Exhibit 10(z)


 


HOVNANIAN
DEFERRED SHARE POLICY


 


THIS POLICY, dated as of                                 ,
relates to one or more Deferred Share Awards which may be granted by Hovnanian
Enterprises, Inc., a Delaware corporation (the “Company”) to                           
(the “Grantee”).


 


The Company may grant the
Grantee from time to time during one or more November 1st
through October 31st fiscal years incentive profit sharing awards
(“Incentives”) pursuant to the Company’s Incentive Profit Sharing Program
applicable to the Grantee.  The Grantee
will receive in cash such percentage of each Incentive as is specified under
the Incentive Profit Sharing Program. 
The remainder of each Incentive will be deferred (all such deferred awards
made on behalf of the Grantee for service performed in a given fiscal year
referred to herein as a “Deferred Share Award”), and, when vested, will be paid
in the form of shares of Class A Common Stock of the Company (“Common
Stock”).


 


The number of shares of Common
Stock to be paid under a Deferred Share Award will be determined by dividing
the dollar amount of the Deferred Share Award by the lesser of (i) the
closing price of a share of Common Stock, as reported in the Wall Street
Journal, on the last day of the fiscal year during which the service giving
rise to the Deferred Share Award was performed, or (ii) the average of the
closing prices of a share of Common Stock, as reported in the Wall Street
Journal, on the last day of the 5 fiscal quarters ending on the last day of the
fiscal year during which the service giving rise to the Deferred Share Award
was performed.  In addition, the Company
will increase the number of shares of Common Stock under the Deferred Share
Award by 20%.  Delivery of the shares of
Common Stock will be deferred, and will become vested and payable, as described
below.


 


1.                                       Crediting of Deferred Share Award.  The Deferred Share Award, which is granted
under and subject to the terms of the 1999 Company Stock Incentive Plan (the “Stock
Plan”), the terms of which are incorporated herein by reference, shall be
credited to a Deferred Share Account maintained on the books of the Company.


 


2.                                       Vesting of Deferred Share Award.


 


The following vesting schedule shall apply
for so long as the Grantee has not attained age 58 or performed 20 years of
service with the Company or any respective subsidiary thereof:


 


·                                         On
the second November 1st following the fiscal year during which
the service giving rise to the Deferred Share Award was performed (e.g., on November 1,
2006 for a Deferred Share Award in respect of service performed during the November 1,
2004 through October 31, 2005 fiscal year), the Grantee shall become
vested in 25% (rounded up to the nearest whole share) of his or her Deferred
Share Award for that fiscal year.


 


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·                                         On
the third November 1st following the fiscal year during which
the service giving rise to the Deferred Share Award was performed (e.g., on November 1,
2007 for a Deferred Share Award in respect of service performed during the November 1,
2004 through October 31, 2005 fiscal year), the Grantee shall become
vested in an additional 25% (rounded up to the nearest whole share) of his or
her Deferred Share Award for that fiscal year.


 


·                                         On
the fourth November 1st following the fiscal year during which
the service giving rise to the Deferred Share Award was performed (e.g., on November 1,
2008 for a Deferred Share Award in respect of service performed during the November 1,
2004 through October 31, 2005 fiscal year), the Grantee shall become
vested in an additional 25% (rounded up to the nearest whole share) of his or
her Deferred Share Award for that fiscal year.


 


·                                         On
the fifth November 1st following the fiscal year during which
the service giving rise to the Deferred Share Award was performed (e.g., on November 1,
2009 for a Deferred Share Award in respect of service performed during the November 1,
2004 through October 31, 2005 fiscal year), the Grantee shall become
vested in 100% of his or her then unvested Deferred Share Award for that fiscal
year.


 


Notwithstanding the preceding vesting
schedule, if the Grantee either attains age 58 or completes 20 years of service
with the Company,  K. Hovnanian
Enterprises, Inc. or any respective subsidiary thereof, the Grantee shall
become immediately vested in 100% of his or her then unvested Deferred Share
Award upon the later of (i) the January 15th following the
fiscal year during which the service giving rise to the Deferred Share Award
was performed (e.g., on January 15, 2006 for a Deferred Share Award in
respect of service performed during the November 1, 2004 through October 31,
2005 fiscal year), or (ii) the date the Grantee attains age 58 or
completes 20 years of service with the Company, K. Hovnanian Enterprises, Inc.
or any respective subsidiary thereof.


 


3.                                       Effects of Termination of Employment on Deferred Share
Award.  In the event that the
Grantee’s employment terminates for any reason other than the Grantee’s death
or Disability (as such term is defined in the Stock Plan), the unvested
Deferred Share Award shall be cancelled immediately without payment
therefor.  In the event that the Grantee’s
employment terminates due to the Grantee’s death or Disability, any unvested
portion of the Deferred Share Award shall become fully vested upon such
termination.


 


4.                                       Dividend Equivalents.   In the event that any cash dividend is paid
on shares of Common Stock as of a record date prior to the day on which the
shares are delivered to the Grantee hereunder, the Company shall credit to the
Grantee’s Deferred Share Account an additional number of shares equal to (x) the
number of shares under the Deferred Share Award credited to the Deferred Share
Account as of any applicable record date multiplied by (y) the dividend
per share, divided by (z)  the Fair Market Value of a share of Common
Stock on the applicable dividend payment date.


 


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5.                                       Distributions.


 


(a)                                  Distribution of the
Deferred Share Account shall be made in the form of Common Stock as soon as
practicable after an applicable vesting date, unless the Grantee is eligible
and has elected to defer the distribution pursuant to the terms a nonqualified
deferred compensation plan maintained by the Company (“Deferred Compensation
Plan”); provided that any such deferred amount, when paid from such Deferred
Compensation Plan, shall be paid in the form of shares of Common Stock.   Once any shares are deferred under any
Deferred Compensation Plan, the rights and privileges of the Grantee with
respect thereto shall be determined solely with reference to such Deferred
Compensation Plan and not to this Policy.


 


(b)                                 The
Grantee shall not have any of the rights or privileges of a holder of Common
Stock (including any voting rights) of the Company unless and until such time
as shares of Common Stock are distributed to the Grantee hereunder or, if
later, are distributed to the Grantee from the Deferred Compensation Plan.


 


(c)                                  If
the Grantee dies before the Deferred Share Account has been distributed
hereunder, payment shall be made to the beneficiary or beneficiaries designated
on the beneficiary designation form on file with the Company.   In the absence of any such designation, the
Deferred Share Account shall be distributed to the Grantee’s spouse (or if no
spouse is then living, to the Grantee’s estate).


 


6.                                       Adjustments.  Subject to the terms of the Stock Plan, in
the event that the outstanding shares of the Common Stock are, from time to
time, changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of a merger,
consolidation, recapitalization, reclassification, stock split, stock dividend,
combination of shares, or otherwise, the Committee (as defined in the Stock
Plan) shall make an appropriate and equitable adjustment in the number of
shares under the Deferred Share Award credited to the Deferred Share
Account.  Any such adjustment made by the
Committee shall be final and binding upon the Grantee, the Company and all
other interested persons.


 


7.                                       Miscellaneous.


 


(a)                                  All capitalized terms
used herein shall have the meaning set forth in the Stock Plan, unless the
context requires a different meaning.


 


(b)                                 Except
as determined by the Company, no person shall have any right to receive a
Deferred Share Award.  The eligibility,
amount and the grant of the Deferred Share Award are entirely at the discretion
of the Company.


 


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(c)                                  The
Company reserves the right to amend this Policy in writing unilaterally so long
as no such amendment adversely affects any accrued and vested rights of the
Grantee with respect to this Policy.


 


(d)                                 The
execution and delivery of this Policy and the granting of one or more Deferred Share
Awards hereunder shall not constitute or be evidence of any agreement or
understanding, express or implied, on the part of the Company or its affiliates
to employ the Grantee for any specific period or in any particular capacity and
shall not prevent the Company or its affiliate from terminating the Grantee’s
employment at any time with or without cause, subject to applicable law.


 


(e)                                  Any
federal, state or local taxes required by the applicable taxing authorities to
be withheld by the Company by reason of the Deferred Share Award shall be paid
to the Company by the Grantee within the requisite time such taxes are required
to be paid or deposited by the Company. 
The Company reserves the right to retain the value of the Deferred Share
Award sufficient to equal the amount of the taxes required to be withheld.


 


(f)                                    This
Policy shall be subject to all applicable laws, rules and regulations, and
to such approvals of any governmental agencies as may be required.  Unless otherwise required by law (without the
application of local conflict of law rules), the interpretation and
administration of this Policy shall be governed by the laws of the State of
Delaware.


 


(g)                                 Unless
the Committee determines otherwise, neither the Deferred Share Award nor the
Deferred Share Account shall be secured by any specific assets of the Company
or its subsidiaries, nor shall any assets of the Company or any of its
subsidiaries be designated as attributable or allocated to the satisfaction of
the Company’s obligations under this Policy or the Deferred Compensation Plan
with respect to the Deferred Share Award granted hereunder.


 


(h)                                 The
execution and delivery of this Policy and the granting of the Deferred Share
Award hereunder shall not give the Grantee or any other person the right to
participate or to continue to participate in any Deferred Compensation Plan of
the Company.  Such rights shall be governed
exclusively by the terms of such Plan.


 


IN WITNESS WHEREOF, the
Company, by its duly authorized officer, has executed this Policy.


 


	
   

  	
  HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
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