extent not previously paid or provided, timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive
following the Executive’s termination of employment under any plan, program, policy, practice, contract or agreement of the Company and its subsidiaries (such other amounts and benefits shall be hereinafter referred to as the “Other
Benefits”). 
 4.2 Termination Following Change in Control Date. 
 (a) Termination within 12 Months Following Change in Control Date. If the Company terminates the Executive’s employment other
than for Cause, Disability or death within 12 months following the Change in Control Date, or if the Executive terminates his employment for Good Reason within 12 months following the Change in Control Date, then the Executive shall be entitled to
the following benefits: 
 (i) the Company shall pay to the Executive, in a lump sum in cash on the Date of Termination,
(A) the Accrued Obligations and (B) the product of (x) the annual target bonus payable to the Executive for the fiscal year in which the Date of Termination occurs and (y) a fraction, the numerator of which is the number of days
in the then-current fiscal year through the Date of Termination, and the denominator of which is 365, less any portion of such bonus previously paid to the Executive; 
 (ii) during the Severance Period, the Company shall continue to pay to the Executive, in accordance with the Company’s regular
payroll practices, the Executive’s highest annual base salary during the two-year period prior to the Date of Termination; and 
 (iii) during the Severance Period, the Company shall continue to provide to the Executive and the Executive’s family those benefits which would have been provided to them if the Executive’s employment had
not been terminated, in accordance with the applicable Benefit Plans in effect on the Date of Termination (to the extent such benefits can be provided to non-employees, or to the extent such health benefits cannot be provided to non-employees, then
the cash equivalent thereof, based on the cost thereof to the Company); provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive a particular type of benefits (e.g., health insurance
benefits) from such employer on terms at least as favorable to the Executive and his family as those being provided by the Company, then the Company shall no longer be required to provide those particular benefits to the Executive and his family.

 (b) Termination More Than 12 Months Following Change in Control Date. If the Company terminates the
Executive’s employment other than for Cause, Disability or death more than 12 months following the Change in Control Date, then the Executive shall be entitled to the following benefits: 
 (i) the Company shall pay to the Executive, in a lump sum in cash on the Date of Termination, the Accrued Obligations; 
 (ii) during the Severance Period, the Company shall continue to pay to the Executive, in accordance with the Company’s regular
payroll practices, the Executive’s highest annual base salary during the two-year period prior to the Date of Termination; and 
  

 5 

 (iii) during the Severance Period, the Company shall continue to provide to the
Executive and the Executive’s family those benefits which would have been provided to them if the Executive’s employment had not been terminated, in accordance with the applicable Benefit Plans in effect on the Date of Termination (to the
extent such health benefits can be provided to non-employees, or to the extent such benefits cannot be provided to non-employees, then the cash equivalent thereof, based on the cost thereof to the Company); provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive a particular type of benefits (e.g., health insurance benefits) from such employer on terms at least as favorable to the Executive and his family as those being provided
by the Company, then the Company shall no longer be required to provide those particular benefits to the Executive and his family. 
 (c) Other Terminations. If, following the Change in Control Date, the Executive’s employment with the Company is terminated other than under the circumstances described in Section 4.2(a) or Section 4.2(b), then the
Company shall (i) pay the Executive (or his estate, if applicable), in a lump sum in cash on the Date of Termination, the Accrued Obligations and (ii) to the extent not previously paid or provided, timely pay or provide to the Executive
the Other Benefits. 
 (d) Expenses. The Company agrees to reimburse the Executive for all legal and other fees and
expenses that the Executive reasonably incurs as a result of any claim or dispute regarding the benefits due to the Executive pursuant to this Section 4.2 if the Executive prevails in such claim or dispute. 
 4.3 Tax Provisions. 
 (a) Notwithstanding any other provision of this Agreement, in the event that the Company undergoes a Change in Ownership or Control (as defined below), the Company shall not be obligated to provide to the Executive a
portion of any Contingent Compensation Payments (as defined below) that the Executive would otherwise be entitled to receive to the extent necessary to eliminate Excess Parachute Payments (as defined below) for the Executive, except as set forth in
Section 4.3(b). For purposes of this Section 4.3, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation
Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.” 
 (b) Notwithstanding the provisions of Section 4.3(a), no such reduction in Contingent Compensation Payments shall be made if
(i) the Eliminated Amount (computed without regard to this sentence) exceeds (ii) 110% of the aggregate present value (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-31, Q/A-32, Q/A-33 or any successor
provisions) of the amount of any additional taxes that would be incurred by the Executive if the Eliminated Payments (determined without regard to this sentence) were paid to him (including, state and federal income taxes on the Eliminated Payments,
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”, which term shall include applicable Treasury Regulations), payable with respect to all of the Contingent Compensation Payments in
excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 4.3(b) shall be
referred to as a “Section 4.3(b) Override.” For purposes of this paragraph, if any federal, state or local income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes 
  

 6 

 shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal,
state and local income tax rate provided by law. 
 (c) For purposes of this Section 4.3 the following terms shall have
the following respective meanings: 
 (i) “Change in Ownership or Control” shall mean a change in the ownership or
effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code. 
 (ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made
available (under this Agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership
or Control of the Company. 
 (iii) “Excess Parachute Payment” shall mean a payment described in
Section 280G(b)(1) of the Code. 
 (d) Any payments or other benefits otherwise due to the Executive following a Change
in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 4.3(d).

 (i) In the event that the Company undergoes a Change in Ownership or Control, and the Executive becomes entitled to
receive Contingent Compensation Payments relating to such Change in Ownership or Control, the Company shall (A) determine at such time or times as may be necessary to comply with the requirements under Section 280G of the Code whether such
Contingent Compensation Payments constitute in whole or in part Excess Parachute Payments and (B) in the event the Company determines that such Contingent Compensation Payments constitute in whole or in part Excess Parachute Payments, notify
the Executive (within 30 days after each such determination and with reasonable detail regarding the basis for its determinations) of the following: (1) which Potential Payments constitute Contingent Compensation Payments, (2) the
Eliminated Amount and (3) whether the Section 4.3(b) Override is applicable. 
 (ii) Within 30 days after delivery
of such notice to the Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating either (A) that he agrees with the Company’s determination pursuant to the preceding sentence, in which
case he shall indicate, if applicable, which Contingent Compensation Payments, or portions thereof (the aggregate amount of which, determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be
equal to the Eliminated Amount), shall be treated as Eliminated Payments or (B) that he disagrees with such determination, in which case he shall set forth (1) which Potential Payments should be characterized as Contingent Compensation
Payments, (2) the Eliminated Amount, (3) whether the Section 4.3(b) Override is applicable, and (4) which (if any) Contingent Compensation Payments, or portions thereof (the aggregate amount of which, determined in accordance
with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal to the Eliminated Amount, if any), shall be treated as Eliminated Payments. 
 (iii) If the Executive fails to deliver an Executive Response on or before the required date, the Company’s initial determinations
shall be final, the Contingent 

  

 7 

 
Compensation Payments that shall be treated as Eliminated Payments shall be determined by the Company in its absolute discretion, and the Company shall make
the Potential Payments (other than the Eliminated Payments) to the Executive within 10 business days following the due date for delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until
after such date, which Potential Payments shall be made on the date on which they are due). 
 (iv) If the Executive states
in the Executive Response that he agrees with the Company’s determinations, the Company’s initial determinations shall be final, the Contingent Compensation Payments that shall be treated as Eliminated Payments shall be as set forth in the
Executive Response, and the Company shall make the Potential Payments (other than the Eliminated Payments) to the Executive within 10 business days following delivery to the Company of the Executive Response (except for any Potential Payments which
are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). 
 (v) If the Executive states in the Executive Response that he disagrees with the Company’s determinations, then, for a period of 60 days following delivery of the Executive Response, the Executive and the Company shall use good faith
efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within 10 business days following delivery to the Company of the Executive Response, make to the Executive those Potential
Payments as to which there is no dispute between the Company and the Executive regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made
on the date on which they are due). The balance of the Potential Payments (other than Eliminated Payments) shall be made within 10 business days following the resolution of such dispute. 
 (vi) Subject to the limitations contained in Sections 4.3(a) and (b) hereof, the amount of any payments to be made to the Executive
following the resolution of such dispute shall be increased by amount of the accrued interest thereon computed at the prime rate announced from time to time by Bank of America, compounded monthly from the date that such payments originally were due.

 (vii) In the event the Company is required to perform a redetermination in accordance with Treas. Reg. 1.280G-1 Q/A-33(b)
with respect to any Contingent Compensation Payments, this Section 4.3(d) shall apply with respect to such redetermination and the parties shall make such adjustments as may be necessary as a result of such redetermination including, if
appropriate, the payment by the Company of Contingent Compensation Payments previously treated as Eliminated Payments if the Section 4.3(b) Override applies as a result of such redetermination. 
 (e) The provisions of this Section 4.3 are intended to apply to any and all payments or benefits available to the Executive under
this Agreement or any other agreement or plan of the Company under which the Executive receives Contingent Compensation Payments. 
 4.4 Release. The obligation of the Company to make the payments and provide the benefits to the Executive under Section 4.1(a), Section 4.2(a) or Section 4.2(b) is conditioned upon the Executive signing a release of
claims in the form attached hereto as Exhibit A, or such other form as may be agreed to by the Company and the Executive (the “Employee Release”), within 21 days (or 

  

 8 

 
such greater period as the Company may specify) (the “Release Period”) following the Date of Termination and upon the Executive not revoking the
Employee Release in a timely manner thereafter. The Company shall not be obligated to make any payments to the Executive under clauses (ii) or (iii) of Section 4.1(a), Section 4.2(a) or Section 4.2(b) until the expiration of
the Release Period, provided that (i) at such time as the Release becomes effective, the Company shall promptly pay to the Executive any payments that would otherwise have been made to the Executive during the Release Period and (ii) the
provision of benefits under Section 4.1(a)(iii), Section 4.2(a)(iii) or Section 4.2(b)(iii) shall continue during the Release Period. 
 4.5 Exclusive Severance Benefits. The making of the payments and the provision of the benefits by the Company to the Executive under Section 4.1(a), Section 4.2(a) or Section 4.2(b) shall
constitute the entire obligation of the Company to the Executive as a result of the termination of his employment under the circumstances set forth in such Sections, and the Executive shall not be entitled to additional payments or benefits under
any other plan, program, policy, practice, contract or agreement of the Company or its subsidiaries. 
 4.6
Mitigation. The Executive shall not be required to mitigate the amount of any payment or benefits provided for in Section 4.1(a), Section 4.2(a) or Section 4.2(b) by seeking other employment or otherwise. Further, except as
provided in Section 4.1(a)(iii), Section 4.2(a)(iii) or Section 4.2(b)(iii), the amount of any payment or benefits provided for in Section 4.1(a), Section 4.2(a) or Section 4.2(b) shall not be reduced by any
compensation earned or benefits received by the Executive as a result of employment by another employer. 
 5. Settlement of Disputes;
Arbitration. All claims by the Executive for benefits under this Agreement shall be directed to the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in
writing and shall set forth the reasons for the denial and the provisions of this Agreement relied upon. Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Boston,
Massachusetts, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. 
 6. Miscellaneous. 
 6.1 Successors. This Agreement shall be binding upon the Company and its successors and assigns. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to the Executive or his family hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate. 
 6.2 Notice. All notices, instructions and other communications given hereunder or in connection herewith shall be in writing. Any
such notice, instruction or communication shall be sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii) prepaid via a reputable nationwide overnight courier service, in each case addressed to
the Company, at Two Technology Drive, Westborough, Massachusetts 01581-1727, and to the Executive at the Executive’s address indicated on the signature page of this Agreement (or to such other address as either the Company or the Executive may
have furnished to the other in writing in accordance herewith). Any such notice, instruction or communication shall be deemed to have been delivered five business days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent via a reputable nationwide overnight courier service. Either party may give any notice, instruction or other communication hereunder using any other means, but no such notice, instruction or
other communication shall be deemed to have been duly delivered unless and until it actually is received by the party for whom it is intended. 
  

 9 

 6.3 Employment by Subsidiary. For purposes of this Agreement, the Executive’s
employment with the Company shall not be deemed to have terminated solely as a result of the Executive continuing to be employed by a wholly-owned subsidiary of the Company. 
 6.4 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in full force and effect. 
 6.5 Governing
Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts, without regard to conflicts of law principles. 
 6.6 Waivers. No waiver by the Executive at any time of any breach of, or compliance with, any provision of this Agreement to be
performed by the Company shall be deemed a waiver of that or any other provision at any subsequent time. 
 6.7
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument. 
 6.8 Tax Withholding. Any payments provided for hereunder shall be paid net of any applicable tax withholding required under
federal, state or local law. 
 6.9 Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of
any party hereto in respect of the subject matter contained herein; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. Notwithstanding the foregoing, the provisions of
any stock option agreements between the Company and the Executive (including any terms thereof relating to acceleration of vesting) shall not be superseded by or modified by the terms of this Agreement. 
 6.10 Amendments. This Agreement may be amended or modified only by a written instrument executed by both the Company and the
Executive. 
 6.11 Executive’s Acknowledgements. The Executive acknowledges that he: (a) has read this
Agreement; (b) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Executive’s own choice or has voluntarily declined to seek such counsel; (c) understands the terms and
consequences of this Agreement; and (d) understands that the law firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the Company in connection with the transactions contemplated by this Agreement, and is not acting as
counsel for the Executive. 
  

 10 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first set
forth above. 
  

			
	AMERICAN SUPERCONDUCTOR CORPORATION
		
	Signature:	 	/s/ Gregory Yurek
	 Print name:
 Title:
	 	 Gregory Yurek
 Chairman, CEO &
President

  

			
	EXECUTIVE
		
	Signature:	 	/s/ Angelo R. Santamaria
	 Print name:
 Address:
	 	 Angelo R. Santamaria
 c/o American
Superconductor
 Two Technology Drive
 Westborough,
MA 01581-1727

  

 11 

 Exhibit A 
 RELEASE 
 In consideration of the payment to me of the severance benefits pursuant to
Section 4.1(a), 4.2(a) or 4.2(b) of my Executive Severance Agreement with American Superconductor Corporation (the “Company”) dated May 4, 2006 (the “Agreement”), I hereby agree as follows: 
 1. I, on behalf of myself and my representatives, agents, estate, heirs, successors and assigns, hereby irrevocably and unconditionally release, remise and discharge the
Company, its officers, directors, stockholders, affiliates (within the meaning of the Securities Act of 1933), attorneys, agents and employees, and their respective predecessors, successors and assigns (collectively, the “Company
Releasees”), from any and all actions or causes of action, suits, claims, complaints, liabilities, contracts, torts, debts, damages, controversies, rights and demands, whether existing or contingent, known or unknown, arising up to and through
the date of this Release out of my employment, or the termination of my employment, with the Company, including, but not limited to, all employment discrimination claims under the Age Discrimination in Employment Act, 29 U.S.C. §621 et seq.,
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and
Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Massachusetts Fair Employment Practices Act, M.G.L. c.151B, § 1 et seq., the Massachusetts Civil Rights Act, M.G.L. c.12, §§ 11H and 11I, the
Massachusetts Equal Rights Act, M.G.L. c.93, § 102 and M.G.L. c.214, § 1C, the Massachusetts Labor and Industries Act, M.G.L. c.149, § 1 et seq., and the Massachusetts Privacy Act, M.G.L. c.214, § 1B, all as amended, and all
claims arising out of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., all as amended; and all claims to any non-vested ownership
interest in the Company, contractual or otherwise, including, but not limited to, claims to stock or stock options. Notwithstanding the foregoing, (a) nothing in this Release prevents me from filing, cooperating with, or participating in any
proceeding before the EEOC or a state Fair Employment Practices Agency (except that I acknowledge that I may not recover any monetary benefits in connection with any such claim, charge or proceeding), (b) this Release does not extend to any
rights I have that arise after the date hereof under the Agreement and (c) this Release does not extend to any rights I may have to indemnification as an officer or director of the Company under the provisions of the Company’s By-laws or
applicable law. 
 2. I have been advised by the Company to consult with counsel before signing this Release, and have been given the opportunity to consult
with my own counsel prior to signing this Release. 
 3. I have been given up to twenty-one (21) days from the receipt of this Release to consider
whether to execute this Release. 
 4. I have been advised that even after I sign this Release, I may revoke it within seven (7) days of the date of my
signing by delivering a signed revocation notice to the Secretary of the 
 Company. Delivery by ordinary mail will effectively revoke my assent to this
Release if it is postmarked no later than seven days after I sign this Release. 
 5. This Release shall not become effective and in force until eight days
after I sign, provided I have not timely revoked my acceptance. 
 6. I acknowledge and reaffirm my obligations under the American Superconductor Corporation
Employee Nondisclosure and Developments Agreement. 
 7. No representation, promise or inducement has been offered or made to induce me to enter into this
Release, and I am competent to execute this Release and accept full responsibility therefor. 
  

			
		
	Name:	 	  
		
	Signature:	 	  
		
	Date of execution:	 	  

  

 12

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