Document:

Blueprint

  Exhibit 10.2

 

AGREEMENT

 

THIS
AGREEMENT is made effective as of September 6, 2018 (the “Effective
Date”), by and Global Venture
Investments Inc. (“GVEST” or
“Consultant”), a Washington corporation, and
Pacific Energy Development
Corp. (“Company”).

 

RECITALS

 

A.           Consultant
desires to perform services as an advisor to the Company’s
Chief Executive Officer, and the Company desires to have Consultant
perform such services.

 

B.           Consultant’s
advisory services are not currently part of Company’s core
business and, therefore, the Company needs to independently
contract with Consultant; and

 

C.           Company
does not retain the authority to direct the day-to-day performance
of Consultant’s services, but rather is requesting that
Consultant accomplish certain tasks based upon Consultant’s
specific skill set and expertise.

 

NOW,
THEREFORE, for and in consideration of the mutual promises and
covenants hereinafter set forth, the parties hereto agree as
follows:

 

 

1.

SERVICES, CONSIDERATION AND TERM

 

(a) Services. Consultant shall
perform for Company services described in Exhibit A attached hereto and
incorporated herein by reference (“Services”) and other
such Services as Company may prescribe.

 

(b) Consideration. Company shall
pay Consultant as set forth in Exhibit A attached hereto and
incorporated herein by reference. Consultant shall devote such time
as is reasonably required to perform Consultant’s
responsibilities under this Agreement.

 

(c)           Term.
This Agreement shall become effective as of the date first set
forth above and shall remain in full force and effect until
October 1, 2018, when the
Agreement automatically terminates.

 

CONFLICTING OBLIGATIONS

 

Consultant confirms
that Consultant has not executed nor is bound by, or party to, any
non-compete covenant, restriction, or other agreement, contractual
or otherwise, with any prior or current employer, supplier,
customer, or firm with which the Consultant has been associated and
which would prevent the consultant from working with Company in the
capacity as stated herein, or otherwise impede or restrict
Consultant from fulfilling the terms of this Agreement with
Company.

 

 

1

 

 

2.

INDEPENDENT CONSULTANT

 

(a)           Independent
Consultant Status. It is the express intention of the
parties that Consultant is an independent consultant and not an
employee, agent, representative, joint venture, or partner of the
Company. Nothing in this Agreement shall be interpreted or
construed as creating or establishing the relationship of employer
and employee between Company and Consultant or any employee or
agent of Consultant. The parties acknowledge that Consultant is not
an employee for state or federal tax purposes. Consultant is
obligated to report as income all income received by Consultant
pursuant to this Agreement, and Consultant agrees to and
acknowledges the obligation to pay all self-employment and other
taxes thereon including applicable federal, state, and local income
taxes, unemployment insurance, workers’ compensation
insurance, disability insurance, Social Security taxes, and other
charges. Consultant further agrees to indemnify Company and hold
Company harmless from any and all claims made by any entity on
account of an alleged failure by Consultant or Company to satisfy
such withholding or other obligation.

 

(b)           Consultation
for Others. Consultant is free to perform work as a
consultant or employee for any other entity and/or person
provided that such
engagement does not create a conflict of interest with
Consultant’s obligations to Company. Specifically, none of
Consultant’s services for any other entity and/or person
shall compromise in any way the Company’s “Confidential
Information” as defined in Paragraph 4(a) below. Further,
Consultant must at all times comply with Paragraph 4 below.

 

(c)           Employment
of Assistants. Consultant may, at Consultant’s own
expense, employ such assistants as Consultant deems necessary to
perform the services required of Consultant by this Agreement.
Consultant assumes full and sole responsibility for the payment of
all compensation and expenses of these assistants and for all
federal, state, and local income taxes, unemployment insurance,
workers’ compensation insurance, disability insurance, Social
Security taxes, and other applicable withholdings.

 

(d)           Time,
Places, and Methods of Providing Services. As long as
Consultant delivers acceptable services to Company in a timely
fashion, Consultant shall generally have the discretion to
determine the location and times of rendering services as well as
the method of accomplishing Consultant’s
Services.

 

(e)           Records
and Invoices. Consultant shall keep complete and systematic
written records of all work relating to the performance of Services
by Consultant hereunder and shall submit monthly invoices to
Company.

 

(f)           Equipment,
Instruments, Documentation and Specifications. Consultant
shall supply all equipment, instruments, documentation, and
specifications required to perform Services under this Agreement,
except when such equipment, instruments, documentation, and
specifications are unique to Company, in which case Company shall
provide Consultant with such equipment, instruments, documentation,
and specifications as may reasonably be required by Consultant to
perform Consultant’s duties under this Agreement. Such
equipment, instruments, documentation, and specifications shall at
all times remain the property of Company.

 

 

2

 

 

3.

CONFIDENTIAL INFORMATION

 

(a) Definition. “Confidential
Information” means any of the Company’s (including its
parents’, affiliates’, or subsidiaries’)
proprietary information, technical data, trade secrets, or
know-how, including but not limited to all actual or potential
customer, employee, supplier, and distributor lists, contacts and
addresses, information about employees and employee relations,
training manuals and procedures, information about recruitment
method and procedures, employment contracts, employee handbooks,
information about marketing, business plans and projections, price
lists, information about costs and expenses, budgets, proposals,
financial information, product plans, products, services, research,
developments, systems, formulas, technology, inventions, data
bases, know how, developments, experiments, improvements,
prototypes, computer programs, software, devices, patterns,
processes, designs, source codes, mask-works, drawings,
engineering, hardware configuration information, manufacturing
methods, distribution techniques, specifications, tapes, and
compilations of information that are owned by Company, parents,
affiliates, or subsidiaries of Company, other parties with which
Company does business (“Third Parties”) or customers of
Company, and that are used in the operation of Company’s,
Third Parties’ and/or a customer’s business.
Confidential Information includes, but is not limited to,
information disclosed to or developed by Consultant in connection
with the Services. Confidential Information shall not include information that:
(i) is now or subsequently becomes generally available to the
public through no wrongful act or omission of Consultant; (ii)
Consultant can demonstrate to have had rightfully in its possession
before disclosure to Consultant by Company; (iii) is independently
developed by Consultant without use, directly or indirectly, of any
Confidential Information; or (iv) Consultant rightfully obtains
from a third party who has the right to transfer or disclose
it.

 

(b) Non-Use and Non-Disclosure.
Except to the extent necessary to perform Services, Consultant
shall not reproduce, use, distribute, disclose, or otherwise
disseminate Confidential Information. Consultant shall not take any
action causing, or fail to take any reasonable action necessary to
prevent, any Confidential Information to lose its character as
Confidential Information. Consultant shall not remove Confidential
Information from Company or the location(s) designated by Company
except as expressly permitted by Company in writing.

 

Consultant agrees
that access to Confidential Information will be limited to those
employees or other authorized representatives of Consultant who:
(1) need to know such Confidential Information in connection with
their provision of Services; and (2) have signed agreements
with Consultant obligating them to maintain the confidentiality of
information disclosed to them and designated or defined as
confidential. Consultant further agrees to inform such employees or
authorized representatives of the confidential nature of
Confidential Information and agrees to take all necessary steps to
ensure that such employees do not violate the terms of this
Agreement.

 

Additionally,
Consultant agrees not to use any Developments, as defined in
Paragraph 6(b), in
connection with any project that Consultant undertakes for
Consultant or for any party other than Company without the
Company’s prior express written approval.

 

(c)           Former
Employer’s Confidential Information. Consultant shall
not, during the term of this Agreement, improperly use or disclose
any proprietary information or trade secrets of any former or
current employer or other person or entity with which Consultant
has an agreement or duty to keep in confidence information acquired
by Consultant in confidence, if any, and Consultant will not bring
onto the Company’s premises any unpublished document or
proprietary information belonging to such employer, person, or
entity, unless consented to in writing by such employer, person, or
entity. Consultant will indemnify Company and hold Company harmless
from and against all claims, liabilities, damages, and expenses,
including reasonable attorneys’ fees and costs of suit,
arising out of or in connection with any violation or claimed
violation of a third party’s rights resulting in whole or in
part from Company’s use of the work product of Consultant
under this Agreement.

 

 

3

 

 

(d)           No
Export. Consultant acknowledges that Confidential
Information or other information disclosed in connection with the
Services might be considered technical data that is subject to
compliance with the export control laws and regulations of the
United States, and hereby agrees to comply with such
laws.

 

(e)           Return
of Company Property and Information. Upon termination of
this Agreement or upon request by Company, Consultant shall
promptly deliver to Company any and all Company property and
Confidential Information in Consultant’s, or
Consultant’s agent’s possession, custody or control.
Consultant agrees to sign and deliver the Termination Certification
attached hereto as Exhibit
B.

 

4.

INTELLECTUAL PROPERTY RIGHTS

 

(a)           Assignment.
Consultant has attached hereto, as Exhibit C, a list describing
all inventions, original works of authorship, developments,
improvements, and trade secrets that were made by Consultant prior
to the date hereof, that belong to Consultant and that relate to
Company’s proposed business and products, and that are not
assigned to Company; or, if such list is not attached or is left
blank, Consultant represents that there are no such
inventions.

 

All
Confidential Information shall remain the property of Company and
no license or other right to such information is granted or implied
hereby. The Services and all Confidential Information developed in
connection therewith shall be the sole and exclusive property of
Company. In the event such Services or Confidential Information
developed in connection therewith is deemed not to be the property
of Company, Consultant hereby assigns all rights thereto to Company
and hereby agrees to sign all instruments reasonably necessary in
the opinion of Company to eliminate any ambiguity as to ownership
by Company.

 

 (b)           Further
Assurances. Consultant agrees that all ideas, techniques,
inventions, systems, formulae, business and/or marketing plans,
projections or analyses, discoveries, technical information,
programs, prototypes, and similar developments, improvements, or
creations developed, conceived, created, discovered, made, written,
or obtained by Consultant in the course of or as the result, direct
or indirect, of the performance of Consultant’s duties
hereunder (hereinafter called “Developments”), and all
related intellectual property rights, including but not limited to
writings and other works of authorship, United States, and/or
foreign letters, patents, maskworks, copyright or trademark
registrations, and/or other forms of protection thereof, shall be
and remain the property of Company, its parents, affiliates, or
subsidiaries. Consultant further agrees to assign (or cause to be
assigned) and does hereby assign fully to Company all such
Developments and any copyrights, patents, maskwork rights, or other
intellectual property rights relating thereto. Consultant, insofar
as Consultant has the right to do so, agrees that Consultant will
execute or cause to be executed such United States and/or foreign
letters, patents, maskworks, copyright or trademark registrations,
and other documents and agreements and take such other action as
may be desirable in the opinion of Company to enable intellectual
property, copyright, and/or other forms of protection for
Developments to be obtained, maintained, renewed, preserved, and
protected throughout the world by or on behalf of
Company.

 

(c)           Pre-Existing
Materials. Consultant agrees that, if in the course of
performing the Services, Consultant incorporates into any invention
developed hereunder any invention, improvement, development,
concept, discovery, or other proprietary information owned by
Consultant or in which Consultant has an interest, (i) Consultant
shall inform Company, in writing, before incorporating such
invention, improvement, development, concept, discovery, or other
proprietary information into any invention; and (ii) Company is
hereby granted and shall have a nonexclusive, royalty-free,
perpetual, irrevocable, worldwide license to make, have made,
modify, use, and sell such item as part of or in connection with
such invention. Consultant shall not incorporate any invention,
improvement, development, concept, discovery, or other proprietary
information owned by any third party into any invention without
Company’s prior written permission.

 

 

4

 

 

6.           NONSOLICITATION

 

Consultant agrees
that during the term of this Agreement and for a period of one (1)
year after the termination of this Agreement, in any State in the
United States in which Company does business, or equivalent
geographical subdivision in any foreign jurisdiction in which
Company does business, Consultant will not solicit or induce
employees of Company to terminate their employment with
Company.

 

Consultant will not
at any time solicit customers of the Company based upon or using
any of the Company’s trade secrets within the meaning of
Texas or federal law.

 

7.           TERMINATION

 

(a)           Termination
For Cause.

 

(i) The
Company shall have the right to terminate this Agreement at any
time for Cause.

 

(ii)
The term “Cause” shall mean the Consultant or any of
its employees (1) conviction of, or plea of nolo contendere to, a
felony or any other crime involving moral turpitude; (2) fraud on
or misappropriation of any funds or property of the Company or any
of its affiliates, customers or vendors; (3) act of material
dishonesty, willful misconduct, willful violation of any law, rule
or regulation, or breach of fiduciary duty involving personal
profit, which has, or could reasonably be deemed to result in, a
Material Adverse Effect upon the Company (a defined below); (4)
illegal use or distribution of drugs; (5) material violation of any
policy or code of conduct of the Company; or (6) material breach of
any provision of this Agreement. However, an event that is or would
constitute “Cause” shall cease to be
“Cause” if Consultant reverse the action or cures the
default that constitutes “Cause” within 10 days after
the Company notifies Consultant in writing that Cause
exists.

 

No act
or failure to act on Consultant' s part will be considered
“willful” unless it is done, or omitted to be done, by
Consultant in bad faith or without reasonable belief that such
action or omission was in the best interests of the
Company.

 

Any
notice or other communication to be given by Consultant to the
Company hereunder shall be in writing and mailed by certified or
registered mail with return receipt requested, and shall be
addressed to Company as follows:

 

Pacific
Energy Development Corp.

Attn:
General Counsel

4125
Blackhawk Plaza Circle

Danville,
California 94506

 

(b)           Automatic
Termination. This Agreement shall terminate automatically on
October 1, 2018, on the occurrence of bankruptcy or insolvency of
either party, by death of Consultant, or by assignment of this
Agreement except as provided under Paragraph 8(e).

 

(c)           Continuation
of Obligations. Consultant Agrees that all obligations under
Paragraphs 4 and 6
of this Agreement shall continue in effect after termination of the
Agreement, and that Consultant will notify any future client,
potential client, or employer of Consultant’s obligations
under this Agreement and that Company will be entitled to notify
any such person or entity of Consultant’s
obligations.

 

 

5

 

 

8.           MISCELLANEOUS

 

(a)           Injunctive
Relief. Consultant acknowledges that any unauthorized
disclosure or use of Confidential Information would constitute a
material breach of this Agreement and may cause great or
irreparable injury to Company for which pecuniary compensation
would not afford adequate relief, or that it would be extremely
difficult to ascertain the amount of the compensation that would
afford adequate relief. Therefore, in the event of such breach,
Consultant agrees that Company will have the right to seek and
obtain injunctive relief in addition to any other rights and
remedies it may have.

 

(b)           Governing
Law and Venue. This Agreement shall be deemed to be a
contract made under, and shall be governed and construed in
accordance with, the laws of the State of Texas. The parties agree
that any dispute, controversy, or claim arising out of or related
to this Agreement, including its validity, scope, or
enforceability, or any alleged breach of any of its provisions, or
any alleged violation of statute, regulation, common law, or public
policy, shall be submitted to and decided by final and binding
arbitration before the American Arbitration Association (AAA) to be
held in Houston, Texas, before a single arbitrator, in accordance
with AAA’s Commercial Arbitration Rules. Company will pay the
arbitrator’s fees and arbitration expenses and any other
costs unique to the arbitration hearing, unless Consultant
initiates the arbitration. If Consultant initiates the arbitration,
Consultant will contribute an amount equal to the filing fee.
Discovery in any arbitration proceeding shall be conducted
according to AAA’s Commercial Arbitration Rules.

 

This
agreement to arbitrate is freely negotiated between Consultant and
Company is mutually entered into between the parties. By entering
into this Agreement, the parties are waiving all rights to have
their disputes heard or decided by a jury or in a court
trial.

 

(c)           Entire
Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter
herein. Any and all written or oral agreements heretofore existing
between the parties with respect to the subject matter hereof are
expressly canceled. No modification, amendment, or waiver of any of
the provisions of this Agreement shall be effective unless made in
writing specifically referring to this Agreement and duly signed by
an authorized officer or agent for each party hereto.

 

(d)           Severability.
The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, all of
which shall remain enforceable in accordance with their terms.
Should any of the obligations created hereunder be found illegal
and unenforceable for being too broad with respect to the duration,
scope, or subject matter thereof, such obligation shall be deemed
and construed to be reduced to the maximum duration, scope, or
subject matter permitted by law.

 

(e)           Assignability.
Neither party shall assign, transfer, or sell its rights under this
Agreement or delegate its duties hereunder without the prior
express written consent of the other party, and any attempted
assignment or delegation shall be void and without effect;
provided, however, that Company may assign this Agreement to any
person or entity acquiring its business and assets.

 

(f)           Attorneys’
Fees and Court Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other
relief to which it may otherwise be entitled.

 

 

6

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written
above.

 

 

	
 

	

GLOBAL VENTURES INVESTMENTS INC.

 

 

/s/ Frank C . Ingriselli

Frank
C. Ingriselli, President & CEO

 

 

	

Accepted
and Agreed to:

 

PACIFIC ENERGY DEVELOPMENT CORP.

 

	
 

	

By:
/s/ Simon G.
Kukes

       Simon G. Kukes,
CEO

	
 

 

 

 

 

 

 

7

 

 

EXHIBIT A

 

 

 

1.

Contact.
Consultant’s principal Company contact is:

 

Name:
Simon Kukes

 

Title:
CEO

 

2.

Services.
Consultant’s services include, but are not limited
to:

 

●

Providing services
to Company’s CEO, including, but not limited to, services in
areas of investor relations, public relations, financing
strategies, corporate strategies, and development of business
opportunities.

 

●

Providing services
to Company’s Board, which will include, but are not limited
to, aiding Board identify and evaluate key and appropriate issues
for discussion; providing briefing on discussion issues and
challenges with accurate, clear, complete, and reliable information
for Board’s fulfillment of duties; providing assistance in
fostering an environment of open communication and constructive
debates between non-executive Directors and Company management;
engaging all Board members to develop and determine Company
strategies and policies with the Company’s best interests in
mind; assistance establishing good corporate governance practices
and procedures, while promoting the highest standards of integrity,
probity, and corporate governance at all levels.

 

3.

Consideration Due
For Services. The Company shall pay to Consultant via
acceleration of vesting of its 140,000 restricted shares
transferred from Frank Ingriselli as detailed in the Severance and
Release Agreement dated September 6, 2018, for all services
requested by the Company and provided by Consultant to the Company
hereunder.

 

4.

Expenses.
Company shall reimburse Consultant for all reasonable out-of-pocket
travel expenses incurred by Consultant when such travel is
specifically requested by the Company. Consultant shall receive
written consent from an authorized agent of Company regarding costs
prior to incurring such expenses. Consultant is permitted to travel
in business class, or first class if business class is not
available, on all flights taken with a scheduled aggregate duration
of over five hours.

 

 

8

 

 

EXHIBIT B

 

 

PACIFIC ENERGY DEVELOPMENT CORP.

 

CERTIFICATION OF RETURN OF COMPANY PROPERTY AND
INFORMATION

 

 

This is
to certify that I do not have in my possession, nor have I failed
to return, any devices, records, software, data, notes, reports,
proposals, lists, and sources of customers, lists of employees,
proposals to customers, drafts of proposals, business plans and
projections, reports, job notes, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items
belonging to PACIFIC ENERGY
DEVELOPMENT CORP., its subsidiaries, affiliates, successors,
or assigns (together, the “Company”), or its customers
or clients.

 

I
further certify that I have complied with all terms of the
Company’s confidential and proprietary information provisions
in the Consulting Agreement signed by me, including the reporting
of any inventions and original works of authorship conceived or
made by me (solely or jointly with others) covered by that
Agreement.

 

I
further agree that, in compliance with the Consulting Agreement, I
will preserve as confidential all trade secrets, confidential
knowledge, data or other proprietary information relating to
products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original
works of authorship, customer lists, business plans, financial
information or other subject matter pertaining to any business of
the Company or any of its customers, consultants or
licensees.

 

 

	
 

 

Date:
____________________________

 

 

	

GLOBAL VENTURES INVESTMENTS LLC

 

______________________________

FRANK INGRISELLI

OWNER

 

 

 

 

9

 

 

EXHIBIT C

 

 

LIST OF PRIOR INVENTIONS

 

 

AND
ORIGINAL WORKS OF AUTHORSHIP

 

 

 

	

TITLE

	

DATE

	

IDENTIFYING NUMBER OR BRIEF DESCRIPTION

	
 

	
 

	
 

 

 

 

 

 

 

 

 

 

10ex_123367.htm

Exhibit 10(a)

2012 HOVNANIAN ENTERPRISES, INC.

AMENDED AND RESTATED STOCK INCENTIVE PLAN

 

MARKET SHARE UNIT AGREEMENT

(Pre-tax Profit Performance Vesting)

 

 

	
			Participant:

				 	
			Date of Grant:

				 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
			Target Number of MSUs:

				 	
			Grant Price:

				 
	 	 	 	 	 	 	 	 
	
			 

			Maximum Number of MSUs:

				 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
			Dates of Vesting:

				 	 	 	 	 	 
	
			Date

				 	
			Number of Eligible MSUs Per 

			 Vesting Date at Target Level

				 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 

 

 

1.     Grant of MSUs.

 

(a)     General. For valuable consideration, receipt of which is hereby acknowledged, Hovnanian Enterprises, Inc., a Delaware Corporation (the "Company"), hereby grants the target number of market share units ("MSUs") listed above to the Participant, on the terms and conditions hereinafter set forth. This grant is made pursuant to the terms and conditions of the 2012 Company Amended and Restated Stock Incentive Plan (the "Plan"), which Plan, as amended from time to time, is incorporated herein by reference and made a part of this Agreement. Each MSU represents the unfunded, unsecured right of the Participant to receive a number of Shares (or fraction thereof) determined by reference to the product of the relevant Stock Performance Multiplier and the Pre-tax Profit Multiplier on the date(s) and subject to the terms specified herein. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.

 

(b)     Certain Definitions. The terms set forth below shall have the meanings as defined below:

 

(i)     “End Price” shall mean, with respect to each Vesting Date, the average closing trading price of the Company’s Shares on the New York Stock Exchange over the 60 calendar day period ending on such Vesting Date; provided, however, that with respect to any Vesting Date occurring on or after the date of a Change in Control, the End Price shall equal the price per Share paid to the holders thereof in accordance with the definitive agreement governing the transaction constituting the Change in Control (or, in the absence of such agreement, the closing price per Share for the last trading day prior to the consummation of the Change in Control).

 

(ii)     “Grant Price” shall mean the Grant Price set forth above, representing the average closing trading price of the Company’s Shares on the New York Stock Exchange over the 60 calendar day period ending on the Date of Grant.

 

(iii)     “Pre-tax Profit Multiplier” shall be determined as follows by reference to income (loss) before income tax expense and before income (loss) from unconsolidated joint ventures as reflected on the Company's audited financial statements plus income (loss) before income tax expense for the Company's unconsolidated joint ventures as reflected on their respective financial statements for the twelve months ended October 31, 2020, excluding the impact of any items deemed by the Committee to be unusual or nonrecurring items and excluding losses from land impairments and gains or losses from debt repurchases/debt retirement such as call premiums and related issuance costs:

 

	
			Fiscal Year 2020 Pre-tax Profit

				
			Applicable Pre-tax Profit Multiplier

			
	
			$0 (or less)

				
			0%

			
	
			50% higher than the annualized average of the 12 quarters ending April 30, 2018

				
			50%

			
	
			200% higher than the annualized average of the 12 quarters ending April 30, 2018 (or greater)

				
			100%

			

 

; provided, however, that (a) the applicable Pre-tax Profit Multiplier for Pre-tax Profit between the performance ranges shown above shall be determined by linear interpolation and (b) in the event that a Change in Control occurs prior to October 31, 2020, the Pre-tax Profit Multiplier shall be deemed to equal 100%. For the avoidance of doubt, the Pre-tax Profit Multiplier shall be applied to the portion of the target number of MSUs that becomes vested on each Vesting Date as described herein.

 

(iv)     “Stock Performance Multiplier” with respect to each Vesting Date shall mean the percentage equal to the corresponding End Price divided by the Grant Price; provided, however, that (a) if such percentage is less than 50%, then the Stock Performance Multiplier shall equal zero and (b) if such percentage exceeds 200%, then the Stock Performance Multiplier shall equal 200%. For the avoidance of doubt, the Stock Performance Multiplier shall be applied to the portion of the target number of MSUs that becomes vested on each Vesting Date as described herein.

 

(v)     “Vesting Dates” shall mean the Vesting Dates referenced above, or if earlier, the date upon which an acceleration of vesting occurs pursuant to Section 2 hereof.

 

2.     Vesting and Timing of Transfer.

 

(a)     The Participant will become vested in the MSUs in accordance with the Vesting Date schedule set forth above and as further described below; provided, however, that upon the occurrence of a Change in Control that results in the Company’s Shares ceasing to be publicly traded on a national securities exchange, the outstanding MSUs shall immediately become vested with the Change in Control date constituting the relevant Vesting Date hereunder and with Share delivery determined based on the applicable Stock Performance Multiplier, Pre-tax Profit Multiplier and timing set forth in Section 2(b) below (subject to any delay in Share delivery required pursuant to Section 16 hereof).

 

(b)     The Company shall transfer to the Participant, as soon as practicable but not later than 60 days after an applicable Vesting Date, a number of Class A Shares (if any) equal to the number of MSUs that became vested on that Vesting Date multiplied by the corresponding Stock Performance Multiplier for such Vesting Date and multiplied further by the Pre-tax Profit Multiplier (with any resulting fractional Share rounded up to the nearest whole Share). If the Participant is eligible to participate in, and has elected to defer the transfer of Shares pursuant to the terms of a nonqualified deferred compensation plan maintained by the Company, such Shares shall be so deferred, and any such deferral, when paid, shall be paid in Shares. Once the transfer of any Shares is deferred, the rights and privileges of the Participant with respect to such Shares shall be determined solely pursuant to the terms of the applicable plan, and not pursuant to the terms and conditions of this Agreement.

 

(c)     Notwithstanding Sections 2(a) and 2(b) of this Agreement, if the Participant's employment with the Company and its Affiliates terminates due to (i) death, (ii) Disability or (iii) Retirement, but only if such Retirement occurs on or after the first anniversary of the Date of Grant indicated above (any such termination, a “Qualifying Termination”), the MSUs shall remain outstanding and the corresponding Shares thereunder shall be delivered in accordance with Section 2(b) on or following each subsequent scheduled Vesting Date as if the Participant had remained employed with the Company and its Affiliates through such applicable Vesting Date based on the corresponding Stock Performance Multiplier for such Vesting Date and the Pre-tax Profit Multiplier. In the event of the death of the Participant, the transfer of Shares under this Section 2(c) shall be made in accordance with the beneficiary designation form on file with the Company; provided, however, that, in the absence of any such beneficiary designation form, the transfer of Shares under this Section 2(c) shall be made to the person or persons to whom the Participant's rights under the Agreement shall pass by will or by the applicable laws of descent and distribution. For purposes of this Agreement, "Disability" shall mean "Disability" as defined in the Plan, and "Retirement" shall mean termination of employment on or after age 60, or on or after age 58 with at least 15 years of "Service" to the Company and its Subsidiaries immediately preceding such termination of employment. For this purpose, "Service" means the period of employment immediately preceding Retirement, plus any prior periods of employment with the Company and its Subsidiaries of one or more years' duration, unless they were succeeded by a period of non-employment with the Company and its Subsidiaries of more than three years' duration.

 

(d)     Upon each transfer or deferral of Shares in accordance with this Agreement, the Participant’s right to receive that number of Shares transferred to the Participant or deferred shall be extinguished. Additionally, to the extent that the Participant earns less than 100% of the Shares underlying the MSUs that are scheduled to vest upon any Vesting Date (i.e., due to the applicable Performance Multiple being less than 100%), such unearned MSUs and all rights pertaining thereto shall be extinguished as of the relevant Vesting Date.

 

(e)     Notwithstanding Sections 2(a), 2(b) and 2(c) of this Agreement, upon the Participant's termination of employment for any reason other than (i) death, Disability or Retirement occurring on or after the first anniversary of the Date of Grant indicated above or (ii) under the circumstances described in clause (f) below, any unvested MSUs shall immediately terminate for no further consideration.

 

(f)     Certain Terminations within Two Years Following a Change in Control. In the event of the Participant’s (i) Qualifying Termination or (ii) involuntary termination of employment with the Company or a subsidiary thereof without “Cause” or termination for “Good Reason”, in each case, within two years following a Change in Control, the MSUs, to the extent not previously vested and settled, shall immediately become fully vested and settled in Shares on the same terms as described under Section 2(b) above treating such termination of employment date as the relevant Vesting Date; provided, however, that to the extent required under Section 16 hereof in connection with any such termination of employment in order to avoid additional taxation under Section 409A of the Code, the Shares underlying the MSUs shall instead either (i) remain outstanding and be settled upon the subsequent normal scheduled Vesting Dates as if the Participant had remained employed through such dates, as described in Section 2(c), if the Change in Control did not constitute a change in ownership or effective control within the meaning of Section 409A(a)(2)(A)(v) of the Code or (ii) be deferred to the extent required under Section 16 if the Participant is a “specified employee” within the meaning of Section 409A of the Code as of such termination date. For purposes of this Agreement, “Cause” shall mean the occurrence of any of the following: (a) the willful and continued failure of the Participant to perform substantially all of his or her duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness) for a period of 10 days following a written demand for substantial performance that is delivered to such Participant by the Company, which specifically identifies the manner in which the Company believes the Participant has not substantially performed his or her duties; (b) dishonesty in the performance of the Participant’s duties with the Company; (c) the Participant’s conviction of, or plea of guilty or nolo contendere to, a crime under the laws of the United States or any state thereof constituting a felony or a misdemeanor involving moral turpitude; (d) the Participant’s willful malfeasance or willful misconduct in connection with the Participant’s duties with the Company or any act or omission which is injurious to the financial condition or business reputation of the Company or its affiliates; or (e) the Participant’s breach of the provisions of Section 11 of this Agreement. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following, without the Participant’s express written consent: (a) any material diminution in the Participant’s duties, titles or responsibilities with the Company from those in effect immediately prior to a Change in Control or (b) any reduction in the Participant's annual base salary or any material reduction in the Participant's annual bonus opportunity, annual equity awards or long-term incentive program awards from the Participant's annual base salary or annual bonus opportunity, annual equity awards or long-term incentive program awards in effect immediately prior to a Change in Control. Notwithstanding the foregoing, no event shall constitute Good Reason unless the Participant provides the Company with written notice of such event within 60 days after the occurrence thereof and the Company fails to cure or resolve the behavior otherwise constituting Good Reason within 30 days of its receipt of such notice.

 

3.     Dividends. If on any date while MSUs are outstanding hereunder the Company shall pay any dividend on the Shares (other than a dividend payable in Shares), the number of MSUs granted to the Participant shall, as of such dividend payment date, be increased by a number of MSUs equal to: (a) the product of (x) the number of MSUs held by the Participant as of the related dividend record date, multiplied by (y) the per Share amount of any cash dividend (or, in the case of any dividend payable in whole or in part other than in cash, the per Share value of such dividend, as determined in good faith by the Committee), divided by (b) the Fair Market Value of a Share on the payment date of such dividend. In the case of any dividend declared on Shares that is payable in the form of Shares, the number of MSUs granted to the Participant shall be increased by a number equal to the product of (a) the MSUs that are held by the Participant on the related dividend record date, multiplied by (b) the number of Shares (including any fraction thereof) payable as a dividend on a Share. Any MSUs attributable to dividends under this Section 3 shall be subject to the vesting provisions provided in Section 2.

 

4.     Adjustments Upon Certain Events. Subject to the terms of the Plan, in the event of any change in the outstanding Shares by reason of any Share dividend or split, reorganization, recapitalization, merger, consolidation, amalgamation, spin-off or combination transaction or exchange of Shares or other similar events (collectively, an "Adjustment Event"), the Committee shall, in its sole discretion, make an appropriate and equitable adjustment in the number of MSUs subject to this Agreement, the relevant stock price measurements and such other terms related to the MSUs to reflect such Adjustment Event. Any such adjustment made by the Committee shall be final and binding upon the Participant, the Company and all other interested persons.

 

5.     No Right to Continued Employment. Neither the Plan nor this Agreement shall be construed as giving the Participant the right to be retained in the employ of, or in any consulting relationship to, the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss the Participant, free from any liability or any claim under the Plan or this Agreement, except as otherwise expressly provided herein.

 

6.     No Acquired Rights. In participating in the Plan, the Participant acknowledges and accepts that the Board has the power to amend or terminate the Plan, to the extent permitted thereunder, at any time and that the opportunity given to the Participant to participate in the Plan is entirely at the discretion of the Committee and does not obligate the Company or any of its Affiliates to offer such participation in the future (whether on the same or different terms). The Participant further acknowledges and accepts that such Participant's participation in the Plan is not to be considered part of any normal or expected compensation and that the termination of the Participant's employment under any circumstances whatsoever will give the Participant no claim or right of action against the Company or its Affiliates in respect of any loss of rights under this Agreement or the Plan that may arise as a result of such termination of employment.

 

7.     No Rights of a Shareholder. The Participant shall not have any rights or privileges as a shareholder of the Company until the Shares in question have been registered in the Company's register of shareholders.

 

8.     Legend on Certificates. Any Shares issued or transferred to the Participant pursuant to Section 2 of this Agreement shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and any applicable Federal or state laws or relevant securities laws of the jurisdiction of the domicile of the Participant, and the Committee may cause a legend or legends to be put on any certificates representing such Shares to make appropriate reference to such restrictions.

 

9.     Transferability. MSUs may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of descent and distribution, and any purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance not permitted by this Section 9 shall be void and unenforceable against the Company or any Affiliate.

 

10.     Withholding. The Participant may be required to pay to the Company or any Affiliate and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any transfer due under this Agreement or under the Plan or from any compensation or other amount owing to the Participant, applicable withholding taxes with respect to any transfer under this Agreement or under the Plan and to take such action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. Notwithstanding the foregoing, if the Participant's employment with the Company terminates prior to the transfer of all of the Shares under this Agreement, the payment of any applicable withholding taxes with respect to any further transfer of Shares under this Agreement or the Plan shall be made solely through the sale of Shares equal to the statutory minimum withholding liability.

 

 

 

11.     Non-Solicitation Covenants. 

 

(a)     The Participant acknowledges and agrees that, during the Participant's employment with the Company and its Affiliates and upon the Participant's termination of Employment with the Company and its Affiliates for any reason, for a period commencing on the termination of such Employment and ending on the second anniversary of such termination, the Participant shall not, whether on Participant's own behalf or on behalf of or in conjunction with any person, company, business entity or other organization whatsoever, directly or indirectly:

 

(i)     solicit any employee of the Company or its Affiliates with whom the Participant had any contact during the last two years of the Participant's employment, or who worked in the same business segment or division as the Participant during that period to terminate employment with the Company or its Affiliates;

 

(ii)     solicit the employment or services of, or hire, any such employee whose employment with the Company or its Affiliates terminated coincident with, or within twelve (12) months prior to or after the termination of Participant's employment with the Company and its Affiliates;

 

(iii)     directly or indirectly, solicit to cease to work with the Company or its Affiliates any consultant then under contract with the Company or its Affiliates.

 

(b)     It is expressly understood and agreed that although the Participant and the Company consider the restrictions contained in this Section 11 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or any other restriction contained in this Agreement is an unenforceable restriction against the Participant, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

 

12.     Specific Performance. The Participant acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of Section 11 would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, the Participant agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to cease making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.

 

13.     Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

14.     MSUs Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. All MSUs are subject to the Plan. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

15.     Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

16.     409A. Notwithstanding any other provisions of this Agreement or the Plan, this MSU shall not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon the Participant. In the event it is reasonably determined by the Committee that, as a result of Section 409A of the Code, the transfer of Class A Shares under this Agreement may not be made at the time contemplated hereunder without causing the Participant to be subject to taxation under Section 409A of the Code (including due to the Participant’s status as a “specified employee” within the meaning of Section 409A of the Code), the Company will make such payment on the first day that would not result in the Participant incurring any tax liability under Section 409A of the Code.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

	 	
			HOVNANIAN ENTERPRISES, INC.

			
	 	
			By:

				 
	 	 	
			Stephen D. Weinroth, Chair

			Compensation Committee

			
	 	 	 
	 	
			PARTICIPANT

			
	 	 	 
	 	 	 
	 	
			By:

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