Exhibit 10(v)


 


K. HOVNANIAN ENTERPRISES, INC.


Plan Document


 


AMENDMENT AND RESTATEMENT


 


EFFECTIVE JANUARY 1, 2005


 

















 


K. HOVNANIAN ENTERPRISES,
INC.


PLAN DOCUMENT  continued...


 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Purpose

  	
   

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 1
  Definitions

  	
  1

  
	
   

  	
   

  
	
  Article 2
  Selection, Enrollment, Eligibility

  	
  9

  
	
   

  	
   

  
	
   

  	
  2.1

  	
  Selection
  by Committee

  	
  9

  
	
   

  	
  2.2

  	
  Enrollment
  Requirements

  	
  9

  
	
   

  	
  2.3

  	
  Eligibility;
  Commencement of Participation

  	
  10

  
	
   

  	
  2.4

  	
  Termination
  of Participation and/or Deferrals

  	
  10

  
	
   

  	
  2.5

  	
  Freeze
  of Participation in Option Swap/In-Kind Stock Bonus/Restricted Share Unit
  Deferral Features of Plan

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 3
  Deferral Commitments/Company Contributions/Crediting/Taxes

  	
  11

  
	
   

  	
   

  
	
   

  	
  3.1

  	
  Matched
  401(k) Continuation Deferral Amount

  	
  11

  
	
   

  	
  3.2

  	
  Annual
  Deferral Amount Deferrals

  	
  11

  
	
   

  	
  3.3

  	
  Annual
  Deferred Share Amount Deferrals

  	
  12

  
	
   

  	
  3.4

  	
  Election
  to Defer; Effect of Election Form

  	
  12

  
	
   

  	
  3.5

  	
  Withholding
  of Annual Deferral Amounts

  	
  16

  
	
   

  	
  3.6

  	
  Annual
  Company Contribution Amount

  	
  16

  
	
   

  	
  3.7

  	
  Rollover
  Amount

  	
  17

  
	
   

  	
  3.8

  	
  Option
  Swaps/In-Kind Stock Bonus/Restricted Share Unit Deferrals

  	
  18

  
	
   

  	
  3.9

  	
  Investment
  of Trust Assets

  	
  19

  
	
   

  	
  3.10

  	
  Sources
  of Stock

  	
  19

  
	
   

  	
  3.11

  	
  Vesting

  	
  19

  
	
   

  	
  3.12

  	
  Crediting/Debiting
  of Account Balances

  	
  20

  
	
   

  	
  3.13

  	
  FICA
  and Other Taxes

  	
  23

  
	
   

  	
  3.14

  	
  Distributions

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 4
  Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election

  	
  25

  
	
   

  	
   

  
	
   

  	
  4.1

  	
  Short-Term
  Payout

  	
  25

  
	
   

  	
  4.2

  	
  Other
  Benefits Take Precedence Over Short-Term Payout

  	
  29

  
	
   

  	
  4.3

  	
  Withdrawal
  Payout/Suspensions for Unforeseeable Financial Emergencies

  	
  29

  
	
   

  	
  4.4

  	
  Withdrawal
  Election (Not Available After December 31, 2004)

  	
  30

  
	
   

  	
  4.5

  	
  Application
  of Section 409A Distribution Election Transition Relief

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 5
  Retirement Benefit 

  	
  32

  



 


i

















 


K. HOVNANIAN ENTERPRISES,
INC.


PLAN DOCUMENT  continued...


 


	
   

  	
  5.1

  	
  Retirement
  Benefit

  	
  32

  
	
   

  	
  5.2

  	
  Payment
  of Retirement Benefit

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 6
  Pre-Retirement Survivor Benefit

  	
  35

  
	
   

  	
   

  
	
   

  	
  6.1

  	
  Pre-Retirement
  Survivor Benefit

  	
  35

  
	
   

  	
  6.2

  	
  Payment
  of Pre-Retirement Survivor Benefit

  	
  35

  
	
   

  	
  6.3

  	
  Death
  Prior to Completion of Termination Benefit or Retirement Benefit

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 7
  Termination Benefit

  	
  36

  
	
   

  	
   

  
	
   

  	
  7.1

  	
  Termination
  Benefit

  	
  36

  
	
   

  	
  7.2

  	
  Payment
  of Termination Benefit

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 8
  Beneficiary Designation

  	
  37

  
	
   

  	
   

  
	
   

  	
  8.1

  	
  Beneficiary

  	
  37

  
	
   

  	
  8.2

  	
  Beneficiary
  Designation; Change

  	
  37

  
	
   

  	
  8.3

  	
  Acceptance

  	
  37

  
	
   

  	
  8.4

  	
  No
  Beneficiary Designation

  	
  37

  
	
   

  	
  8.5

  	
  Doubt
  as to Beneficiary

  	
  37

  
	
   

  	
  8.6

  	
  Discharge
  of Obligations

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 9
  Termination, Amendment or Modification

  	
  38

  
	
   

  	
   

  
	
   

  	
  9.1

  	
  Termination

  	
  38

  
	
   

  	
  9.2

  	
  Amendment

  	
  39

  
	
   

  	
  9.3

  	
  Plan
  Agreement

  	
  39

  
	
   

  	
  9.4

  	
  Effect
  of Payment

  	
  39

  
	
   

  	
  9.5

  	
  Amendment
  to Ensure Proper Characterization of the Plan

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 10
  Administration

  	
  40

  
	
   

  	
   

  
	
   

  	
  10.1

  	
  Committee
  Duties

  	
  40

  
	
   

  	
  10.2

  	
  Agents

  	
  40

  
	
   

  	
  10.3

  	
  Binding
  Effect of Decisions

  	
  40

  
	
   

  	
  10.4

  	
  Indemnity
  of Committee

  	
  40

  
	
   

  	
  10.5

  	
  Employer
  Information

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 11
  Other Benefits and Agreements

  	
  41

  
	
   

  	
   

  
	
   

  	
  11.1

  	
  Coordination
  with Other Benefits

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 12
  Claims Procedures

  	
  41

  



 


ii

















 


K. HOVNANIAN ENTERPRISES,
INC.


PLAN DOCUMENT  continued...


 


	
   

  	
  12.1

  	
  Scope
  of Claims Procedures

  	
  41

  
	
   

  	
  12.2

  	
  Initial
  Claim

  	
  41

  
	
   

  	
  12.3

  	
  Review
  Procedures

  	
  42

  
	
   

  	
  12.4

  	
  Calculation
  of Time Periods

  	
  43

  
	
   

  	
  12.5

  	
  Legal
  Action

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 13
  Trust

  	
  43

  
	
   

  	
   

  
	
   

  	
  13.1

  	
  Establishment
  of the Trust

  	
  43

  
	
   

  	
  13.2

  	
  Interrelationship
  of the Plan and the Trust

  	
  43

  
	
   

  	
  13.3

  	
  Distributions
  From the Trust

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 14
  Miscellaneous

  	
  44

  
	
   

  	
   

  
	
   

  	
  14.1

  	
  Status
  of Plan

  	
  44

  
	
   

  	
  14.2

  	
  Unsecured
  General Creditor

  	
  44

  
	
   

  	
  14.3

  	
  Employer’s
  Liability

  	
  44

  
	
   

  	
  14.4

  	
  Nonassignability

  	
  44

  
	
   

  	
  14.5

  	
  Not
  a Contract of Employment

  	
  44

  
	
   

  	
  14.6

  	
  Furnishing
  Information

  	
  45

  
	
   

  	
  14.7

  	
  Terms

  	
  45

  
	
   

  	
  14.8

  	
  Captions

  	
  45

  
	
   

  	
  14.9

  	
  Governing
  Law

  	
  45

  
	
   

  	
  14.10

  	
  Notice

  	
  45

  
	
   

  	
  14.11

  	
  Successors

  	
  46

  
	
   

  	
  14.12

  	
  Spouse’s
  Interest

  	
  46

  
	
   

  	
  14.13

  	
  Validity

  	
  46

  
	
   

  	
  14.14

  	
  Incompetent

  	
  46

  
	
   

  	
  14.15

  	
  Court
  Order

  	
  46

  
	
   

  	
  14.16

  	
  Acceleration
  of Distribution

  	
  46

  
	
   

  	
  14.17

  	
  Delay
  in Payment

  	
  47

  
	
   

  	
  14.18

  	
  Prohibited
  Acceleration/Distribution Timing

  	
  47

  
	
   

  	
  14.19

  	
  Insurance

  	
  47

  
	
   

  	
  14.20

  	
  Aggregation
  of Employers

  	
  48

  
	
   

  	
  14.21

  	
  Aggregation
  of Plans

  	
  48

  
	
   

  	
  14.22

  	
  USERRA

  	
  48

  
	
   

  	
  14.23

  	
  Legal
  Fees to Enforce Rights After Change in Control

  	
  48

  
	
   

  	
   

  	
   

  
	
  Schedule
  A

  	
  50

  



 


iii

















 


K. HOVNANIAN ENTERPRISES,
INC.


PLAN DOCUMENT  continued...


 


K. HOVNANIAN ENTERPRISES, INC.


 


EXECUTIVE DEFERRED
COMPENSATION PLAN


 


 


Amendment and Restatement


 


Effective January 1,
2005


 


Purpose


 


The
purpose of this Plan is to provide specified benefits to a select group of
management and highly compensated Associates of Hovnanian Enterprises, Inc.,
a Delaware corporation, and its subsidiaries, if any, that sponsor this
Plan.  This Plan shall be unfunded for
tax purposes and for purposes of Title I of ERISA.  This
Plan, as amended and restated herein, is intended to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as
amended, as added by the American Jobs Creation Act of 2004 and the final
Treasury regulations or any other authoritative guidance issued thereunder (“Section 409A”).  In order to facilitate administration and
participant communications of certain changes to the Plan becoming effective January 1,
2005 due to Section 409A, certain documents associated with this Plan
refer to that portion of this Plan relating to deferrals and credits made on or
after January 1, 2005 as the “K. Hovnanian Enterprises, Inc. 2005
Executive Deferred Compensation Plan”. 
Notwithstanding any such references, it is intended that, effective January 1,
2005, the official Plan document governing the terms and conditions of all Plan
balances (whether attributable to deferrals/credits made before or after January 1,
2005) shall be this Plan document.


 


ARTICLE 1

Definitions


 


For
purposes of this Plan, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated meanings:


 


1.1           “Account
Balance” shall mean, with respect to a Participant, a credit on the records of
the Employer equal to the sum of (i) the Deferral Account balance, (ii) the
Company Contribution Account balance, (iii) the Deferred Share Deferral
Account balance, (iv) the Pre-2005 Deferral Account balance, (v) the
Pre-2005 Company Contribution Account balance, (vi) the Pre-2005 Deferred
Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral Account
balance, and (vii) the Pre-2005 Rollover Account balance.  The Account Balance, and each other specified
account balance, shall be a bookkeeping entry only and shall be utilized solely
as a device for the measurement and determination of the amounts to be paid to
a Participant, or his or her designated Beneficiary, pursuant to this Plan.


 


1














 


K.
HOVNANIAN ENTERPRISES, INC. 


PLAN
DOCUMENT continued...


 


1.2                                 “Annual
Company Contribution Amount” shall mean, for any one Plan Year, the amount
determined in accordance with Section 3.6 of this Plan, which shall
consist of Annual Company Matching Contribution Amounts described in Section 3.6(a) and
Annual Company Basic Contribution Amounts described in Section 3.6(b) to
the extent the Participant is entitled thereto.


 


1.3                                 “Annual
Deferral Amount” shall mean that portion of a Participant’s Base Annual Salary
and Bonus (including any Matched 401(k) Continuation Deferral Amount, as
elected by the Participant) that is deferred, in accordance with Article 3,
for any one Plan Year.  In the event of a
Participant’s Retirement, death or a Termination of Employment prior to the end
of a Plan Year, such year’s Annual Deferral Amount shall be the actual amount
withheld prior to such event.


 


1.4                                 “Annual
Deferred Share Amount” shall mean, with respect to a Participant for any one
Fiscal Year, the value of unvested Stock awarded under any Hovnanian
Enterprises, Inc. or Company stock incentive plan, deferred in accordance
with Section 3.3 of this Plan.


 


1.5                                 “Annual
Installment Method” shall be an annual installment payment over one of the
installment payout alternatives selected by the Participant in accordance with
this Plan, calculated as follows (subject to Section 3.14):  The Account Balance of the Participant shall
be calculated as of the close of business on the date of reference (or, if the
date of reference is not a business day, on the immediately following business
day), and shall be paid during the ninety (90) day period thereafter unless
otherwise provided herein.  The date of
reference with respect to the first annual installment payment shall be as
provided in Section 5.2 and the date of reference with respect to
subsequent annual installment payments shall be the anniversary of the first
annual installment payment.


 


The installment payout
alternatives available for election by the Participant with respect to his or
her Retirement Benefit is substantially equal annual installments between two (2) and
fifteen (15) years.  The annual
installment shall be calculated by multiplying the Account Balance by a
fraction, the numerator of which is one (1), and the denominator of which is
the remaining number of annual payments due the Participant.  By way of example, if a Participant elects a
five (5) year Annual Installment Method, the first payout shall be
one-fifth (1/5) of the Account Balance (or applicable portion thereof),
calculated as described in this definition. 
Within ninety (90) days after the anniversary of the first annual
installment payment, the payment shall be one-fourth (1/4) of the Account
Balance (or applicable portion thereof), calculated as described in this
definition.


 


1.6                                 “Associate”
shall mean a person who is an employee of any Employer.


 


1.7                                 “Base
Annual Salary” shall mean the annual cash compensation relating to services
performed during any calendar year, whether or not paid in such calendar 


 


2

















 


K.
HOVNANIAN ENTERPRISES, INC. 


PLAN
DOCUMENT continued...


 


year or included on the Federal
Income Tax Form W-2 for such calendar year, excluding bonuses,
commissions, overtime, fringe benefits, stock options, relocation expenses,
incentive payments, non-monetary awards, directors fees and other fees,
automobile and other allowances paid to a Participant for employment services
rendered (whether or not such allowances are included in the Associate’s gross
income).  Base Annual Salary shall be
calculated before reduction for compensation voluntarily deferred or
contributed by the Participant pursuant to all qualified or non-qualified plans
of any Employer and shall be calculated to include amounts not otherwise
included in the Participant’s gross income under Code Sections 125, 402(e)(3),
402(h), 403(b), or 132(f)(4) pursuant to plans established by any
Employer; provided, however, that all such amounts will be included in
compensation only to the extent that, had there been no such plan, the amount
would have been payable in cash to the Associate.


 


1.8                                 “Beneficiary”
shall mean one or more persons, trusts, estates or other entities, designated
in accordance with Article 8, that are entitled to receive benefits under
this Plan upon the death of a Participant.


 


1.9                                 “Beneficiary
Designation Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to
designate one or more Beneficiaries.


 


1.10                           “Board”
shall mean the board of directors of the Company.


 


1.11                           “Bonus”
shall mean any compensation, in addition to Base Annual Salary, relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such
calendar year, ordinarily payable in cash to a Participant as an Associate
under any Employer’s bonus and cash incentive plans, excluding any stock
awards.


 


1.12                           “Claimant”
shall have the meaning set forth in Section 12.2 of this Plan.


 


1.13                           “Code”
shall mean the Internal Revenue Code of 1986, as it may be amended from time to
time.


 


1.14                           “Committee”
shall mean the committee described in Article 10 of this Plan.


 


1.15                           “Company”
shall mean K. Hovnanian Enterprises, Inc., a California corporation, and
any successor to all or substantially all of the Company’s assets or business.


 


1.16                           “Company
Contribution Account” shall mean (i) the sum of the Participant’s Annual
Company Contribution Amounts credited on or after January 1, 2005, plus (ii) amounts
credited or debited in accordance with all the applicable crediting/debiting
provisions of this Plan that relate to the Participant’s Company Contribution
Account, less (iii) all distributions made to the Participant or his or 


 


3

















 


K.
HOVNANIAN ENTERPRISES, INC. 


PLAN
DOCUMENT continued...


 


her
Beneficiary pursuant to this Plan that relate to the Participant’s Company
Contribution Account.


 


1.17                           “Deduction
Limitation” shall mean the following described limitation on a benefit that may
otherwise be distributable pursuant to the provisions of this Plan.  Except as otherwise provided, this limitation
shall be applied to all distributions that are “subject to the Deduction
Limitation” under this Plan.   If an
Employer reasonably anticipates that, if any distribution hereunder were made
as scheduled, the Employer’s deduction with respect to that distribution would
not be permitted by reason of the limitation under Code Section 162(m),
then the Employer may defer that distribution, provided that all distributions
that could be deferred in accordance with this Section 1.17 are so
deferred, and provided further that the Employer treats payments to all
similarly situated Participants on a reasonably consistent basis.  Any amounts deferred pursuant to this
limitation shall continue to be credited/debited with additional amounts in
accordance with Section 3.12 below, even if such amount is being paid out
in installments. The amounts so deferred and amounts credited thereon shall be
distributed to the Participant or his or her Beneficiary (in the event of the
Participant’s death) during the Participant’s first taxable year in which the
Employer reasonably anticipates, or should reasonably anticipate, that if the
distribution is made during such year, the deduction of such payment will not
be limited by Code Section 162(m). 
To the extent required under Section 409A, where payment to a
Specified Employee is delayed pursuant to the preceding to a date on or after
the Specified Employee’s Separation from Service, the payment will be
considered a payment upon a Separation from Service for purposes of the rules under
Section 409A(a)(2)(B)(i) (generally requiring a six (6) month
delay on distributions upon a Specified Employee’s Separation from
Service).  In no event shall an election
be provided to the Participant with respect to the timing of the payment under
the preceding.  Notwithstanding the foregoing,
this Section 1.17 shall apply only to the extent permitted by Section 409A.


 


1.18                           “Deferral
Account” shall mean (i) the sum of all of a Participant’s Annual Deferral
Amounts deferred on or after January 1, 2005, plus (ii) amounts
credited or debited in accordance with all the applicable crediting/debiting
provisions of this Plan that relate to the Participant’s Deferral Account, less
(iii) all distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to his or her Deferral Account.


 


1.19                           “Deferred
Share Deferral Account” shall mean (i) the sum of the Participant’s Annual
Deferred Share Amount deferrals deferred on or after January 1, 2005, plus
(ii) amounts credited/debited in accordance with all the applicable
crediting/debiting provisions of this Plan that relate to the Participant’s
Deferred Share Deferral Account, less (iii) all distributions made to the
Participant or his or 


 


4

















 


K.
HOVNANIAN ENTERPRISES, INC. 


PLAN
DOCUMENT continued...


 


her Beneficiary pursuant to this Plan that relate to the Participant’s
Deferred Share Deferral Account.


 


1.20                           “Deferred
Share Award” shall mean unvested shares of Stock selected by the Committee in
its sole discretion and awarded (currently, or on a deferred basis) to the
Participant under any stock incentive plan of Hovnanian Enterprises, Inc.
or the Company.


 


1.21                           “Deferred
Shares” shall mean, for any Deferred Share Award, the amount of such Deferred
Share Award deferred in accordance with Section 3.3 of this Plan.


 


1.22                           “Election
Form” shall mean the form or forms established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to
make an election under the Plan (which form or forms may take the form of an
electronic transmission, if required or permitted by the Committee).


 


1.23                           “Employer(s)”
shall mean Hovnanian Enterprises, Inc. and/or any of its subsidiaries (now
in existence or hereafter formed or acquired) that have been selected by the
Board to participate in the Plan and have adopted the Plan as a sponsor.  For purposes of this Plan, “subsidiary” shall
include entities required to be aggregated pursuant to Section 14.20.


 


1.24                           “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as it may be
amended from time to time.


 


1.25                           “Fiscal
Year” shall mean a period beginning on November 1 of each calendar year
and continuing through October 31 of the following calendar year.


 


1.26                           “401(k) Plan”
shall mean the Hovnanian Savings and Investment Retirement Plan, as it may be amended
from time to time.


 


1.27                           “In-Kind
Stock Bonus Deferral Amount” shall mean, with respect to a Participant, the
value of that portion of a Participant’s Stock Bonus deferred prior to January 1,
2005 in accordance with Section 3.8(b) of this Plan.


 


1.28                           “Matched
401(k) Continuation Deferral Amount” shall mean, for any one Plan Year,
the amount determined in accordance with Section 3.1 of the Plan.


 


1.29                           “Option
Swap Amount” shall mean, with respect to a Participant, the value of any
unexercised option to purchase Stock under any Hovnanian Enterprises, Inc.
or Company stock incentive plan deferred prior to January 1, 2005 in
accordance with Section 3.8(a) of this Plan.


 


1.30                           “Participant”
shall mean any Associate (i) who is determined by the Committee to be a
member of a select group of management or highly compensated employees 


 


5

















 


K.
HOVNANIAN ENTERPRISES, INC. 


PLAN
DOCUMENT continued...


 


(within the meaning of ERISA), (ii) who
is selected to participate in the Plan, and (iii)(A) who elects to
participate in the Plan, (B) who signs a Plan Agreement, an Election Form and
a Beneficiary Designation Form, (C) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (D) who
commences participation in the Plan, and (E) whose Plan Agreement has not
terminated.  A spouse or former spouse of
a Participant shall not be treated as a Participant in the Plan or have an
Account Balance under the Plan, even if he or she has an interest in the
Participant’s benefits under the Plan as a result of applicable law or property
settlements resulting from legal separation or divorce.


 


1.31                           “Performance-Based
Compensation” shall mean that portion of a Participant’s Bonus, the amount of
which, or the entitlement to which, is contingent on the satisfaction of
pre-established organizational or individual performance criteria relating to a
performance period of at least twelve (12) consecutive months, and which
qualifies as “performance-based compensation” under Section 409A including
the requirement that the performance criteria be established in writing by not
later than (i) ninety (90) days after the commencement of the period of
service to which the criteria relates and (ii) the date the outcome ceases
to be substantially uncertain.


 


1.32                           “Plan”
shall mean the Company’s Executive Deferred Compensation Plan, which shall be
evidenced by this instrument and by each Plan Agreement, as they may be amended
from time to time.


 


1.33                           “Plan
Agreement” shall mean a written agreement (which may take the form of an
electronic transmission, if required or permitted by the Committee), as may be
amended from time to time, which is entered into by and between an Employer and
a Participant.  Each Plan Agreement
executed by a Participant and the Participant’s Employer shall provide for the
entire benefit to which such Participant is entitled under the Plan; should
there be more than one Plan Agreement, the Plan Agreement bearing the latest
date of acceptance by the Employer shall supersede all previous Plan Agreements
in their entirety and shall govern such entitlement.  The terms of any Plan Agreement may be
different for any Participant, and any Plan Agreement may provide additional
benefits not set forth in the Plan or limit the benefits otherwise provided
under the Plan; provided, however, that any such additional benefits or benefit
limitations must, unless otherwise provided by the Plan Agreement, be agreed to
by both the Employer and the Participant. 
In the Plan Agreement, each Participant shall acknowledge that he or she
accepts all of the terms of the Plan, including the discretionary authority of
the Committee as set forth in Article 10.


 


1.34                           “Plan
Year” shall mean a period beginning on January 1 of each calendar year and
continuing through December 31 of such calendar year.


 


6

















 


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1.35                           “Pre-Retirement
Survivor Benefit” shall mean the benefit set forth in Article 6 of this
Plan.


 


1.36                           “Pre-2005
Deferral Account” shall mean (i) the sum of all of a Participant’s Annual
Deferral Amounts deferred prior to January 1, 2005, plus (ii) amounts
credited or debited in accordance with all the applicable crediting/debiting
provisions of this Plan that relate to the Participant’s Pre-2005 Deferral
Account, less (iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to his or her Pre-2005
Deferral Account.


 


1.37                           “Pre-2005
Deferred Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral
Account” shall mean (i) the sum of the Participant’s Annual Deferred Share
Amounts, Option Swap Amounts, In-Kind Stock Bonus Deferral Amounts and
Restricted Share Unit deferrals deferred prior to January 1, 2005, plus (ii) amounts
credited/debited in accordance with all the applicable crediting/debiting
provisions of this Plan that relate to the Participant’s Pre-2005 Deferred
Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral Account,
less (iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Participant’s Pre-2005
Deferred Share/Option Swap/In-Kind Bonus/Restricted Share Unit Deferral Account.


 


1.38                           “Pre-2005
Company Contribution Account” shall mean (i) the sum of the Participant’s
Company Contribution Amounts credited prior to January 1, 2005, plus (ii) amounts
credited or debited in accordance with all of the applicable crediting/debiting
provisions of this Plan that relate to the Participant’s Pre-2005 Company
Contribution Account, less (iii) all distributions made to the Participant
or his or her Beneficiary pursuant to this Plan that relate to the Participant’s
Pre-2005 Company Contribution Account.


 


1.39                           “Pre-2005
Rollover Account” shall mean (i) the sum of the Participant’s Rollover
Amount credited prior to January 1, 2005, plus (ii) amounts credited
or debited in accordance with all of the applicable crediting/debiting
provisions of this Plan that relate to the Participant’s Pre-2005 Rollover
Account, less (iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to the Participant’s Pre-2005
Rollover Account.


 


1.40                           “Retirement”,
“Retire(s)” or “Retired” shall mean, with respect to an Associate, a Separation
from Service for any reason other than a leave of absence or death on or after
the earlier of the attainment of (a) age sixty-five (65) or (b) age
fifty-five (55) with ten (10) Years of Service.


 


1.41                           “Retirement
Benefit” shall mean the benefit set forth in Article 5.


 


1.42                           “Rollover
Amount” shall mean the amount determined in accordance with Section 3.7 of
this Plan.


 


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1.43                           “Section 409A”
shall mean Code Section 409A and the Treasury regulations or other
authoritative guidance issued thereunder. 
Whenever the terms “subject to Section 409A” or “to the extent
permitted by Section 409A” (or any such similar reference so as to
indicate that a Plan provision is subject to Section 409A) are used, such
terms shall be interpreted to mean that the applicable Plan provision shall be
effective only if and to the extent such provision would not trigger penalty
taxes or interest under Section 409A; except to the extent that Section 409A
requires that such terms be disregarded because they purport to nullify Plan
terms that are not in compliance with Section 409A.


 


1.44                           “Separation
from Service” shall mean the Participant’s separation from service within the
meaning of Section 409A, treating as
a Separation from Service an anticipated permanent reduction in the level of
bona fide services to twenty percent (20%) or less of the average level of bona
fide services performed over the immediately preceding thirty-six (36) month
period (or the full period during which the Participant performed services for
the Employer, if that is less than thirty-six (36) months).  For this purpose, upon a sale or other
disposition of the assets of the Employer to an unrelated purchaser, the
Employer reserves the right to the extent permitted by Section 409A to
determine whether Participants providing services to the purchaser after and in
connection with the purchase transaction have experienced a Separation from
Service.


 


1.45                           “Short-Term
Payout” shall mean the payout set forth in Section 4.1 of this Plan.


 


1.46                           “Specified
Employee” shall mean, with respect to an Employer corporation any stock of
which is publicly traded on an established securities market or otherwise, an
individual who, as of the date of his or her Separation from Service, is a Key
Employee, as currently defined in Code Section 416(j) (without regard
to paragraph (5) thereof) to mean, as of the Effective Date, an employee
of the corporation who, at any time during the twelve (12) month period ending
on a Specified Employee identification date, is (a) an officer of the
corporation having an annual compensation greater than one hundred thirty-five
thousand dollars ($135,000) for 2005 (indexed for inflation in future years), (b) a
five-percent (5%) owner of the corporation, or (c) a one-percent (1%)
owner of the corporation having an annual compensation from the corporation of
more than one hundred fifty thousand dollars ($150,000).


 


1.47                           “Stock”
shall mean Hovnanian Enterprises, Inc. Class A or Class B common
stock, $.01 par value, or any other equity securities of Hovnanian Enterprises, Inc.
or of the Company designated by the Committee.


 


1.48                           “Stock
Bonus” shall mean any compensation, in addition to Base Annual Salary and cash
Bonus, relating to services performed during any calendar year, whether 


 


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or not paid in such calendar
year, payable as a bonus in shares of Stock under any Hovnanian Enterprises, Inc.
or Company stock incentive plan.


 


1.49                           “Termination
Benefit” shall mean the benefit set forth in Article 7 of this Plan.


 


1.50                           “Termination
of Employment” shall mean the Separation from Service with all Employers,
voluntarily or involuntarily, for any reason other than Retirement, death or an
authorized leave of absence.


 


1.51                           “Trust”
shall mean the trust established pursuant to this Plan, as amended from time to
time.  The assets of the Trust shall be
the property of the Employer.


 


1.52                           “Unforeseeable
Financial Emergency” shall mean a severe financial hardship to the Participant
resulting from (i) an illness or accident of the Participant, the Participant’s
spouse, the Participant’s dependent (as defined in Code Section 152
without regard to Code Section 152(b)(1), (b)(2) and (d)(1)(B)) or,
effective August 17, 2006, the Participant’s beneficiary, (ii) a loss
of the Participant’s property due to casualty (including the need to rebuild a
home following damage not otherwise covered by insurance, for example, not as a
result of a natural disaster), or (iii) such other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond the
control of the Participant (e.g., imminent foreclosure or eviction from the
Participant’s primary residence, the need to pay for medical expenses,
including non-refundable deductibles and prescription drugs, the need to pay
funeral expenses of a spouse, dependent or, effective August 17, 2006,
beneficiary), all as determined in the sole discretion of the Committee (which
discretion the Committee is bound to exercise, however, within the limits of Section 409A).


 


1.53                           “Years
of Service” shall mean the total number of full years in which a Participant
has been employed by one or more Employers. 
For purposes of this definition, a year of employment shall be a 365 day
period (or 366 day period in the case of a leap year) that, for the first year
of employment, commences on the Associate’s date of hiring and that, for any
subsequent year, commences on an anniversary of that hiring date.  Any partial year of employment shall not be
counted.


 


ARTICLE 2

Selection, Enrollment, Eligibility


 


2.1                                 Selection
by Committee. 
Participation in the Plan shall be limited to a select group of
management and highly compensated Associates of the Employers, as determined by
the Committee in its sole discretion. 
From that group, the Committee shall select, in its sole discretion,
Associates to participate in the Plan.


 


2.2                                 Enrollment Requirements.  The Committee may require that as a condition
to participation, each selected Associate shall complete, execute and return to
the 


 


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Committee a Plan Agreement, an
Election Form and a Beneficiary Designation Form (or to enroll using
the Internet enrollment procedures established by the Committee, if any), all
within 30 days after he or she is selected to participate in the Plan.  In addition, the Committee shall establish
from time to time such other enrollment requirements as it determines in its
sole discretion are necessary.  Timely
enrollment in the Plan for the 2005 Plan Year is intended to constitute good
faith operational compliance with Section 409A regardless of whether such
enrollment is conducted prior to the date of adoption of this amended and
restated Plan.


 


2.3                                 Eligibility; Commencement of Participation.  Provided an Associate selected to participate
in the Plan has met all enrollment requirements set forth in this Plan and/or
required by the Committee, including returning all required documents to the
Committee (or enrolling using the Internet enrollment procedures established by
the Committee, if any) within the specified time period, that Associate shall
commence participation in the Plan on the first day of the month following the
month in which the Associate completes all enrollment requirements.  If an Associate fails to meet all such
requirements within the period required, in accordance with Section 2.2,
that Associate shall not be eligible to participate in the Plan until the first
day of the Plan Year (or Fiscal Year with respect to Annual Deferred Share
Amount deferrals) following the delivery to and acceptance by the Committee of
the required documents.  In addition,
notwithstanding anything in the Plan to the contrary, a Participant’s
eligibility to participate in the Annual Company Matching Contribution Amount
and/or Annual Company Basic Contribution Amount provisions of the Plan shall be
in the sole discretion of the Committee.


 


2.4                                 Termination of Participation and/or Deferrals.  If the Committee determines in good faith
that a Participant no longer qualifies as a member of a select group of
management or highly compensated Associates, as membership in such group is
determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA, the Committee shall have the right, in its sole discretion, to prevent
the Participant from making future deferral elections and/or from being
credited with any further Annual Company Matching Contribution Amounts or
Annual Company Basic Contribution Amounts.


 


2.5                                 Freeze of Participation in Option Swap/In-Kind Stock
Bonus/Restricted Share Unit Deferral Features of Plan.  Notwithstanding any other provision of this
Plan, no individual shall become a Participant in the Option Swap Amounts,
In-Kind Stock Bonus Deferral Amounts and/or Restricted Stock Unit deferral features
of this Plan after December 31, 2004.


 


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ARTICLE
3


Deferral
Commitments/Company Contributions/Crediting/Taxes


 


3.1                                Matched 401(k) Continuation Deferral Amount.  For each Plan Year,
any Participant whose Total Compensation (as defined in Section 3.6(a)) is
expected to exceed the limit imposed under Code Section 401(a)(17) on the
amount of compensation recognizable under the 401(k) Plan (i.e., $210,000 for
2005) and whom the Committee designates, in its sole discretion, as eligible to
make deferrals of Matched 401(k) Continuation Deferral Amounts under this Section
for the Plan Year, may elect to defer to this Plan as the Participant’s “Matched
401(k) Continuation Deferral Amount” six percent (6%) of that portion of the
Participant’s Base Annual Salary and/or Bonus exceeding the Code Section 401(a)(17)
limit (i.e., $210,000 for 2005).  
Notwithstanding anything in the Plan or the 401(k) Plan to the contrary,
the level of a Participant’s Matched 401(k) Contribution Deferral Amount, if
any, for a given Plan Year shall be fixed as of the applicable deferral
deadline described in Section 3.4(a)(i) for the Plan Year (i.e., generally the
last day of the Plan Year prior to the Plan Year in which the Matched 401(k) Contribution
Deferral Amount will be earned).


 


3.2                                Annual Deferral Amount Deferrals.


 


(a)                                  Minimum and Maximum Deferrals.  For each Plan Year, in addition to or instead
of any Matched 401(k) Continuation Deferral Amount which a Participant elects
to defer to the Plan for the Plan Year, a Participant may elect to defer, as
his or her Annual Deferral Amount, Base Annual Salary and Bonus in the
following minimum and maximum amounts/percentages:


 


	
  Deferral

  	
   

  	
  Minimum Amount

  	
   

  	
  Maximum Percentage

  	
   

  
	
  Base Annual
  Salary

  	
   

  	
  $

  	
  2,000

  	
   

  	
  75

  	
  %

  
	
  Bonus

  	
   

  	
  $

  	
  2,000

  	
   

  	
  100

  	
  %

  



 


Notwithstanding the foregoing,
the Committee may, in its sole discretion, establish for any Plan Year minimum(s)
and/or maximum(s) which differ from those set forth above.


 


Subject to Section 409A, if an
election is made for less than the stated minimum amounts (except for any
Matched 401(k) Continuation Deferral Amount), or if no election is made, the
amount deferred shall be zero.


 


(b)                                 Short Plan Year.  Notwithstanding the foregoing, if a
Participant first becomes a Participant after the first day of a Plan Year, the
minimum Base 


 


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Annual Salary deferral shall be
an amount equal to the minimum set forth above, multiplied by a fraction, the
numerator of which is the number of complete months remaining in the Plan Year
and the denominator of which is 12.  Also
notwithstanding the foregoing, if a Participant first becomes a Participant
after the first day of a Plan Year, the maximum Annual Deferral Amount, with
respect to Base Annual Salary and Bonus, shall be limited to the amount of
compensation not yet earned by the Participant as of the date the Participant
submits a Plan Agreement and Election Form to the Committee for
acceptance.  Finally, any Bonus deferral
election made by a new Participant after the beginning of the performance
period to which the Bonus relates shall be subject to the pro-ration provisions
of Section 3.4(a)(i) describing that portion of the Bonus amounts which are
considered as applying to services performed after the deferral election.


 


3.3                                Annual Deferred Share Amount Deferrals.  Subject to any terms and conditions imposed
by the Committee, Participants may elect to defer under the Plan Annual
Deferred Share Amounts.  A Participant
may elect to defer, as his or her Annual Deferred Share Amount, up to 100% of
his or her Deferred Share Award.  Annual
Deferred Share Amounts shall be credited (or continue to be credited) to the
Participant on the books of the Company or the Employer in connection with such
an election.  An Annual Deferred Share
Amount shall consist of all Deferred Shares deferred pursuant to this Section 3.3
in any one Fiscal Year.


 


3.4                                Election to Defer; Effect of Election Form.


 


(a)                                  Timing of Election.


 


(i)                                    Base Annual Salary and Bonus
Deferrals.  Except as provided below, a Participant shall make a deferral election
with respect to Base Annual Salary and/or Bonus amounts to be earned for
services performed during an upcoming twelve (12) month Plan Year.  To the extent permitted by the Committee, a
Participant may make a unique Base Annual Salary deferral election for the six (6)
month period beginning January 1 and ending June 30 of a given Plan Year and
for the six (6) month period beginning July 1 and ending December 31 of a given
Plan Year.  Except as provided below, any
Base Annual Salary and/or Bonus deferral election must be made during such
period as shall be established by the Committee which ends no later than the
last day of the Plan Year preceding the Plan Year in which the services giving
rise to the Base Annual Salary and/or Bonus amounts, as applicable, to be
deferred are to be performed.  For these
purposes, Base Annual Salary payable after the last day of the Plan Year for
services 


 


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performed during the final payroll period containing the last day of
the Plan Year shall be treated as Base Annual Salary for services performed in
the subsequent Plan Year.


 


Also, notwithstanding the preceding, if and
to the extent permitted by the Committee, a Participant may make an election to
defer that portion (if any) of his or her Bonus which qualifies as
Performance-Based Compensation no later than six (6) months prior to the last
day of the period over which the services giving rise to the Performance-Based
Compensation are performed, provided that the Participant performs services
continuously from the later of the beginning of the performance period or the
date the performance criteria are established through the date of the deferral
election, and provided further that in no event may such deferral election be
made with respect to any portion of the Performance-Based Compensation that has
become reasonably ascertainable prior to the making of the deferral election,
within the meaning of Section 409A.


 


In addition, notwithstanding the preceding,
but subject to Section 14.21, in the case of the first Plan Year in which an
Employee first becomes eligible to become a Participant (or again becomes
eligible after having been ineligible for at least twenty four (24) months), if
and to the extent permitted by the Committee, the individual may make an
election no later than thirty (30) days after the date he or she becomes
eligible to become a Participant to defer Base Salary and/or Bonus amounts (as
applicable) for services to be performed after the election.  For this purpose, an election will be deemed
to apply to Bonus amounts for services performed after the election if the
election applies to no more than an amount equal to the total Bonus for the
performance period multiplied by the ratio of the number of days remaining in
the performance period after the election over the total number of days in the
performance period.


 


In addition, notwithstanding
the preceding, to the extent permitted by the Committee and under Section 409A,
a Participant may make an election to defer Annual Deferral Amounts that relate
all or in part to services performed on or before December 31, 2005 no later
than the earlier of (i) March 15, 2005, or (ii) the date such Annual Deferral
Amounts are otherwise payable to the Participant.


 


Notwithstanding
the preceding, the Committee shall, in its discretion, be permitted to cause to
be paid to the Participant Base Annual Salary and/or Bonus amounts, as
applicable, rather than 


 


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being
deferred under the Plan if, under Section 409A, an earlier election was
required in order to properly defer tax with respect to such amount(s).  In addition, the Committee, in its
discretion, shall be permitted to allow a Participant to revoke or modify a
Base Annual Salary and/or Bonus deferral election he or she has made if Section
409A provides an opportunity to later modify a deferral election with respect
to such amount(s); provided, however, that no such revocation or modification
will be effective or available if and to the extent Section 409A provides that
such revocation or modification, or the availability thereof, prevents the
proper deferral of tax with respect to such amount(s).


 


(ii)                                 Annual Deferred Share Amount
Deferrals.  Except as otherwise provided below, a Participant shall make a deferral
election with respect to Deferred Shares scheduled to vest during an upcoming
twelve (12) month Fiscal Year. Such election must be made during such period as
shall be established by the Committee which ends no later than:


 


1.                                       October 31, 2005 (or any earlier deadline
established by the Committee) for any Deferred Shares scheduled to vest on or
after November 1, 2005 and prior to November 1, 2007;


 


2.                                       December 31, 2006 (or any earlier deadline
established by the Committee) for any Deferred Shares scheduled to vest on or
after November 1, 2007 and prior to November 1, 2008;


 


3.                                       December 31, 2007 (or any earlier deadline
established by the Committee) for any Deferred Shares scheduled to vest on or
after November 1, 2008 and prior to November 1, 2009;


 


4.                                       December 31, 2008 (or any earlier deadline
established by the Committee) for any Deferred Shares scheduled to vest on or
after November 1, 2009 and prior to November 1, 2010;


 


5.                                       the last day of the Fiscal Year which precedes
by at least twelve (12) months the Fiscal Year in which the Deferred Shares are
scheduled to vest for any Deferred Shares scheduled to vest on or after November
1, 2010 (e.g., an election to defer Deferred Shares scheduled to vest during
the Fiscal Year beginning November 1, 2010 and 


 


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ending October 31, 2011 must be made no later than October 31, 2009; an
election to defer Deferred Shares scheduled to vest during the Fiscal Year
beginning November 1, 2011 and ending October 31, 2012 must be made no later
than October 31, 2010; and so forth), or any earlier deadline established by
the Committee.


 


Notwithstanding anything above
or elsewhere in the Plan to the contrary, to the extent Section 409A requires
that an Annual Deferred Share Amount deferral election satisfy the rules under Section
409A applicable to changes to form and timing of distribution elections in
order for such Annual Deferred Share Amount deferral election to effectively
defer tax with respect to the Annual Deferred Share Amounts, the deferral
election shall not be accepted by the Committee to the extent it would violate
the rules under Section 409A applicable to changes to form and timing of
distribution elections.


 


Notwithstanding
the preceding, the Committee shall, in its discretion, be permitted to
disregard any Annual Deferred Share Amount deferral election if, under Section 409A,
an earlier election was required in order to properly defer tax with respect to
such Annual Deferred Share Amounts.  In
addition, the Committee, in its discretion, shall be permitted to allow a
Participant to revoke or modify an Annual Deferred Share Amount deferral
election he or she has made if Section 409A provides an opportunity to later
modify a deferral election with respect to such Annual Deferred Share Amounts;
provided, however, that no such revocation or modification will be effective or
available if and to the extent Section 409A provides that such revocation or
modification, or the availability thereof, prevents the proper deferral of tax
with respect to such Annual Deferred Share Amounts.


 


(b)                                 Manner of Election.


 


(i)                                    Base Annual Salary and Bonus
Deferrals.  For any Plan Year (or portion thereof), a deferral election for Base
Annual Salary and/or Bonus amount(s) earned during that Plan Year (or portion
thereof), and such other elections as the Committee deems necessary or
desirable under the Plan, shall be made by timely delivering to the Committee,
in accordance with its rules and procedures, by the deadline(s) set forth
above, an Election Form, along with such other elections as the Committee deems
necessary or desirable under the Plan. 
For these elections to be valid, the Election 


 


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Form(s)
must be completed and signed by the Participant, timely delivered to the
Committee (in accordance with Section 2.2 above) and accepted by the
Committee.  If no such Election Form(s) is
timely delivered for a Plan Year (or portion thereof), the Annual Deferral
Amount shall be zero (0) for that Plan Year (or portion thereof).


 


(ii)                                 Deferred Share Award Deferrals.  For any Fiscal Year, a deferral election for
Deferred Share Award amount(s) otherwise scheduled to vest during that Fiscal
Year, and such other elections as the Committee deems necessary or desirable
under the Plan, shall be made by timely delivering to the Committee, in
accordance with its rules and procedures, by the deadline(s) set forth above,
an Election Form, along with such other elections as the Committee deems
necessary or desirable under the Plan. 
For these elections to be valid, the Election Form(s) must be completed
and signed by the Participant, timely delivered to the Committee (in accordance
with Section 2.2 above) and accepted by the Committee.  If no such Election Form(s) is timely
delivered for a Fiscal Year, the Annual Deferred Share Amount shall be zero (0)
for that Fiscal Year.


 


(c)                                  Change in Election.  Once a
Plan Year (or Fiscal Year in respect of Annual Deferred Share Amount deferrals)
has commenced, a Participant may not elect to change his or her deferral
election that is in effect for that Plan Year (or Fiscal Year, if applicable),
except if and to the extent permitted by the Committee and made in accordance
with the provisions of Section 409A specifically relating to the change and/or
revocation of deferral elections (such as, for example, following an
Unforeseeable Financial Emergency).


 


3.5                                Withholding of Annual Deferral Amounts.  For each Plan Year,
the Base Annual Salary portion of the Annual Deferral Amount shall be withheld
from each regularly scheduled Base Annual Salary payroll in equal amounts,
except as otherwise provided in Section 3.6, as adjusted from time to time for
increases and decreases in Base Annual Salary. 
The Bonus portion of the Annual Deferral Amount shall be withheld at the
time the Bonus is or otherwise would be paid to the Participant, whether or not
this occurs during the Plan Year itself.


 


3.6                                Annual Company Contribution Amount.


 


(a)                                  Annual Company Matching Contribution Amount.  The Company may, but is not required to,
credit to the Company Contribution Account of one or more Participants an
amount (an “Annual Company Matching Contribution Amount”) for any one or more
Plan Years.  The Company 


 


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shall credit such Annual
Company Matching Contribution Amounts for such Participants, with such
frequency, and in such amounts, as the Company determines in its sole
discretion, including, for example, by crediting to the Participant’s Company
Contribution Account of an eligible Participant an amount equal to:  (i) the percentage match to which the
Participant is entitled under the 401(k) Plan based on the Participant’s years
of service determined under the 401(k) Plan (or any other percentage match rate
applicable to the Participant, as determined by the Committee in its discretion)
multiplied by (ii) the Participant’s Matched 401(k) Continuation Deferral
Amount hereunder.  The Annual Company
Matching Contribution Amounts, if any, shall be withheld by the Company pending
the Participant’s satisfaction of the 401(k) Plan’s vesting schedule, but such
withheld Annual Company Matching Contribution Amounts shall be made in full
(with or without credited interest in the sole and absolute discretion of the
Committee) upon satisfaction of the 401(k) Plan’s vesting schedule.


 


(b)                                 Annual Company Basic Contribution Amount.
The Company shall make a contribution to each Participant’s Company
Contribution Account, if the Participant is eligible to receive a basic profit
sharing contribution under the 401(k) Plan for the Plan Year, as soon as practicable
after the close of each Plan Year, in an amount (an “Annual Company Basic
Contribution Amount”) equal to (i) minus (ii), where (i) is equal to (A) the
percentage basic profit sharing contribution to which the Participant is
entitled under the 401(k) Plan, times (B) the Participant’s Total Compensation,
and (ii) is equal to the basic profit sharing contributions made for the Plan
Year to the 401(k) Plan on behalf of the Participant.  The Annual Company Basic Contribution Amounts
shall be withheld by the Company pending the Participant’s satisfaction of the
401(k) Plan vesting schedule, but such withheld Annual Company Basic
Contribution Amounts shall be made in full (with or without credited interest
in the sole and absolute discretion of the Committee) upon satisfaction of the
401(k) Plan’s vesting schedule.


 


3.7                                Rollover Amount.  If a Participant had an account balance in
the K. Hovnanian Enterprises, Inc. Executive Incentive and Excess Benefits Plan
(the “EIEBP”) as of January 1, 2000, the Participant’s EIEBP account balance,
as determined as of such date, was transferred to and added to the Participant’s
Account Balance under this Plan, if so elected by the Participant in accordance
with the terms of the Plan prior to this amendment and restatement, is
thereafter governed by the terms and conditions of this Plan, and is referred
to as the “Rollover Amount.”  In
addition, subject to the distribution restrictions of Section 409A beginning January
1, 2005, any distribution elections made by the Participant with respect to his
or her 


 


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account balance under the EIEBP shall apply to the Rollover Amount
under this Plan.


 


3.8                                Option Swaps/In-Kind Stock Bonus/Restricted Share
Unit Deferrals.


 


(a)                                  Option Swap Amounts.  Prior to January 1, 2005, subject to any
terms and conditions imposed by the Committee, a Participant who had been
specifically extended the right to be credited under the Plan with an Option
Swap Amount was entitled to elect to have credited to his or her Pre-2005
Deferred Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral
Account an Option Swap Amount.  An Option
Swap Amount election must have been made by a Participant with respect to
options to purchase Stock no earlier than the date on which the options became
exercisable, and must have been made, in accordance with such administrative
procedures established by the Committee in its discretion, prior to the date on
which the options were exercised.  An
Option Swap Amount was credited to the Participant’s Pre-2005 Deferred
Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral Account on
or soon after the date of such exercise in an amount equal to the difference
between the fair market value as of such date of the Stock subject to the
option for which an Option Swap Amount election had been made and the exercise
price of such option, as set forth in the Option Swap Agreement.


 


(b)                                 In-Kind Stock Bonus Deferral Amounts.  Prior to January 1, 2005, subject to any
terms and conditions imposed by the Committee, a Participant who had been
specifically extended the right under the Plan to defer an In-Kind Stock Bonus
Deferral Amount was entitled to elect to defer to his or her Pre-2005 Deferred
Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral Account an
In-Kind Stock Bonus Deferral Amount.  An
In-Kind Stock Bonus Deferral Amount election must have been made by a
Participant, in accordance with such administrative procedures established by
the Committee in its discretion and subject to the provisions of the In-Kind
Stock Bonus Deferral Agreement, prior to the date to Stock Bonus was due to be
paid to the Participant.  An In-Kind
Stock Bonus Deferral Amount was credited to the Participant’s Pre-2005 Deferred
Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral Account on
or soon after the date the Stock Bonus would, but for the election, have been
paid to the Participant.


 


(c)                                  Restricted Share Units.  Prior to January 1, 2005, subject to any
terms and conditions imposed by the Committee, a Participant who had been
specifically extended the right under the Plan to defer awards for the future
delivery of Stock which were granted under any stock incentive plan of 


 


18

















 


K.
HOVNANIAN ENTERPRISES, INC. 


PLAN
DOCUMENT continued...


 


Hovnanian Enterprises, Inc. or
the Company pursuant to “Restricted Share Unit Agreement” between Hovnanian
Enterprises, Inc. and the Participant, was entitled to elect to defer to his or
her Pre-2005 Deferral Share/Option Swap/In-Kind Stock Bonus/Restricted Share
Unit Deferral Account such awards (“Restricted Share Units”).  A Restricted Share Unit deferral election must
have been made by a Participant in accordance with such administrative
procedures established by the Committee in its discretion.


 


(d)                                 No Further Option Swaps/In-Kind Stock
Bonus/Restricted Share Unit Deferrals After December 31, 2004.  Notwithstanding any other provision of
this Plan, no new Participant deferrals shall be permitted under this Section 3.8
after December 31, 2004.


 


3.9                                Investment of Trust Assets.  The Trustee of the Trust shall be authorized,
upon written instructions received from the Committee or investment manager
appointed by the Committee, to invest and reinvest the assets of the Trust in
accordance with the applicable Trust agreement, including the disposition of
investment vehicles and reinvestment of the proceeds in one or more other
investment vehicles designated by the Committee.


 


3.10                          Sources of Stock. If
Stock is credited under the Plan on the books of the Company or the Employer,
or in the Trust in connection with a deferral of an Annual Deferred Share
Amount (or, prior to January 1, 2005, a deferral of an Option Swap Amount,
In-Kind Stock Bonus Amount or Restricted Share Unit deferral), the shares so
credited shall be deemed to have originated, and shall be counted against the
number of shares reserved, under such other plan, program or arrangement.


 


3.11                          Vesting. 
Unless otherwise provided in the Plan Agreement, a Participant shall at
all times be 100% vested in his or her Deferral Account, his or her Company
Contribution Account and his or her Deferred Share Deferral Account, his or her
Pre-2005 Deferral Account, his or her Pre-2005 Company Contribution Account,
his or her Pre-2005 Deferred Share/Option Swap/In-Kind Stock Bonus/Restricted
Share Unit Deferral Account and his or her Pre-2005 Rollover Account.  Notwithstanding anything to the contrary in
any Plan Agreement, in the event of a Change in Control, a Participant’s
Account Balance, to the extent not then vested, shall immediately become 100%
vested.  For purposes of this Section 3.11,
a “Change in Control” shall mean the first to occur of any of the following
events:


 


(a)                                  Any
“person” (as that term is used in Section 13 and 14(d)(2) of the Securities
Exchange Act of 1934 (“Exchange Act”)) becomes the beneficial owner (as that
term is used in Section 13(d) of the Exchange Act), directly or indirectly, of
50% or more of Hovnanian Enterprises, Inc. Stock entitled to vote in the
election of directors;


 


19














 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


(b)           During any period of not
more than two consecutive years, not including any period prior to the adoption
of this Plan, individuals who at the beginning of such period constitute the
board of directors of Hovnanian Enterprises, Inc., and any new director
(other than a director designated by a person who has entered into an agreement
with Hovnanian Enterprises, Inc. to effect a transaction described in
clause (a), (c), (d) or (e) of this Section 3.11) whose election
by the board of directors or nomination for election by Hovnanian Enterprises, Inc.’s
stockholders was approved by a vote of at least three-fourths (3/4ths) 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;


 


(c)           The shareholders of
Hovnanian Enterprises, Inc. approve any consolidation or merger of
Hovnanian Enterprises, Inc., other than a consolidation or merger of the
Company in which the holders of the Stock of Hovnanian Enterprises, Inc.
immediately prior to the consolidation or merger hold more than 50% of the
common stock of the surviving corporation immediately after the consolidation
or merger;


 


(d)           The shareholders of
Hovnanian Enterprises, Inc. approve any plan or proposal for the
liquidation or dissolution of Hovnanian Enterprises, Inc.; or


 


(e)           The shareholders of
Hovnanian Enterprises, Inc. approve the sale or transfer of all or
substantially all of the assets of Hovnanian Enterprises, Inc. to parties
that are not within a “controlled group of corporations” (as defined in Code Section 1563)
in which Hovnanian Enterprises, Inc. is a member.


 


3.12         Crediting/Debiting of Account Balances.  In accordance with, and subject to, the rules and
procedures that are established from time to time by the Committee, in its sole
discretion, amounts shall be credited or debited to a Participant’s Account
Balance in accordance with the following rules:


 


(a)           Sub-Accounts.  Separate sub-accounts shall be established and maintained with respect
to each Participant’s Account Balance (together, the “Sub-Accounts”), each
attributable to the portion of the Participant’s Account Balance representing
the same type of credited deferral or contribution.  That is, for each Plan Year, if and as
applicable, one Sub-Account shall be attributable to the portion of the
Participant’s Account Balance which represents Matched 401(k) Continuation
Deferral Amounts, another attributable to the portion of the Participant’s
Account Balance which represents other Base Annual Salary deferrals, another
attributable to the 


 


20

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


portion
of the Participant’s Account Balance which represents other Bonus deferrals,
another attributable to the portion of the Participant’s Account Balance which
represents Annual Company Matching Contribution Amounts, and another
attributable to the portion of the Participant’s Account Balance which
represents Annual Company Basic Contribution Amounts.  The preceding sub-accounts shall all apply to
deferrals made by the Participant on or after January 1, 2005.  In addition to
the preceding, and as described elsewhere in this document, separate
Sub-Accounts shall be maintained with respect to the Participant’s
Pre-2005 Deferral Account balance (if any), Pre-2005 Company Contribution
Account balance (if any), Pre-2005 Deferred Share/Option Swap/In-Kind Stock
Bonus/Restricted Share Unit Deferral Account balance (if any), and Pre-2005
Rollover Account balance (if any).


 


(b)           Election of Measurement Funds.  Except as otherwise provided
in Section 3.12(f) below, a Participant, in connection with his or
her initial deferral election in accordance with Section 3.4(a) above,
shall elect, on the Election Form(s), one or more Measurement Fund(s) (as
described in Section 3.12(d) below) to be used to determine the
additional amounts to be credited or debited to each of his or her Sub-Accounts
for the first business day of the Plan Year, continuing thereafter unless
changed in accordance with the next sentence. 
Commencing with the first business day of the Plan Year, and continuing
thereafter for the remainder of the Participant’s participation in the Plan,
the Participant may (but is not required to) elect daily, by submitting an
Election Form(s) to the Committee that is accepted by the Committee (which
submission may take the form of an electronic transmission, if required or
permitted by the Committee), to add or delete one or more Measurement Fund(s) to
be used to determine the additional amounts to be credited or debited to each
of his or her Sub-Accounts, or to change the portion of each of his or her
Sub-Accounts allocated to each previously or newly elected Measurement Fund. If
an election is made in accordance with the previous sentence, it shall apply to
the next business day and continue thereafter for the remainder of the Participant’s
participation in the Plan, unless changed in accordance with the previous
sentence.


 


(c)           Proportionate Allocation.  In making any election described in Section 3.12(b) above,
the Participant shall specify on the Election Form, in increments of one
percentage point (1%), the percentage of each of his or her Sub-Accounts to be
allocated to a Measurement Fund (as if the Participant was making an investment
in that Measurement Fund with that portion of his or her Account Balance).


 


21

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


(d)         Measurement Funds.  Except as otherwise provided in Section 3.12(f) below,
the Participant may elect one or more of the Measurement Funds set forth on Schedule
A (the “Measurement Funds”), for the purpose of crediting or debiting
additional amounts to his or her Account Balance.  The Committee may, in its sole discretion,
discontinue, substitute or add a Measurement Fund without the need to formally
amend this Plan.  Each such action will
take effect as of the first business day that follows by thirty (30) days the
day on which the Committee gives Participants advanced written notice of such
change.  If the Committee receives an
initial or revised Measurement Fund(s) election which it deems to be
incomplete, unclear or improper, the Participant’s Measurement Fund(s) election
then in effect shall remain in effect (or, in the case of a deficiency in an
initial Measurement Fund(s) election, the Participant shall be deemed to
have filed no deemed investment direction). 
If the Committee possesses (or is deemed to possess as provided in the
previous sentence) at any time directions as to Measurement Funds of less than
all of the Participant’s Account Balance, the Participant shall be deemed to
have directed that the undesignated portion of the Account Balance be deemed to
be invested in a money market, fixed income, or other or similar Measurement
Fund made available under the Plan as determined by the Committee in its discretion.  Each Participant hereunder, as a condition to
his or her participation hereunder, agrees to indemnify and hold harmless the
Committee, the Company and the Employer, and their agents and representatives,
from any losses or damages of any kind relating to (i) the Measurement
Funds made available hereunder and (ii) any discrepancy between the
credits and debits to the Participant’s Account Balance based on the
performance of the Measurement Funds and what the credits and debits otherwise
might be in the case of an actual investment in the Measurement Funds.


 


(e)         Crediting or Debiting Method.  The performance of each elected Measurement
Fund (either positive or negative) will be determined by the Committee, in its
reasonable discretion, based on the performance of the Measurement Funds
themselves.  A Participant’s Account
Balance shall be credited or debited on a daily basis based on the performance
of each Measurement Fund selected by the Participant, as determined by the
Committee in its sole discretion, as though (i) a Participant’s
Account Balance were invested in the Measurement Fund(s) selected by the
Participant, in the percentages elected by the Participant as of such date, at
the closing price on such date; (ii) the portion of the Annual Deferral
Amount that was actually deferred was invested in the Measurement Fund(s) selected
by the Participant, in the percentages elected by the Participant, no later
than the close of business on the third business day after the day on which
such amounts are actually deferred from the Participant’s Base Annual Salary
and/or Bonus through reductions in his or her payroll, at the closing price on
such date; and (iii) any distribution made 


 


22

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


to a Participant that decreases such
Participant’s Account Balance ceased being invested in the Measurement Fund(s),
in the percentages elected by the Participant, no earlier than three business
days prior to the distribution, at the closing price on such date.  The Participant’s Annual Company Contribution
Amount shall be credited to his or her Company Contribution Account for
purposes of this Section 3.12(e) as soon as administratively practicable
following the date such amount(s) were credited to the Participant’s
Account Balance.  The Participant’s
Annual Deferred Share Amount shall be credited to his or her Deferred Share
Deferral Account no later than the close of business on the third business day
after the day on which the Annual Deferred Share Amount was deferred.


 


(f)          No Actual Investment.  Notwithstanding any other provision of this
Plan that may be interpreted to the contrary, the Measurement Funds are to be
used for measurement purposes only, and a Participant’s election of any such
Measurement Fund, the allocation to his or her Account Balance thereto, the
calculation of additional amounts and the crediting or debiting of such amounts
to a Participant’s Account Balance shall  not be considered or
construed in any manner as an actual investment of his or her Account Balance
in any such Measurement Fund.  In the
event that the Company or the Trustee (as that term is defined in the Trust),
in its own discretion, decides to invest funds in any or all of the Measurement
Funds, no Participant shall have any rights in or to such investments
themselves.  Without limiting the
foregoing, a Participant’s Account Balance shall at all times be a bookkeeping
entry only and shall not represent any investment made on his or her behalf by
the Company, the Employer or the Trust; the Participant shall at all times
remain an unsecured creditor of the Employer.


 


(g)         Special Rule for Deferred
Share Deferral Account and Pre-2005 Deferred Share/Option Swap/In-Kind
Bonus/Restricted Share Unit Account.  Notwithstanding anything in this Plan to the
contrary, the Deferred Share Deferral
Account and the Pre-2005 Deferred
Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral Account
(if any) shall be allocated exclusively to the Stock fund and to no other
Measurement Fund.


 


(h)         Beneficiary Elections.  Each reference in this Section 3.12 to a
Participant shall be deemed to include, where applicable, a reference to a
Beneficiary.


 


3.13         FICA and Other Taxes.


 


(a)         Annual Deferral Amounts.  For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the Participant’s
Employer(s) shall withhold from that portion of the Participant’s Base
Annual Salary and Bonus that is not being deferred, in a manner determined by
the Employer(s), the Participant’s share of FICA and other 


 


23

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


employment taxes on such Annual Deferral
Amount, and any other applicable deductions. 
If necessary, the Committee may reduce the Annual Deferral Amount in
order to comply with this Section 3.13(a).


 


(b)         Annual Company Contribution
Amounts.  When an
Annual Company Contribution Amount is credited to a Participant’s Company
Contribution Account (or, if later, when a Participant becomes vested in his or
her Company Contribution Account), the Participant’s Employer(s) shall
withhold from the Participant’s Base Annual Salary and/or Bonus that is not
deferred, in a manner determined by the Employer(s), the Participant’s share of
FICA and other employment taxes, and any other applicable deductions.  If necessary, the Committee may reduce the
Participant’s Annual Company Contribution Amount in order to comply with this Section 3.13(b).


 


(c)         Annual Deferred Share Amounts.  For each Fiscal Year in which an Annual
Deferred Share Amount is being first withheld from a Participant, or at such
other time as FICA taxes are due, the Participant’s Employer(s) shall
withhold from that portion of the Participant’s Base Annual Salary, Bonus or
Deferred Share Award that is not being deferred, in a manner determined by the
Employer(s), the Participant’s share of FICA and other employment taxes on such
Annual Deferred Share Amount, and any other applicable deductions.  If necessary, the Committee may reduce the
Participant’s Annual Deferred Share Amount in order to comply with this Section 3.13(c).


 


3.14         Distributions.  Notwithstanding anything herein to the
contrary, the Employer, or the trustee of the Trust, shall withhold from any
payments made under this Plan all Federal, state and local income, employment
and other taxes required to be withheld by the Employer, or the trustee of the
Trust, in connection with such payments, and any indebtedness of the Participant
to the Employer as of the date(s) of distribution, in amounts and in a
manner to be determined in the reasonable discretion of the Employer and the
trustee of the Trust.  Any payment made
to a Participant or Beneficiary under this Plan shall be made on or during the
period after the payment date or event specified herein; provided, however,
such payment shall not be made later than the later of (i) the last day of
the calendar year in which the payment date or event occurs, or, if later, the
fifteenth (15th) day of the third (3rd) calendar month
following the date of the payment date or event, or (ii) the last day of
such other, extended period as the IRS may prescribe, such as in the case of
disputed payments or refusals to pay, provided the conditions of such extension
have been satisfied.  If a Participant
who experiences a Separation from Service is rehired, his or her distributions
hereunder may not be suspended.


 


24

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


ARTICLE 4

Short-Term Payout; Unforeseeable Financial Emergencies;

Withdrawal Election


 


4.1           Short-Term Payout.


 


(a)           Short-Term
Payouts of Annual Deferral Amounts and Vested Annual Company Contribution
Amounts.  At the same
time that a Participant elects to defer an Annual Deferral Amount for a given
Plan Year, the Participant may irrevocably elect to receive a future “Short-Term
Payout” from the Plan.  Except as
provided in Section 4.5, any Short-Term Payout election must be made by
the deadline(s) set forth in Section 3.4(a) for making a
deferral election in respect of the Base Annual Salary, Bonus and/or Matched
401(k) Continuation Deferral Amount to which it relates, and is
irrevocable after that deadline has passed. 
Subject to such requirements as may be imposed by the Committee, a
Participant may make separate Short-Term Payout elections in respect of the
Base Annual Salary, Bonus and/or Matched 401(k) Continuation Deferral Amount
portions of his or her Annual Deferral Amount for a given Plan Year, in respect
of any vested Annual Company Matching Contribution Amounts credited for the
Plan Year and in respect of any vested Annual Company Basic Contribution
Amounts credited for the Plan Year. 
Subject to the Deduction Limitation and to Section 3.14, the
Short-Term Payout shall be a lump sum payment in an amount that is equal to the
Annual Deferral Amount (or applicable portion thereof), vested Annual Company
Matching Contribution Amounts and/or vested Annual Company Basic Contribution
Amounts, as applicable, and amounts credited or debited thereto in the manner
provided in Section 3.12 above, determined at the time that the Short-Term
Payout becomes payable.  Subject to the
Deduction Limitation, Section 3.14, Section 4.5 and the other terms
and conditions of this Plan, each Short-Term Payout elected shall be paid out
during a period beginning one (1) day and ending sixty (60) days after the
last day of the Plan Year designated by the Participant that is at least two (2) Plan
Years after the Plan Year of the Annual Deferral Amount (or applicable portion
thereof), vested Annual Company Matching Contribution Amounts and/or vested
Annual Company Basic Contribution Amounts, as applicable, as specifically
elected by the Participant.  By way of
example, if a two (2) year Short-Term Payout is elected for 2009 Plan Year
Annual Deferral Amounts, vested Annual Company Matching Contribution Amounts
and/or vested Annual Company Basic Contribution Amounts, the two (2) year
Short-Term Payout would become payable during a sixty (60) day period
commencing January 1, 2012.


 


25

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


(b)           Short-Term Payouts of Annual
Deferred Share Amounts. 
At the same time that a Participant elects to defer an Annual Deferred
Share Amount for a given Fiscal Year, the Participant may irrevocably elect to
receive a future “Short-Term Payout” from the Plan.  Subject to the Deduction Limitation and to Section 3.14,
the Short-Term Payout shall be a lump sum payment in an amount that is equal to
the Annual Deferred Share Amount and amounts credited or debited thereto in the
manner provided in Section 3.12 above, determined at the time that the
Short-Term Payout becomes payable.  Subject
to the Deduction Limitation, to Section 3.14, to Section 4.5 and the
other terms and conditions of this Plan, each Short-Term Payout elected shall
be paid out as follows:


 


(i)            with respect to any
Short-Term Payout election in respect of deferrals of Deferred Shares otherwise
scheduled to vest prior to November 1, 2005, the Short-Term Payout elected
shall be paid during a period beginning one (1) day and ending sixty (60)
days after the last day of the Plan Year designated by the Participant that is at
least two (2) Plan Years after the Fiscal Year for which the Annual
Deferred Share Amount deferral is actually credited;


 


(ii)           with respect to any
Short-Term Payout elected in respect of deferrals of Deferred Shares otherwise
scheduled to vest on or after November 1, 2005 and prior to November 1,
2006 (“2006 Fiscal Year DSA Deferrals”), the Short-Term Payout elected shall be
paid during a period beginning one (1) day and ending sixty (60) days
after the last day of the Plan Year designated by the Participant that is no
earlier than 2008 (i.e., the earliest Short-Term Payout in respect of 2006
Fiscal Year DSA Deferrals would be during the sixty (60) day period commencing January 1,
2009);


 


(iii)          with respect to any
Short-Term Payout elected in respect of deferrals of Deferred Shares otherwise
scheduled to vest on or after November 1, 2006 and prior to November 1,
2007 (“2007 Fiscal Year DSA Deferrals”), the Short-Term Payout elected shall be
paid during a period beginning one (1) day and ending sixty (60) days
after the last day of the Plan Year designated by the Participant that is no
earlier than 2009 (i.e., the earliest Short-Term Payout in respect of 2007
Fiscal Year DSA Deferrals would be during the sixty (60) day period commencing January 1,
2010);


 


(iv)          with respect to any
Short-Term Payout elected in respect of deferrals of Deferred Shares otherwise
scheduled to vest on or after November 1, 2007 and prior to November 1,
2008 (“2008 Fiscal Year DSA Deferrals”), the Short-Term Payout elected shall be
paid 


 


26

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


during a period beginning one (1) day
and ending sixty (60) days after the last day of the Plan Year designated by
the Participant that is no earlier than 2010 (i.e., the earliest Short-Term
Payout in respect of 2008 Fiscal Year DSA Deferrals would be during the sixty
(60) day period commencing January 1, 2011);


 


(v)           with respect to any
Short-Term Payout elected in respect of deferrals of Deferred Shares otherwise
scheduled to vest on or after November 1, 2008 and prior to November 1,
2009 (“2009 Fiscal Year DSA Deferrals”), the Short-Term Payout elected shall be
paid during a period beginning one (1) day and ending sixty (60) days
after the last day of the Plan Year designated by the Participant that is no
earlier than 2011 (i.e., the earliest Short-Term Payout in respect of 2009
Fiscal Year DSA Deferrals would be during the sixty (60) day period commencing January 1,
2012);


 


(vi)          with respect to any
Short-Term Payout elected in respect of deferrals of Deferred Shares otherwise
scheduled to vest on or after November 1, 2009 and prior to November 1,
2010 (“2010 Fiscal Year DSA Deferrals”), the Short-Term Payout elected shall be
paid during a period beginning one (1) day and ending sixty (60) days
after the last day of the Plan Year designated by the Participant that is no
earlier than 2012 (i.e., the earliest Short-Term Payout in respect of 2010
Fiscal Year DSA Deferrals would be during the sixty (60) day period commencing January 1,
2013);


 


(vii)         with respect to any
Short-Term Payout elected in respect of deferrals of Deferred Shares pursuant
to a deferral election made after December 31, 2008 (i.e., with respect to
any deferral of Deferred Shares otherwise scheduled to vest on or after November 1,
2010 (“2011 and Later Fiscal Year DSA Deferrals”)), the Short-Term Payout
elected shall be paid during a period beginning one (1) and ending sixty
(60) days after the last day of the Plan Year designated by the Participant
that results in the 2011 and Later Fiscal Year DSA Deferral remaining in the
Plan for at least five (5) full calendar years (i.e., the earliest
Short-Term Payout in respect of deferrals of Deferred Shares otherwise
scheduled to vest on November 1, 2010 would be during the sixty (60) day
period commencing January 1, 2016).


 


Notwithstanding anything above or elsewhere
in the Plan to the contrary, to the extent Section 409A requires that an
Annual Deferred Share Amount deferral election satisfy the rules under Section 409A
applicable to changes to form and timing of distribution elections in order for
such 


 


27

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


Annual Deferred Share Amount deferral
election to effectively defer tax with respect to the Annual Deferred Share
Amounts, that portion of the Participant’s Deferred Share Deferral Account
attributable to such Annual Deferred Share Amount deferral election shall be
distributable as a Short-Term Payout solely at such time(s) and in such
manner as the Short-Term Payout does not violate the rules under Section 409A
applicable to changes to form and timing of distribution elections.


 


(d)           Short-Term Payouts of Pre-2005
Deferrals of Option Swap Amounts and/or In-Kind Bonus Deferral Amounts.  Prior to January 1,
2005, at the same time that a Participant elected to defer Option Swap Amounts
and/or In-Kind Bonus Deferral Amounts for a given Plan Year, the Participant
could have irrevocably elected to receive a future “Short-Term Payout” from the
Plan.  Subject to the Deduction
Limitation and to Section 3.14, the Short-Term Payout shall be a lump sum
payment in an amount that is equal to the Option Swap Amounts and/or In-Kind
Bonus Deferral Amounts deferred and amounts credited or debited thereto in the
manner provided in Section 3.12 above, determined at the time that the
Short-Term Payout becomes payable. 
Subject to the Deduction Limitation, to Section 3.14, to Section 4.5
and the other terms and conditions of this Plan, the Short-Term Payout elected
shall be paid during a period beginning one (1) day and ending sixty (60)
days after the last day of the Plan Year designated by the Participant that is
at least two (2) Plan Years after the Plan Year for which the Option Swap
Amounts and/or In-Kind Bonus Deferral Amounts were actually credited.


 


(e)           Short-Term Payouts of Pre-2005
Deferrals of Restricted Share Units. 
Prior to January 1, 2005, at the same time that a Participant
elected to defer an Restricted Share Units for a given Fiscal Year, the
Participant could have irrevocably elected to receive a future “Short-Term
Payout” from the Plan.  Subject to the
Deduction Limitation and to Section 3.14, the Short-Term Payout shall be a
lump sum payment in an amount that is equal to the Restricted Share Units
deferred and amounts credited or debited thereto in the manner provided in Section 3.12
above, determined at the time that the Short-Term Payout becomes payable.  Subject to the Deduction Limitation, to Section 3.14,
to Section 4.5 and the other terms and conditions of this Plan, the
Short-Term Payout elected shall be paid during a period beginning one (1) day
and ending sixty (60) days after the last day of the Plan Year designated by
the Participant that is at least two (2) Plan Years after the Fiscal Year
for which the Restricted Share Unit deferral was actually credited.


 


(f)            Postponements of Previously
Elected Short-Term Payouts.  Notwithstanding the preceding paragraphs or
any other provision of this 


 


28

















 


K. HOVNANIAN ENTERPRISES,
INC. 


PLAN DOCUMENT continued...


 


Plan that may be construed to the contrary, a
Participant who is in active service with the Employer may, with respect to
each Short-Term Payout, on a form determined by the Committee, make one (1) or
more additional deferral elections (a “Subsequent Election”) to defer payment
of all or a portion of such Short-Term Payout to a Plan Year subsequent to the
Plan Year originally (or subsequently) elected; provided, however, that, except
as provided in Section 4.5, such Subsequent Election will be null and void
unless accepted by the Committee no later than one (1) year prior to the
first day of the Plan Year in which, but for the Subsequent Election, such
Short-Term Payout would be paid, and such Subsequent Election provides for the
deferral of at least five (5) Plan Years following the Plan Year in which
the Short-Term Payout, but for the Subsequent Election, would be paid.  By way of example,
if a two (2) year Short-Term Payout is elected for 2009 Plan Year Annual
Deferral Amounts and/or vested Annual Company Contribution Amounts (resulting,
as described above, in a Short-Term Payout payable during the sixty (60) day
period commencing January 1, 2012), 
the Participant shall be entitled to make a Subsequent Election prior to
the time designated by the Committee (e.g., September 2010 or any such
other time designated by the Committee which is no later than December 31,
2010) to have the Short-Term Payout instead paid during the sixty (60) day
period commencing January 1, 2017 (or January 1 of any later Plan
Year).


 


4.2           Other Benefits Take Precedence Over Short-Term Payout.  Should an event occur that triggers a benefit
under Article 5, 6 or 7, all Account Balances (or portions thereof) that
are subject to Short-Term Payout elections under Section 4.1 shall not be
paid in accordance with Section 4.1 but shall be paid in accordance with
the other applicable Article.


 


4.3           Withdrawal Payout/Suspensions for Unforeseeable
Financial Emergencies.  If a
Participant experiences an Unforeseeable Financial Emergency, the Participant
may petition the Committee to (i) halt any deferrals required to be made
by the Participant and (ii) receive a partial or full payout from the
Plan.  The payout shall not exceed the
lesser of the Participant’s Account Balance, or the amount reasonably needed to
satisfy the Unforeseeable Financial Emergency plus amounts necessary to pay
taxes reasonably anticipated as a result of the payouts, after taking into
account the extent to which the Unforeseeable Financial Emergency is or may be
relieved through reimbursement or compensation by insurance or otherwise, by
liquidation of the Participant’s assets (to the extent the
liquidation of assets would not itself cause severe financial hardship) or by
termination of deferrals hereunder.  If,
subject to the sole discretion of the Committee (which discretion the Committee
is bound to exercise, however, within the limitations of Section 409A),
the petition for a termination of deferrals and payout is approved, cessation
shall take effect upon the date of approval and any payout shall be made 


 


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within
sixty (60) days of the date of approval. 
The payment of any amount under this Section 4.3 shall be subject
to Section 3.14, but shall not be subject to the Deduction
Limitation.  Notwithstanding anything in
this Plan to the contrary, any distribution from the Deferred Share Deferral
Account under this Section 4.3 shall be in the form of Stock.


 


4.4           Withdrawal Election (Not
Available After December 31, 2004).  Prior to January 1, 2005, a Participant
(or, after a Participant’s death, his or her Beneficiary) could have elected in
accordance with the terms, conditions and procedures of this Section 4.4
in effect prior to January 1, 2005 to withdraw all of his or her Account
Balance, calculated as if there had occurred a Termination of Employment as of
the day of the election, less a withdrawal penalty equal to 10% of such amount
(the net amount shall be referred to as the “Withdrawal Amount”).  Effective January 1, 2005, no such
elections are permitted under the Plan.


 


4.5           Application of Section 409A
Distribution Election Transition Relief.  Notwithstanding anything in the Plan to the
contrary, in accordance with applicable Section 409A transition relief,
including the transition relief prescribed under IRS Notice 2007-86, 2007 IRB
990, 10/22/2007, Participants are permitted to make new payment elections under
the Plan on or before December 31, 2008 in accordance with such rules and
procedures as are established by the Committee without regard to the otherwise
applicable Section 409A payment election requirements reflected in this
amended and restated Plan document; provided that:


 


(a)           Any new payment elections made on or after January 1,
2006 and on or before December 31, 2006 may apply only to amounts that
would not otherwise be payable in 2006 and may not cause an amount to be paid
in 2006 that would not otherwise be payable in 2006;


 


(b)           Any new payment elections made on or after January 1,
2007 and on or before December 31, 2007 may apply only to amounts that
would not otherwise be payable in 2007 and may not cause an amount to be paid
in 2007 that would not otherwise be payable in 2007; and


 


(c)           Any new payment elections made on or after January 1,
2008 and on or before December 31, 2008 may apply only to amounts that
would not otherwise be payable in 2008 and may not cause an amount to be paid
in 2008 that would not otherwise be payable in 2008.


 


For example, notwithstanding anything in the
Plan to the contrary, in accordance with the applicable Section 409A
transition relief for new payment elections, the Committee permitted each
Participant to elect on or before December 31, 2007 to receive a lump sum
payment, to be paid during January 2008, of one or more of the following:


 


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HOVNANIAN ENTERPRISES, INC. 


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DOCUMENT continued...


 


(i)            his
or her entire Deferral Account balance and Company Contribution Account balance
(i.e., not including amounts attributable to deferrals/credits made prior to January 1,
2005) not otherwise payable during 2007;


 


(ii)           his
or her entire Deferred Share Account balance (i.e., not including amounts
attributable to deferrals made prior to January 1, 2005) not otherwise
payable during 2007;


 


(iii)          his
or her entire Pre-2005 Deferral Account balance, Pre-2005 Company Contribution
Account balance and Pre-2005 Rollover Account balance not otherwise payable
during 2007; and/or


 


(iv)          his
or her entire Pre-2005 Deferred Share/Option Swap/In-Kind Stock
Bonus/Restricted Share Unit Deferral Account balance not otherwise payable
during 2007.


 


As another example,
notwithstanding anything in the Plan to the contrary, in accordance with the
applicable Section 409A transition relief for new payment elections, the
Committee shall permit each Participant to elect on or before December 31,
2008 to receive a lump sum payment, to be paid generally during January 2009,
of one or more of the following:


 


(i)            his
or her entire Deferral Account balance and Company Contribution Account balance
not otherwise payable during 2008;


 


(ii)           his
or her entire Deferred Share Account balance and entire Pre-2005 Deferred
Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral Account
balance not otherwise payable during 2008;


 


(iii)          that
portion of his or her Deferral Account balance attributable to Bonus deferrals
to be deferred in early 2009 pursuant to the Participant’s Bonus deferral
election made during October 2007; and/or


 


(iv)          that
portion of his or her Deferred Share Award Account balance attributable to 2009
Deferred Share Award share deferrals deferred pursuant to the Participant’s
Deferred Share Award deferral election made during October 2007.


 


Furthermore, to the extent
permitted by the Committee and Section 409A transition relief, each
Participant may elect on or before December 31, 2008 to change his or her
payment election(s) in respect of any other portion of the Participant’s
Account Balance not otherwise payable during 2008.


 


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ARTICLE 5

Retirement Benefit


 


5.1           Retirement Benefit. 
Subject to the Deduction Limitation and to Section 3.14, and any
other conditions imposed by the Committee, a Participant who Retires shall
receive, as a Retirement Benefit, his or her vested Account Balance (or
applicable portion thereof).


 


5.2           Payment of Retirement Benefit.


 


(a)           Retirement Benefit Payments of Annual Deferral
Amounts and Vested Annual Company Contribution Amounts.  At the same time that a Participant elects
to defer an Annual Deferral Amount for a given Plan Year, the Participant may
elect to receive that portion of his or her Retirement Benefit attributable to
the Annual Deferral Amount (and/or that portion of his or her Retirement
Benefit attributable to any vested Annual Company Matching Contribution Amounts
credited for the Plan Year and/or that portion of his or her Retirement Benefit
attributable to any vested Annual Company Basic Contribution Amounts credited
for the Plan Year) in a lump sum, or pursuant to one of the available Annual
Installment Methods.  At such time, the
Participant may also elect to have any such lump sum payment paid, or
installments commence, during the sixty (60) day period immediately following
the close of the calendar quarter in which the Participant Retires or,
alternatively, during the sixty (60) day period immediately following the close
of the Plan Year in which the Participant Retires; provided, however, that, to
the extent required under Section 409A, Retirement Benefit distributions
to an individual who is a Specified Employee as of the date of his or her
Separation from Service shall commence no earlier than six (6) months
after the date or his or her Retirement (or, if earlier, his or her
death).   If a Participant does not make
any election with respect to the form of distribution of any portion of his or
her Retirement Benefit, such portion shall be distributable in the form of a
lump sum. In addition, subject to the preceding limitation on Retirement
Benefit distributions to Specified Employees, if a Participant does not make
any election with respect to when any portion of his or her Retirement Benefit
shall be made or begin, such portion shall be made or begin during the sixty
(60) day period immediately following the close of the calendar quarter in
which the Participant Retires. Any payment made shall be subject to Section 3.14
and the Deduction Limitation.   Subject
to such requirements as may be imposed by the Committee, a Participant may make
separate Retirement Benefit distribution elections in respect of the Base
Annual Salary, Bonus and/or Matched 401(k) Continuation Deferral Amount
portions of his or her Annual Deferral Amount for a given Plan Year, in respect
of any vested Annual Company Matching Contribution 


 


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Amounts credited for the Plan
Year and in respect of any vested Annual Company Basic Contribution Amount
credited for the Plan Year.  The
preceding applies only to Annual Deferral Amounts, Annual Company Matching
Contribution Amounts and Annual Company Basic contribution Amounts
deferred/credited on or after January 1, 2005.


 


(b)           Retirement Benefit Payments of Annual Deferred
Share Amounts.  At the
same time that a Participant elects to defer an Annual Deferred Share Amount
for a given Fiscal Year, the Participant may elect to receive that portion of
his or her Retirement Benefit attributable to the Annual Deferred Share Amount
in a lump sum, or pursuant to one of the available Annual Installment
Methods.  At such time, the Participant
may also elect to have any such lump sum payment paid, or installments
commence, during the sixty (60) day period immediately following the close of
the calendar quarter in which the Participant Retires or, alternatively, during
the sixty (60) day period immediately following the close of the Plan Year in
which the Participant Retires; provided, however, that, to the extent required
under Section 409A, Retirement Benefit distributions to a Specified
Employee shall commence no earlier than six (6) months after the date or
his or her Retirement (or, if earlier, his or her death).  If a Participant does not make any election
with respect to the form of distribution of any portion of his or her
Retirement Benefit, such portion shall be distributable in the form of a lump
sum. In addition, subject to the preceding limitation on Retirement Benefit
distributions to Specified Employees, if a Participant does not make any election
with respect to when any portion of his or her Retirement Benefit shall be made
or begin, such portion shall be made or begin during the sixty (60) day period
immediately following the close of the calendar quarter in which the
Participant Retires. Any payment made shall be subject to Section 3.14 and
the Deduction Limitation.


 


Notwithstanding anything above
or elsewhere in the Plan to the contrary, to the extent Section 409A
requires that an Annual Deferred Share Amount deferral election satisfy the rules under
Section 409A applicable to changes to form and timing of distribution
elections in order for such Annual Deferred Share Amount deferral election to
effectively defer tax with respect to the Annual Deferred Share Amounts, that
portion of the Participant’s Deferred Share Deferral Account attributable to
such Annual Deferred Share Amount deferral election shall be distributable as a
Retirement Benefit solely at such time(s) and in such manner as the
Retirement Benefit distribution does not violate the rules under Section 409A
applicable to changes to form and timing of distribution elections.


 


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DOCUMENT continued...


 


Notwithstanding anything in
this Plan to the contrary, any distribution from the Deferred Share Deferral
Account under this Section 5.2 shall be in the form of Stock.


 


The preceding applies only to
Annual Deferred Share Amounts deferred on or after January 1, 2005.


 


(c)           Retirement Benefit Payments Relating to Pre-2005
Deferrals/Credits.  A
Participant who entered the Plan prior to January 1, 2005 was permitted,
in connection with his or her commencement of participation in the Plan, to
elect on an Election Form to receive the Retirement Benefit relating to
his or her pre-2005 deferrals/credits in a lump sum or pursuant to an Annual
Installment Method of 5, 10 or 15 years. 
The Participant was also permitted to elect on the Election Form to
have his or her Retirement Benefit relating to his or her pre-2005
deferrals/credits  made or begin as soon
as administratively practicable following the close of the calendar quarter in
which the Participant Retires or, alternatively, as soon as administratively
practicable following the close of the Plan Year in which the Participant
Retires.  Notwithstanding such elections,
effective January 1, 2005, in no event shall Retirement Benefit
distributions relating to a Specified Employee’s pre-2005 deferrals/credits
commence earlier than six (6) months after the date of his or her
Retirement (or, if earlier, his or death). 
If a Participant does not make any election with respect to the payment
of the Retirement Benefit relating to his or her pre-2005 deferrals/credits,
then such benefit shall be payable in a lump sum.  If a Participant does not make any election
with respect to when his or her Retirement Benefit relating to his or her
pre-2005 deferrals/credits shall be made or begin, such Retirement Benefit
shall be made or begin as soon as administratively practicable following the
close of the calendar quarter in which the Participant Retires.  Any payment made shall be subject to the
Deduction Limitation.  Notwithstanding
anything in this Plan to the contrary, any distribution from the Pre-2005
Deferred Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit Deferral
Account under this paragraph shall be in the form of Stock.


 


(d)           Changes to Retirement Benefit Distribution
Elections.  The
Participant may change his or her election(s) to an allowable alternative
payout period date by submitting a new Election Form to the Committee,
provided that, effective January 1, 2005, and except as provided in Section 4.5,
any such Election Form is submitted at least one (1) year prior to
the distribution date then in effect and, if required by Section 409A,
provides for a distribution (or commencement of distributions) date which is at
least five (5) years from the distribution date then in effect.  Subject to the foregoing, the Election Form most
recently accepted by the Committee 


 


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HOVNANIAN ENTERPRISES, INC. 


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DOCUMENT continued...


 


shall govern the payout of the
Retirement Benefit with respect to the portion of the Participant’s Account
Balance to which it pertains.


 


Notwithstanding anything above
or elsewhere in the Plan to the contrary (except Section 4.5), effective January 1,
2005, no change submitted on an Election Form shall be accepted by the
Committee if the change accelerates the time over which distributions shall be
made to the Participant (except as otherwise permitted under Section 409A)
and the Committee shall deny any change made to an election if the Committee
determines that the change violates the requirement under Section 409A
that the first payment with respect to which such election is made be deferred
for a period of not less than five (5) years from the date the payment
would otherwise have been made.  For
these purposes, installment payments shall be treated as a single payment, with
the result that an election to change from installments to a lump sum (or to a
different Annual Installment Method) will require that the lump sum be
postponed until a date which is at least five (5) years from the
previously scheduled payment date of the first installment.


 


ARTICLE 6

Pre-Retirement Survivor Benefit


 


6.1           Pre-Retirement Survivor Benefit.  Subject to the Deduction Limitation, and any
other conditions imposed by the Committee, the Participant’s Beneficiary shall
receive a Pre-Retirement Survivor Benefit equal to the Participant’s Account
Balance if the Participant dies before he or she Retires or experiences a
Termination of Employment.


 


6.2           Payment of Pre-Retirement Survivor Benefit.  The Participant’s Beneficiary shall receive
the Pre-Retirement Survivor Benefit in a lump sum during the sixty (60) day
period immediately following the close of the calendar quarter in which the
Committee receives proof that is satisfactory to the Committee of the
Participant’s death, in accordance with the procedures established by the
Committee.  Any payment made shall be
subject to Section 3.14 and to the Deduction Limitation.  Notwithstanding anything in this Plan to the
contrary, any distribution from the Deferred Share Deferral Account and/or the
Pre-2005 Deferred Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit
Deferral Account under this Section 6.2 shall be in the form of Stock.


 


6.3           Death Prior to Completion of Termination Benefit or Retirement Benefit.  If a
Participant dies after Termination of Employment or Retirement but before the
Termination Benefit or Retirement Benefit is paid in full, the Participant’s
unpaid Termination Benefit or Retirement Benefit shall be paid to the
Participant’s Beneficiary in a lump sum during the sixty (60) day period
immediately following 


 


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HOVNANIAN ENTERPRISES, INC. 


PLAN
DOCUMENT continued...


 


the close of the calendar
quarter in which the Committee receives proof that is satisfactory to the
Committee of the Participant’s death, in
accordance with the procedures established by the Committee.  Any payment made hereunder shall be subject
to Section 3.14, but shall not be subject to the Deduction
Limitation.  Notwithstanding
anything in this Plan to the contrary, any distribution from the Deferred Share
Deferral Account and/or the Pre-2005 Deferred Share/Option Swap/In-Kind Stock
Bonus/Restricted Share Unit Deferral Account under this Section 6.3 shall
be in the form of Stock.


 


ARTICLE 7

Termination Benefit


 


7.1           Termination Benefit.  Subject to the Deduction Limitation and to Section 3.14,
and any other conditions imposed by the Committee, the Participant shall
receive a Termination Benefit, which shall be equal to the Participant’s vested
Account Balance if a Participant experiences a Termination of Employment prior
to his or her Retirement or death.


 


7.2           Payment of Termination Benefit.  A Participant’s Termination Benefit shall be
paid in a lump sum during the sixty (60) day period immediately following the
close of the calendar quarter in which the Participant experiences a
Termination of Employment, in accordance with the procedures established by the
Committee; provided, however, that, to the extent required under Section 409A,
Termination Benefit distributions to an individual who is a Specified Employee
as of the date of his or her Separation from Service shall commence no earlier
than six (6) months after the date or his or her Termination of Employment
(or, if earlier, his or her death).


 


Notwithstanding anything above
or elsewhere in the Plan to the contrary, to the extent Section 409A
requires that an Annual Deferred Share Amount deferral election satisfy the rules under
Section 409A applicable to changes to form and timing of distribution
elections in order for such Annual Deferred Share Amount deferral election to
effectively defer tax with respect to the Annual Deferred Share Amounts, that
portion of the Participant’s Deferred Share Deferral Account attributable to
such Annual Deferred Share Amount deferral election shall be distributable as a
Termination Benefit solely at such time(s) and in such manner as the
Termination Benefit distribution does not violate the rules under Section 409A
applicable to changes to form and timing of distribution elections.


 


Any payment made shall be
subject to the Deduction Limitation and to Section 3.14.  Notwithstanding anything in this Plan to the
contrary, any distribution from the Deferred Share Deferral Account and/or the
Pre-2005 Deferred Share/Option Swap/In-Kind Stock Bonus/Restricted Share Unit
Deferral Account under this Section 7.2 shall be in the form of Stock.


 


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DOCUMENT continued...


 


ARTICLE 8

Beneficiary Designation


 


8.1           Beneficiary. 
Each Participant shall have the right, at any time, to designate his or
her Beneficiary(ies) (both primary as well as contingent) to receive any
benefits payable under the Plan to a Beneficiary upon the death of a
Participant.  The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the Participant
participates.


 


8.2           Beneficiary Designation; Change.  A Participant shall designate his or her
Beneficiary by completing and signing the Beneficiary Designation Form, and
returning it to the Committee or its designated agent.  A Participant shall have the right to change
a Beneficiary by completing, signing and otherwise complying with the terms of
the Beneficiary Designation Form and the Committee’s rules and
procedures, as in effect from time to time. 
Upon the acceptance by the Committee or its designated agent of a new
Beneficiary Designation Form, all Beneficiary designations previously filed
shall be canceled.  The Committee shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee or its designated agent prior to his
or her death.


 


8.3           Acceptance. 
No designation or change in designation of a Beneficiary shall be
effective until received and accepted by the Committee or its designated agent.


 


8.4           No Beneficiary Designation.  If a Participant fails to designate a
Beneficiary as provided in Sections 8.1, 8.2 and 8.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant’s benefits, then the Participant’s designated
Beneficiary shall be deemed to be his or her surviving spouse.  If the Participant has no surviving spouse,
the benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the Participant’s estate.


 


8.5           Doubt as to Beneficiary.  If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its discretion, to cause the Participant’s
Employer to withhold such payments until this matter is resolved to the
Committee’s satisfaction.


 


8.6           Discharge of Obligations.  The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to the
Participant, and that Participant’s Plan Agreement shall terminate upon such full
payment of benefits.


 


Neither the Committee nor the
Employer shall be obliged to search for any Participant or Beneficiary beyond
the sending of a registered letter to such person’s last known address.


 


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If the Committee notifies any
Participant or Beneficiary that he or she is entitled to an amount under the
Plan and the Participant or Beneficiary fails to claim such amount or make his
or her location known to the Committee within three (3) years thereafter,
then, except as otherwise required by law, if the location of one or more of
the next of kin of the Participant is known to the Committee, the Committee may
direct distribution of such amount to any one or more or all of such next of
kin, and in such proportions as the Committee determines.  If the location of none of the foregoing
persons can be determined, the Committee shall have the right to direct that
the amount payable shall be deemed to be a forfeiture, except that the dollar
amount of the forfeiture, unadjusted for deemed gains or losses in the interim,
shall be paid by the Employer if a claim for the benefit subsequently is made
by the Participant or the Beneficiary to whom it was payable.  If a benefit payable to an unlocated
Participant or Beneficiary is subject to escheat and/or unclaimed property laws
pursuant to applicable law, neither the Committee nor the Employer shall be
liable to any person for any payment made in accordance with such law.


 


ARTICLE 9

Termination, Amendment or Modification


 


9.1           Termination. 
Although each Employer anticipates that it will continue the Plan for an
indefinite period of time, there is no guarantee that any Employer will
continue the Plan or will not terminate the Plan at any time in the
future.  Accordingly, each Employer
reserves the right to discontinue its sponsorship of the Plan and/or to
terminate the Plan at any time with respect to any or all of its participating
Associates, by action of its board of directors. In addition, the Committee may
terminate the Plan with respect to one or more Employers.  Upon a termination of the Plan in accordance
with the requirements, restrictions and limitations of Section 1.409A-3(j)(4)(ix) of
the Treasury regulations, the Plan Agreements of the affected Participants
shall terminate and they shall be paid in a single lump sum distribution their
vested Account Balances (but not to commence before or end after any
distribution period required by Section 409A).  If, due
to the circumstances surrounding the Plan termination, a distribution of a
Participant’s vested Account Balance upon Plan termination is not
permitted by Section 409A, the payment of the Account Balance shall be
made only after Plan benefits otherwise become due hereunder.  The termination of the Plan shall not
adversely affect any Participant or Beneficiary who has become entitled to the
payment of any benefits under the Plan as of the date of termination.


 


Without
limiting the generality of the foregoing, the Employer specifically reserves
the right to terminate and liquidate the Plan with respect to all of its
participating Associates, in its discretion and by action of the Committee,
within the thirty (30) days preceding or the twelve (12) months following a “change
in control event” (as defined in Section 409A); provided, however, that
such termination and liquidation must be irrevocable and shall be permitted
only if all


 


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arrangements
sponsored by the Employer that are required to be aggregated with the Plan
pursuant to Section 14.21 are also irrevocably terminated and liquidated
with respect to each participant therein that has experienced a change in
control event, so that Associates participating under the Plan and all
participants under those other arrangements that have experienced a change in
control event are required to receive all amounts of compensation deferred
under the terminated arrangements within twelve (12) months of the date the
Employer takes irrevocable action to terminate and liquidate the arrangements.


 


Notwithstanding anything in
this Plan to the contrary, any distribution from the Deferred Share Deferral
Account and/or the Pre-2005 Deferred Share/Option Swap/In-Kind Stock
Bonus/Restricted Share Unit Deferral Account under this Section 9.1 shall
be in the form of Stock.


 


9.2           Amendment. 
Any Employer may, at any time, amend or modify the Plan in whole or in
part with respect to that Employer by the action of its board of directors and
the Committee may, at any time, amend or modify the Plan in whole or in part
with respect to one or more Employers; provided, however, that no amendment or
modification shall be effective to decrease or restrict the value of a
Participant’s Account Balance in existence at the time the amendment or
modification is made, calculated as if the Participant had experienced a
Termination of Employment as of the effective date of the amendment or
modification or, if the amendment or modification occurs after the date upon
which the Participant was eligible to Retire, the Participant had Retired as of
the effective date of the amendment or modification.  The amendment or modification of the Plan shall
not affect any Participant or Beneficiary who has become entitled to the
payment of benefits under the Plan as of the date of the amendment or
modification.


 


9.3           Plan Agreement. 
Despite the provisions of Sections 9.1 and 9.2 above, if a
Participant’s Plan Agreement contains benefits or limitations that are not in
this Plan document, the Employer or the Committee may only amend or terminate
such provisions with the consent of the Participant, unless otherwise provided
in the Plan Agreement.


 


9.4           Effect of Payment. 
The full payment of the applicable benefit under Articles 4, 5, 6
or 7 of the Plan shall completely discharge all obligations to a Participant
and his or her designated Beneficiaries under this Plan and the Participant’s
Plan Agreement shall terminate.


 


9.5           Amendment to Ensure Proper Characterization of the Plan.  Notwithstanding the previous Sections of this
Article 9, the Plan may be amended at any time, retroactively if required,
if found necessary, in the opinion of the Committee, in order to ensure that
the Plan is characterized as a non-tax-qualified “top hat” plan of deferred 


 


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compensation
maintained for a select group of management or highly compensated employees, as
described under ERISA Sections 201(2), 301(a)(3) and 401(a)(1), to conform
the Plan to the provisions of Section 409A, to ensure that amounts under
the Plan are not considered to be taxed to a Participant under the Federal
income tax laws prior to the Participant’s receipt of the amounts or to conform
the Plan and the Trust to the provisions and requirements of any applicable law
(including ERISA and the Code).


 


ARTICLE 10

Administration


 


10.1         Committee Duties. 
This Plan shall be administered by a Committee which shall consist of
the Board, or such committee as the Board shall appoint.  Members of the Committee may be Participants
under this Plan.  The Committee shall
also have the discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of
this Plan and (ii) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection with the Plan.  Any individual serving on the Committee who
is a Participant shall not vote or act on any matter relating solely to himself
or herself.  When making a determination
or calculation, the Committee shall be entitled to rely on information
furnished by a Participant or the Company.


 


10.2         Agents.  In the administration of this Plan, the
Committee may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel who may be
counsel to any Employer.


 


10.3         Binding Effect of Decisions.  The decision or action of the Committee with
respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Plan.


 


10.4         Indemnity of Committee.  All Employers shall indemnify and hold
harmless the members of the Committee, and any Associate to whom the duties of
the Committee may be delegated, against any and all claims, losses, damages,
expenses or liabilities arising from any action or failure to act with respect
to this Plan, except in the case of willful misconduct by the Committee, any of
its members, or any such Associate.


 


10.5         Employer Information.  To enable the Committee to perform its
functions, the Company and each Employer shall supply full and timely
information to the Committee on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement, death or
Termination of Employment of its


 


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Participants,
and such other pertinent information as the Committee may reasonably require.


 


ARTICLE 11

Other Benefits and Agreements


 


11.1         Coordination with Other
Benefits.  The
benefits provided for a Participant and Participant’s Beneficiary under the
Plan are in addition to any other benefits available to such Participant under
any other plan or program for Associates of the Participant’s Employer.  The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.


 


ARTICLE 12

Claims Procedures


 


12.1         Scope of Claims Procedures.
This Article is based on final regulations issued by the Department
of Labor and published in the Federal Register on November 21, 2000 and
codified at 29 C.F.R. section 2560.503-1. 
If any provision of this Article conflicts with the requirements of
those regulations, the requirements of those regulations will prevail.


 


12.2         Initial Claim.  A Participant or Beneficiary who believes he
or she is entitled to any benefit under the Plan (a “Claimant”) may file a
claim with the Committee.  The Committee
shall review the claim itself or appoint an individual or an entity to review
the claim.


 


(a)           Decision on Initial Claim.  The Claimant shall be notified within ninety
(90) days after the claim is filed whether the claim is allowed or denied,
unless the Claimant receives written notice from the Committee or appointee of
the Committee prior to the end of the ninety (90) day period stating that
special circumstances require an extension of the time for decision, such
extension not to extend beyond the day which is one hundred eighty (180) days
after the day the claim is filed.


 


(b)           Manner and Content of Denial of Initial Claims.  If the Committee denies a claim, it must
provide to the Claimant, in writing or by electronic communication:


 


(i)            The
specific reasons for the denial;


 


(ii)           A
reference to the Plan provision or insurance contract provision upon which the
denial is based;


 


(iii)          A
description of any additional information or material that the Claimant must
provide in order to perfect the claim;


 


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(iv)          An explanation of why such additional material or
information is necessary;


 


(v)           Notice
that the Claimant has a right to request a review of the claim denial and
information on the steps to be taken if the Claimant wishes to request a review
of the claim denial; and


 


(vi)          A
statement of the Participant’s right to bring a civil action under ERISA Section 502(a) following
a denial on review of the initial denial.


 


12.3                           Review Procedures.


 


(a)           Request for Review of
Denied Claim.  A request
for review of a denied claim must be made in writing to the Committee within
sixty (60) days after receiving notice of denial.  The decision upon review will be made within
sixty (60) days after the Committee’s receipt of a request for review, unless
special circumstances require an extension of time for processing, in which
case a decision will be rendered not later than one hundred twenty (120) days
after receipt of a request for review.  A
notice of such an extension must be provided to the Claimant within the initial
sixty (60) day period and must explain the special circumstances and provide an
expected date of decision.


 


The reviewer
shall afford the Claimant an opportunity to review and receive, without charge,
all relevant documents, information and records and to submit issues and
comments in writing to the Committee. 
The reviewer shall take into account all comments, documents, records
and other information submitted by the Claimant relating to the claim
regardless of whether the information was submitted or considered in the
initial benefit determination.


 


(b)           Manner and Content of Notice of Decision on Review.  Upon completion of its review of an adverse
initial claim determination, the Committee will give the Claimant, in writing
or by electronic notification, a notice containing:


 


(i)            its
decision;


 


(ii)           the
specific reasons for the decision;


 


(iii)          the
relevant Plan provisions or insurance contract provisions on which its decision
is based;


 


(iv)          a
statement that the Claimant is entitled to receive, upon request and without
charge, reasonable access to, and copies of, all documents, records and other
information in the Plan’s files which is relevant to the Claimant’s claim for
benefits;


 


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HOVNANIAN ENTERPRISES, INC.


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(v)           a statement describing the Claimant’s right
to bring an action for judicial review under ERISA Section 502(a); and


 


(vi)          if an internal rule, guideline, protocol or
other similar criterion was relied upon in making the adverse determination on
review, a statement that a copy of the rule, guideline, protocol or other
similar criterion will be provided without charge to the Claimant upon request.


 


12.4         Calculation of Time Periods.  For purposes of the time periods specified in
this Article, the period of time during which a benefit determination is
required to be made begins at the time a claim is filed in accordance with the
Plan procedures without regard to whether all the information necessary to make
a decision accompanies the claim.  If a
period of time is extended due to a Claimant’s failure to submit all
information necessary, the period for making the determination shall be tolled
from the date the notification is sent to the Claimant until the date the
Claimant responds.


 


12.5         Legal Action.  If the Plan fails to follow the claims
procedures required by this Article, a Claimant shall be deemed to have
exhausted the administrative remedies available under the Plan and shall be
entitled to pursue any available remedy under ERISA Section 502(a) on
the basis that the Plan has failed to provide a reasonable claims procedure
that would yield a decision on the merits of the claim.  A Claimant’s compliance with the foregoing
provisions of this Article is a mandatory prerequisite to a Claimant’s
right to commence any legal action with respect to any claims for benefits
under the Plan.  However, notwithstanding
anything herein that may suggest otherwise, with respect to any claim
pertaining to a Participant who is not subject to ERISA, following the Claimant’s
exhaustion of the foregoing provisions of this Article, all disputes in
connection with such claim shall be resolved by binding arbitration in
accordance with the commercial arbitration rules of the American
Arbitration Association.


 


ARTICLE 13

Trust


 


13.1         Establishment of the Trust.  The Company has established the Trust, and
each Employer shall at least annually transfer over to the Trust such assets as
the Employer determines, in its sole discretion, are necessary to provide for
its respective future liabilities created with respect to the Annual Deferral
Amounts and Annual Company Contribution Amounts for such Employer’s
Participants.


 


13.2         Interrelationship of the Plan and the Trust.  The provisions of the Plan and the Plan
Agreement shall govern the rights of a Participant to receive distributions
pursuant to the Plan.  The provisions of
the Trust shall govern the rights of the Employers, Participants and the
creditors of the Employers to the assets transferred to the Trust.  Each Employer shall at all times remain
liable to carry out its obligations under the Plan.


 


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13.3         Distributions From the Trust.  Each Employer’s obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of the
Trust, and any such distribution shall reduce the Employer’s obligations under
this Plan.


 


ARTICLE 14

Miscellaneous


 


14.1         Status of Plan. 
The Plan is not qualified within the meaning of Code Section 401(a) and
“is unfunded and is maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1).  The Plan shall be
administered and interpreted to the extent possible in a manner consistent with
that intent.


 


14.2         Unsecured General Creditor.  Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of an Employer.  For purposes of the payment of benefits under
this Plan, any and all of an Employer’s assets shall be, and remain, the
general, unpledged unrestricted assets of the Employer.  An Employer’s obligation under the Plan shall
be merely that of an unfunded and unsecured promise to pay money in the future.


 


14.3         Employer’s Liability.  An Employer’s liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as entered
into between the Employer and a Participant. 
An Employer shall have no obligation to a Participant under the Plan
except as expressly provided in the Plan and his or her Plan Agreement.


 


14.4         Nonassignability. 
Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate, alienate or convey in advance of actual receipt,
the amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are expressly declared to be, unassignable and
non-transferable.  Subject to Section 14.15,
no part of the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, be transferable by operation of law in the event of a Participant’s or
any other person’s bankruptcy or insolvency or be transferable to a spouse as a
result of a property settlement or otherwise.


 


14.5         Not a Contract of Employment.  The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between any Employer and
the Participant.  Such employment is
hereby acknowledged to be an “at will” employment relationship that can be
terminated at any time for any reason, or no


 


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HOVNANIAN ENTERPRISES, INC.


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reason, with
or without cause, and with or without notice, unless expressly provided in a
written employment agreement.  Nothing in
this Plan shall be deemed to give a Participant the right to be retained in the
service of any Employer or to interfere with the right of any Employer to
discipline or discharge the Participant at any time.


 


14.6         Furnishing Information.  A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as
the Committee may deem necessary.


 


14.7         Terms. 
Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so
apply; and whenever any words are used herein in the singular or in the plural,
they shall be construed as though they were used in the plural or the singular,
as the case may be, in all cases where they would so apply.


 


14.8         Captions. 
The captions of the articles, sections and paragraphs of this Plan are
for convenience only and shall not control or affect the meaning or
construction of any of its provisions.


 


14.9         Governing Law. 
Subject to ERISA, the provisions of this Plan shall be construed and
interpreted according to the internal laws of the State of Delaware without regard
to its conflicts of laws principles.


 


14.10       Notice.  Any
notice or filing required or permitted to be given to the Committee under this
Plan shall be sufficient if it is in accordance with the procedures established
by the Committee for notice or filing delivery via electronic transmission or
if it is in writing and hand-delivered, or sent by registered or certified
mail, to the address below:


 


Treasurer


K. Hovnanian
Enterprises, Inc.


10 Highway 35


Red Bank, New
Jersey  07701


(732) 747-7800


 


Such notice shall be deemed
given as of the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or
certification.  Any notice or filing
required or permitted to be given to a Participant under this Plan shall be
sufficient if in writing and hand-delivered, or sent by mail, to the last known
address of the Participant.


 


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14.11       Successors. 
The provisions of this Plan shall bind and inure to the benefit of the
Participant’s Employer and its successors and assigns and the Participant and
the Participant’s designated Beneficiaries.


 


14.12       Spouse’s Interest. 
The interest in the benefits hereunder of a spouse of a Participant who
has predeceased the Participant shall automatically pass to the Participant and
shall not be transferable by such spouse in any manner, including but not
limited to such spouse’s will, nor shall such interest pass under the laws of
intestate succession.


 


14.13       Validity.  In
case any provision of this Plan shall be illegal or invalid for any reason,
said illegality or invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal or invalid
provision had never been inserted herein; except to the extent that Section 409A
requires that this Section 14.13 be disregarded because it purports to
nullify Plan terms that are not in compliance with Section 409A.


 


14.14       Incompetent. 
If the Committee determines in its discretion that a benefit under this
Plan is to be paid to a minor, a person declared incompetent or to a person
incapable of handling the disposition of that person’s property, the Committee
may direct payment of such benefit to the guardian, legal representative or
person having the care and custody of such minor, incompetent or incapable
person.  The Committee may require proof
of minority, incompetence, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit.  Any payment of a benefit shall be a payment
for the account of the Participant and the Participant’s Beneficiary, as the
case may be, and shall be a complete discharge of any liability under the Plan
for such payment amount.


 


14.15       Court Order. 
The Committee is authorized to make any payments directed by court order
in any action in which the Plan or the Committee has been named as a
party.  In addition, if a court determines
that a spouse or former spouse of a Participant has an interest in the
Participant’s benefits under the Plan in connection with a property settlement
or otherwise, the Committee, in its sole discretion but solely if and to the
extent permitted by Section 409A, shall have the right, notwithstanding
any election made by a Participant, to immediately distribute the spouse’s or
former spouse’s interest in the Participant’s benefits under the Plan to that
spouse or former spouse.


 


14.16       Acceleration of Distribution.


 


(a)           In
General.  The Employer
may, its discretion, accelerate the date of distribution or commencement of
distributions hereunder, or accelerate installment payments by paying the
vesting Account Balance in a lump sum or pursuant to a Annual Installment
Method using fewer years, to the extent


 


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HOVNANIAN ENTERPRISES, INC.


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permitted under Section 409A
(such as, for example, as provided in Section 1.409A-3(j)(4) of the
Treasury regulations  to comply with
domestic relations orders or certain conflict of interest rules, to pay
employment taxes, or to pay certain de minimus amount, or to make payments upon
income inclusion under Section 409A). 
Notwithstanding anything in this Plan to the contrary, any distribution
from the Deferred Share Deferral Account under this Section 14.16 shall be
in the form of Stock.


 


(b)           Trust.  If the Trust terminates in accordance with
the provisions of the Trust and benefits are distributed from the Trust to a
Participant in accordance with such provisions, the Participant’s benefits
under this Plan shall be reduced to the extent of such distributions.


 


14.17       Delay in Payment.  If the Employer reasonably anticipates
that any payment scheduled to be made hereunder would violate securities laws
(or other applicable laws) or jeopardize the ability of the Employer to
continue as a going concern if paid as scheduled, then the Employer may defer
that payment, provided the Employer
treats payments to all similarly situated Participants on a reasonably consistent
basis.  In addition, the Employer
may, in its discretion, delay a payment upon such other events and conditions
as the IRS may prescribe, provided the
Employer treats payments to all similarly situated Participants on a reasonably
consistent basis.  Any amounts
deferred pursuant to this Section shall continue to be credited or debited
with additional amounts in accordance with Section 3.12 above, even if
such amount is being paid out in installments. 
The amounts so deferred and amounts credited or debited thereon shall be
distributed to the Participant or his or her Beneficiary (in the event of the
Participant’s death) at the earliest possible date on which the Employer
reasonably anticipates that such violation or material harm would be avoided or
as otherwise prescribed by the IRS.


 


14.18       Prohibited Acceleration/Distribution Timing.  This Section shall
take precedence over any other provision of the Plan or this Article 14 to
the contrary.  If the timing of any
deferral or distribution election would result in any tax or other penalty
(other than ordinarily payable Federal, state or local income or payroll
taxes), which tax or penalty can be avoided by payment of the distribution at a
later time, then the distribution shall be made (or commence, as the case may
be) on the first date on which such distributions can be made (or commence)
without such tax or penalty; except to the extent that Section 409A
requires that this Section 14.18 be disregarded because it purports to
nullify Plan terms that are not in compliance with Section 409A.


 


14.19       Insurance. 
The Employers, on their own behalf or on behalf of the Trustee of the
Trust, and, in their sole discretion, may apply for and procure insurance on
the life of the Participant, in such amounts and in such forms as the Trust may
choose.  The Employers or the Trustee of
the Trust, as the case may be, shall be the sole owner and beneficiary of any
such insurance.  The Participant shall
have no


 


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interest
whatsoever in any such policy or policies, and at the request of the Employers
shall submit to medical examinations and supply such information and execute
such documents as may be required by the insurance company or companies to whom
the Employers have applied for insurance.


 


14.20       Aggregation of Employers.  If the Employer is a member of
a controlled group of corporations or a group of trades or business under
common control (as described in Code §414(b) or (c)), but substituting a
twenty-five percent (25%) ownership level for the eighty percent (80%) level
set forth in those Code Sections, all members of the group shall be treated as
a single Employer for purposes of whether there has occurred a Separation from
Service and for any other purposes under the Plan as Section 409A shall
require.  For purposes of Section 9.1,
in the case of a change in control event, the entities to be treated as a
single Employer shall be determined immediately following the change in control
event.


 


14.21       Aggregation of Plans.  If the Employer offers other
account balance deferred compensation plans in addition to the Plan, those
plans together with the Plan shall be treated as a single plan to the extent
required under Section 409A for purposes of determining whether an
Employee may make a deferral election pursuant to Section 3.4(a) within
thirty (30) days of becoming eligible to participate in the Plan and for any
other purposes under the Plan as Section 409A shall require.


 


14.22       USERRA.  Notwithstanding anything herein
to the contrary, any election provided to a Participant as necessary to satisfy
the requirements of the Uniformed Services Employment and Reemployment Rights
Act of 1994, as amended, shall be permissible hereunder.


 


14.23       Legal Fees To Enforce Rights After Change in Control. 
Hovnanian Enterprises, Inc. and each Employer is aware that upon the
occurrence of a Change in Control, the Board or the board of directors of a
Participant’s Employer (which might then be composed of new members) or a
shareholder of Hovnanian Enterprises, Inc. or the Participant’s Employer,
or of any successor corporation might then cause or attempt to cause Hovnanian
Enterprises, Inc., the Participant’s Employer or such successor to refuse
to comply with its obligations under the Plan and might cause or attempt to
cause Hovnanian Enterprises, Inc. or the Participant’s Employer to
institute, or may institute, litigation seeking to deny Participants the
benefits intended under the Plan.  In these circumstances, the purpose of
the Plan could be frustrated.  Accordingly, if, following a Change in
Control, it should appear to any Participant that Hovnanian Enterprises, Inc.,
the Participant’s Employer or any successor corporation has failed to comply
with any of its obligations under the Plan or any agreement thereunder or, if
Hovnanian Enterprises, Inc., such Employer or any other person takes any
action to declare


 


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the Plan void
or unenforceable or institutes any litigation or other legal action designed to
deny, diminish or to recover from any Participant the benefits intended to be
provided, then Hovnanian Enterprises, Inc. and the Participant’s Employer
irrevocably authorize such Participant to retain counsel of his or her choice
at the expense of Hovnanian Enterprises, Inc. and the Participant’s
Employer (who shall be jointly and severally liable) to represent such
Participant in connection with the initiation or defense of any litigation or
other legal action, whether by or against Hovnanian Enterprises, Inc., the
Participant’s Employer or any director, officer, shareholder or other person
affiliated with Hovnanian Enterprises, Inc., the Participant’s Employer or
any successor thereto in any jurisdiction.


 


IN WITNESS WHEREOF, the Company has signed this Plan document as of January 1,
2005.


 


	
   

  	
  K. HOVNANIAN ENTERPRISES, INC., a

  California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Sr. Vice President Human Resources

  



 


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SCHEDULE A


 


MEASUREMENT FUNDS


 


Pursuant to Section 3.12(d),
the Participant may elect one or more of the Measurement Funds:


 


	
  Fund Class

  	
   

  	
  Measurement Fund

  	
   

  
	
  Money Market
  Fund

  	
   

  	
  Vanguard VIF
  Money Market

  	
   

  
	
  Income

  	
   

  	
  PIMCo (VIT)
  Total Return Bond

  	
   

  
	
  Income

  	
   

  	
  Vanguard VIF
  Hi-Yield Bond

  	
   

  
	
  Balanced

  	
   

  	
  Vanguard VIF
  Balanced

  	
   

  
	
  Large Blend

  	
   

  	
  PIMCo (VIT)
  Stocks Plus

  	
   

  
	
  Large Growth

  	
   

  	
  Vanguard VIF
  Capital Growth

  	
   

  
	
  Large Value

  	
   

  	
  T. Rowe
  Price Equity Income Portfolio

  	
   

  
	
  Mid Cap

  	
   

  	
  T. Rowe
  Price Mid-Cap Growth

  	
   

  
	
  Small/Mid
  Value

  	
   

  	
  First Eagle
  Overseas

  	
   

  
	
  Small Value

  	
   

  	
  Royce
  Micro-Cap

  	
   

  
	
  Small Growth

  	
   

  	
  Vanguard VIF
  Small Company

  	
   

  
	
  Aggressive-Growth

  	
   

  	
  INVESCO
  (VIF) Dynamics

  	
   

  
	
  Foreign
  Large Blend

  	
   

  	
  T. Rowe
  Price International

  	
   

  
	
  Phantom
  Stock

  	
   

  	
  Company
  Stock

  	
   

  



 


50