Document:

jan-ex1020_399.htm

Exhibit 10.20

 

 

 

 

Certain identified information has been omitted from this document because it is both not material and would be competitively harmful if publicly disclosed and had been marked with “[***]” to indicate where omissions have been made.

 

MASTER EQUIPMENT FINANCE AGREEMENT NO.  7085A

 

This Master Equipment Finance Agreement dated as of March 25, 2021, is entered into between KLC Financial, Inc. ("Lender"), and ARCA Recycling, Inc. dba (if applicable)   ("Borrower").

 

1.Financing Agreement and Security Interest. This Master Equipment Finance Agreement (the “Agreement”) constitutes an agreement to loan money secured by property. Lender loans to Borrower either: (a) the purchase price for property (the "Equipment") described on the schedule(s) to this Agreement (each, a “Schedule” or “Schedules”); or (b) funds secured by the Equipment described on a Schedule. Each Schedule incorporates all of the terms and provisions of the Agreement and shall be construed as a discrete loan, independent from every other Schedule. The term “Agreement” shall hereinafter refer to this Agreement, its Schedules and any ancillary documents.  This Agreement is not a legal commitment to enter into any further Schedule after executing a Schedule and Lender shall have no obligation to loan any additional amounts until all conditions to such funding are completed to Lender’s sole satisfaction.  Each Schedule may be terminated or prepaid only if expressly provided herein. As security for any Obligation, as defined herein, Borrower grants to Lender a first priority security interest in (a) all Equipment identified in any and all Schedules and all equipment, inventory, accessories, parts, attachments, improvements, accessions, replacements, substitutions, additions and proceeds (including without limitation, insurance proceeds) thereof; (b) all accounts, chattel paper, payment intangibles, leases, subleases, security deposits or other cash deposits and proceeds relating to any Equipment financed pursuant to this Agreement including any Schedule(s); and (c) all other collateral as to which a security interest has been or is hereinafter granted by Borrower to Lender in connection with any contractual agreements entered into between the parties and all proceeds thereof (the “Collateral”).  Borrower hereby authorizes Lender to file or record this Agreement, any related assignment(s) or financing statements with respect to Lender’s security interest in the Collateral with any appropriate governmental office in order to perfect such security interest. The security interest created thereunder will automatically terminate when all Obligations of Borrower to Lender under any and all Schedule(s) are discharged, and Lender, at the written request of Borrower, shall then promptly (but in no event later than three business days after such request) execute termination statements and such other documents as may be necessary or appropriate to make clear upon the public records the termination of such security interest.  

2.Term; Monthly Payments. This Agreement shall start on the date signed by the Borrower (the “Start Date”) and continue until all Obligations have been satisfied. The term of each Schedule is the time period stated in each Schedule (the “Initial Term”).  The Initial Term commences on the date that all items of Equipment are accepted by Borrower in accordance with Section 5 hereof. Borrower shall pay to Lender the amounts set forth on each Schedule (“Monthly Payments”) which are payable monthly in advance and due on the First business day of each month (“Payment Date”) unless Borrower is notified in a written addendum to this Agreement (singularly or collectively an “Addendum”) by Lender.  Borrower agrees that any Addendum may be sent by Lender utilizing any communication channel authorized by this Agreement. Payment Date starts in the month in which all items of Equipment are accepted by Borrower in accordance with Section 5 

hereof or the first day of a subsequent month if the all items of Equipment are accepted by Borrower in accordance with Section 5 hereof occurs after the first day of the month in which the Start Date occurs unless Borrower is notified by an Addendum otherwise. If the Start Date falls on a day other than the Payment Date, Borrower must pay an interim payment calculated by multiplying 1/30th of the Monthly Payment by the number of days between and including the Start Date and the first Payment Date.  The interim payment is due on the first day of the month, unless otherwise stated in the Schedule, following the Start Date and on the first of each subsequent month, unless Borrower is notified by an Addendum otherwise, until the Payment Date.  All payments shall be made to Lender at the address listed on this Agreement, or at such address that it designates in writing. Borrower authorizes the insertion into the Agreement of any serial numbers and other identification data about the Equipment, as well as other omitted material factual matters, as Lender deems necessary.

 

All Monthly Payments shall be remitted as designated on each Schedule, WITHOUT NOTICE OR DEMAND BY LENDER AND WITHOUT ABATEMENT, DEDUCTION OR SETOFF. A monthly "Transaction Fee" in the amount of $[***] shall be added to each Monthly Payment for maintenance of the Schedule. Any Monthly Payments which are not received by Lender within 10 days of the Payment Date shall be subject to a service charge of [***]% of each overdue payment so as to compensate Lender for the cost of administration and collection (a "Late Payment Servicing Charge"). Monthly Payments, Document Fees, Transaction Fees, Late Payment Servicing Charges, interest accrued at the Overdue Rate and all other sums due or to become due hereunder plus all covenants, warranties and duties of Borrower are herein referred to as the "Obligations." Time is of the essence for this Agreement and the receipt and performance of the Obligations. Lender's acceptance of any Obligation not timely paid by Borrower shall not be deemed a waiver of Borrower's continuing obligation to observe the terms and conditions of this Agreement in a timely manner. It is the express intent of the parties not to violate any applicable usury laws or to exceed the maximum interest rate allowed to be charged or collected under applicable law; therefore, any excess payment, if any, made by Borrower will be applied to any outstanding Obligation and any remaining excess payment will be refunded to Borrower and Borrower further agrees that such remedy is its exclusive relief solely with respect to such usury matter, if any, and that no other relief or remedy for excess interest will be available to Borrower hereunder.

3.Estimated Cost of Equipment. The Monthly Payment for each Schedule may be based on the estimated cost of the Equipment. Accordingly, Borrower and Lender shall, if necessary, adjust the payment term(s) of a Schedule and/or to insert a more specific description of the Equipment whenever necessary and execute an Addendum to the Schedule reflecting such change(s).

4.Borrower’s Disclaimer of Warranties. BORROWER ACKNOWLEDGES THAT: (I) THE EQUIPMENT IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY BORROWER; (II) LENDER IS NEITHER A MANUFACTURER NOR A DEALER IN PROPERTY OF SUCH KIND AS THE EQUIPMENT, OR ANY EQUIPMENT; (III) NEITHER THE SUPPLIER, VENDOR NOR ANY REPRESENTATIVE OF ANY SUPPLIER OR VENDOR OR ANY MANUFACTURER OF THE EQUIPMENT IS AN AGENT OF LENDER OR IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS AGREEMENT; AND 

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(IV) LENDER HAS NOT MADE AND DOES NOT HEREBY MAKE ANY WARRANTY, WHETHER EXPRESS, IMPLIED OR OTHERWISE, AS TO ANY MATTER WHATSOEVER INCLUDING, WITHOUT LIMITATION, THE CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE EQUIPMENT. BORROWER ACCEPTS THE EQUIPMENT "AS-IS" AND WITH ALL FAULTS. NO DEFECT IN, UNFITNESS OF, OR AN INABILITY OF BORROWER TO USE ANY EQUIPMENT, HOWSOEVER CAUSED, RELIEVES BORROWER FROM ITS OBLIGATION TO MAKE MONTHLY PAYMENTS OR FROM ANY OTHER OBLIGATION UNDER THIS AGREEMENT. Lender shall not be responsible to Borrower or anyone claiming through Borrower for any damages, direct, consequential, or otherwise, resulting from the delivery, installation, use, existence, operation, performance or condition of the Equipment, or any delay or failure by any vendor or supplier in delivering and/or installing any Equipment or performing any service for Borrower. Nothing herein shall be construed as depriving Borrower of whatever rights Lender may have against any vendor or supplier of the Equipment, and Lender hereby authorizes Borrower, at Borrower's expense, to assert for Lender's account during the term of this Agreement, all of Lender's rights under any warranty or promise given by a vendor or supplier and relating to the Equipment. Borrower may communicate with such vendor or supplier providing the Equipment and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of such warranties or remedies.

5.Non-Cancelable Agreement; Unconditional Obligations.  BORROWER SELECTED THE EQUIPMENT BASED ON BORROWER’S OWN SKILL AND EXPERIENCE AND HAS NOT RELIED UPON ANY REPRESENTATION OR WARRANTY FROM LENDER IN CONNECTION WITH SUCH SELECTION. THIS AGREEMENT CANNOT BE CANCELED OR TERMINATED EXCEPT BY LENDER AS PROVIDED HEREIN. ALL THE OBLIGATIONS UNDER THIS AGREEMENT ARE ABSOLUTE, IRREVOCABLE, UNCONDITIONAL AND INDEPENDENT OF ANY CLAIMS AND WILL BE DULY PAID AND PERFORMED BY BORROWER WITHOUT ABATEMENT, DEDUCTION, OFFSET OR ANY MODIFICATION WHATSOVER, FOR ANY REASON INCLUDING, BUT NOT LIMITED TO, THE CONDITION, INSTALLATION, EXISTENCE, PERFORMANCE, OPERATION, USE, WARRANTY, DELAY OR FAILURE OF DELIVERY OR LOCATION OF THE EQUIPMENT.  

6.Maintenance. Borrower shall maintain the Equipment in good operating order and appearance at Borrower's expense and shall protect the Equipment from deterioration, other than ordinary wear and tear, and will not use the Equipment for any purpose other than that for which it was designed. Borrower's duties to maintain the Equipment will include, without limitation, the performance of all service, maintenance and repair as required, recommended or advised by the manufacturer or vendor of the Equipment, and/or by any government agency or regulatory authority and/or according to reasonable and customary business and/or professional practices. BORROWER SHALL NOT REPLACE, ALTER, MODIFY OR OTHERWISE CHANGE THE EQUIPMENT WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER.

7.Security Deposit. Borrower's "Security Deposit", if any, shall secure Borrower's full and faithful performance of the Obligations. Lender may apply all or any part of any Security Deposit toward any overdue Obligation. To the extent the Security Deposit is so applied, Borrower shall promptly restore the Security Deposit to its full amount following written request by Lender to do so. Provided no Event of Default has occurred and is continuing and Borrower has complied with the Equipment return provisions of a Schedule, a Security Deposit may, a Borrower’s option, be applied to the final Monthly Payment. Security Deposits may be commingled with Lender's other funds. No interest shall be payable on any Security Deposit. 

8.Insurance. Borrower shall, at its expense, keep the Equipment insured against all risk of loss or physical damage including loss, fire, theft or damage to the Equipment for the full replacement value of the Equipment.  Borrower shall also maintain comprehensive public liability 

insurance against claims for bodily injury, death and/or property damage arising out of the use, ownership, possession, operation or condition of the Equipment with a combined single limit in the minimum amount of $[***], together with such other insurance as may be required by law or as may be reasonably requested by Lender. All such insurance shall name Lender as an additional insured and loss payee and Lender shall be listed on any certificates of insurance as KLC Financial, Inc., and its successors and assigns and shall be in form and amount and with insurers satisfactory to Lender. Borrower shall furnish to Lender, promptly upon request, certified copies of or evidence of the policies of such insurance and evidence of each renewal thereof. Each insurer must agree, by endorsement upon the policy or policies issued by it, that it will give Lender not less than 30 days prior written notice before such policy or policies are canceled or materially altered, and, under the physical damage insurance; (i) that losses shall be payable solely to Lender, and (ii) that no act or omission of Borrower or any of its officers, agents, employees or representatives, or any other persons shall affect the obligation of the insurer to pay the full amount of any loss. Borrower hereby irrevocably authorizes Lender, at its option and in its sole discretion, to make, settle and adjust claims under such policy or policies of physical damage insurance and to endorse the name of Borrower on any check or other item of payment for the proceeds thereof. If Borrower fails to maintain such insurance, Lender shall have the right, but not the obligation, to obtain such insurance at Borrower’s expense. Such placement by Lender will result in an increase in Borrower’s Monthly Payments attributable to the premium paid for such insurance and Lender’s costs of obtaining the insurance and applicable service charges and/or fees.

9.Event of Loss; Borrower’s Risk of Loss. As used herein, an "Event of Loss" shall mean any of the following events with respect to any item of the Equipment: (i) the actual or constructive total loss of the Equipment; (ii) the loss, theft, or destruction of such Equipment or damage to such Equipment to such extent as shall make repair thereof uneconomical or shall render such Equipment permanently unfit for normal use; or (iii) the condemnation, confiscation, requisition, seizure, forfeiture or other taking of title to or use of such Equipment. THE OCCURRENCE OF ANY EVENT OF LOSS SHALL NOT REDUCE OR IMPAIR ANY OF THE OBLIGATIONS WHATSOEVER UNTIL NOTIFIED IN WRITING BY LENDER. Borrower assumes and shall bear, from the time that such risk passes to Lender from the vendor or supplier of the Equipment until the expiration or termination of the Agreement, and where applicable the return of the Equipment to Lender, the entire risk of an Event of Loss. Upon the occurrence of any damage to any Equipment not constituting an Event of Loss, Borrower, at its sole cost and expense, will promptly repair and restore such Equipment to substantially the same condition as existed prior to the date of such occurrence (assuming such Equipment was then in the condition required by this Agreement). Provided that no Event of Default has occurred, upon receipt of evidence reasonably satisfactory to Lender of completion of such repairs, Lender will apply any insurance proceeds it receives on account of such occurrence to the cost of such repairs and restoration; however, if at such time an Event of Default has occurred, Lender may apply any part or all of such proceeds to any of the Obligations. Upon the occurrence of an Event of Loss, Borrower shall immediately notify Lender in writing of such occurrence and shall fully inform Lender thereof within: (i) 5 days after the date upon which the Event of Loss occurred, and (ii) 5 days after the date on which either Borrower receives any proceeds of insurance in connection with such Event of Loss, or (iii) 5 days after any underwriter of insurance on the Equipment advises Borrower orally or in writing that it disclaims liability with respect to such Event of Loss, in which case the Borrower shall promptly pay to Lender on demand an amount equal to the sum of (a) the accrued but unpaid Monthly Payments and other sums due under the Agreement, plus (b) the present value of all future Monthly Payments to become due under the Agreement over the Initial Term, discounted at [***]% per annum, plus (c) any remaining outstanding Obligations including but not limited, attorney’s fees and costs, repossession or storage costs (the “Stipulated Loss Value”) less  the amount of any insurance proceeds or condemnation or similar award received by Lender on account of such Event of Loss. An Event of Loss shall not 

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extend to or otherwise affect the Obligations up to and including the date upon which the full Stipulated Loss Value is received by Lender, whereupon the Schedule with respect to such Equipment shall terminate. After receipt by Lender of the Stipulated Loss Value and provided all of the Obligations are satisfied, Lender will, upon written request of Borrower, transfer its interest, if any, in such Equipment to Borrower on an "as is, where is" basis without warranty by or recourse to Lender. The proceeds of insurance with respect to an Event of Loss and any award on account of any condemnation or other taking of Equipment shall be paid to Lender and applied by Lender against the Stipulated Loss Value and the Obligations until fully satisfied; the excess balance, if any, of such proceeds or award shall be paid over by Lender to Borrower

10.Indemnity. Borrower shall indemnify and hold Lender harmless from and against any and all claims, costs, expenses (including reasonable attorneys' fees), losses and liabilities arising out of or occasioned by or in connection with (i) the purchase, delivery, installation, acceptance, rejection, ownership, non-existence, leasing, possession, use, operation, condition, return or disposition of any Equipment including, without limitation, any claim alleging latent or other defects and any claim arising out of strict liability in tort, or (ii) any breach by Borrower of any of the Obligations.

11.Taxes. Borrower shall pay as and when due, and indemnify and hold Lender harmless from and against, all present and future taxes and other charges (including, without limitation, sales, use, stamp and personal property taxes, licenses and registration fees) and amounts in lieu of such taxes and charges and any penalties and interest on any of the foregoing, imposed, levied or based upon, or in connection with the Equipment.

12.Notice of Encumbrances and Location Change; Inspection. Borrower shall give Lender prompt notice of any attachment, judicial process, lien, encumbrance or claim affecting the Equipment, any loss or damage to the Equipment or material accident or casualty to the Equipment, as well as any change in the residency or principal place of business of Borrower or any guarantor of Borrower's obligations hereunder (a "Guarantor"). Lender may (but is not required to), for the purpose of inspection, with prior 3 business days prior written notice and during reasonable business hours, enter from time to time upon any premises where the Equipment is located upon reasonable notice to Borrower. 

13.Title; Additional Assurances. The Equipment shall remain personal property even though installed in or attached to real property.  Borrower shall otherwise keep the Equipment free from all liens and encumbrances, except for those of (i) Lender, (ii) Prestige Capital Finance, LLC, and (iii) other third parties imposed on the Equipment in connection with the Disposition Transaction (as defined below) (collectively, the “Permitted Liens”), and shall defend Lender's security interest in the Equipment at Borrower’s expense. Borrower shall cause the Equipment to be kept marked with labels, plates or other markings reasonably requested by Lender or otherwise required by law. Borrower agrees to keep the Equipment numbered with the identification and/or serial numbers. Borrower will promptly execute, or otherwise authenticate, and deliver to Lender such documents, instruments, assurances and records, and take such further action as Lender may reasonably request in order to carry out the intent and purpose of this Agreement including, without limitation (i) lien searches and (ii) financing statements, crop liens, fixture filings and waivers as may reasonably be required in connection with any change in circumstances relating to Borrower, the Equipment or otherwise. Borrower shall provide written notice to Lender not less than 30 days prior to any contemplated change in the name, the jurisdiction of organization, the address of the chief executive office of Borrower and/or the location of the Equipment.

14.Borrower's Warranties and Covenants. In order to induce Lender to enter into this Agreement, Borrower represents and warrants as to the following: (a) Disclosures; (i) its applications, financial statements and reports which have been submitted to Lender are, and all information hereafter furnished by Borrower to Lender is and will be, true and correct in all material respects; (ii) as of the date hereof and the date of any Schedule and any Start Date, there has been no material adverse change in any matter stated in such applications, financial statements and reports; (iii) there are no known contingent liabilities or liabilities for 

taxes of Borrower which are not reflected in said financial statements or reports; and, (iv) none of the foregoing omit or omitted to state any material fact; (b) Organization; Borrower’s legal name, state of organization and chief executive office is as first set forth herein and Borrower is duly organized, validly existing and in good standing in such state and duly qualified to do business in each state where the Equipment is located; (c) Power and Authority; Borrower has full power, authority and legal right to execute, deliver and perform this Agreement and any Schedule thereto, and the execution, delivery and performance hereof has been duly authorized by all necessary action; (d) Enforceability; this Agreement and any Schedule or other document executed therewith has been duly executed and delivered by Borrower and constitutes a legal, valid and binding obligation enforceable in accordance with its terms; (e) Consents and Permits; the execution, delivery and performance of this Agreement does not require any approval or consent of any stockholders, partners or proprietors or of any trustee or holders of any indebtedness or obligations of Borrower, and will not contravene any law, regulation, judgment or decree applicable to Borrower, or the certificate of organization, partnership agreement or by-laws of Borrower, or contravene the provisions of, or constitute a default under, or result in the creation of any lien upon any property of Borrower under any mortgage, instrument or other agreement to which Borrower is a party or by which Borrower or its assets may be bound or affected; (f) Operations; Borrower shall not: (i) commence or conduct the operation of the Equipment until Lender has received the applicable Delivery and Acceptance Acknowledgment duly executed by the Borrower; (ii) operate the Equipment except by and through duly trained qualified personnel in the course of Borrower's regular and customary business and; (iii) at any time be in material violation of any laws, ordinances, decrees, orders, governmental rules or regulations to which it is subject and Borrower has, or will have, all the material licenses, accreditations, permits and regulatory approvals necessary for the operation of its business and the performance of this Agreement.

15.Assignment. Borrower hereby consents to any assignment (“Assignment”) by Lender and any reassignment of this Agreement or Monthly Payments hereunder with or without notice. BORROWER AGREES THAT THE RIGHTS OF ANY ASSIGNEE SHALL NOT BE SUBJECT TO ANY DEFENSE, SETOFF OR COUNTERCLAIM THAT BORROWER MAY HAVE AGAINST LENDER, AND THAT ANY SUCH ASSIGNEE SHALL HAVE ALL OF LENDER'S RIGHTS HEREUNDER, BUT NONE OF LENDER'S OBLIGATIONS. Lender may, at its option, grant a security interest in the Equipment and Borrower's interests shall be subordinate to the rights of Lender's secured party. Except in connection with the Disposition Transaction, Borrower shall not assign the Agreement, any Schedule thereto, nor any of Borrower's rights in connection herewith nor may any of Borrower’s duties hereunder be delegated to any other person or entity, whether by Borrower’s own act or by operation of law, without the prior written consent of Lender. Borrower further agrees it will not, without the prior written consent of Lender, allow the Equipment to be used by persons other than duly authorized and trained employees, or to change, modify, rent or sublet any Equipment to others or relocate any Equipment from the Equipment Location of a Schedule. “Disposition Transaction” means the consummation of the transactions contemplated by that certain Asset Purchase Agreement dated February 19, 2021 (the “Purchase Agreement”) among JanOne Inc., Borrower, and Customer Connexx LLC (“Connexx”), on the one hand, and ARCA Affiliated Holdings Corporation, a Delaware corporation, ARCA Services Inc., a Delaware corporation, and Connexx Services Inc, on the other hand (collectively, the “Buyers”), pursuant to which, among other things, the Buyers agreed to acquire substantially all of the assets, and assume certain liabilities, of Recycling and Connexx.  

 

16.Lender's Right to Terminate. Without limiting the rights of Lender in the Event of a Default by Borrower, Lender shall at any time prior to Borrower’s acceptance of any Equipment have the right to terminate this Agreement with respect to such Equipment if: (a) there shall be a material adverse change in Borrower's or any Guarantor's financial position or credit standing; or (b) Lender otherwise in good faith deems itself insecure; or (c) such Equipment is not for any reason delivered to Borrower within 90 days of the date of any Schedule; or (d) 

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Borrower rejects or attempts to reject delivery of any Equipment. 

17.Lender’s Right to Perform Obligations. If Borrower fails to perform any act or Obligation within a reasonable time after being requested to do so in writing by Lender, Lender may (but need not) make such payment or perform such act or Obligation. Any reasonable expense or cost so incurred by Lender shall be payable by Borrower to Lender upon demand, with interest at the Overdue Rate.

18.Events of Default. An "Event of Default" shall have occurred under this Agreement or any Schedule(s) to this Agreement if: (i) other than in connection with the Disposition Transaction, the owner(s) or interest holders of Borrower sell or otherwise transfer the controlling interest in Borrower; (ii) Borrower or any Guarantor fails to pay any Monthly Payments or any other payment required under this Agreement or any related Schedule(s) when due and such failure shall continue for more than 10 days; (iii) any part of the Equipment is sold, transferred, encumbered, or sublet or is attempted to be sold, transferred, encumbered, or sublet; (iv) Borrower or any Guarantor breaches or shall have breached any covenant, representation or warranty made or given by Borrower or Guarantor in this Agreement or in any other document furnished to Lender, or any such representation or warranty shall be untrue or, by reason of failure to state a material fact or otherwise, shall be misleading; (v) Borrower or any Guarantor fails to perform or observe any other warranty, covenant, condition or agreement to be performed or observed by it hereunder including, but not limited to, Borrower’s obligation to provide financial statements in the manner provided in this Agreement and such failure or breach of warranty, covenant, condition or agreement continues un-remedied for a period of 30 days after the earlier of (a) the date on which Borrower obtains knowledge of such failure or breach; or (b) the date on which written notice thereof shall be given by Lender to Borrower; (vi) Borrower or any Guarantor becomes insolvent or bankrupt or makes an assignment for the benefit of creditors or consents to the appointment of a trustee or receiver, or a trustee or receiver shall be appointed for a substantial part of its property without its consent, or a bankruptcy or reorganization or insolvency proceeding shall be instituted by or against Borrower or Guarantor; (vii) Borrower or any Guarantor ceases doing business as a going concern; (viii) other than in connection with the Disposition Transaction, Borrower or any Guarantor shall have terminated its legal existence, consolidated with, merged into, or conveyed or leased substantially all of its assets to any person or otherwise undergoes a material change in the composition of Borrower’s ownership, stockholders, unit-owners, partners or management, including the death, disability or incompetence of any Borrower, Co-Borrower, key shareholder, key member or Guarantor; (ix) Borrower or any Guarantor voluntarily or involuntarily permits the Equipment to become subject to a lien other than a Permitted Lien or arising out of claims against Lender not related to this Agreement (x) Borrower or any of its Guarantors, controlling shareholders, members or officers is criminally indicted or convicted; (xi) Borrower or any Guarantor is in breach of, or default under, any other loan, lease, finance or other agreement at any time executed with Lender, including, but not limited to, the agreements and ancillary documents executed in connection with this Agreement; (xii) Borrower or any Guarantor fails or refuses to allow an inspection of the Equipment; (xiii) if there exists, in Lender’s sole discretion, a material adverse change in Borrower's, or any Guarantor's, financial position or credit standing; or (xiv) Lender in good faith deems Borrower or any Guarantor unable to perform its obligations hereunder.

19.Remedies. Upon the occurrence and existence of any Event of Default for 30 days or greater, Lender may, at its option, do one or more of the following: (i) terminate this Agreement, all Schedules and all of Borrower's rights, but not Borrower's duties or the Obligations; (ii) proceed in court to enforce the performance of the terms of this Agreement and/or recover damages for the breach hereof; (iii) directly or by its agent, enter upon any premises where any Equipment is located, take possession of the Equipment and either store it on said premises without charge or remove the same (any damages occasioned by such taking of possession, storage or removal being hereby waived by Borrower); (iv) instruct Borrower in writing to assemble and deliver the Equipment to such location and to such person(s) or party(ies) Lender may designate and Borrower shall comply with such instructions promptly in accordance with the return provisions of a Schedule at 

Borrower's own expense; (v) declare as immediately due and payable and forthwith recover from Borrower an amount equal to the Stipulated Loss Value, plus all unpaid Obligations including any attorney’s fees and costs incurred in the collection or enforcement of this Agreement and any related Schedule, including costs incurred in any insolvency, collection, class action, appeal and any other expenditures for counsel whether in court or out of court and any and all fees, costs and expenses incurred by Lender as a result of an Event of Default including, without limitation, appraisers' and brokers' fees, plus all other expenses and costs of removal, storage, transportation, insurance and disposition of the Equipment; and/or (vi) exercise any one or more rights and remedies available under the Uniform Commercial Code ("UCC") and/or applicable statutory or common law. In the event of any repossession of any Equipment by Lender, Lender may (but need not), without notice to Borrower, (i) hold or use all or part of such Equipment for any purpose whatsoever, (ii) sell all or part of such Equipment at public or private sale for cash or on credit and/or (iii) relet all or part of such Equipment upon such terms as Lender may solely determine; in each case without any duty to account to Borrower except as herein expressly provided or required by law. BORROWER WAIVES RIGHTS TO POSSESSION OF THE EQUIPMENT AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT AND ALL CLAIMS OF LOSS ARISING FROM OR OUT OF LENDER'S RECOVERY OF THE EQUIPMENT. After any repossession of Equipment by Lender there shall be applied on account of the Obligations one of the following, chosen at the option of Lender: (i) the net proceeds actually received by Lender from a sale of such Equipment, after deduction of all expenses of sale and other expenses recoverable by Lender hereunder, or (ii) the "Forced Liquidation Value" of such Equipment, which shall mean a price equal to the amount of value that would be received from a public auction with the seller being compelled to sell with a sense of immediacy on an “as-is” “where-is” basis as of a specific date, less the aggregate costs of all expenses necessary to effect such a sale, including reconditioning and transportation; and Borrower shall remain liable, subject to all provisions of this Agreement, for the balance of all amounts required under this Agreement. Subject to this Agreement, Interest shall accrue at the rate of 11⁄2% per month on the Obligations that are not timely paid (the “Overdue Rate”) and shall continue to accrue until such time as Lender receives all past due Obligations. No termination, repossession or other act by Lender after default shall relieve Borrower from any of the Obligations. Borrower shall also pay to Lender, on demand, all fees, costs and expenses incurred by Lender as a result of such default including, without limitation, Lender’s reasonable attorneys' fees, including appraisers' and brokers' fees and all other expenses and costs of removal, storage, transportation, insurance and disposition of the Equipment. For purposes hereof, the parties agree that attorney’s fees are to be construed broadly to include any attorneys’ fees, including in-house counsel fees and paraprofessional fees, incurred by Lender or its assigns, whether or not there is a lawsuit and, if there is a lawsuit, any fees and costs for any proceeding, including any insolvency, collection, class action, appeals or other proceedings and any other legal fee expenditures incurred by Lender arising out of or related to this Agreement and any related Schedules or Guaranties and/or exercise any one or more rights and remedies available under same or any other remedy allowed under the Uniform Commercial Code ("UCC") and/or applicable statutory or common law. In the event that any court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable in whole or in part, such determination shall not prohibit Lender from establishing its damages sustained as a result of any breach of this Agreement in any action or proceeding in which Lender seeks to recover such damages. The remedies provided herein in favor of Lender shall not be exclusive but shall be cumulative and in addition to all other remedies existing at law or in equity, any one or more of which may be exercised simultaneously or successively. 

20.Non-Waiver. Lender's failure at any time to require strict performance by Borrower of any provision hereof shall not waive or diminish Lender's rights thereafter to demand strict performance thereof or of any other provision. None of the provisions of this Agreement shall be held to have been waived by any act or knowledge of Lender, but 

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only by a written instrument executed by Lender and delivered to 

Borrower. Waiver of any Event of Default or breach hereof shall not be a waiver of any other or subsequent default.

21.Communications. Any Addendum, notice or other communication authorized or required to be given to Borrower hereunder shall be given in writing and shall be deemed to have been duly given and received when sent by any one of the following methods to the address indicated in the signature block to this Agreement or provided to Lender: by a confirmed nationally reputable overnight courier, email, fax and text messaging. Any notice or other communication authorized or required by Borrower to Lender must be sent via U.S. mail, postage paid, certified mail, by confirmed nationally reputable overnight courier, or electronic email, fax and text messaging and then confirmed receipt by Lender.  

22.Financial and Other Information. Borrower shall furnish to Lender, at its own cost and expense, (i) federal and state tax returns of Borrower and any Guarantor (i) within 45 days of the expiration of each fiscal year of such party or entity, and (ii) within 30 days of the end of each calendar month, at the Lender’s request, unaudited financial statements certified by an officer of Borrower, as true and correct, consisting in each case of a balance sheet, income statement and statement of cash flows, all prepared in accordance with generally accepted accounting principles, consistently applied; (iii) current statements of order and backlog reports, receivables aging reports; and (iv) such other information as Lender may reasonably request from time to time. Borrower agrees that Lender may share any financial information provided herein with Lender's participants, funding partners and/or assigns. Each time Borrower requests from Lender a statement of the outstanding amount of the indebtedness owed under the Agreement, Borrower shall pay Lender a service fee for each such request to compensate Lender for the costs of administration of such requests.

23.Choice of Law; Venue. THIS AGREEMENT, SCHEDULES, RIDERS, ANCILLARY DOCUMENTS AND AMENDMENTS THERETO SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF MINNESOTA. TO INDUCE LENDER TO EXECUTE THIS AGREEMENT, BORROWER HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY OR INDIRECTLY FROM THIS AGREEMENT SHALL BE LITIGATED EXCLUSIVELY IN COURTS (STATE OR FEDERAL) HAVING SITUS IN THE STATE OF MINNESOTA AND THE COUNTY OF HENNEPIN UNLESS LENDER, IN ITS SOLE DISCRETION, WAIVES THIS PROVISION. BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER IN ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF MINNESOTA AND THE STATE IN WHICH THE BORROWER'S PRINCIPAL PLACE OF BUSINESS IS SITUATED OR THE EQUIPMENT IS LOCATED. BORROWER WAIVES ANY CLAIM THAT ANY ACTION INSTITUTED BY LENDER HEREUNDER IS IN AN INCONVENIENT OR IMPROPER FORUM. TO THE EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES TRIAL BY JURY AND ANY RIGHT OF SETOFF OR COUNTERCLAIM.

24.Borrower Waivers. BORROWER HEREBY WAIVES ANY AND ALL RIGHTS AND REMEDIES TO RECOVER ANY GENERAL, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING ANTICIPATORY PROFITS, FROM LENDER, FOR ANY REASON; AND TO THE EXTENT APPLICABLE BY LAW, BORROWER WAIVES THE RIGHT TO SPECIFIC PERFORMANCE, REPLEVIN, DETINUE OR SEQUESTRATION. 

25.Authorization to Access, Order and Review Personal Credit; Identification Waiver; Permission To Solicit. Borrower authorizes Lender to obtain credit bureau reports and make any other credit inquiries that Lender determines are appropriate. By signing below, the undersigned individual affirms that he or she is either a principal of the Borrower, or is also a personal guarantor of Borrower's obligations under this Agreement and thereby provides written instruction to Lender or its designees (including any assignee or potential assignee) authorizing the review of his or her personal credit profile from a national credit bureau. 

Such authorization shall extend to obtaining a credit profile in considering the application for the extension of credit by Lender under the Agreement and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account. Borrower grants Lender, its successors, assigns and participants, permission to make copies of drivers licenses and other personal identification, whether state, government or other issue for all Borrower(s), signor(s), guarantor(s) or any other parties to this Agreement. Borrower hereby grants Lender, its successors, assigns and participants, permission to provide copies of documents and information to any successor or third party that is or becomes a party to this Agreement, without notice; Borrower grants Lender, its successors, assigns and participants permission to allow Lender to solicit them for business as Lender may see fit and Lender may use any method to do so including, but not limited to, facsimile transmission, email, text, telephone and direct mail.

26.Miscellaneous. The Agreement is submitted by Borrower to Lender for its acceptance or rejection and shall not become effective and shall impose no obligations on Lender until it is accepted by Lender in writing at its offices Minnetonka, Minnesota. If any provision of this Agreement or the application thereof is hereafter held to be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and to this end the provisions of this Agreement are severable. The titles to the Sections of the Agreement shall not be considered in the interpretation of this Agreement.  The Agreement (including the Schedules) sets forth the entire understanding between the parties and may not be modified except in a writing signed by both parties except in the case of an Addendum changing the Payment Date in which case Borrowers expressly agrees that Lender retains the right to change such date(s) in its sole reasonable discretion and Borrower waives any right to contest the enforceability of such modification(s) and Borrower’s waive of any such right is a material requirement and consideration of this Agreement necessary to facilitate Lender’s efficient and standardized loan operations. If there is more than one Borrower, the obligations of Borrowers hereunder and co-Borrowers are joint and several. The necessary grammatical changes required to make the provisions hereof apply to corporations, partnerships, limited liability companies and/or individuals, whether male or female, shall in all cases assumed as though in each case fully expressed.  Subject to the terms hereof, this Agreement shall be binding upon and inure to the benefit of Lender and Borrower and their respective personal representatives, successors and assigns. The individuals executing this Agreement on behalf of Borrower personally warrant that they are doing so pursuant to due authorization by the Borrower as required by Borrower’s articles, bylaws and/or Borrower’s membership, partnership or operating agreement. Borrower’s representations, warranties, covenants, duties and indemnities hereof survive the expiration or other termination of the Agreement.

27.Counterparts; Delivery of Executed Documents. This Agreement and any Schedules may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of the Agreement by facsimile, e-mail or other electronic means shall be equally as effective as delivery of a manually executed counterpart. Any party delivering an executed counterpart of the Agreement by such electronic means also shall deliver a manually executed counterpart of the Agreement to Lender. The failure to deliver a manually executed counterpart shall not affect the validity, enforceability and binding effect of this Agreement.

28.USPA Disclosure To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. What this means to you: When you open an account, we will ask you for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

AGREED: SIGNATURES

5

 

 

Dated as of the day and year first above written.

 

ARCA Recycling, Inc., a Corporation organized under the laws of the state of CA

DBA (if applicable): 

 

Signature: /s/ Virland A. Johnson_______________________________

                      (signature of Borrower's duly authorized representative)

 

Print Name: Virland A Johnson

Title: CFO

FEIN: 36-3893973

Principal Office:

7301 Ohms Ln, Suite 320, Edina, MN 55439

Telephone: +1 800-452-8680

E-mail: v.johnson@isaac.com

 

With copies of all notices required hereunder to:

Tony Isaac

President and CEO  / Email:  t.isaac@isaac.com

 

 

 

Accepted by Lender at Minnetonka, Minnesota:

KLC Financial, Inc., a Corporation organized under the laws of the State of Minnesota, 3514 County Road 101, Minnetonka, Minnesota 55345

 

Signature: /s/ Sharon Smith___________________________________

 

Title: ____Chief Credit Officer_________________

6

 

 

 

SCHEDULE NO.  01 TO MASTER EQUIPMENT FINANCE AGREEMENT NO. 7085A

 

This Schedule to Master Equipment Finance Agreement ("Schedule") is hereby made a part of Master Equipment Finance Agreement No. 7085A dated as of March 25, 2021 (as amended, renewed or restated from time to time, the "Agreement") entered into between KLC Financial, Inc. ("Lender") and ARCA Recycling, Inc. dba (if applicable)  ("Borrower"). All capitalized terms herein shall have the same meaning as such terms are defined in the Agreement. To the extent the terms of this Schedule may be inconsistent with the Agreement, the terms of this Schedule shall control.  The Master Finance Agreement is incorporated herein as if fully set forth.  

 

		
	
Equipment Description:
	
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Vendor:
	
[***]

 

		
	
Equipment Description:
	
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Vendor:
	
[***]

 

		
	
Equipment Description:
	
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Vendor:
	
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Equipment Description:
	
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Vendor:
	
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Equipment Description:
	
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Vendor:
	
[***]

 

		
	
Equipment Description:
	
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Vendor:
	
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Equipment Description:
	
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Vendor:
	
[***]

 

		
	
Equipment Description:
	
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Vendor:
	
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Equipment Description:
	
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Vendor:
	
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All of the foregoing property, together with all parts and accessories thereto, all attachments, accessories and 

 

additions incorporated therein, attached thereto or used in connection therewith, all replacements and substitutions thereto and all income, proceeds and products thereof being collectively referred as the “Equipment.”

 

Equipment Location:  7301 Ohms Ln, Suite 320, Edina, MN 55439

 

Total Equipment Cost: $1,561,788.41 plus any applicable taxes and fees. “Cost” means the total cost to the Lender of purchasing and causing the delivery and installation of the Equipment and shall include taxes, transportation and any other charges paid by Lender.

 

Down Payment (if applicable): 

 

Total Finance Amount: $1,561,788.41

 

Initial Term:  1 + 71

 

Security Deposit:  

 

Advance Payment: 1 - $26,814.82

 

Monthly Payments: $26,814.82  plus any applicable taxes and fees.

 

Payment Date: Each Payment shall be due on the 1 day of each month subsequent to the Start Date unless Borrower is notified in an Addendum.

 

Monthly Payments Remitted to/via: ACH        

 

ADDITIONAL PROVISIONS: (If applicable)

 

 

 

 

 

 

 

 

 

 

 

7

 

 

AGREED:  Dated as of March 24, 2021.

 

Borrower: ARCA Recycling, Inc.

DBA ( if applicable): 

 

Signature: /s/ Virland A. Johnson __________________

       (signature of Borrower's duly authorized representative)

 

Print Name of Signor: Virland A Johnson

Title: CFO

Lessee's FEIN: 36-3893973

Lessee's Address:  7301 Ohms Ln, Suite 320, Edina, Minnesota 55439

Telephone: +1 800-452-8680

E-mail: [***]

 

 

 

 

Accepted by Lender at Minnetonka, Minnesota

KLC Financial, Inc.

 

Signature: /s/ Sharon Smith________________________

 

Title:  Chief Credit Officer______________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8ex_237278.htm

 

Exhibit 10.1

 

AMENDED AND RESTATED 2020 HOVNANIAN ENTERPRISES, INC.

STOCK INCENTIVE PLAN

 

	
			1.

				
			PURPOSE OF THE PLAN

			

 

The purpose of the Plan is to aid the Company and its Affiliates in recruiting and retaining key employees, directors and consultants of outstanding ability and to motivate such employees, directors and consultants to exert their best efforts on behalf of the Company and its Affiliates by providing incentives through the granting of Awards. The Company expects that it will benefit from the added interest which such key employees, directors or consultants will have in the welfare of the Company as a result of their proprietary interest in the Company’s success.

 

	
			2.

				
			DEFINITIONS

			

 

The following capitalized terms used in the Plan have the respective meanings set forth in this Section:

 

(a)    Act: The Securities Exchange Act of 1934, as amended, or any successor thereto.

 

(b)   Affiliate: With respect to the Company, any entity directly or indirectly controlling, controlled by, or under common control with, the Company or any other entity designated by the Board in which the Company or an Affiliate has an interest.

 

(c)    Award: An Option, Stock Appreciation Right or Other Stock-Based Award granted pursuant to the Plan.

 

(d)    Beneficial Owner: A “beneficial owner”, as such term is defined in Rule 13d-3 under the Act (or any successor rule thereto).

 

(e)    Board: The Board of Directors of the Company.

 

(f)    Cause: The occurrence of any of the following with respect to a Participant: (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 any restrictive covenant provisions set forth in the Participant’s Award agreement.

 

(g)    Change in Control:

 

The occurrence of any of the following events:

 

(i)     any Person (other than a Person holding securities representing 10% or more of the combined voting power of the Company’s outstanding securities as of the Effective Date, or any Family Member of such a Person, the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any company owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company), becomes the Beneficial Owner, directly or indirectly, of securities of the Company, representing 50% or more of the combined voting power of the Company’s then-outstanding securities;

 

(ii)     during any period of twenty-four consecutive months (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board, and any new director (other than (A) a director nominated by a Person who has entered into an agreement with the Company to effect a transaction described in clauses (i), (iii) or (iv) of this definition or (B) a director nominated by any Person (including the Company) who publicly announces an intention to take or to consider taking actions (including, but not limited to, an actual or threatened proxy contest) which if consummated would constitute a Change in Control) whose election by the Board or nomination for election by the Company’s shareholders was approved in advance by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

 

 

 

 

 

(iii)     the consummation of any transaction or series of transactions under which the Company is merged or consolidated with any other company, other than a merger or consolidation which results in the shareholders of the Company immediately prior thereto continuing to own (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 65% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

 

(iv)     the consummation of a complete liquidation of the Company or the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a liquidation of the Company into a wholly-owned subsidiary.

 

(h)    Code: The Internal Revenue Code of 1986, as amended, or any successor thereto.

 

(i)    Committee: The Compensation Committee of the Board (or a subcommittee thereof as provided under Section 4), or such other committee of the Board to which the Board has delegated power to act under or pursuant to the provisions of the Plan, or the full Board.

 

(j)     Company: Hovnanian Enterprises, Inc., a Delaware corporation, and any successors thereto.

 

(k)    Disability: Inability of a Participant to perform in all material respects his duties and responsibilities to the Company, or any Subsidiary of the Company, by reason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutive months or (ii) such shorter period as the Committee may reasonably determine in good faith. The Disability determination shall be in the sole discretion of the Committee and a Participant (or his representative) shall furnish the Committee with medical evidence documenting the Participant’s disability or infirmity which is satisfactory to the Committee.

 

(l)     Effective Date: January 24, 2020, the date the Plan was initially adopted by the Board, prior to the amendment and restatement thereof.

 

(m)  Fair Market Value: On a given date, the closing price of the Shares as reported on such date on the Composite Tape of the principal national securities exchange on which such Shares are listed or admitted to trading, or, if no Composite Tape exists for such national securities exchange on such date, then on the principal national securities exchange on which such Shares are listed or admitted to trading, or, if the Shares are not listed or admitted on a national securities exchange, the arithmetic mean of the per Share closing bid price and per Share closing asked price on such date as quoted on the National Association of Securities Dealers Automated Quotation System (or such market in which such prices are regularly quoted), or, if there is no market on which the Shares are regularly quoted, the Fair Market Value shall be the value established by the Committee in good faith. If no sale of Shares shall have been reported on such Composite Tape or such national securities exchange on such date or quoted on the National Association of Securities Dealer Automated Quotation System on such date, then the immediately preceding date on which sales of the Shares have been so reported or quoted shall be used.

 

(n)    Family Member:

 

(i)       any Person holding securities representing 10% or more of the combined voting power of the Company’s outstanding securities as of the Effective Date;

 

(ii)      any spouse of such a person;

 

(iii)     any descendant of such a person;

 

2

 

 

(iv)     any spouse of any descendant of such a person; or

 

(v)      any trust for the benefit of any of the aforementioned persons.

 

(o)    Good Reason: The occurrence of any of the following with respect to a Participant, 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.

 

(p)    ISO: An Option that is also an incentive stock option granted pursuant to Section 6(d) of the Plan.  

 

(q)   Minimum Vesting Condition: The requirement, with respect to any Award, that vesting of (or lapsing of restrictions on) such Award does not occur any more rapidly than on the first anniversary of the grant date for such Award (or the date of commencement of employment or service, in the case of a grant made in connection with a Participant’s commencement of employment or service), other than (i) in connection with a Change in Control or (ii) as a result of a Participant’s death, retirement, Disability or involuntary termination of employment without cause; provided, that such Minimum Vesting Condition will not be required on Awards covering, in the aggregate, a number of Shares not to exceed 5% of the Absolute Share Limit, as defined in Section 3.

 

(r)    Other Stock-Based Awards: Awards granted pursuant to Section 8 of the Plan.

 

(s)    Option: A stock option granted pursuant to Section 6 of the Plan.

 

(t)     Option Price: The purchase price per Share of an Option, as determined pursuant to Section 6(a) of the Plan.

 

(u)    Participant: An employee, director or consultant of the Company or any of its Affiliates who is selected by the Committee to participate in the Plan.

 

(v)    Performance-Based Awards: Certain Other Stock-Based Awards granted pursuant to Section 8(b) of the Plan.

 

(w)   Person: A “person”, as such term is used for purposes of Section 13(d) or 14(d) of the Act (or any successor section thereto).

 

(x)    Plan: The Amended and Restated 2020 Hovnanian Enterprises, Inc. Stock Incentive Plan.

 

(y)    Prior Plan: The 2012 Hovnanian Enterprises, Inc. Amended and Restated Stock Incentive Plan.

 

(z)    Prior Plan Award: An equity award granted under the Prior Plan which remained outstanding as of March 24, 2020 (the date this Plan was initially approved by the Company’s shareholders prior to the amendment and restatement thereof).

 

(aa)   Shares: Shares of common stock of the Company.

 

(bb)  Stock Appreciation Right: A stock appreciation right granted pursuant to Section 7 of the Plan.

 

(cc)   Subsidiary: A subsidiary corporation, as defined in Section 424(f) of the Code (or any successor section thereto).

 

3

 

 

	
			3.

				
			SHARES SUBJECT TO THE PLAN

			

 

Subject to Sections 4, 6(f) and 9 of the Plan, the total number of Shares which may be issued under the Plan pursuant to grants of ISOs or other Awards is 865,000 (the “Absolute Share Limit”). The Shares may consist, in whole or in part, of unissued Shares or treasury Shares. The issuance of Shares or payment of cash upon the exercise of an Award or in consideration of the cancellation or termination of an Award shall reduce the total number of Shares available under the Plan, as applicable. If Shares are not issued or are withheld from payment of an Award to satisfy tax obligations with respect to the Award, such Shares will not be added back to the aggregate number of Shares with respect to which Awards may be granted under the Plan, but rather will count against the aggregate number of Shares with respect to which Awards may be granted under the Plan. When an Option or Stock Appreciation Right is granted under the Plan, the number of Shares subject to the Option or Stock Appreciation Right will be counted against the aggregate number of Shares with respect to which Awards may be granted under the Plan as one Share for every Share subject to such Option or Stock Appreciation Right. No Shares will be added back to the Share reserve under the Plan with respect to exercised Stock Appreciation Rights granted under the Plan (regardless of whether the Stock Appreciation Rights are cash settled or stock settled). Additionally, no Shares will be added back to the Share reserve under the Plan in the event that (i) a portion of the Shares covered by an Option are tendered to the Company or “net settled” to cover payment of the Option exercise price or (ii) the Company utilizes the proceeds received upon Option exercise to repurchase Shares on the open market or otherwise. For the avoidance of doubt, any cash-based or other incentive awards granted outside of the Plan shall not count against the Absolute Share Limit, regardless of whether any such incentive awards may be denominated in or otherwise linked to the Company’s Shares. In the event that any Awards under the Plan or any Prior Plan Awards terminate or lapse for any reason without payment of consideration, the number of Shares subject to such terminated or lapsed Awards or Prior Plan Awards shall be available for future Award grants under the Plan. The maximum number of Shares subject to Awards granted during a calendar year to any non-employee director serving on the Board, taken together with any cash fees paid to such non-employee director during such calendar year, shall not exceed $600,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes).

 

	
			4.

				
			ADMINISTRATION

			

 

The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof consisting solely of at least two individuals who are each intended to qualify as “non-employee directors” within the meaning of Rule 16b-3 under the Act (or any successor rule thereto) and “independent directors” within the meaning of the applicable rules, if any, of any national securities exchange on which Shares are listed or admitted to trading; provided, however, that any action permitted to be taken by the Committee may be taken by the Board, in its discretion. The Committee shall have the full power and authority to establish the terms and conditions of any Award consistent with the provisions of the Plan and subject to the Minimum Vesting Condition. Following the grant of any Award, the Committee shall be authorized to waive any such terms and conditions associated with the Award at any time (including, without limitation, accelerating or waiving any vesting conditions) in connection with a Participant’s death or Disability. The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administrations of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to Participants and their beneficiaries or successors). Determinations made by the Committee under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated. Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its Affiliates or a company acquired by the Company or with which the Company combines. The number of Shares underlying such substitute awards shall be counted against the aggregate number of Shares available for Awards under the Plan. The Committee shall require payment of any minimum amount it may determine to be necessary to withhold for federal, state, local or other, taxes as a result of the exercise or vesting of an Award. Unless the Committee specifies otherwise, the Participant may elect to pay a portion or all of such minimum withholding taxes by (a) delivery in Shares or (b) having Shares withheld by the Company from any Shares that would have otherwise been received by the Participant. The number of Shares so delivered or withheld shall have an aggregate Fair Market Value sufficient to satisfy the applicable minimum withholding taxes. If the chief executive officer of the Company is a member of the Board, the Board by specific resolution may constitute such chief executive officer as a committee of one which shall have the authority to grant Awards of up to an aggregate of 40,000 Shares in each fiscal year to Participants who are not subject to the rules promulgated under Section 16 of the Act (or any successor section thereto); provided, however, that such chief executive officer shall notify the Committee of any such grants made pursuant to this Section 4.

 

4

 

 

	
			5.

				
			LIMITATIONS

			

 

No Award may be granted under the Plan after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date.

 

	
			6.

				
			TERMS AND CONDITIONS OF OPTIONS

			

 

Options granted under the Plan shall be, as determined by the Committee, non-qualified or incentive stock options for federal income tax purposes, as evidenced by the related Award agreements, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall determine:

 

(a)     Option Price. The Option Price per Share shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value of a Share on the date an Option is granted (other than in the case of Options granted in substitution of previously granted awards, as described in Section 4).

 

(b)    Exercisability. Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee, but in no event shall an Option be exercisable more than ten years after the date it is granted.

 

(c)     Exercise of Options. Except as otherwise provided in the Plan or in an Award agreement, an Option may be exercised for all, or from time to time any part, of the Shares for which it is then exercisable. For purposes of Section 6 of the Plan, the exercise date of an Option shall be the later of the date a notice of exercise is received by the Company and, if applicable, the date payment is received by the Company pursuant to clauses (i), (ii), (iii) or (iv) in the following sentence. The purchase price for the Shares as to which an Option is exercised shall be paid to the Company in full not later than at the time that the Shares being purchased are delivered to or at the direction of the Participant, in each case at the election of the Participant to the extent permitted by law and as designated by the Committee, (i) in cash, (ii) in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee; provided, that such Shares have been held by the Participant for no less than six months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying generally accepted accounting principles), (iii) partly in cash and partly in such Shares, (iv) through the delivery of irrevocable instruments to a broker to deliver promptly to the Company an amount equal to the aggregate Option Price for the Shares being purchased or (v) through net settlement in Shares. No Participant shall have any rights to dividends or other rights of a shareholder with respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan.

 

(d)     ISOs. The Committee may grant Options under the Plan that are intended to be ISOs. Such ISOs shall comply with the requirements of Section 422 of the Code (or any successor section thereto). No ISO may be granted to any Participant who at the time of such grant, owns more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, unless (i) the Option Price for such ISO is at least 110% of the Fair Market Value of a Share on the date the ISO is granted and (ii) the date on which such ISO terminates is a date not later than the day preceding the fifth anniversary of the date on which the ISO is granted. Any Participant who disposes of Shares acquired upon the exercise of an ISO either (i) within two years after the date of grant of such ISO or (ii) within one year after the transfer of such Shares to the Participant, shall notify the Company of such disposition and of the amount realized upon such disposition. All Options granted under the Plan are intended to be nonqualified stock options, unless the applicable Award agreement expressly states that the Option is intended to be an ISO. If an Option is intended to be an ISO, and if for any reason such Option (or portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a nonqualified stock option granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to nonqualified stock options. In no event shall any member of the Committee, the Company or any of its Affiliates (or their respective employees, officers or directors) have any liability to any Participant (or any other Person) due to the failure of an Option to qualify for any reason as an ISO.

 

5

 

 

(e)     Attestation. Wherever in this Plan or any agreement evidencing an Award a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and/or shall withhold such number of Shares from the Shares acquired by the exercise of the Option, as appropriate.

 

(f)     Repricing of Options. Notwithstanding any other provisions under the Plan, no action shall be taken under the Plan to (i) lower the exercise prices of any Company stock options after they are granted, (ii) exchange stock options for stock options with lower exercise prices or cancel an Option when the Option Price exceeds the Fair Market Value in exchange for cash or other Awards (other than pursuant to Section 9 hereof) or (iii) take any other action that is treated as a “repricing” of stock options under generally accepted accounting principles. Any such approved action shall be treated as a grant of a new Award to the extent required under Sections 422 or 424 of the Code (for stock options that are intended to retain their status as ISOs).

 

	
			7.

				
			TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

			

 

(a)     Grants. The Committee also may grant (i) a Stock Appreciation Right independent of an Option or (ii) a Stock Appreciation Right in connection with an Option, or a portion thereof. A Stock Appreciation Right granted pursuant to clause (ii) of the preceding sentence (A) may be granted at the time the related Option is granted or at any time prior to the exercise or cancellation of the related Option, (B) shall cover the same number of Shares covered by an Option (or such lesser number of Shares as the Committee may determine) and (C) shall be subject to the same terms and conditions as such Option except for such additional limitations as are contemplated by this Section 7 (or such additional limitations as may be included in an Award agreement).

 

(b)     Terms. The exercise price per Share of a Stock Appreciation Right shall be an amount determined by the Committee but in no event shall such amount be less than the greater of (i) the Fair Market Value of a Share on the date the Stock Appreciation Right is granted or, in the case of a Stock Appreciation Right granted in conjunction with an Option, or a portion thereof, the Option Price of the related Option and (ii) an amount permitted by applicable laws, rules, restated By-laws or policies of regulatory authorities or stock exchanges. Each Stock Appreciation Right granted independent of an Option shall entitle a Participant upon exercise to an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the exercise price per Share, times (ii) the number of Shares covered by the Stock Appreciation Right. Each Stock Appreciation Right granted in conjunction with an Option, or a portion thereof, shall entitle a Participant to surrender to the Company the unexercised Option, or any portion thereof, and to receive from the Company in exchange therefor an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the Option Price per Share, times (ii) the number of Shares covered by the Option, or portion thereof, which is surrendered. The date a notice of exercise is received by the Company shall be the exercise date. Payment shall be made in Shares or in cash, or partly in Shares and partly in cash (any such Shares valued at such Fair Market Value), all as shall be determined by the Committee. Stock Appreciation Rights may be exercised from time to time upon actual receipt by the Company of written notice of exercise stating the number of Shares with respect to which the Stock Appreciation Right is being exercised. No fractional Shares will be issued in payment for Stock Appreciation Rights, but instead cash will be paid for a fraction or, if the Committee should so determine, the number of Shares will be rounded downward to the next whole Share.

 

(c)     Limitations. The Committee may impose, in its discretion, such conditions upon the exercisability or transferability of Stock Appreciation Rights as it may deem fit.

 

(d)     Repricing of Stock Appreciation Rights. Notwithstanding any other provisions under the Plan, no action shall be taken under the Plan to (i) lower the exercise prices of any Company stock appreciation right after they are granted, (ii) exchange stock appreciation rights for stock appreciation rights with lower exercise prices or cancel a stock appreciation right when the exercise price exceeds the Fair Market Value in exchange for cash or other Awards (other than pursuant to Section 9 hereof) or (iii) take any other action that is treated as a “repricing” of stock appreciation rights under generally accepted accounting principles.

 

6

 

 

	
			8.

				
			OTHER STOCK-BASED AWARDS

			

 

(a)     Generally. The Committee, in its sole discretion, may grant or sell Awards of Shares, Awards of restricted Shares and Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares or a combination thereof) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Stock-Based Awards will be made, the number of Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares; and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof subject to Section 4 and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable).

 

(b)     Performance-Based Awards. Notwithstanding anything to the contrary herein, certain Other Stock-Based Awards granted under this Section 8 may be granted subject to performance-vesting conditions (“Performance-Based Awards”). The performance goals, which must be objective, shall be based upon one or more of the following criteria: (i) earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (ii) net income; (iii) operating income; (iv) earnings per Share; (v) book value per Share; (vi) return on shareholders’ equity; (vii) total shareholder return; (viii) expense management; (ix) return on investment before or after the cost of capital; (x) improvements in capital structure; (xi) profitability of an identifiable business unit or product; (xii) maintenance or improvement of profit margins; (xiii) stock price; (xiv) market share; (xv) revenues or sales; (xvi) costs; (xvii) cash flow; (xviii) working capital; (xix) changes in net assets (whether or not multiplied by a constant percentage intended to represent the cost of capital); and (xx) return on assets. The foregoing criteria may relate to the Company, one or more of its Affiliates or one or more of its divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee shall determine. In addition, the performance goals may be calculated without regard to extraordinary items. In any event, the performance goals shall be based on an objective formula or standard. The Committee shall determine whether, with respect to a performance period, the applicable performance goals have been met with respect to a given Participant. The amount of the Performance-Based Award actually paid to a given Participant may be less than the amount determined by the applicable performance goal formula, at the discretion of the Committee. The amount of the Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion after the end of such performance period; provided, however, that a Participant may, if and to the extent permitted by the Committee, elect to defer payment of a Performance-Based Award.

 

(c)     To the extent that any dividends or dividend equivalent payments may be paid with respect to any Other Stock-Based Award, no such dividend or dividend equivalent payments will be made unless and until the corresponding portion of the underlying Other Stock-Based Award becomes earned and vested in accordance with its terms.

 

	
			9.

				
			ADJUSTMENTS UPON CERTAIN EVENTS

			

 

Notwithstanding any other provisions in the Plan to the contrary, the following provisions shall apply to all Awards granted under the Plan:

 

(a)     Generally. In the event of any change in the outstanding Shares after the Effective Date by reason of any Share dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of Shares or other corporate exchange or change in capital structure, any distribution to shareholders other than regular cash dividends or any similar event, the Committee in its sole discretion and without liability to any person shall make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number or kind of Shares or other securities issued or reserved for issuance as set forth in Section 3 of the Plan or pursuant to outstanding Awards, (ii) the exercise price relating to outstanding Options or Stock Appreciation Rights, (iii) the maximum number or amount of Awards that may be granted to any Participant during a fiscal year and/or (iv) any other affected terms of such Awards.

 

7

 

 

(b)      General Treatment of Awards Following Change in Control. Without limiting the generality of Sections 9(a) and 9(c) and except as otherwise provided in an Award agreement, the following provisions shall apply to any outstanding Awards following a Change in Control:

 

(i)      In the event of a Participant’s involuntary termination of employment with the Company or a subsidiary thereof without “Cause” or for “Good Reason” within two years following a Change in Control, any service-based vesting conditions applicable to Awards held by such Participant shall be deemed fully satisfied and any outstanding Options held by such Participant shall become immediately exercisable.

 

(ii)    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, any service-based vesting conditions applicable to outstanding Awards shall be deemed fully satisfied and any outstanding Options shall become immediately exercisable.

 

(iii)    With respect to any outstanding Performance-Based Awards with uncompleted performance periods as of the Change in Control date, (A) any performance-based vesting conditions that are linked to the Company’s Share price shall be deemed to have been achieved at the Share price set forth in the definitive agreement governing the transaction constituting the Change in Control (or, in the absence of such agreement, the closing price per Share for the last trading day prior to the consummation of the Change in Control) and (B) any performance-based vesting conditions that are linked to performance criteria other than the Company’s Share price shall be deemed to have been achieved at “target” or “100% multiplier” level, as applicable.

 

(c)     Treatment of Awards Following Change in Control if Awards are Not Assumed. In the event that the Company or other surviving entity following a Change in Control will not be assuming outstanding Awards following the Change in Control, the vesting of outstanding Awards will be automatically accelerated and such Awards will then be canceled in exchange for a payment in cash or other property equal to the value thereof as determined by the Committee which, in the case of Options and Stock Appreciation Rights, shall equal the excess, if any, of value of the consideration to be paid in the Change in Control transaction to holders of the same number of Shares subject to such Options or Stock Appreciation Rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the Shares subject to such Options or Stock Appreciation Rights) over the aggregate exercise price of such Options or Stock Appreciation Rights.

 

	
			10.

				
			NO RIGHT TO EMPLOYMENT

			

 

The granting of an Award under the Plan shall impose no obligation on the Company or any Subsidiary to continue the employment of a Participant and shall not lessen or affect the Company’s or Subsidiary’s right to terminate the employment of such Participant.

 

	
			11.

				
			SUCCESSORS AND ASSIGNS

			

 

The Plan shall be binding on all successors and assigns of the Company and a Participant; including without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.

 

8

 

 

	
			12.

				
			NONTRANSFERABILITY OF AWARDS

			

 

Unless otherwise determined by the Committee, an Award shall not be transferable or assignable by the Participant otherwise than by will or by the laws of descent and distribution, and any Award transfers authorized by the Committee shall not be transferred for value. Notwithstanding the foregoing, a Participant may transfer an Option (other than an ISO) or a stock appreciation right in whole or in part by gift or domestic relations order to a family member of the Participant (a “Permitted Transferee”) and, following any such transfer such Option or stock appreciation right or portion thereof shall be exercisable only by the Permitted Transferee, provided that no such Option or stock appreciation right or portion thereof is transferred for value, and provided further that, following any such transfer, neither such Option or stock appreciation right or any portion thereof nor any right hereunder shall be transferable other than to the Participant or otherwise than by will or the laws of descent and distribution or be subject to attachment, execution or other similar process. For purposes of this Section 12, “family member” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets and any other entity in which these persons (or the Participant) own more than 50% of the voting interests. An Award exercisable after the death of a Participant may be exercised by the legatees, personal representatives or distributees of the Participant.

 

	
			13.

				
			AMENDMENTS OR TERMINATION

			

 

The Committee may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which, (a) without the approval of the shareholders of the Company, would (except as is provided in the Plan for adjustments in certain events), increase the total number of Shares reserved for the purposes of the Plan or change the maximum number of Shares for which Awards may be granted to any Participant or amend the repricing prohibitions under Sections 6(f) and 7(d) or (b) without the consent of a Participant, would materially impair any of the rights or obligations under any Award theretofore granted to such Participant under the Plan; provided, however, that the Committee may amend the Plan in such manner as it deems necessary to permit the granting of Awards meeting the requirements of the Code or other applicable laws. Notwithstanding anything to the contrary herein, the Committee may not amend, alter or discontinue the provisions relating to Section 9(b) or Section 9(c) of the Plan after the occurrence of a Change in Control.

 

Without limiting the generality of the foregoing, to the extent applicable, notwithstanding anything herein to the contrary, this Plan and Awards issued hereunder shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any amounts payable hereunder will be taxable to a Participant under Section 409A of the Code and related Department of Treasury guidance prior to payment to such Participant of such amount, the Company may (a) adopt such amendments to the Plan and Awards and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and Awards hereunder and/or (b) take such other actions as the Committee determines necessary or appropriate to avoid the imposition of an additional tax under Section 409A of the Code.

 

	
			14.

				
			INTERNATIONAL PARTICIPANTS

			

 

With respect to Participants who reside or work outside the United States of America, the Committee may, in its sole discretion, amend the terms of the Plan or Awards with respect to such Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other treatment for a Participant, the Company or an Affiliate.

 

	
			15.

				
			CHOICE OF LAW

			

 

The Plan shall be governed by and construed in accordance with the laws of the State of Delaware.

 

9

 

 

	
			16.

				
			EFFECTIVENESS OF THE PLAN

			

 

The Plan was initially effective as of the Effective Date, subject to the approval of the Company’s shareholders.

 

	
			17.

				
			SECTION 409A

			

 

Notwithstanding other provisions of the Plan or any Award agreements thereunder, no Award shall be granted, deferred, accelerated, extended, paid out or modified under this Plan in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon a Participant. In the event that it is reasonably determined by the Committee that, as a result of Section 409A of the Code, payments or deliveries of shares in respect of any Award under the Plan may not be made at the time contemplated by the terms of the Plan or the relevant Award agreement, as the case may be, without causing the Participant holding such Award to be subject to taxation under Section 409A of the Code, the Company will make such payment or delivery of shares on the first day that would not result in the Participant incurring any tax liability under Section 409A of the Code. In the case of a Participant who is a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code), payments and/or deliveries of shares in respect of any Award subject to Section 409A of the Code that are linked to the date of the Participant’s separation from service shall not be made prior to the date which is six (6) months after the date of such Participant’s separation from service from the Company and its affiliates, determined in accordance with Section 409A of the Code and the regulations promulgated thereunder. The Company shall use commercially reasonable efforts to implement the provisions of this Section 17 in good faith; provided that neither the Company, the Committee nor any of the Company’s employees, directors or representatives shall have any liability to Participants with respect to this Section 17.

 

	
			18.

				
			FORFEITURE/CLAWBACK

			

 

Any Awards granted under the Plan may be subject to reduction, cancellation, forfeiture or recoupment to the extent required by applicable law or listed company rules or to the extent otherwise provided in an Award agreement at the time of grant.

 

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