Document:

EXHIBIT 4.1

 

 

Fourth
Supplemental Indenture

 

This Fourth
Supplemental Indenture (this “Fourth Supplemental Indenture”), dated as of March 9, 2016, between The
Phoenix Companies, Inc., a Delaware corporation (the “Company”), and U.S. Bank National Association, a national
banking association, as successor trustee to SunTrust Bank, as Trustee (the “Trustee”), amends the Indenture,
dated as of December 27, 2001, between the Company and the Trustee (the “Original Indenture”), as amended by
that certain First Supplemental Indenture, dated as of January 18, 2013 (the “First Supplemental Indenture”),
that certain Second Supplemental Indenture, dated as of May 23, 2013, between the Company and the Trustee (the “Second
Supplemental Indenture”) and that certain Third Supplemental Indenture, dated as of February 21, 2014, between the Company
and Trustee (the “Third Supplemental Indenture”, and together with the Second Supplemental Indenture, the First
Supplemental Indenture and the Original Indenture, the “Indenture”), pursuant to which $300,000,000 aggregate
principal amount of the Company’s 7.45% Quarterly Interest Bonds due 2032 were issued (the “Securities”).
Capitalized terms used in this Fourth Supplemental Indenture and not defined are used with the meanings given to such terms in
the Indenture.

 

RECITALS OF THE COMPANY

 

WHEREAS, Section 902
of the Indenture provides that, with the consent of the Holders of not less than a majority in principal amount of the Outstanding
Securities affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company,
when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental thereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in
any manner the rights of the Holders of Securities under the Indenture; and

 

WHEREAS, the Company
has received and delivered to the Trustee Acts of Holders evidencing consents of the Holders of not less than a majority in principal
amount of the Outstanding Securities to the amendment to the Indenture set forth in this Fourth Supplemental Indenture (the “Amendment”);
and

 

WHEREAS, the Company
has requested that the Trustee join with it in entering into this Fourth Supplemental Indenture for the purpose of effecting the
Amendment as permitted by Section 902 of the Indenture and has furnished to the Trustee Board Resolutions authorizing the Amendment
and this Fourth Supplemental Indenture, an Officers’ Certificate pursuant to Section 102 of the Indenture and an Opinion
of Counsel pursuant to Sections 102 and 903 of the Indenture; and

 

WHEREAS, all other
things necessary in order to execute and deliver this Fourth Supplemental Indenture have been obtained; and

 

 

    	 	 	 

     

    

 

NOW, THEREFORE, in
order to amend the terms of the Indenture with respect to the Securities, and in consideration of the premises, it is mutually
agreed by the Company and the Trustee, for the equal and ratable benefit of all Holders of the Securities, as follows:

 

1.           Reports
by Company. Section 704 of the Indenture is hereby amended to read in its entirety as follows:

 

Section 704.
Reports by Company.

 

The Company shall,
except as otherwise provided in this Section 704:

 

(1)           file
with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section
13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant
to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission under the Trust Indenture Act, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on
a national securities exchange as may be prescribed from time to time in such rules and regulations;

 

(2)           file
with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and regulations; and

 

(3)           transmit
by mail, to all Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to Clauses
(1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.

 

If the Company
is not otherwise required to file information, documents or reports with the Trustee or the Commission pursuant to any of the preceding
provisions of this Section 704, then the Company shall deliver to the Trustee and make available to Holders (1) within one hundred
and twenty (120) days following the end of each fiscal year of the Company, the consolidated financial statements of the Company
for such year prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), together
with a report thereon by the Company’s independent auditors (it being understood that the Company shall not be required to
include any separate consolidating financial information with respect to the Company, any Subsidiary, any joint venture or any
other Affiliate of the Company, or any separate financial statements

 

 

    	 	2	 

     

    

 

or information for the Company, any Subsidiary, any joint
venture or any other Affiliate of the Company), (2) within sixty (60) days after the end of each of the first three fiscal quarters
in each fiscal year of the Company, the condensed consolidated financial statements of the Company for such quarter prepared in
accordance with GAAP (it being understood that the Company shall not be required to include any separate consolidating financial
information with respect to the Company, any Subsidiary, any joint venture or any other Affiliate of the Company, or any separate
financial statements or information for the Company, any Subsidiary, any joint venture or any other Affiliate of the Company),
and (3) information substantially similar to the information that would be required to be included in a Current Report on Form
8-K filed with the Commission by the Company (if the Company were required to prepare and file such form) pursuant to Item 1.03
(Bankruptcy or Receivership), 2.01 (Completion of Acquisition or Disposition of Assets), 4.01 (Changes in Registrant’s Certifying
Accountant) or 5.01 (Changes in Control of Registrant) of such form or similarly corresponding items of any revisions implemented
by the Commission to such form (and in any event excluding, for the avoidance of doubt, the financial statements, pro forma financial
information and exhibits, if any, that would be required by Item 9.01 (Financial Statements and Exhibits) of such form), within
five (5) Business Days after the date of filing that would have been required for a Current Report on Form 8-K (it being understood
that the Company will be deemed to have satisfied the foregoing requirements if any parent of the Company furnishes or makes available
information of the type otherwise so required within the applicable time periods and the Company is not required to make available
such information separately under the applicable rules and regulations of the Commission (after giving effect to any exemptive
relief) because of the filings by such parent). The Trustee shall have no duty to examine any such reports, information or documents.
In connection with this paragraph, it is understood that the Company shall not be required to (a) comply with Section 302, Section
404 and Section 906 of the Sarbanes-Oxley Act of 2002, as amended, or related Items 307, 308 and 308T of Regulation S-K under the
Securities Act or (b) comply with Rule 3-10 and Rule 3-16 of Regulation S-X under the Securities Act.

 

Notwithstanding
any other provision of this Section 704 or this Indenture, the documents and reports referred to in this Section 704 that the Company
would have been required to file with the Trustee on any date on or before the Covenant Reversion Date, but for this sentence,
will not be required to be filed by the Company until the Covenant Reversion Date, and the filing by the Company with the Commission
of its Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, its Annual Report on Form 10-K for the year ended
December 31, 2012, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013,
its Annual Report on Form 10-K for the year ended December 31, 2013 and its Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2014, June 30, 2014 and September 30, 2014 on or prior to the Covenant Reversion Date shall fully satisfy the requirement
to file reports with the Trustee for any periods prior to the Covenant Reversion Date.

 

2.           Miscellaneous.

 

    	 	3	 

     

    

 

(a)           Recitals by the Company.
The recitals contained in this Fourth Supplemental Indenture shall be taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Fourth
Supplemental Indenture.

 

(b)           Ratification and Incorporation
of Indenture. Except as amended hereby, the Indenture is in all respects ratified and confirmed, and all of the terms thereof
shall remain in full force and effect. This Fourth Supplemental Indenture is executed and shall be construed as an indenture supplemental
to the Indenture and, as provided in the Indenture, this Fourth Supplemental Indenture forms a part thereof for all purposes. The
Indenture and this Fourth Supplemental Indenture shall be read, taken and construed as one and the same instrument, and every Holder
of Securities heretofore and hereafter authenticated and delivered under the Indenture shall be bound by the Indenture as amended
hereby.

 

(c)           Effectiveness. This Fourth
Supplemental Indenture is effective as of the date hereof; provided, however, that the Amendment set forth in Section 1
of this Fourth Supplemental Indenture shall not become operative unless, and until, the merger between Nassau Reinsurance Group
Holdings, L.P., a Delaware limited partnership, and the Company contemplated by the Agreement and Plan of Merger, dated September
28, 2015, is consummated (the “Operative Time”). The Company shall give the Trustee prompt written notice of
the occurrence of the Operative Time, upon which the Trustee may conclusively rely.

 

(d)           Execution
in Counterparts. This Fourth Supplemental Indenture may be executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts shall together constitute one and the same instrument.

 

(e)           Governing Law. THIS FOURTH
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

 

(f)           Successors and Assigns.
All covenants and agreements in this Fourth Supplemental Indenture of the Company shall bind its respective successors and assigns,
whether so expressed or not.

 

(g)           Severability. If any
provision of this Fourth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired thereby.

 

 

[Signature Page Follows]

 

    	 	4	 

     

    

 

IN WITNESS WHEREOF,
each party hereto has caused this Fourth Supplemental Indenture to be signed in its name and on its behalf by one of its duly authorized
officers, to be effective as of the date set forth above.

 

 

	 	THE PHOENIX COMPANIES, INC.
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Bonnie J. Malley	 
	 	Name:	Bonnie J. Malley	 
	 	Title:	Executive Vice President and	 
	 	 	Chief Financial Officer	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION, 
	 	as Trustee	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ David Ferrell 	 
	 	Name:	David Ferrell	 
	 	Title:	Vice Presidentex10-a.htm

          EXHIBIT 10(a)

2012 HOVNANIAN ENTERPRISES, INC.
AMENDED AND RESTATED STOCK INCENTIVE PLAN

 

2016 LONG-TERM INCENTIVE PROGRAM AWARD AGREEMENT

 

	
Participant:
	  	  	
Cash Percentage of Award up to Target1:
	
50%

	 	 	 	 	 
	
Date of Grant:
	
December 14, 2015
	  	
Stock Percentage of Award up to Target1:
	
50%

	 	 	 	 	 
	
Maximum LTIP Award (total)1:
	
 
	  	
Target LTIP Award (total)2:
	  
	 	 	 	 	 
	
Maximum Cash Amount:
	
 
	  	
Target Cash Amount:
	  
	 	 	 	 	 
	
Maximum Number of Class [A/B] Shares:
	
 
	  	
Target Number of  Class [A/B] Shares:
	 

 

1.     Grant of LTIP Award. For valuable consideration, receipt of which is hereby acknowledged, Hovnanian Enterprises, Inc., a Delaware Corporation (the "Company"), hereby grants the Long-Term Incentive Program award opportunity (the “Award”) 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") and the 2016 Long-Term Incentive Program adopted thereunder (the “LTIP”), which Plan and LTIP, as amended from time to time, are incorporated herein by reference and made a part of this Agreement. The Award represents an unfunded, unsecured right of the Participant to receive cash and/or Class [A/B] Shares (“Shares”) on the date(s) specified under the LTIP, subject to the performance and time vesting conditions set forth thereunder. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan or the LTIP, as applicable. A copy of the LTIP is attached hereto as Exhibit A.

 

2.     Amount of Award; Vesting and Timing of Payments. The target amount of the Award listed above represents the amount of cash and Shares that the Participant will be eligible to receive if the performance levels achieved during the Performance Period correspond to a payout level of 100% of target under the terms of the LTIP, assuming the time vesting requirements set forth under the LTIP are also met. The actual amount of cash and/or Shares payable in respect of the Award may be more or less than the targeted amounts, and the amounts (if any) that become payable under the Award will be paid to the Participant at such times and subject to such performance and time vesting conditions as set forth under the LTIP. 

 

3.     Adjustments Upon Certain Events. Subject to the terms of the Plan and the LTIP, 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 Shares 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.

 

1 Any portion of the Award in excess of Target is payable 100% in cash.

2 Based on December 14, 2015 grant price of $1.56.

 

	
LTIP Award Agreement
	
 Page 1

 

 

 

 

4.     No Right to Continued Employment. Neither the Plan, the LTIP 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, the LTIP or this Agreement, except as otherwise expressly provided herein.

 

5.     No Acquired Rights. In participating in the Plan and the LTIP, the Participant acknowledges and accepts that the Board and the Committee have the power to amend or terminate the Plan and the LTIP, to the extent permitted thereunder, at any time and that the opportunity given to the Participant to participate in the Plan and the LTIP 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 and the LTIP 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, the Plan or the LTIP that may arise as a result of such termination of employment.

 

6.     No Rights of a Shareholder. The Participant shall have no voting, dividend or other rights or privileges as a shareholder of the Company until the Shares in question have been issued or transferred to the Participant.

 

7.     Legend on Certificates. Any Shares issued or transferred to the Participant pursuant to 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.

 

8.     Transferability. This Award 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 8 shall be void and unenforceable against the Company or any Affiliate.

 

9.     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 of cash or Shares due under this Agreement, the LTIP 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, the LTIP 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 payment or transfer of all of the cash and/or Shares under this Agreement, the payment of any applicable withholding taxes with respect to any further payments of cash or transfer of Shares under this Award shall be made solely through withholding of cash or Shares otherwise payable under this Agreement in amounts equal to the statutory minimum withholding liability.

 

	
LTIP Award Agreement
	
 Page 2

 

 

 

 

10.     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 10 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.

 

11.     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 10 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.

 

12.     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.

 

	
LTIP Award Agreement
	
 Page 3

 

 

 

 

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

 

14.     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.

 

15.     409A. Notwithstanding any other provisions of this Agreement, the Plan or the LTIP, this Award 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 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: 

________________________________

 

 

PARTICIPANT

 

 

By: 

________________________________

 

	
LTIP Award Agreement
	
 Page 4

 

 

 

 

Exhibit A

2016 Long-Term Incentive Program

 

1. Purpose

The purpose of the 2016 Long-Term Incentive Program (“LTIP”) is to aid the Company in retaining key employees and to motivate them to exert their best efforts on behalf of the Company. The LTIP has been adopted pursuant to the terms of the 2012 Hovnanian Enterprises, Inc. Amended and Restated Stock Incentive Plan (the “2012 Plan”) and is intended to incentivize achievement of certain Pre-tax Profit goals and certain improvements in the Company’s capital structure through reductions of Interest Expense as a Percent of Homebuilding Revenue. Capitalized terms used herein without definition have the meanings assigned to such terms under the 2012 Plan.

 

2. Participants

The Compensation Committee will designate the Participants who will be granted incentive awards under the LTIP, with the first such awards to be granted on or about December 14, 2015 (the “Initial Grant Date”). Additional Associates may be eligible to participate at the discretion of the Compensation Committee or at the discretion of the Company’s Chief Executive Officer (to the extent that the Compensation Committee has delegated granting authority to the Chief Executive Officer). The awards for Participants who are selected by the Compensation Committee to participate after the Initial Grant Date will be determined based on actual performance for the full Performance Period (as defined below) and will be prorated based on the number of full months of eligible service completed during the thirty-six (36) month Performance Period, subject to the vesting requirements outlined below in section 6. 

 

3. Performance Period

The LTIP “Performance Period” will commence on November 1, 2015 and end on October 31, 2018.

 

4. Details

Each Participant will be eligible to receive an award based on the achievement of certain cumulative Pre-tax Profit levels in fiscal years 2016 through 2018, and certain Interest Expense as a Percent of Homebuilding Revenue levels in fiscal 2018. The award will be based on the closing Share price on the date the Participant is granted the award (the “Grant Date”); provided, however, that the Share price for new Participants will be no less than the Share price on the Initial Grant Date. 

 

For purposes of the LTIP, “Pre-tax Profit” is defined as earnings (loss) before income tax expense as reflected on our audited financial statements, excluding the impact of any items deemed to be unusual or nonrecurring items for financial reporting purposes and excluding losses from land impairments and losses from debt repurchases/debt retirement such as call premiums, above par purchase prices and related issuance costs. “Interest Expense as a Percent of Homebuilding Revenue” is (i) the sum of cost of sales interest and other interest for Hovnanian as reflected on our audited financial statements and for our unconsolidated joint ventures as reflected on their respective financial statements for the twelve months ended October 31, 2018, divided by (ii) the sum of total homebuilding revenue for Hovnanian as reflected on our audited financial statements and total homebuilding revenue for our unconsolidated joint ventures as reflected on their respective financial statements for the twelve months ended October 31, 2018.

 

The following table illustrates the percent of the target award that can be achieved at each performance level. Awards will be interpolated between performance levels but will not be extrapolated above the maximum performance levels listed below.

 

	  	  	
FY 2018 Interest Expense as a Percent of FY 2018 Homebuilding Revenue

	  	  	
7.3% 

or more
	
6.8%
	
6.3%
	
5.8%
	
5.3%
	
4.8%
	
4.3% 

or less

	
Cumulative Pre-tax Profit

for FY 2016 through FY 2018 

(in millions)
	
$325 or more
	
100%
of target award
	
125%
of target award
	
150%
of target award
	
175%
of target award
	
200%
of target award
	
225%
of target award
	
250%
of target award

	  	
$225
	
75%
of target award
	
100%
of target award
	
125%
of target award
	
150%
of target award
	
175%
of target award
	
200%
of target award
	
225%
of target award

	  	
$125
	
50%
of target award
	
75%
of target award
	
100%
of target award
	
125%
of target award
	
150%
of target award
	
175%
of target award
	
200%
of target award

	  	
$50
	
0%
of target award
	
15%
of target award
	
30%
of target award
	
45%
of target award
	
60%
of target award
	
75%
of target award
	
90%
of target award

	  	
Less than $50
	
0%

of target award
	
0%

of target award
	
0%

of target award
	
0%

of target award
	
0%

of target award
	
0%

of target award
	
0%

of target award

 

5. Examples

	 	
a.
	
If cumulative Pre-tax Profit for fiscal years 2016 through 2018 is $125 million and Interest Expense as a Percent of Homebuilding Revenue is 6.3% for fiscal 2018, a Participant would achieve an award equal to one hundred percent (100%) of the target award, subject to the vesting requirements in section 6.

 

	 	
b.
	
If cumulative Pre-tax Profit for fiscal years 2016 through 2018 is $305 million and Interest Expense as a Percent of Homebuilding Revenue is 6.0% for fiscal 2018, the Participant would achieve an award equal to one hundred and sixty percent (160%) of the target award (calculated by linear interpolation from the performance goals listed on the chart), subject to the vesting requirements in section 6. 

 

	 	
c.
	
If cumulative Pre-tax Profit for fiscal years 2016 through 2018 is $50 million and Interest Expense as a Percent of Homebuilding Revenue is 6.8% for fiscal 2018, a Participant would achieve an award equal to fifteen percent (15%) of the target award, subject to the vesting requirements in section 6. 

 

	
Exhibit A
	
 Page 1

 

 

 

 

Exhibit A

2016 Long-Term Incentive Program

 

6. Payout Method and Conditions For Earning Award

The award is payable fifty percent (50%) in cash and fifty percent (50%) in Shares provided, however, that (i) the target amount payable in Shares will be determined based on the Fair Market Value of a Share as of the Grant Date (subject to the limitation under Section 6(a)), (ii) any portion of the award in excess of target is payable 100% in cash. and (iii) the timing of payments for installments of the award in cash and in Shares will be determined using the respective values of the cash and Share portions of the award as of 10/31/2018, with all cash installments of the award becoming vested and payable before any Share denominated installments of the award becomes vested and payable pursuant to Section 6(b) below.

	 	
a.
	
The target award amount payable in Shares will be determined by dividing the portion of the target award payable in Shares by the closing Share price on the Grant Date, provided, however, that the Share price for new Participants will be no less than the Share price on the Initial Grant Date. 

 

	 	
b.
	
Except as provided in Section 6(c) – (f) below, as a condition of earning each portion of the award, Participants must be employed through the vesting dates outlined below. The vesting percentages relate to the award value as of 10/31/2018.

	 	
i.
	
Fifty percent (50%) of the award will become vested on 10/31/2018 and payable in January 2019

 

	 	
ii.
	
Thirty percent (30%) of the award will become vested on 10/31/2019 and payable in January 2020

 

	 	
iii.
	
Twenty percent (20%) of the award will become vested on 10/31/2020 and payable in January 2021

 

Suppose an original Participant’s target award is $260,000.00 and the closing Share price on the Participant’s Grant Date is $1.56. Fifty percent (50%) of the award up to target is payable in cash and fifty percent (50%) of the award up to target is payable in Shares with any portion of the Award in excess of target payable 100% in cash, resulting in a target cash award of $130,000.00 (target award x 50%) and a target stock award of 83,333 Shares (target award x 50% ÷ $1.56, rounded). Under this example, if the Participant earns one hundred and fifty percent (150%) of the target award, based on actual performance achievement, subject to the vesting requirements in this section 6, the Participant will be eligible to receive a cash portion of $260,000.00 ($130,000.00 target cash portion x 150% + $130,000.00 target stock portion x 50% (representing the excess “stock portion” of the award above target level, which is payable in cash)) and a Share portion of 83,333 Shares (83,333 target Share portion x 100%, rounded). 

 

Assume that the Share price on October 31, 2018 is $5.00 so the value of the Share portion for vesting purposes is $416,665.00 (83,333 x $5.00). The value of the cash portion of the award is not affected by stock price fluctuations and therefore remains at $260,000 resulting in a total award value of $676,665.00 ($416,665.00 + $260,000.00) as of 10/31/2018. 

 

Per the vesting schedule, the award vests fifty percent (50%) on 10/31/2018, thirty percent (30%) on 10/31/2019 and twenty percent (20%) on 10/31/2020 with the cash portion of the award vesting before the stock portion. Fifty percent (50%) of the total award value as of 10/31/2018 is $338,332.50 ($676,665.00 x 50%). Since the cash portion is less than this amount, $260,000.00 in cash and 15,667 Shares (78,332.50 ÷ $5.00, rounded up) will vest on 10/31/2018 and be paid in January 2019. 

 

On 10/31/2019, an additional thirty percent (30%) of the total award value as of 10/31/2018, or $202,999.50 ($676,665.00 x 30%), is scheduled to vest. Since the entire cash portion had vested in the prior year, 40,600 Shares ($202,999.50 ÷ $5.00, rounded up) will vest on 10/31/2019 and be paid in January 2020.

 

On 10/31/2020, the remaining portion of the award is scheduled to vest. Since the entire cash portion and 56,267 Shares (15,667 + 40,600) had vested in prior years, the remaining 27,066 Shares (83,333 – 56,267) will vest on 10/31/2020 and be paid in January 2021. 

 

	 	
c.
	
In the event a Participant ceases to be employed by the Company due to death prior to the end of the Performance Period, the Participant’s beneficiary will be eligible for a prorata award payable in January 2019. The award will be determined based on actual performance for the full Performance Period and will be prorated based on the number of full months of eligible service completed during the thirty-six (36) month Performance Period. In the event a Participant ceases to be employed by the Company due to death following the end of the Performance Period, the Participant’s beneficiary will be eligible to receive any unpaid, earned portion of the award within seventy-five (75) days.

 

	 	
d.
	
In the event a Participant ceases to be employed by the Company due to Disability prior to the end of the Performance Period, the Participant will be eligible to receive a prorata award on the scheduled payout dates. The award will be determined based on actual performance for the full Performance Period and will be prorated based on the number of full months of eligible service completed during the thirty-six (36) month Performance Period. In the event a Participant ceases to be employed by the Company due to Disability following the end of the Performance Period, the Participant will be eligible to receive any unpaid, earned portions of the award on the scheduled payout dates as if there was no termination of employment. 

 

	 	
e.
	
In the event a Participant ceases to be employed by the Company due to “Retirement” following the end of the Performance Period, the Participant will be eligible to receive any unpaid, earned portions of the award on the scheduled payout dates as if there was no termination of employment. "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.

 

	
Exhibit A
	
 Page 2

 

 

 

 

Exhibit A

2016 Long-Term Incentive Program

 

	 	
f.
	
If a Change in Control occurs while awards remain outstanding under the LTIP, then (x) if such Change in Control occurs prior to October 31, 2018 any outstanding awards will be deemed earned at target level performance and (y) all earned awards (including any earned pursuant to the preceding clause (x)) will remain eligible to vest on the scheduled vesting dates subject to meeting the employment requirements described above; provided, however, that (i) in the event the Participant is involuntarily terminated without Cause or the Participant terminates employment for Good Reason, in either case, within two years following the Change in Control, then the remaining portion of such Participant’s earned award shall become fully vested and immediately payable to the Participant; (ii) in the event the Participant terminates employment due to Retirement or Disability within two years following the Change in Control, then the Participant’s earned award (as determined under Section 6(d) or (e) above)) shall become immediately payable to the Participant; (iii) in the event that the surviving corporation following the Change in Control is not publicly traded or, if the surviving corporation is otherwise not willing to convert the stock portion of the awards into time-based vesting stock awards of the surviving corporation, then the outstanding awards shall be deemed fully vested as of the Change in Control date and, to the extent permissible under Section 409A of the Code and the regulations thereunder (including, without limitation, the plan termination rules thereunder), shall be immediately payable following the Change in Control; and (iv) amounts payable upon or following a Change in Control will be subject to delay in payments to the extent necessary to avoid subjecting the Participant to additional or accelerated taxes under Section 409A of the Code. 

 

For purposes of the LTIP, "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 10 of the award agreement governing the LTIP award. 

 

For purposes of the LTIP, "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.

 

	
7.
	
Non-Solicitation Covenants

	 	
a.
	
Each Participant shall be required as a condition to receiving the award to acknowledge and agree 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 shall be expressly understood and agreed that although the Participant and the Company consider the restrictions contained in this Section 7 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 LTIP is an unenforceable restriction against the Participant, the provisions of this LTIP 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 LTIP 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.

 

	
8.
	
Specific Performance

Each Participant shall acknowledge and agree that the Company's remedies at law for a breach or threatened breach of any of the provisions of Section 7 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 shall agree 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 LTIP 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.

 

	
Exhibit A
	
 Page 3

 

 

 

 

Exhibit A

2016 Long-Term Incentive Program

 

	
9.
	
Adjustments 

Adjustments Upon Certain Events. Subject to the terms of the 2012 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 Shares subject to awards granted under this LTIP 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.

 

	
10.
	
Amendments 

The Committee may amend, alter or discontinue the LTIP at any time, provided that no such amendment, alteration or discontinuation shall be made that would materially adversely affect the rights of a Participant with respect to a previously granted award hereunder without such Participant’s consent.

 

	
Exhibit A
	
 Page 4

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