Document:

exhibit43

                                                       CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED                                                         FROM THEEXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL                                                         AND (II) WOULD BE COMPETITIVELY HARMFUL IF                                                         PUBLICLY DISCLOSED                                                                      EXECUTION VERSION          AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT         This Amendment No. 1 to Amended and Restated Credit Agreement (this “Agreement”) is dated  as of July 6, 2020, and effective in accordance with Section 4 below, by and among QUANEX BUILDING  PRODUCTS CORPORATION, a Delaware corporation (the “Borrower”), the Lenders (as defined below)  party hereto and WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as administrative  agent (in such capacity, “Agent”) for each member of the Lender Group (as defined in the Credit Agreement  referenced below) and the Bank Product Providers (as defined in the Credit Agreement referenced below).                                  STATEMENT OF PURPOSE:          The Borrower, the lenders party thereto from time to time (the “Lenders”) and the Agent are parties to  that certain Amended and Restated Credit Agreement dated as of October 18, 2018 (as amended, restated,  supplemented or otherwise modified from time to time, the “Credit Agreement” and the Credit Agreement  prior to giving effect to this Agreement being referred to as the “Existing Credit Agreement”).         The Borrower has notified the Agent that (i) Woodcraft Industries, Inc. and Primewood, Inc. (together,  “Woodcraft”), have entered into an arrangement relating to the collection of certain accounts receivable due  from its customer, [_____], and (ii) pursuant to such arrangement, [_____] for Woodcraft, is authorized to  sell  and sells  such accounts  receivables  from  time  to  time  to  one  or  more  financial  institutions  or  purchasers for early payment (the “Woodcraft AR Collection Arrangement”).           The Borrower has requested that the Agent and the Lenders agree to (a) amend the Existing Credit  Agreement as more specifically set forth herein and (b) solely to the extent that the Woodcraft AR Collection  Arrangement constitutes a Default or an Event of Default, waive any such Default or Event of Default (the  “Woodcraft AR Collection Arrangement Waiver”). Subject to the terms and conditions set forth herein, the  Agent and each of the Lenders party hereto have agreed to grant such request of the Borrower.         NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which  are hereby acknowledged, the parties hereto hereby agree as follows:         1.  Capitalized Terms.  All capitalized undefined terms used in this Agreement (including, without  limitation, in the introductory paragraph and the statement of purpose hereto) shall have the meanings  assigned thereto in the Credit Agreement.         2.  Amendments.  Subject to the terms and conditions set forth herein and the effectiveness of this  Agreement in accordance with its terms, the parties hereto agree that the Existing Credit Agreement is  amended as follows:                (a)    The following new definitions are inserted in Section 1.1 of the Existing Credit       Agreement in the appropriate alphabetical positions therein:                       “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any               UK Financial Institution.                       “Permitted Receivables Sales” means sales (including at a discount) by one or               more Loan Parties and/or their Subsidiaries of Receivables owing from customers from               time to time pursuant to a supply chain financing arrangement or other financing               arrangement for the collection or compromise of the same (“Supply Chain Financing               Arrangements”) in the ordinary course of business on customary terms; provided that (a)               the aggregate amount of Receivables sold in connection with such Supply Chain Financing                                              1   132106247_4 

 

             Arrangements (calculated based on the non-discounted value of such Receivables) that               remain outstanding or uncollected by the purchaser thereof shall not exceed $25,000,000               at any time outstanding and (b) any Liens arising under the Permitted Receivables Sales               shall not at any time encumber any property other than the identified Receivables sold               pursuant to the applicable Permitted Receivables Sales.                       “Receivables” means the accounts receivable or Accounts and the related property               and rights of any Loan Party.                        “Resolution Authority” means an EEA Resolution Authority or, with respect to               any UK Financial Institution, a UK Resolution Authority.                       “UK Financial Institution” means any BRRD Undertaking (as such term is defined               under the PRA Rulebook (as amended from time to time) promulgated by the United               Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the               FCA Handbook (as amended from time to time) promulgated by the United Kingdom               Financial Conduct Authority, which includes certain credit institutions and investment               firms, and certain affiliates of such credit institutions or investment firms.                       “UK Resolution Authority” means the Bank of England or any other public               administrative authority having responsibility for the resolution of any UK Financial               Institution.                (b)    The definitions of “Bail-In Action”, “Bail-In Legislation”, and “Write-Down and        Conversion Powers” in Section 1.1 of the Existing Credit Agreement are amended and restated in        their entirety to read as follows:                       “Bail-In Action” means the exercise of any Write-Down and Conversion Powers               by the applicable Resolution Authority in respect of any liability of an Affected Financial               Institution.                       “Bail-In Legislation” means (a) with respect to any EEA Member Country               implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the               Council of the European Union, the implementing law, regulation, rule or requirement for               such EEA Member Country from time to time which is described in the EU Bail-In               Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United               Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation               or rule applicable in the United Kingdom relating to the resolution of unsound or failing               banks, investment firms or other financial institutions or their affiliates (other than through               liquidation, administration or other insolvency proceedings).                       “Write-Down and Conversion Powers” means, with respect to any EEA               Resolution Authority, the write-down and conversion powers of such EEA Resolution               Authority from time to time under the Bail-In Legislation for the applicable EEA Member               Country, which write-down and conversion powers are described in the EU Bail-In               Legislation Schedule.                 (c)    The definition of “Permitted Dispositions” in Section 1.1 of the Existing Credit        Agreement is amended to (i) delete the word “and” at the end of clause (n) of such definition, (ii) replace        the reference therein to clause “(o)” with a reference to clause “(p)”, (iii) replace the reference therein        to clause “(n)” with a reference to clause “(o)” and (iv) insert therein a new clause (o) in appropriate        position to read as follows:                                              2    132106247_4 

 

                    (o) the Disposition of Receivables in connection  with Permitted Receivables                      Sales, and                (d)    The definition of “Permitted Indebtedness” in Section 1.1 of the Existing Credit        Agreement is amended to (i) delete the word “and” at the end of clause (q) of such definition, (ii) replace        each reference therein to clause “(r)” with a reference to clause “(s)” and (iii) insert therein a new clause        (r) in appropriate position to read as follows:                       (r)    customary indemnification obligations incurred by any Loan Party or any                      Subsidiary thereof in connection with any Permitted Receivables Sale, and                (e)    The definition of “Permitted Liens” in Section 1.1 of the Existing Credit Agreement is        amended to (i) delete the word “and” at the end of clause (r) of such definition, (ii) replace each reference        therein to clause “(s)” with a reference to clause “(t)”, (iii) insert a reference to clause “(s)” in appropriate        position in the proviso thereto and (iv) insert therein a new clause (s) in appropriate position to read as        follows:                       (s)    Liens arising under a Permitted Receivables Sale solely with respect to                      Receivables disposed of by a Loan Party or its Subsidiary in accordance with such                      Permitted Receivables Sale, and                (f)    Section 4.1(a) of the Existing Credit Agreement is amended to replace the reference        therein to “EEA Financial Institution” with a reference to “Affected Financial Institution” in lieu thereof.                (g)    Section 4.27 of the Existing Credit Agreement is hereby deleted in its entirety.                (h)    Section 17.16 of the Existing Credit Agreement is deleted in its entirety and the        following is inserted in lieu thereof:           17.16  Acknowledgement and Consent to Bail-In of Affected Financial               Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any               other agreement, arrangement or understanding among any such parties, each party hereto               acknowledges that any liability of any Affected Financial Institution arising under any               Loan Document, to the extent such liability is unsecured, may be subject to the Write-              Down and Conversion Powers of the applicable Resolution Authority and agrees and               consents to, and acknowledges and agrees to be bound by:                             (a)  the application of any Write-Down and Conversion Powers by the applicable               Resolution Authority to any such liabilities arising hereunder which may be payable to it               by any party hereto that is an Affected Financial Institution; and                             (b)  the effects of any Bail-In Action on any such liability, including, if applicable:                                    (i)   a reduction in full or in part or cancellation of any such liability;                                    (ii)  a conversion of all, or a portion of, such liability into shares or other                     instruments of ownership in such Affected Financial Institution, its parent                     undertaking, or a bridge institution that may be issued to it or otherwise conferred                     on it, and that such shares or other instruments of ownership will be accepted by it                     in lieu of any rights with respect to any such liability under this Agreement or any                     other Loan Document; or                                                       3    132106247_4 

 

                           (iii)  the variation of the terms of such liability in connection with the                      exercise of the Write-Down and Conversion Powers of the applicable Resolution                      Authority.               (i)    Article 17 of the Existing Credit Agreement is amended to insert a new Section        17.19 at the end of such Article to read as follows:                       17.19  Acknowledgement Regarding Any Supported QFCs.  To the extent that               the Loan Documents provide support, through a guarantee or otherwise, for Hedge               Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit               Support” and, each such QFC, a “Supported QFC”), the parties acknowledge and agree as               follows with respect to the resolution power of the FDIC under the Federal Deposit               Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection               Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution               Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions               below applicable notwithstanding that the Loan Documents and any Supported QFC may               in fact be stated to be governed by the laws of the State of New York and/or of the United               States or any other state of the United States):                             (a)  In the event a Covered Entity that is party to a Supported QFC (each, a               “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution               Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support               (and any interest and obligation in or under such Supported QFC and such QFC Credit               Support, and any rights in property securing such Supported QFC or such QFC Credit               Support) from such Covered Party will be effective to the same extent as the transfer would               be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC               Credit Support (and any such interest, obligation and rights in property) were governed by               the laws of the United States or a state of the United States. In the event a Covered Party               or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S.               Special Resolution Regime, Default Rights under the Loan Documents that might               otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised               against such Covered Party are permitted to be exercised to no greater extent than such               Default Rights could be exercised under the U.S. Special Resolution Regime if the               Supported QFC and the Loan Documents were governed by the laws of the United States               or a state of the United States. Without limitation of the foregoing, it is understood and               agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in               no event affect the rights of any Covered Party with respect to a Supported QFC or any               QFC Credit Support.                              (b)    As used in this Section 17.19, the following terms have the following               meanings:                              “BHC Act Affiliate” of a party means an “affiliate” (as such term is                      defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such                      party.                                                   “Covered Entity” means any of the following:                                                         (i)   a “covered entity” as that term is defined in, and interpreted                             in accordance with, 12 C.F.R. § 252.82(b);                                                                    4    132106247_4 

 

                           (ii)  a “covered bank” as that term is defined in, and interpreted                             in accordance with, 12 C.F.R. § 47.3(b); or                                                   (iii)  a “covered FSI” as that term is defined in, and interpreted in                             accordance with, 12 C.F.R. § 382.2(b).                                                   “Default Right” has the meaning assigned to that term in, and shall be                      interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.                             “QFC” has the meaning assigned to the term “qualified financial contract”                      in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).        3.  Limited Waiver. Subject to the terms and conditions set forth herein, and in reliance upon the  representations and warranties set forth herein, solely to the extent that the Woodcraft AR Collection  Arrangement constitutes a Default or an Event of Default,  the Agent and each of the Lenders party hereto  hereby agree to the Woodcraft AR Collection Arrangement Waiver.  The Woodcraft AR Collection  Arrangement Waiver set forth in this Agreement is limited to the extent specifically set forth above and  shall in no way serve to waive compliance with any other terms, covenants or provisions of the Credit  Agreement or any other Loan Document, or any obligations of the Borrower or any other Loan Party, other  than as expressly set forth above.          4. Conditions to Effectiveness.  This Agreement (including the Woodcraft AR Collection  Arrangement Waiver) shall be deemed to be effective upon (a) the Agent receiving counterparts of this  Agreement executed by the Agent, the Lenders constituting Required Lenders and the Borrower and  (b)  unless otherwise agreed to by the Agent, the Agent being paid or reimbursed for all reasonable fees and  out-of-pocket charges and other expenses incurred in connection with this Agreement, including, without  limitation, the reasonable documented fees of counsel for the Agent.         5.  Effect of this Agreement.  Except as expressly provided herein, the Existing Credit Agreement  and the other Loan Documents shall remain unmodified and in full force and effect.  Except as expressly  set forth herein (including with respect to the Woodcraft AR Collection Arrangement Waiver), this  Agreement shall not be deemed (a) to be a waiver of, or consent to, a modification or amendment of, any  other term or condition of the Credit Agreement or any other Loan Document, (b) to prejudice any other  right or rights which the Agent or the Lenders may now have or may have in the future under or in  connection with the Credit Agreement or the other Loan Documents or any of the instruments or agreements  referred to therein, as the same may be amended, restated, supplemented or otherwise modified from time  to time, (c) to be a commitment or any other undertaking or expression of any willingness to engage in any  further discussion with the Borrower, any other Loan Party or any other Person with respect to any waiver,  amendment, modification or any other change to the Credit Agreement or the Loan Documents or any rights  or remedies arising in favor of the Lenders or the Agent, or any of them, under or with respect to any such  documents or (d) to be a waiver of, or consent to or a modification or amendment of, any other term or  condition of any other agreement by and among the Loan Parties, on the one hand, and the Agent or any  other Lender, on the other hand.  References in the Existing Credit Agreement to “this Agreement” (and  indirect references such as “hereunder”, “hereby”, “herein”, and “hereof”) and in any Loan Document to  the “Credit Agreement” shall be deemed to be references to the Credit Agreement as modified hereby.          6. Representations and Warranties/No Default.  By its execution hereof,                (a)    the Borrower represents and warrants that after giving effect to this Agreement        (including the Woodcraft AR Collection Arrangement Waiver) (i) the representations and        warranties contained in the Credit Agreement and each other Loan Document (including this        Agreement) are true and correct in all material respects on and as of the date hereof (except to the        extent that any such representation and warranty is qualified by materiality or reference to Material                                              5    132106247_4 

 

      Adverse Effect, in which case such representation and warranty shall be true, correct and complete        in all respects), other than any such representations or warranties that, by their express terms, refer        to an earlier date, in which case they shall have been true and correct in all material respects on and        as of such earlier date (except to the extent that any such representation and warranty is qualified        by materiality or reference to Material Adverse Effect, in which case such representation and        warranty shall be true, correct and complete in all respects), and (ii) no Default or Event of Default        has occurred and is continuing as of the effective date hereof or will occur after giving effect to this        Agreement; and                (b)    the Borrower hereby certifies, represents and warrants to the Agent, for the benefit        of the Lender Group and the Bank Product Providers, that (a) it is duly authorized to execute and        deliver this Agreement, and to perform its obligations under this Agreement; (b) this Agreement        has been duly executed and delivered on behalf of its duly authorized representative; (c) this        Agreement constitutes its legal, valid, and binding obligation, enforceable against it in accordance        with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency,        reorganization, fraudulent transfer, moratorium, or other similar laws affecting creditors’ rights        generally and general principles of equity (regardless of whether such enforceability is considered        in a proceeding at law or in equity); and (d) its execution, delivery and performance of this        Agreement do not violate or constitute a breach of (i) any of its Governing Documents, (ii) any        material agreement or instrument to which such party is a party, or (iii) any Applicable Law to        which it or its properties or operations is subject.          7.  Acknowledgment and Consent.  By its execution hereof, the Borrower (a) acknowledges and  consents to all of the terms and conditions of this Agreement, including the Supply Chain Financing Waiver,  (b) affirms all of its obligations under the Loan Documents and acknowledges that the covenants,  representations, warranties and other obligations set forth in the Credit Agreement, the Notes and the other  Loan Documents to which it is a party remain in full force and effect, (c) affirms that each of the Liens  granted in or pursuant to the Loan Documents are valid and subsisting, (d) agrees that this Agreement shall  in no manner impair or otherwise adversely affect any of the Liens granted in or pursuant to the Loan  Documents and (e) agrees that this Agreement and all documents executed in connection herewith do not  operate to reduce or discharge such Person’s obligations under the Loan Documents.          8. Miscellaneous.  Except as expressly provided herein, the Credit Agreement and the other Loan  Documents shall remain unmodified and in full force and effect.  This Agreement is the entire agreement,  and supersedes any prior agreements and contemporaneous oral agreements, of the parties concerning its  subject matter. This Agreement shall be binding on and inure to the benefit of the parties and their heirs,  beneficiaries, successors and permitted assigns. This Agreement shall be deemed to be a Loan Document  under and as defined in the Credit Agreement for all purposes.          9. Governing Law.  THIS AGREEMENT AND THE TRANSACTIONS EVIDENCED HEREBY  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE  STATE OF NEW YORK, AND SHALL BE FURTHER SUBJECT TO THE PROVISIONS OF SECTION  12 OF THE CREDIT AGREEMENT.         10. Counterparts.  This Agreement may be executed in any number of counterparts and by different  parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original  and all of which taken together shall constitute one and the same agreement.  Delivery by telecopier or  electronic mail of an executed counterpart of a signature page to this Agreement shall be effective as  delivery of an original executed counterpart of this Agreement.                                          [Signature Pages Follow]                                              6    132106247_4 

 

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as  of the date and year first above written.     BORROWER:                        QUANEX BUILDING PRODUCTS CORPORATION                                   By:                                  Name:  Paul B. Cornett                                  Title: Senior Vice President – General Counsel                            Quanex Building Products Corporation                  Amendment No. 1 to Amended and Restated Credit Agreement                                  Signature Page

 

 

                   BANK OF AMERICA, N.A., as a Lender                     By:      ________________________________________________________                    Name:     Karen  Virani                    Title:    Vice President                                Quanex Building Products Corporation  Amendment No. 1 to Amended and Restated Credit Agreement                      Signature Page 

 

 

                                               JPMORGAN CHASE BANK, N.A., as a Lender                                                      By:    ______________________________________                  Name:   John Kushnerick                 Title:  Executive Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Quanex Building Products Corporation  Amendment No. 1 to Amended and Restated Credit Agreement                  Signature Pageex_201641.htm

Exhibit 10(b)

 

2020 HOVNANIAN ENTERPRISES, INC.
STOCK INCENTIVE PLAN

 

PERFORMANCE SHARE UNIT AGREEMENT

 

 

	
  Participant:

  	
   
  	
  Date of Grant:

  
	
   
  	
   
  	
   
  	
   
  
	
   
  	
   
  	
   
  
	
  Target Number of PSUs:

  	
   
  	
   
  
	
   
  	
   
  	
   
  	
   
  
	
   
  	
   
  	
   
  
	
  Dates of Vesting of Earned PSUs:

  	
   
  
	
  Date

  	
   
  	
  Percentage of Earned PSUs

  
	
  June 12, 2022

  	
   
  	
   
  	
  25%

  	
   
  
	
  June 12, 2023

  	
   
  	
   
  	
  25%

  	
   
  
	
  June 12, 2024

  	
   
  	
   
  	
  25%

  	
   
  
	
  June 12, 2025

  	
   
  	
   
  	
  25%

  	
   
  

 

 

1.     Grant of PSUs.  For valuable consideration, receipt of which is hereby acknowledged, Hovnanian Enterprises, Inc., a Delaware Corporation (the "Company"), hereby grants the target number (“Target Number”) of performance share units ("PSUs") 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 2020 Company 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.  The actual number of PSUs, if any, that the Participant will be eligible to earn with respect to this Agreement (the “Earned PSUs”), subject to meeting the applicable service and performance vesting requirements, will equal the Target Number multiplied by the applicable “Performance Multiplier” as defined in Exhibit A hereto.  Each Earned PSU represents the unfunded, unsecured right of the Participant to receive a Share on the date(s) specified herein.  Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.

 

2.     Vesting and Timing of Transfer.

 

(a)     The Participant will become vested in the Earned PSUs in accordance with the schedule set forth above (each such vesting date, a “Vesting Date”); 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 Earned PSUs shall immediately become fully vested (subject to any delay in Share delivery required pursuant to Sections 2(b) and 16 hereof). 

 

(b)     The Company shall transfer to the Participant, as soon as practicable but not later than 60 days after an applicable “Delivery Date” (as defined below), a number of Class A Shares equal to the number of Earned PSUs that became vested on the corresponding Vesting Date (rounded up to the next whole share), provided, however, that upon the final transfer of Shares to the Participant (i) such number of Shares shall be reduced to the extent necessary to reflect any previous rounding up pursuant to this sentence, and (ii) in lieu of a fractional Share, the Participant shall receive a cash payment equal to the Fair Market Value of such fractional 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.  For purposes of this Agreement, the “Delivery Date” with respect to each Vesting Date shall mean the date that is the earlier of (i) the second anniversary of such Vesting Date or (ii) the second anniversary of the date of the Participant’s Qualified Termination (as defined below), if applicable.

 

(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, (any such termination, a “Qualified Termination”), then (A) any previously unvested Earned PSUs shall become fully vested, (B) if such Qualified Termination occurs prior to the determination of the number of Earned PSUs in accordance with Exhibit A hereto, the PSUs granted hereunder shall remaining outstanding and eligible to become Earned PSUs in accordance with such Exhibit A and (C) the Shares underlying all of the Participant’s Earned PSUs, if any, shall be delivered to the Participant as soon as practicable but not later than 60 days after the corresponding Delivery Date(s) subject to Section 16 of this Agreement; provided, however, that upon the transfer of such Shares to the Participant, in lieu of a fractional Share, the Participant shall receive a cash payment equal to the Fair Market Value of such fractional Share.  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 Sections 2(a), 2(b) and 2(c) of this Agreement, a number of Earned PSUs equal to the number of Shares transferred to the Participant or deferred shall be extinguished.

 

(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 or (ii) under the circumstances described in clause (f) below, any unvested PSUs (including, without limitation, any Earned PSUs) shall immediately terminate for no further consideration.

 

(f)     Termination without Cause or for Good Reason within Two Years Following a Change in Control.  In the event of the Participant's Qualifying Termination or involuntary termination of employment with the Company or a subsidiary thereof without "Cause" or for "Good Reason", in each case, within two years following a Change in Control, the Earned PSUs, to the extent not previously vested and settled, shall immediately become fully vested and settled in Shares.  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.

 

(g)     Any portion of the PSUs granted pursuant to this Agreement which do not become Earned PSUs in accordance with Exhibit A hereto shall be forfeited for no further consideration.

 

3.     Dividends.  If on any date while PSUs are outstanding hereunder the Company shall pay any dividend on the Shares (other than a dividend payable in Shares), the number of PSUs granted to the Participant shall, as of such dividend payment date, be increased by a number of PSUs equal to: (a) the product of (x) the number of PSUs 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 PSUs granted to the Participant shall be increased by a number equal to the product of (a) the PSUs 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 PSUs attributable to dividends under this Section 3 shall be subject to the vesting provisions provided in Section 2 and the performance conditions set forth in Exhibit A.

 

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 PSUs subject to this Agreement 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.  Whenever reference in this Agreement is made to the issuance or delivery of certificates representing Shares, the Company may elect to issue or deliver such Shares in book entry form in lieu of certificates.

 

9.     Transferability.  PSUs 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.     RSUs 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 PSUs 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, the PSUs covered by this Agreement 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:

  	
   
  
	
   
  	
   
  	
  Ara K. Hovnanian
President, Chief Executive Officer and Chairman of the Board

  
	
   
  	
   
  	
   
  
	
   
  	
  PARTICIPANT1

  
	
   
  	
   
  	
   
  
	
   
  	
   
  	
   
  
	
   
  	
  By:

  	
   
  
	
   
  	
   
  	
   
  
	
   

  	
   
  	
   
  

 

 

 

 

 

	
   
  	
   
  
	
  1. To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.

  

 

 

 

Exhibit A

Performance Metrics for Determining Earned PSUs

 

The number of PSUs, if any, which become Earned PSUs shall equal the product of the Target Number of PSUs multiplied by the applicable Performance Multiplier set forth below.  The determination of the Performance Multiplier in the event of achievement of actual Revenue in between the performance levels set forth in the table below will be pro-rated based on linear interpolation.

 

	
  Revenue Amount

  	
  Performance Multiplier

  
	
  $1 billion or less (Threshold)

  	
  0%

  
	
  $1.5 billion (Target)

  	
  100%

  
	
  $2 billion or more (Maximum)

  	
  200%

  

 

For purposes of this Exhibit A, the following terms shall have the following meanings:

 

“Performance Multiplier” shall mean the applicable multiplier as determined in accordance with the table above based on Revenue achievement; provided, however, that in the event that a Change in Control occurs prior to the end of the Performance Period, then the Performance Multiplier shall automatically be deemed to equal 100%.

 

“Performance Period” shall mean the Company’s 4 fiscal year quarters ending July 31, 2021.

 

“Revenue” shall mean total revenue during the Performance Period as reflected on the Company's audited financial statements for such Performance Period plus total revenue for the Company's unconsolidated joint ventures as reflected on their respective financial statements for the twelve months ended July 31, 2021.

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