Exhibit 10.4

CALTON, INC. INCENTIVE COMPENSATION PLAN
 
1.    PURPOSE
 
       Pursuant to Calton’s (“Calton” or the “Company”) philosophy of providing
compensation to its employees which is competitive with the compensation offered
by similar companies operating in the same regions, the Company has established
the Calton, Inc. Incentive Compensation Plan (the “Plan”) to promote the
interests of Calton and its shareholders by enhancing the Company’s ability to
attract, retain and motivate highly qualified individuals to serve the Company
and any of its 80% or greater owned subsidiaries by providing such individuals
the opportunity to earn meaningful additional compensation based on the
operating results of the Company. This Plan is consistent with the Plan that has
been in effect and renewed since 1995.

2.    EFFECTIVE DATE AND TERM OF THE PLAN
 
       The Plan shall be effective as of December 1, 2004, subject to the
approval of the Company’s Board of Directors (the “Board”), and it shall
terminate on November 30, 2006 (the “Term”). The Board, in its sole discretion,
may renew, for up to two (2) fiscal years upon each such renewal, the Term of
the Plan and the provisions hereunder.

3.    PARTICIPATION 
 
       All officers of the Company and any of its 80% or greater owned
subsidiaries are eligible for participation in the Plan. In addition, up to 10%
of the Incentive Pool (as defined below) may be used for bonuses to other full
time employees of the Company and any of its 80% or greater owned subsidiaries
who are not otherwise eligible for commissions or bonuses. The employees that
are eligible to participate in the Plan (the “Eligible Employees”) shall be
determined each fiscal year by the Compensation Committee of the Board (the
“Committee”) based on the recommendations of the President and Chief Executive
Officer of the Company. The determination of Eligible Employees entitled to
participate in the Plan shall be made by the Committee no later than the end of
the first quarter of any fiscal year; provided, however, that an Eligible
Employee hired after the end of the first quarter of any fiscal year may be
considered by the Committee for participation in the Plan. Participation in the
Plan during any one fiscal year does not imply or guarantee participation in any
other fiscal year during the Term of the Plan.

4.    INCENTIVE COMPENSATION
 
       The available pool of incentive compensation (the “Incentive Pool”) under
this Plan during any particular fiscal year shall be equal to ten percent (10%)
of the Company’s pre-tax income as reported in the Company’s Form 10-K for a
particular fiscal year, subject to certain non-operating adjustments (the
“Adjustments”) that may be made to the Incentive Pool at the discretion of the
Committee to remove the effect of events or transactions not in the ordinary
course of the Company’s operations.

5.    DISTRIBUTION OF INCENTIVE COMPENSATION
 
       The President and Chief Executive Officer of the Company shall recommend
the dollar amount of an award from the Incentive Pool (the “Incentive Award’) to
be granted to each Eligible Employee participating in the Plan; provided,
however, that the Eligible Employee participating in the Plan may not receive an
Incentive Award during any particular fiscal year that exceeds the lesser of
twenty percent (20%) of the Incentive Pool or one hundred percent (100%) of the
Eligible Employee’s base salary compensation for the same fiscal year; provided,
however, that (i) such twenty percent (20%) limit shall not apply with respect
to a fiscal year if the total amount of the Incentive Pool for such fiscal year
is less than $200,000 and (ii) the Committee reserves the right to make special,
supplemental grants that exceed one hundred percent (100%) of an Eligible
Employee’s base salary for the same fiscal year.
 
 

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       The Committee shall then review and approve, with the power to alter,
modify or disapprove in whole or in part, the proposed Incentive Award for each
Eligible Employee participating in the Plan no later than February 15 of the
succeeding fiscal year, or the fifteenth day of the last month of the first
quarter of the succeeding fiscal year if the end of such preceding fiscal year
is other than November 30.       

An Eligible Employee selected for participation in the Plan who was hired by the
Company or one of its 80% or greater owned subsidiaries subsequent to the
commencement of the relevant fiscal year shall only be entitled to a pro-rata
portion of any Incentive Award. An Eligible Employee participating in the Plan
shall not be entitled to receive any Incentive Award until the grant of any such
Incentive Award has been approved by the Committee. Any Incentive Award shall be
distributed and paid to an Eligible Employee in accordance with the Company’s
ordinary payroll policies and procedures during the last pay period of February
of each fiscal year, or during the last pay period of the last month of the
first quarter of the fiscal year if the end of such preceding fiscal year is
other than November 30. All approved and paid Incentive Awards shall be subject
to all tax withholding and reporting requirements.

6.     TERMINATION

Upon the termination of employment of an Eligible Employee selected to
participate in the Plan for a particular fiscal year for any reason, the
Committee shall not grant, and the Eligible Employee shall not be entitled to,
an Incentive Award for the fiscal year in which termination occurred, unless
otherwise determined by the Board of Directors.

7.    AMENDMENT OR DISCONTINUANCE
 
       At any time during the Term of the Plan, the Committee may alter, amend,
suspend or discontinue the Plan.

8.    OTHER AGREEMENTS
 
       In the event that any term or condition of the Plan varies from, or is in
any way dissimilar to or in contrast with, any term, condition or provision of
any other agreement between the Company and an Eligible Employee, such as an
employment agreement, the relevant terms, conditions and/or provisions of such
other agreement will control.

9.    SUCCESSORS
 
       The provisions of the Plan shall be binding upon all successors of any
Eligible Employee granted an Incentive Award under the Plan, including, without
limitation, the estate of any such Eligible Employee and the executors,
administrators or trustees of such estate, and any receiver, trustee in
bankruptcy or representative of the creditors of any such Eligible Employee. Any
obligations with respect to Incentive Awards granted pursuant to the Plan shall
be expressly assumed by any successor in interest to the Company.

10.          GOVERNING LAW AND JURISDICTION OF NEW JERSEY COURTS
 
       The Plan and any agreement entered into in connection therewith shall be
construed and its provision enforced and administered in accordance with the
laws of the State of New Jersey.
 
 
 
 
BOD APPROVED: 11/02/2004