Exhibit 10(aa)


 


2008 HOVNANIAN ENTERPRISES, INC.

STOCK INCENTIVE PLAN


 


NON-QUALIFIED STOCK OPTION
AGREEMENT


 


	
  Participant:  

  	
   

  	
  Date of Grant:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of Class B Shares:

  	
   

  	
  Grant Price:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Vesting Schedule:

  	
   

  
	
   

  	
   

  
	
  Date

  	
  Number of Shares
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Option Termination Date:

  	
   

  



 


1.     Grant
of the Option. For valuable consideration, receipt of which is hereby
acknowledged, Hovnanian Enterprises, Inc., a Delaware Corporation (The “Company”),
hereby grants the right and option (the “Option”) to purchase, on the terms and
conditions hereinafter set forth, all or any part of an aggregate number of Class B
Shares set forth above. This grant is made subject to the terms and conditions
of the 2008 Company Stock Incentive Plan  (the
“Plan”), which Plan is incorporated herein by reference and subject to
amendments to the Plan. The purchase price of the Shares subject to the Option
(the “Grant Price”) shall be the price per Share set forth above. This Option
is not an Incentive Stock Option within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the “Code”).


 


2.     Vesting.  This Option will vest in accordance with the
schedule set forth above, subject to Section 3 of this Agreement.


 


3.     Exercise
of Option.


 


(a)           Period
of Exercise.


 


(i)            In General. The Option must
be exercised before the Option Termination Date set forth above (the “Option Termination
Date”).  The Participant may exercise less than the full installment available
to him or her under this Option, but the Participant must exercise this 


 


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Option in full shares of the Common Stock of
the Company.  The Participant is limited
to ten exercises during the term of this Option.


 


(ii)           Termination of Employment Other Than Due to
Death, Disability or Retirement.
If, prior to the Option Termination Date, the Participant ceases to be employed
by the Company or a subsidiary thereof (otherwise than by reason of death, Disability
or Retirement, the nonvested portion of the Option shall be canceled and the
vested portion of the Option, to the extent not previously exercised, shall
remain exercisable until the earlier of (a) the Option Termination Date
and (b) the sixtieth (60th) day after the date of cessation of
employment, and thereafter all Options, to the extent not previously exercised,
shall terminate together with all other rights hereunder.  This Option shall be wholly void and of no
effect after the Option Termination Date. 
For purposes of this Agreement, “Disability” shall mean disability within
the meaning of Section 22(e)(3) of the Code, and “Retirement” shall
mean termination of employment on or after age 60, or on or after age 58 with
at least 15 years of “Service” to the Company and its Subsidiaries immediately
preceding such termination of employment. 
For this purpose, “Service” means the period of employment immediately
preceding Retirement, plus any prior periods of employment with the Company and
its Subsidiaries of one or more years’ duration, unless they were succeeded by
a period of non-employment with the Company and its Subsidiaries of more than
three years’ duration.


 


(iii)          Termination of Employment Due to Death. If, prior to the Option Termination Date,
the Participant ceases to be employed by the Company or a subsidiary thereof
due to the Participant’s death, the Option, to the extent not previously vested
and exercised, shall immediately become fully vested and exercisable and remain
exercisable until the earlier of (i) the Option Termination Date and (ii) the
first anniversary of the Participant’s death, and thereafter all Options, to
the extent not previously exercised, shall terminate together with all other
rights hereunder.  During such time, the
Option will be exercisable by the person or persons to whom the Participant’s
rights under the Option shall pass by will or by the applicable laws of descent
and distribution.


 


(iv)          Termination of Employment Due to Disability. If prior to the Option Termination Date the
Participant ceases to be employed by the Company or a subsidiary thereof by
reason of Disability, the Option, to the extent not previously vested and exercised,
shall immediately become fully vested and exercisable and shall remain
exercisable until the earlier of (i) the Option Termination Date and (ii) the
first anniversary of the date of cessation of employment due to Disability, by
the Participant or his or her designated personal representative on the
Participant’s behalf, and thereafter all Options, to the extent not previously
exercised, shall terminate together with all other rights hereunder.


 


(v)           Termination of Employment Due to Retirement.  If
prior to the Option Termination Date the Participant ceases to be employed by
the Company or a subsidiary thereof due to Participant’s Retirement, the
Option, to the extent not previously vested and exercised, shall immediately become
fully vested and exercisable and remain exercisable until the earlier of (i) the
Option Termination Date and (ii) the first anniversary of the Participant’s
Retirement, and thereafter all Options, to the extent not previously exercised,
shall terminate together with all other rights hereunder.


 


(b)           Method
of Exercise.  Subject to the
provisions of the Plan, this Option may be exercised by written notice to the
Company stating the number of shares with respect to which it is being
exercised and accompanied by payment of the Option Price (a) by certified
or bank cashier’s check payable to the order of the Company in New York
Clearing House Funds, (b) by surrender or delivery to the Company of
shares of its Common Stock that have been held by the Participant for at least
six months (or such other period of time as may be determined by the Board of
Directors), or (c) in any other form acceptable to the Company together
with payment or arrangement for payment of any federal income or other tax
required to be withheld by the Company. 
As soon as 


 


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practical after receipt of such notice
and payment, the Company, shall, without transfer or issue tax or other
incidental expense to the Participant, deliver to the Participant at the
offices of the Company at 110 West Front Street, Red Bank, New Jersey, or such
other place as may be mutually acceptable, or, at the election of the Company,
by first-class insured mail addressed to the Participant at his or her address
shown in the employment records of the Company or at the location at which he
or she is employed by the Company or a subsidiary, a certificate or
certificates for previously unissued shares or reacquired shares of its Common
Stock as the Company may elect.


 


(c)           Delivery.


 


(i)            The Company may postpone the time of delivery
of certificates for shares of its Common Stock for such additional time as the
Company shall deem necessary or desirable to enable it to comply with the
listing requirements of any securities exchange upon which the Common Stock of
the Company may be listed, or the requirements of the Securities Act of 1933 or
the Securities Exchange Act of 1934 or any Rules or Regulations of the
Securities and Exchange Commission promulgates thereunder or the requirements
of applicable state laws relating to authorization, issuance or sale of
securities.


 


(ii)           If the Participant fails to accept delivery of the shares of Common
Stock of the Company upon tender of delivery thereof, his or her right to
exercise this Option with respect to such undelivered shares may be terminated
by the Company.


 


4.     Adjustments
Upon Certain Events. 
Subject to the terms of the Plan, in the event of any change in the
outstanding Shares by reason of any Share dividend or split, reorganization,
recapitalization, merger, consolidation, amalgamation, spin-off or combination
transaction or exchange of Shares or other similar events (collectively, an “Adjustment
Event”), the Committee shall, in its sole discretion, make an appropriate and
equitable adjustment in the number of Shares subject to this Agreement to
reflect such Adjustment Event. Any such adjustment made by the Committee shall
be final and binding upon the Participant, the Company and all other interested
persons.


 


5.     No
Right to Continued Employment. 
Neither the Plan nor this Agreement shall be construed as giving the
Participant the right to be retained in the employ of, or in any consulting
relationship to, the Company or any Affiliate. 
Further, the Company or an Affiliate may at any time dismiss the
Participant, free from any liability or any claim under the Plan or this
Agreement, except as otherwise expressly provided herein.


 


6.     No
Acquired Rights.  In participating in
the Plan, the Participant acknowledges and accepts that the Board has the power
to amend or terminate the Plan, to the extent permitted thereunder, at any time
and that the opportunity given to the Participant to participate in the Plan is
entirely at the discretion of the Committee and does not obligate the Company
or any of its Affiliates to offer such participation in the future (whether on
the same or different terms).  The
Participant further acknowledges and accepts that such Participant’s
participation in the Plan is not to be considered part of any normal or
expected compensation and that the termination of the Participant’s employment
under any circumstances whatsoever will give the Participant no claim or right
of action against the Company or its Affiliates in respect of any loss of
rights under this Agreement or the Plan that may arise as a result of such
termination of employment.


 


7.     No
Rights of a Shareholder. 
The Participant shall not have any rights or privileges as a shareholder
of the Company until the Shares in question have been registered in the Company’s
register of shareholders.


 


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8.     Legend
on Certificates.  Any Shares issued
or transferred to the Participant pursuant to Section 3 of this Agreement
shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock exchange
upon which such Shares are listed, and any applicable Federal or state laws or
relevant securities laws of the jurisdiction of the domicile of the
Participant, and the Committee may cause a legend or legends to be put on any
certificates representing such Shares to make appropriate reference to such
restrictions.


 


9.     Transferability.  The Option may not be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by the
Participant otherwise than by will or by the laws of descent and distribution.
Notwithstanding the foregoing, a Participant may transfer this option in whole
or in part by gift or domestic relations order to a family member of the
Participant (a “Permitted Transferee”) and, following any such transfer such
option or portion thereof shall be exercisable only by the Permitted
Transferee, provided that no such option or portion thereof is transferred for
value, and provided further that, following any such transfer, neither such
option or any portion thereof nor any right hereunder shall be transferable
other than to the Participant or otherwise than by will or the laws of descent
and distribution or be subject to attachment, execution or other similar
process.  For purposes of this paragraph,
“family member” includes any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, any person sharing the Participant’s
household (other than a tenant or employee), trust in which these persons have
more than fifty percent of the beneficial interest, a foundation in which these
persons (or the Participant) control the management of assets and any other entity
in which these persons (or the Participant) own more than fifty percent of the
voting interests. Any purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance not permitted by this Section 9 shall be
void and unenforceable against the Company or any Affiliate.


 


10.   Withholding.  The Participant may be required to pay to the
Company or any Affiliate and the Company or any Affiliate shall have the right
and is hereby authorized to withhold from any transfer due under this Agreement
or under the Plan or from any compensation or other amount owing to the
Participant, applicable withholding taxes with respect to any transfer under
this Agreement or under the Plan and to take such action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes.  Notwithstanding the foregoing, if
the Participant’s employment with the Company terminates prior to the transfer
of all of the Shares under this Agreement, the payment of any applicable withholding
taxes with respect to any further transfer of Shares under this Agreement or
the Plan shall be made solely through the sale of Shares equal to the statutory
minimum withholding liability.


 


11.  Non-Solicitation Covenants.


 


(a)           The Participant acknowledges and agrees that, during the
Participant’s employment with the Company and its Affiliates and upon the
Participant’s termination of Employment with the Company and its Affiliates for
any reason, for a period commencing on the termination of such Employment and
ending on the second anniversary of such termination, the Participant shall
not, whether on Participant’s own behalf or on behalf of or in conjunction with
any person, company, business entity or other organization whatsoever, directly
or indirectly:


 


(i)            solicit any employee of the
Company or its Affiliates with whom the Participant had any contact during the
last two years of the Participant’s employment, or who worked in the same
business segment or division as the Participant during that period to terminate
employment with the Company or its Affiliates;


 


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(ii)           solicit the employment or
services of, or hire, any such employee whose employment with the Company or
its Affiliates terminated coincident with, or within twelve (12) months prior
to or after the termination of Participant’s employment with the Company and
its Affiliates;


 


(iii)         directly or indirectly, solicit to cease to work with the Company or
its Affiliates any consultant then under contract with the Company or its
Affiliates.


 


(b)           It is expressly understood and agreed that although the
Participant and the Company consider the restrictions contained in this Section 11
to be reasonable, if a final judicial determination is made by a court of
competent jurisdiction that the time or any other restriction contained in this
Agreement is an unenforceable restriction against the Participant, the
provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be
enforceable.  Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to
make it enforceable, such finding shall not affect the enforceability of any of
the other restrictions contained herein.


 


12.  Specific Performance.  The Participant acknowledges and agrees that
the Company’s remedies at law for a breach or threatened breach of any of the
provisions of Section 11 would be inadequate and the Company would suffer
irreparable damages as a result of such breach or threatened breach.  In recognition of this fact, the Participant
agrees that, in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company, without posting any bond, shall be entitled
to cease making any payments or providing any benefit otherwise required by
this Agreement and obtain equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available.


 


13.  Choice of Law.  THE
INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.


 


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


 


15.   Signature
in Counterparts.  This Agreement may
be signed in counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.


 


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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement.


 


 


	
   

  	
  HOVNANIAN
  ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 


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