AMENDED AND
RESTATED
2008 HOVNANIAN ENTERPRISES,
INC.
STOCK INCENTIVE
PLAN
The purpose of the Plan is to aid
the Company and its Affiliates in recruiting and retaining key
employees, directors and consultants of outstanding ability and to
motivate such employees, directors and consultants to exert their
best efforts on behalf of the Company and its Affiliates by
providing incentives through the granting of Awards. The Company
expects that it will benefit from the added interest which such key
employees, directors or consultants will have in the welfare of the
Company as a result of their proprietary interest in the Company's
success. Upon approval by the Company’s stockholders, the
Plan is intended to supersede and replace the 1999 Hovnanian
Enterprises, Inc. Stock Incentive Plan, as amended and restated
prior to the Effective Date (the “1999 Plan”), and
equity-based Awards that were previously granted under the 1999
Plan that remain outstanding shall be governed pursuant to the
terms set forth herein.
The following capitalized terms used
in the Plan have the respective meanings set forth in this
Section:
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(a)
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Act: The Securities Exchange Act of 1934, as
amended, or any successor thereto.
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(b) Affiliate:
With respect to the Company, any entity directly or indirectly
controlling, controlled by, or under common control with, the
Company or any other entity designated by the Board in which the
Company or an Affiliate has an interest.
(c) Award:
An Option, Stock Appreciation Right or Other Stock-Based Award
granted pursuant to the Plan (including, without limitation, Awards
granted under the 1999 Plan).
(d) Beneficial
Owner: A “beneficial owner”, as such term is defined in
Rule 13d-3 under the Act (or any successor rule
thereto).
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(e)
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Board: The Board of Directors of the
Company.
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The occurrence of any of the
following events:
(i) any
Person (other than a Person holding securities representing 10% or
more of the combined voting power of the Company's outstanding
securities as of the Effective Date, or any Family Member of such a
Person, the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), becomes the Beneficial Owner, directly or
indirectly, of securities of the
045050-0001-08347-Active.10647769.6
Company, representing 50% or more of
the combined voting power of the Company's then-outstanding
securities;
(ii) during
any period of twenty-four consecutive months (not including any
period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board, and any new director
(other than (A) a director nominated by a Person who has entered
into an agreement with the Company to effect a transaction
described in Sections 2(f) (i), (iii) or (iv) of the Plan or (B) a
director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking
actions (including, but not limited to, an actual or threatened
proxy contest) which if consummated would constitute a Change in
Control) whose election by the Board or nomination for election by
the Company's shareholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority
thereof;
(iii) the
consummation of any transaction or series of transactions under
which the Company is merged or consolidated with any other company,
other than a merger or consolidation which would result in the
shareholders of the Company immediately prior thereto continuing to
own (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 65% of the
combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iv) the
Company undergoes a complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a liquidation
of the Company into a wholly-owned subsidiary.
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(g)
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Code: The Internal Revenue Code of 1986, as
amended, or any successor thereto.
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(h) Committee:
The Compensation Committee of the Board (or a subcommittee thereof
as provided under Section 4), or such other committee of the Board
to which the Board has delegated power to act under or pursuant to
the provisions of the Plan, or the full Board.
(i) Company:
Hovnanian Enterprises, Inc., a Delaware corporation, and any
successors thereto.
(j) Disability:
Inability of a Participant to perform in all material respects his
duties and responsibilities to the Company, or any Subsidiary of
the Company, by reason of a physical or mental disability or
infirmity which inability is reasonably expected to be permanent
and has continued (i) for a period of six consecutive months or
(ii) such shorter period as the Committee may reasonably determine
in good faith. The Disability determination shall be in the sole
discretion of the Committee and a Participant (or his
representative) shall furnish the Committee with medical evidence
documenting the Participant's disability or infirmity which is
satisfactory to the Committee.
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(k)
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Effective Date: February 6, 2008.
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(l) Fair
Market Value: On a given date, the closing price of the Shares as
reported on such date on the Composite Tape of the principal
national securities exchange on which such
045050-0001-08347-Active.10647769.6
Shares are listed or admitted to
trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal national
securities exchange on which such Shares are listed or admitted to
trading, or, if the Shares are not listed or admitted on a national
securities exchange, the arithmetic mean of the per Share closing
bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated
Quotation System (or such market in which such prices are regularly
quoted), or, if there is no market on which the Shares are
regularly quoted, the Fair Market Value shall be the value
established by the Committee in good faith. If no sale of Shares
shall have been reported on such Composite Tape or such national
securities exchange on such date or quoted on the National
Association of Securities Dealer Automated Quotation System on such
date, then the immediately preceding date on which sales of the
Shares have been so reported or quoted shall be used.
(i) any
Person holding securities representing 10% or more of the combined
voting power of the Company's outstanding securities as of the
Effective Date;
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(ii)
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any spouse of such a person;
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(iii)
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any descendant of such a person;
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(iv)
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any spouse of any descendant of such a person;
or
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(v)
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any trust for the benefit of any of the
aforementioned persons.
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(n) ISO:
An Option that is also an incentive stock option granted pursuant
to Section 6(d) of the Plan.
(o) LSAR:
A limited stock appreciation right granted pursuant to Section 7(d)
of the Plan.
(p) 1999
Plan: The 1999 Hovnanian Enterprises, Inc. Stock Incentive Plan, as
amended and restated prior to the Effective Date 1999.
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(q)
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Other Stock-Based Awards: Awards granted
pursuant to Section 8 of the Plan.
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(r)
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Option: A stock option granted pursuant to
Section 6 of the Plan.
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(s) Option
Price: The purchase price per Share of an Option, as determined
pursuant to Section 6(a) of the Plan.
(t) Participant:
An employee, director or consultant of the Company or any of its
Affiliates who is selected by the Committee to participate in the
Plan.
(u) Performance-Based
Awards: Certain Other Stock-Based Awards granted pursuant to
Section 8(b) of the Plan.
045050-0001-08347-Active.10647769.6
(v) Person:
A “person”, as such term is used for purposes of
Section 13(d) or 14(d) of the Act (or any successor section
thereto).
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(w)
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Plan: The 2008 Hovnanian Enterprises, Inc. Stock
Incentive Plan.
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(x)
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Shares: Shares of common stock of the
Company.
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(y) Stock
Appreciation Right: A stock appreciation right granted pursuant to
Section 7 of the Plan.
(z) Subsidiary:
A subsidiary corporation, as defined in Section 424(f) of the Code
(or any successor section thereto).
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3.
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SHARES SUBJECT TO THE PLAN
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Subject to Sections 4, 6(f) and 9 of
the Plan (and giving effect to the Company’s stock split on
March 26, 2004), the total number of Shares which may be issued
under the Plan pursuant to grants of ISOs or other Awards
(inclusive of Shares previously issued under the 1999 Plan) is
16,972,128 and the maximum number of Shares for which Options,
Stock Appreciation Rights, restricted Shares or restricted Share
units may be granted during a fiscal year (inclusive of any such
Awards previously granted under the 1999 Plan) to any Participant
shall be 1,000,000. The Shares may consist, in whole or in part, of
unissued Shares or treasury Shares. The issuance of Shares or the
payment of cash upon the exercise of an Award or in consideration
of the cancellation or termination of an Award shall reduce the
total number of Shares available under the Plan, as applicable.
Notwithstanding the forgoing, in the event that any Awards under
the Plan terminate or lapse (or have terminated or lapsed) for any
reason from and after November 1, 2007 (including, without
limitation, due to a voluntary or involuntary forfeiture of such
Awards), the number of Shares subject to such terminated or lapsed
Awards shall not be available for future Award grants under the
Plan and the total number of Shares available for issuance under
the Plan shall instead be reduced by such number of
Shares.
The Plan shall be administered by
the Committee, which may delegate its duties and powers in whole or
in part to any subcommittee thereof consisting solely of at least
two individuals who are each intended to qualify as
“non-employee directors” within the meaning of Rule
16b-3 under the Act (or any successor rule thereto), “outside
directors” within the meaning of Section 162(m) of the Code
(or any successor section thereto) and “independent
directors” within the meaning of the applicable rules, if
any, of any national securities exchange on which Shares are listed
or admitted to trading; provided, however, that any action
permitted to be taken by the Committee may be taken by the Board,
in its discretion. The Committee is authorized to interpret the
Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make any other determinations that it
deems necessary or desirable for the administration of the Plan.
The Committee may correct any defect or omission or reconcile any
inconsistency in the Plan in the manner and to the extent the
Committee deems necessary or desirable. Any decision of the
Committee in the interpretation and administrations of the Plan, as
described herein, shall lie within its sole and absolute discretion
and shall be final, conclusive and binding on all parties concerned
(including, but not limited to Participants and their beneficiaries
or successors).
045050-0001-08347-Active.10647769.6
Determinations made by the Committee
under the Plan need not be uniform and may be made selectively
among Participants, whether or not such Participants are similarly
situated. Awards may, in the discretion of the Committee, be made
under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or its
Affiliates or a company acquired by the Company or with which the
Company combines. The number of Shares underlying such substitute
awards shall be counted against the aggregate number of Shares
available for Awards under the Plan. The Committee shall require
payment of any minimum amount it may determine to be necessary to
withhold for federal, state, local or other, taxes as a result of
the exercise or vesting of an Award. Unless the Committee specifies
otherwise, the Participant may elect to pay a portion or all of
such minimum withholding taxes by (a) delivery in Shares or (b)
having Shares withheld by the Company from any Shares that would
have otherwise been received by the Participant. The number of
Shares so delivered or withheld shall have an aggregate Fair Market
Value sufficient to satisfy the applicable minimum withholding
taxes. If the chief executive officer of the Company is a member of
the Board, the Board by specific resolution may constitute such
chief executive officer as a committee of one which shall have the
authority to grant Awards of up to an aggregate of 1,000,000 Shares
(giving effect to the Company’s stock split on March 26,
2004, and otherwise subject to the provisions of Section 9 of the
Plan) in each fiscal year to Participants who are (i) not subject
to the rules promulgated under Section 16 of the Act (or any
successor section thereto) or (ii) covered employees (or
anticipated to become covered employees) as such term is defined in
Section 162(m) of the Code; provided, however, that such chief
executive officer shall notify the Committee of any such grants
made pursuant to this Section 4.
No Award may be granted under the
Plan after the tenth anniversary of the Effective Date, but Awards
theretofore granted may extend beyond that date.
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6.
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TERMS AND CONDITIONS OF OPTIONS
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Options granted under the Plan shall
be, as determined by the Committee, non-qualified or incentive
stock options for federal income tax purposes, as evidenced by the
related Award agreements, and shall be subject to the foregoing and
the following terms and conditions and to such other terms and
conditions, not inconsistent therewith, as the Committee shall
determine:
(a) Option
Price. The Option Price per Share shall be determined by the
Committee, but shall not be less than 100% of the Fair Market Value
of a Share on the date an Option is granted (other than in the case
of Options granted in substitution of previously granted awards, as
described in Section 4).
(b) Exercisability.
Options granted under the Plan shall be exercisable at such time
and upon such terms and conditions as may be determined by the
Committee, but in no event shall an Option be exercisable more than
ten years after the date it is granted. The Committee may, in its
discretion, accelerate the date after which Options may be
exercised in whole or in part. If the chief executive officer of
the Company is a member of the Board, the Board by specific
resolution may constitute such chief executive officer as a
committee of one which shall
045050-0001-08347-Active.10647769.6
have the authority to accelerate the
date after which Options may be exercised in whole or in
part.
(c) Exercise
of Options. Except as otherwise provided in the Plan or in an Award
agreement, an Option may be exercised for all, or from time to time
any part, of the Shares for which it is then exercisable. For
purposes of Section 6 of the Plan, the exer
