Document:

EX-4.3

 Exhibit 4.3 

CHINA DIGITAL TV HOLDING CO., LTD. 

2012 STOCK INCENTIVE PLAN 
  

	1.	PURPOSE OF PLAN 

 The purpose of the China Digital TV Holding Co., Ltd. 2012 Stock
Incentive Plan (this “Plan”) is to promote the success of the Corporation and to increase shareholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and
other eligible persons of the Group. As used herein, “Corporation” means China Digital TV Holding Co., Ltd., a company organized under the laws of the Cayman Islands; “Subsidiary” means any corporation or other
entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation, or in which the Corporation has a variable interest; “Group” means the Corporation and its
Subsidiaries, collectively; and “Board” means the Board of Directors of the Corporation. 
  

	2.	ELIGIBILITY 

 The Administrator (as such term is defined in Section 3.1) may grant
awards under this Plan only to those persons that the Administrator determines to be Eligible Persons. An “Eligible Person” is any person who is either: (a) an officer (whether or not a director) or employee of the Group;
(b) a director of any member of the Group; or (c) an individual consultant or advisor who renders or has rendered bona fide services (other than services in connection with the offering or sale of securities of the Corporation in a
capital-raising transaction or as a market maker or promoter of the Corporation’s securities) to the Corporation and who is selected to participate in this Plan by the Administrator. Notwithstanding the foregoing, a person who is otherwise an
Eligible Person under clause (c) above may participate in this Plan only if such participation would not compromise the Corporation’s ability to rely on Rule 701 to exempt from registration under the United States Securities Act of 1933,
as amended (the “Securities Act”), or use Form S-8 to register under the Securities Act, the offering and sale of securities issuable under this Plan by the Corporation or the Corporation’s compliance with any other applicable
laws. An Eligible Person who has been granted an award (a “participant”) may, if otherwise eligible, be granted additional awards if the Administrator shall so determine. 

 

	3.	PLAN ADMINISTRATION 

  

	 	3.1	The Administrator. Mr. Jianhua Zhu shall serve as the “Administrator” under the 2012 Plan. 

  

	 	3.2	Powers of the Administrator. Subject to the express provisions of this Plan, the Administrator is authorized and empowered to do all things necessary or desirable in connection with the
authorization of awards and the administration of this Plan (in the case of a committee, within the authority delegated to that committee or person(s)), including, without limitation, the authority to: 

 

	 	(a)	determine eligibility and, from among those persons determined to be eligible, the particular Eligible Persons who will receive an award under this Plan; 

 

	 	(b)	grant awards to Eligible Persons, determine the price at which securities will be offered or awarded and the number of securities to be offered or awarded to any of such persons, determine the other specific terms and
conditions of such awards consistent with the express limits of this Plan, establish the installments (if any) in which such awards shall become exercisable or shall vest (which may include, without limitation, performance and/or time-based
schedules), or determine that no delayed exercisability or vesting is required, establish any applicable performance targets, and establish the events of termination or reversion of such awards; 

	 	(c)	approve the forms of award agreements (which need not be identical either as to type of award or among participants); 

  

	 	(d)	construe and interpret this Plan and any agreements defining the rights and obligations of the Corporation and participants under this Plan, further define the terms used in this Plan, and prescribe, amend and rescind
rules and regulations relating to the administration of this Plan or the awards granted under this Plan; 

  

	 	(e)	cancel, modify, or waive the Corporation’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consent under Section 8.6.5;

  

	 	(f)	accelerate or extend the vesting or exercisability or extend the term of any or all such outstanding awards (in the case of options or stock appreciation rights, within the maximum ten-year term of such awards) in such
circumstances as the Administrator may deem appropriate (including, without limitation, in connection with a termination of employment or services or other events of a personal nature) subject to any required consent under Section 8.6.5;

  

	 	(g)	adjust the number of shares subject to any award, adjust the price of any or all outstanding awards or otherwise change previously imposed terms and conditions, in such circumstances as the Administrator may deem
appropriate, in each case subject to Sections 4 and 8.6, and provided that in no case (except due to an adjustment contemplated by Section 7 or any repricing that may be approved by shareholders) shall such an adjustment constitute a repricing
(by amendment, cancellation and regrant, exchange or other means) of the per share exercise or base price of any option (other than a non-qualified stock option) or stock appreciation right to a price that is less than the fair market value of a
share (as adjusted pursuant to Section 7) on the date of the grant of the initial award; 

  

	 	(h)	determine the date of grant of an award, which may be a designated date after but not before the date of the Administrator’s action (unless otherwise designated by the Administrator, the date of grant of an award
shall be the date upon which the Administrator took the action granting an award); 

  

	 	(i)	determine whether, and the extent to which, adjustments are required pursuant to Section 7 hereof and authorize the termination, conversion, substitution or succession of awards upon the occurrence of an event of
the type described in Section 7; 

  

	 	(j)	acquire or settle (subject to Sections 7 and 8.6) rights under awards in cash, stock of equivalent value, or other consideration; and 

 

	 	(k)	determine the fair market value of the shares or awards under this Plan from time to time and/or the manner in which such value will be determined. 

 

	 	3.3	Binding Determinations. Any action taken by, or inaction of, the Corporation, any Subsidiary, or the Administrator relating or pursuant to this Plan and within its authority hereunder or under
applicable law shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons. Neither the Board nor any Board committee, nor any member thereof or person acting at the direction thereof, shall be
liable for any act, omission, interpretation, construction or determination made in good faith in connection with this Plan (or any award made under this Plan), and all such persons shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense (including, without limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors and officers liability insurance
coverage that may be in effect from time to time. 

	 	3.4	Reliance on Experts. In making any determination or in taking or not taking any action under this Plan, the Board or a committee, as the case may be, may obtain and may rely upon the advice of
experts, including employees and professional advisors to the Corporation. No director, officer or agent of any member of the Group shall be liable for any such action or determination taken or made or omitted in good faith. 

 

	 	3.5	Delegation. The Administrator may delegate ministerial, non-discretionary functions to individuals who are officers or employees of any member of the Group or to third parties. 

 

	4.	ORDINARY SHARES SUBJECT TO THE PLAN; SHARE LIMITS 

  

	 	4.1	Shares Available. Subject to the provisions of Section 7.1, the capital stock that may be delivered under this Plan shall be shares of the Corporation’s authorized but unissued ordinary
shares (“Ordinary Shares”). For purposes of this Plan, “Plan Shares” shall mean the Ordinary Shares of the Corporation and such other securities or property as may become the subject of awards under this Plan, or
may become subject to such awards, pursuant to an adjustment made under Section 7.1. 

  

	 	4.2	Share Limits. The maximum aggregate number of Ordinary Shares that may be delivered pursuant to awards granted to Eligible Persons under this Plan (the “Share Limit”) is 1,200,000
Ordinary Shares. The following limits also apply with respect to awards granted under this Plan: 

  

	 	(a)	the maximum number of Ordinary Shares that may be delivered pursuant to options qualified as incentive stock option granted under this Plan is 1,200,000 Ordinary Share. 

 

	 	4.3	Awards Settled in Cash, Reissue of Awards and Shares. To the extent that an award is settled in cash or a form other than Plan Shares, the Plan Shares that would have been delivered had there been
no such cash or other settlement shall not be counted against the Ordinary Shares available for issuance under this Plan. In the event that Plan Shares are delivered in respect of a dividend equivalent, stock appreciation right, or other award, only
the actual number of Plan Shares delivered with respect to the award shall be counted against the share limits of this Plan. Plan Shares that are subject to or underlie awards which expire or for any reason are cancelled or terminated, are
forfeited, fail to vest, or for any other reason are not paid or delivered under this Plan shall again be available for subsequent awards under this Plan. Plan Shares that are exchanged by a participant or withheld by the Corporation as full or
partial payment in connection with any award under this Plan, as well as any Plan Shares exchanged by a participant or withheld by the Group to satisfy the tax withholding obligations related to any award under this Plan, shall be available for
subsequent awards under this Plan. Refer to Section 8.10 for application of the foregoing share limits with respect to assumed awards. The foregoing adjustments to the share limits of this Plan are subject to any applicable limitations under
Section 162(m) of the Code with respect to awards intended as performance-based compensation thereunder. 

  

	 	4.4	Reservation of Shares; Minimum Issue. The Corporation shall at all times reserve a number of Ordinary Shares sufficient to cover the Corporation’s obligations and contingent obligations to
deliver Plan Shares with respect to awards then outstanding under this Plan (exclusive of any dividend equivalent obligations to the extent the Corporation has the right to settle such rights in cash). No fewer than 200 Ordinary Shares may be
purchased on exercise of any award (or, in the case of stock appreciation or purchase rights, no fewer than 200 rights may be exercised at any one time) unless the total number purchased or exercised is the total number at the time available for
purchase or exercise under the award. 

	5.	AWARDS 

  

	 	5.1	Type and Form of Awards. The Administrator shall determine the type or types of award(s) to be made to each selected Eligible Person. Awards may be granted singly, in combination or in tandem.
Awards also may be made in combination or in tandem with, in replacement of, as alternatives to, or as the payment form for grants or rights under any other employee or compensation plan of the Group. The types of awards that may be granted under
this Plan are: 

 5.1.1 Stock Options. A stock option is the grant of a right to purchase a specified
number of Plan Shares during a specified period as determined by the Administrator. An option may be intended as an incentive stock option within the meaning of Section 422 of the Code (an “ISO”) or a nonqualified stock option
(an option not intended to be an ISO). The award agreement for an option will indicate if the option is intended as an ISO, otherwise it will be deemed to be a nonqualified stock option. The maximum term of each option (ISO or nonqualified) shall be
ten (10) years. The per share exercise price for each option shall be not less than 100% of the fair market value of a Plan Share on the date of grant of the option, except as follows: (a) in the case of a stock option granted
retroactively in tandem with or as a substitution for another award, the per share exercise price may be no lower than the fair market value of a Plan Share on the date such other award was granted (to the extent consistent with Sections 422 and 424
of the Code in the case of options intended as incentive stock options); and (b) in any other circumstances, a nonqualified stock option may be granted with a per share exercise price that is less than the fair market value of a Plan Share on
the date of grant. When an option is exercised, the exercise price for the Plan Shares to be purchased shall be paid in full in cash or such other method permitted by the Administrator consistent with Section 5.5. 

5.1.2 Additional Rules Applicable to ISOs. To the extent that the aggregate fair market value (determined at the time of
grant of the applicable option) of stock with respect to which ISOs first become exercisable by a participant in any calendar year exceeds US$100,000, taking into account both Plan Shares subject to ISOs under this Plan and stock subject to ISOs
under all other plans of the Group (or any parent or predecessor corporation to the extent required by and within the meaning of Section 422 of the Code and the regulations promulgated thereunder), such options shall be treated as nonqualified
stock options. In reducing the number of options treated as ISOs to meet the US$100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the US$100,000
limit, the Administrator may, in the manner and to the extent permitted by law, designate which Plan Shares are to be treated as shares acquired pursuant to the exercise of an ISO. ISOs may only be granted to employees of the Corporation or one of
its subsidiaries (for this purpose, the term “subsidiary” is used as defined in Section 424(f) of the Code, which generally requires an unbroken chain of ownership of at least 50% of the total combined voting power of all classes of
stock of each subsidiary in the chain beginning with the Corporation and ending with the subsidiary in question). There shall be imposed in any award agreement relating to ISOs such other terms and conditions as from time to time are required in
order that the option be an “incentive stock option” as that term is defined in Section 422 of the Code. 

 5.1.3 Stock Appreciation Rights. A stock appreciation right is a right to
receive a payment, in cash and/or Plan Shares, equal to the excess of the fair market value of a specified number of Plan Shares on the date the stock appreciation right is exercised over the fair market value of a Plan Share on the date the stock
appreciation right was granted (the “base price”) as set forth in the applicable award agreement, except in the case of a stock appreciation right granted retroactively in tandem with or as a substitution for another award, the base
price may be no lower than the fair market value of a Plan Share on the date such other award was granted. The maximum term of a stock appreciation right shall be ten (10) years. The Administrator may grant limited stock appreciation rights
which are exercisable only upon a change in control or other specified event and may be payable based on the spread between the base price of the stock appreciation right and the fair market value of a Plan Share during a specified period or at a
specified time within a specified period before, after or including the date of such event. 
 5.1.4 Restricted Stock
Units. A restricted stock unit is an unfunded and unsecured promise of the Corporation to pay the grantee, on a specified future vesting date, one Ordinary Share for each restricted stock unit or, in the discretion of the Administrator, a
cash payment equal to the fair market value of such Ordinary Share as of the relevant vesting date. There may be imposed in any award agreement relating to restricted stock units such other terms and conditions as the Administrator shall determine
in its discretion, subject to the provisions of this Plan. 
 5.1.5 Other Awards. The other types of awards that may be
granted under this Plan include: (a) stock bonuses, restricted stock, performance stock, stock units, phantom stock, dividend equivalents, or similar rights to purchase or acquire shares, whether at a fixed or variable price or ratio related to
the Plan Shares, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof; (b) any similar securities with a value derived from the value of or
related to the Plan Shares and/or returns thereon; or (c) cash awards granted consistent with Section 5.2 below. 
  

	 	5.2	Section 162(m) Performance-Based Awards. Without limiting the generality of the foregoing, any of the types of awards listed in Section 5.1.4 above may be, and options and stock
appreciation rights granted with an exercise or base price not less than the fair market value of a Plan Share at the date of grant (“Qualifying Options” and “Qualifying Stock Appreciation Rights,” respectively)
typically will be, granted as awards intended to satisfy the requirements for “performance-based compensation” within the meaning of Section 162(m) of the Code (“Performance-Based Awards”). The grant, vesting,
exercisability or payment of Performance-Based Awards may depend (or, in the case of Qualifying Options or Qualifying Stock Appreciation Rights, may also depend) on the degree of achievement of one or more performance goals relative to a
pre-established targeted level or level using one or more of the Business Criteria set forth below (on an absolute or relative basis) for the Corporation on a consolidated basis or for one or more of the Corporation’s subsidiaries, segments,
divisions or business units, or any combination of the foregoing. Any Qualifying Option or Qualifying Stock Appreciation Right shall be subject only to the requirements of Section 5.2.1 and 5.2.3 in order for such award to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the Code. Any other Performance-Based Award shall be subject to all of the following provisions of this Section 5.2. 

5.2.1 Class; Administrator. The eligible class of persons for Performance-Based Awards under this Section 5.2
shall be officers and employees of any member of the Group. The Administrator approving Performance-Based Awards or making any certification required pursuant to Section 5.2.4 must be constituted as provided in Section 3.1 for awards that
are intended as performance-based compensation under Section 162(m) of the Code. 

 5.2.2 Performance Goals. The specific performance goals for
Performance-Based Awards (other than Qualifying Options and Qualifying Stock Appreciation Rights) shall be, on an absolute or relative basis, established based on one or more of the following business criteria, or any business criteria as deemed
appropriate by the Administrator, (“Business Criteria”) as selected by the Administrator in its sole discretion: earnings per share, cash flow (which means cash and cash equivalents derived from either net cash flow from operations
or net cash flow from operations, financing and investing activities), total shareholder return, gross revenue, revenue growth, operating income (before or after taxes), net earnings (before or after interest, taxes, depreciation and/or
amortization), return on equity or on assets or on net investment, cost containment or reduction, or any combination thereof. These terms are used as applied under generally accepted accounting principles or in the Group’s financial reporting.
To qualify awards as performance-based under Section 162(m) of the Code, the applicable Business Criterion (or Business Criteria, as the case may be) and specific performance goal or goals (“targets”) must be established and
approved by the Administrator during the first 90 days of the performance period (and, in the case of performance periods of less than one year, in no event more than 25% of the performance period has elapsed) and while performance relating to such
target(s) remains substantially uncertain within the meaning of Section 162(m) of the Code. Performance targets shall be adjusted to mitigate the unbudgeted impact of material, unusual or nonrecurring gains and losses, accounting changes or
other extraordinary events not foreseen at the time the targets were set unless the Administrator provides otherwise at the time of establishing the targets. The applicable performance measurement period may not be less than three months nor more
than 10 years. 
 5.2.3 Form of Payment; Maximum Performance-Based Award. Grants or awards under this
Section 5.2 may be paid in cash or Plan Shares or any combination thereof. 1,000,000 Awards that are cancelled during the year shall be counted against these limits to the extent permitted by Section 162(m) of the Code. 

5.2.4 Certification of Payment. Before any Performance-Based Award under this Section 5.2 (other than
Qualifying Options and Qualifying Stock Appreciation Rights) is paid and to the extent required to qualify the award as performance-based compensation within the meaning of Section 162(m) of the Code, the Administrator must certify in writing
that the performance target(s) and any other material terms of the Performance-Based Award were in fact timely satisfied. 
 5.2.5
Reservation of Discretion. The Administrator will have the discretion to determine the restrictions or other limitations of the individual awards granted under this Section 5.2 including the authority to reduce awards,
payouts or vesting or to pay no awards, in its sole discretion, if the Administrator preserves such authority at the time of grant by language to this effect in its authorizing resolutions or otherwise. 

5.2.6 Expiration of Grant Authority. As required pursuant to Section 162(m) of the Code and the regulations
promulgated thereunder, the Administrator’s authority to grant new awards that are intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code (other than Qualifying Options and Qualifying Stock
Appreciation Rights) shall terminate upon the first meeting of the Corporation’s shareholders that occurs in the fifth year following the year in which the Corporation’s shareholders first approve this Plan. 

 

	 	5.3	Award Agreements. Each award shall be evidenced by a written award agreement in the form approved by the Administrator and executed on behalf of the Corporation and, if required by the
Administrator, executed by the recipient of the award. The Administrator may authorize any officer of the Corporation (other than the particular award recipient) to execute any or all award agreements on behalf of the Corporation. The award
agreement shall set forth the material terms and conditions of the award as established by the Administrator consistent with the express limitations of this Plan. 

	 	5.4	Deferrals and Settlements. Payment of awards may be in the form of cash, Plan Shares, other awards or combinations thereof as the Administrator shall determine, and with such restrictions as it may
impose. The Administrator may also require or permit participants to elect to defer the issuance of shares or the settlement of awards in cash under such rules and procedures as it may establish under this Plan. The Administrator may also provide
that deferred settlements include the payment or crediting of interest or other earnings on the deferral amounts, or the payment or crediting of dividend equivalents where the deferred amounts are denominated in shares. 

 

	 	5.5	Consideration for Plan Shares or Awards. The purchase price for any award granted under this Plan or the Plan Shares to be delivered pursuant to an award, as applicable, may be paid by means of any
lawful consideration as determined by the Administrator, including, without limitation, one or a combination of the following methods: 

  

	 	•	 	services rendered by the recipient of such award; 

  

	 	•	 	cash, check payable to the order of the Corporation, or electronic funds transfer; 

  

	 	•	 	notice and third party payment in such manner as may be authorized by the Administrator; 

  

	 	•	 	the delivery of previously owned Plan Shares; 

  

	 	•	 	by a reduction in the number of Plan Shares otherwise deliverable pursuant to the award; or 

  

	 	•	 	subject to such procedures as the Administrator may adopt, pursuant to a “cashless exercise” with a third party who provides financing for the purposes of (or who otherwise facilitates) the purchase or
exercise of awards. 

 In no event shall any shares newly-issued by the Corporation be issued for less than the
minimum lawful consideration for such shares or for consideration other than consideration permitted by applicable law. In the event that the Administrator allows a participant to exercise an award by delivering Plan Shares previously owned by such
participant and unless otherwise expressly provided by the Administrator, any shares delivered which were initially acquired by the participant from the Corporation (upon exercise of a stock option or otherwise) must have been owned by the
participant at least six months as of the date of delivery. Plan Shares used to satisfy the exercise price of an option shall be valued at their fair market value on the date of exercise. The Corporation will not be obligated to deliver any Plan
Shares unless and until it receives full payment of the exercise or purchase price therefor and any related withholding obligations under Section 8.5 and any other conditions to exercise or purchase have been satisfied. Unless otherwise
expressly provided in the applicable award agreement, the Administrator may at any time eliminate or limit a participant’s ability to pay the purchase or exercise price of any award or shares by any method other than cash payment to the
Corporation. 

	 	5.6	Definition of Fair Market Value. For purposes of this Plan, “fair market value” of one Plan Share on any date shall be (i) the closing sale price per share of the depositary shares
representing the Plan Shares (the “Depositary Shares”), as adjusted to reflect the ratio of the Depositary Shares to the Plan Shares, during normal trading hours on the U.S. national securities exchange on which the Depositary
Shares are principally traded for such date or the last preceding date on which there was a sale of such Depositary Shares on such exchange or (ii) if the Depositary Shares are then traded in an over-the-counter market in the United States, the
average of the closing bid and asked prices for the Depositary Shares, as adjusted to reflect the ratio of the Depositary Shares to the Plan Shares, during normal trading hours in such over-the-counter market for such date or the last preceding date
on which there was a sale of such Depositary Shares in such market, or (iii) if the Depositary Shares are not then listed on a U.S. national securities exchange or traded in an over-the-counter market in the United States, such value as the
Administrator, in its sole discretion, shall determine. The Administrator also may adopt a different methodology for determining fair market value with respect to one or more awards if a different methodology is necessary or advisable to secure any
intended favorable tax, legal or other treatment for the particular award(s) (for example, and without limitation, the Administrator may provide that fair market value for purposes of one or more awards will be based on an average of closing prices
(or the average of high and low daily trading prices) for a specified period preceding the relevant date). Notwithstanding the foregoing, the fair market value of Plan Shares for purposes of grants of ISOs shall be determined in compliance with
applicable provisions of the Code. 

  

	 	5.7	Transfer Restrictions. 

 5.7.1 Limitations on Exercise and
Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 5.7, by applicable law and by the award agreement, as the same may be amended, (a) all awards are non-transferable and shall not be subject in any
manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge; (b) awards shall be exercised only by the participant; and (c) amounts payable or shares issuable pursuant to any award shall be delivered only
to (or for the account of) the participant. 
 5.7.2 Exceptions. The Administrator may permit awards to be exercised by
and paid to certain persons or entities related to the participant, including but not limited to members of the participant’s immediate family, trusts or other entities controlled by or whose beneficiaries or beneficial owners are the
participant and/or members of the participant’s immediate family, pursuant to such conditions and procedures, including limitations on subsequent transfers, as the Administrator may establish. Consistent with Section 8.1, any permitted
transfer shall be subject to the condition that the Administrator receive evidence satisfactory to it that the transfer (a) is being made for essentially donative, estate and/or tax planning purposes on a gratuitous or donative basis and
without consideration (other than nominal consideration or in exchange for an interest in a qualified transferee), and (b) will not compromise the Corporation’s ability to rely on Rule 701, or register Plan Shares issuable under this Plan
on Form S-8, under the Securities Act. Notwithstanding the foregoing or anything in Section 5.7.3, ISOs and restricted stock awards shall be subject to any and all additional transfer restrictions under the Code to the extent necessary to
maintain the intended tax consequences of such awards. 
 5.7.3 Further Exceptions to Limits on Transfer. The exercise
and transfer restrictions in Section 5.7.1 shall not apply to: 
  

	 	(a)	transfers to the Corporation, 

  

	 	(b)	the designation of a beneficiary to receive benefits in the event of the participant’s death or, if the participant has died, transfers to or exercise by the participant’s beneficiary, or, in the absence of a
validly designated beneficiary, transfers by will or the laws of descent and distribution, 

	 	(c)	subject to any applicable limitations on ISOs, transfers to a family member (or former family member) pursuant to a domestic relations order if approved or ratified by the Administrator, 

 

	 	(d)	if the participant has suffered a disability, permitted transfers or exercises on behalf of the participant by his or her legal representative, or 

 

	 	(e)	the authorization by the Administrator of “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of awards consistent with
applicable laws and the express authorization of the Administrator. 

  

	6.	EFFECT OF TERMINATION OF SERVICE ON AWARDS 

  

	 	6.1	General. The Administrator shall establish the effect of a termination of employment or service on the rights and benefits under each award under this Plan and in so doing may make distinctions
based upon, inter alia, the cause of termination and type of award. Notwithstanding the foregoing, unless the Board expressly otherwise provides, if the participant is not an employee of any member of the Group and provides other services to the
Group, the Administrator shall be the sole judge for purposes of this Plan (unless a contract or the award otherwise provides) of whether the participant continues to render services to the Group and the date, if any, upon which such services shall
be deemed to have terminated. Unless the Board otherwise expressly provides, (1) to the extent an outstanding option granted under this Plan has not become vested and exercisable on the date the participant’s employment by or service to
the Group terminates, the option to the extent unvested and unexercisable shall terminate, and (2) any shares subject to a restricted stock award that remain subject to restrictions at the time the participant’s employment by or service to
the Group terminates shall not vest and the Corporation shall have the right to reacquire any such unvested shares subject to such award in such manner and on such terms as the Administrator provides, which terms shall include return or repayment of
the lower of the Fair Market Value or the original purchase price of the restricted shares, without interest, to the participant to the extent not prohibited by law. 

 

	 	6.2	Events Not Deemed Terminations of Service. Unless Group policy or the Administrator otherwise provides, the employment relationship shall not be considered terminated in the case of (a) sick
leave, (b) military leave, or (c) any other leave of absence authorized by the Group or the Administrator; provided that unless reemployment upon the expiration of such leave is guaranteed by contract or law, such leave is for a period of
not more than 90 days. In the case of any employee of any member of the Group on an approved leave of absence, continued vesting of the award while on leave from the employ of such member of the Group may be suspended until the employee returns to
service, unless the Administrator otherwise provides or applicable law otherwise requires. In no event shall an award be exercised after the expiration of the term set forth in the award agreement. 

 

	 	6.3	Effect of Change of Subsidiary Status. For purposes of this Plan and any award, if an entity ceases to be a Subsidiary of the Corporation a termination of employment or service shall be deemed to
have occurred with respect to each Eligible Person in respect of such Subsidiary who does not continue as an Eligible Person in respect of another member of the Group after giving effect to the Subsidiary’s change in status. 

	7.	ADJUSTMENTS; ACCELERATION 

  

	 	7.1	Adjustments. Upon or in contemplation of: any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split (“stock
split”); any merger, combination, consolidation, or other reorganization; any spin-off, split-up, or similar extraordinary dividend distribution in respect of the Plan Shares (whether in the form of securities or property); any exchange of
Plan Shares or other securities of the Corporation, or any similar, unusual or extraordinary corporate transaction in respect of the Plan Shares; or a sale of all or substantially all the business or assets of the Corporation as an entirety; then
the Administrator shall, in such manner, to such extent (if any) and at such time as it deems appropriate and equitable in the circumstances: 

  

	 	(a)	proportionately adjust any or all of (1) the number and type of Plan Shares (or other securities) that thereafter may be made the subject of awards (including the specific share limits, maximums and numbers of
shares set forth elsewhere in this Plan), (2) the number, amount and type of Plan Shares (or other securities or property) subject to any or all outstanding awards, (3) the grant, purchase, or exercise price (which term includes the base
price of any stock appreciation right or similar right) of any or all outstanding awards, (4) the securities, cash or other property deliverable upon exercise or payment of any outstanding awards, or (5) (subject to Sections 7.7 and
8.8.3(a)) the performance standards applicable to any outstanding awards, or 

  

	 	(b)	make provision for a cash payment or for the assumption, substitution or exchange of any or all outstanding share-based awards or the cash, securities or property deliverable to the holder of any or all outstanding
share-based awards, based upon the distribution or consideration payable to holders of the Plan Shares upon or in respect of such event. 

The Administrator may adopt such valuation methodologies for outstanding awards as it deems reasonable in the event of a cash or property
settlement and, in the case of options, stock appreciation rights or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess if any of the per share amount payable upon or in respect of such
event over the exercise or base price of the award. With respect to any award of an ISO, the Administrator may make such an adjustment that causes the option to cease to qualify as an ISO without the consent of the affected participant. 

In any of such events, the Administrator may take such action prior to such event to the extent that the Administrator deems the action
necessary to permit the participant to realize the benefits intended to be conveyed with respect to the underlying shares in the same manner as is or will be available to shareholders generally. In the case of any stock split or reverse stock split,
if no action is taken by the Administrator, the proportionate adjustments contemplated by clause (a) above shall nevertheless be made. 
  

	 	7.2	Automatic Acceleration of Awards. Upon a dissolution of the Corporation or other event described in Section 7.1 that the Corporation does not survive (or does not survive as a public company in
respect of its Ordinary Shares), then each then outstanding option and stock appreciation right shall become fully vested, all shares of restricted stock then outstanding shall fully vest free of restrictions, and each other award granted under this
Plan that is then outstanding shall become payable to the holder of such award; provided that such acceleration provision shall not apply, unless otherwise expressly provided by the Administrator, with respect to any award to the extent that the
Administrator has made a provision for the substitution, assumption, exchange or other continuation or settlement of the award, or the award would otherwise continue in accordance with its terms, in the circumstances. 

	 	7.3	Possible Acceleration of Awards. Without limiting Section 7.2, in the event of a Change in Control Event (as defined below), the Administrator may, in its discretion, provide that any
outstanding option or stock appreciation right shall become fully vested, that any share of restricted stock then outstanding shall fully vest free of restrictions, and that any other award granted under this Plan that is then outstanding shall be
payable to the holder of such award. The Administrator may take such action with respect to all awards then outstanding or only with respect to certain specific awards identified by the Administrator in the circumstances. For purposes of this Plan,
“Change in Control Event” means any of the following: 

  

	 	(a)	The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either (1) the then-outstanding Ordinary Shares of the Corporation (the “Outstanding Ordinary Shares”) or (2) the combined voting power of the then-outstanding voting
securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a
Change in Control Event; (A) any acquisition directly from the Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any
affiliate of the Corporation or a successor, or (D) any acquisition by any entity pursuant to a transaction that complies with Sections (c)(1), (2) and (3) below; 

 

	 	(b)	Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the Effective Date whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (including for
these purposes, the new members whose election or nomination was so approved, without counting the member and his predecessor twice) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose,
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; 

  

	 	(c)	Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Corporation or any of its Subsidiaries, a sale or other disposition of all or
substantially all of the assets of the Corporation, or the acquisition of assets or stock of another entity by the Corporation or any of its Subsidiaries (each, a “Business Combination”), in each case unless, following such Business
Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Ordinary Shares and the Outstanding Voting Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding ordinary shares and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation’s assets directly or through one or more subsidiaries
(a “Parent”)) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Ordinary Shares and the Outstanding Voting Securities, as the case may be, (2) no Person
(excluding any entity resulting from such Business Combination or a Parent or any employee benefit plan (or related trust) of the Corporation or such entity resulting from such Business Combination or Parent) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding ordinary shares of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that
the ownership in excess of 20% existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors or trustees of the entity resulting from such Business Combination or a Parent were members of the
Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or 

  

	 	(d)	Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation other than in the context of a transaction that does not constitute a Change in Control Event under clause
(c) above. 

	 	7.4	Early Termination of Awards. Any award that has been accelerated as required or contemplated by Section 7.2 or 7.3 (or would have been so accelerated but for Section 7.5, 7.6 or 7.7) shall
terminate upon the related event referred to in Section 7.2 or 7.3, as applicable, subject to any provision that has been expressly made by the Administrator, through a plan of reorganization or otherwise, for the survival, substitution,
assumption, exchange or other continuation or settlement of such award and provided that, in the case of options and stock appreciation rights that will not survive, be substituted for, assumed, exchanged, or otherwise continued or settled in the
transaction, the holder of such award shall be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding options and stock appreciation rights in accordance with their terms before
the termination of such awards (except that in no case shall more than ten days’ notice of accelerated vesting and the impending termination be required and any acceleration may be made contingent upon the actual occurrence of the event).

  

	 	7.5	Other Acceleration Rules. Any acceleration of awards pursuant to this Section 7 shall comply with applicable legal requirements and, if necessary to accomplish the purposes of the acceleration
or if the circumstances require, may be deemed by the Administrator to occur a limited period of time not greater than 30 days before the event. Without limiting the generality of the foregoing, the Administrator may deem an acceleration to occur
immediately prior to the applicable event and/or reinstate the original terms of an award if an event giving rise to an acceleration does not occur. The Administrator may override the provisions of Section 7.2, 7.3, 7.4 and/or 7.6 by express
provision in the award agreement and may accord any Eligible Person a right to refuse any acceleration, whether pursuant to the award agreement or otherwise, in such circumstances as the Administrator may approve. The portion of any ISO accelerated
in connection with a Change in Control Event or any other action permitted hereunder shall remain exercisable as an ISO only to the extent the applicable US$100,000 limitation on ISOs is not exceeded. To the extent exceeded, the accelerated portion
of the option shall be exercisable as a nonqualified stock option under the Code. 

  

	 	7.6	Possible Rescission of Acceleration. If the vesting of an award has been accelerated expressly in anticipation of an event or upon shareholder approval of an event and the Administrator later
determines that the event will not occur, the Administrator may rescind the effect of the acceleration as to any then outstanding and unexercised or otherwise unvested awards. 

 

	 	7.7	Golden Parachute Limitation. Notwithstanding anything else contained in this Section 7 to the contrary and to the extent the Group is subject to U.S. federal income tax, in no event shall an
award be accelerated under this Plan to an extent or in a manner which would not be fully deductible by the Group for federal income tax purposes because of Section 280G of the Code, nor shall any payment hereunder be accelerated to the extent
any portion of such accelerated payment would not be deductible by the Group because of Section 280G of the Code. If a participant would be entitled to benefits or payments hereunder and under any other plan or program that would constitute
“parachute payments” as defined in Section 280G of the Code, then the participant may by written notice to the Corporation designate the order in which such parachute payments will be reduced or modified so that the Group is not
denied federal income tax deductions for any “parachute payments” because of Section 280G of the Code. Notwithstanding the foregoing, an employment or other agreement with the participant may expressly provide for benefits in excess
of amounts determined by applying the foregoing Section 280G limitations. 

	 	7.8	Section 162(m) Limitations. To the extent limited by Section 162(m) of the Code in the case of an award intended as performance-based compensation thereunder and necessary to assure the
deductibility of the compensation payable under the award, the Administrator shall have no discretion under this Plan (a) to increase the amount of compensation or the number of shares that would otherwise be due upon the attainment of the
applicable performance target or the exercise of the option or SAR, or (b) to waive the achievement of any applicable performance goal as a condition to receiving a benefit or right under the award. 

 

	8.	OTHER PROVISIONS 

  

	 	8.1	Compliance with Laws. This Plan, the granting and vesting of awards under this Plan, the offer, issuance and delivery of Plan Shares, the acceptance of promissory notes and/or the payment of money
under this Plan or under awards are subject to compliance with all applicable national, federal and state laws, rules and regulations (including but not limited to state and federal securities law, federal margin requirements) and to such approvals
by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Group, be necessary or advisable in connection therewith. The person acquiring any securities under this Plan will, if requested by the Corporation,
provide such assurances and representations to the Corporation as the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements. 

 

	 	8.2	Employment Status. No person shall have any claim or rights to be granted an award (or additional awards, as the case may be) under this Plan, subject to any express contractual rights (set forth in
a document other than this Plan) to the contrary. 

  

	 	8.3	No Employment/Service Contract. Nothing contained in this Plan (or in any other documents under this Plan or in any award) shall confer upon any Eligible Person or other participant any right to
continue in the employ or other service of any member of the Group, constitute any contract or agreement of employment or other service or affect an employee’s status as an employee at will, nor shall interfere in any way with the right of such
member of the Group to change a person’s compensation or other benefits, or to terminate his or her employment or other service, with or without cause. Nothing in this Section 8.3, however, is intended to adversely affect any express
independent right of such person under a separate employment or service contract other than an award agreement. 

  

	 	8.4	Plan Not Funded. Awards payable under this Plan shall be payable in Plan Shares or from the general assets of the Corporation, and no special or separate reserve, fund or deposit shall be made to
assure payment of such awards. No participant, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset (including Plan Shares, except as expressly otherwise provided) of any member of the Group by
reason of any award hereunder. Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a
trust of any kind or a fiduciary relationship between any member of the Group and any participant, beneficiary or other person. To the extent that a participant, beneficiary or other person acquires a right to receive payment pursuant to any award
hereunder, such right shall be no greater than the right of any unsecured general creditor of the Group. 

	 	8.5	Tax Withholding. Upon any exercise, vesting, or payment of any award or upon the disposition of Plan Shares acquired pursuant to the exercise of an ISO prior to satisfaction of the holding period
requirements of Section 422 of the Code, the Group shall have the right at its option to: 

  

	 	(a)	require the participant (or the participant’s personal representative or beneficiary, as the case may be) to pay or provide for payment of at least the minimum amount of any taxes which the Group may be required to
withhold with respect to such award event or payment; or 

  

	 	(b)	deduct from any amount otherwise payable in cash to the participant (or the participant’s personal representative or beneficiary, as the case may be) the minimum amount of any taxes which the Group may be required
to withhold with respect to such cash payment. 

 In any case where a tax is required to be withheld in connection with the
delivery of Plan Shares under this Plan, the Administrator may in its sole discretion (subject to Section 8.1) grant (either at the time of the award or thereafter) to the participant the right to elect, pursuant to such rules and subject to
such conditions as the Administrator may establish, to have the Corporation reduce the number of Plan Shares to be delivered by (or otherwise reacquire) the appropriate number of Plan Shares, valued in a consistent manner at their fair market value
or at the sales price in accordance with authorized procedures for cashless exercises, necessary to satisfy the minimum applicable withholding obligation on exercise, vesting or payment. In no event shall the Plan Shares withheld exceed the minimum
whole number of shares required for tax withholding under applicable law. The Corporation may, with the Administrator’s approval, accept one or more promissory notes from any Eligible Person in connection with taxes required to be withheld upon
the exercise, vesting or payment of any award under this Plan; provided that any such note shall be subject to terms and conditions established by the Administrator and the requirements of applicable law. 

 

	 	8.6	Effective Date, Termination and Suspension, Amendments. 

 8.6.1
Effective Date. This Plan is effective as of the date of its approval by the Board (the “Effective Date”). Unless earlier terminated by the shareholders or the Board, this Plan shall terminate at the close of
business on the day before the tenth anniversary of the Effective Date. After the termination of this Plan either upon such stated expiration date or its earlier termination by the shareholders or the Board, no additional awards may be granted under
this Plan, but previously granted awards (and the authority of the Administrator with respect thereto, including the authority to amend such awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and
conditions of this Plan. 
 8.6.2 Board Authorization. The Board may, at any time, terminate or, from time to time,
amend, modify or suspend this Plan, in whole or in part. No awards may be granted during any period that the Board suspends this Plan. 

8.6.3 Shareholder Approval. To the extent then required by applicable law or any applicable listing agency or required
under Sections 162, 422 or 424 of the Code to preserve the intended tax consequences of this Plan, or deemed necessary or advisable by the Board, any amendment to this Plan shall be subject to shareholder approval. 

 8.6.4 Amendments to Awards. Without limiting any other express authority of
the Administrator under (but subject to) the express limits of this Plan, the Administrator by agreement or resolution may waive conditions of or limitations on awards to participants that the Administrator in the prior exercise of its discretion
has imposed, without the consent of a participant, and (subject to the requirements of Sections 3.2 and 8.6.5) may make other changes to the terms and conditions of awards. Any amendment or other action that would constitute a repricing of an award
is subject to the limitations set forth in Section 3.2(g). 
 8.6.5 Limitations on Amendments to Plan and Awards.
No amendment, suspension or termination of this Plan or change of or affecting any outstanding award shall, without written consent of the participant, affect in any manner materially adverse to the participant any rights or benefits of the
participant or obligations of the Group under any award granted under this Plan prior to the effective date of such change. Changes, settlements and other actions contemplated by Section 7 shall not be deemed to constitute changes or amendments
for purposes of this Section 8.6. 
  

	 	8.7	Privileges of Share Ownership. Except as otherwise expressly authorized by the Administrator or this Plan, a participant shall not be entitled to any privilege of share ownership as to any Plan
Shares not actually delivered to and held of record by the participant. No adjustment will be made for dividends or other rights as a shareholder for which a record date is prior to such date of delivery. 

 

	 	8.8	Governing Law; Construction; Severability. 

 8.8.1 Choice of
Law. This Plan, the awards, all documents evidencing awards and all other related documents shall be governed by, and construed in accordance with the laws of the State of New York, U.S.A. without regard to conflicts of law principles
thereof. 
 8.8.2 Severability. If a court of competent jurisdiction holds any provision invalid and unenforceable, the
remaining provisions of this Plan shall continue in effect. 
 8.8.3 Plan Construction. Awards under Section 5.1.4
to persons described in Section 5.2 that are either granted or become vested, exercisable or payable based on attainment of one or more performance goals related to the Business Criteria, as well as Qualifying Options and Qualifying Stock
Appreciation Rights granted to persons described in Section 5.2, that are approved by a committee composed solely of two or more outside directors (as this requirement is applied under Section 162(m) of the Code) shall be deemed to be
intended as performance-based compensation within the meaning of Section 162(m) of the Code unless such committee provides otherwise at the time of grant of the award. It is the further intent of the Group that (to the extent the Group or
awards under this Plan may be or become subject to limitations on deductibility under Section 162(m) of the Code) any such awards and any other Performance-Based Awards under Section 5.2 that are granted to or held by a person subject to
Section 162(m) will qualify as performance-based compensation or otherwise be exempt from deductibility limitations under Section 162(m). 
  

	 	8.9	Captions. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of this Plan or any provision thereof. 

	 	8.10	Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other Corporation. Awards may be granted to Eligible Persons under this Plan in substitution for or in connection with an
assumption of employee stock options, stock appreciation rights, restricted stock units, restricted stock or other stock-based awards granted by other entities to persons who are or who will become Eligible Persons in respect of the Group, in
connection with a distribution, merger or other reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Group, directly or indirectly, of all or a substantial part of the stock or assets of the employing
entity. The awards so granted need not comply with other specific terms of this Plan, provided the awards reflect only adjustments giving effect to the assumption or substitution consistent with the conversion applicable to the Plan Shares in the
transaction and any change in the issuer of the security. Any shares that are delivered and any awards that are granted by, or become obligations of, the Corporation, as a result of the assumption by the Corporation of, or in substitution for,
outstanding awards previously granted by an acquired company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become employed by any member of the Group in connection with a business
or asset acquisition or similar transaction) shall not be counted against the Share Limit or other limits on the number of Plan Shares available for issuance under this Plan. 

 

	 	8.11	Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the Administrator to grant awards or authorize any other compensation, with or without
reference to the Plan Shares, under any other plan or authority. 

  

	 	8.12	No Corporate Action Restriction. The existence of this Plan, the award agreements and the awards granted hereunder shall not limit, affect or restrict in any way the right or power of the Board or
the shareholders of the Corporation to make or authorize: (a) any adjustment, recapitalization, reorganization or other change in the capital structure or business of the Corporation or any subsidiary, (b) any merger, amalgamation,
consolidation or change in the ownership of the Corporation or any subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior preference stock ahead of or affecting the capital stock (or the rights thereof) of the Corporation
or any subsidiary, (d) any dissolution or liquidation of the Corporation or any subsidiary, (e) any sale or transfer of all or any part of the assets or business of the Corporation or any subsidiary, or (f) any other corporate act or
proceeding by the Corporation or any subsidiary. No participant, beneficiary or any other person shall have any claim under any award or award agreement against any member of the Board or the Administrator, or the Corporation or any employees,
officers or agents of the Corporation or any subsidiary, as a result of any such action. 

  

	 	8.13	Other Benefit and Compensation Programs. Payments and other benefits received by a participant under an award made pursuant to this Plan shall not be deemed a part of a participant’s
compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Corporation or any subsidiary, except where the Administrator expressly otherwise provides or
authorizes in writing. Awards under this Plan may be made in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans or arrangements of the Corporation or its subsidiaries.a50940441ex10_1.htm

Exhibit 10.1

 

 

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT, effective as of October 1, 2014, between SUMMIT HOTEL PROPERTIES, INC., a Maryland corporation (the “Company”), and GREG DOWELL (the “Executive”), recites and provides as follows:

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to employ the Executive to devote substantially all of the Executive’s business time, attention and efforts to the business of the Company and to serve as Executive Vice President and Chief Financial Officer of the Company; and

 

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

 

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

 

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

 

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

 

3.           TERM.  The Initial Term of the Executive’s employment hereunder (the “Initial Term”) shall commence on October 1, 2014 (the “Effective Date”), and continuing until May 27, 2016.  If neither the Company nor the Executive has provided the other with written notice of an intention to terminate this Agreement at least thirty (30) days before the end of the Initial Term (or any subsequent renewal period), this Agreement will automatically renew for a twelve (12) month period.  For purposes of this Agreement, the word “Term” means the Initial Term and any renewal period pursuant to the preceding sentence and any extension pursuant to clause (ii) of the following sentence.  Notwithstanding the preceding sentences (i) this Agreement may be terminated earlier as provided herein and (ii) if a Control Change Date (as defined in Section 11 of this Agreement) occurs during the Term, then the Term shall not end before the first anniversary of the Control Change Date or the date this Agreement is terminated earlier as provided herein.

 

4.           SERVICES.  The Executive shall devote substantially all of the Executive’s business time, attention and effort to the Company’s affairs.  The Company further agrees that the Executive may engage in civic and community activities and endeavors provided that such activities do not interfere with the performance of the Executive’s duties hereunder.  The Executive shall have full authority and responsibility for formulating policies and administering the Company in all respects, subject to the general direction, approval and control of the Company’s Board of Directors (the “Board”).

 

  

  

  

 

5.           COMPENSATION.

 

(a)           Base Salary.  During the Term, the Company shall pay the Executive an annual base salary (as such base is in effect at a given time “Base Salary”) equal to Three Hundred Fifty Thousand Dollars ($350,000), subject to any increases approved by the Board or its Compensation Committee (the “Committee”).  Such Base Salary shall be paid in accordance with the Company’s payroll schedule.  Any increase in Base Salary shall not serve to limit or reduce any other obligations to the Executive under this Agreement.

 

(b)           2014 Bonus.  In addition to the Executive’s annual Base Salary the Executive may have the opportunity to earn additional cash compensation (“2014 Bonus”).  The 2014 Bonus shall be determined by the Committee at its discretion, but shall not be less than $75,000.00.  Any 2014 Bonus that is earned pursuant to this paragraph shall be paid in a single lump sum payment no later than March 15, 2015.

 

(c)           Annual Bonus.  In addition to the Executive’s annual Base Salary, for performance in each calendar year, except for 2014, during the Term, the Executive shall have the opportunity to earn an Annual Bonus with respect to each calendar year.  The Annual Bonus shall be earned and payable to the extent that predetermined individual and/or corporate goals established by the Committee are achieved and any other requirements prescribed by the Committee, at the time the performance goals are established, are satisfied.  Subject to the satisfaction of any requirements described in the preceding sentence, the Annual Bonus that will be earned on account of achieving a “target” level of performance (as established by the Committee), shall not be less than seventy five percent (75%) of the Executive’s then current Base Salary.  Any Annual Bonus that is earned pursuant to the preceding sentence shall be paid in a single lump sum payment no later than March 15 following the calendar year in which the Annual Bonus is earned, whether or not the Executive is employed by the Company on such March 15 or any such earlier payment date.

 

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

 

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

 

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

 

  

2

  

 

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

 

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

 

8.           TERMINATION.

 

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

 

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

 

  

3

  

 

(c)           Date of Termination.  For the purposes of this Agreement, “Date of Termination” means (i) if the Company intends to treat the termination as a termination based upon the Executive’s Disability, the Executive’s employment with the Company shall terminate effective on the thirtieth day after the date of the Notice of Termination (which may not be given before the Executive has been absent from work on account of a physical or mental illness or physical injury for at least one hundred fifty (150) days) provided that, before such date, the Executive shall not have returned to the performance of the Executive’s duties with or without reasonable accommodation; (ii) if the Executive’s employment is terminated by reason of Death, the Date of Termination shall be the date of death of the Executive; (iii) if the Executive’s employment is terminated by reason of Voluntary Termination, the Date of Termination shall be thirty (30) days from the date of the Notice of Termination (and the Executive shall be deemed to have terminated employment by Voluntary Termination if the Executive voluntarily refuses to provide substantially all the services described in Section 4 hereof for a period greater than four (4) consecutive weeks, excluding periods in which the Executive is not performing services on account of vacation in accordance with Section 6(a) hereof and periods in which the Executive is not performing services on account of the Executive’s illness or injury or the illness or injury of a member of the Executive’s immediate family or an approved leave under the Family and Medical Leave Act, if applicable); in such event, the Date of Termination shall be the day after the last day of such four-week period; (iv) if the Company intends to treat the termination as a Termination With Cause, the Company shall provide the Executive written notice of such grounds for termination and the Executive shall have, to the extent provided in Section 11(j), the period specified in Section 11(j) to cure such cause to the reasonable satisfaction of the Board or to the reasonable satisfaction of the Board’s Audit Committee, as applicable, failing which, the Date of Termination shall be the end of the applicable cure period; (v) if the Executive’s employment is terminated by reason of Voluntary Termination for Good Reason, the Date of Termination shall be thirty (30) days after the end of the thirty (30) day cure period or (vi) if the Executive’s employment is terminated by a Termination Without Cause, the Date of Termination shall be thirty (30) days from the Notice of Termination.

 

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

 

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

 

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

 

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

 

  

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10.           COMPENSATION UPON TERMINATION WITHOUT CAUSE OR VOLUNTARY TERMINATION WITH GOOD REASON.  This Section 10 applies in the event that the Executive’s employment ends upon a Termination Without Cause or a Voluntary Termination With Good Reason.  In either of those events but subject to the provisions of this Agreement, the Executive shall be entitled to receive the benefits and amounts described in the following subsections (a), (b), (c) and (d):

 

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

 

(b)           The Company shall pay an amount equal to the Multiple (defined in Section 11 of this Agreement) times the Executive’s Base Salary at the rate in effect immediately prior to the Date of Termination (or, in the case of a Voluntary Termination for Good Reason, at the rate in effect immediately before any reduction in Base Salary that constitutes Good Reason for resignation), such amount to be paid in accordance with Section 10(g).

 

(c)           The Company shall pay an amount equal to the Multiple (defined in Section 11 of this Agreement) times the Executive’s “target” Annual Bonus under Section 5(c) for the calendar year that includes the Date of Termination.  If the “target” Annual Bonus for such year has not been established by the Committee before the Date of Termination, then the amount payable under this Section 10(c) shall be the Multiple (defined in Section 11 of this Agreement) times the amount equal to seventy five percent (75%) of the Executive’s Base Salary at the rate in effect immediately prior to the Date of Termination (or, in the case of a Voluntary Termination for Good Reason, at the rate in effect before a reduction in Base Salary that constitutes Good Reason for resignation), such amount to be paid in accordance with Section 10(g).

 

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

 

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

 

  

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

 

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

 

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

 

(i)           If this Section 10(g)(1)(i) applies, then the Cash Severance shall be payable in eighteen (18) equal or nearly equal monthly installments.  The first installment shall be payable on the sixtieth (60th) day after the Date of Termination or, if later, on the sixtieth (60th) day after the Executive’s Separation from Service.  The remaining installments shall be payable on the first day of the month beginning after the date on which the first installment is payable and on the first day of each month thereafter until all of the Cash Severance has been paid.

 

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

 

(x)           The lesser of (1) one-sixth of the total Cash Severance and (2) the maximum amount of the Cash Severance that can be exempt from Section 409A of the Code pursuant to Treasury Regulation §1.409A-1(b)(9)(iii) (the lesser of (1) and (2) being the “Exempt Amount”) shall be payable in six (6) equal or nearly equal monthly installments.  The first installment shall be payable on the sixtieth (60th) day after the Date of Termination or, if later, on the sixtieth (60th) day after the Executive’s Separation from Service.

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

 

  

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

 

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

 

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

 

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

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

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

 

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

 

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

 

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

 

(d)           “Control Change Event” means a “change in control event” as defined under Treasury Regulation §1.409A-3(i)(5).

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

 

(f)            “Multiple” is “one and one-half (1.5)” if the Executive’s employment ends upon a Termination Without Cause pursuant to a Notice of Termination given by the Company before the date of a  Control Change Date and a  Control Change Date does not occur within ninety (90) days after the Date of Termination or if the Executive’s employment ends upon a Voluntary Termination With Good Reason pursuant to a Notice of Termination given by the Executive before the date of a Control Change Date.  The Multiple is “two (2.0)” if the Executive’s employment ends upon a Termination Without Cause on or after the date of a Control Change Date or within the ninety (90) day period preceding the date of a Control Change Date or if the Executive’s employment ends upon a Voluntary Termination With Good Reason on or after the date of a Control Change Date.

 

  

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

 

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

(i)           “Termination With Cause” means the termination of the Executive’s employment by act of the Board on account of (i) the Executive’s failure to perform a material duty or the Executive’s material breach of an obligation set forth in this Agreement or a breach of a material and written Company policy other than by reason of mental or physical illness or injury, (ii) the Executive’s breach of Executive’s fiduciary duties to the Company, (iii) the Executive’s conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise; provided that, in the cases of the foregoing clauses (i)-(iii), that following written notice from the Board describing any such event, such event is not cured, to the reasonable satisfaction of the Board, within thirty (30) days after such notice is received by the Executive, or (iv) the Executive’s conviction of, or plea of guilty or nolo contendre to, a felony or crime involving moral turpitude or fraud or dishonesty involving assets of the Company.

 

(j)           “Termination Without Cause” means the termination of the Executive’s employment by act of the Board that does not constitute a Termination With Cause at a time when the Executive is otherwise willing and able to continue providing services hereunder.  For the avoidance of doubt, termination of the Executive’s employment on account of death or Disability or Voluntary Termination is not a Termination Without Cause.

 

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

 

(l)           Voluntary Termination for “Good Reason” means the Executive’s termination of employment hereunder on account of (i) the Company’s material breach of the terms of this Agreement or a direction from the Board that the Executive act or refrain from acting which in either case would be unlawful or contrary to a material and written Company policy, (ii) a material diminution in the Executive’s duties, functions and responsibilities to the Company and its affiliates without the Executive’s prior written consent or the Company preventing the Executive from fulfilling or exercising the Executive’s material duties, functions and responsibilities to the Company and its affiliates without the Executive’s prior written consent, (iii) a material reduction in the Executive’s Base Salary or Annual Bonus opportunity or (iv) a requirement that the Executive relocate the Executive’s employment more than fifty (50) miles from the location of the Company’s principal office in Austin, Texas as of the date of this Agreement, without the prior written consent of the Executive.  The Executive’s resignation shall not be deemed a “Voluntary Termination for Good Reason” unless the Executive gives the Board written notice (delivered within thirty (30) days after the Executive receives notice of the event, action, etc. that the Executive asserts constitutes Good Reason), the event, action, etc. that the Executive asserts constitutes Good Reason is not cured, to the reasonable satisfaction of the Executive, within thirty (30) days after such notice and the Executive resigns effective not later than thirty (30) days after the expiration of such cure period.

 

  

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

 

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

 

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

 

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

 

As a result of the uncertainty in the application of Sections 280G and 4999 of the Code at the time that the Accounting Firm makes its determinations under this Section 12, it is possible that amounts will have been paid or distributed to the Executive that should not have been paid or distributed under this Section 12 (“Overpayments”), or that additional amounts should be paid or distributed to the Executive under this Section 12 (“Underpayments”).  If the Accounting Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against either the Company or the Executive, which assertion the Accounting Firm reasonably believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been made, the Executive must repay to the Company, without interest; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Executive to the Company unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Executive is subject to tax under Section 4999 of the Code or generate a refund of tax imposed under Section 4999 of the Code.  If the Accounting Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the Accounting Firm will notify the Executive and the Company of that determination and the amount of that Underpayment will be paid to the Executive promptly by the Company.

 

  

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

 

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

 

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

 

  

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

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

 

15.           COVENANTS OF THE EXECUTIVE.

 

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

 

(b)           Covenants Against Competition.  The covenant against competition herein described shall apply during the Executive’s employment with the Company and its subsidiaries and, if a Control Change Date has not occurred, following a termination of the Executive’s employment with the Company and its subsidiaries for any reason until the earlier of the first anniversary of such termination or a Control Change Date (the “Restriction Period”).  During the Restriction Period the Executive shall not, directly or indirectly, own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated with, in an executive, senior management, strategic or professional capacity, whether as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director or in any other individual or representative capacity, that is similar to an engagement in an executive, senior management, strategic or professional capacity although otherwise named in any business or venture engaged in the Business and that owns at least twenty-five (25) hotels, at least one of which is located within twenty-five (25) miles of any hotel acquired, owned, managed, developed or re-developed by the Company and its subsidiary, or within twenty-five (25) miles of any hotel the Company is pursuing to acquire, own, manage, develop or re-develop so long as the pursuit of such began prior to, and remained ongoing at the time of the termination of the Executive’s employment; provided, however, that, notwithstanding the foregoing, (i) the Executive may own or participate in the ownership of any entity which the Executive owned or managed or participated in the ownership or management of prior to the Effective Date, which ownership, management or participation has been disclosed to the Company; and (ii) the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System or equivalent non-U.S. securities exchange, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own one percent (1%) or more of any class of securities of such entity.  Notwithstanding the foregoing, this Section 15(b) shall not apply after the Executive’s Termination Without Cause or Voluntary Termination for Good Reason.

 

  

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

 

(d)           Nonsolicitation.  During the Restriction Period, the Executive shall not, without the Company’s prior-written consent, directly or indirectly, (i) knowingly solicit or knowingly encourage to leave the employment or other service of the Company or any of its affiliates, any employee employed by the Company on the Date of Termination or knowingly hire (on behalf of the Executive or any other person or entity) any employee employed by the Company on the Date of Termination who has left the employment or other service of the Company or any of its affiliates (or any predecessor of either) within one (1) year of the termination of such employee’s or independent contractor’s employment or other service with the Company and its affiliates; or (ii) whether for the Executive’s own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the Company’s or any of its affiliates, relationship with, or endeavor to entice away from the Company or any of its affiliates, any person who during the Executive’s employment with the Company is or was a customer or client of the Company or any of its affiliates (or any predecessor of either).  Notwithstanding the above, nothing shall prevent the Executive from soliciting loans, investment capital, or the provision of management services from third parties engaged in the Business if the activities of the Executive facilitated thereby do not otherwise adversely interfere with the operations of the Business.

 

  

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

 

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

 

(g)           Rights and Remedies upon Breach.  The Executive acknowledges and agrees that any breach by the Executive of any of the provisions of this section 15 (the “Covenants”) would result in irreparable injury and damage for which money damages, would not provide an adequate remedy.  Therefore, if the Executive breaches, or threatens to commit a breach of, any of the Covenants, the Company and its affiliates shall have the right and remedy to seek to have the Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants.  This right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company and its affiliates under law or in equity (including, without limitation, the recovery of damages).  The existence of any claim or cause of action by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Covenants.  The Company has the right to cease making the payments of any Cash Severance installments that remains payable under Section 10(g)(1) or other benefits to the Executive in the event of a material breach of any of the Covenants that, if capable of cure and not willful, is not cured within thirty (30) days after receipt of notice thereof from the Company.

 

  

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

 

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

 

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

 

16.           INDEMNIFICATION.  In addition to the indemnification and exculpation provisions contained in the Company’s organizational documents, the Company will indemnify the Executive in accordance with the terms of the Executive’s Indemnification Agreement with the Company, which is attached hereto as Exhibit A.  In addition, the Executive shall be entitled to coverage under the Company’s directors and officers insurance policies, which shall be maintained in effect at all times, with minimum limits established by the Board of Directors in its good faith discretion

 

17.           EXECUTIVE REPRESENTATIONS AND WARRANTIES.  The Executive hereby represents and warrants to the Company there are no covenants or restrictions prohibiting the Executive from entering into this Employment Agreement or accepting employment with the Company in the capacities stated herein.  If the Executive is found to be wilfully and knowingly in breach of this Section 17, the Company shall have the right to pursue a Termination With Cause for such breach.

 

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

 

  

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To the Company:

	
Summit Hotel Properties, Inc.

	 	 	Attn:  Corporate Secretary
	 	 	12600 Hill Country Boulevard
	 	  	
Suite R-100

	 	 	Austin, Texas  78738
	 	  	  
	 	
To the Executive:

	
Greg Dowell

	 	  	
[Address]

	 	 	 

 

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

 

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

 

21.           APPLICABLE LAW.  This Agreement shall be governed and construed in accordance with the laws of the State of Texas.  Except as expressly provided above with respect to the Covenants, WITH RESPECT TO ANY SUIT, ACTION OR OTHER PROCEEDING ARISING FROM (OR RELATING TO) THIS EMPLOYMENT AGREEMENT, THE COMPANY AND THE EXECUTIVE HEREBY IRREVOCABLY AGREE TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS, AUSTIN DIVISION (AND ANY TEXAS STATE COURT WITHIN TRAVIS COUNTY, TEXAS).

 

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

 

  

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

 

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

 

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

 

26.           EXPENSE REIMBURSEMENT.  Upon the execution of this Employment Agreement, the Company shall reimburse the Executive for his documented legal fees and expenses in reviewing and negotiating this Employment Agreement, up to a maximum of $5,000.00.

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the 11th day of September, 2014 to be effective as of October 1, 2014.

 

	 	 	SUMMIT HOTEL PROPERTIES, INC.	 
	 	 	 	 
	 	 	 	 
	
 

	
 

	 /s/ Christopher Eng	 
	 	 	By:  Christopher Eng	 
	 	 	Title:  Secretary	 
	 	 	 	 
	 	 	 	 
	 	 	EXECUTIVE	 
	 	 	 	 
	 	 	 /s/ Greg A. Dowell	 
	 	 	Greg A. Dowell	 

  

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EXHIBIT A

INDEMNIFICATION AGREEMENT

 

 

 

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