Exhibit 10(l)

 

EXECUTION VERSION

 

 

 

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$75,000,000

CREDIT AGREEMENT

Dated as of July 29, 2016

 

among

 

K. HOVNANIAN ENTERPRISES, INC.,
as Borrower

HOVNANIAN ENTERPRISES, INC.,
as Holdings

 

THE SUBSIDIARIES OF HOLDINGS NAMED HEREIN,

as Subsidiary Guarantors

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Administrative Agent

 

and

 

THE LENDERS PARTY HERETO

 

 

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TABLE OF CONTENTS

 

Page

 

ARTICLE I

     

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01

Defined Terms

1

SECTION 1.02

Rules of Construction

45

SECTION 1.03

Times of Day

46

SECTION 1.04

Timing of Payment or Performance

46

     

ARTICLE II

     

THE COMMITMENTS AND BORROWINGS

 

SECTION 2.01

The Loans

46

SECTION 2.02

Borrowings, Conversions and Continuations of Loans

46

SECTION 2.03

Prepayments

48

SECTION 2.04

Termination of Commitments

51

SECTION 2.05

Repayment of Loans

51

SECTION 2.06

Interest

52

SECTION 2.07

Fees

52

SECTION 2.08

Computation of Interest and Fees

52

SECTION 2.09

Evidence of Indebtedness

52

SECTION 2.10

Payments Generally

53

SECTION 2.11

Sharing of Payments

54

SECTION 2.12

[Reserved]

55

SECTION 2.13

Extensions of Term Loans

55

SECTION 2.14

Refinancing Facilities

57

SECTION 2.15

Defaulting Lenders

58

     

ARTICLE III

     

TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

 

SECTION 3.01

Taxes

59

SECTION 3.02

Illegality

63

SECTION 3.03

Inability to Determine Rates

63

SECTION 3.04

Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate
Loans

64

SECTION 3.05

Funding Losses

65

SECTION 3.06

Matters Applicable to All Requests for Compensation

65

SECTION 3.07

Replacement of Lenders Under Certain Circumstances

66

 

 
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SECTION 3.08

Survival

67

     

ARTICLE IV

     

CONDITIONS PRECEDENT

 

SECTION 4.01

Conditions to Effectiveness

67

SECTION 4.02

Conditions to Initial (Closing Date) Borrowing

68

     

ARTICLE V

     

REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND THE BORROWER

 

SECTION 5.01

Good Standing of the Borrower, Holdings and its Subsidiaries

70

SECTION 5.02

Capital Stock

70

SECTION 5.03

Loan Documents

71

SECTION 5.04

Absence of Further Requirements

71

SECTION 5.05

Title to Properties

71

SECTION 5.06

Absence of Defaults and Conflicts Resulting from the Transactions

71

SECTION 5.07

Absence of Existing Defaults and Conflicts

72

SECTION 5.08

Authorization of this Agreement

72

SECTION 5.09

Possession of Licenses and Permits

72

SECTION 5.10

Environmental Laws and ERISA

72

SECTION 5.11

Insurance

73

SECTION 5.12

Internal Control Over Financial Reporting

73

SECTION 5.13

Disclosure Controls

73

SECTION 5.14

Litigation

73

SECTION 5.15

Financial Statements

73

SECTION 5.16

No Material Adverse Change in Business

73

SECTION 5.17

Investment Company Act

73

SECTION 5.18

Solvency

74

SECTION 5.19

Regulations T, U, X

74

SECTION 5.20

Sanctions

74

SECTION 5.21

Exchange Act

74

SECTION 5.22

Tender Offer and Consent Solicitation

74

SECTION 5.23

Taxes

74

SECTION 5.24

Compliance with Laws

75

     

ARTICLE VI

     

COVENANTS

 

SECTION 6.01

Existence

75

SECTION 6.02

Payment of Taxes

75

 

 
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SECTION 6.03

Limitations on Indebtedness

75

SECTION  6.04

Limitations on Restricted Payments

77

SECTION 6.05

Limitations on Liens

81

SECTION 6.06

Limitations on Restrictions Affecting Restricted Subsidiaries

81

SECTION 6.07

Limitations on Dispositions of Assets

83

SECTION 6.08

Guarantees by Restricted Subsidiaries

84

SECTION 6.09

[Reserved]

84

SECTION 6.10

Limitations on Transactions with Affiliates

84

SECTION 6.11

Limitations on Mergers, Consolidations and Sales of Assets

86

SECTION 6.12

Reports to Lenders

87

SECTION 6.13

Notice of Other Default

88

SECTION 6.14

Collateral Requirement; Further Assurances; Costs

88

SECTION 6.15

Maintenance of Ratings

91

SECTION 6.16

Change of Control Offers

91

SECTION 6.17

Maintenance of Properties

92

SECTION 6.18

Insurance

92

SECTION 6.19

Compliance with Laws

92

SECTION 6.20

Use of Proceeds

92

SECTION 6.21

Books and Records

93

     

ARTICLE VII

     

EVENTS OF DEFAULT AND REMEDIES

 

SECTION 7.01

Events of Default

93

SECTION 7.02

[Reserved]

96

SECTION 7.03

Application of Funds

96

     

ARTICLE VIII

     

ADMINISTRATIVE AGENT AND OTHER AGENTS

 

SECTION 8.01

Appointment and Authority

97

SECTION 8.02

Rights as a Lender

98

SECTION 8.03

Exculpatory Provisions

98

SECTION 8.04

Reliance by Administrative Agent

100

SECTION 8.05

Delegation of Duties

100

SECTION 8.06

Resignation of Administrative Agent: Appointment of Successor

101

SECTION 8.07

Non-Reliance on Administrative Agent and Other Lenders

102

SECTION 8.08

Collateral and Guarantee Matters

102

SECTION 8.09

[Reserved]

104

SECTION 8.10

Appointment of Supplemental Administrative Agents

104

 

 
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SECTION 8.11

Administrative Agent May File Proofs of Claim

105

SECTION 8.12

Indemnification of Administrative Agent

105

SECTION 8.13

Agency for Perfection

106

     

ARTICLE IX

     

MISCELLANEOUS

 

SECTION 9.01

Amendments, Etc.

106

SECTION 9.02

Notices and Other Communications; Facsimile Copies

109

SECTION 9.03

No Waiver; Cumulative Remedies

110

SECTION 9.04

Expenses

110

SECTION 9.05

Indemnification by the Borrower

111

SECTION 9.06

Marshalling; Payments Set Aside

112

SECTION 9.07

Successors and Assigns

112

SECTION 9.08

[Reserved]

115

SECTION 9.09

Setoff

115

SECTION 9.10

Interest Rate Limitation

116

SECTION 9.11

Counterparts

116

SECTION 9.12

Integration

116

SECTION 9.13

Survival

116

SECTION 9.14

Severability

117

SECTION 9.15

GOVERNING LAW

117

SECTION 9.16

WAIVER OF RIGHT TO TRIAL BY JURY

117

SECTION 9.17

Binding Effect

118

SECTION 9.18

USA PATRIOT Act Notice

118

SECTION 9.19

No Advisory or Fiduciary Relationship

118

     

ARTICLE X

     

GUARANTEES; RELEASE OF GUARANTOR

 

SECTION 10.01

Guarantee

118

SECTION 10.02

Obligations of each Guarantor Unconditional

119

SECTION 10.03

Release of a Guarantor

119

SECTION 10.04

Execution and Delivery of Guarantee

120

SECTION 10.05

Limitation on Guarantor Liability

120

SECTION 10.06

Article X not to Prevent Events of Default

120

SECTION 10.07

Waiver by the Guarantors

120

SECTION 10.08

Subrogation and Contribution

120

SECTION 10.09

Stay of Acceleration

121

 

 
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SCHEDULES

I

Initial Term Lenders

1.01

Unrestricted Subsidiaries

2.01

Initial Term Commitments

4.02

Closing Date Collateral Documents

9.02

Administrative Agent’s Office, Certain Addresses for Notices

10.01

Subsidiary Guarantors

    EXHIBITS  

A-1

Form of Loan Notice

A-2

Form of Prepayment Notice

B

Form of Term Note

C

Form of Assignment and Assumption

D

Form of Administrative Questionnaire

E-1

US Tax Certificate (For Non-US Lenders that are not Partnerships For US Federal
Income Tax Purposes)

E-2

US Tax Certificate (For Non-US Lenders that are Partnerships For US Federal
Income Tax Purposes)

E-3

US Tax Certificate (For Non-US Participants that are not Partnerships For US
Federal Income Tax Purposes)

E-4

US Tax Certificate (For Non-US Participants that are Partnerships For US Federal
Income Tax Purposes)

F-1

Form of First Lien Intercreditor Agreement

F-2

Form of Amended and Restated Intercreditor Agreement

F-3

Form of Amended and Restated Collateral Agency Agreement

G-1

Form of Borrower Secretary’s Certificate

G-2

Form of Loan Party Secretary’s Certificate

H-1

Form of Certificate of Responsible Officer

H-2

Form of Perfection Certificate

H-3

Form of Solvency Certificate

I

Form of Supplemental Guarantee

J

Form of Offer to Purchase Statement

K

Collateral Perfection Officer’s Certificate

 

 
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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (as amended, restated, amended and restated or otherwise
modified from time to time, this “Agreement”) is entered into as of July 29,
2016 among HOVNANIAN ENTERPRISES, INC., a Delaware corporation (“Holdings”), K.
HOVNANIAN ENTERPRISES, INC., a California corporation (the “Borrower”), the
Subsidiaries of Holdings from time to time party hereto (each a “Subsidiary
Guarantor” and collectively, together with Holdings, the “Guarantors”), each
lender from time to time party hereto (collectively, the “Lenders” and
individually, each a “Lender”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, as
Administrative Agent (as defined herein).

 

PRELIMINARY STATEMENTS

 

The Borrower has requested that the Initial Term Lenders make Initial Term Loans
to the Borrower in an aggregate principal amount of $75,000,000.

 

The Loan Parties have agreed pursuant to the Security Agreement to secure all of
the Loan Obligations by granting to the Administrative Agent, for the benefit of
the Secured Parties, super-priority Liens (subject to certain Liens permitted by
this Agreement) on the assets currently constituting collateral under the First
Lien Notes and Existing Second Lien Notes.

 

The Guarantors have agreed to guarantee the Loan Obligations of the Borrower
hereunder pursuant to the Guarantee.

 

The applicable Lenders have indicated their willingness to lend on the terms and
subject to the conditions set forth in this Agreement.

 

In consideration of the mutual covenants and agreements contained in this
Agreement, the parties hereto covenant and agree as follows:

 

Article I

DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.01     Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:

 

“2017 Notes” means the collective reference to the January 2017 Notes and the
Units.

 

“7.000% Notes” means the Borrower’s 7.000% Senior Notes due 2019 issued under
the 7.000% Notes Indenture.

 

“7.000% Notes Indenture” means the indenture governing the Borrower’s 7.000%
Notes, dated as of January 10, 2014 (as may be amended or supplemented as of the
date hereof or from time to time), among the Borrower, Holdings, each of the
other guarantors named therein and Wilmington Trust, National Association as
Trustee (as defined in the 7.000% Notes Indenture).

 

“8.000% Notes” means the Borrower’s 8.000% Senior Notes due 2019.

 

 
 

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“Acquired Indebtedness” means (a) with respect to any Person that becomes a
Restricted Subsidiary (or is merged into Holdings, the Borrower or any
Restricted Subsidiary) after the Closing Date, Indebtedness of such Person or
any of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary (or is merged into Holdings, the Borrower or any Restricted
Subsidiary) that was not incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary (or being merged into Holdings, the
Borrower or any Restricted Subsidiary) and (b) with respect to Holdings, the
Borrower or any Restricted Subsidiary, any Indebtedness expressly assumed by
Holdings, the Borrower or any Restricted Subsidiary in connection with the
acquisition of any assets from another Person (other than Holdings, the Borrower
or any Restricted Subsidiary), which Indebtedness was not incurred by such other
Person in connection with or in contemplation of such acquisition. Indebtedness
incurred in connection with or in contemplation of any transaction described in
clause (a) or (b) of the preceding sentence shall be deemed to have been
incurred by Holdings or a Restricted Subsidiary, as the case may be, at the time
such Person becomes a Restricted Subsidiary (or is merged into Holdings, the
Borrower or any Restricted Subsidiary) in the case of clause (a) or at the time
of the acquisition of such assets in the case of clause (b), but shall not be
deemed Acquired Indebtedness.

 

“Administrative Agent” means Wilmington Trust, National Association in its
capacity as administrative agent or collateral agent, as the case may be, under
any of the Loan Documents, or any permitted successor administrative agent or
collateral agent, as the case may be.

 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 9.02, or such other address or
account as the Administrative Agent may from time to time notify in writing to
the Borrower and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire
substantially in the form of Exhibit D.

 

“Affiliate” means, when used with reference to a specified Person, any Person
directly or indirectly controlling, or controlled by or under direct or indirect
common control with, the Person specified.

 

“Affiliate Transaction” has the meaning specified in Section 6.10.

 

“Agent-Related Person” means the Administrative Agent, together with its
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.

 

“Agents” means, collectively, the Administrative Agent and the Supplemental
Administrative Agents (if any).

 

“Aggregate Commitments” means the Term Commitments of all the Lenders.

 

“Aggregate Exposure” means, with respect to any Lender at any time, an amount
equal to such Lender’s Total Outstandings.

 

“Aggregate Exposure Percentage” means, with respect to any Lender at any time,
the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at
such time to the Aggregate Exposure of all Lenders at such time.

 

“Agreement” has the meaning specified in the introductory paragraph.

 

“Amended and Restated Collateral Agency Agreement” means the Amended and
Restated Collateral Agency Agreement, dated as of the Closing Date, among the
Borrower, Holdings, the other grantors party from time to time thereto, the
First Lien Notes Collateral Agent, the Administrative Agent, the Existing Second
Lien Collateral Agent, the New Second Lien Notes Collateral Agent, Wilmington
Trust, National Association, as Junior Joint Collateral Agent (as defined
therein) and the Mortgage Tax Collateral Agent, as may be amended, restated,
supplemented or otherwise modified from time to time.

 

 
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“Amended and Restated Intercreditor Agreement” means the Amended and Restated
Intercreditor Agreement, dated as of the Closing Date, among the Borrower,
Holdings, the other grantors party from time to time thereto, the Administrative
Agent, the First Lien Notes Collateral Agent and the First Lien Notes Trustee,
the Existing Second Lien Collateral Agent and the Existing Second Lien Trustee,
the New Second Lien Notes Collateral Agent and the New Second Lien Notes
Trustee, Wilmington Trust, National Association, as Junior Joint Collateral
Agent (as defined therein) and the Mortgage Tax Collateral Agent, as may be
amended, restated, supplemented or otherwise modified from time to time.

 

“Applicable Debt” means all Indebtedness of Holdings, the Borrower or any other
Loan Party (a) under Credit Facilities or (b) that is publicly traded (including
in the Rule 144A market), including, without limitation, the Borrower’s senior
notes outstanding on the Closing Date.

 

“Applicable Rate” means with respect to an Initial Term Loan, (i) in the case of
any Base Rate Loan, 6.00% and (ii) in the case of any Eurodollar Rate Loan,
7.00%.

 

“Appropriate Lender” means, at any time, with respect to Loans of any Class, the
Lenders of such Class.

 

“Approved Fund” means any Fund that is administered, advised or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers, advises or manages a Lender.

 

“Asset Acquisition” means (a) an Investment by Holdings, the Borrower or any
Restricted Subsidiary in any other Person if, as a result of such Investment,
such Person shall become a Restricted Subsidiary or shall be consolidated or
merged with or into Holdings, the Borrower or any Restricted Subsidiary or (b)
the acquisition by Holdings, the Borrower or any Restricted Subsidiary of the
assets of any Person, which constitute all or substantially all of the assets or
of an operating unit or line of business of such Person or which is otherwise
outside the ordinary course of business.

 

“Asset Disposition” means any sale, transfer, conveyance, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback or sale of shares of Capital Stock in any Subsidiary) (each,
a “transaction”) by Holdings, the Borrower or any Restricted Subsidiary to any
Person of any Property having a Fair Market Value in any transaction or series
of related transactions of at least $10.0 million, provided that such de-minimis
amount shall not apply to any Land Banking Transactions (and with respect to
Land Banking Transactions, the proviso in clause (b) below shall apply). The
term “Asset Disposition” shall not include:

 

(a)     a transaction between Holdings, the Borrower and any Restricted
Subsidiary or a transaction between Restricted Subsidiaries,

 

(b)     a transaction in the ordinary course of business, including, without
limitation, sales (directly or indirectly), sales subject to repurchase options,
dedications and other donations to governmental authorities, leases and sales
and leasebacks of (i) homes, improved land and unimproved land and (ii) real
estate (including related amenities and improvements); provided that sales of
Collateral pursuant to Land Banking Transactions (other than Collateral acquired
by Holdings, the Borrower or any Restricted Subsidiary within 180 days prior to
the entering into of a definitive agreement for such Land Banking Transaction)
do not in the aggregate exceed a GAAP book value for all such Collateral of
$10.0 million during any fiscal quarter (with any unused amounts in any fiscal
quarter being carried over to subsequent fiscal quarters subject to a maximum
GAAP book value of $50.0 million in any fiscal quarter),

 

 
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(c)     a transaction involving the sale of Capital Stock of, or the disposition
of assets in, an Unrestricted Subsidiary,

 

(d)     any exchange or swap of assets of Holdings, the Borrower or any
Restricted Subsidiary for assets (including Capital Stock of any Person that is
or will be a Restricted Subsidiary following receipt thereof) that (i) are to be
used by Holdings, the Borrower or any Restricted Subsidiary in the ordinary
course of its Real Estate Business and (ii) have a Fair Market Value not less
than the Fair Market Value of the assets exchanged or swapped (provided that
(except as permitted by clause (c) under the definition of “Permitted
Investment”) to the extent that the assets exchanged or swapped were Collateral,
the assets received are pledged as Collateral under the Collateral Documents
substantially simultaneously with such exchange or swap, with the Lien on such
assets received being of the same priority with respect to Loans as the Lien on
the assets disposed of),

 

(e)     any sale, transfer, conveyance, lease or other disposition of assets and
properties that is governed by Section 6.11 hereof,

 

(f)     dispositions of mortgage loans and related assets and mortgage-backed
securities in the ordinary course of a mortgage lending business,

 

(g)     the creation of a Permitted Lien and dispositions in connection with
Permitted Liens,

 

(h)     any sale, transfer, conveyance, lease or other disposition that
constitutes a Restricted Payment or Permitted Investment,

 

(i)     sales, transfers and other dispositions of Investments in joint ventures
to the extent required by, or made pursuant to, customary buy/sell arrangements
between the joint venture parties set forth in joint venture arrangements and
similar binding arrangements,

 

(j)     the unwinding of any Hedging Obligations,

 

(k)     foreclosures, condemnation, eminent domain or any similar action on
assets,

 

(l)     any financing transaction with respect to property built or acquired by
Holdings or any Restricted Subsidiary after the Closing Date,

 

(m)     any surrender or waiver of contractual rights or the settlement, release
or surrender of contractual rights or other litigation claims in the ordinary
course of business, and

 

(n)     the issuance of directors’ qualifying shares and shares issued to
foreign nationals or other third parties as required by applicable law.

 

“Assignment and Assumption” means an Assignment and Assumption substantially in
the form of Exhibit C or in another form reasonably acceptable to the
Administrative Agent.

 

 
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“Attorney Costs” means and includes all reasonable and documented out-of-pocket
fees, expenses and disbursements of any law firm or other external counsel.

 

“Attributable Debt” means, with respect to any Capitalized Lease Obligations,
the capitalized amount thereof determined in accordance with GAAP.

 

“Authorization” has the meaning specified in Section 5.09.

 

“Bankruptcy Law” means Title 11 of the United States Code, as amended, or any
similar federal or state law for the relief of debtors.

 

“Base Rate” means, for any day, a fluctuating rate per annum equal to the
highest of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1%, (b)
the Prime Rate and (c) the Eurodollar Rate applicable for an Interest Period of
one (1) month beginning on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1.00%. Any change in the Base Rate due
to a change in the Federal Funds Rate, the Prime Rate or the Eurodollar Rate, as
the case may be, shall be effective as of the opening of business on the
effective day of such change in the Federal Funds Rate, Prime Rate or Eurodollar
Rate, as the case may be.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Board of Directors” means, when used with reference to the Borrower or
Holdings, as the case may be, the board of directors or any duly authorized
committee of that board or any director or directors and/or officer or officers
to whom that board or committee shall have duly delegated its authority.

 

“Borrower” has the meaning specified in the introductory paragraph to this
Agreement.

 

“Borrowing” means a borrowing of Term Loans, Refinancing Term Loans or Extended
Term Loans, as the context may require.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in the state where the Administrative Agent’s Office is located, and, if
such day relates to any interest rate settings as to a Eurodollar Rate Loan, any
fundings, disbursements, settlements and payments in respect of any such
Eurodollar Rate Loan, or any other dealings to be carried out pursuant to this
Agreement in respect of any such Eurodollar Rate Loan, means any such day on
which dealings in deposits in Dollars are conducted by and between banks in the
London interbank eurodollar market.

 

“Capital Stock” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of or in
such Person’s capital stock or other equity interests, and options, rights or
warrants to purchase such capital stock or other equity interests, whether now
outstanding or issued after the Closing Date, including, without limitation, all
Disqualified Stock and Preferred Stock, but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock.

 

“Capitalized Lease Obligations” of any Person means the obligations of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligations will be the capitalized amount thereof determined in
accordance with GAAP.

 

 
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“Cash Equivalents” means:

 

(a)     U.S. dollars, Canadian dollars, euros, pound sterling, any national
currency of any participating member state in the European Union or local
currencies held from time to time in the ordinary course of business;

 

(b)     securities issued or directly and fully guaranteed or insured by the
U.S. government or any country that is a member state of the European Union or
any agency or instrumentality thereof having maturities of one year or less from
the date of acquisition;

 

(c)     certificates of deposit, time deposits, eurodollar time deposits,
overnight bank deposits or bankers’ acceptances with maturities of one year or
less from the date of acquisition, in each case with any domestic commercial
bank having capital and surplus in excess of $500.0 million;

 

(d)     marketable general obligations issued by any state of the United States
of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
and, at the time of acquisition, having a credit rating of at least “A” or the
equivalent thereof by S&P or Moody’s, or carrying an equivalent rating by a
nationally recognized Rating Agency, if both of the two named Rating Agencies
cease publishing ratings of investments;

 

(e)     repurchase obligations for underlying securities of the types described
in clauses (b), (c) and (d) of this definition entered into with any financial
institution meeting the qualifications specified in clause (c) of this
definition;

 

(f)     commercial paper rated P-1, A-1 or the equivalent thereof by Moody’s or
S&P, respectively, and in each case maturing within one year after the date of
acquisition;

 

(g)     investments with average maturities of one year or less from the date of
acquisition in money market funds rated AAA- (or the equivalent thereof) or
better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s; and

 

(h)     investments in investment companies or money market funds substantially
all of the assets of which consist of securities described in the foregoing
clauses (a) through (g) of this definition.

 

Notwithstanding the foregoing, Cash Equivalents shall include amounts
denominated in currencies other than those set forth in clause (a) above;
provided that such amounts are converted into any currency listed in clause (a)
as promptly as practicable and in any event within ten business days following
the receipt of such amounts.

 

“Cash Management Services” means any of the following to the extent not
constituting a line of credit (other than an overnight overdraft facility that
is not in default): ACH transactions, treasury and/or cash management services,
including, without limitation, controlled disbursement services, overdraft
facilities, foreign exchange facilities, deposit and other accounts and merchant
services.

 

“Casualty Event” means any event that gives rise to the receipt by Holdings, the
Borrower or any Restricted Subsidiary of any insurance proceeds or condemnation
awards in respect of any equipment, fixed assets or real property (including any
improvements thereon) to replace or repair any such equipment, fixed assets or
real property.

 

“Change of Control” means:

 

(a)     any sale, lease or other transfer (in one transaction or a series of
transactions) of all or substantially all of the consolidated assets of Holdings
and its Restricted Subsidiaries to any Person (other than a Restricted
Subsidiary); provided, however, that a transaction where the holders of all
classes of Common Equity of Holdings immediately prior to such transaction own,
directly or indirectly, more than 50% of all classes of Common Equity of such
Person immediately after such transaction shall not be a Change of Control;

 

 
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(b)     a “person” or “group” (within the meaning of Section 13(d) of the
Exchange Act (other than (x) Holdings or (y) the Permitted Hovnanian Holders))
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act)
of Common Equity of Holdings representing more than 50% of the voting power of
the Common Equity of Holdings;

 

(c)     Continuing Directors cease to constitute at least a majority of the
Board of Directors of Holdings; or

 

(d)     the stockholders of Holdings approve any plan or proposal for the
liquidation or dissolution of Holdings; provided, however, that a liquidation or
dissolution of Holdings which is part of a transaction that does not constitute
a Change of Control under the proviso contained in clause (a) of this definition
shall not constitute a Change of Control.

 

“Change of Control Offer” has the meaning specified in Section 6.16.

 

“Change of Control Repurchase Date” has the meaning specified in Section 6.16.

 

“Class” (a) when used with respect to Lenders, refers to whether such Lenders
are the Initial Term Lenders, Refinancing Term Lenders or Extending Term Lenders
with loans or commitments hereunder with identical terms, (b) when used with
respect to Term Commitments, refers to whether such Term Commitments are Initial
Term Commitments or Term Commitments in respect of Refinancing Term Loans with
identical terms and (c) when used with respect to Loans or a Borrowing, refers
to whether such Loans, or the Loans comprising such Borrowing, are Initial Term
Loans, Refinancing Term Loans or Extended Term Loans with identical terms, in
the case of each of clauses (a), (b) and (c), under this Agreement as originally
in effect or as amended or otherwise modified pursuant to Sections 2.13, 2.14 or
9.01, of which such Loan, Borrowing or Term Commitment shall be a part.

 

“Closing Date” means the first date all the conditions precedent in Section 4.02
are satisfied or waived in accordance with Section 4.02, which date shall be no
later than the Commitment Termination Date.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time, and rules and regulations related thereto.

 

“Collateral” means all property or assets of the Borrower and the other Loan
Parties (whether now owned or hereafter arising or acquired) that secures Loan
Obligations under the Collateral Documents.

 

“Collateral Documents” means, collectively, the First Lien Intercreditor
Agreement, the Amended and Restated Intercreditor Agreement, the Amended and
Restated Collateral Agency Agreement, the Security Agreement, the Pledge
Agreement, the Intellectual Property Security Agreements and any collateral
agency agreement related to any of the foregoing, in each case, if any, and each
of the other agreements, instruments or documents that creates, purports to
create or perfects a Lien in favor of the Administrative Agent for the benefit
of the Secured Parties as security for the Loan Obligations.

 

 
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“Collateral Perfection Officer’s Certificate” has the meaning specified in
Section 6.14(g)

 

“Commission” means the Securities and Exchange Commission.

 

“Commitment Termination Date” means (a) five (5) Business Days after the
Effective Date, if the Tender Offer and Consent Solicitation has not been
commenced substantially on the terms (subject to the right of the Purchasers (as
defined in the Note Purchase Agreement) to consent to certain changes to such
terms in accordance with Section 7.01 of the Note Purchase Agreement) set forth
in the Offer to Purchase Statement in the form attached hereto as Exhibit J by
such date, and otherwise, (b) 45 Business Days after the Effective Date, if the
condition set forth in Section 4.02(j) has not been satisfied.

 

“Common Equity” of any Person means Capital Stock of such Person that is
generally entitled to (a) vote in the election of directors of such Person or
(b) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management or policies of such Person.

 

“Compensation Period” has the meaning specified in Section 2.10(b)(ii).

 

“Competitors” means those Persons identified in writing to the Administrative
Agent and the Initial Term Lenders on or prior to the Effective Date as
competitors or who are clearly identifiable Affiliates of such Persons solely by
similarity of such Affiliate’s name.

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

 

“Consent Solicitation” has the meaning specified in the definition of “Tender
Offer and Consent Solicitation.”

 

“Consolidated Cash Flow Available for Fixed Charges” means, for any period,
Consolidated Net Income for such period plus (each to the extent deducted in
calculating such Consolidated Net Income and determined in accordance with GAAP)
the sum for such period, without duplication, of:

 

(a)     provision for taxes based on income or profits or capital gains,
including, without limitation, U.S. federal, state, non-U.S., franchise, excise,
value added and similar taxes and foreign withholding taxes of such Person paid
or accrued during such period, including any penalties and interest relating to
such taxes or arising from any tax examinations,

 

(b)     Consolidated Interest Expense,

 

(c)     depreciation and amortization expenses and other non-cash charges to
earnings,

 

(d)     any fees, expenses, charges or losses (other than depreciation or
amortization expense) related to any Equity Offering, Permitted Investment,
acquisition, disposition, recapitalization or the incurrence of Indebtedness
permitted to be incurred by this Agreement (including a refinancing thereof)
(whether or not successful), including (i) such fees, expenses or charges
related to the making of Loans and the issuance of the New Second Lien Notes and
the First Lien Exchange Notes and (ii) any amendment or other modification of
the Loans hereunder, the New Second Lien Notes and the First Lien Exchange Notes
or other Indebtedness,

 

 
8

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(e)     any other non-cash charges, including any write offs, write downs,
expenses, losses or items, excluding any such charge that represents an accrual
or reserve for a cash expenditure for a future period,

 

(f)     costs of surety bonds incurred in such period in connection with
financing activities,

 

(g)      any costs or expense incurred by Holdings or a Restricted Subsidiary
pursuant to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement or any stock subscription or
shareholder agreement, to the extent that such cost or expenses are funded with
cash proceeds contributed to the capital of Holdings or net cash proceeds of an
issuance of Qualified Stock solely to the extent that such net cash proceeds are
excluded from the calculation set forth in clause (iii) of Section 6.04(a),

 

(h) effects of adjustments (including the effects of such adjustments pushed
down to Holdings and its Restricted Subsidiaries) in any line item in such
Person’s consolidated financial statements in accordance with GAAP resulting
from the application of purchase accounting, or the amortization or write-off of
any amounts thereof, net of taxes,

 

(i)     any impairment charge, asset write-off or write-down pursuant to ASC 350
and ASC 360 (formerly Financial Accounting Standards Board Statement Nos. 142
and 144, respectively) and the amortization of intangibles arising pursuant to
ASC 805 (formerly Financial Accounting Standards Board Statement No. 141), and

 

(j)     cash receipts (or any netting arrangements resulting in reduced cash
expenses) not included in Consolidated Cash Flow Available for Fixed Charges in
any period to the extent non-cash gains relating to such receipts were deducted
in the calculation of Consolidated Cash Flow Available for Fixed Charges
pursuant to clause (k) below for any previous period and not added back, minus

 

(k)     non-cash gains increasing Consolidated Net Income for such period,
excluding any non-cash gains which represent the reversal of any accrual of, or
cash reserve for, anticipated cash charges that reduced Consolidated Cash Flow
Available for Fixed Charges in any prior period; provided that, to the extent
non-cash gains are deducted pursuant to this clause (k) for any previous period
and not otherwise added back to Consolidated Cash Flow Available for Fixed
Charges, Consolidated Cash Flow Available for Fixed Charges shall be increased
by the amount of any cash receipts (or any netting arrangements resulting in
reduced cash expenses) in respect of such non-cash gains received in subsequent
periods to the extent not already included therein, and plus or minus (as
applicable and without duplication) to eliminate the following items to the
extent reflected in Consolidated Net Income,

 

(l)     (i) any net gain or loss resulting in such period from currency gains or
losses related to Indebtedness, intercompany balances and other balance sheet
items, and (ii) any unrealized net gain or loss resulting in such period from
Hedging Obligations, and the application of Financial Accounting Standards
Codification No. 815—Derivatives and Hedging (formerly Financing Accounting
Standards Board Statement No. 133), and its related pronouncements and
interpretations (or any successor provision).

 

 
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“Consolidated Fixed Charge Coverage Ratio” means, with respect to any
determination date, the ratio of (x) Consolidated Cash Flow Available for Fixed
Charges for the prior four full fiscal quarters (the “Four Quarter Period”) for
which financial results have been reported immediately preceding the
determination date (the “Transaction Date”), to (y) the aggregate Consolidated
Interest Incurred for the Four Quarter Period. For purposes of this definition,
“Consolidated Cash Flow Available for Fixed Charges” and “Consolidated Interest
Incurred” shall be calculated after giving effect on a pro forma basis for the
period of such calculation to:

 

(a)     the incurrence or the repayment, repurchase, redemption, retirement,
defeasance or other discharge or the assumption by another Person that is not an
Affiliate (collectively, “repayment”) of any Indebtedness of Holdings, the
Borrower or any Restricted Subsidiary (and the application of the proceeds
thereof) giving rise to the need to make such calculation, and any incurrence or
repayment of other Indebtedness (and the application of the proceeds thereof),
at any time on or after the first day of the Four Quarter Period and on or prior
to the Transaction Date, as if such incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period, except that Indebtedness under revolving credit facilities
shall be deemed to be the average daily balance of such Indebtedness during the
Four Quarter Period (as reduced on such pro forma basis by the application of
any proceeds of the incurrence of Indebtedness giving rise to the need to make
such calculation);

 

(b)     any Asset Disposition, Asset Acquisition (including, without limitation,
any Asset Acquisition giving rise to the need to make such calculation as a
result of Holdings, the Borrower or any Restricted Subsidiary (including any
Person that becomes a Restricted Subsidiary as a result of any such Asset
Acquisition) incurring Acquired Indebtedness at any time on or after the first
day of the Four Quarter Period and on or prior to the Transaction Date),
Investment, merger or consolidation as if such Asset Disposition, Asset
Acquisition (including the incurrence or repayment of any such Indebtedness),
Investment, merger or consolidation and the inclusion, notwithstanding clause
(b) of the definition of “Consolidated Net Income,” of any Consolidated Cash
Flow Available for Fixed Charges associated with such Asset Acquisition or other
transaction occurred on the first day of the Four Quarter Period; provided,
however, that the Consolidated Cash Flow Available for Fixed Charges associated
with any Asset Acquisition or other transaction shall not be included to the
extent the net income so associated would be excluded pursuant to the definition
of “Consolidated Net Income,” other than clause (b) thereof, as if it applied to
the Person or assets involved before they were acquired; and

 

(c)     the Consolidated Cash Flow Available for Fixed Charges and the
Consolidated Interest Incurred attributable to discontinued operations, as
determined in accordance with GAAP, shall be excluded.

 

Furthermore, in calculating “Consolidated Cash Flow Available for Fixed Charges”
for purposes of determining the denominator (but not the numerator) of this
“Consolidated Fixed Charge Coverage Ratio,”

 

(a)     interest on Indebtedness in respect of which a pro forma calculation is
required that is determined on a fluctuating basis as of the Transaction Date
(including Indebtedness actually incurred on the Transaction Date) and which
will continue to be so determined thereafter shall be deemed to have accrued at
a fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date, and

 

(b)     notwithstanding the immediately preceding clause (a), interest on such
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Protection Agreements, shall be
deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.

 

“Consolidated Interest Expense” of Holdings for any period means the Interest
Expense of Holdings, the Borrower and the Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Interest Incurred” for any period means the Interest Incurred of
Holdings, the Borrower and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” for any period means the aggregate net income (or
loss) of Holdings and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided, that there will be
excluded from such net income (loss) (to the extent otherwise included therein),
without duplication:

 

(a)     the net income (or loss) of (x) any Unrestricted Subsidiary (other than
a Mortgage Subsidiary) or (y) any Person (other than a Restricted Subsidiary or
a Mortgage Subsidiary) that is accounted for by the equity method of accounting,
except, in each case, to the extent that any such income has actually been
received by Holdings, the Borrower or any Restricted Subsidiary in the form of
cash dividends or similar cash distributions during such period,

 

 
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(b)     except to the extent includable in Consolidated Net Income pursuant to
clause (a) of this definition, the net income (or loss) of any Person that
accrued prior to the date that (i) such Person becomes a Restricted Subsidiary
or is merged with or into or consolidated with Holdings, the Borrower or any of
its Restricted Subsidiaries (except, in the case of an Unrestricted Subsidiary
that is redesignated a Restricted Subsidiary during such period, to the extent
of its retained earnings from the beginning of such period to the date of such
redesignation) or (ii) the assets of such Person are acquired by Holdings or any
Restricted Subsidiary,

 

(c)     solely for the purpose of determining the amount available for
Restricted Payments under clause (iii) of Section 6.04(a), the net income of any
Restricted Subsidiary that is not a Loan Party to the extent that (but only so
long as) the declaration or payment of dividends or similar distributions by
such Restricted Subsidiary of that income is not permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary during such period, except, the net income of any such Restricted
Subsidiary for such period will be included in such Consolidated Net Income up
to the aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to Holdings or another Restricted
Subsidiary as a dividend,

 

(d)     the gains or losses, together with any related provision for taxes,
realized during such period by Holdings, the Borrower or any Restricted
Subsidiary resulting from (i) the acquisition of securities, or extinguishment
of Indebtedness or Hedging Obligations or other derivative instruments
(including deferred financing costs written off and premiums paid), of Holdings
or any Restricted Subsidiary, (ii) any Asset Disposition by Holdings or any
Restricted Subsidiary, (iii) any non-cash income (or loss) related to currency
gains or losses related to Indebtedness, intercompany balances and other balance
sheet items and to Hedging Obligations pursuant to Financial Accounting
Standards Codification No. 815—Derivatives and Hedging (formerly Financing
Accounting Standards Board Statement No. 133) and its related pronouncements and
interpretations (or any successor provision) and (iv) any non-cash expense,
income or loss attributable to the movement in mark-to-market valuation of
foreign currencies, Indebtedness or derivative instruments pursuant to GAAP,

 

 
11

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(e)     any extraordinary, unusual or non-recurring gain or loss (but excluding
any impairment charges), in each case, less all fees and expenses relating
thereto and any expenses, severance, relocation costs, curtailments or
modifications to pension and post-retirement employee benefits plans,
integration and other restructuring and business optimization costs, charges,
reserves or expenses (including relating to acquisitions after January 10,
2014), and one-time compensation charges together with any related provision for
taxes, realized by Holdings, the Borrower or any Restricted Subsidiary,

 

(f)     the cumulative effect of a change in accounting principles and changes
as a result of adoption or modification of accounting policies during such
period,

 

(g)     any net after-tax gains or losses on disposal of disposed, abandoned,
transferred, closed or discontinued operations,

 

(h)     any after-tax effect of gains or losses (less all fees and expenses
relating thereto) attributable to asset dispositions or abandonments other than
in the ordinary course of business, as determined in good faith by Holdings,

 

(i)     (A) any non-cash compensation expense recorded from grants of stock
appreciation or similar rights, phantom equity, stock options, restricted stock,
units or other rights to officers, directors, managers or employees and (B)
non-cash income (loss) attributable to deferred compensation plans or trusts,

 

(j)     any fees and expenses incurred during such period, or any amortization
thereof for such period, in connection with any acquisition, Investment,
recapitalization, Asset Disposition, issuance or repayment of Indebtedness,
issuance of Capital Stock, refinancing transaction or amendment or modification
of any debt instrument (in each case, including any such transaction consummated
prior to January 10, 2014 and any such transaction undertaken but not completed)
and any charges or non-recurring merger costs incurred during such period as a
result of any such transaction, and

 

(k) to the extent covered by insurance or indemnification and actually
reimbursed, or, so long as the Borrower has made a determination that there
exists reasonable evidence that such amount will in fact be reimbursed by the
insurer or indemnifying party and only to the extent that such amount is (i) not
denied by the applicable carrier or indemnifying party in writing within 180
days and (ii) in fact reimbursed within 365 days of the date of such evidence
(with a deduction for any amount so added back to the extent not so reimbursed
within 365 days), losses and expenses with respect to liability or casualty
events or business interruption shall be excluded;

 

provided, further, that for purposes of calculating Consolidated Net Income
solely as it relates to clause (iii) of Section 6.04(a), clauses (d)(ii) and (h)
above shall not be applicable.

 

 
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“Consolidated Tangible Assets” of Holdings as of any date means the total amount
of assets of Holdings and its Restricted Subsidiaries (less applicable reserves
and including any deferred tax assets (for which a valuation allowance has been
recorded with respect thereto as if no such valuation allowance was required in
making such calculation)) on a consolidated basis at the end of the fiscal
quarter for which financial results have been reported immediately preceding
such date, as determined in accordance with GAAP, less: (a) Intangible Assets
and (b) appropriate adjustments on account of minority interests of other
Persons holding equity investments in Restricted Subsidiaries, in the case of
each of clauses (a) and (b) above, as reflected on the consolidated balance
sheet of Holdings and its Restricted Subsidiaries as of the end of the fiscal
quarter immediately preceding such date, with such pro forma adjustments to
Consolidated Tangible Assets as are appropriate and consistent with the pro
forma adjustment provisions set forth in the definition of “Consolidated Fixed
Charge Coverage Ratio.”

 

“Consolidated Tangible Net Worth” of Holdings as of any date means the
stockholders’ equity (including any Preferred Stock that is classified as equity
under GAAP, other than Disqualified Stock) of Holdings and its Restricted
Subsidiaries on a consolidated basis at the end of the fiscal quarter for which
financial results have been reported immediately preceding such date, as
determined in accordance with GAAP (provided that any deferred tax assets for
which a valuation allowance has been recorded with respect thereto shall be
included as if no such valuation allowance was required in making such
calculation), less the amount of Intangible Assets reflected on the consolidated
balance sheet of Holdings and its Restricted Subsidiaries as of the end of the
fiscal quarter for which financial results have been reported immediately
preceding such date.

 

“Continuing Director” means a director who either was a member of the Board of
Directors of Holdings on the Effective Date or who became a director of Holdings
subsequent to such date and whose election or nomination for election by
Holdings’ stockholders was duly approved by a majority of the Continuing
Directors on the Board of Directors of Holdings at the time of such approval,
either by a specific vote or by approval of the proxy statement issued by
Holdings on behalf of the entire Board of Directors of Holdings in which such
individual is named as nominee for director.

 

“control” when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.

 

“Credit Facilities” means, with respect to Holdings, the Borrower or any of its
Restricted Subsidiaries, one or more debt facilities or other financing
arrangements (including, without limitation, commercial paper facilities or
indentures) providing for revolving credit loans, term loans, letters of credit
or other long-term indebtedness, including any notes, mortgages, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and any amendments, supplements, modifications, extensions, renewals,
restatements or refundings thereof and any indentures or credit facilities or
commercial paper facilities that exchange, replace, refund, refinance, extend,
renew, restate, amend, supplement or modify any part of the loans, notes, other
credit facilities or commitments thereunder, including any such exchanged,
replacement, refunding, refinancing, extended, renewed, restated, amended,
supplemented or modified facility or indenture that increases the amount
permitted to be borrowed thereunder or alters the maturity thereof (provided
that such increase in borrowings is permitted under Section 6.03(a)) or adds
Holdings, the Borrower or Restricted Subsidiaries as additional borrowers or
guarantors thereunder and whether by the same or any other agent, lender or
group of lenders.

 

 
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“Currency Agreement” of any Person means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
such Person or any of its Subsidiaries against fluctuations in currency values.
For the avoidance of doubt, any Permitted Convertible Indebtedness Call
Transaction will not constitute a Currency Agreement.

 

“Custodian” means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.

 

“Debtor Relief Laws” means Title 11 of the United States Code, and all other
liquidation, conservatorship, bankruptcy, general assignment for the benefit of
creditors, moratorium, rearrangement, receivership, examinership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

 

“Declined Proceeds” has the meaning specified in Section 2.03(b)(iii).

 

“Default” means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.

 

“Default Rate” means, with respect to any overdue Loan or interest, an interest
rate equal to 2.00% per annum in excess of the interest rate otherwise
applicable to such overdue Loan (or the Loan to which such overdue interest
relates).

 

“Defaulting Lender” means, at any time, a Lender as to which the Administrative
Agent has notified the Borrower that (a) such Lender has failed for two (2) or
more Business Days to comply with its obligations under this Agreement to make a
Loan (a “Lender Funding Obligation”) required to be funded hereunder, (b) such
Lender has notified the Administrative Agent or Borrower in writing, that it
will not comply with any such Lender Funding Obligation hereunder, or has
defaulted on its Lender Funding Obligations under other loan agreements, credit
agreements or other similar agreements in which it commits to extend credit
generally or (c) such Lender has, for three (3) or more Business Days, failed to
confirm in writing to the Borrower, in response to a written request of the
Borrower (based on the reasonable belief that it may not fulfill its Lender
Funding Obligations), that it will comply with its Lender Funding Obligations
hereunder; provided, that any such Lender shall cease to be a Defaulting Lender
under this clause (c) upon receipt of such confirmation by the Borrower. The
Administrative Agent or Borrower will promptly send to all parties hereto a copy
of any notice to the Borrower or Administrative Agent, as applicable, provided
for in this definition.

 

“Designation Amount” has the meaning specified under the definition of
“Unrestricted Subsidiary.”

 

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, (a) matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, in whole or in part, on or prior to the Latest
Maturity Date on the date of determination or (b) is convertible into or
exchangeable or exercisable for (whether at the option of the issuer or the
holder thereof) (i) debt securities or (ii) any Capital Stock referred to in (a)
above, in each case, at any time prior to the Latest Maturity Date on the date
of determination; provided, however, that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
(or the holders of any security into or for which such Capital Stock is
convertible, exchangeable or exercisable) the right to require Holdings to
repurchase or redeem such Capital Stock upon the occurrence of a change in
control or asset disposition occurring prior to the Latest Maturity Date on the
date of determination shall not constitute Disqualified Stock if the change in
control or asset disposition provision applicable to such Capital Stock are no
more favorable to such holders than the provisions of Section 6.07 or Section
6.09 (as applicable) and such Capital Stock specifically provides that Holdings
will not repurchase or redeem any such Capital Stock pursuant to such provisions
prior to Holdings’ repurchase of the Loans as are required pursuant to the
provisions of Section 6.07 or Section 6.09 hereof (as applicable).

 

 
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“Dollar” and “$” mean lawful money of the United States.

 

“Effective Date” means the date on which the conditions precedent in Section
4.01 are satisfied, which date is July 29, 2016.

 

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person that meets the requirements to be an
assignee under Section 9.07(b), provided, that under no circumstances shall (i)
any Competitor be an assignee without the prior written consent of the Borrower
and, (ii) subject to clauses (k) and (l) of Section 9.07, Holdings, the Borrower
or any Affiliate thereof or a natural person, be an Eligible Assignee.

 

“Environmental Laws” has the meaning specified in Section 5.10.

 

“Equity Offering” means any public or private sale, after the Closing Date, of
Qualified Stock of Holdings, other than (a) public offerings registered on Form
S-4 or S-8 or any successor form thereto or (b) any issuance pursuant to
employee benefit plans or otherwise in compensation to officers, directors or
employees.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“Eurodollar Rate” means, for any Interest Period with respect to any Eurodollar
Rate Loan (a) the per annum London interbank offered rate as administered by the
ICE Benchmark Administration (or any other Person that takes over the
administration of such rate) for Dollars for a period equal in length to such
Interest Period as displayed on page LIBOR01 or LIBOR02 of the Reuters Screen
that displays such rate (or, in the event such rate does not appear on a Reuters
page or screen, on any successor or substitute page on such screen that displays
such rate, or on the appropriate page of such other information service that
publishes such rate from time to time as selected by the Administrative Agent in
consultation with the Borrower; in each case, the “Screen Rate”) determined as
of approximately 11:00 a.m. (London time) two (2) Business Days prior to the
first (1st) day of such Interest Period or (b) if the Screen Rate shall not be
available at such time for such Interest Period (an “Impacted Interest Period”)
with respect to Dollars, then the Eurodollar Rate shall be the Interpolated Rate
at such time; provided that in no event shall the Eurodollar Rate be less than
0.75% per annum. “Interpolated Rate” means, at any time, the rate per annum
determined by the Administrative Agent (which determination shall be conclusive
and binding absent manifest error) to be equal to the rate that results from
interpolating on a linear basis between: (i) the Screen Rate for the longest
period (for which that Screen is available in Dollars) that is shorter than the
Impacted Interest Period and (ii) the Screen Rate for the shortest period (for
which that Screen Rate is available for Dollars) that exceeds the Impacted
Interest Period, in each case, at such time.

 

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

 

“Event of Default” has the meaning specified in Section 7.01.

 

 
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“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended.

 

“Exchange Agreement” means that certain Exchange Agreement, dated as of the
Effective Date, among the Borrower, the guarantors named therein and the
purchasers named therein for the exchange of $75,000,000 aggregate principal
amount of the Borrower’s Existing Second Lien Notes for the First Lien Exchange
Notes.

 

“Excluded Property” means (a) any pledges of stock of the Borrower, any other
Loan Party or of K. Hovnanian JV Holdings, L.L.C. to the extent that (including
if the Loans were “Securities” as defined in the Securities Act) Rule 3-16 of
Regulation S-X under the Securities Act requires or would require (or is
replaced with another rule or regulation, or any other law, rule or regulation
is adopted, that would require) the filing with the Commission of separate
financial statements of the Borrower, such Loan Party or of K. Hovnanian JV
Holdings, L.L.C. that are not otherwise required to be filed, but only to the
extent necessary to not be subject to such requirement, (b) up to $50.0 million
of assets received in connection with Asset Dispositions and asset swaps or
exchanges as permitted by clause (c) of the definition of “Permitted
Investment,” (c) personal property where the cost of obtaining a security
interest or perfection thereof exceeds its benefits (as reasonably determined by
Holdings’ Board of Directors in a board resolution delivered to the
Administrative Agent), (d) property subject to a Lien securing Indebtedness
incurred for the purpose of financing the acquisition thereof (plus any
construction or improvements thereon and any licenses, permits, authorizations,
consent forms or contracts related to the acquisition, development, use or
improvement thereof) to the extent the terms of such Indebtedness prohibit the
incurrence of any other Liens thereon, (e) real property located outside the
United States, (f) Unentitled Land, (g) property that is leased or held for the
purpose of leasing to unaffiliated third parties, (h) equity interests in
Unrestricted Subsidiaries, except for K. Hovnanian JV Holdings, L.L.C., and
subject to future grants under the terms of this Agreement, (i) any property in
a community under development with a dollar amount of investment as of the most
recent month-end (as determined in accordance with GAAP) of less than $2.0
million or with less than 10 lots remaining, (j) any assets or property excluded
from the Collateral pursuant to clause (ii) of the proviso of Article 2 of the
Security Agreement and (k) up to $25.0 million of cash or cash equivalents that
are pledged to secure obligations permitted to be secured pursuant to clause (d)
of the definition of “Permitted Liens” if, after the use of commercially
reasonable efforts by Holdings to obtain a Lien on such cash or cash equivalents
for the benefit of the Secured Parties, the holders of the obligations secured
by such cash and cash equivalents do not consent to the granting of such Liens.

 

“Excluded Subsidiary” means (a) each non-wholly owned Subsidiary and (b) each
Subsidiary of Holdings (other than the Borrower) that has a book value of less
than $5.0 million, measured at the end of the most recently completed fiscal
year for which financial statements have been provided as set forth under
Section 6.12 (or if acquired or created subsequent to such delivery, measured at
the most recent practicable date (or estimated in the reasonable judgment of
Holdings)); provided that in each case, such Subsidiary has not guaranteed any
other Applicable Debt of Holdings or the Borrower; provided, further, that in no
event shall Excluded Subsidiaries comprise in the aggregate more than 5% of the
Consolidated Tangible Assets, measured at the end of the most recently completed
fiscal quarter or year, as applicable, for which financial statements have been
provided as set forth under Section 6.12.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
any Agent or Lender or required to be withheld or deducted from a payment to any
Lender or an Agent, (a) Taxes imposed on or measured by net income (however
denominated), franchise Taxes, and branch profits Taxes, in each case, (i)
imposed as a result of such Lender or Agent being organized under the laws of,
or having its principal office or, in the case of any Lender, its applicable
lending office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of
a Lender, United States federal withholding Taxes imposed on amounts payable to
or for the account of such Lender with respect to an applicable interest in a
Loan or Term Commitment pursuant to a law in effect on the date on which (i)
such Lender acquires such interest in the Loan or Term Commitment (other than
pursuant to an assignment request by the Borrower under Section 3.07) or (ii)
such Lender changes its Lending Office, except in each case to the extent that,
pursuant to Section 3.01, amounts with respect to such Taxes were payable either
to such Lender's assignor immediately before such Lender acquired the applicable
interest in a Loan or Term Commitment or to such Lender immediately before it
changed its Lending Office, (c) Taxes attributable to such Lender or Agent’s
failure to comply with Section 3.01(f) and (d) any withholding Taxes imposed
under FATCA.

 

 
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“Existing Second Lien Collateral Agent” means the Existing Second Lien Trustee
acting as the collateral agent for the holders of the Existing Second Lien Notes
under the security documents related thereto and any successor acting in such
capacity.

 

“Existing Second Lien Guarantees” means the guarantee of the Existing Second
Lien Notes by each guarantor under the Existing Second Lien Indenture.

 

“Existing Second Lien Indenture” means the indenture, dated as of October 2,
2012, by and among the Borrower, Holdings, each of the guarantors party thereto,
the Existing Second Lien Trustee and the Existing Second Lien Collateral Agent,
as amended or supplemented as of the date hereof and as further amended or
supplemented from time to time hereafter, under which the Existing Second Lien
Notes were issued.

 

“Existing Second Lien Notes” means the Borrower’s 9.125% Senior Secured Second
Lien Notes due 2020 issued under the Existing Second Lien Indenture.

 

“Existing Second Lien Trustee” means Wilmington Trust, National Association
acting as the trustee for the holders of the Existing Second Lien Notes under
the Existing Second Lien Indenture and any successor acting in such capacity.

 

“Existing Senior Secured New Group Notes” means the Borrower’s 2.00% Senior
Secured Notes due 2021 and 5.00% Senior Secured Notes due 2021 issued under the
Existing Senior Secured New Group Notes Indenture.

 

“Existing Senior Secured New Group Notes Collateral Agent” means the Existing
Senior Secured New Group Notes Trustee acting as the collateral agent for the
holders of the Existing Senior Secured New Group Notes under the Existing Senior
Secured New Group Notes Indenture and the security documents related thereto and
any successor acting in such capacity.

 

“Existing Senior Secured New Group Notes Indenture” means the indenture dated as
of November 1, 2011 among the Borrower, Holdings, the other guarantors party
thereto and the Existing Senior Secured New Group Notes Trustee and the Existing
Senior Secured New Group Notes Collateral Agent, as amended and supplemented as
of the date hereof and as further amended or supplemented from time to time
hereafter, relating to the Existing Senior Secured New Group Notes.

 

“Existing Senior Secured New Group Notes Trustee” means Wilmington Trust,
National Association acting as the trustee for the holders of the Existing
Senior Secured New Group Notes under the Existing Senior Secured New Group Notes
Indenture and any successor acting in such capacity.

 

 
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“Existing Senior Secured Old Group Notes” means the First Lien Notes and
Existing Second Lien Notes.

 

“Existing Unsecured Notes” means the 7.000% Notes and the 8.000% Notes.

 

“Extended Term Loan Facility” means a facility providing for the Borrowing of
Extended Term Loans.

 

“Extended Term Loans” shall have the meaning assigned to such term in Section
2.13(a)(ii).

 

“Extending Term Lender” shall have the meaning assigned to such term in Section
2.13(a)(ii).

 

“Extension” shall have the meaning specified in Section 2.13(a).

 

“Extension Offer” shall have the meaning specified in Section 2.13(a).

 

“Facility” means the Term Loan Facility.

 

“Fair Market Value” means, with respect to any asset, the price (after taking
into account any liabilities relating to such assets) that would be negotiated
in an arm’s-length transaction for cash between a willing seller and a willing
and able buyer, neither of which is under any compulsion to complete the
transaction, as such price is determined in good faith by the Board of Directors
of Holdings or a duly authorized committee thereof, as evidenced by a resolution
of such Board or committee.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations with respect thereto or official administrative interpretations
thereof, any agreements entered into pursuant to current Section 1471(b)(1) of
the Code (or any amended or successor version described above), any
intergovernmental agreements entered into to implement such Sections of the
Code, any laws, fiscal or regulatory legislation, rules, guidance notes and
practices implementing the foregoing.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the immediately preceding Business Day as so published on the next succeeding
Business Day, and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
charged to the Administrative Agent on such day on such transactions as
determined by the Administrative Agent.

 

“First-Priority Lien Obligations” means (a) the First Lien Notes and the First
Lien Notes Guarantees thereof and (b) all other Indebtedness secured by Liens on
the Collateral that are senior or equal in priority to the Liens on the
Collateral securing the First Lien Notes, including Loans made under this
Agreement, and, in each case, all Obligations in respect thereof.

 

“First Lien Exchange Notes” means the 9.50% Senior Secured First Lien Notes due
2020 of the Borrower and issued under the First Lien Exchange Notes Indenture.

 

 
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“First Lien Exchange Notes Guarantees” means the guarantee of the First Lien
Exchange Notes by each guarantor under the First Lien Exchange Notes Indenture.

 

“First Lien Exchange Notes Indenture” means the indenture, dated as of the
Closing Date (as it may be amended or supplemented from time to time), by and
among the Borrower, Holdings, each of the guarantors party thereto, the First
Lien Exchange Notes Trustee and the collateral agent named therein under which
the First Lien Exchange Notes were issued.

 

“First Lien Exchange Notes Trustee” means Wilmington Trust, National Association
acting as the trustee for the holders of the First Lien Exchange Notes under the
First Lien Exchange Notes Indenture and any successor acting in such capacity.

 

“First Lien Intercreditor Agreement” means the Intercreditor Agreement, to be
dated as of the Closing Date, among the Borrower, Holdings, the other grantors
party from time to time thereto, the Administrative Agent, the Mortgage Tax
Collateral Agent, the First Lien Notes Trustee and the First Lien Notes
Collateral Agent, as may be amended, restated, supplemented or otherwise
modified from time to time, substantially in the form of Exhibit F.

 

“First Lien Notes” means the Borrower’s 7.25% Senior Secured First Lien Notes
due 2020 issued under the First Lien Notes Indenture.

 

“First Lien Notes Collateral Agent” means the First Lien Notes Trustee acting as
the collateral agent for the holders of the First Lien Notes under the security
documents related thereto and any successor acting in such capacity.

 

“First Lien Notes Guarantees” means the guarantee of the First Lien Notes by
each guarantor under the First Lien Notes Indenture.

 

“First Lien Notes Indenture” means the indenture, dated as of October 2, 2012,
by and among the Borrower, Holdings, each of the other guarantors party thereto,
the First Lien Notes Trustee and the First Lien Notes Collateral Agent, as
amended or supplemented as of the date hereof and as further amended or
supplemented from time to time hereafter, under which the First Lien Notes were
issued.

 

“First Lien Notes Trustee” means Wilmington Trust, National Association acting
as the trustee for the holders of the First Lien Notes under the First Lien
Notes Indenture and any successor acting in such capacity.

 

“Flood Insurance Laws” shall mean, collectively, (i) the National Flood
Insurance Reform Act of 1994 (which comprehensively revised the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or
hereafter in effect or any successor statute thereto, (ii) the Flood Insurance
Reform Act of 2004 as now or hereafter in effect or any successor statute
thereto and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now
or hereafter in effect or any successor statute thereto.

 

“Four Quarter Period” has the meaning specified in the definition of
“Consolidated Fixed Charge Coverage Ratio”.

 

“Fund” means any Person (other than a natural person) that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course.

 

 
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“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
of the United States, as in effect on February 1, 2014.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, Taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national body exercising such powers or functions).

 

“Guarantee” means the guarantee of the Loan Obligations by each Guarantor under
this Agreement.

 

“guarantee” means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person: (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (b)
entered into for purposes of assuring in any other manner the obligee of such
Indebtedness of the payment thereof or to protect such obligee against loss in
respect thereof, in whole or in part; provided, that the term “guarantee” does
not include endorsements for collection or deposit in the ordinary course of
business. The term “guarantee” used as a verb has a corresponding meaning.

 

“Guarantors” has the meaning specified in the introductory paragraph to this
Agreement.

 

“Hedging Obligations” means, with respect to any Person, the obligations of such
Person under any Interest Protection Agreement, commodity swap agreement,
commodity cap agreement, commodity collar agreement, Currency Agreement or
similar agreement providing for the transfer or mitigation of interest rate,
commodity price or currency risks either generally or under specific
contingencies.

 

“Historical Financial Statements” has the meaning specified in Section 5.15.

 

“Holdings” has the meaning specified in the introductory paragraph to this
Agreement.

 

“incurrence” has the meaning ascribed to it in Section 6.03 hereof.

 

“Indebtedness” of any Person means, without duplication,

 

(a)     any liability of such Person (i) for borrowed money or under any
reimbursement obligation relating to a letter of credit or other similar
instruments (other than standby letters of credit or similar instruments issued
for the benefit of, or surety, performance, completion or payment bonds, earnest
money notes or similar purpose undertakings or indemnifications issued by, such
Person in the ordinary course of business), (ii) evidenced by a bond, note,
debenture or similar instrument (including a purchase money obligation) given in
connection with the acquisition of any businesses, properties or assets of any
kind or with services incurred in connection with capital expenditures (other
than any obligation to pay a contingent purchase price which, as of the date of
incurrence thereof, is not required to be recorded as a liability in accordance
with GAAP), or (iii) in respect of Capitalized Lease Obligations (to the extent
of the Attributable Debt in respect thereof),

 

 
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(b)     any Indebtedness of others that such Person has guaranteed to the extent
of the guarantee; provided, however, that Indebtedness of Holdings and its
Restricted Subsidiaries will not include the obligations of Holdings or a
Restricted Subsidiary under warehouse lines of credit of Mortgage Subsidiaries
to repurchase mortgages at prices no greater than 98% of the principal amount
thereof, and upon any such purchase the excess, if any, of the purchase price
thereof over the Fair Market Value of the mortgages acquired, will constitute
Restricted Payments subject to Section 6.04 hereof,

 

(c)     to the extent not otherwise included, the obligations of such Person
under Hedging Obligations to the extent recorded as liabilities not constituting
Interest Incurred, net of amounts recorded as assets in respect of such
obligations, in accordance with GAAP, and

 

(d)     all Indebtedness of others secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person;

 

provided, that Indebtedness shall not include accounts payable, liabilities to
trade creditors of such Person or other accrued expenses arising in the ordinary
course of business or completion guarantees entered into in the ordinary course
of business. The amount of Indebtedness of any Person at any date shall be (i)
the outstanding balance at such date of all unconditional obligations as
described above, net of any unamortized discount to be accounted for as Interest
Expense, in accordance with GAAP, (ii) the maximum liability of such Person for
any contingent obligations under clause (a) of this definition at such date, net
of an unamortized discount to be accounted for as Interest Expense in accordance
with GAAP, (iii) in the case of clause (c) above, the net termination amount
payable in respect thereof, and (iv) in the case of clause (d) above, the lesser
of (x) the fair market value of any asset subject to a Lien securing the
Indebtedness of others on the date that the Lien attaches and (y) the amount of
the Indebtedness secured.

 

For the avoidance of doubt, obligations of any Person under a Permitted Bond
Hedge Transaction or a Permitted Warrant Transaction shall be deemed not to
constitute Indebtedness.

 

“Indemnified Liabilities” has the meaning specified in Section 9.05.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any Loan
Party under any Loan Document and (b) to the extent not otherwise described in
(a), Other Taxes.

 

“Indemnitees” has the meaning specified in Section 9.05.

 

“Information” has the meaning specified in Section 9.08.

 

“Initial Term Commitment” means, as to the Initial Term Lenders, its obligation
to make an Initial Term Loan to the Borrower pursuant to Section 2.01 in an
aggregate amount not to exceed the amount set forth opposite such Lender’s name
in Schedule 2.01 under the caption “Initial Term Commitment” or in the
Assignment and Assumption pursuant to which such Lender purchases such Term
Loans, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement. The aggregate amount of the Initial Term
Commitments as of the Closing Date is $75,000,000. The Initial Term Lenders
shall have the right, on or before the Closing Date, to deliver an updated
Schedule 2.01 to Holdings providing for the re-allocation of the Initial Term
Commitment solely among the Initial Term Lenders, which shall replace any
existing Schedule 2.01 in its entirety, provided that, in no event shall the
aggregate amount of Initial Term Commitments of the Initial Term Lenders as of
the Closing Date be less than $75,000,000.

 

 
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“Initial Term Lenders” means the Lenders listed on Schedule 2.01.

 

“Initial Term Loan” has the meaning specified in Section 2.01.

 

“Initial Term Loan Facility” means the facility providing for the Borrowing of
Initial Term Loans.

 

“Intangible Assets” of Holdings means all unamortized debt discount and expense,
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights and all other items (other than any deferred tax assets)
which would be treated as intangibles on the consolidated balance sheet of
Holdings and its Restricted Subsidiaries prepared in accordance with GAAP.

 

“Intellectual Property Security Agreements” has the meaning set forth in the
Security Agreement.

 

“Intercreditor Agreements” means, collectively, the Amended and Restated
Intercreditor Agreement and the First Lien Intercreditor Agreement.

 

“Interest Expense” of any Person for any period means, without duplication, the
aggregate amount of (a) interest which, in conformity with GAAP, would be set
opposite the caption “interest expense” or any like caption on an income
statement for such Person (including, without limitation, imputed interest
included in Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers’ acceptance
financing, the net costs (but reduced by net gains) associated with Currency
Agreements and Interest Protection Agreements, amortization of other financing
fees and expenses, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other noncash interest
expense (other than interest and other charges amortized to cost of sales)), and
(b) all interest actually paid by Holdings or a Restricted Subsidiary under any
guarantee of Indebtedness (including, without limitation, a guarantee of
principal, interest or any combination thereof) of any Person other than
Holdings, the Borrower or any Restricted Subsidiary during such period;
provided, that Interest Expense shall exclude any expense associated with the
complete write-off of financing fees and expenses in connection with the
repayment of any Indebtedness.

 

“Interest Incurred” of any Person for any period means, without duplication, the
aggregate amount of (a) Interest Expense and (b) all capitalized interest and
amortized debt issuance costs.

 

“Interest Payment Date” means (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date of the Facility under which such Loan was made and (b) as to any Base Rate
Loan, the Last Business Day of each calendar month and the Maturity Date of the
Facility under which such Loan was made.

 

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one (1) month thereafter;
provided that:

 

(a)     any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day;

 

 
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(b)     any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

 

(c)     no Interest Period shall extend beyond the Maturity Date of the Facility
under which such Loan was made.

 

“Interest Protection Agreement” of any Person means any interest rate swap
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates with respect to Indebtedness
permitted to be incurred under this Agreement. For the avoidance of doubt, any
Permitted Convertible Indebtedness Call Transaction will not constitute an
Interest Protection Agreement.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Investments” of any Person means (a) all investments by such Person in any
other Person in the form of loans, advances or capital contributions, (b) all
guarantees of Indebtedness of any other Person by such Person, (c) all purchases
(or other acquisitions for consideration) by such Person of Indebtedness,
Capital Stock or other securities of any other Person and (d) all other items
that would be classified as investments in any other Person (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet of such Person prepared in accordance with GAAP.

 

“IRS” means the United States Internal Revenue Service.

 

“January 2017 Notes” means the Borrower’s 8.625% Senior Notes due 2017 issued
under the January 2017 Notes Indenture.

 

“January 2017 Notes Indenture” means the Senior Indenture, dated as of November
3, 2003, as amended by the Seventh Supplemental Indenture, dated as of June 12,
2006, and the Eighth Supplemental Indenture, dated as of April 21, 2011 (as may
be further amended or supplemented as of the date hereof or from time to time),
among the Borrower, Holdings and the other guarantors party thereto and Deutsche
Bank National Trust Company, as Successor Trustee (as defined in the January
2017 Notes Indenture).

 

“Joint Second Lien Collateral Agent” means the Existing Second Lien Collateral
Agent, in its capacity as Collateral Agent (as defined in the Second Lien
Collateral Agency Agreement) for the Existing Second Lien Notes and the New
Second Lien Notes pursuant to the appointment under the Second Lien Collateral
Agency Agreement and any successor thereto.

 

“L/C Collateral” means cash and cash equivalents that secure obligations
permitted to be secured pursuant to clause (d) of the definition of “Permitted
Liens”.

 

“Land Banking Transaction” means an arrangement relating to Property now owned
or hereafter acquired whereby Holdings, the Borrower or a Restricted Subsidiary
sells such Property to a Person (other than Holdings, the Borrower or a
Restricted Subsidiary) and Holdings, the Borrower or a Restricted Subsidiary, as
applicable, has an option to purchase such Property back on a specified
schedule.

 

 
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“Latest Maturity Date” means, at any date of determination, the latest maturity
or expiration date applicable to any Loan or Commitment hereunder at such time,
as extended in accordance with this Agreement from time to time.

 

“Laws” means, collectively, all applicable international, foreign, Federal,
state, commonwealth and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority, in each case whether or not having the force of law.

 

“Lender” has the meaning specified in the introductory paragraph to this
Agreement.

 

“Lender Funding Obligation” has the meaning specified in the definition of
“Defaulting Lender.”

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

 

“Lien” means, with respect to any Property, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such Property. For
purposes of this definition, a Person shall be deemed to own, subject to a Lien,
any Property which it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such Property.

 

“Loan” means an extension of credit by a Lender to the Borrower in the form of a
Term Loan.

 

“Loan Documents” means, collectively, (a) this Agreement, (b) the Notes and
(c) the Collateral Documents.

 

“Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from
one Type to the other or (c) a continuation of Eurodollar Rate Loans, pursuant
to Section 2.02(a), which, if in writing, shall be substantially in the form of
Exhibit A-1.

 

“Loan Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Loan Party of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding. Without
limiting the generality of the foregoing, the Loan Obligations of the Loan
Parties under the Loan Documents include the obligation to pay principal,
interest, charges, expenses, fees, Attorney Costs indemnities and other amounts
payable by any Loan Party under any Loan Document.

 

“Loan Parties” means, collectively, Holdings, the Borrower and each Subsidiary
Guarantor.

 

“Marketable Securities” means (a) equity securities that are listed on the New
York Stock Exchange, the NYSE MKT or the Nasdaq Stock Market and (b) debt
securities that are rated by a nationally recognized rating agency, listed on
the New York Stock Exchange, the NYSE MKT or covered by at least two reputable
market makers.

 

 
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“Material Adverse Effect” has the meaning specified in Section 5.01.

 

“Maturity Date” means with respect to the Initial Term Loan Facility, August 1,
2019; provided that the Maturity Date shall occur on October 15, 2018 if (a) any
of the Borrower’s 7.000% Notes remain outstanding on such date or (b) in the
case where the Borrower’s 7.000% Notes have been refinanced in full, any such
refinancing indebtedness has a maturity date that occurs prior to January 15,
2021; provided further that the reference to Maturity Date (i) with respect to
Refinancing Term Loans shall be the final maturity date as specified in the
applicable Refinancing Term Loan Amendment and (ii) with respect to Extended
Term Loans shall be the final maturity date as specified in the applicable
Extension Offer.

 

“Maximum Rate” has the meaning specified in Section 9.10.

 

“Minimum Extension Condition” shall have the meaning specified in Section
2.13(b).

 

“Moody’s” means Moody’s Investors Service, Inc. or any successor to its debt
rating business.

 

“Mortgage Subsidiary” means any Subsidiary of Holdings substantially all of
whose operations consist of the mortgage lending business.

 

“Mortgage Tax Collateral Agent” means Wilmington Trust, National Association in
its capacity as Mortgage Tax Collateral Agent with respect to Liens granted on
real property located in certain states identified pursuant to the terms of the
Intercreditor Agreements and any successor thereto.

 

“Net Cash Proceeds” means

 

(a) with respect to an Asset Disposition or Casualty Event, payments received in
cash (including any such payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise (including
any cash received upon sale or disposition of such note or receivable), but only
as and when received), excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the Property disposed of in such Asset Disposition or that is the subject of
such Casualty Event, as the case may be, or received in any other non-cash form
unless and until such non-cash consideration is converted into cash therefrom,
in each case, net of all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all federal, state and local taxes
required to be accrued as a liability under GAAP as a consequence of such Asset
Disposition or Casualty Event, and in each case net of a reasonable reserve for
the after-tax cost of any indemnification or other payments (fixed and
contingent) attributable to the seller’s indemnities or other obligations to the
purchaser undertaken by Holdings, the Borrower or any of its Restricted
Subsidiaries in connection with such Asset Disposition or Casualty Event, and
net of all payments made on any Indebtedness which is secured by or relates to
such Property (other than Indebtedness secured by Liens on the Collateral) in
accordance with the terms of any Lien or agreement upon or with respect to such
Property or which such Indebtedness must by its terms or by applicable law be
repaid out of the proceeds from such Asset Disposition or Casualty Event, and
net of all contractually required distributions and payments made to minority
interest holders in Restricted Subsidiaries or joint ventures as a result of
such Asset Disposition or Casualty Event; and

 

(b) with respect to the incurrence or issuance of any Indebtedness by Holdings,
the Borrower or any Restricted Subsidiary meeting the definition of Other
Prepayment Event, the excess, if any, of (i) the sum of cash and Cash
Equivalents received in connection with such incurrence or issuance or sale over
(ii) all taxes paid or reasonably estimated to be payable, and all fees,
commissions, costs and other out-of-pocket expenses and other customary expenses
incurred, in each case by the applicable party in connection with such
incurrence, sale or issuance.

 

 
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“New Second Lien Notes Collateral Agent” means the New Second Lien Notes Trustee
acting as the collateral agent for the holders of the New Second Lien Notes
under the New Second Lien Indenture and any successor acting in such capacity.

 

“New Second Lien Notes Guarantees” means the guarantee of the New Second Lien
Notes by each of the guarantors under the New Second Lien Notes Indenture.

 

“New Second Lien Notes Indenture” means the indenture, to be dated as of the
Closing Date (as may be amended or supplemented from time to time), among the
Borrower, Holdings, each of the guarantors party thereto and the New Second Lien
Notes Trustee and the New Second Lien Notes Collateral Agent.

 

“New Second Lien Notes” means the Borrower’s 10.000% Senior Secured Second Lien
Notes due 2018.

 

“New Second Lien Notes Trustee” means Wilmington Trust, National Association
acting as the trustee for the holders of the New Second Lien Notes under the New
Second Lien Notes Indenture and any successor acting in such capacity.

 

“Non-Call Period” has the meaning specified in Section 2.03(a)(i).

 

“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting
Lender.

 

“Non-Recourse Indebtedness” with respect to any Person means Indebtedness of
such Person for which (a) the sole legal recourse for collection of principal
and interest on such Indebtedness is against the specific property, including
for the avoidance of doubt, assets directly related thereto or derived
therefrom, identified in the instruments evidencing or securing such
Indebtedness or other property of such Person financed pursuant to the Credit
Facility of such Person under which such Indebtedness was incurred (provided
that the aggregate principal amount of the total Indebtedness shall not exceed
the purchase price or cost (including financing costs) of the properties
financed thereby), (b) such properties were acquired (directly or indirectly,
including through the purchase of Capital Stock of the Person owning such
property), constructed or improved with the proceeds of such Indebtedness or
such Indebtedness was incurred within 365 days after the acquisition (directly
or indirectly, including through the purchase of Capital Stock of the Person
owning such property) or completion of such construction or improvement and (c)
no other assets of such Person may be realized upon in collection of principal
or interest on such Indebtedness. Indebtedness which is otherwise Non-Recourse
Indebtedness will not lose its character as Non-Recourse Indebtedness because
there is recourse to the borrower, any guarantor or any other Person for (i)
environmental warranties, covenants and indemnities, (ii) indemnities for and
liabilities arising from fraud, misrepresentation, misapplication or non-payment
of rents, profits, deposits, insurance and condemnation proceeds and other sums
actually received by the borrower from secured assets to be paid to the lender,
waste and mechanics’ liens, breach of separateness covenants, and other
customary exceptions, (iii) in the case of the borrower thereof only, other
obligations in respect of such Indebtedness that are payable solely as a result
of a voluntary or collusive non-voluntary bankruptcy filing (or similar filing
or action) by such borrower or (iv) similar customary “bad-boy” guarantees.

 

“Non-US Lender” means a Lender that is not a U.S. Person.

 

 
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“Note” means a Term Note.

 

“Note Purchase Agreement” means the agreement, dated as of the Effective Date by
and among the Borrower, Holdings, the other guarantors named therein, and the
Purchasers (as defined therein) party thereto.

 

“Obligations” means with respect to any Indebtedness, all obligations (whether
in existence on the Effective Date or arising afterwards, absolute or
contingent, direct or indirect) for or in respect of principal (when due, upon
acceleration, upon redemption, upon mandatory repayment or repurchase pursuant
to a mandatory offer to purchase, or otherwise), premium, interest, penalties,
fees, indemnification, reimbursement and other amounts payable and liabilities
with respect to such Indebtedness, including all interest accrued or accruing
after the commencement of any bankruptcy, insolvency or reorganization or
similar case or proceeding at the contract rate (including, without limitation,
any contract rate applicable upon default) specified in the relevant
documentation, whether or not the claim for such interest is allowed as a claim
in such case or proceeding.

 

“OFAC” has the meaning specified in Section 5.20.

 

“Offer to Purchase Statement” has the meaning specified in the definition of
“Tender Offer and Consent Solicitation”.

 

“Officer,” when used with respect to the Borrower or Holdings, means the
chairman of the Board of Directors, the president or chief executive officer,
any vice president, the chief financial officer, the treasurer, any assistant
treasurer, the controller, any assistant controller, the secretary or any
assistant secretary of the Borrower or Holdings, as the case may be.

 

“Officers’ Certificate,” when used with respect to the Borrower or Holdings,
means a certificate signed by the chairman of the Board of Directors, the
president or chief executive officer, or any vice president and by the chief
financial officer, the treasurer, any assistant treasurer, the controller, any
assistant controller, the secretary or any assistant secretary of the Borrower
or Holdings, as the case may be.

 

“Opinion of Counsel” means a written opinion signed by legal counsel of the
Borrower or Holdings, who may be an employee of, or counsel to, the Borrower or
Holdings, and who shall be reasonably satisfactory to the Administrative Agent.

 

“Other Connection Taxes” means, with respect to any Lender or Agent, Taxes
imposed as a result of a present or former connection between such Lender or
Agent and the jurisdiction imposing such Tax (other than connections arising
from such Lender or Agent having executed, delivered, become a party to,
performed its obligations under, received payments under, received or perfected
a security interest under, engaged in any other transaction pursuant to or
enforced any Loan Document, or sold or assigned an interest in any Loan or Loan
Document).

 

“Other Prepayment Event” means the incurrence by the Borrower or any of its
Restricted Subsidiaries of any Indebtedness, other than Indebtedness permitted
under Section 6.03 (other than Refinancing Term Loans or any Refinancing
Indebtedness which Refinances the Loans, or permitted by the Required Lenders
pursuant to Section 9.02).

 

“Other Taxes” means all present or future stamp, court, or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 3.07).

 

 
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“Outstanding Amount” means with respect to the Term Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Term Loans occurring on such date.

 

“Parent Company” means, with respect to a Lender, the bank holding company (as
defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or
any Person owning, beneficially or of record, directly or indirectly, a majority
of the economic or voting Capital Stock of such Lender.

 

“Participant” has the meaning specified in Section 9.07(e).

 

“Participant Register” has the meaning specified in Section 9.07(e).

 

“PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into Law October 26, 2001)).

 

“Perfection Certificate” has the meaning set forth in the Security Agreement.

 

“Permitted Bond Hedge” means any call or capped call option (or substantively
equivalent derivative transaction) on Holdings’ Capital Stock purchased by
Holdings, the Borrower or any Restricted Subsidiary in connection with the
issuance of any Permitted Convertible Indebtedness; provided that the purchase
price for such Permitted Bond Hedge, less the proceeds received by Holdings, the
Borrower or the Restricted Subsidiaries from the sale of any related Permitted
Warrant, does not exceed the net proceeds received by Holdings, the Borrower or
the Restricted Subsidiaries from the sale of such Permitted Convertible
Indebtedness issued in connection with the Permitted Bond Hedge.

 

“Permitted Convertible Indebtedness” means Indebtedness of Holdings, the
Borrower or any Restricted Subsidiary permitted to be incurred under the terms
of this Agreement that is either (a) convertible or exchangeable into Capital
Stock of Holdings (and cash in lieu of fractional shares) and/or cash (in an
amount determined by reference to the price of such Capital Stock) or (b) sold
as units with call options, warrants or rights to purchase (or substantially
equivalent derivative transactions) that are exercisable for Capital Stock of
Holdings and/or cash (in an amount determined by reference to the price of such
Capital Stock). For the avoidance of doubt, the Units and the senior unsecured
exchange notes which are a component of such Units, shall be Permitted
Convertible Indebtedness.

 

“Permitted Convertible Indebtedness Call Transaction” means any Permitted Bond
Hedge and any Permitted Warrant.

 

“Permitted Hovnanian Holders” means, collectively, Ara K. Hovnanian, the members
of his immediate family and the members of the immediate family of the late
Kevork S. Hovnanian, the respective estates, spouses, heirs, ancestors, lineal
descendants, legatees and legal representatives of any of the foregoing and the
trustee of any bona fide trust of which one or more of the foregoing are the
sole beneficiaries or the grantors thereof, or any entity of which any of the
foregoing, individually or collectively, beneficially own more than 50% of the
Common Equity. Any Person or group whose acquisition of beneficial ownership
constitutes a Change of Control in respect of which a Change of Control offer is
made in accordance with the requirements of this Agreement (or would result in a
Change of Control offer in the absence of the waiver of such requirement by
Lenders in accordance with this Agreement) will thereafter constitute Permitted
Hovnanian Holders.

 

 
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“Permitted Indebtedness” means:

 

(a)     Indebtedness under (i) this Agreement and the Loan Documents, (ii) the
First Lien Exchange Notes (and the First Lien Exchange Notes Guarantees), other
than Additional Notes (as defined in the First Lien Exchange Notes Indenture)
and (iii) New Second Lien Notes (and New Second Lien Notes Guarantees thereof),
other than Additional Notes (as defined in the New Second Lien Notes Indenture);

 

(b)      Indebtedness incurred under Credit Facilities in an aggregate principal
amount outstanding at any one time (including for purposes of determining
amounts outstanding under this clause (b), any Refinancing Indebtedness in
respect thereof, which Refinancing Indebtedness shall be deemed to have been
incurred under this clause (b)) not to exceed the greater of (i) $250.0 million
and (ii) 10.0% of Consolidated Tangible Assets measured at the time of
incurrence; provided that all Indebtedness of Holdings or any Restricted
Subsidiary incurred pursuant to this clause (b) (other than any Indebtedness
outstanding on the Effective Date and incurred under this clause (b)) shall be
scheduled to mature no earlier than January 15, 2021;

 

(c)     Indebtedness under (i) the Existing Senior Secured Old Group Notes (and
the guarantees thereof), other than Additional Notes (as defined in the First
Lien Notes Indenture and the Existing Second Lien Indenture, as applicable),
(ii) the Existing Senior Secured New Group Notes (and the guarantees thereof),
other than Additional Notes (as defined in the Existing Senior Secured New Group
Notes Indenture) and (iii) the Revolving Credit Facility, provided that the
amount of Indebtedness under the Revolving Credit Facility permitted under this
clause (c)(iii) shall not exceed $75.0 million principal amount;

 

(d)     Indebtedness in respect of obligations of Holdings and its Subsidiaries
to the trustees under indentures for debt securities;

 

(e)     intercompany debt obligations of (i) Holdings to the Borrower, (ii) the
Borrower to Holdings, (iii) Holdings or the Borrower to any Restricted
Subsidiary and (iv) any Restricted Subsidiary to Holdings or the Borrower or any
other Restricted Subsidiary; provided, however, that any Indebtedness of any
Restricted Subsidiary or the Borrower or Holdings owed to any Restricted
Subsidiary or the Borrower that ceases to be a Restricted Subsidiary shall be
deemed to be incurred and shall be treated as an incurrence for purposes of
Section 6.03 at the time the Restricted Subsidiary in question ceases to be a
Restricted Subsidiary;

 

(f)     Indebtedness of Holdings or the Borrower or any Restricted Subsidiary
under Hedging Obligations, in the case of any Currency Agreements or Interest
Protection Agreements in a notional amount no greater than the payments due (at
the time the related Currency Agreement or Interest Protection Agreement is
entered into) with respect to the Indebtedness or currency being hedged, to the
extent entered into in the ordinary course of business and not for speculative
purposes;

 

(g)     Purchase Money Indebtedness and Capitalized Lease Obligations entered
into in the ordinary course of business in an aggregate principal amount
(including for purposes of determining amounts outstanding under this clause
(g), any Refinancing Indebtedness in respect thereof, which Refinancing
Indebtedness shall be deemed to have been incurred under this clause (g)) at any
one time outstanding not to exceed $50.0 million;

 

 
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(h)     obligations for, pledge of assets in respect of, and guaranties of, bond
financings of political subdivisions or enterprises thereof in the ordinary
course of business;

 

(i)     Indebtedness entered into in the ordinary course of business secured
only by office buildings owned or occupied by Holdings or any Restricted
Subsidiary, which Indebtedness does not exceed $25.0 million aggregate principal
amount outstanding at any one time;

 

(j)     Indebtedness under warehouse lines of credit, repurchase agreements and
Indebtedness secured only by mortgage loans and related assets of mortgage
lending Subsidiaries in the ordinary course of a mortgage lending business;

 

(k)     Indebtedness of Holdings, the Borrower or any Restricted Subsidiary
which (A) together with all other Indebtedness under this clause (k), does not
exceed $475.0 million aggregate principal amount outstanding at any one time,
including for purposes of determining amounts outstanding under this clause (k),
any Refinancing Indebtedness in respect thereof, which Refinancing Indebtedness
shall be deemed to have been incurred under this clause (k), and (B) is
scheduled to mature no earlier than January 15, 2021 (except with respect to
Indebtedness incurred pursuant to this clause (k) that (1) is outstanding on the
Effective Date, (2) does not exceed $20.0 million in aggregate principal amount
outstanding at any one time or (3) is Purchase Money Indebtedness not to exceed,
together with any amounts outstanding under clause (2) above, $25.0 million in
aggregate principal amount outstanding at any one time, which, in the case of
clauses (1) through (3), may be scheduled to mature earlier than January 15,
2021);

 

(l)     obligations in respect of self-insurance, performance, bid, appeal and
surety bonds and completion guarantees and similar obligations provided by
Holdings or any Restricted Subsidiary or obligations in respect of letters of
credit, bank guarantees or similar instruments related thereto, in each case, in
the ordinary course of business;

 

(m)     Indebtedness of (x) Holdings, the Borrower or a Restricted Subsidiary
incurred or issued to finance an acquisition (provided that all Indebtedness of
Holdings, the Borrower or a Restricted Subsidiary incurred pursuant to this
clause (x) shall be scheduled to mature no earlier than January 15, 2021) or (y)
Persons that are acquired by Holdings, the Borrower or any Restricted Subsidiary
or merged into or consolidated with Holdings, the Borrower or a Restricted
Subsidiary in accordance with the terms of this Agreement (including designating
an Unrestricted Subsidiary a Restricted Subsidiary), to the extent that the
Indebtedness of such Persons in the case of this clause (y), was not incurred or
entered into in contemplation of such acquisition, merger or consolidation;
provided that after giving effect to such acquisition, merger or consolidation,
either: (i) Holdings could incur at least $1.00 of Indebtedness pursuant to
Section 6.03(a), or (ii) the Consolidated Fixed Charge Coverage Ratio would be
equal to or greater than the Consolidated Fixed Charge Coverage Ratio
immediately prior to such transaction or the ratio of Indebtedness of Holdings
and the Restricted Subsidiaries to Consolidated Tangible Net Worth of Holdings
would be equal to or less than the ratio immediately prior to such transaction;

 

(n)     Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business;

 

 
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(o)     Indebtedness of Holdings or any Restricted Subsidiary supported by a
letter of credit (which letter of credit is incurred pursuant to another clause
hereof (other than clause (l) of this definition), in a principal amount not in
excess of the stated amount of such letter of credit;

 

(p)     Indebtedness of Holdings or any Restricted Subsidiary consisting of (i)
the financing of insurance premiums or (ii) take or pay obligations contained in
supply arrangements, in each case incurred in the ordinary course of business;

 

(q)     Indebtedness of Holdings or any of its Restricted Subsidiaries in
respect of Cash Management Services;

 

(r)     obligations (other than Indebtedness for borrowed money) of Holdings or
any of its Restricted Subsidiaries under an agreement with any governmental
authority, quasi-governmental entity, utility, adjoining (or common master plan)
landowner or seller of real property, in each case entered into in the ordinary
course of business in connection with the acquisition of real property, to
entitle, develop or construct infrastructure thereupon;

 

(s)     the incurrence by Holdings or any Restricted Subsidiary of Indebtedness
deemed to exist pursuant to the terms of a joint venture agreement as a result
of a failure of Holdings or such Restricted Subsidiary to make a required
capital contribution therein; provided that the only recourse on such
Indebtedness is limited to Holdings’ or such Restricted Subsidiary’s equity
interests in the related joint venture; and

 

(t)     Indebtedness under the January 2017 Notes outstanding on the Effective
Date.

 

“Permitted Investment” means:

 

(a)     Cash Equivalents;

 

(b)     any Investment in Holdings, the Borrower or any Restricted Subsidiary or
any Person that becomes a Restricted Subsidiary as a result of such Investment
or that is consolidated or merged with or into, or transfers all or
substantially all of the assets of it or an operating unit or line of business
to, Holdings or a Restricted Subsidiary;

 

(c)     any receivables, loans or other consideration taken by Holdings, the
Borrower or any Restricted Subsidiary in connection with any asset sale
otherwise permitted by this Agreement; provided that non-cash consideration
received in an Asset Disposition or an exchange or swap of assets shall be
pledged as Collateral under the Collateral Documents to the extent the assets
subject to such Asset Disposition or exchange or swap of assets constituted
Collateral, with the Lien on such Collateral securing the Notes being of the
same priority with respect to the Notes as the Lien on the assets disposed of;
provided, further, that notwithstanding the foregoing clause, up to an aggregate
of $50.0 million of (i) non-cash consideration and consideration received as
referred to in Section 6.07(b)(ii), (ii) assets invested in pursuant to Section
6.07(c) and (iii) assets received pursuant to clause (d) under the definition of
“Asset Disposition” may be designated by Holdings or the Borrower as Excluded
Property not required to be pledged as Collateral, to the extent the
documentation, instruments or agreements governing such non-cash consideration
or assets, as applicable, prohibit such a pledge as Collateral;

 

(d)     Investments received in connection with any bankruptcy or reorganization
proceeding, or as a result of foreclosure, perfection or enforcement of any Lien
or any judgment or settlement of any Person in exchange for or satisfaction of
Indebtedness or other obligations or other property received from such Person,
or for other liabilities or obligations of such Person created, in accordance
with the terms of this Agreement;

 

 
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(e)     Investments in Hedging Obligations described in the definition of
“Permitted Indebtedness”;

 

(f)     any loan or advance to an executive officer, director or employee of
Holdings or any Restricted Subsidiary made in the ordinary course of business or
in accordance with past practice; provided, however, that any such loan or
advance exceeding $1.0 million shall have been approved by the Board of
Directors of Holdings or a committee thereof consisting of disinterested
members;

 

(g)     Investments in interests in issuances of collateralized mortgage
obligations, mortgages, mortgage loan servicing, or other mortgage related
assets;

 

(h)     obligations of Holdings or a Restricted Subsidiary under warehouse lines
of credit of Mortgage Subsidiaries to repurchase mortgages;

 

(i)     Investments in an aggregate amount at any time outstanding not to exceed
$100.0 million (measured at the time made and without giving effect to
subsequent changes in value); provided, however, that Investments in
Unrestricted Subsidiaries shall not be permitted pursuant to this clause (i);

 

(j)     Guarantees issued in accordance with Section 6.03;

 

(k)     Investments existing on the Effective Date in K. Hovnanian JV Holdings,
L.L.C. and its subsidiaries;

 

(l)     Permitted Bond Hedges which constitute Investments;

 

(m)     extensions of trade credit and credit in connection with the sale of
land owned by Holdings or a Restricted Subsidiary which is zoned by the
applicable governmental authority having jurisdiction for construction and use
as a detached or attached (including town homes or condominium) single-family
house (but excluding mobile homes), or the sale of a detached or attached
(including town homes or condominium) single-family house (but excluding mobile
homes) owned by Holdings or a Restricted Subsidiary which is completed or for
which there has been a start of construction and which has been or is being
constructed on any such land;

 

(n)     obligations (but not payments thereon) with respect to homeowners
association obligations, community facility district bonds, metro district
bonds, mello-roos bonds and subdivision improvement bonds and similar bonding
requirements arising in the ordinary course of business of a homebuilder;

 

(o)     guarantee obligations, including completion guarantee or indemnification
obligations (other than for the payment of borrowed money) entered into in the
ordinary course of business and incurred for the benefit of any adjoining
landowner, lender, seller of real property or municipal government authority (or
enterprises thereof) in connection with the acquisition, construction,
subdivision, entitlement and development of real property;

 

 
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(p)     Investments the payment for which consists of Qualified Stock of
Holdings; provided that such Qualified Stock will not increase the amount
available for Restricted Payments under clause (iii) of Section 6.04(a);

 

(q)     advances, loans or extensions of trade credit in the ordinary course of
business by Holdings or any of the Restricted Subsidiaries;

 

(r)     intercompany current liabilities owed to Unrestricted Subsidiaries or
joint ventures incurred in the ordinary course of business in connection with
the cash management operations of Holdings and its Subsidiaries; and

 

(s)     insurance, lease, utility and workers’ compensation, performance and
other similar deposits made in the ordinary course of business.

 

“Permitted Liens” means

 

(a)     Liens for taxes, assessments or governmental or quasi-governmental
charges or claims that (i) are not yet delinquent for a period of more than 30
days, (ii) are being contested in good faith by appropriate proceedings and as
to which appropriate reserves have been established or other provisions have
been made in accordance with GAAP, if required, or (iii) encumber solely
property abandoned or in the process of being abandoned;

 

(b)     statutory Liens of landlords and carriers’, warehousemen’s, mechanics’,
suppliers’, materialmen’s, repairmen’s or other Liens imposed by law and arising
in the ordinary course of business and with respect to amounts that, to the
extent applicable, either (i) are not yet delinquent for a period of more than
30 days or (ii) are being contested in good faith by appropriate proceedings and
as to which appropriate reserves have been established or other provisions have
been made in accordance with GAAP, if required;

 

(c)     Liens (other than any Lien imposed by the Employer Retirement Income
Security Act of 1974, as amended) incurred or deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and other types of social security or similar legislation or other
insurance related obligations (including, but not limited to, in respect of
deductibles, self-insured retention amounts and premiums and adjustments
thereto) or indemnification obligations of (including obligations in respect of
letters of credit or bank guarantees for the benefit of) insurance carriers
providing property, casualty or liability insurance, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or U.S.
government bonds to secure surety, stay, customs or appeal bonds to which such
Person is a party, or deposits as security for contested taxes or import duties
or for the payment of rent, performance and return-of-money bonds and other
similar obligations (including letters of credit issued in lieu of any such
bonds or to support the issuance thereof and including those to secure health,
safety and environmental obligations);

 

(d)     Liens incurred or deposits made to secure the performance of tenders,
bids, leases, statutory obligations, surety and appeal bonds, development
obligations, progress payments, government contracts, utility services,
developer’s or other obligations to make on-site or off-site improvements and
other obligations of like nature (exclusive of obligations for the payment of
borrowed money but including the items referred to in the parenthetical in
clause (a)(i) of the definition of “Indebtedness”), in each case incurred in the
ordinary course of business of Holdings, the Borrower and the Restricted
Subsidiaries;

 

 
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(e)     attachment or judgment Liens not giving rise to a Default or an Event of
Default;

 

(f)     easements, dedications, assessment district or similar Liens in
connection with municipal or special district financing, rights-of-way,
restrictions, reservations and other similar charges, burdens, and other similar
charges or encumbrances not materially interfering with the ordinary course of
business of Holdings, the Borrower and the Restricted Subsidiaries;

 

(g)     zoning restrictions, licenses, restrictions on the use of real property
or minor irregularities in title thereto, which do not materially impair the use
of such real property in the ordinary course of business of Holdings, the
Borrower and the Restricted Subsidiaries;

 

(h)     Liens securing Indebtedness incurred pursuant to clauses (i) or (j) of
the definition of “Permitted Indebtedness”;

 

(i)     Liens on the Collateral and other assets not constituting Collateral
pursuant to clause (a) of the definition of “Excluded Property” securing
Indebtedness of Holdings, the Borrower or any Restricted Subsidiary permitted to
be incurred under this Agreement; provided, that the aggregate amount of all
consolidated Indebtedness of Holdings, the Borrower and the Restricted
Subsidiaries (including, with respect to Capitalized Lease Obligations, the
Attributable Debt in respect thereof) secured by Liens under this clause (i)
(together with the principal amounts then outstanding under the New Second Lien
Notes and the Existing Senior Secured Old Group Notes and any refinancing,
replacement or renewal thereof that constitutes Secured Indebtedness which is
not permitted by and incurred under another clause of this definition of
“Permitted Liens” (other than clauses (s) and (w)) shall not exceed the greater
of (i) $800.0 million and (ii) 30% of Consolidated Tangible Assets at any one
time outstanding (after giving effect to the incurrence of such Indebtedness and
the use of the proceeds thereof) measured at the time of incurrence; provided
that the Liens under this clause (i) securing (x) Indebtedness which is not
Refinancing Indebtedness in respect of, or Indebtedness otherwise serving to
renew, extend, refinance or replace, Secured Indebtedness outstanding on the
Effective Date or the New Second Lien Notes outstanding on the Closing Date
shall rank junior to the Liens securing the Loans and (y) any Refinancing
Indebtedness in respect of, or Indebtedness otherwise serving to renew, extend,
refinance or replace, Secured Indebtedness outstanding on the Effective Date or
the New Second Lien Notes outstanding on the Closing Date shall have the same or
junior priority as the initial Liens;

 

(j)     Liens securing Non-Recourse Indebtedness of Holdings, the Borrower or
any Restricted Subsidiary; provided, that such Liens apply only to (i) the
property financed, constructed or improved out of the net proceeds of such
Non-Recourse Indebtedness within 365 days after the incurrence of such
Non-Recourse Indebtedness, and, including for the avoidance of doubt, assets
directly related thereto or derived therefrom or other property of Holdings, the
Borrower or any Restricted Subsidiary financed pursuant to the Credit Facility
of such person under which the Non-Recourse Indebtedness was incurred, or (ii)
licenses, permits, authorizations, consent forms or contracts related to the
acquisition, development, use or improvement of such property;

 

(k)     Liens securing Purchase Money Indebtedness; provided, that such Liens
apply only to (i) the property financed, designed, installed, constructed or
improved with the proceeds of such Purchase Money Indebtedness within 365 days
after the incurrence of such Purchase Money Indebtedness, and, including for the
avoidance of doubt, assets directly related thereto or derived therefrom or
other property of Holdings, the Borrower or any Restricted Subsidiary financed
pursuant to the Credit Facility of such person under which the Purchase Money
Indebtedness was incurred, or (ii) licenses, permits, authorizations, consent
forms or contracts related to the acquisition, development, use or improvement
of such property;

 

 
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(l)     Liens on property or assets of Holdings, the Borrower or any Restricted
Subsidiary securing Indebtedness of Holdings, the Borrower or any Restricted
Subsidiary owing to Holdings, the Borrower or one or more Restricted
Subsidiaries;

 

(m)     leases, subleases, licenses or sublicenses (including of intellectual
property) granted to others not materially interfering with the ordinary course
of business of Holdings and the Restricted Subsidiaries;

 

(n)     purchase money security interests (including, without limitation,
Capitalized Lease Obligations); provided, that such Liens apply only to the
Property acquired and the related Indebtedness is incurred within 365 days after
the acquisition of such Property;

 

(o)     any right of first refusal, right of first offer, option, contract or
other agreement to sell an asset; provided that such sale is not otherwise
prohibited under this Agreement;

 

(p)     any right of a lender or lenders to which Holdings, the Borrower or a
Restricted Subsidiary may be indebted to offset against, or appropriate and
apply to the payment of such, Indebtedness and any and all balances, credits,
deposits, accounts or money of Holdings, the Borrower or a Restricted Subsidiary
with or held by such lender or lenders or its Affiliates;

 

(q)     any pledge or deposit of cash or property in conjunction with obtaining
surety, performance, completion or payment bonds and letters of credit or other
similar instruments or providing earnest money obligations, escrows or similar
purpose undertakings or indemnifications in the ordinary course of business of
Holdings, the Borrower and the Restricted Subsidiaries;

 

(r)     Liens for homeowner, condominium, property owner association
developments and similar fees, assessments and other payments;

 

(s)     Liens securing Refinancing Indebtedness (except Liens securing
Refinancing Indebtedness in respect of Indebtedness secured pursuant to clauses
(i), (qq) and (rr) under this definition); provided, that such Liens extend only
to the assets securing the Indebtedness being refinanced and have the same or
junior priority as the initial Liens;

 

(t)     Liens incurred in the ordinary course of business as security for the
obligations of Holdings, the Borrower and the Restricted Subsidiaries with
respect to indemnification in respect of title insurance providers;

 

(u)     Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with Holdings or any Subsidiary of Holdings or
becomes a Subsidiary of Holdings; provided, that such Liens were in existence
prior to the contemplation of such merger or consolidation or acquisition and do
not extend to any assets other than those of the Person merged into or
consolidated with Holdings or the Subsidiary or acquired by Holdings or its
Subsidiaries;

 

 
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(v)     Liens on property existing at the time of acquisition thereof by
Holdings or any Subsidiary of Holdings, provided, that such Liens were in
existence prior to the contemplation of such acquisition;

 

(w)     Liens existing on the issue date of the Existing Second Lien Notes
(other than Liens securing Applicable Debt) and any extensions, renewals,
refinancings or replacements thereof;

 

(x)     Liens on specific items of inventory or other goods and proceeds of any
Person securing such Person’s obligations in respect of bankers’ acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;

 

(y)     pledges, deposits and other Liens existing under, or required to be made
in connection with, (i) earnest money obligations, escrows or similar purpose
undertakings or indemnifications in connection with any purchase and sale
agreement, (ii) development agreements or other contracts entered into with
governmental authorities (or an entity sponsored by a governmental authority) in
connection with the entitlement of real property or (iii) agreements for the
funding of infrastructure, including in respect of the issuance of community
facility district bonds, metro district bonds, subdivision improvement bonds and
similar bonding requirements arising in the ordinary course of business of a
homebuilder;

 

(z)     Liens securing obligations of Holdings or any Restricted Subsidiary to
any third party in connection with any option, repurchase right or right of
first refusal to purchase real property granted to the master developer or the
seller of real property that arises as a result of the non-use or
non-development of such real property by Holdings or any Restricted Subsidiary
and joint development agreements with third parties to perform and/or pay for or
reimburse the costs of construction and/or development related to or benefiting
property (and additions, accessions, improvements and replacements and customary
deposits in connection therewith and proceeds and products therefrom) of
Holdings or any Restricted Subsidiary and property belonging to such third
parties, in each case entered into in the ordinary course of business; provided
that such Liens do not at any time encumber any property, other than the
property (and additions, accessions, improvements and replacements and customary
deposits in connection therewith and proceeds and products therefrom) financed
by such Indebtedness and the proceeds and products thereof;

 

(aa)     Liens securing Hedging Obligations and Cash Management Services
permitted to be incurred under this Agreement, so long as the related
Indebtedness is, and is permitted under this Agreement to be, secured by a Lien
on the same property securing such Hedging Obligations or Cash Management
Services;

 

(bb)     Liens arising from Uniform Commercial Code (or equivalent statute)
financing statement filings regarding operating leases or consignments entered
into by Holdings or any Restricted Subsidiary in the ordinary course of
business;

 

(cc)     Liens in favor of the Borrower or any other Loan Party;

 

 
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(dd)     deposits made or other security provided to secure liabilities to
insurance carriers under insurance or self-insurance arrangements in the
ordinary course of business;

 

(ee)     Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of
goods in the ordinary course of business;

 

(ff)     Liens (i) of a collection bank arising under Section 4-210 of the
Uniform Commercial Code or any comparable or successor provision on items in the
course of collection and (ii) in favor of banking or other financial
institutions or electronic payment service providers arising as a matter of law
encumbering deposits (including the right of set-off) and which are within the
general parameters customary in the banking or finance industry;

 

(gg)     the rights reserved or vested in any Person by the terms of any lease,
license, grant or permit held by Holdings or any of its Restricted Subsidiaries
or by a statutory provision, to terminate any such lease, license, grant or
permit, or to require annual or periodic payments as a condition to the
continuance thereof;

 

(hh)     restrictive covenants affecting the use to which real property may be
put; provided that the covenants are complied with;

 

(ii)     security given to a public utility or any municipality or governmental
authority when required by such utility or authority in connection with the
operations of that Person in the ordinary course of business;

 

(jj)     zoning by-laws and other land use restrictions, including, without
limitation, site plan agreements, development agreements and contract zoning
agreements;

 

(kk)     Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by Holdings or any
Restricted Subsidiary in the ordinary course of business;

 

(ll)     [Reserved];

 

(mm)     [Reserved];

 

(nn)     any encumbrance or restriction (including put and call arrangements)
with respect to capital stock of any joint venture or similar arrangement
pursuant to any joint venture or similar agreement, to the extent that such
encumbrance or restriction does not secure Indebtedness;

 

(oo)     Liens on property or assets used to defease or to irrevocably satisfy
and discharge Indebtedness; provided that such defeasance or satisfaction and
discharge is not prohibited by this Agreement;

 

(pp)     easements, rights-of-way, dedications, covenants, conditions,
restrictions, reservations and assessment district or similar Liens in
connection with municipal or special district financing, agreements with
adjoining landowners or state or local government authorities,
quasi-governmental entities or utilities and other similar charges or
encumbrances incurred in the ordinary course of business and which do not, in
the aggregate, materially interfere with the ordinary course of business of
Holdings and its Subsidiaries;

 

 
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(qq)     Liens on the Collateral and other assets not constituting Collateral
pursuant to clause (a) of the definition of “Excluded Property” securing
Indebtedness (including Refinancing Indebtedness) of the Borrower or any other
Loan Party incurred under Credit Facilities that constitute revolving credit
loans, term loans, letters of credit or similar lines of credit in an aggregate
amount at any time outstanding (together with the principal amounts then
outstanding under this Agreement and any refinancing, replacement or renewal
thereof that constitutes Secured Indebtedness which is not permitted by and
incurred under another clause of this definition of “Permitted Liens” (other
than clauses (s) and (w)) not to exceed the greater of (i) $125.0 million and
(ii) 4.0% of Consolidated Tangible Assets at any one time outstanding measured
at the time of the incurrence; provided that (i) any Indebtedness incurred to
refund, refinance or extend (including Refinancing Indebtedness) Indebtedness
secured by Liens pursuant to this clause (qq) shall be permitted to be secured
by Liens pursuant to this clause (qq) notwithstanding that at the time of
incurrence thereof, such Indebtedness may exceed the amount of Indebtedness that
would then be permitted to be secured under this clause (qq) due to a diminution
in the amount of Consolidated Tangible Assets and (ii) the Liens under this
clause (qq) securing (x) Indebtedness which is not Refinancing Indebtedness in
respect of, or Indebtedness otherwise serving to renew, extend, refinance or
replace, Secured Indebtedness outstanding on the Effective Date or the Loans
outstanding on the Closing Date shall rank junior to the Liens securing the
Loans and (y) any Refinancing Indebtedness in respect of, or Indebtedness
otherwise serving to renew, extend, refinance or replace, Secured Indebtedness
outstanding on the Effective Date or the Loans outstanding on the Closing Date
shall have the same or junior priority as the initial Liens; and

 

(rr)     Liens securing obligations not to exceed $25.0 million at any one time
outstanding, provided that any Liens on the Collateral incurred under this
clause (rr) securing Indebtedness incurred after the Closing Date shall rank
junior to the Liens securing the Loans.

 

For purposes of determining compliance with this definition, (x) a Lien need not
be incurred solely by reference to one category of Permitted Liens described in
this definition but may be incurred under any combination of such categories
(including in part under one such category and in part under any other such
category) and (y) in the event that a Lien (or any portion thereof) meets the
criteria of one or more of such categories of Permitted Liens, the Borrower
shall, in its sole discretion, classify or reclassify such Lien (or any portion
thereof) in any manner that complies with this definition.

 

“Permitted Warrant” means any call option on, warrant or right to purchase (or
substantively equivalent derivative transaction) Holdings’ Capital Stock sold by
Holdings, the Borrower or any Restricted Subsidiary substantially concurrently
with any purchase by Holdings, the Borrower or any Restricted Subsidiary of a
related Permitted Bond Hedge.

 

“Person” means any individual, corporation, partnership, limited liability
company, joint venture, incorporated or unincorporated association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.

 

“Pledge” has the meaning specified in Section 9.07(i).

 

“Pledgee” has the meaning specified in Section 9.07(i).

 

 
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“Pledge Agreement” means the Pledge Agreement among the Borrower, the other
Grantors named therein and the Administrative Agent, dated as of the Closing
Date.

 

“Preferred Stock” of any Person means all Capital Stock of such Person which has
a preference in liquidation or with respect to the payment of dividends.

 

“Prepayment Notice” has the meaning specified in Section 2.03(a)(i), which shall
be substantially in the form of Exhibit A-2.

 

“Prepayment Premium” has the meaning specified in Section 2.03(a)(i).

 

“Prime Rate” means the rate of interest per annum reported as the “prime rate”
in the money rate column of the “Wall Street Journal” (or any other publication
selected by the Administrative Agent) on the date of determination.

 

“Pro Rata Share” means, with respect to each Lender at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the Term Commitments of such Lender under
the applicable Facility or Facilities or the Outstanding Amount of such Lender’s
Term Loans under such Facility at such time and the denominator of which is the
amount of the Aggregate Commitments under the applicable Facility or Facilities
or the aggregate Outstanding Amount of all Term Loans under such Facility at
such time.

 

“Property” of any Person means all types of real, personal, tangible, intangible
or mixed property owned by such Person, whether or not included in the most
recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.

 

“Public Filings” means Holding’s annual report on Form 10-K for the fiscal year
ended October 31, 2015, each subsequently filed quarterly report on Form 10-Q
and current report on Form 8-K (other than Items 2.02 and 7.01) and all other
documents filed by Holdings with the Securities and Exchange Commission since
November 1, 2015 under Section 13(a), 13(c), 14 and 15(d) of the Exchange Act on
or prior to the Closing Date (other than Items 2.02 and 7.01 of a Form 8-K).

 

“Purchase Money Indebtedness” means Indebtedness of Holdings, the Borrower or
any Restricted Subsidiary incurred for the purpose of financing all or any part
of the purchase price, or the cost of design, installation, construction, lease
or improvement, of any property to be used in the business of Holdings, the
Borrower and the Restricted Subsidiaries; provided, however, that (a) the
aggregate principal amount of such Indebtedness shall not exceed such purchase
price or cost (including financing costs) and (b) such Indebtedness shall be
incurred no later than 365 days after the acquisition of such property or
completion of such design, installation, construction, lease or improvement.

 

“Purchasing Borrower Party” means Holdings or any subsidiary of Holdings.

 

“Qualified Stock” means Capital Stock of Holdings other than Disqualified Stock.

 

“Rating Agency” means a statistical rating agency or agencies, as the case may
be, nationally recognized in the United States and selected by Holdings (as
certified by a resolution of the Board of Directors of Holdings) which shall be
substituted for S&P or Moody’s, or both, as the case may be.

 

 
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“Real Estate Business” means homebuilding, housing construction, real estate
development or construction and the sale of homes and related real estate
activities, including the provision of mortgage financing or title insurance.

 

“Refinance” has the meaning specified in Section 2.14.

 

“Refinancing Effective Date” has the meaning specified in Section 2.14.

 

“Refinancing Indebtedness” means Indebtedness (to the extent not Permitted
Indebtedness) that refunds, refinances or extends any Indebtedness of Holdings,
the Borrower or any Restricted Subsidiary (other than Non-Recourse Indebtedness
and Permitted Indebtedness described under clauses (d) through (f), (h) through
(j), (l), and (n) through (t) of the definition thereof), but only to the extent
that:

 

(a)     the Refinancing Indebtedness is subordinated, if at all, to the Loans or
the Guarantees, as the case may be, to the same extent as the Indebtedness being
refunded, refinanced or extended,

 

(b)     the Refinancing Indebtedness (i) in respect of Permitted Indebtedness
under clause (g) of the definition thereof and Permitted Indebtedness described
under (2) and (3) of the proviso to clause (k)(B) of the definition thereof is
scheduled to mature either (x) no earlier than the Indebtedness being refunded,
refinanced or extended or (y) after the maturity date of the Loans and (ii) in
respect of all other Indebtedness, is scheduled to mature no earlier than
January 15, 2021,

 

(c)     the portion, if any, of the Refinancing Indebtedness that is scheduled
to mature on or prior to the maturity date of the Loans has a Weighted Average
Life to Maturity at the time such Refinancing Indebtedness is incurred that is
equal to or greater than the Weighted Average Life to Maturity of the portion of
the Indebtedness being refunded, refinanced or extended that is scheduled to
mature on or prior to the maturity date of the Loans, and

 

(d)     such Refinancing Indebtedness is in an aggregate principal amount that
is equal to or less than the aggregate principal amount then outstanding under
the Indebtedness being refunded, refinanced or extended (plus all accrued
interest thereon and the amount of any premiums (including tender premiums) and
fees, costs and expenses incurred in connection with the refinancing thereof);

 

provided, that for purposes of determining the principal amount outstanding
under clauses (b), (g), (k) and (t) of “Permitted Indebtedness” and clauses (i),
(qq) and (rr) of “Permitted Liens,” the principal amount referred to in such
clauses shall be calculated excluding any principal amount that was incurred in
respect of amounts set forth in the parenthetical in clause (d) of this
definition and such principal amount shall nonetheless be permitted under such
clauses.

 

“Refinancing Term Lender” has the meaning specified in Section 2.14(v)(i).

 

“Refinancing Term Loan Amendment” has the meaning specified in Section
2.14(vii).

 

“Refinancing Term Loan Facility” means a facility providing for the Borrowing of
Refinancing Term Loans.

 

“Refinancing Term Loan Series” has the meaning specified in Section 2.14(vi).

 

 
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“Refinancing Term Loans” has the meaning specified in Section 2.14.

 

“Register” has the meaning specified in Section 9.07(c).

 

“Related Indemnitee” has the meaning specified in Section 9.05.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.

 

“Release” means any release, spill, emission, discharge, deposit, disposal,
leaking, pumping, pouring, dumping, emptying, injection or leaching into the
Environment, or into, from or through any structure or facility.

 

“repayment” has the meaning specified in the definition of “Consolidated Fixed
Charge Coverage Ratio”.

 

“Representatives” has the meaning specified in Section 9.08.

 

“Required Lenders” means, as of any date of determination, Lenders having more
than 50% of the sum of the Total Outstandings; provided that the unused Term
Commitment and the portion of the Total Outstandings held or deemed held by any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Lenders.

 

“Responsible Officer” means the chief executive officer, president, executive
vice president, vice president, chief financial officer, chief accounting
officer, treasurer, assistant treasurer, controller or other similar officer of
a Loan Party or, in the case of any Foreign Subsidiary, any duly appointed
authorized signatory or any director or managing member of such Person and, as
to any document delivered on the Closing Date, any secretary or assistant
secretary. Any document delivered hereunder that is signed by a Responsible
Officer of a Loan Party shall be conclusively presumed to have been authorized
by all necessary corporate, partnership and/or other action on the part of such
Loan Party, and such Responsible Officer shall be conclusively presumed to have
acted on behalf of such Loan Party.

 

“Restricted Investment” means any Investment other than a Permitted Investment.

 

“Restricted Payment” means any of the following:

 

(a)     the declaration or payment of any dividend or any other distribution on
Capital Stock of Holdings, the Borrower or any Restricted Subsidiary or any
payment made to the direct or indirect holders (in their capacities as such) of
Capital Stock of Holdings, the Borrower or any Restricted Subsidiary (other than
(i) dividends or distributions payable solely in Qualified Stock and (ii) in the
case of the Borrower or Restricted Subsidiaries, dividends or distributions
payable to Holdings, the Borrower or a Restricted Subsidiary);

 

(b)     the purchase, redemption or other acquisition or retirement for value of
any Capital Stock of Holdings, the Borrower or any Restricted Subsidiary (other
than a payment made to Holdings, the Borrower or any Restricted Subsidiary);

 

(c)     any Investment (other than any Permitted Investment), including any
Investment in an Unrestricted Subsidiary (including by the designation of a
Subsidiary of Holdings as an Unrestricted Subsidiary); and

 

 
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(d)     the purchase, repurchase, redemption, acquisition or retirement for
value, prior to the date for any scheduled maturity, sinking fund or
amortization or other principal installment payment, of any Subordinated
Indebtedness (other than (i) Indebtedness permitted under clause (d) of the
definition of “Permitted Indebtedness” or (ii) the purchase, repurchase,
redemption, defeasance, or other acquisition or retirement of Subordinated
Indebtedness purchased in anticipation of satisfying a sinking fund obligation,
amortization or principal installment or final maturity, in each case due within
one year of the date of purchase, repurchase, redemption, defeasance or other
acquisition or retirement).

 

“Restricted Subsidiary” means any Subsidiary of Holdings which is not an
Unrestricted Subsidiary.

 

“Rule 144A” means Rule 144A under the Securities Act.

 

“Revolving Credit Facility” means the revolving credit facility under the Credit
Agreement, dated as of June 7, 2013, among the Borrower, Holdings, the other
guarantors party thereto, and the lender party thereto, as amended by the Credit
Agreement First Amendment, dated as of June 11, 2013, the Credit Agreement
Second Amendment, dated as of June 18, 2013, the Credit Agreement Third
Amendment, dated as of June 27, 2013 and the Credit Agreement Fourth Amendment,
dated as of July 10, 2013 and as further amended, restated, supplemented or
otherwise modified from time to time hereafter, including any such amendment,
restatement or other modification that increases the amount permitted to be
borrowed thereunder or alters the maturity thereof (to the extent that such
increase in borrowings is permitted under Section 6.03 hereof) or adds Holdings,
the Borrower or Restricted Subsidiaries as additional borrowers or guarantors
thereunder and whether by the same or any other agent, lender or group of
lenders.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.

 

“Sanctioned Country” has the meaning specified in Section 5.20.

 

“Sanctions” has the meaning specified in Section 5.20.

 

“Second Lien Collateral Agency Agreement” means the Collateral Agency Agreement,
dated as of the Closing Date, among the Borrower, Holdings, the guarantors party
thereto, the New Second Lien Notes Collateral Agent, the Existing Second Lien
Collateral Agent and the Joint Second Lien Collateral Agent.

 

“Second-Priority Lien Obligations” means (1) the New Second Lien Notes and the
New Second Lien Notes Guarantees thereof, (2) the Existing Second Lien Notes and
the Existing Second Lien Guarantees thereof and (3) all other Indebtedness
secured by Liens on the Collateral that are equal in priority to the Liens on
the Collateral securing the New Second Lien Notes and the Existing Second Lien
Notes, and, in each case, all Obligations in respect thereof.

 

“Secured Parties” means, collectively, the Administrative Agent, the Mortgage
Tax Collateral Agent, the Lenders, the Supplemental Administrative Agent, if
any, and each co-agent or sub-agent appointed by the Administrative Agent from
time to time pursuant to Section 8.05.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

 
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“Security Agreement” means the Security Agreement among the Borrower, the other
Grantors named therein and the Administrative Agent, dated as of the Closing
Date.

 

“Segregated Account” means one or more segregated accounts pledged under the
Collateral Documents that is under the control of the Administrative Agent or
the Joint Second Lien Collateral Agent, subject to the Intercreditor Agreement.

 

“Significant Subsidiary” means any Subsidiary of Holdings which would constitute
a “significant subsidiary” as defined in Rule 1-02(w)(1) or (2) of Regulation
S-X under the Securities Act and the Exchange Act as in effect on the Effective
Date.

 

“Subordinated Indebtedness” means Indebtedness subordinated in right of payment
to the Loans pursuant to a written agreement.

 

“Subsidiary” of any Person means any corporation or other entity of which a
majority of the Capital Stock having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions is at
the time directly or indirectly owned or controlled by such Person.

 

“Subsidiary Guarantor” has the meaning specified in the introductory paragraph
to this Agreement. Each Subsidiary Guarantor as of the date hereof is listed on
Schedule 10.01 hereto.

 

“Successor” has the meaning specified in Section 6.11(i).

 

“Supplemental Administrative Agent” has the meaning specified in Section 8.10
and “Supplemental Administrative Agents” shall have the corresponding meaning.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

 

“Tender Offer” has the meaning specified in the definition of “Tender Offer and
Consent Solicitation.”

 

“Tender Offer and Consent Solicitation” means the Borrower’s offer to purchase
for cash (the “Tender Offer”) any and all of the January 2017 Notes, as well as
the related consent solicitation (the “Consent Solicitation”) to amend the
January 2017 Notes Indenture, each subject to the terms and conditions set forth
in the offer to purchase and consent solicitation statement (the “Offer to
Purchase Statement”), to be dated on or about the Effective Date, and the
related letter of transmittal and consent.

 

“Term Commitment” means an Initial Term Commitment, a commitment in respect of
Refinancing Term Loans or a commitment in respect of Extended Term Loans.

 

“Term Lender” means, at any time, any Lender that has a Term Commitment or a
Term Loan at such time.

 

“Term Loan Facility” means the Initial Term Loan Facility, each Refinancing Term
Loan Facility and each Extended Term Loan Facility.

 

“Term Loans” means Initial Term Loans, Refinancing Term Loans and Extended Term
Loans.

 

 
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“Term Note” means a promissory note of the Borrower payable to any Term Lender
or its registered assigns, in substantially the form of Exhibit B hereto,
evidencing the indebtedness of the Borrower to such Term Lender resulting from
the Initial Term Loans made by such Initial Term Lenders.

 

“Termination Date” has the meaning specified in Section 8.08(a).

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans.

 

“tranche” shall have the meaning specified in Section 2.13(a).

 

“Transaction Date” has the meaning specified in the definition of “Consolidated
Fixed Charge Coverage Ratio”.

 

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

“Unentitled Land” means land owned by the Borrower or a Loan Party which has not
been granted preliminary approvals ((a) in New Jersey, as defined in the
Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.) and (b) for states other than
New Jersey, a point in time equivalent thereto) for residential development.

 

“Uniform Commercial Code” means the Uniform Commercial Code as the same may from
time to time be in effect in the State of New York or the Uniform Commercial
Code (or similar code or statute) of another jurisdiction, to the extent it may
be required to apply to the creation or perfection of a security interest in any
item or items of Collateral.

 

“United States” and “US” mean the United States of America.

 

“Units” means the 6.00% Exchangeable Note Units of the Borrower and Holdings
issued on October 2, 2012 composed of a senior unsecured exchangeable note of
the Borrower and guaranteed by the applicable guarantors thereof and a senior
unsecured amortizing note of the Borrower and guaranteed by the applicable
guarantors thereof.

 

“Unrestricted Subsidiary” means any Subsidiary of Holdings so designated by a
resolution adopted by the Board of Directors of Holdings or a duly authorized
committee thereof as provided below; provided, that the holders of Indebtedness
thereof do not have direct or indirect recourse against Holdings, the Borrower
or any Restricted Subsidiary, and neither Holdings, the Borrower nor any
Restricted Subsidiary otherwise has liability for, any payment obligations in
respect of such Indebtedness (including any undertaking, agreement or instrument
evidencing such Indebtedness), except, in each case, to the extent that the
amount thereof constitutes a Restricted Payment or Permitted Investment
permitted by this Agreement, in the case of Non-Recourse Indebtedness, to the
extent such recourse or liability is for the matters discussed in the last
sentence of the definition of “Non-Recourse Indebtedness,” or to the extent such
Indebtedness is a guarantee by such Subsidiary of Indebtedness of Holdings, the
Borrower or a Restricted Subsidiary. As of the Effective Date, the Unrestricted
Subsidiaries were the Subsidiaries of Holdings named in Schedule 1.01 hereto.

 

Subject to the foregoing, the Board of Directors of Holdings or a duly
authorized committee thereof may designate any Subsidiary in addition to those
named above to be an Unrestricted Subsidiary; provided, however, that (a) the
net amount (the “Designation Amount”) then outstanding of all previous
Investments by Holdings and the Restricted Subsidiaries in such Subsidiary will
be deemed to be a Restricted Payment at the time of such designation and will
reduce the amount available for Restricted Payments under Section 6.04 hereof to
the extent provided therein, (b) Holdings must be permitted under Section 6.04
hereof or pursuant to the definition of “Permitted Investment” to make the
Restricted Payment deemed to have been made pursuant to clause (a) of this
paragraph, and (c) after giving effect to such designation, no Default or Event
of Default shall have occurred or be continuing. In accordance with the
foregoing, and not in limitation thereof, Investments made by any Person in any
Subsidiary of such Person prior to such Person’s merger with Holdings or any
Restricted Subsidiary (but not in contemplation or anticipation of such merger)
shall not be counted as an Investment by Holdings or such Restricted Subsidiary
if such Subsidiary of such Person is designated as an Unrestricted Subsidiary.

 

 
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The Board of Directors of Holdings or a duly authorized committee thereof may
also redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary;
provided, however, that (a) the Indebtedness of such Unrestricted Subsidiary as
of the date of such redesignation could then be incurred under Section 6.03
hereof and (b) immediately after giving effect to such redesignation and the
incurrence of any such additional Indebtedness, (i) Holdings and the Restricted
Subsidiaries could incur $1.00 of additional Indebtedness under Section 6.03(a)
hereof or (ii) the Consolidated Fixed Charge Coverage Ratio would be equal to or
greater than the Consolidated Fixed Charge Coverage Ratio immediately prior to
such redesignation or the ratio of Indebtedness of Holding and the Restricted
Subsidiaries to Consolidated Tangible Net Worth of Holdings would be equal to or
less than the ratio immediately prior to such redesignation. Any such
designation or redesignation by the Board of Directors of Holdings or a
committee thereof will be evidenced to the Trustee by the filing with the
Trustee of a certified copy of the resolution of the Board of Directors of
Holdings or a committee thereof giving effect to such designation or
redesignation and an Officers’ Certificate certifying that such designation or
redesignation complied with the foregoing conditions and setting forth the
underlying calculations of such Officers’ Certificate. The designation of any
Person as an Unrestricted Subsidiary shall be deemed to include a designation of
all Subsidiaries of such Person as Unrestricted Subsidiaries; provided, however,
that the ownership of the general partnership interest (or a similar member’s
interest in a limited liability company) by an Unrestricted Subsidiary shall not
cause a Subsidiary of Holdings of which more than 95% of the equity interest is
held by Holdings or one or more Restricted Subsidiaries to be deemed an
Unrestricted Subsidiary.

 

“US Person” means any Person that is a “United States person” within the meaning
of Section 7701(a)(30) of the Code.

 

“US Tax Certificate” has the meaning set forth in Section 3.01(f)(ii)(B)(3).

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness or
portion thereof at any date, the number of years obtained by dividing (a) the
sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including, without limitation, payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment
by (b) the sum of all such payments described in clause (a)(i) of this
definition.

 

“Withholding Agent” means any Loan Party, the Administrative Agent and, for U.S.
federal income tax purposes only, any other withholding agent.

 

Section 1.02     Rules of Construction. Unless the context otherwise requires or
except as otherwise expressly provided:

 

(a)     an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;

 

 
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(b)     “herein,” “hereof” and other words of similar import refer to this
Agreement as a whole and not to any particular Section, Article or other
subdivision;

 

(c)     all references to Sections or Articles or Exhibits refer to Sections or
Articles or Exhibits of or to this Agreement unless otherwise indicated;

 

(d)     references to agreements or instruments, or to statutes or regulations,
are to such agreements or instruments, or statutes or regulations, as amended
from time to time (or to successor statutes and regulations); and

 

(e)     in the event that a transaction meets the criteria of more than one
category of permitted transactions or listed exceptions, the Borrower may
classify such transaction as it, in its sole discretion, determines.

 

Section 1.03     Times of Day. Unless otherwise specified, all references herein
to times of day shall be references to New York time (daylight or standard, as
applicable).

 

Section 1.04     Timing of Payment or Performance. When the payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance required on a day which is not a Business Day, the date of
such payment (other than as described in the definition of Interest Period) or
performance shall extend to the immediately succeeding Business Day and such
extension of time shall be reflected in computing interest or fees, as the case
may be.

 

Article II

THE COMMITMENTS AND BORROWINGS

 

Section 2.01     The Loans. Subject to the terms and conditions set forth
herein, each Initial Term Lender agrees to make loans on the Closing Date to the
Borrower (each, an “Initial Term Loan” and, collectively, the “Initial Term
Loans”) in an amount denominated in Dollars equal to such Initial Term Lender’s
Initial Term Commitment. Amounts borrowed under this Section 2.01 and repaid or
prepaid may not be reborrowed. Term Loans may be Base Rate Loans or Eurodollar
Rate Loans, as further provided herein.

 

Section 2.02     Borrowings, Conversions and Continuations of Loans.

 

(a)     Each Borrowing, each conversion of Term Loans from one Type to the
other, and each continuation of Eurodollar Rate Loans shall be made upon the
Borrower’s irrevocable delivery to the Administrative Agent of a Loan Notice
(which may be given by telephone as provided below), appropriately completed and
signed by a Responsible Officer of the Borrower. Each such notice must be
received by the Administrative Agent (i) not later than 11:00 a.m. three (3)
Business Days (or such shorter time period as agreed to by the Initial Term
Lenders) prior to the requested date of any Borrowing of Eurodollar Rate Loans,
continuation of Eurodollar Rate Loans or any conversion of Base Rate Loans to
Eurodollar Rate Loans or (ii) not later than 12:00 p.m. (noon) one (1) Business
Day prior to the requested date of any Borrowing of Base Rate Loans. Each
telephonic notice delivered pursuant to this Section 2.02(a) must be confirmed
promptly by delivery to the Administrative Agent of a written Loan Notice,
appropriately completed and signed by a Responsible Officer of the Borrower.
Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall
be in a minimum principal amount of $1,000,000 or a whole multiple of $500,000
in excess thereof. Each Borrowing of or conversion to Base Rate Loans shall be
in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof. Each Loan Notice (whether telephonic or written) shall specify
(i) whether the Borrower is requesting a Borrowing of Term Loans, a conversion
of Term Loans from one Type to the other, or a continuation of Eurodollar Rate
Loans, (ii) the requested date of the Borrowing, conversion or continuation, as
the case may be (which shall be a Business Day), (iii) the principal amount of
Loans to be borrowed, converted or continued, (iv) the Type of Loans to be
borrowed or to which existing Term Loans are to be converted, and (v) the
account of the Borrower to be credited with the proceeds of such Borrowing. If
the Borrower fails to specify a Type of Loan in a Loan Notice or fails to give a
timely notice requesting a conversion or continuation, then the applicable Term
Loans shall be made as, or converted to, Eurodollar Rate Loans with an Interest
Period of one (1) month. Any such automatic conversion shall be effective as of
the last day of the Interest Period then in effect with respect to the
applicable Eurodollar Rate Loans.

 

 
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(b)     Following receipt of a Loan Notice, the Administrative Agent shall
promptly notify each Appropriate Lender of the amount of its Pro Rata Share of
the applicable Class of Loans, and if no timely notice of a conversion or
continuation is provided by the Borrower, the Administrative Agent shall notify
each Lender of the details of any automatic conversion or continuation described
in Section 2.02(a). In the case of each Borrowing, each Appropriate Lender shall
make the amount of its Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent’s Office not later than 1:00 p.m.
(with respect to Eurodollar Rate Loans) or 2:00 p.m. (with respect to Base Rate
Loans) on the Business Day specified in the applicable Loan Notice. Subject to
the terms and conditions hereof, the Administrative Agent shall make all funds
so received available to the Borrower in like funds as received by the
Administrative Agent by wire transfer of such funds in accordance with
instructions provided to the Administrative Agent by the Borrower.

 

(c)     A Eurodollar Rate Loan may be continued or converted only on the last
day of an Interest Period for such Eurodollar Rate Loan unless the Borrower pays
the amount due, if any, under Section 3.05 in connection therewith. During the
existence of an Event of Default, the Required Lenders, upon written notice to
the Borrower and the Administrative Agent, may require that no Loans may be
converted to or continued as Eurodollar Rate Loans.

 

(d)     The Administrative Agent shall promptly notify the Borrower and the
Appropriate Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans upon determination of such interest rate. The
determination of the Eurodollar Rate by the Administrative Agent shall be
conclusive in the absence of manifest error. At any time that Base Rate Loans
are outstanding, the Administrative Agent shall notify the Borrower and the
Appropriate Lenders of any change in the Prime Rate used in determining the Base
Rate promptly following the determination of such change.

 

(e)     After giving effect to all Borrowings, all conversions of Loans from one
Type to the other and all continuations of Loans as the same Type, there shall
not be more than six (6) Interest Periods in effect.

 

(f)     The failure of any Lender to make the Loan to be made by it as part of
any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing.

 

 
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Section 2.03     Prepayments.

 

(a)     (i)     The Borrower will not be permitted to voluntarily prepay all or
any portion of the Initial Term Loans prior to the second anniversary of the
Closing Date (such two year period, the “Non-Call Period”). The Borrower may, at
its option, upon notice to the Administrative Agent (a “Prepayment Notice”), at
any time from and after the second anniversary of the Closing Date, voluntarily
prepay the principal outstanding amount of the Initial Term Loans made to the
Borrower, in whole or in part, plus (a) all accrued and unpaid interest on the
principal amount to be prepaid to, but excluding the date of, prepayment and, in
the case of a prepayment of a Eurodollar Rate Loan, together with any additional
amounts required pursuant to Section 3.05 and (b) in the case of a prepayment
made after the second anniversary of the Closing Date but prior to February 1,
2019, a premium (the “Prepayment Premium”) in an amount equal to 1.0% of the
aggregate principal amount of the Term Loans so prepaid (it being understood
that, any prepayment of the Term Loans made on or after the date that is six (6)
months prior to the Maturity Date shall be without any Prepayment Premium);
provided, that (1) such notice must be received by the Administrative Agent not
later than 12:00 p.m., (x) three (3) Business Days prior to any date of
prepayment of Eurodollar Rate Loans and (y) one (1) Business Day prior to any
date of prepayment of Base Rate Loans; (2) any prepayment of Eurodollar Rate
Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof; and (3) any prepayment of Base Rate Loans shall be
in a principal amount of $250,000 or a whole multiple of $50,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then
outstanding. Each such notice shall specify the date and amount of such
prepayment and the Class(es) and Type(s) of Term Loans to be prepaid. The
Administrative Agent will promptly notify each Appropriate Lender of its receipt
of each such notice, and of the amount of such Lender’s Pro Rata Share of such
prepayment. The Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
Each prepayment of the Loans pursuant to this Section 2.03(a) shall be applied
among the Facilities in such amounts as the relevant Borrower may direct in its
sole discretion (and absent such direction, pro rata among the Term Loan
Facilities and in direct order of maturity). Each prepayment made by any
Borrower in respect of a particular Facility shall be paid to the Administrative
Agent for the account of (and to be promptly disbursed to) the Appropriate
Lenders in accordance with their respective Pro Rata Shares.

 

(ii)     Notwithstanding anything to the contrary contained in this Agreement,
the Borrower may rescind any notice of prepayment under Section 2.03(a)(i) if
such prepayment would have resulted from (A) a refinancing of all of the
Facilities, which refinancing shall not be consummated or shall otherwise be
delayed or (B) the refinancing of all or a portion of the Facilities pursuant to
a Permitted Refinancing, which refinancing shall not be consummated or shall
otherwise be delayed. Notices of prepayment may, at the Borrower’s discretion,
be subject to one or more conditions precedent, including, but not limited to,
completion of an Equity Offering, another offering or another transaction or
event.

 

(iii)     In the event and on each occasion that Holdings, the Borrower or any
Restricted Subsidiary makes an Asset Disposition which results in the
realization or receipt of Net Cash Proceeds (other than the Net Cash Proceeds in
connection with Land Banking Transactions constituting Asset Dispositions which
shall be applied in accordance with Section 2.03(a)(vii) below), such Net Cash
Proceeds of an Asset Disposition shall, subject to Section 2.03(c) below, within
one year, at Holding’s election:

 

(A)     be used pursuant to Section 2.03(a)(vi),

 

 
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(B)     be used to permanently prepay or permanently repay any (i) Indebtedness
which had been secured by the assets sold in the relevant Asset Disposition, to
the extent the assets sold were not Collateral, or (ii) Indebtedness of a
Restricted Subsidiary that is not a Guarantor, to the extent the assets sold
were not Collateral, or

 

(C)     be used to permanently prepay or permanently repay, subject to Section
2.03(b)(iii), the Term Loans, and, if Holdings or a Restricted Subsidiary elects
or is required to do so, to repay, purchase or redeem the First Lien Notes and,
if Holdings or a Restricted Subsidiary elects or is required to do so and the
assets disposed of were not Collateral, repay, purchase or redeem any
unsubordinated Indebtedness (on a pro rata basis if the amount available for
such repayment, purchase, or redemption is less than the aggregate amount of (x)
the aggregate principal amount of Loans held by the Term Loans Lenders who have
not provided a Rejection Notice pursuant to Section 2.03(b)(iii), (y) the lesser
of the principal amount, or accreted value, of First Lien Notes tendered or to
be repaid, redeemed, or repurchased and (z) the lesser of the principal amount,
or accreted value, of such unsubordinated Indebtedness tendered or to be repaid,
repurchased or redeemed, plus, in each case, accrued interest to the date of
repayment, purchase or redemption) at 100% of the principal amount or accreted
value thereof, as the case may be, plus accrued and unpaid interest, if any, to
the date of repurchase, repayment or redemption;

 

provided that pending any such application under this Section 2.03(a)(iii), Net
Cash Proceeds may be used to temporarily reduce Indebtedness or otherwise be
invested in any manner not prohibited by this Agreement.

 

(iv)     In the event and on each occasion that a Casualty Event occurs, which
results in the realization or receipt of Net Cash Proceeds, such Net Cash
Proceeds of a Casualty Event shall, within one year, at Holding’s election:

 

(A)     be used pursuant to Section 2.03(a)(vi),

 

(B)     be used to permanently prepay or permanently repay any (i) Indebtedness
which had been secured by the assets that are the subject of such Casualty
Event, to the extent the such assets were not Collateral, or (ii) Indebtedness
of a Restricted Subsidiary that is not a Guarantor, to the extent such assets
were not Collateral, or

 

(C)     be used to permanently prepay or permanently repay, subject to Section
2.03(b)(iii), the Term Loans, and, if Holdings or a Restricted Subsidiary elects
or is required to do so, to repay, purchase or redeem the First Lien Notes and,
if Holdings or a Restricted Subsidiary elects or is required to do so and the
assets that are the subject of such Casualty Event were not Collateral, repay,
purchase or redeem any unsubordinated Indebtedness (on a pro rata basis if the
amount available for such repayment, purchase, or redemption is less than the
aggregate amount of (x) the aggregate principal amount of Loans held by the Term
Loans Lenders who have not provided a Rejection Notice pursuant to Section
2.03(b)(iii), (y) the lesser of the principal amount, or accreted value, of
First Lien Notes tendered or to be repaid, redeemed, or repurchased and (z) the
lesser of the principal amount, or accreted value, of such unsubordinated
Indebtedness tendered or to be repaid, repurchased or redeemed, plus, in each
case, accrued interest to the date of repayment, purchase or redemption) at 100%
of the principal amount or accreted value thereof, as the case may be, plus
accrued and unpaid interest, if any, to the date of repurchase, repayment or
redemption;

 

 
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provided that pending any such application under this Section 2.03(a)(iv), Net
Cash Proceeds may be used to temporarily reduce Indebtedness or otherwise be
invested in any manner not prohibited by this Agreement.

 

(v)     In the event and on each occasion that any Other Prepayment Event
occurs, which results in the realization or receipt of Net Cash Proceeds, the
Borrower shall prepay, or cause to be prepaid, subject to Section 2.03(b)(iii),
on or prior to the date which is ten (10) Business Days after the date of
realization or receipt of such Net Cash Proceeds, an aggregate principal amount
of Term Loans equal to 100% of all Net Cash Proceeds realized or received.

 

(vi)     With respect to any Net Cash Proceeds realized or received with respect
to any Asset Disposition or any Casualty Event, the Borrower or any of the
Restricted Subsidiaries may, at its option, reinvest the Net Cash Proceeds from
such event (or a portion thereof) within 12 months after receipt of such Net
Cash Proceeds in assets (including Capital Stock of any Person that is or will
be a Restricted Subsidiary following investment therein) used or useful in a
Real Estate Business (provided that, to the extent the assets that were the
subject of such Asset Disposition or Casualty Event were Collateral, such
reinvested assets are pledged as Collateral under the Collateral Documents with
the Lien on such Collateral securing the Loans being of the same priority with
respect to the Loans as the Liens on the assets disposed of).

 

(vii)     The Net Cash Proceeds of Land Banking Transactions constituting Asset
Dispositions shall, within 60 days, be used to permanently prepay or permanently
repay, subject to Section 2.03(b)(iii), the Term Loans, and if Holdings or a
Restricted Subsidiary elects or is required to do so, to repay, purchase or
redeem the First Lien Notes (on a pro rata basis if the amount available for
such repayment, purchase, redemption is less than the aggregate amount of (x)
the aggregate principal amount of Loans held by the Term Loans Lenders who have
not provided a Rejection Notice pursuant to Section 2.03(b)(iii), and (y) the
lesser of the principal amount, or accreted value, of First Lien Notes tendered
or to be repaid, redeemed, or repurchased) at 100% of the principal amount or
accreted value thereof, as the case may be, plus accrued and unpaid interest, if
any, to the date of repurchase, repayment or redemption.

 

(b)     Application and Funding Losses.

 

(i)     Application of Prepayments. All prepayments pursuant to Section
2.05(a)(i) and Section 2.03(a) shall be applied to prepay the Term Loans among
the various Classes thereof on a ratable basis (in accordance with the aggregate
outstanding principal amount of the Term Loans of each such Class), applied to
each such Class of Term Loans to reduce the remaining scheduled amortization
payments (if any) in direct order of maturity, unless otherwise agreed among the
Borrower and the lenders providing Extended Term Loans in accordance with
Section 2.13 (it being understood that, in any case, the Initial Term Loans
shall not be allocated any less than such Class’s pro rata share of such
prepayment). Unless otherwise provided herein, each such prepayment shall be
paid to the Lenders in accordance with their respective Pro Rata Shares.

 

(ii)     Funding Losses, Etc. All prepayments under this Section 2.03 shall be
made together with, in the case of any such prepayment of a Eurodollar Rate Loan
on a date other than the last day of an Interest Period therefor, any amounts
owing in respect of such Eurodollar Rate Loan pursuant to Section 3.05.

 

 
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(iii)     Declined Proceeds. The Borrower shall notify the Administrative Agent
in writing of any mandatory prepayments of Loans required to be made pursuant to
Section 2.03(a)(iii), (iv), (v), and (vii) no less than ten (10) Business Days
before the date of such mandatory prepayment. Each such notice shall specify the
date of such prepayment and provide a reasonably detailed calculation of the
aggregate amount of such prepayment to be made by the Borrower. The
Administrative Agent will promptly notify each Lender of the contents of the
Borrower’s prepayment notice and of each Lender’s Pro Rata Share, or other
applicable share provided for under this Agreement. Each Lender may reject all
or a portion of its Pro Rata Share, or other applicable share provided for under
this Agreement, of such mandatory prepayment (such declined amounts, the
“Declined Proceeds”) of Loans, by providing written notice to the Administrative
Agent (a “Rejection Notice”) no later than 5:00 p.m., New York time, five (5)
Business Days after the date of such Lender’s receipt of notice from the
Administrative Agent regarding such prepayment. A Rejection Notice from a Lender
shall specify the principal amount of the mandatory repayment of Loans to be
declined by such Lender. If a Lender fails to deliver a Rejection Notice to the
Administrative Agent within the time frame specified above, or the Rejection
Notice fails to specify the principal amount of the Loans to be declined, it
will be deemed an acceptance of the total amount of such mandatory prepayment of
Term Loans.

 

(iv)     Any Declined Proceeds may be used by Holdings, the Borrower and the
Subsidiaries for general corporate purposes (including, for the avoidance of
doubt, the repayment or repurchase of Indebtedness), subject to the other
covenants hereunder.

 

(c)     Threshold. Notwithstanding the foregoing, and other than with respect to
Net Cash Proceeds in connection with Land Banking Transactions constituting
Asset Dispositions which shall be applied in accordance with Section
2.03(a)(vii) above, the Borrower will not be required to make a prepayment from
such Net Cash Proceeds in accordance with Section 2.03(a)(iii) except to the
extent that such Net Cash Proceeds, together with the aggregate Net Cash
Proceeds of prior Asset Dispositions (other than those so used) which have not
been applied in accordance with this Section 2.03 and as to which no prior
prepayments or repayments shall have been made, exceed $25.0 million.

 

Section 2.04     Termination of Commitments.

 

(a)     Mandatory. The Initial Term Commitment of the Initial Term Lenders shall
be automatically and permanently reduced to $0 at 5:30 pm on the Closing Date
upon the funding of the Initial Term Loans.

 

(b)     Closing Date. If the Commitment Termination Date occurs, the Initial
Term Commitments shall immediately and automatically terminate.

 

Section 2.05     Repayment of Loans.

 

Payment at Maturity. The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Term Loan on the Maturity Date of the applicable Term Loan
Facility in an amount equal to the aggregate principal amount of all Term Loans
of such Class outstanding on such date.

 

 
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Section 2.06     Interest.

 

(a)     Subject to the provisions of Section 2.06(b), (i) each Eurodollar Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.

 

(b)     While any Event of Default set forth in Sections 7.01(i) or (ii) (as
applicable) exists with respect to the payment of any principal, interest or
fees, the Borrower shall pay interest on all such overdue amounts hereunder at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws. Accrued and unpaid interest on
past due amounts (including interest on past due interest) shall be due and
payable upon demand.

 

(c)     Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

 

Section 2.07     Fees.

 

The Borrower shall pay or cause to be paid to the Agents such fees as shall have
been separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

 

Section 2.08     Computation of Interest and Fees. All computations of interest
for Base Rate Loans when the Base Rate is determined by the Prime Rate shall be
made on the basis of a year of three hundred and sixty-five (365) or three
hundred and sixty-six (366) days, as the case may be, and actual days elapsed.
All other computations of fees and interest shall be made on the basis of a
three hundred and sixty (360) day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a three hundred and sixty-five (365) day year). Interest shall accrue on each
Loan for the day on which the Loan is made and shall not accrue on a Loan, or
any portion thereof, for the day on which the Loan or such portion is paid;
provided that any Loan that is repaid on the same day on which it is made shall,
subject to Section 2.10(a), bear interest for one (1) day. Each determination by
the Administrative Agent of an interest rate or fee hereunder shall be
conclusive and binding for all purposes, absent manifest error.

 

Section 2.09     Evidence of Indebtedness.

 

(a)     The Loans made by each Lender shall be evidenced by one or more accounts
or records maintained by such Lender and evidenced by one or more entries in the
Register maintained by the Administrative Agent in accordance with Section
9.07(c), acting as a non-fiduciary agent solely for purposes of Treasury
Regulation Section 5f.103-1(c), as agent for the Borrower, in each case in the
ordinary course of business. The accounts or records maintained by each Lender
shall be prima facie evidence absent manifest error of the amount of the Loans
made by the Lenders to the Borrower and the interest and payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Loan Obligations. In the event of any conflict between
the accounts and records maintained by any Lender and the Register in respect of
such matters, the Register shall control in the absence of manifest error. Upon
the request of any Lender made through the Administrative Agent, the Borrower
shall execute and deliver to such Lender (through the Administrative Agent) a
Note payable to such Lender, which shall evidence such Lender’s Loans in
addition to such accounts or records. Each Lender may attach schedules to its
Note and endorse thereon the date, Type (if applicable), amount and maturity of
its Loans and payments with respect thereto.

 

 
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(b)     Entries made in good faith by the Administrative Agent in the Register
pursuant to Section 2.09(a), and by each Lender in its account or accounts
pursuant to Section 2.09(a), shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Borrower to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement and the other Loan
Documents, absent manifest error; provided that the failure of the
Administrative Agent or such Lender to make an entry, or any finding that an
entry is incorrect, in the Register or such account or accounts shall not limit
or otherwise affect the obligations of the Borrower under this Agreement and the
other Loan Documents.

 

Section 2.10     Payments Generally.

 

(a)     Except as otherwise required by applicable Law, all payments to be made
by the Borrower shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff. Except as otherwise expressly
provided herein, all payments by the Borrower hereunder shall be made to the
Administrative Agent, for the account of the respective Lenders to which such
payment is owed, at the Administrative Agent’s Office in Dollars and in
immediately available funds not later than noon, 12:00 p.m., on the date
specified herein. The Administrative Agent will promptly distribute to each
Lender its Pro Rata Share (or other applicable share as provided herein) of such
payment in like funds as received by wire transfer to such Lender’s Lending
Office. All payments received by the Administrative Agent after noon, 12:00
p.m., shall be deemed received on the next succeeding Business Day in the
Administrative Agent’s sole discretion and any applicable interest or fee shall
continue to accrue to the extent applicable.

 

(b)     Unless the Borrower or any Lender has notified the Administrative Agent,
prior to the date any payment is required to be made by it to the Administrative
Agent hereunder, that the Borrower or such Lender, as the case may be, will not
make such payment, the Administrative Agent may assume that the Borrower or such
Lender, as the case may be, has timely made such payment and may (but shall not
be so required to), in reliance thereon, make available a corresponding amount
to the Person entitled thereto. If and to the extent that such payment was not
in fact made to the Administrative Agent in immediately available funds, then:

 

(i)     if the Borrower failed to make such payment, each Lender shall forthwith
on demand repay to the Administrative Agent the portion of such assumed payment
that was made available to such Lender in immediately available funds, together
with interest thereon in respect of each day from and including the date such
amount was made available by the Administrative Agent to such Lender to the date
such amount is repaid to the Administrative Agent in immediately available funds
at the applicable Federal Funds Rate from time to time in effect; and

 

(ii)     if any Lender failed to make such payment, such Lender shall forthwith
on demand pay to the Administrative Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the date
such amount was made available by the Administrative Agent to the Borrower to
the date such amount is recovered by the Administrative Agent (the “Compensation
Period”) at a rate per annum equal to the applicable Federal Funds Rate from
time to time in effect. When such Lender makes payment to the Administrative
Agent (together with all accrued interest thereon), then such payment amount
(excluding the amount of any interest which may have accrued and been paid in
respect of such late payment) shall constitute such Lender’s Loan included in
the applicable Borrowing. If such Lender does not pay such amount forthwith upon
the Administrative Agent’s demand therefor, the Administrative Agent may make a
demand therefor upon the Borrower, and the Borrower shall pay such amount to the
Administrative Agent, together with interest thereon for the Compensation Period
at a rate per annum equal to the rate of interest applicable to the applicable
Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Term Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender as a result of
any Default by such Lender hereunder.

 

 
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A notice of the Administrative Agent to any Lender or the Borrower with respect
to any amount owing under this Section 2.10(b) shall be conclusive, absent
manifest error.

 

(c)     If any Lender makes available to the Administrative Agent funds for any
Loan to be made by such Lender as provided in this Article 2, and such funds are
not made available to the Borrower by the Administrative Agent because the
conditions to the applicable Borrowing set forth in Article 4 are not satisfied
or waived in accordance with the terms hereof, the Administrative Agent shall
promptly return such funds (in like funds as received from such Lender) to such
Lender, without interest.

 

(d)     The obligations of the Lenders hereunder to make Loans are several and
not joint. The failure of any Lender to make any Loan or to fund any such
participation on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan or purchase
its participation.

 

(e)     Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

 

(f)     Whenever any payment received by the Administrative Agent under this
Agreement or any of the other Loan Documents is insufficient to pay in full all
amounts then due and payable to the Administrative Agent and the Lenders under
or in respect of this Agreement and the other Loan Documents on any date, such
payment shall be distributed by the Administrative Agent and applied by the
Administrative Agent and the Lenders in the order of priority set forth in
clauses First through Last of Section 7.03. If the Administrative Agent receives
funds for application to the Loan Obligations of the Loan Parties under or in
respect of the Loan Documents under circumstances for which the Loan Documents
do not specify the manner in which such funds are to be applied, the
Administrative Agent may, but shall not be obligated to, elect to distribute
such funds to each of the Lenders in accordance with such Lender’s Pro Rata
Share of the Outstanding Amount of all Loans outstanding at such time, in
repayment or prepayment of such of the outstanding Loans or other Loan
Obligations then owing to such Lender.

 

Section 2.11     Sharing of Payments. If any Lender shall obtain on account of
the Loans made by it, any payment (whether voluntary, involuntary, through the
exercise of any right of setoff, or otherwise, and other than (x) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or Participant or (y) as
otherwise expressly provided elsewhere herein, including, without limitation, as
provided in or contemplated by Section 2.13, Section 2.14 or Section 9.01) in
excess of its ratable share (or other share contemplated hereunder) thereof,
such Lender shall immediately (a) notify the Administrative Agent of such fact
and (b) purchase from the other Lenders such participations in the Loans made by
them, as shall be necessary to cause such purchasing Lender to share the excess
payment in respect of such Loans or such participations, as the case may be, pro
rata with each of them (and notify the Administrative Agent of such purchase);
provided that if all or any portion of such excess payment is thereafter
recovered from the purchasing Lender under any of the circumstances described in
Section 9.06 (including pursuant to any settlement entered into by the
purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (i) the amount of such
paying Lender’s required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered, without further
interest thereon. The Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by Law,
exercise all its rights of payment (including the right of setoff, but subject
to Section 9.09) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
The Administrative Agent will keep records and maintain entries in the Register
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section 2.11 and will in each case notify
the Lenders following any such purchases or repayments. Each Lender that
purchases a participation pursuant to this Section 2.11 shall from and after
such purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion of the
Loan Obligations purchased to the same extent as though the purchasing Lender
were the original owner of the Loan Obligations purchased.

 

 
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Section 2.12     [Reserved].

 

Section 2.13     Extensions of Term Loans.

 

(a)     Notwithstanding anything to the contrary in this Agreement, pursuant to
one or more offers (each, an “Extension Offer”) made from time to time by the
Borrower to all Lenders of any Class of Term Loans with a like Maturity Date, in
each case on a pro rata basis (based on the aggregate outstanding principal
amount of such Term Loans) and on the same terms to each such Lender, the
Borrower is hereby permitted to consummate from time to time transactions with
individual Lenders that accept the terms contained in such Extension Offers to
extend the Maturity Date of each such Lender’s Term Loans and otherwise modify
the terms of such Term Loans, subject to the provisions below, pursuant to the
terms of the relevant Extension Offer (including, without limitation, by
increasing the fees (other than fees on undrawn amounts) payable in respect of
such Term Loans (and related outstandings) (each, an “Extension”, and each group
of Term Loans, in each case as so extended, as well as the original Initial Term
Loans (in each case not so extended), being a “tranche”; any Extended Term Loans
shall constitute a separate tranche of Term Loans from the tranche of Term Loans
from which they were converted), so long as the following terms are satisfied:

 

(i)     no Default or Event of Default shall have occurred and be continuing at
the time the offering document in respect of an Extension Offer is delivered to
the Lenders or at the time of the effectiveness of the Extension;

 

(ii)     except as to interest rates, fees, amortization, final Maturity Date,
premium, required prepayment dates and participation in prepayments (which
shall, subject to the immediately succeeding clauses (iii), (iv) and (v), be
determined between the Borrower and set forth in the relevant Extension Offer),
the Term Loans of any Term Lender that agrees to an Extension with respect to
such Term Loans (an “Extending Term Lender”) extended pursuant to any Extension
(“Extended Term Loans”) shall have the same terms as the tranche of Term Loans
subject to such Extension Offer;

 

 
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(iii)     the final Maturity Date of any Extended Term Loans shall be no earlier
than the later of (A) January 15, 2021 and (B) Latest Maturity Date of the Term
Loans extended thereby;

 

(iv)     the Weighted Average Life to Maturity of any Extended Term Loans shall
be no shorter than the Weighted Average Life to Maturity of the Term Loans
extended thereby;

 

(v)     any Extended Term Loans may participate on a pro rata basis or a less
than pro rata basis (but not greater than a pro rata basis) in any voluntary
repayments or prepayments hereunder, in each case as specified in the respective
Extension Offer;

 

(vi)     if the aggregate principal amount of Term Loans (calculated on the face
amount thereof), in respect of which Term Lenders shall have accepted the
relevant Extension Offer shall exceed the maximum aggregate principal amount of
Term Loans offered to be extended by the Borrower pursuant to such Extension
Offer, then the Term Loans of such Term Lenders shall be extended ratably up to
such maximum amount based on the respective principal amounts (but not to exceed
actual holdings of record) with respect to which such Term Lenders have accepted
such Extension Offer;

 

(vii)     all documentation in respect of such Extension shall be consistent
with the foregoing, and the covenants and events of default applicable to any
Extended Term Loans shall be substantially identical to, or, taken as a whole,
no more favorable to the Lenders providing such Extended Term Loans than those
applicable to the Term Loans subject to such Extension Offer;

 

(viii)     the Extended Term Loans are not secured by any assets or property
that does not constitute Collateral, and are not guaranteed by any Subsidiary of
Holdings that is not a Subsidiary Guarantor; and

 

(ix)     any applicable Minimum Extension Condition shall be satisfied unless
waived by the Borrower.

 

(b)     With respect to all Extensions consummated by the Borrower pursuant to
this Section, (i) such Extensions shall not constitute payments or prepayments
for purposes of Section 2.03 and (ii) shall be in an integral multiple of $1.0
million and in an aggregate principal amount that is not less than $10.0
million, provided that the Borrower may at its election specify as a condition
(a “Minimum Extension Condition”) to consummating any such Extension that a
minimum amount (to be determined and specified in the relevant Extension Offer
in the Borrower’s sole discretion and which may be waived by the Borrower, but
not less than $10.0 million) of Term Loans of any or all applicable tranches be
tendered. The Administrative Agent and the Lenders hereby consent to the
transactions contemplated by this Section (including, for the avoidance of
doubt, payment of any interest, fees or premium in respect of any Extended Term
Loans on such terms as may be set forth in the relevant Extension Offer (which
shall be consistent with the foregoing provisions of this Section 2.13)) and
hereby waive the requirements of any provision of this Agreement (including,
without limitation, Sections 2.03, 2.11 and 9.01) or any other Loan Document
that may otherwise prohibit or conflict with any such Extension or any other
transaction contemplated by this Section.

 

(c)     No consent of any Lender or the Administrative Agent shall be required
to effectuate any Extension, other than the consent of each Lender agreeing to
such Extension with respect to one or more of its Term Loans (or a portion
thereof). All Extended Term Loans and all obligations in respect thereof shall
be Loan Obligations under this Agreement and the other Loan Documents that are
secured by the Collateral on a pari passu basis with all other applicable Loan
Obligations under this Agreement and the other Loan Documents. The Lenders
hereby irrevocably authorize the Administrative Agent to enter into amendments
to this Agreement and the other Loan Documents with the Borrower as may be
necessary in order to establish new tranches or sub-tranches in respect of Term
Loans so extended and such technical amendments as may be necessary in the
reasonable opinion of the Administrative Agent and the Borrower in connection
with the establishment of such new tranches or sub-tranches, in each case on
terms consistent with this Section.

 

 
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(d)     In connection with any Extension, the Borrower shall provide the
Administrative Agent at least five (5) Business Days (or such shorter period as
may be agreed by the Administrative Agent) prior written notice thereof, and
shall agree to such procedures (including, without limitation, regarding timing,
rounding and other adjustments and to ensure reasonable administrative
management of the Facilities hereunder after such Extension), if any, as may be
established by, or acceptable to, the Administrative Agent, in each case acting
reasonably to accomplish the purposes of this Section 2.13.

 

Section 2.14     Refinancing Facilities. (a) The Borrower may by written notice
to the Administrative Agent elect to request the establishment of one or more
additional Classes of term loans under this Agreement (“Refinancing Term
Loans”), which refinance, renew, replace, defease or refund (collectively,
“Refinance”), in whole or in part, one or more Classes of Term Loans under this
Agreement; provided, that such Refinancing Term Loans may not be in an amount
greater than the Term Loans being Refinanced plus unpaid accrued interest, fees,
expenses and premium (if any) thereon and underwriting discounts, fees,
commissions and expenses incurred in connection with the Refinancing Term Loans.
Each such notice shall specify the date (each, a “Refinancing Effective Date”)
on which the Borrower proposes that the Refinancing Term Loans shall be made,
which shall be a date not less than five (5) Business Days after the date on
which such notice is delivered to the Administrative Agent; provided that:

 

(i)     the Weighted Average Life to Maturity of such Refinancing Term Loans
shall not be shorter than the then remaining Weighted Average Life to Maturity
of the Class or Classes of Term Loans being Refinanced and the Refinancing Term
Loans shall not have a final maturity before the later of (A) January 15, 2021
and (B) the Maturity Date of the Term Loans being Refinanced;

 

(ii)     the Refinancing Term Loans shall have terms and conditions agreed to by
the Borrower and the lenders providing such Refinancing Term Loans, but shall be
substantially the same as (or, taken as a whole, no more favorable to, the
lenders providing such Refinancing Term Loans than) those applicable to the then
outstanding Term Loans, except to the extent such covenants and other terms
apply solely to any period after the Latest Maturity Date;

 

(iii)     the proceeds of any Refinancing Term Loans shall be applied
substantially concurrently with the incurrence thereof to the pro rata
prepayment of the Class or Classes of Term Loans being Refinanced hereunder;

 

(iv)     the Refinancing Term Loan Amendment shall set forth the principal
installment payment dates of the Refinancing Term Loans, which dates may be
delayed to later dates than the corresponding scheduled principal installment
payment dates of the Term Loans being refinanced;

 

(v)     the Loan Parties and the Administrative Agent shall (i) enter into such
amendments to the Collateral Documents as may be reasonably requested by the
Lenders providing the Refinancing Term Loans (which shall not require any
consent from any Lender) in order to ensure that the Refinancing Term Loans are
provided with the benefit of the applicable Collateral Documents on a pari passu
basis with the other Loan Obligations and (ii) deliver such other documents and
certificates as may be reasonably requested by the Administrative Agent;

 

 
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(vi)     the Refinancing Term Loans will be unsecured or will rank pari passu or
junior in respect of Collateral with the other Loans hereunder; and

 

(vii)     (1) no Refinancing Term Loans shall be made with respect to the
Initial Term Loans during the Non-Call Period without the consent of the Initial
Lender with respect to such Initial Term Loans, (2) with respect to any
Refinancing Term Loans made from and after the end of the Non-Call Period, but
prior to February 1, 2019, a premium in an amount equal to 1.0% of the aggregate
principal amount of the Initial Term Loans being Refinanced shall be paid to the
Lenders holding such Initial Term Loans.

 

(b)     The Borrower may approach any Lender or any other Person that would be
an Eligible Assignee to provide all or a portion of the Refinancing Term Loans
(a “Refinancing Term Lender”); provided any Lender offered or approached to
provide all or a portion of the Refinancing Term Loans may elect or decline, in
its sole discretion, to provide a Refinancing Term Loan. Any Refinancing Term
Loans made on any Refinancing Effective Date shall be designated a series (a
“Refinancing Term Loan Series”) of Refinancing Term Loans for all purposes of
this Agreement and the selection of Refinancing Term Lenders shall be subject to
any consent that would be required pursuant to Section 9.07(b) hereof; provided
that any Refinancing Term Loans may, to the extent provided in the applicable
Refinancing Term Loan Amendment, be designated as an increase in any previously
established Refinancing Term Loan Series of Refinancing Term Loans made to the
Borrower.

 

(c)     The Refinancing Term Loans shall be established pursuant to an amendment
to this Agreement among Holdings, the Borrower and the Refinancing Term Lenders
providing such Refinancing Term Loans (a “Refinancing Term Loan Amendment”)
which shall be consistent with the provisions set forth in paragraph (i) above.
Each Refinancing Term Loan Amendment shall be binding on the Lenders, the
Administrative Agent, the Loan Parties party thereto and the other parties
hereto. Upon receipt of an Officer’s Certificate certifying that such
Refinancing Term Loan Amendment is permitted under the Loan Documents, the
Administrative Agent shall be permitted, and is hereby authorized, to enter into
such amendments with the Borrower to effect the foregoing. Any Refinancing Term
Loan made by a Term Lender pursuant to a Refinancing Term Loan Amendment shall
be deemed a “Term Loan” for all purposes of this Agreement and each Lender with
a Refinancing Term Loan shall become a Lender with respect to such Refinancing
Term Loans and all matters relating thereto. Notwithstanding anything to the
contrary herein, at no time shall there be Term Loans (including Refinancing
Term Loans and Extended Term Loans) which have more than five different
scheduled final maturity dates or shall there be more than five different “Term
Loan Facilities”.

 

Section 2.15     Defaulting Lenders.

 

(a)     Reallocation of Defaulting Lender Commitment, Etc. If a Lender becomes,
and during the period it remains, a Defaulting Lender, the following provisions
shall apply with respect to such Defaulting Lender:

 

(i)     any amount paid by the Borrower for the account of a Defaulting Lender
that was or is a Lender under this Agreement (whether on account of principal,
interest, fees, indemnity payments or other amounts) will not be paid or
distributed to such Defaulting Lender, but will instead be retained by the
Administrative Agent in a segregated non-interest-bearing account until (subject
to Section 2.15(c)) the Termination Date and will be applied by the
Administrative Agent, to the fullest extent permitted by Law, to the making of
payments from time to time in the following order of priority: first, to the
payment of any amounts owing by such Defaulting Lender to the Administrative
Agent under this Agreement; second, to satisfy the obligations, if any, of such
Term Lender to make Term Loans to the Borrower; third, to the payment of
post-default interest and then current interest due and payable to the Lenders
hereunder other than Defaulting Lenders that are Lenders, ratably among them in
accordance with the amounts of such interest then due and payable to them;
fourth, to the payment of fees then due and payable to the Non-Defaulting
Lenders that are Lenders hereunder, ratably among them in accordance with the
amounts of such fees then due and payable to them; fifth, to the ratable payment
of other amounts then due and payable to the Non-Defaulting Lenders that are
Lenders; sixth, on the Termination Date, to the payment of any amounts owing to
the Borrower as a result of a final judgment of a court of competent
jurisdiction obtained by the Borrower against such Defaulting Lender as a result
of such Defaulting Lender’s breach of its obligations under this Agreement; and
seventh, after the Termination Date, to pay amounts owing under this Agreement
to such Defaulting Lender or as a court of competent jurisdiction may otherwise
direct.

 

 
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(b)     Fees. Anything herein to the contrary notwithstanding, during such
period as a Lender is a Defaulting Lender, such Defaulting Lender will not be
entitled to any fees accruing during such period pursuant to Section 2.07
(without prejudice to the rights of the Lenders other than Defaulting Lenders in
respect of such fees).

 

(c)     Cure. If the Borrower determines that a Lender that is a Defaulting
Lender should no longer be deemed to be a Defaulting Lender, the Borrower will
so notify the parties hereto, whereupon as of the effective date specified in
such notice and subject to any conditions set forth therein (which may include
arrangements with respect to any amounts then held in the segregated account
referred to in Section 2.15(a)), such Lender will, to the extent applicable,
purchase such portion of outstanding Loans of the other Lenders and/or make such
other adjustments as the Administrative Agent may determine to be necessary to
cause the total Term Commitments pursuant to Section 2.01 of the Term Lenders to
be on a pro rata basis in accordance with their respective Term Commitments,
whereupon such Term Lender will cease to be a Defaulting Lender and will be a
Non-Defaulting Lender (and such Term Commitments and Term Loans of each Term
Lender will automatically be adjusted on a prospective basis to reflect the
foregoing); provided that no adjustments will be made retroactively with respect
to fees accrued or payments made by or on behalf of the Borrower while such
Lender was a Defaulting Lender; provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from
Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release
of any claim of any party hereunder arising from such Lender’s having been a
Defaulting Lender.

 

Article III

TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

 

Section 3.01     Taxes. (a)      Payments Free of Taxes. Any and all payments by
or on account of any obligation of any Loan Party under any Loan Document shall
be made without deduction or withholding for any Taxes, except as required by
applicable Law. If any applicable Law (as determined in the good faith
discretion of an applicable Withholding Agent) requires the deduction or
withholding of any Tax from any such payment by a Withholding Agent, then the
applicable Withholding Agent shall be entitled to make such deduction or
withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law and, if such
Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party
shall be increased as necessary so that after such deduction or withholding has
been made (including such deductions and withholdings applicable to additional
sums payable under this Section 3.01) the applicable Lender or Agent receives an
amount equal to the sum it would have received had no such deduction or
withholding been made.

 

 
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(b)     Payment of Other Taxes by the Borrower. The Loan Parties shall timely
pay to the relevant Governmental Authority in accordance with applicable law, or
at the option of the Administrative Agent timely reimburse it for, Other Taxes.

 

(c)     Evidence of Payments. As soon as practicable after any payment of Taxes
by any Loan Party to a Governmental Authority pursuant to this Section 3.01,
such Loan Party shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

 

(d)     Indemnification by the Borrower. The Loan Parties shall jointly and
severally indemnify each Lender and each Agent, within 10 days after demand
therefor, for the full amount of any Indemnified Taxes (including Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this
Section 3.01) payable or paid by such Lender or such Agent or required to be
withheld or deducted from a payment to such Lender or such Agent and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to the Borrower by a Lender or Agent (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender or other Agent, shall be conclusive absent manifest error.

 

(e)     Indemnification by the Lenders. Each Lender shall severally (but not
jointly) indemnify the Administrative Agent, within 10 days after demand
therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to
the extent that any Loan Party has not already indemnified the Administrative
Agent for such Indemnified Taxes and without limiting the obligation of the Loan
Parties to do so), (ii) any Taxes attributable to such Lender’s failure to
comply with the provisions of Section 9.07(e) relating to the maintenance of a
Participant Register and (iii) any Excluded Taxes attributable to such Lender,
in each case, that are payable or paid by the Administrative Agent in connection
with any Loan Document, and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to any Lender by the Administrative Agent
shall be conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (e).

 

(f)     Status of Lenders. (i) Any Lender that is entitled to an exemption from
or reduction of withholding Tax with respect to payments made under any Loan
Document shall deliver to the Borrower and the Administrative Agent, at the time
or times reasonably requested by the Borrower or the Administrative Agent, such
properly completed and executed documentation reasonably requested by the
Borrower or the Administrative Agent as will permit such payments to be made
without withholding or at a reduced rate of withholding. In addition, any
Lender, if reasonably requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 3.01(f)(ii)(A), (ii)(B) and (ii)(D) below)
shall not be required if in the Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.

 

 
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(ii)     Without limiting the generality of the foregoing,

 

(A)     any Lender that is a US Person shall deliver to the Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Administrative Agent), executed
originals of IRS Form W-9 certifying that such Lender is exempt from United
States federal backup withholding tax;

 

(B)     any Non-US Lender shall deliver to the Borrower and the Administrative
Agent (in such number of copies as shall be requested by the recipient) on or
prior to the date on which such non-US Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the reasonable request of the
Borrower or the Administrative Agent), whichever of the following is applicable:

 

(1) in the case of a Non-US Lender claiming the benefits of an income tax treaty
to which the United States is a party (x) with respect to payments of interest
under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form
W-8BEN-E establishing an exemption from, or reduction of, United States federal
withholding Tax pursuant to the “interest” article of such tax treaty and (y)
with respect to any other applicable payments under any Loan Document, IRS Form
W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of,
United States federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;

 

(2) executed originals of IRS Form W-8ECI;

 

(3) in the case of a Non-US Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit E-1 to the effect that such Non-US Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code (a “US Tax Certificate”) and (y) executed originals of
IRS Form W-8BEN or IRS Form W-8BEN-E; or

 

(4) to the extent a Non-US Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN,
IRS Form W-8BEN-E, a US Tax Certificate substantially in the form of Exhibit E-2
or Exhibit E-3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Non-US Lender is a
partnership and one or more direct or indirect partners of such Non-US Lender
are claiming the portfolio interest exemption, such Non-US Lender may provide a
US Tax Certificate substantially in the form of Exhibit E-4 on behalf of each
such direct and indirect partner;

 

 
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(C)     any Non-US Lender shall deliver to the Borrower and the Administrative
Agent (in such number of copies as shall be requested by the recipient) on or
prior to the date on which such Non-US Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the reasonable request of the
Borrower or the Administrative Agent), executed originals of any other form
prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States federal withholding Tax, duly completed, together
with such supplementary documentation as may be prescribed by applicable law to
permit the Borrower or the Administrative Agent to determine the withholding or
deduction required to be made; and

 

(D)     if a payment made to a Lender under any Loan Document would be subject
to United States federal withholding Tax imposed by FATCA if such Lender were to
fail to comply with the applicable reporting requirements of FATCA (including
those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Lender shall deliver to the Borrower and the Administrative Agent at the time or
times prescribed by law and at such time or times reasonably requested by the
Borrower or the Administrative Agent such documentation prescribed by applicable
law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (D), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement.

 

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower and the Administrative
Agent in writing of its legal inability to do so.

 

(g)     Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 3.01, (including by
the payment of additional amounts pursuant to this Section 3.01), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section 3.01 with respect to the Taxes
giving rise to such refund), net of all out-of-pocket expenses (including Taxes)
of such indemnified party and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this paragraph (g) (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (g), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (g) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

 
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(h)     Change of Lending Office. Each Lender agrees that, upon the occurrence
of any event giving rise to the operation of Section 3.01(a) or Section 3.01(d)
with respect to such Lender it will, if requested by the Borrower, use
reasonable efforts to avoid the consequences of such event, including to
designate another Lending Office for any Loan affected by such event or to
assign its rights and obligations with respect to such Loan to another of its
offices, branches or affiliates; provided that such efforts are made on terms
that, in the reasonable judgment of such Lender, cause such Lender and its
Lending Office(s) to suffer no material economic, legal or regulatory
disadvantage; and provided further that nothing in this Section 3.01(h) shall
affect or postpone any of the Loan Obligations of any Loan Party or Lender or
the rights of the Lender or Loan Party pursuant to this Section 3.01.

 

(i)     Survival. Each party’s obligations under this Section 3.01 shall survive
the resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Term
Commitments and the repayment, satisfaction or discharge of all obligations
under any Loan Document.

 

(j)     Defined Terms. For purposes of this Section 3.01, the term “applicable
Law” includes FATCA.

 

Section 3.02     Illegality. If any Lender reasonably determines that any Law
has made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans, or to determine or charge interest rates based upon
the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower
(with a copy to the Administrative Agent), any obligation of such Lender to make
or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar
Rate Loans shall be suspended until such Lender notifies the Administrative
Agent and the Borrower that the circumstances giving rise to such determination
no longer exist. Upon receipt of such notice, the Borrower shall, upon written
demand from such Lender (with a copy to the Administrative Agent), prepay or, if
applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans,
either on the last day of the Interest Period therefor, if such Lender may
lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted. Each
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

 

Section 3.03     Inability to Determine Rates. If the Administrative Agent
determines that for any reason adequate and reasonable means do not exist for
determining the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Loan (including, without limitation, by means of
an Interpolated Rate), or if the Required Lenders reasonably determine that the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan, or that Dollar deposits are not being offered to
banks in the London interbank eurodollar market for the applicable amount and
the Interest Period of such Eurodollar Rate Loan, the Administrative Agent or
the Required Lenders, as applicable, will promptly so notify the Borrower and
each Lender. Thereafter, the obligation of the Lenders to make or maintain
Eurodollar Rate Loans shall be suspended until the Administrative Agent or the
Required Lenders, as applicable, revokes such notice. Upon receipt of such
notice, the Borrower may revoke any pending request for a Borrowing of,
conversion to or continuation of Eurodollar Rate Loans or, failing that, will be
deemed to have converted such request into a request for a Borrowing of Base
Rate Loans in the amount specified therein.

 

 
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Section 3.04     Increased Cost and Reduced Return; Capital Adequacy; Reserves
on Eurodollar Rate Loans.

(a)     If any Lender reasonably determines that as a result of the introduction
of or any change in or in the interpretation of any Law, in each case after the
date such Lender becomes a party to this Agreement, or such Lender’s compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining any Eurodollar Rate Loans, or a reduction
in the amount received or receivable by such Lender in connection with any of
the foregoing (excluding for purposes of this Section 3.04(a) any increased
costs or reduction in amount resulting from (A) Indemnified Taxes, (B) Taxes
described in clauses (b) through (d) of the definition of Excluded Taxes and (C)
Connection Income Taxes or (D) reserve requirements contemplated by Section
3.04(c)), then from time to time upon written demand of such Lender setting
forth in reasonable detail such increased costs (with a copy of such demand to
the Administrative Agent given in accordance with Section 3.06), the Borrower
shall, without duplication, pay to such Lender such additional amounts as will
compensate such Lender for such increased cost or reduction.

 

(b)     If any Lender reasonably determines that the introduction of any Law
regarding capital adequacy or liquidity requirements or any change therein or in
the interpretation thereof, in each case after the date such Lender becomes a
party to this Agreement, or compliance by such Lender (or its Lending Office)
therewith, has the effect of reducing the rate of return on the capital of such
Lender or any Person controlling such Lender as a consequence of such Lender’s
obligations hereunder (taking into consideration its policies with respect to
capital adequacy and/or liquidity and such Lender’s desired return on capital),
then from time to time upon written demand of such Lender setting forth in
reasonable detail the charge and the calculation of such reduced rate of return
(with a copy of such demand to the Administrative Agent given in accordance with
Section 3.06), the Borrower shall pay to such Lender such additional amounts as
will compensate such Lender for such reduction.

 

(c)     The Borrower shall pay to each Lender, (i) as long as such Lender shall
be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits, additional interest
on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual
costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive in the
absence of manifest error) and (ii) as long as such Lender shall be required to
comply with any reserve ratio requirement or analogous requirement of any other
central banking or financial regulatory authority imposed in respect of the
maintenance of the Term Commitments or the funding of the Eurodollar Rate Loans,
such additional costs (expressed as a percentage per annum and rounded upwards,
if necessary, to the nearest five decimal places) equal to the actual costs
allocated to such Term Commitment or Loan by such Lender (as determined by such
Lender in good faith, which determination shall be conclusive absent manifest
error) which in each case shall be due and payable on each date on which
interest is payable on such Loan; provided the Borrower shall have received at
least fifteen (15) days’ prior notice (with a copy to the Administrative Agent)
of such additional interest or cost from such Lender. If a Lender fails to give
notice fifteen (15) days prior to the relevant Interest Payment Date, such
additional interest or cost shall be due and payable fifteen (15) days from
receipt of such notice.

 

 
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(d)     If any Lender requests compensation under this Section 3.04, then such
Lender will, if requested by the Borrower, use commercially reasonable efforts
to designate another Lending Office for any Loan affected by such event or to
assign its rights and obligations with respect to such Loan to another of its
offices, branches or affiliates; provided that such efforts are made on terms
that, in the reasonable judgment of such Lender, cause such Lender and its
Lending Office(s) to suffer no material economic, legal or regulatory
disadvantage, and provided further that nothing in this Section 3.04(d) shall
affect or postpone any of the Loan Obligations of the Borrower or the rights of
such Lender pursuant to Section 3.04(a), Section 3.04(b) or Section 3.04(c).

 

(e)     Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all rules, regulations, orders,
requests, guidelines or directives in connection therewith or in implementation
thereof and (ii) all requests, rules, guidelines, requirements and directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, are, in
each case deemed to have been adopted and to have taken effect after the
Effective Date.

 

Section 3.05     Funding Losses. Upon demand of any Lender from time to time,
the Borrower shall promptly compensate such Lender for and hold such Lender
harmless from any loss, cost or expense incurred by it as a result of:

 

(a)     any continuation, conversion, payment or prepayment of any Eurodollar
Rate Loan on a day other than the last day of the Interest Period for such Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise); or

 

(b)     any failure by the Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Eurodollar
Rate Loan on the date or in the amount notified by the Borrower;

 

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained, but excluding any loss of margin.

 

For purposes of calculating amounts payable by a Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded. A certificate of such Lender submitted to the Borrower and
its Restricted Subsidiaries (with a copy to the Administrative Agent) with
respect to any amounts owing under this Section 3.05 shall be conclusive absent
manifest error.

 

Section 3.06     Matters Applicable to All Requests for Compensation.

 

(a)     Any Agent or any Lender claiming compensation under this Article 3 shall
deliver a certificate to the Borrower setting forth in reasonable detail the
additional amount or amounts to be paid to it hereunder, which shall be
conclusive in the absence of manifest error. In determining such amount, such
Agent or such Lender may use any reasonable averaging and attribution methods.

 

(b)     With respect to any Lender’s claim for compensation under Section 3.01
or Section 3.04, the Borrower shall not be required to compensate such Lender
for any amount incurred more than one hundred and eighty (180) days prior to the
date that such Lender notifies the Borrower of the event that gives rise to such
claim and that such Lender has determined to request such compensation; provided
that if the circumstance giving rise to such increased cost or reduction is
retroactive, then such one hundred eighty (180)-day period referred to above
shall be extended to include the period of retroactive effect thereof. If any
Lender requests compensation by the Borrower under Section 3.04, the Borrower
may, by notice to such Lender (with a copy to the Administrative Agent), suspend
the obligation of such Lender to make or continue Eurodollar Rate Loans from one
Interest Period to another, or to convert Base Rate Loans into Eurodollar Rate
Loans, until the event or condition giving rise to such request ceases to be in
effect (in which case the provisions of Section 3.06(c) shall be applicable);
provided that such suspension shall not affect the right of such Lender to
receive the compensation so requested.

 

 
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(c)     If the obligation of any Lender to make or continue any Eurodollar Rate
Loan from one Interest Period to another, or to convert Base Rate Loans into
Eurodollar Rate Loans shall be suspended pursuant to Section 3.02 or 3.03
hereof, such Lender’s Eurodollar Rate Loans shall be automatically converted
into Base Rate Loans on the last day(s) of the then current Interest Period(s)
for such Eurodollar Rate Loans (or, in the case of an immediate conversion
required by Section 3.02, on such earlier date as required by Law) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 3.02 or Section 3.03 hereof that gave rise to such
conversion no longer exist:

 

(i)     to the extent that such Lender’s Eurodollar Rate Loans have been so
converted, all payments and prepayments of principal that would otherwise be
applied to such Lender’s Eurodollar Rate Loans shall be applied instead to its
Base Rate Loans; and

 

(ii)     all Loans that would otherwise be made or continued as Eurodollar Rate
Loans from one Interest Period to another by such Lender shall be made or
continued instead as Base Rate Loans, and all Base Rate Loans of such Lender
that would otherwise be converted into Eurodollar Rate Loans shall remain as
Base Rate Loans.

 

(d)     If any Lender gives notice to a Borrower (with a copy to the
Administrative Agent) that the circumstances specified in Section 3.02 or
Section 3.03 hereof that gave rise to the conversion of such Lender’s Eurodollar
Rate Loans pursuant to this Section 3.06 no longer exist (which such Lender
agrees to do promptly upon such circumstances ceasing to exist) at a time when
Eurodollar Rate Loans made by other Lenders of such Class of Loans are
outstanding, such Lender’s Base Rate Loans of such Class of Loans shall be
automatically converted irrespective of whether such conversion results in
greater than six (6) Interest Periods being outstanding under this Agreement, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Rate Loans, to the extent necessary so that, after giving effect
thereto, all Loans held by the Lenders holding Eurodollar Rate Loans of the
applicable Class and by such Lender are held pro rata (as to principal amounts,
interest rate basis, and Interest Periods) in accordance with their respective
Term Commitments in respect of such Class.

 

Section 3.07     Replacement of Lenders Under Certain Circumstances.

 

(a)     If at any time (x) the Borrower becomes obligated to pay additional
amounts or indemnity payments described in Section 3.01(a) or (d) or Section
3.04 as a result of any condition described in such Sections or any Lender
ceases to make Eurodollar Rate Loans as a result of any condition described in
Section 3.03, or (y) any Lender becomes a Defaulting Lender, then the Borrower
may, on ten (10) Business Days’ prior written notice to the Administrative Agent
and such Lender, replace such Lender by causing such Lender to (and such Lender
shall be obligated to) assign pursuant to Section 9.07(b) (with the assignment
fee to be paid by the Borrower in such instance) all of its rights and
obligations under this Agreement to one or more Eligible Assignees; provided
that (i) in the case of any such assignment resulting from a claim for
compensation under Section 3.01(a) or (d) or Section 3.04, such assignment will
result in a reduction in such compensation or payments thereafter, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Term Loans, accrued but unpaid interest thereon, accrued but
unpaid fees, premium and all other amounts payable to it hereunder from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) neither the
Administrative Agent nor any Lender shall have any obligation to the Borrower to
find a replacement Lender or other such Person.

 

 
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(b)     Any Lender being replaced pursuant to Section 3.07(a) above shall
(i) execute and deliver an Assignment and Assumption with respect to such
Lender’s Term Commitment and outstanding Loans of the applicable Class
(ii) deliver any Notes evidencing such Loans to the Borrower or the
Administrative Agent; provided that the failure of any such Lender to execute an
Assignment and Assumption shall not render such assignment invalid, and such
Lender shall be deemed to have executed such Assignment and Assumption within
one Business Day of a request that it do so in the event that it has failed to
do so within such period, and such assignment shall be recorded in the Register.
Pursuant to such Assignment and Assumption, (x) the assignee Lender shall
acquire all or a portion, as the case may be, of the assigning Lender’s Term
Commitment and outstanding Loans of the applicable Class, (y) all obligations of
the Borrower owing to the assigning Lender relating to the Loans and
participations so assigned shall be paid in full by the assignee Lender to such
assigning Lender concurrently with such assignment and assumption and (z) upon
such payment and, if so requested by the assignee Lender, delivery to the
assignee Lender of the appropriate Note or Notes executed by the Borrower, the
assignee Lender shall become a Lender hereunder and the assigning Lender shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Section 3.01, Section 3.04 and Section 9.05 (and bound by the obligations set
forth in Section 9.08) with respect to facts and circumstances occurring prior
to the effective date of such assignment.

 

(c)     Notwithstanding anything to the contrary contained above, the Lender
that acts as the Administrative Agent may not be replaced in such capacity
hereunder except in accordance with the terms of Section 8.06.

 

Section 3.08     Survival. The Borrower’s obligations under this Article 3 shall
survive any assignment of rights by, or the replacement of, a Lender and the
Termination Date.

 

Article IV

CONDITIONS PRECEDENT

 

Section 4.01     Conditions to Effectiveness. The effectiveness of this
Agreement is subject solely to the Administrative Agent’s receipt of executed
counterparts of this Agreement, in the form of an original, facsimile or
electronic copy (followed promptly by originals), executed by each Lender and a
Responsible Officer of each of the Borrower and Holdings. For the avoidance of
doubt, any Default or Event of Default arising under this Agreement during the
period between (and including) the Effective Date and the Closing Date shall be
deemed to be a Default or Event of Default from such date as such Default or
Event or Default occurs, until cured or waived, notwithstanding the fact that
such date may occur prior to the Closing Date. It is understood and agreed that,
for purposes of calculating the availability under any basket or ratio, or
determining the availability of an exception to any covenant, agreement or
provision, under this Agreement, such calculation or determination, as the case
may be, shall take into account the effectiveness of this Agreement as of and
from the Effective Date; provided, that, no action taken or omitted to be taken
by the Borrower, Holdings or any of its Restricted Subsidiaries during the
period between (and including) the Effective Date and the Closing Date shall
give rise to a Default or Event of Default by virtue of this Section 4.01, so
long as such action that is taken or omitted to be taken would not give rise to
a Default or Event of Default had the “Closing Date” instead been the Effective
Date.

 

 
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Section 4.02     Conditions to Initial (Closing Date) Borrowing. The obligation
of each Lender to make the Loans hereunder on the Closing Date is subject to the
performance by the Borrower and the Guarantors of their respective covenants and
other obligations hereunder and to the satisfaction of solely the following
conditions precedent (or expressly waived in accordance with Section 9.01);
provided that such date shall not be earlier than September 6, 2016; provided,
further, that if the conditions have not been satisfied or waived in accordance
with this Section 4.02, then each Lender as to which the conditions shall not
have been met shall, at its election, be relieved of all further obligations
under this Agreement, without thereby waiving any rights such Lender may have by
reason of such failure or such non-fulfillment:

 

(a)     The receipt by the Administrative Agent and the Initial Term Lenders of
the following, each of which shall be in the form of an original, facsimile or
electronic copy unless otherwise specified, and each executed by a Responsible
Officer of the Borrower:

 

(i)     a Note executed by the Borrower in favor of each Lender requesting a
Note at least two (2) Business Days prior to the Closing Date (the original to
the Lender and a copy to the Administrative Agent), if any;

 

(ii)     executed counterparts of (A) (1) the First Lien Intercreditor Agreement
substantially in the form of Exhibit F-1 hereto, (2) the Amended and Restated
Intercreditor Agreement substantially in the form of Exhibit F-2 hereto, (3) the
Amended and Restated Collateral Agency Agreement substantially in the form of
Exhibit F-3 hereto, and (4) the other Collateral Documents required to be
executed on the Closing Date and set forth on Schedule 4.02 hereto, duly
executed by each of the parties thereto and (B) such evidence as the
Administrative Agent and the Initial Term Lenders may reasonably require of the
effectiveness of the security contemplated thereby and the perfection of the
security interest created thereby (including, without limitation, the filing of
UCC-1s or UCC-3s, as applicable, and delivery of certificated securities or
other possessory collateral, but excluding the actions, perfections and filings
set forth in Section 6.14(d) of this Agreement and recordations with the United
States Patent and Trademark Office); and

 

(iii)     a certificate of the Borrower and each other Loan Party, dated the
Closing Date and executed by the secretary or assistant secretary of the
Borrower and each other Loan Party, respectively, in the form attached as
Exhibit G-1 and G-2, respectively, hereto.

 

(b)     (i) a certificate signed by a Responsible Officer of the Borrower,
substantially in the form of Exhibit H-1 hereto, certifying as to the
satisfaction of the conditions set forth in this Section 4.02(f), (i) and (j),
(ii) a Perfection Certificate substantially in the form attached as Exhibit H-2
hereto and (iii) a Solvency Certificate in the form attached as Exhibit H-3.

 

(c)     The receipt by the Administrative Agent and the Initial Term Lenders of
(i) a written opinion of Simpson Thacher & Bartlett LLP, special counsel for the
Borrower and Holdings, dated as of the Closing Date and (ii) a written opinion
of Michael Discafani, Vice President, Corporate Counsel and Secretary of the
Borrower and Holdings, dated as of the Closing Date, in each case in form and
substance reasonably satisfactory to the Administrative Agent and the Initial
Term Lenders.

 

 
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(d)     To the extent requested by the Administrative Agent and/or the Initial
Term Lenders not less than ten (10) Business Days prior to the Closing Date, the
Administrative Agent and the Initial Term Lenders shall have received, at least
three (3) Business Days prior to the Closing Date, all documentation and other
information reasonably requested with respect to the Loan Parties required by
regulatory authorities under applicable “know-your-customer” and anti-money
laundering rules and regulations, including without limitation the PATRIOT Act.

 

(e)     The Administrative Agent and Lenders shall have received a Request for
Borrowing relating to the initial Borrowings in accordance with Section 2.02(a).

 

(f)     Substantially concurrently with the making of Loans on the Closing Date,
(i) the Borrower shall have issued the New Second Lien Notes in an aggregate
principal amount of $75,000,000 and (ii) the Borrower shall issue to the
purchasers under the Exchange Agreement $75,000,000 aggregate principal amount
of First Lien Exchange Notes in exchange for $75,000,000 aggregate principal
amount of such purchasers’ Existing Second Lien Notes, in each case subject to
the terms and conditions set forth in the Note Purchase Agreement and the
Exchange Agreement, respectively.

 

(g)     The Borrower shall have obtained CUSIP and loan identification numbers
for the Loans.

 

(h)     The Loans shall have been rated by Standard & Poor’s and by Moody’s
Investors Service, Inc.

 

(i)     (A) All representations and warranties in the Loan Documents shall be
true and correct in all material respects as of the Closing Date; provided that
to the extent any such representations and warranties are qualified by
“materiality,” “Material Adverse Effect” or similar language, such
representations and warranties (after giving effect to any qualification
therein) are true and correct in all respects as of the Closing Date; and (B)
upon consummation of the transactions contemplated by the Loan Documents, the
Note Purchase Agreement and the Exchange Agreement (and the application of the
proceeds thereof), no Default or Event of Default shall have occurred.

 

(j)     Substantially concurrently with the borrowing of Initial Term Loans,
either (i) the Tender Offer will have been consummated and the Borrower will
have accepted for purchase, in each case on the terms of the Offer to Purchase
Statement (subject to the right of the Purchasers (as defined in the Note
Purchase Agreement) to consent to certain changes to such terms in accordance
with Section 7.01 of the Note Purchase Agreement), all January 2017 Notes
validly tendered and not withdrawn; provided that (x) at least 90% of the
aggregate principal amount of the January 2017 Notes outstanding as of the date
of this Agreement will have been accepted for purchase by the Borrower pursuant
to the Tender Offer and (y) the Borrower shall have received the Required
Consents (as defined in the Offer to Purchase Statement), or (ii) the Borrower
will have otherwise purchased or irrevocably called for redemption, together
with any January 2017 Notes accepted for purchase pursuant to the terms of the
Tender Offer and Consent Solicitation (subject to the right of the Purchasers
(as defined in the Note Purchase Agreement) to consent to certain changes to
such terms in accordance with Section 7.01 of the Note Purchase Agreement), at
least 90% of the aggregate principal amount of the January 2017 Notes
outstanding as of the date of this Agreement, provided that either (i) the
Borrower shall have received the Required Consents (as defined in the Offer to
Purchase Statement) or (ii) the liens covenant contained in the January 2017
Notes Indenture shall permit the incurrence of the liens securing the New Second
Lien Notes or shall no longer be operative.

 

 
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(k)     The proceeds of Initial Term Loans under this Agreement, together with
the proceeds from the sale of the New Second Lien Notes under the New Second
Lien Notes Indenture, will be used on the Closing Date to pay all amounts due to
holders of the January 2017 Notes in accordance with clause (j) of this Section
4.02 and the Borrower shall deposit any remaining proceeds on the Closing Date
into the Segregated Account to be used by the Borrower solely to purchase or
redeem (including through a satisfaction and discharge of the relevant
indenture) its 2017 Notes, or as expressly agreed in writing in accordance with
Section 9.01 between the Borrower, Holdings and the Lenders, any of the
Borrower’s other Indebtedness.

 

For purposes of determining satisfaction of the conditions specified in this
Section 4.02, by releasing its signature page hereto or to an Assignment and
Assumption Agreement, the Administrative Agent and each Lender that has signed
this Agreement or an Assignment and Assumption Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required hereunder to be consented to or approved by or acceptable
or satisfactory to the Administrative Agent or such Lender, as the case may be.

 

Article V

REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND THE BORROWER

 

The Borrower and Holdings jointly and severally, represent and warrant to, and
agree with the Administrative Agent and each Lender, that as of the date hereof
and as of the Closing Date:

 

Section 5.01     Good Standing of the Borrower, Holdings and its Subsidiaries.
Each of the Borrower, Holdings and its subsidiaries has been duly incorporated
or formed, as the case may be, is validly existing as a corporation, limited
liability company or limited partnership, as the case may be, in good standing
under the laws of its jurisdiction of incorporation or organization and has the
corporate power, or its equivalent in the case of a limited partnership or
limited liability company, and authority to carry on its business as described
in the Public Filings and to own, lease and operate its properties; and each is
duly qualified and is in good standing as a foreign corporation, limited
liability company or limited partnership, as the case may be, authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, prospects, financial condition or results of operations of Holdings
and its subsidiaries, taken as a whole, or their ability to perform their
respective obligations under this Agreement, the Note Purchase Agreement and the
Exchange Agreement (a “Material Adverse Effect”).

 

Section 5.02     Capital Stock. All outstanding shares of capital stock of the
Borrower and Holdings have been duly authorized and validly issued and are fully
paid, nonassessable and not subject to any preemptive or similar rights, except,
for the avoidance of doubt, with respect to the Rights Plan of Holdings, as
described in the Public Filings; all of the outstanding shares of capital stock
of each of Holdings’ direct and indirect subsidiaries have been duly authorized
and validly issued and are fully paid and nonassessable and such shares that are
owned by Holdings are owned by Holdings, directly or indirectly through one or
more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature other than Liens securing
obligations under (i) the Borrower’s First Lien Notes issued pursuant to the
First Lien Notes Indenture, (ii) the Borrower’s Existing Second Lien Notes
issued pursuant to the Existing Second Lien Indenture, (iii) the Borrower’s
Existing Senior Secured New Group Notes issued pursuant to the Existing Senior
Secured New Group Notes Indenture, and (iv) “Permitted Liens” as defined in this
Agreement, the Existing Senior Secured New Group Notes Indenture, First Lien
Notes Indenture, the First Lien Exchange Notes Indenture, the Existing Second
Lien Notes Indenture and the New Second Lien Notes Indenture.

 

 
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Section 5.03     Loan Documents. Each of the Loan Documents has been duly
authorized by the Borrower and each other Loan Party thereto; when each Loan
Document has been duly executed and delivered by the Borrower and each other
Loan Party that is a party thereto, and, assuming that each Loan Document is a
valid and binding obligation of the Administrative Agent, each Loan Document
will be, a valid and binding agreement of the Borrower and each other Loan Party
that is a party thereto, enforceable against the Borrower and each other Loan
Party in accordance with its terms except as the enforceability thereof may be
limited by the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing; the applicable Collateral Documents, when duly executed and delivered,
will create valid and perfected security interests or mortgage liens in the
Collateral to which they relate, subject to no prior liens other than Permitted
Liens.

 

Section 5.04     Absence of Further Requirements. The execution, delivery and
performance of this Agreement and any other Loan Document by the Borrower and
each of the Loan Parties, as applicable, compliance by the Borrower and each of
the Loan Parties party thereto with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not
require any consent, approval, authorization or other order of, or qualification
with, any court or governmental body or agency except for the filing of any
UCC-1s or UCC-3s, as applicable, the recording of any mortgages or deeds of
trust, and any other filing or recording necessary to perfect the interest in
the Collateral pursuant to the Collateral Documents.

 

Section 5.05     Title to Properties. Except as would not, singly or in the
aggregate, have a Material Adverse Effect, each of the Borrower and the other
Loan Parties has good and marketable title to or a valid leasehold interest in
all properties, assets and other rights which it purports to own or lease or
which are reflected as owned or leased on its books and records, free and clear
of all liens and encumbrances, except Permitted Liens, and subject to the terms
and conditions of the applicable leases. All leases of property are in full
force and effect without the necessity for any consent which has not previously
been obtained upon consummation of the transactions contemplated hereby.

 

Section 5.06     Absence of Defaults and Conflicts Resulting from the
Transactions. The execution, delivery and performance of the Loan Documents by
the Borrower and each of the Loan Parties, as applicable, compliance by the
Borrower and each of the Loan Parties with all provisions hereof and thereof and
the consummation of the transactions contemplated hereby and thereby will not
(i) conflict with or constitute a breach of any of the terms or provisions of
the charter, by-laws or other organizational documents of the Borrower or any
other Loan Party, (ii) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Borrower or
Holdings and its subsidiaries, taken as a whole, to which the Borrower or the
Loan Parties is a party or by which the Borrower or the Loan Parties or their
respective property is bound, (iii) violate or conflict with any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Borrower, Holdings or
any of its subsidiaries or their respective property, (iv) result in the
imposition or creation of (or the obligation to create or impose) a Lien under,
any agreement or instrument to which the Borrower, Holdings or any of its
subsidiaries is a party or by which the Borrower, Holdings or any of its
subsidiaries or their respective property is bound, other than as contemplated
by the Loan Documents, the First Lien Exchange Notes Indenture and the
collateral documents related thereto and the New Second Lien Notes Indenture and
the collateral documents related thereto or (v) result in the termination,
suspension or revocation of any Authorization (as defined in Section 5.09
hereof) of the Borrower, Holdings or any of its subsidiaries or result in any
other impairment of the rights of the holder of any such Authorization, except
in the case of clauses (iii), (iv) and (v), for such conflicts, breaches,
defaults, liens, charges, encumbrances, impositions, terminations, suspensions
or revocations that would not, singly or in the aggregate, have a Material
Adverse Effect.

 

 
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Section 5.07     Absence of Existing Defaults and Conflicts. None of the
Borrower, Holdings or any of their direct or indirect subsidiaries is (i) in
violation of its respective charter, by-laws and/or other applicable
organizational documents, as the case may be, or (ii) in default in the
performance of any obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Borrower, or Holdings and its subsidiaries, taken as a whole,
to which the Borrower, Holdings or any of its subsidiaries is a party or by
which the Borrower, Holdings or any of its subsidiaries or their respective
property is bound, except in the case of clause (ii) for such default that would
not, singly or in the aggregate, have a Material Adverse Effect.

 

Section 5.08     Authorization of this Agreement. This Agreement has been duly
authorized, executed and delivered by the Borrower, Holdings and each other
Guarantor and is the legal, valid and binding obligation of the Borrower,
Holdings and each other Guarantor, enforceable against the Borrower, Holdings
and each other Guarantor in accordance with the terms hereof.

 

Section 5.09     Possession of Licenses and Permits. Except as disclosed in the
Public Filings, each of the Borrower, Holdings and its subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an “Authorization”) of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
under any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Borrower,
Holdings and its subsidiaries is in compliance with all the terms and conditions
thereof and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any authority or
governing body) which allows or, after notice or lapse of time or both, would
allow, revocation, suspension or termination of any such Authorization or
results or, after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization; except where
such failure to be valid and in full force and effect or to be in compliance,
the occurrence of any such event or the presence of any such restriction would
not, singly or in the aggregate, have a Material Adverse Effect.

 

Section 5.10     Environmental Laws and ERISA. Except as disclosed in the Public
Filings, neither the Borrower, Holdings nor any of its subsidiaries has (i)
violated any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), and, to
the knowledge of the Borrower and Holdings, there are no pending or threatened
liabilities relating to Environmental Laws or (ii) violated any provisions of
ERISA, except, in each case, for such violations or liabilities, as the case may
be, which, singly or in the aggregate, would not have a Material Adverse Effect.

 

 
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Section 5.11     Insurance. Holdings, the Borrower and each of their
subsidiaries maintain insurance covering their properties, assets, operations,
personnel and businesses, and, in the good faith estimate of management, such
insurance is of such type and in such amounts as is in accordance with customary
industry practice in the locations where Holdings, the Borrower and each
subsidiary conduct operations, taking into account the costs and availability of
such insurance.

 

Section 5.12     Internal Control Over Financial Reporting. Holdings maintains a
system of internal control over financial reporting (as such term is defined in
Rule 13a-15(f) under the Exchange Act) that complies with the requirements of
the Exchange Act and has been designed by Holdings’ principal executive officer
and principal financial officer, or under their supervision, to provide
reasonable assurance regarding the reliability of the financial reporting and
the preparation of financial statements for external purposes in accordance with
GAAP; and Holdings’ internal control over financial reporting is effective in
all material respects to perform the functions for which it was established and
Holdings is not aware of any material weaknesses in its internal control over
financial reporting.

 

Section 5.13     Disclosure Controls. Holdings maintains “disclosure controls
and procedures” (as such term is defined in Rule 13a-15(e) under the Exchange
Act); and such disclosure controls and procedures are effective in all material
respects to perform the functions for which they were established.

 

Section 5.14     Litigation. Except as disclosed in the Public Filings, there
are no legal or governmental proceedings pending or, to the knowledge of the
Borrower or Holdings, threatened to which the Borrower, Holdings or any of its
subsidiaries is or could be a party or to which any of their respective property
is or could be subject, which might result, singly or in the aggregate, in a
Material Adverse Effect.

 

Section 5.15     Financial Statements. The historical financial statements,
together with related notes, included in Holdings’ annual report on Form 10-K
for the year ended October 31, 2015 and in Holdings’ quarterly reports for the
quarterly periods ended January 31, 2016 and April 30, 2016 (collectively, the
“Historical Financial Statements”), present fairly the consolidated financial
position, results of operations and changes in financial position of Holdings
and its subsidiaries, on the basis stated therein and at the respective dates or
for the respective periods to which they apply; such Historical Financial
Statements have been prepared in accordance with GAAP consistently applied
throughout the periods involved, except as disclosed therein.

 

Section 5.16     No Material Adverse Change in Business. Since April 30, 2016,
except as set forth in any of the Public Filings (including future events or
trends specifically identified in such Public Filings), (i) there has not
occurred any material adverse change or any development involving a prospective
material adverse change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Borrower, or Holdings and
its subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of Holdings or any of its subsidiaries
and (iii) neither Holdings nor any of its subsidiaries has incurred any material
liability or obligation, direct or contingent.

 

Section 5.17     Investment Company Act. Each of the Borrower and the Loan
Parties is not and, after giving effect to the Borrowing of Loans hereunder and
the consummation of the transactions contemplated by the Loan Documents, the
Exchange Agreement and the Note Purchase Agreement and the application of the
net proceeds thereof, will not be, an “investment company,” as such term is
defined in the Investment Company Act.

 

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Section 5.18     Solvency. On the Closing Date, immediately after the
consummation of the transactions contemplated by the Loan Documents, the
Exchange Agreement and the Note Purchase Agreement (i) the present fair saleable
value of the properties and assets of Holdings and its subsidiaries (on a
consolidated basis) is not less than the total amount that would be required to
pay the probable liability of Holdings and its subsidiaries (on a consolidated
basis) on their total debts and liabilities (including contingent liabilities)
as they become absolute and matured; (ii) Holdings and its subsidiaries (on a
consolidated basis) are able to realize upon their properties and assets and
generally pay their debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of business;
(iii) Holdings and its subsidiaries (on a consolidated basis) do not intend to,
and do not believe that they will, incur debts or liabilities beyond their
ability to pay as such debts and liabilities mature; and (iv) Holdings and its
subsidiaries (on a consolidated basis) are not engaged in any business or
transaction, and do not propose to engage in any business or transaction, for
which their properties and assets would constitute unreasonably small capital
after giving due consideration to the prevailing practices in the industry in
which Holdings and its subsidiaries are engaged. For purposes of this Section
5.18, the amount of any contingent liability shall be computed in accordance
with GAAP.

 

Section 5.19     Regulations T, U, X. Neither the Borrower nor any Loan Party
nor any of their respective subsidiaries nor any agent thereof acting on their
behalf has taken, and none of them will take, any action that might cause this
Agreement or the borrowing of Loans to violate Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System.

 

Section 5.20     Sanctions. (a) Neither the Borrower or Holdings and its
subsidiaries, nor any director or officer thereof, nor, to the Borrower’s or
Holdings’ knowledge, any employee, agent, affiliate or representative of the
Borrower or Holdings and its subsidiaries, is a Person that is, or is owned or
controlled by a Person that is: (A) the target of any sanctions administered or
enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control
(“OFAC”) (“Sanctions”), nor (B) located, organized or resident in the Crimea
Republic of Ukraine, Cuba, Iran, North Korea, Sudan and Syria (each, a
“Sanctioned Country”); and

 

(b)     The Borrower will not, directly or indirectly, use the proceeds of
Initial Term Loans and the sale of the New Second Lien Notes, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other Person for the purpose of funding or facilitating any
activities or business of or with any Person in any Sanctioned Country.

 

Section 5.21     Exchange Act. Holdings is subject to Section 13 or 15(d) of the
Exchange Act and has filed all reports required to be filed by it thereunder
since October 31, 2015.

 

Section 5.22     Tender Offer and Consent Solicitation. Attached hereto as
Exhibit J is a true and correct copy of the Offer to Purchase Statement that
will be used by the Borrower to commence the Tender Offer and Consent
Solicitation.

 

Section 5.23     Taxes. Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, each of the Borrower,
Holdings and its Restricted Subsidiaries (a) have timely filed or cause to be
filed all Tax returns and reports required to have been filed, and (b) have paid
or caused to be paid all Taxes levied or imposed on their properties, income or
assets (whether or not shown on a Tax return) that are due and payable,
including in their capacity as tax withholding agents, except any Taxes that are
being contested in good faith by appropriate proceedings, provided that
Holdings, the Borrower or such Restricted Subsidiary, as the case may be, has
set aside on its books adequate reserves therefor in accordance with GAAP. There
is no proposed Tax assessment, deficiency or other claim against Holdings, the
Borrower or any Restricted Subsidiary that would reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.

 

 
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Section 5.24     Compliance with Laws. Each of the Borrower, Holdings and its
Restricted Subsidiaries is in compliance with all applicable laws, orders,
writs, injunctions and orders, except to the extent that failure to do so would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

Article VI

COVENANTS

 

Until the Termination Date, the Borrower and Holdings shall, and to the extent
applicable, shall cause each Restricted Subsidiary to comply with the following
covenants:

 

Section 6.01     Existence. Holdings and the Borrower shall each do or cause to
be done all things necessary to preserve and keep in full force and effect their
existence and the existence of each of the Restricted Subsidiaries in accordance
with their respective organizational documents, and the material rights,
licenses and franchises of Holdings, the Borrower and each Restricted
Subsidiary; provided, that Holdings and the Borrower are not required to
preserve any such right, license or franchise, or the existence of any
Restricted Subsidiary, if the maintenance or preservation thereof is no longer
desirable in the conduct of the business of Holdings and its Restricted
Subsidiaries taken as a whole; and provided, further, that this Section shall
not prohibit any transaction otherwise permitted by Section 6.07 or Section
6.11.

 

Section 6.02     Payment of Taxes. Holdings shall pay or discharge, and cause
each of its Subsidiaries to pay or discharge before the same become delinquent
all material taxes, assessments and governmental charges levied or imposed upon
Holdings or any Subsidiary or its income or profits or property, other than any
such tax, assessment or charge the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings.

 

Section 6.03     Limitations on Indebtedness. (a) Holdings and the Borrower will
not, and will not cause or permit any Restricted Subsidiary to, directly or
indirectly, create, incur, assume, become liable for or guarantee the payment of
(collectively, an “incurrence”) any Indebtedness (including Acquired
Indebtedness); provided that Holdings, the Borrower and any other Loan Party may
incur any Indebtedness (including Acquired Indebtedness) if, after giving effect
thereto and the application of the proceeds therefrom, either (i) the
Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least
2.0 to 1.0 or (ii) the ratio of Indebtedness of Holdings and the Restricted
Subsidiaries to Consolidated Tangible Net Worth of Holdings is less than 3.0 to
1.0.

 

(b)     Notwithstanding the foregoing, the provisions of this Agreement will not
prevent the incurrence of:

 

(i)     Permitted Indebtedness,

 

(ii)     Refinancing Indebtedness,

 

(iii)     Non-Recourse Indebtedness,

 

 
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(iv)     any Guarantee of Indebtedness represented by the Loans, the New Second
Lien Notes and the First Lien Exchange Notes,

 

(v)     any guarantee of Indebtedness incurred under Credit Facilities in
compliance with this Agreement, and

 

(vi)     any guarantee by the Borrower, Holdings or any other Loan Party of
Indebtedness that is permitted to be incurred in compliance with this Agreement;
provided that in the event such Indebtedness that is being guaranteed is
subordinated in right of payment to the Loans or a Guarantee, as the case may
be, then the related guarantee shall be subordinated in right of payment to the
Loans or such Guarantee, as the case may be.

 

(c)     For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness may be incurred through Section 6.03(a) or by
meeting the criteria of one or more of the types of Indebtedness described in
Section 6.03(b) (or the definitions of the terms used therein), Holdings, in its
sole discretion,

 

(i)     may divide, classify or later reclassify the amount and type of such
item of Indebtedness (or any portion thereof) under and comply with any of such
paragraphs (or any of such definitions), as applicable,

 

(ii)     may divide, classify or later reclassify the amount and type of such
item of Indebtedness (or any portion thereof) into more than one of such
paragraphs (or definitions), as applicable, and

 

(iii)     may elect to comply with such paragraphs (or definitions), as
applicable, in any order.

 

(d)     Holdings and the Borrower will not, and will not cause or permit any
other Loan Party to, directly or indirectly, in any event incur any Indebtedness
that purports to be by its terms (or by the terms of any agreement governing
such Indebtedness) subordinated to any other Indebtedness of Holdings or of such
other Loan Party, as the case may be, unless such Indebtedness is also by its
terms (or by the terms of any agreement governing such Indebtedness) made
expressly subordinated to the Loans or the Guarantee of such other Loan Party,
as the case may be, to the same extent and in the same manner as such
Indebtedness is subordinated to such other Indebtedness of Holdings or such
other Loan Party, as the case may be.

 

(e)     Accrual of interest or dividends, the accretion of accreted value, the
accretion or amortization of original issue discount and the payment of interest
or dividends in the form of additional Indebtedness will not be deemed to be an
incurrence of Indebtedness for purposes of this Section.

 

(f)     For purposes of determining compliance with any U.S. dollar-denominated
restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in another currency shall be
calculated based on the relevant currency exchange rate in effect on the date
such Indebtedness was incurred, in the case of term debt, or first committed, in
the case of revolving credit debt; provided that if such Indebtedness is
incurred to refinance other Indebtedness denominated in another currency, and
such refinancing would cause the applicable U.S. dollar-denominated restriction
to be exceeded if calculated at the relevant currency exchange rate in effect on
the date of such refinancing, such U.S. dollar-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount of such
Refinancing Indebtedness does not exceed (i) the principal amount of such
Indebtedness being refinanced plus all accrued interest thereon plus (ii) the
aggregate amount of fees, underwriting discounts, premiums and other costs and
expenses incurred in connection with such refinancing. Notwithstanding any other
provision of this Section 6.03, the maximum amount of Indebtedness Holdings, the
Borrower or a Restricted Subsidiary may incur pursuant to this covenant shall
not be deemed to be exceeded solely as a result of fluctuations in the exchange
rate of currencies.

 

 
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(g)     The principal amount of any Indebtedness incurred to refinance other
Indebtedness, if incurred in a different currency from the Indebtedness being
refinanced, shall be calculated based on the currency exchange rate applicable
to the currencies in which such respective Indebtedness is denominated that is
in effect on the date of such refinancing.

 

(h)     For purposes of this Section 6.03 and the other provisions of this
Agreement, (i) unsecured Indebtedness shall not be treated as subordinated or
junior to secured Indebtedness merely because it is unsecured, and (ii) senior
Indebtedness shall not be treated as subordinated or junior to any other senior
Indebtedness merely because it has a junior priority with respect to the same
collateral.

 

(i)     Holdings and the Borrower will not, and will not cause or permit any
other Loan Party, directly or indirectly, to incur Indebtedness under Section
6.03(a) (other than Purchase Money Indebtedness) unless it is scheduled to
mature no earlier than January 15, 2021.

 

(j)     For purposes of determining compliance with this covenant, (i) any
Existing Unsecured Notes and any Units outstanding on the Effective Date shall
be deemed to be incurred, at Holdings’ sole discretion, under clauses (b) or (k)
of the definition of “Permitted Indebtedness” and (ii) all Indebtedness
outstanding on the Effective Date under the Revolving Credit Facility shall be
deemed to be incurred under clause (c) of the definition of “Permitted
Indebtedness”.

 

Section 6.04     Limitations on Restricted Payments. (a) Holdings and the
Borrower will not, and will not cause or permit any Restricted Subsidiary to,
directly or indirectly, make any Restricted Payment unless:

 

(i)     no Default or Event of Default shall have occurred and be continuing at
the time of or immediately after giving effect to such Restricted Payment;

 

(ii)     immediately after giving effect to such Restricted Payment, Holdings
could incur at least $1.00 of Indebtedness pursuant to Section 6.03(a) hereof;
and

 

(iii)     immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments (including the Fair Market Value of
any non-cash Restricted Payment) declared or made on or after February 1, 2014
does not exceed the sum of:

 

(A)     $16.0 million, plus

 

(B)     50% of the Consolidated Net Income of Holdings on a cumulative basis
during the period (taken as one accounting period) from and including February
1, 2014 and ending on the last day of Holdings’ fiscal quarter immediately
preceding the date of such Restricted Payment (or in the event such Consolidated
Net Income shall be a deficit, minus 100% of such deficit), plus

 

 
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(C)     100% of the aggregate net cash proceeds of and the Fair Market Value of
Property received by Holdings from (1) any capital contribution to Holdings
after February 1, 2014 or any issue or sale after February 1, 2014 of Qualified
Stock (other than to any Subsidiary of Holdings) and (2) the issue or sale on or
after February 1, 2014 of any Indebtedness or other securities of Holdings or
the Borrower convertible into or exchangeable or exercisable for Qualified Stock
of Holdings that have been so converted, exchanged or exercised, as the case may
be, plus

 

(D)     in the case of the disposition or repayment of any Investment
constituting a Restricted Payment (or if the Investment was made prior to
February 1, 2014, that would have constituted a Restricted Payment if made after
February 1, 2014, if such disposition or repayment results in cash received by
Holdings, the Borrower or any Restricted Subsidiary), an amount (to the extent
not included in the calculation of Consolidated Net Income referred to in (B))
equal to the return of capital with respect to such Investment, including by
dividend, distribution or sale of Capital Stock (to the extent not included in
the calculation of Consolidated Net Income referred to in (B)), plus

 

(E)     with respect to any Unrestricted Subsidiary that is redesignated as a
Restricted Subsidiary after February 1, 2014, in accordance with the definition
of “Unrestricted Subsidiary” (so long as the designation of such Subsidiary as
an Unrestricted Subsidiary was treated under the 7.000% Notes Indenture or this
Agreement as a Restricted Payment made after February 1, 2014, and only to the
extent not included in the calculation of Consolidated Net Income referred to in
(B)), an amount equal to the lesser of (x) the proportionate interest of
Holdings or a Restricted Subsidiary in an amount equal to the excess of (I) the
total assets of such Subsidiary, valued on an aggregate basis at the lesser of
book value and Fair Market Value thereof, over (II) the total liabilities of
such Subsidiary, determined in accordance with GAAP, and (y) the Designation
Amount at the time of such Subsidiary’s designation as an Unrestricted
Subsidiary.

 

(b)     Clause (a) of this Section 6.04 (provided that in the case of clauses
(iv) and (v) below no Default or Event of Default has occurred and is continuing
at the time of such payment) will not prohibit:

 

(i)     the payment of any dividend or distribution or the consummation of any
irrevocable redemption within 60 days of its declaration or the giving of notice
of such irrevocable redemption, as applicable, if such dividend or such payment
could have been made on the date of its declaration or provision of notice, as
applicable, without violation of the provisions of this Agreement;

 

(ii)     the purchase, repayment, repurchase, redemption, defeasance or other
acquisition, cancellation or retirement for value of any Subordinated
Indebtedness of the Borrower, Holdings or any Restricted Subsidiary or shares of
Capital Stock of Holdings in exchange for, or out of the net proceeds of the
substantially concurrent sale (other than to a Subsidiary of Holdings) of,
shares of Qualified Stock;

 

(iii)     the purchase, repayment, redemption, repurchase, defeasance or other
acquisition, cancellation or retirement for value of Subordinated Indebtedness
of the Borrower, Holdings or any Restricted Subsidiary in exchange for, or out
of proceeds of, Refinancing Indebtedness;

 

 
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(iv)     the payment of dividends on Preferred Stock and Disqualified Stock up
to an aggregate amount of $10.0 million in any fiscal year; provided that
immediately after giving effect to any declaration of such dividend, Holdings
could incur at least $1.00 of Indebtedness pursuant to clause (i) of Section
6.03(a);

 

(v)     the purchase, redemption or other acquisition, cancellation or
retirement for value of Capital Stock, or options, warrants, equity appreciation
rights or other rights to purchase or acquire Capital Stock, of Holdings or any
Subsidiary held by any present, future or former officers, directors, managers,
employees or consultants of Holdings or any Subsidiary (or their estates or
beneficiaries under their estates) not to exceed $10.0 million in the aggregate
since the Closing Date;

 

(vi)     the making of cash payments in connection with any conversion or
exchange of Permitted Convertible Indebtedness in an aggregate amount since the
date of the indenture therefor not to exceed the sum of (A) the principal amount
of such Permitted Convertible Indebtedness plus (B) any payments received by
Holdings, the Borrower or any Restricted Subsidiaries pursuant to the exercise,
settlement or termination of any related Permitted Bond Hedge;

 

(vii)     any payments in connection with (including, without limitation, the
purchase of) a Permitted Bond Hedge and the settlement of any related Permitted
Warrant (A) by delivery of shares of Holdings’ Capital Stock upon net share
settlement of such Permitted Warrant or (B) by (x) set-off of such Permitted
Warrant against the related Permitted Bond Hedge and (y) payment of an amount
due upon termination of such Permitted Warrant in Capital Stock or using cash
received upon the exercise, settlement or termination of a Permitted Bond Hedge
upon any early termination thereof;

 

(viii)     the purchase, repayment, repurchase, redemption, defeasance or other
acquisition, cancellation or retirement for value of any Subordinated
Indebtedness (A) at a purchase price not greater than 101% of the principal
amount of such Subordinated Indebtedness in the event of a Change of Control in
accordance with provisions similar to Section 6.16 hereof or (B) at a purchase
price not greater than 100% of the principal amount thereof in accordance with
provisions similar to Section 2.03(a)(iii) hereof; provided that, prior to or
simultaneously with such purchase, repayment, repurchase, redemption, defeasance
or other acquisition, cancellation, or retirement, Holdings, the Borrower or any
Restricted Subsidiary has made, (i) payment in full of the Loans and any other
amounts then due and owing to any Lender or the Administrative Agent hereunder,
or (ii) made a Change of Control offer pursuant to Section 6.16 or any
application of relevant proceeds pursuant to Section 2.03(a)(iii), as
applicable, and completed the repurchase or repayments of all Term Loans which
have accepted such Change of Control Offer or application of relevant proceeds;

 

(ix)     (A) any payment of cash by Holdings, the Borrower or any of the
Restricted Subsidiaries in respect of fractional shares of Holdings’ Capital
Stock upon the exercise, conversion or exchange of any stock options, warrants
or other rights to purchase Capital Stock or other convertible or exchangeable
securities and (B) payments made or expected to be made by Holdings, the
Borrower or any of the Restricted Subsidiaries in respect of withholding or
similar taxes payable in connection with the exercise or vesting of Capital
Stock by any future, present or former officer, employee, director, manager or
consultant and repurchases of Capital Stock deemed to occur upon exercise,
conversion or exchange of stock options, warrants or other rights to purchase
Capital Stock or other convertible or exchangeable securities if such Capital
Stock represents all or a portion of the exercise price thereof;

 

 
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(x)     other Restricted Payments in an aggregate amount, when taken together
with all other Restricted Payments made pursuant to this clause (x) not to
exceed $5.0 million (after giving effect to any return of capital with respect
to any Restricted Investments made under this clause (x) in the form of cash);

 

(xi)     payments or distributions to satisfy dissenters’ rights, pursuant to or
in connection with a consolidation, merger or transfer of assets that complies
with Section 6.11; and

 

(xii)     any purchase, repayment, repurchase, redemption, defeasance or other
acquisition, cancellation or retirement for value of Subordinated Indebtedness
from Net Cash Proceeds of an Asset Disposition to the extent permitted under
Section 2.03;

 

provided, however, that each Restricted Payment described in clauses (i) and
(ii) of this Section 6.04(b) shall be taken into account for purposes of
computing the aggregate amount of all Restricted Payments pursuant to clause
(iii) of Section 6.04(a).

 

(c)     For purposes of determining the aggregate and permitted amounts of
Restricted Payments made, the amount of any guarantee of any Investment in any
Person that was initially treated as a Restricted Payment and which was
subsequently terminated or expired, net of any amounts paid by Holdings or any
Restricted Subsidiary in respect of such guarantee, shall be deducted.

 

(d)     In determining the “Fair Market Value of Property” for purposes of
clause (iii) of Section 6.04(a), Property other than cash, Cash Equivalents and
Marketable Securities shall be deemed to be equal in value to the “equity value”
of the Capital Stock or other securities issued in exchange therefor. The equity
value of such Capital Stock or other securities shall be equal to (i) the number
of shares of Common Equity issued in the transaction (or issuable upon
conversion or exercise of the Capital Stock or other securities issued in the
transaction) multiplied by the closing sale price of the Common Equity on its
principal market on the date of the transaction (less, in the case of Capital
Stock or other securities which require the payment of consideration at the time
of conversion or exercise, the aggregate consideration payable thereupon) or
(ii) if the Common Equity is not then traded on a the New York Stock Exchange,
the NYSE MKT or Nasdaq Stock Market, or if the Capital Stock or other securities
issued in the transaction do not consist of Common Equity (or Capital Stock or
other securities convertible into or exercisable for Common Equity), the value
(if more than $10.0 million) of such Capital Stock or other securities as
determined by a nationally recognized investment banking firm retained by the
Board of Directors of Holdings.

 

(e)     For purposes of determining compliance with this Section 6.04, in the
event that a proposed Restricted Payment or Investment (or a portion thereof)
meets the criteria of clauses (i) through (xii) above or is entitled to be made
pursuant to Section 6.04(a) and/or one or more of the exceptions contained in
the definition of “Permitted Investments” (other than clause (k) of such
definition), the Borrower will be entitled to divide, classify or later
reclassify (based on circumstances existing on the date of such
reclassification) such Restricted Payment or Investment (or portion thereof)
among such clauses (i) through (xii) and Section 6.04(a) and/or one or more of
the exceptions contained in the definition of “Permitted Investments” (other
than clause (k) of such definition) in a manner that otherwise complies with
this covenant.

 

 
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Section 6.05     Limitations on Liens. Holdings and the Borrower will not, and
will not cause or permit any Restricted Subsidiary to, create, incur, assume or
suffer to exist any Liens, other than Permitted Liens, on any of its Property,
or on any shares of Capital Stock or Indebtedness of any Restricted Subsidiary.

 

Section 6.06     Limitations on Restrictions Affecting Restricted Subsidiaries.
Holdings and the Borrower will not cause or permit any Restricted Subsidiary to,
create, assume or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction (other than encumbrances or restrictions
imposed by law or by judicial or regulatory action or by provisions of
agreements that restrict the assignability thereof) on the ability of such
Restricted Subsidiary to:

 

(a)     pay dividends or make any other distributions on its Capital Stock or
any other interest or participation in, or measured by, its profits, owned by
Holdings or any other Restricted Subsidiary, or pay interest on or principal of
any Indebtedness owed to Holdings or any other Restricted Subsidiary,

 

(b)     make loans or advances to Holdings or any other Restricted Subsidiary,
or

 

(c)     transfer any of its property or assets to Holdings or any other
Restricted Subsidiary,

 

except for:

 

(i)     encumbrances or restrictions existing under or by reason of applicable
law,

 

(ii)     contractual encumbrances or restrictions in effect at or entered into
on the Effective Date or the Closing Date and any amendments, modifications,
restatements, renewals, supplements, refundings, replacements or refinancings
thereof; provided, that such amendments, modifications, restatements, renewals,
supplements, refundings, replacements or refinancings are not materially more
restrictive, taken as a whole, with respect to such dividend and other payment
restrictions than those contained in such contractual encumbrances or
restrictions, as in effect at or entered into on the Effective Date or the
Closing Date,

 

(iii)     encumbrances or restrictions under any agreement or other instrument
of a Person acquired by or merged or consolidated with or into Holdings or any
Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a
Restricted Subsidiary, or that is assumed in connection with the acquisition of
assets from such Person, in each case that is in existence at the time of such
transaction (but not created in contemplation thereof), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person and its Subsidiaries, or the property or assets of
the Person and its Subsidiaries, so acquired or designated,

 

(iv)     any restrictions or encumbrances arising in connection with Refinancing
Indebtedness; provided, however, that any restrictions and encumbrances of the
type described in this clause (iv) that arise under such Refinancing
Indebtedness shall not be materially more restrictive or apply to additional
assets than those under the agreement creating or evidencing the Indebtedness
being refunded, refinanced, replaced or extended,

 

(v)     any Permitted Lien, or any other agreement restricting the sale or other
disposition of property, securing Indebtedness permitted by this Agreement if
such Permitted Lien or agreement does not expressly restrict the ability of a
Subsidiary of Holdings to pay dividends or make or repay loans or advances prior
to default thereunder,

 

 

 
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(vi)     reasonable and customary borrowing base covenants set forth in
agreements evidencing Indebtedness otherwise permitted by this Agreement,

 

(vii)     customary non-assignment provisions in leases, licenses, encumbrances,
contracts or similar assets entered into or acquired in the ordinary course of
business,

 

(viii)     any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition,

 

(ix)     encumbrances or restrictions existing under or by reason of (A) this
Agreement and the other Loan Documents, (B) the First Lien Notes Indenture, the
First Lien Notes and the First Lien Notes Guarantees, (C) the First Lien
Exchange Notes Indenture, the First Lien Exchange Notes and the First Lien
Exchange Notes Guarantees, (D) the Existing Second Lien Indenture, the Existing
Second Lien Notes and the Existing Second Lien Guarantees, (E) the New Second
Lien Notes Indenture, the New Second Lien Notes and the New Second Lien Notes
Guarantees and (F) the Existing Senior Secured New Group Notes Indenture, the
Existing Senior Secured New Group Notes and the Existing Senior Secured New
Group Notes Guarantees,

 

(x)     purchase money obligations that impose restrictions on the property so
acquired of the nature described in clause (c) of this Section 6.06,

 

(xi)     Liens permitted under this Agreement securing Indebtedness that limit
the right of the debtor to dispose of the assets subject to such Lien,

 

(xii)     provisions with respect to the disposition or distribution of assets
or property in joint venture agreements, assets sale agreements, stock sale
agreements and other similar agreements,

 

(xiii)     customary provisions of any franchise, distribution or similar
agreements,

 

(xiv)     restrictions on cash or other deposits or net worth imposed by
contracts entered into in the ordinary course of business,

 

(xv)     any encumbrances or restrictions existing under (A) development
agreements or other contracts entered into with municipal entities, agencies or
sponsors in connection with the entitlement or development of real property or
(B) agreements for funding of infrastructure, including in respect of the
issuance of community facility district bonds, metro district bonds, mello-roos
bonds and subdivision improvement bonds, and similar bonding requirements
arising in the ordinary course of business of a homebuilder,

 

(xvi)     any encumbrances or restrictions that require “lockbox” or similar
obligations with respect to Non-Recourse Indebtedness,

 

(xvii)     any encumbrances or restrictions of the type referred to in clauses
(a), (b) or (c) of this Section 6.06 imposed by any amendments, modifications,
restatements, renewals, supplements, refundings, replacements or refinancings of
the contracts, instruments or obligations referred to in clauses (i) and (iii)
through (xvi) of this Section 6.06; provided, that such amendments,
modifications, restatements, renewals, supplements, refundings, replacements or
refinancings are, in the good faith judgment of Holdings’ Board of Directors or
its chief executive officer or chief financial officer, not materially more
restrictive with respect to such encumbrances or restrictions than those
contained in the encumbrance or restrictions prior to such amendment,
modification, restatement, renewal, supplement, refunding, replacement or
refinancing, and

 

 
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(xviii)     any encumbrance or restriction under other Indebtedness of
Restricted Subsidiaries permitted to be incurred subsequent to the Closing Date
pursuant to Section 6.03; provided, that such encumbrances or restrictions will
not materially affect the Borrower’s ability to make anticipated principal and
interest payments on the Loans, as determined in the good faith judgment of
Holdings’ Board of Directors or its chief executive officer or chief financial
officer.

 

(d)     For purposes of determining compliance with this Section 6.06: (i) the
priority of any preferred stock in receiving dividends or liquidating
distributions prior to dividends or liquidating distributions being paid on
common stock shall not be deemed a restriction on the ability to make
distributions on Capital Stock and (ii) the subordination of loans or advances
made to Holdings or a Restricted Subsidiary to other Indebtedness incurred by
Holdings or any such Restricted Subsidiary shall not be deemed a restriction on
the ability to make loans or advances.

 

Section 6.07     Limitations on Dispositions of Assets. (a) Holdings and the
Borrower will not, and will not cause or permit any Restricted Subsidiary to,
make any Asset Disposition unless: (i) Holdings (or the Borrower or such
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Disposition at least equal to the Fair Market Value thereof, and (ii)
not less than 70% of the consideration received by Holdings (or the Borrower or
such Restricted Subsidiary, as the case may be) from such Asset Disposition and
all other Asset Dispositions since the Closing Date, on a cumulative basis, is
in the form of cash, Cash Equivalents and Marketable Securities (which must be
pledged as Collateral if the assets disposed of constituted Collateral);
provided that (other than with respect to an Asset Disposition constituting a
Land Banking Transaction) the Borrower and the Restricted Subsidiaries will not
be required to comply with the requirements of this subclause (ii) to the extent
that the non-cash consideration received in connection with such Asset
Disposition, together with the sum of all non-cash consideration received in
connection with all prior Asset Dispositions that has not yet been converted
into cash, Cash Equivalents or Marketable Securities, does not exceed $25.0
million; provided, however, that when any non-cash consideration is converted
into cash, Cash Equivalents or Marketable Securities, such cash shall constitute
Net Cash Proceeds and be subject to Section 2.03.

 

(b)     The amount of (i) any Indebtedness (as reflected on Holdings’ most
recent consolidated balance sheet or in the footnotes thereto, or if incurred or
accrued subsequent to the date of such balance sheet, such Indebtedness that
would have been reflected on Holdings’ consolidated balance sheet or in the
footnotes thereto if such incurrence or accrual had taken place on or prior to
the date of such balance sheet, as determined in good faith by Holdings) of
Holdings or the Borrower or any Restricted Subsidiary (other than any
Subordinated Indebtedness) that is actually assumed by the transferee in such
Asset Disposition (or is otherwise extinguished in connection with the
transactions relating to such Asset Disposition), (ii) the fair market value (as
determined in good faith by the Board of Directors of Holdings) of any property
or assets (including Capital Stock of any Person that will be a Restricted
Subsidiary) received that are used or useful in a Real Estate Business (provided
that (except as permitted by clause (c) under the definition of “Permitted
Investment”) to the extent that the assets disposed of in such Asset Disposition
were Collateral, such property or assets are pledged as Collateral under the
Collateral Documents substantially simultaneously with such sale, with the Lien
on such Collateral securing the Loans being of the same priority with respect to
the Loans as the Lien on the assets disposed of), and (iii) any securities,
notes or other obligations or assets received by Holdings or such Restricted
Subsidiary from such transferee that are converted by Holdings or such
Restricted Subsidiary into cash or Cash Equivalents, or by their terms are
required to be satisfied for cash or Cash Equivalents (to the extent of the cash
or Cash Equivalents received), in each case, within 180 days following the
closing of such Asset Disposition, shall in each case be deemed to be
consideration required by clause (ii) of Section 6.07(a) for purposes of
determining the percentage of such consideration received by Holdings or the
Restricted Subsidiaries.

 

 
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(c)     The Net Cash Proceeds of an Asset Disposition (including any Land
Banking Transaction) shall be applied pursuant to Section 2.03.

 

Section 6.08     Guarantees by Restricted Subsidiaries. Each existing Restricted
Subsidiary (other than the Borrower (for so long as it remains the Borrower) and
any Excluded Subsidiary) will be a Loan Party. Holdings is permitted to cause
any Unrestricted Subsidiary to be a Loan Party. If the Borrower, Holdings or any
of its Restricted Subsidiaries acquires or creates a Restricted Subsidiary
(other than any Excluded Subsidiary) after the Closing Date, such Restricted
Subsidiary shall execute a supplemental guarantee substantially consistent with
the existing Guarantee, and deliver an Opinion of Counsel to the Administrative
Agent to the effect that the supplemental guarantee has been duly authorized,
executed and delivered by the new Restricted Subsidiary and constitutes a valid
and binding obligation of the new Restricted Subsidiary, enforceable against the
new Restricted Subsidiary in accordance with its terms (subject to customary
exceptions).

 

Section 6.09     [Reserved].

 

Section 6.10     Limitations on Transactions with Affiliates. (a) Holdings and
the Borrower will not, and will not cause or permit any Restricted Subsidiary
to, make any loan, advance, guarantee or capital contribution to, or for the
benefit of, or sell, lease, transfer or otherwise dispose of any property or
assets to or for the benefit of, or purchase or lease any property or assets
from, or enter into or amend any contract, agreement or understanding with, or
for the benefit of, any Affiliate of Holdings or any Affiliate of any of
Holdings’ Subsidiaries involving aggregate payments or consideration in excess
of $7.5 million in a single transaction or series of related transactions (each,
an “Affiliate Transaction”), except for any Affiliate Transaction the terms of
which are at least as favorable as the terms which could be obtained by
Holdings, the Borrower or such Restricted Subsidiary, as the case may be, in a
comparable transaction made on an arm’s-length basis with Persons who are not
such a holder, an Affiliate of such a holder or an Affiliate of Holdings or any
of Holdings’ Subsidiaries.

 

(b)     In addition, Holdings and the Borrower will not, and will not cause or
permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless:

 

(i)     with respect to any such Affiliate Transaction involving or having a
value of more than $15.0 million, Holdings shall have (A) obtained the approval
of a majority of the Board of Directors of Holdings and (B) either obtained the
approval of a majority of Holdings’ disinterested directors or obtained an
opinion of a qualified independent financial advisor to the effect that such
Affiliate Transaction is fair to Holdings, the Borrower or such Restricted
Subsidiary, as the case may be, from a financial point of view, and

 

(ii)     with respect to any such Affiliate Transaction involving or having a
value of more than $30.0 million, Holdings shall have (A) obtained the approval
of a majority of the Board of Directors of Holdings and (B) delivered to the
Administrative Agent an opinion of a qualified independent financial advisor to
the effect that such Affiliate Transaction is fair to Holdings, the Borrower or
such Restricted Subsidiary, as the case may be, from a financial point of view.

 

 
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(c)     Notwithstanding the foregoing, an Affiliate Transaction will not
include:

 

(i)     any contract, agreement or understanding with, or for the benefit of, or
plan for the benefit of, employees of Holdings or its Subsidiaries generally (in
their capacities as such) that has been approved by the Board of Directors of
Holdings;

 

(ii)     Capital Stock issuances to directors, officers and employees of
Holdings or its Subsidiaries pursuant to plans approved by the stockholders of
Holdings;

 

(iii)     any Restricted Payment otherwise permitted under Section 6.04 hereof
or any Permitted Investment (other than a Permitted Investment referred to in
clause (b) of the definition thereof, except as permitted by clause (iv) below);

 

(iv)     any transaction between or among Holdings and/or one or more Restricted
Subsidiaries or between or among Restricted Subsidiaries (provided, however, no
such transaction shall involve any other Affiliate of Holdings (other than an
Unrestricted Subsidiary to the extent permitted by this Agreement)) and any
Guarantees issued by Holdings or a Restricted Subsidiary for the benefit of
Holdings or a Restricted Subsidiary, as the case may be, in accordance with
Section 6.03;

 

(v)     any transaction between Holdings or one or more Restricted Subsidiaries
and one or more Unrestricted Subsidiaries (A) where all of the payments to, or
other benefits conferred upon, such Unrestricted Subsidiaries are substantially
contemporaneously dividended, or otherwise distributed or transferred without
charge, to Holdings or a Restricted Subsidiary or (B) in the ordinary course of
business, including, without limitation, sales (directly or indirectly), sales
subject to repurchase options, leases and sales and leasebacks of (1) homes,
improved land and unimproved land and (2) real estate (including related
amenities and improvements);

 

(vi)     issuances, sales or other transfers or dispositions of mortgages and
collateralized mortgage obligations in the ordinary course of business between
Restricted Subsidiaries and Unrestricted Subsidiaries of Holdings;

 

(vii)     the payment of reasonable and customary fees to, and indemnity
provided on behalf of, officers, directors, employees or consultants of
Holdings, the Borrower or any Restricted Subsidiary;

 

(viii)     transactions in which Holdings or any Restricted Subsidiary, as the
case may be, delivers to the Administrative Agent an opinion of a qualified
independent financial advisor stating that such transaction is fair to Holdings
or such Restricted Subsidiary from a financial point of view or stating that the
terms are not materially less favorable to Holdings or its relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by Holdings or such Restricted Subsidiary with an unrelated Person on an arm’s
length basis;

 

(ix)     any agreement or arrangement as in effect as of the Effective Date or
the Closing Date, or any amendment thereto (so long as any such amendment is not
disadvantageous in any material respect to the Holders when taken as a whole as
compared to the applicable agreement or arrangement as in effect on the
Effective Date or the Closing Date);

 

 
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(x)     transactions with joint ventures entered into in the ordinary course of
business, including, without limitation, sales (directly or indirectly), sales
subject to repurchase options, leases and sales and leasebacks of (A) homes,
improved land and unimproved land and (B) real estate (including related
amenities and improvements);

 

(xi)     any transaction with a Person (other than an Unrestricted Subsidiary)
which would constitute an Affiliate Transaction solely because Holdings or a
Restricted Subsidiary owns Capital Stock in or otherwise controls such Person;

 

(xii)     the issuance and transfer of Capital Stock of Holdings and the
granting and performance of customary registration rights;

 

(xiii)     any lease entered into between Holdings or any Restricted Subsidiary,
as lessee, and any Affiliate of Holdings, as lessor, in the ordinary course of
business;

 

(xiv)     intellectual property licenses in the ordinary course of business;

 

(xv)     transactions between Holdings or any of its Restricted Subsidiaries and
any Person that would constitute an Affiliate Transaction solely because a
director of which is also a director of Holdings; provided, however, that such
director abstains from voting as a director of Holdings on any matter involving
such other Person; and

 

(xvi)     pledges of Capital Stock of Unrestricted Subsidiaries.

 

Section 6.11     Limitations on Mergers, Consolidations and Sales of Assets.
Neither the Borrower nor any other Loan Party will consolidate or merge with or
into, or sell, lease, convey or otherwise dispose of all or substantially all of
its assets (including, without limitation, by way of liquidation or
dissolution), or assign any of its obligations under this Agreement and any
other Loan Document (as an entirety or substantially as an entirety in one
transaction or in a series of related transactions), to any Person (in each case
other than in a transaction in which Holdings, the Borrower or a Restricted
Subsidiary is the survivor of a consolidation or merger, or the transferee in a
sale, lease, conveyance or other disposition) unless:

 

(i)     the Person formed by or surviving such consolidation or merger (if other
than Holdings, the Borrower or the other Loan Parties, as the case may be), or
to which such sale, lease, conveyance or other disposition or assignment will be
made (collectively, the “Successor”), is a corporation or other legal entity
organized and existing under the laws of the United States or any state thereof
or the District of Columbia, and the Successor assumes by amendment hereto in a
form reasonably satisfactory to the Administrative Agent all of the obligations
of Holdings, the Borrower or the other Loan Parties, as the case may be, under
this Agreement and any other Loan Document, as the case may be,

 

(ii)     immediately after giving effect to such transaction, no Default or
Event of Default has occurred and is continuing, and

 

(iii)     immediately after giving effect to such transaction,

 

(A)     Holdings (or its Successor) could incur at least $1.00 of Indebtedness
pursuant to Section 6.03(a) hereof, or

 

 
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(B)     the Consolidated Fixed Charge Coverage Ratio would be equal to or
greater than the Consolidated Fixed Charge Coverage Ratio immediately prior to
such transaction or the ratio of Indebtedness of Holdings and the Restricted
Subsidiaries to Consolidated Tangible Net Worth of Holdings would be equal to or
less than the ratio immediately prior to such transaction.

 

The foregoing provisions shall not apply to: (1) a transaction involving the
sale or disposition of Capital Stock of a Guarantor, or the consolidation or
merger of a Guarantor, or the sale, lease, conveyance or other disposition of
all or substantially all of the assets of a Guarantor, that in any such case
results in such Guarantor being released from its Guarantee, or (2) a
transaction the purpose of which is to change the state of incorporation or
formation of Holdings, the Borrower or any other Loan Party.

 

Section 6.12     Reports to Lenders. (a) Holdings shall file with the Commission
the annual reports and the information, documents and other reports required to
be filed pursuant to Section 13 or 15(d) of the Exchange Act. Holdings shall
file with the Administrative Agent and deliver to each Lender such reports,
information and documents within 15 days after it files them with the
Commission. In the event that Holdings is no longer subject to these periodic
reporting requirements of the Exchange Act, it will nonetheless continue to file
reports with the Commission and the Administrative Agent and deliver such
reports to each Lender as if it were subject to such reporting requirements.
Regardless of whether Holdings is required to furnish such reports to its
stockholders pursuant to the Exchange Act, Holdings will cause its consolidated
financial statements and a “Management’s Discussion and Analysis of Results of
Operations and Financial Condition” written report, similar to those that would
have been required to appear in annual or quarterly reports, to be delivered to
each Lender.

 

(b)     The posting of the reports, information and documents referred to above
on Holdings’ website or one maintained on its behalf for such purpose shall be
deemed to satisfy Holdings’ delivery obligations to the Administrative Agent and
the Lenders. In addition, availability of the foregoing materials on the
Commission’s EDGAR service shall be deemed to satisfy Holdings’ delivery
obligations to the Administrative Agent and the Lenders. The Administrative
Agent shall have no obligation to monitor whether Holdings posts such reports,
information and documents on its website or the Commission’s EDGAR service, or
collect any such information from Holdings’ website or the Commission’s EDGAR
service.

 

(c)     Delivery of such reports, information and documents to the
Administrative Agent is for informational purposes only and the Administrative
Agent’s receipt of them will not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Borrower’s and/or Holdings’ compliance with any of its
covenants in this Agreement (as to which the Administrative Agent is entitled to
rely exclusively on Officers’ Certificates).

 

 
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Section 6.13     Notice of Other Default. In the event that any Indebtedness of
the Borrower or any other Loan Party is declared due and payable before its
maturity because of the occurrence of any default under such Indebtedness, the
Borrower or the relevant Loan Party, as the case may be, shall promptly deliver
to the Administrative Agent an Officers’ Certificate stating such declaration;
provided, that the term “Indebtedness” as used in this Section 6.13 shall not
include Non-Recourse Indebtedness.

 

Section 6.14     Collateral Requirement; Further Assurances; Costs.

 

(a)     On the Closing Date, the Borrower and each other Loan Party shall grant
Liens on all their property (other than Excluded Property) and take all
appropriate steps to cause such Liens to be perfected first-priority liens
ranking senior as to the Collateral relative to the First Lien Notes (subject to
Permitted Liens), including through recordation of mortgages, entry into control
agreements, filing of UCC-1 financing statements or otherwise, pursuant to, and
to the extent required by, the Collateral Documents to be entered into on the
Closing Date and this Agreement. As soon as reasonably practicable following the
filing of UCC-1 financing statements in respect of the Borrower and each Loan
Party, the Borrower shall perform or cause to be performed UCC file searches
that reflect such filings, and shall deliver to the Administrative Agent and
each Lender copies of such search reports; provided, that, such UCC file
searches shall be limited to the filings required to be made on the Closing
Date. For the avoidance of doubt, the requirements of this Section 6.14(a) are
subject to Section 6.14(d) below.

 

(b)     If the Borrower or any of the other Loan Parties at any time grants,
assumes, perfects or becomes subject to any Lien upon any of its property (other
than Excluded Property of the type referred to in clause (a) of the definition
thereof) then owned or thereafter acquired as security for any other
First-Priority Lien Obligation which Obligation is subject to the First Lien
Intercreditor Agreement or the Amended and Restated Intercreditor Agreement, the
Borrower will, or will cause such other Loan Party to, as promptly as practical
(subject to Section 6.14(d) below):

 

(i)     grant a first-priority Lien ranking senior as to the Collateral relative
to the First Lien Notes on such property to the Administrative Agent for the
benefit of the Secured Parties and, to the extent such grant would require the
execution and delivery of a Collateral Document, the Borrower or such other Loan
Party shall execute and deliver a Collateral Document on substantially the same
terms as the agreement or instrument executed and delivered to secure such other
First-Priority Lien Obligations (but, subject to changes to make such new
Collateral Document consistent with the Collateral Documents delivered on the
Closing Date in respect of the Loan Obligations compared to those for the other
First-Priority Lien Obligations);

 

(ii)     cause the Lien granted in such Collateral Document to be duly perfected
as a first-priority lien ranking senior as to the Collateral relative to the
First Lien Notes in any manner permitted by law to the same extent as the Liens
granted for the benefit of such other First-Priority Lien Obligations are
perfected; and

 

(iii)     instruct the Administrative Agent in writing to take all action
necessary in connection with the foregoing provisions of this Section 6.14(b),
including as necessary under the Collateral Documents and determining whether
Collateral constitutes Mortgage Tax Collateral (as defined in the First Lien
Intercreditor Agreement) for purposes of the First Lien Intercreditor Agreement
or Amended and Restated Intercreditor Agreement. By their making of the Loans,
the Lenders shall be deemed to have instructed and authorized the Administrative
Agent to take such actions as instructed by Holdings or the Borrower or any
other Guarantor.

 

 
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(c)     If the Borrower or any other Loan Party at any time after the Closing
Date acquires any new property (other than Excluded Property) that is not
automatically subject to a Lien under the Collateral Documents, or a non-Loan
Party Restricted Subsidiary becomes a Loan Party, the Borrower will, or will
cause such other Loan Party, subject to the requirements of the Collateral
Documents, to as soon as practical after such property’s acquisition or it no
longer being Excluded Property (subject to Section 6.14(d) below):

 

(i)     grant a first-priority Lien ranking senior as to the Collateral relative
to the First Lien Notes on such property (or, in the case of a new Loan Party,
all of its assets except Excluded Property) to the Administrative Agent for the
benefit of the Secured Parties (and, to the extent such grant would require the
execution and delivery of a Collateral Document, the Borrower or such other Loan
Party shall execute and deliver a Collateral Document on substantially the same
terms as the Collateral Documents executed and delivered on the Closing Date);

 

(ii)     cause the Lien granted in such Collateral Document to be duly perfected
in any manner permitted by law to the same extent as the Liens granted on the
Closing Date are perfected; and

 

(iii)     instruct the Administrative Agent in writing to take all action
necessary in connection with the foregoing provisions of this Section 6.14(c)
including as necessary under the Collateral Documents and determining whether
Collateral constitutes Mortgage Tax Collateral (as defined in the First Lien
Intercreditor Agreement) for purposes of the First Lien Intercreditor Agreement
or Amended and Restated Intercreditor Agreement. By their making of the Loans,
the Lenders shall be deemed to have instructed and authorized the Administrative
Agent to take such actions as instructed by Holdings or the Borrower or any
other Guarantor.

 

The Borrower or such other Loan Party shall deliver an Opinion of Counsel to the
Administrative Agent in respect of any Lien grant referred to in this Section
6.14(c) by a new Loan Party or with respect to real property, addressing
customary matters (and containing customary exceptions) consistent with the
Opinion of Counsel (if any) delivered on the Closing Date in respect of such
matters; provided, that, an Opinion of Counsel shall not be required with
respect to any mortgage or similar instrument for real property located in a
jurisdiction for which an Opinion of Counsel has been previously delivered to
the Administrative Agent pursuant to this Agreement.

 

(d)     Notwithstanding anything to the contrary set forth in this Section 6.14
or elsewhere in this Agreement or any Collateral Document:

 

(i)     any mortgages, deeds of trust or similar instruments (and any related
Collateral Documents) required to be granted pursuant to this Agreement or the
Collateral Documents with respect to real property owned by the Borrower or a
Loan Party on the Closing Date shall be granted, together with Opinions of
Counsel delivered to the Administrative Agent in respect of the enforceability
and validity of such mortgages, deeds of trust and similar instruments,
addressing customary matters (and containing customary exceptions) (provided,
that, an Opinion of Counsel shall not be required with respect to any mortgage
or similar instrument for real property located in a jurisdiction for which an
Opinion of Counsel has been previously delivered to the Administrative Agent
pursuant to this Agreement), using reasonable best efforts following the Closing
Date, but in no event later than (A) 90 days following the Closing Date with
respect to real property to be pledged as Collateral with an aggregate book
value of at least 40% of the aggregate book value of such real property owned on
the Closing Date, (B) 120 days following the Closing Date with respect to real
property to be pledged as Collateral with an aggregate book value of at least
50% of the aggregate book value of such real property owned on the Closing Date,
(C) 150 days following the Closing Date with respect to real property to be
pledged as Collateral with an aggregate book value of at least 60% of the
aggregate book value of such real property owned on the Closing Date, (D) 180
days following the Closing Date with respect to real property to be pledged as
Collateral with an aggregate book value of at least 75% of the aggregate book
value of such real property owned on the Closing Date and (E) in any event, 210
days after the Closing Date with respect to all real property owned on the
Closing Date to be pledged as Collateral;

 

 
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(ii)     any control, intercreditor or similar agreements or other Collateral
Documents with respect to L/C Collateral (other than Excluded Property) and any
deposit, checking and securities accounts required to be provided pursuant to
this Agreement or the Collateral Documents on the Closing Date shall be provided
as soon as commercially reasonable following the Closing Date, but in no event
later than 90 days following the Closing Date;

 

(iii)     [Reserved];

 

(iv)     any control, intercreditor or similar agreements or other Collateral
Documents required pursuant to this Agreement or the Collateral Documents with
respect to L/C Collateral (other than Excluded Property) may provide that the
Administrative Agent for the benefit of the Secured Parties has a security
interest in such Collateral that is junior to the lien granted to the holders of
the obligations secured by such L/C Collateral;

 

(v)     in the case of personal property, the Borrower and the other Loan
Parties will not be required to take any steps to perfect liens on personal
property outside the United States; and

 

(vi)     in the case of real property Collateral, the Borrower and the other
Loan Parties will not be required to provide title insurance policies in respect
thereof.

 

(e)     The Borrower will bear and pay all legal expenses, collateral audit and
valuation costs, filing fees, insurance premiums and other costs associated with
the performance of the obligations of the Borrower and the other Loan Parties
set forth in this Section 6.14 and will also pay or reimburse the Administrative
Agent for all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by the Administrative Agent in connection therewith, including
the reasonable compensation and expenses of the Administrative Agent and
Administrative Agent’s agents and counsel.

 

(f)     Neither the Borrower nor any of the other Loan Parties will be permitted
to take any action, or knowingly or negligently omit to take any action, which
action or omission might or would have the result of materially impairing the
security interest with respect to the Collateral for the benefit of the
Administrative Agent and the Secured Parties.

 

(g)     Holdings is required to deliver to the Administrative Agent, (i) on the
Closing Date, a Perfection Certificate in substantially the form attached hereto
as Exhibit H-2 and (ii) within 5 days after October 31 of each year, beginning
October 31, 2017, a certificate in substantially the form attached hereto as
Exhibit K (a “Collateral Perfection Officer’s Certificate”).

 

(h)     Holdings shall make available (i) by January 31, 2017, a copy of the
perfection certificate delivered on the Closing Date, (ii) promptly after the
delivery to the Administrative Agent of a Collateral Perfection Officer’s
Certificate as required by clause (g) above, a copy of such Collateral
Perfection Officer’s Certificate and (iii) within 5 days after the end of each
fiscal quarter of Holdings, beginning with the fiscal quarter ending on January
31, 2017, (w) copies of any control agreements entered into by the Borrower or
any Guarantor, (x) copies of any possessory collateral delivered to, and in the
possession of, the Administrative Agent, (y) acknowledgment copies of UCC-1
financing statements and UCC-3 amendments, and (z) copies of any other
Collateral Documents (including copies of mortgages and mortgage amendments that
have been recorded and returned to the Borrower or a Guarantor) that grant or
evidence the perfection of Liens on the Collateral that have been entered into,
delivered, filed and acknowledged or recorded and returned, as the case may be,
during such fiscal quarter (or, in the case of the fiscal quarter ending January
31, 2017, prior to January 31, 2017) and which may be redacted to remove
confidential or commercially-sensitive information (including but not limited to
all but the last 4 digits of bank account numbers), to any Lender or any bona
fide prospective Lender who, in each case, agrees to treat such information as
confidential on customary confidentiality terms or accesses such information
through a password-protected online data system, by posting such information on
a website (which may be a non-public, password-protected online data system that
requires a customary confidentiality acknowledgment and may be maintained by
Holdings or a third party); provided that Holdings shall make available any
password or other log-in information required to access such website to any such
Lender or bona fide prospective Lender reasonably promptly following request
therefor. Such website shall be accessible to Lenders and any bona fide
prospective Lenders, subject to the customary confidentiality requirements
described in the foregoing, from and after January 31, 2017 and for so long as
any Loans are outstanding.

 

 
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Section 6.15     Maintenance of Ratings. The Loan Parties shall use commercially
reasonable efforts to maintain (i) a public corporate credit rating (but not any
particular rating) from S&P and a public corporate family rating (but not any
particular rating) from Moody’s, in each case in respect of the Borrower or
Holdings and (ii) a public rating (but not any particular rating) in respect of
the Loans from each of S&P and Moody’s.

 

Section 6.16     Change of Control Offers.

 

(a)     Upon the occurrence of a Change of Control, each Lender shall have the
right, at such Lender’s option, to require Holdings to purchase (the “Change of
Control Offer”) all or any part of such Lender’s Loans on a date (the “Change of
Control Repurchase Date”) that is no later than ten Business Days after notice
of the Change of Control, at 100% of the principal amount of the Loans held by
such Lender plus accrued and unpaid interest, if any, to the Change of Control
Repurchase Date.

 

(b)     Holdings or the Borrower shall, promptly upon the occurrence of a Change
of Control, and in no event after one Business Day upon such occurrence, provide
written notice to the Administrative Agent and the Lenders, regarding the Change
of Control Offer. The notice shall state the Change of Control Repurchase Date,
the date by which the Change of Control Offer must be accepted, and the
procedure which the Lender must follow to exercise such right. To accept such
Change of Control Offer, a Lender must deliver, at least two Business Days prior
to the Change of Control Repurchase Date, written notice to Holdings and the
Administrative Agent of the Lender’s exercise of such right.

 

(c)     Notices may be delivered prior to the occurrence of a Change of Control
stating that the Change of Control Offer is conditional on the occurrence of
such Change of Control, and, if applicable, shall state that, in Holding’s
discretion, the Change of Control Repurchase Date may be delayed until such time
as the Change of Control shall occur, or that such repurchase may not occur and
such notice may be rescinded in the event that the Borrower shall determine that
such condition will not be satisfied by the Change of Control Repurchase Date,
or by the Change of Control Repurchase Date as so delayed.

 

 
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Section 6.17     Maintenance of Properties. Each of Holdings and the Borrower
will, and will cause each Restricted Subsidiary to, keep and maintain all
tangible property material to the conduct of its business in good working order
and condition (subject to casualty, condemnation and ordinary wear and tear),
except where the failure to do so could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

Section 6.18     Insurance.

 

(a)     At any time on and after the Closing Date, each of Holdings and the
Borrower will, and will cause each Restricted Subsidiary to, maintain, with
insurance companies that Holdings believes (in the good faith judgment of the
management of Holdings) are financially sound and responsible at the time the
relevant coverage is placed or renewed, insurance in at least such amounts
(after giving effect to any self-insurance which Holdings believes (in the good
faith judgment of management of Holdings) is reasonable and prudent in light of
the size and nature of its business) and against at least such risks (and with
such risk retentions) as Holdings believes (in the good faith judgment or the
management of Holdings) are reasonable and prudent in light of the size and
nature of its business, and will furnish to the Lenders, upon written request
from the Administrative Agent (acting at the direction of the Required Lenders),
information presented in reasonable detail as to the insurance so carried. Each
such general liability policy of insurance shall (i) name the Administrative
Agent, on behalf of the Secured Parties, as an additional insured thereunder as
its interests may appear and (ii) in the case of each casualty insurance policy,
contain a loss payable clause or mortgagee endorsement that names the
Administrative Agent, on behalf of the Lenders as the loss payee or mortgagee
thereunder.

 

(b)     If any portion of any Collateral upon which a “Building” (as defined in
12 CFR Chapter III, Section 339.2) is at any time located is situated in an area
identified by the Federal Emergency Management Agency (or any successor agency)
as a special flood hazard area with respect to which flood insurance has been
made available under the Flood Insurance Laws, then the Borrower shall, or shall
cause each Loan Party to (i) maintain, or cause to be maintained, with a
financially sound and reputable insurer, flood insurance in an amount and
otherwise sufficient to comply with all applicable rules and regulations
promulgated pursuant to the Flood Insurance Laws and (ii) furnish to the
Lenders, upon written request from the Administrative Agent, evidence of such
compliance in form and substance reasonably acceptable to the Administrative
Agent, including, without limitation evidence of annual renewals of such
insurance.

 

Section 6.19     Compliance with Laws. Each of Holdings and the Borrower will,
and will cause each Restricted Subsidiary to, comply with its charter, by-laws
or other organizational documents, and with all applicable laws, orders, writs,
injunctions and orders (including, but not limited to Environmental Laws, and
ERISA), except to the extent that failure to do so would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 6.20     Use of Proceeds. The proceeds of Initial Term Loans under this
Agreement, together with the proceeds from the sale of the New Second Lien Notes
under the New Second Lien Notes Indenture, will be used on the Closing Date to
pay all amounts due to holders of the 2017 Notes in accordance with Section
4.02(j) and the Borrower shall deposit any remaining proceeds on the Closing
Date into the Segregated Account to be used by the Borrower solely to purchase
or redeem (including through a satisfaction and discharge of the relevant
indenture) its 2017 Notes, or as expressly agreed in accordance with Section
9.01 between the Borrower, Holdings and the Lenders, any of the Borrower’s
Indebtedness.

 

 
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Section 6.21     Books and Records. Each of Holdings and the Borrower will, and
will cause each if the Restricted Subsidiaries to maintain proper books of
record and account, in which entries that are full, true and correct in all
material respects and are in conformity with GAAP consistently applied shall be
made of all material financial transactions and matters involving the assets and
business of Holdings, the Borrower or its Restricted Subsidiaries, as the case
may be.

 

Article VII

EVENTS OF DEFAULT AND REMEDIES

 

Section 7.01     Events of Default. “Event of Default” means any one or more of
the following events:

 

(i)     the failure by Holdings, the Borrower and the other Loan Parties to pay
interest on any Loan or any other amount payable hereunder or with respect to
any other Loan Document when the same becomes due and payable and the
continuance of any such failure for a period of five (5) Business Days;

 

(ii)     the failure by Holdings, the Borrower and the other Loan Parties to pay
the principal of any Loan when the same becomes due and payable at maturity,
upon acceleration or otherwise;

 

(iii)     the failure by Holdings, the Borrower or any Restricted Subsidiary to
comply with any of its agreements or covenants in, or provisions of, this
Agreement, the Collateral Documents or the Guarantees and such failure continues
for the period and after the notice specified below (except in the case of a
default under Section 6.11, which will constitute an Event of Default with
notice but without passage of time);

 

(iv)     any event or condition occurs that results in any Indebtedness (other
than Non-Recourse Indebtedness) of Holdings, the Borrower or any Restricted
Subsidiary that has an outstanding principal amount of $40.0 million or more,
individually or in the aggregate, becoming due prior to its scheduled maturity
or that enables or permits (with all applicable grace periods having expired)
the holder or holders of any such Indebtedness or any trustee or agent on its or
their behalf to cause such Indebtedness to become due, or to require the
prepayment, redemption, repurchase or defeasance thereof, prior to its scheduled
maturity, and such event or condition does not cease to exist, or such
Indebtedness is not satisfied, prior to the acceleration of the Loans pursuant
to Section 7.01, provided that this clause (iv) shall not apply to (x)
Indebtedness that becomes due as a result of a Change of Control (to the extent
Holdings or the Borrower has made and consummated a Change of Control Offer) or
the sale, transfer or other disposition of property or assets, if such sale or
transfer is permitted hereunder and under the documents providing for such
Indebtedness or (y) termination events or similar events occurring under any
Hedging Obligations described in the definition of “Permitted Indebtedness”, it
being understood that clause (v) of this Section 7.01 shall apply to any failure
to make any payment required as a result of any such termination or similar
event;

 

(v)     the failure by Holdings, the Borrower or any Restricted Subsidiary to
make any principal or interest payment in an amount of $40.0 million or more,
individually or in the aggregate, in respect of Indebtedness (other than
Non-Recourse Indebtedness) of Holdings, the Borrower or any Restricted
Subsidiary after such principal or interest becomes due and payable (after
giving effect to any applicable grace period set forth in the document governing
such Indebtedness);

 

 
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(vi)     a final judgment or judgments that exceed $40.0 million or more,
individually or in the aggregate, for the payment of money having been entered
by a court or courts of competent jurisdiction against Holdings, the Borrower or
any Restricted Subsidiaries and such judgment or judgments is not satisfied,
stayed, annulled or rescinded within 60 days of being entered;

 

(vii)     Holdings, the Borrower or any Restricted Subsidiary that is a
Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

 

(A)     commences a voluntary case,

 

(B)     consents to the entry of an order for relief against it in an
involuntary case,

 

(C)     consents to the appointment of a Custodian of it or for all or
substantially all of its property, or

 

(D)     makes a general assignment for the benefit of its creditors;

 

(viii)     a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:

 

(A)     is for relief against Holdings, the Borrower or any Restricted
Subsidiary that is a Significant Subsidiary as debtor in an involuntary case,

 

(B)     appoints a Custodian of Holdings, the Borrower or any Restricted
Subsidiary that is a Significant Subsidiary or a Custodian for all or
substantially all of the property of Holdings or any Restricted Subsidiary that
is a Significant Subsidiary, or

 

(C)     orders the liquidation of Holdings, the Borrower or any Restricted
Subsidiary that is a Significant Subsidiary,

 

and the order or decree remains unstayed and in effect for 60 days;

 

(ix)     any Guarantee of a Loan Party that is a Significant Subsidiary ceases
to be in full force and effect (other than in accordance with the terms of this
Agreement) or is declared null and void and unenforceable or found to be invalid
or Holdings or any Subsidiary Guarantor denies its liability under its Guarantee
(other than by reason of release of such Loan Party from its Guarantee in
accordance with the terms of this Agreement);

 

(x)     the Liens created by the Collateral Documents shall at any time not
constitute valid and perfected Liens on any material portion of the Collateral
intended to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required by this Agreement or the
Collateral Documents) other than in accordance with the terms of the relevant
Collateral Document and this Agreement and other than the satisfaction in full
of all Loan Obligations under this Agreement or the release or amendment of any
such Lien in accordance with the terms of this Agreement or the Collateral
Documents, or, except for expiration in accordance with its terms or amendment,
modification, waiver, termination or release in accordance with the terms of
this Agreement and the relevant Collateral Document, any of the Collateral
Documents shall for whatever reason be terminated or cease to be in full force
and effect, if in either case, such default continues for 30 days after notice,
or the enforceability thereof shall be contested by the Borrower or any other
Loan Party;

 

 
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(xi)     any representation, warranty or certification made or deemed made by or
on behalf of the Borrower or any other Loan Party herein, in the Notes, or in
any document required to be delivered in connection herewith or therewith shall
be incorrect or misleading in any material respect (and in any respect if
qualified by materiality) when made or deemed made;

 

(xii)     unless Holdings or the Borrower has made and consummated a Change of
Control Offer, the occurrence of a Change of Control; or

 

(xiii)     any material provision of the Loan Documents (other than as described
in subclause (viii) or subclause (ix) of this Section 7.01) shall for any reason
be asserted by any Loan Party not to be a legal, valid and binding obligation of
any Loan Party thereto other than as expressly permitted hereunder or
thereunder.

 

A Default as described in subclause (iii) of this Section 7.01 will not be
deemed an Event of Default until the Lenders of at least 25 percent in principal
amount of the then outstanding Loans notify Holdings and the Administrative
Agent, of the Default and (except in the case of a Default with respect to
Section 6.11 hereof) Holdings does not cure the Default within 60 days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a “Notice of Default.” If such a Default
is cured within such time period, it ceases to be a Default.

 

If an Event of Default (other than an Event of Default with respect to Holdings
or the Borrower resulting from subclauses (vii) or (viii) of this Section 7.01),
shall have occurred and be continuing under this Agreement, the Administrative
Agent by notice to Holdings, or the Required Lenders by notice to Holdings and
the Administrative Agent, may declare all Loans to be due and payable
immediately. Upon such declaration of acceleration, the amounts due and payable
on the Loans will be due and payable immediately. If an Event of Default with
respect to Holdings or the Borrower specified in subclauses (vii) or (viii) of
this Section 7.01 occurs, such an amount will ipso facto become and be
immediately due and payable without any declaration, notice or other act on the
part of the Administrative Agent and Holdings or any Lender. This provision,
however, is subject to the condition that, if at any time after the unpaid
principal amount (or such specified amount) of the Loans shall have been so
declared due and payable and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Borrower shall pay or shall deposit with the Administrative Agent a sum
sufficient to pay all matured installments of interest, if any, upon all of the
Loans and the principal of all the Loans, which shall have become due otherwise
than by acceleration (with interest on overdue installments of interest, if any,
to the extent that payment of such interest is enforceable under applicable law
and on such principal at the rate borne by the Loans to the date of such payment
or deposit) and the reasonable compensation, disbursements, expenses and
advances of the Administrative Agent and all other amounts due to the
Administrative Agent under Section 2.07 and Section 8.12 and any and all
defaults under this Agreement, other than the nonpayment of such portion of the
principal amount of and accrued interest, if any, on Loans which shall have
become due by acceleration, shall have been cured or shall have been waived in
accordance with Section 9.01 or provision deemed by the Administrative Agent to
be adequate shall have been made therefor, then and in every such case the
Required Lenders, by written notice to the Borrower and to the Administrative
Agent, may rescind and annul such declaration and its consequences; but no such
rescission and annulment shall extend to or shall affect any subsequent default,
or shall impair any right consequent thereon. Notwithstanding the previous
sentence, no waiver shall be effective against any Lender for any Event of
Default or event which with notice or lapse of time or both would be an Event of
Default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Lender of each outstanding Loan affected
thereby, unless all such affected Lenders agree, in writing, to waive such Event
of Default or other event.

 

 
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If the Administrative Agent shall have proceeded to enforce any right under this
Agreement and such proceedings shall have been discontinued or abandoned because
of such rescission or annulment or for any reason or shall have been determined
to be adverse to the Administrative Agent, then and in every such case the
Borrower, the Administrative Agent and the Lenders shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Borrower, the Administrative Agent and the Lenders
shall continue as though no such proceeding had been taken.

 

Except with respect to an Event of Default pursuant to clauses (i) or (ii) of
this Section 7.01, the Administrative Agent shall not be charged with knowledge
of any Event of Default unless written notice thereof shall have been given to a
Responsible Officer of the Administrative Agent by the Borrower or any Lender
and such notice references the Loans and this Agreement.

 

Section 7.02     [Reserved].

 

Section 7.03     Application of Funds. After the exercise of remedies provided
for in Section 7.02 (or after the Loans have automatically become immediately
due and payable and the Term Commitments have automatically terminated as set
forth in the proviso to Section 7.02), any amounts received on account of the
Loan Obligations shall be applied by the Administrative Agent in the following
order:

 

First, to payment of that portion of the Loan Obligations constituting fees,
indemnities, expenses and other amounts (including amounts payable under Article
3, but not including principal of or interest on any Loan) payable to the
Administrative Agent in its capacity as such;

 

Second, to payment of that portion of the Loan Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including amounts payable under Article 3), ratably among them in
proportion to the amounts described in this clause Second payable to them;

 

Third, to payment of that portion of the Loan Obligations constituting accrued
and unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Loan Obligations constituting unpaid
principal of the Loans;

 

Fifth, to the payment of all other Loan Obligations of the Loan Parties that are
due and payable to the Administrative Agent and the other Secured Parties on
such date, ratably based upon the respective aggregate amounts of all such Loan
Obligations owing to the Administrative Agent and the other Secured Parties on
such date; and

 

Last, the balance, if any, after all of the Loan Obligations have been paid in
full, to the Borrower or as otherwise required by Law.

 

 
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Article VIII

ADMINISTRATIVE AGENT AND OTHER AGENTS

 

Section 8.01     Appointment and Authority.

 

(a)     Each of the Lenders hereby irrevocably appoints Wilmington Trust,
National Association to act on its behalf as the Administrative Agent hereunder
and under the other Loan Documents and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers, rights and remedies
as are delegated to the Administrative Agent by the terms hereof or thereof,
together with such actions and powers as are reasonably incidental thereto. In
performing its functions and duties hereunder, the Administrative Agent shall
act solely as an agent of the Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Holdings or any of its Subsidiaries.

 

(b)     The Administrative Agent shall also act as the “collateral agent” under
the Loan Documents, and each of the Lenders hereby irrevocably appoints and
authorizes the Administrative Agent to act as the agent of (and to hold any
security interest created by the Collateral Documents for and on behalf of or on
trust for) such Agent or Lender (i) for purposes of the perfection of all Liens
created by the Loan Documents and all other purposes stated therein, (ii) to
manage, supervise and otherwise deal with the Collateral, (iii) to take such
other action as is necessary or desirable to maintain the perfection and
priority of the Liens created or purported to be created by the Loan Documents
and (iv) except as may be otherwise specified in any Loan Document, to exercise
all remedies given to the Administrative Agent and the other Secured Parties
with respect to the Collateral, whether under the Loan Documents, applicable Law
or otherwise, in each case, together with such powers and discretion as are
reasonably incidental thereto. In this connection, the Administrative Agent, as
“collateral agent” (and any sub-agents appointed by the Administrative Agent
pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the
Collateral (or any portion thereof) granted under the Collateral Documents, or
for exercising any rights and remedies thereunder at the direction of the
Administrative Agent), shall be entitled to the benefits of all provisions of
this Article 8 and Section 8.05 as though such sub-agents were the “collateral
agent” under the Loan Documents and as if the term Administrative Agent included
the “collateral agent” as if set forth in full herein with respect thereto.

 

(c)     Each Lender irrevocably authorizes the Administrative Agent to enter
into any and all of the Collateral Documents together with such other documents
as shall be necessary to give effect to the Lien on the Collateral contemplated
by the other Collateral Documents, on its behalf. The Administrative Agent shall
have only those duties and responsibilities that are expressly specified herein
and the other Loan Documents to which it is a party. The Administrative Agent
may exercise such powers, rights and remedies and perform such duties by or
through its agents or employees. The Administrative Agent’s duties hereunder
shall be entirely administrative in nature. The Administrative Agent (i) is not
assuming any obligation under any Loan Document other than as expressly set
forth therein and (ii) shall not have implied functions, responsibilities,
duties, obligations or other liabilities under any Loan Document, and each
Lender hereby waives and agrees not to assert any claim against the
Administrative Agent based on the roles, duties and legal relationships
expressly disclaimed in this or the immediately preceding sentence or in Section
8.03. The Administrative Agent shall not have, by reason hereof or any of the
other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing herein or any of the Loan Documents, expressed or implied, is intended
to or shall be so construed as to impose upon the Administrative Agent any
obligations in respect hereof or any of the other Loan Documents except as
expressly set forth herein or therein. Any action taken by the Administrative
Agent in reliance upon the instructions of the Required Lenders (or, where so
required by Section 9.01, such greater proportion of Lenders) and the exercise
by the Administrative Agent of the powers set forth herein or in the other Loan
Documents, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all of the Secured Parties.

 

 
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Section 8.02     Rights as a Lender. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Administrative Agent in its individual capacity as a
Lender hereunder. The Person serving as the Administrative Agent hereunder
shall, if it is a Lender, have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, own
securities of, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of banking, trust or other business with
Holdings or any Subsidiary or other Affiliate thereof as if such Person were not
the Administrative Agent hereunder and may accept fees and other consideration
from the Borrower for services in connection herewith and otherwise without any
duty to account therefor to the Lenders. The Lenders acknowledge that pursuant
to such activities, the Administrative Agent and its Related Parties may receive
information regarding any Loan Party or any Affiliate of any Loan Party
(including information that may be subject to confidentiality obligations in
favor of such Loan Party or such Affiliate) and acknowledge that the
Administrative Agent and its Related Parties shall be under no obligation to
provide such information to them.

 

Section 8.03     Exculpatory Provisions. No Agent shall have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents to which it is a party. Without limiting the generality of the
foregoing, the Administrative Agent:

 

(a)     shall not be subject to any fiduciary or other implied (or express)
duties or obligations arising under the agency doctrine of any applicable Law or
otherwise, regardless of whether a Default has occurred and is continuing;

 

(b)     notwithstanding anything herein to the contrary, the Administrative
Agent shall not be required to take any action (or omit to take any action)
that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or
applicable Laws or if the Administrative Agent is not indemnified to its
satisfaction; and

 

(c)     shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by the Person serving as the Administrative Agent
or any Agent-Related Person in any capacity.

 

The Administrative Agent and the Agent-Related Persons shall not be liable for
any action taken or not taken by it or them (i)(A) under or in connection with
any of the Loan Documents or (B) with the consent or at the request of the
Required Lenders (or such other number or percentage of Lenders as shall be
necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances provided in Section 7.02 and 9.01) or (ii) in
the absence of its own gross negligence, or willful misconduct; provided, that
the Administrative Agent shall be deemed not to have knowledge of any Default or
Event of Default unless and until notice describing such Default or Event of
Default and stating it is a “notice of default” is given to the Administrative
Agent by the Borrower or a Lender; provided, further, that in the event the
Administrative Agent shall receive such a notice, the Administrative Agent shall
give notice thereof to the Lenders; it being understood that the failure to give
such notice shall not result in any liability on the part of the Administrative
Agent.

 

 
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The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the representations, warranties, covenants, agreements or
other terms or conditions set forth herein or therein or the occurrence of any
Default, (iv) the execution, validity, enforceability, effectiveness,
genuineness, collectability or sufficiency of this Agreement, any other Loan
Document or any other agreement, instrument or document or the creation,
perfection or priority of any Lien purported to be created by the Loan
Documents, (v) the value or the sufficiency of any Collateral, (vi) the
financial condition or business affairs of any Loan Party or any other Person
liable for the payment of any Loan Obligations or as to the use of the proceeds
of the Loans, (vii) the properties, books or records of any Loan Party,
(viii) the existence or possible existence of any Event of Default or Default or
(ix) the satisfaction of any condition set forth in Article 4 or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

 

The Administrative Agent shall not have any liability arising from confirmations
of the amount of outstanding Loans or the component amounts thereof.

 

Administrative Agent shall not be required to exercise any discretion or take,
or to omit to take, any action, including with respect to enforcement or
collection unless Administrative Agent has received satisfactory instructions
from the Required Lenders (or, where expressly required by the terms of this
Agreement, a greater proportion of the Lenders, it being understood, however,
that with regards to enforcement actions following an Event of Default, the
Administrative Agent shall be entitled to act upon the direction of the Required
Lenders), and, if necessary in the Administrative Agent’s opinion, satisfactory
indemnity and security. Phrases such as “satisfactory to the Administrative
Agent”, “approved by the Administrative Agent”, “acceptable to the
Administrative Agent”, “as determined by the Administrative Agent”, “in the
Administrative Agent’s discretion”, “selected by the Administrative Agent”, and
phrases of similar import authorize and permit the Administrative Agent to
approve, disapprove, determine, act or decline to act in its discretion, it
being understood that the Administrative Agent in exercising such discretion
under the Loan Documents shall be acting on the instructions of the Required
Lenders (or Lenders to the extent required hereunder) and shall be fully
protected in, and shall incur no liability in connection with, acting or failing
to act (or failing to act while awaiting such direction) pursuant to such
instructions.

 

The Administrative Agent shall never be required to use, risk or advance its own
funds or otherwise incur financial liability in the performance of any of its
duties or the exercise of any of its rights and powers hereunder (including, but
not limited to, no obligation to grant any credit extension or to make any
advance hereunder).

 

Neither the Administrative Agent nor any Agent-Related Person shall be
responsible for delays or failures in performance resulting from acts beyond its
control. Such acts shall include but not be limited to acts of God, strikes,
lockouts, riots, acts of war, epidemics, governmental regulations superimposed
after the fact, fire, communication line failures, computer viruses, power
failures, earthquakes, terrorist attacks or other disasters

 

 
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The permissive authorizations, entitlements, powers and rights (including the
right to request that the Borrower take an action or deliver a document and the
exercise of remedies following an Event of Default) granted to the
Administrative Agent herein shall not be construed as duties. The Administrative
Agent shall have no responsibility for interest or income on any funds held by
it hereunder and any funds so held shall be held un-invested pending
distribution thereof.

 

Notwithstanding anything herein to the contrary, the Administrative Agent shall
not have any duty to (i) file or prepare any financing or continuation
statements or record any documents or instruments in any public office for
purposes of creating, perfecting or maintaining any Lien or security interest
created under the Loan Documents; (ii) take any necessary steps to preserve
rights against any parties with respect to any Collateral; or (iii) take any
action to protect against any diminution in value of the Collateral.

 

Section 8.04     Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition
hereunder to the making of a Loan, that by its terms must be fulfilled to the
satisfaction of a Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender unless the Administrative Agent shall
have received notice to the contrary from such Lender prior to the making of
such Loan. The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants, experts or
professional advisors. No Lender shall have any right of action whatsoever
against the Administrative Agent as a result of the Administrative Agent acting
or refraining from acting hereunder or under any of the other Loan Documents in
accordance with the instructions of Required Lenders (or such other number or
percentage of the Lenders as shall be expressly provided for herein or in the
other Loan Documents). If at any time the Administrative Agent is served with
any judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process which in any way affects the Collateral
(including, but not limited to, orders of attachment or garnishment or other
forms of levies or injunctions or stays relating to the transfer of the
Collateral), the Administrative Agent is authorized to comply therewith in any
manner as it or its legal counsel of its own choosing deems appropriate; and if
the Administrative Agent complies with any such judicial or administrative
order, judgment, decree, writ or other form of judicial or administrative
process, the Administrative Agent shall not be liable to any of the parties
hereto or to any other person or entity even though such order, judgment,
decree, writ or process may be subsequently modified or vacated or otherwise
determined to have been without legal force or effect.

 

Section 8.05     Delegation of Duties. The Administrative Agent may perform any
and all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by the
Administrative Agent and shall not be responsible for the acts of any such party
appointed with due care. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory, indemnification and
other provisions of this Article 8 shall apply to any such sub-agent and its
Related Parties and to the Agent-Related Persons in any role or capacity, and
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as
Administrative Agent. All of the rights, benefits and privileges (including the
exculpatory and indemnification provisions) of this Article 8 shall apply to any
such sub-agent and to the Related Parties of any such sub-agent, and shall apply
to their respective activities as sub-agent as if such sub-agent and Related
Parties were named herein. Notwithstanding anything herein to the contrary, with
respect to each sub-agent appointed by the Administrative Agent, (i) such
sub-agent shall be a third party beneficiary under this Agreement with respect
to all such rights, benefits and privileges (including exculpatory rights and
rights to indemnification) and shall have all of the rights and benefits of a
third party beneficiary, including an independent right of action to enforce
such rights, benefits and privileges (including exculpatory rights and rights to
indemnification) directly, without the consent or joinder of any other Person,
against any or all of the Loan Parties and the Lenders, (ii) such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) shall not be modified or amended without the consent of such
sub-agent and (iii) such sub-agent shall only have obligations to the
Administrative Agent and not to any Loan Party, Lender or any other Person and
no Loan Party, Lender or other Person shall have any rights, directly or
indirectly, as a third party beneficiary or otherwise against such sub-agent.

 

 
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Section 8.06     Resignation of Administrative Agent: Appointment of Successor.
The Administrative Agent may at any time resign or, if it is a Defaulting Lender
pursuant to clause (iv) of the definition thereof, be removed by the Borrower
upon ten (10) days’ prior written notice of such resignation or removal to the
Lenders and the Borrower. Upon receipt of any such notice of resignation or
removal, the Required Lenders shall have the right, with the consent of the
Borrower (such consent not to be unreasonably withheld, conditioned or delayed
and provided that no consent of the Borrower shall be required if an Event of
Default has occurred and is continuing), to appoint a successor Administrative
Agent which shall be a commercial bank or trust company with offices in the U.S.
having combined capital and surplus in excess of $100,000,000. If no such
successor shall have been so appointed by the Required Lenders and accepted such
appointment within thirty (30) days after notice of the Administrative Agent’s
resignation or removal, then, (i) in the case of a resignation of the
Administrative Agent, the resigning Administrative Agent with the consent of the
Borrower (such consent not to be unreasonably withheld, or delayed; provided
that no consent of the Borrower shall be required if an Event of Default has
occurred and is continuing) or (ii) in the case of a removal of the
Administrative Agent, the Borrower, may, with the consent of the Required
Lenders, on behalf of the Lenders, appoint a successor Administrative Agent;
provided that if no qualifying Person has accepted such appointment, then such
resignation or removal shall nonetheless become effective after such thirty-day
period and (1) the retiring or removed Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents
(except that in the case of any possessory Collateral held by the Administrative
Agent on behalf of the Lenders the retiring Administrative Agent shall continue
to hold such Collateral until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations provided to
be made by, to or through the Administrative Agent shall instead be made by or
to each Lender directly (and each Lender will cooperate with the Borrower to
enable the Borrower to take such actions), until such time as the Required
Lenders appoint a successor Administrative Agent as provided for above in this
paragraph. Upon the acceptance of a successor’s appointment as Administrative
Agent hereunder, such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring (or retired) or
removed Administrative Agent, and the retiring (or retired) or removed
Administrative Agent shall be discharged from all of its duties and obligations
hereunder and under the other Loan Documents (if not already discharged
therefrom as provided above in this paragraph) other than its obligations under
Section 9.08. The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrower and such successor. After the resignation or removal
of the Administrative Agent hereunder and under the other Loan Documents, the
provisions of this Article 8 and Section 9.05 shall continue in effect for the
benefit of such retiring or removed Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while the retiring or removed Administrative Agent was
acting as the Administrative Agent.

 

 
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Section 8.07     Non-Reliance on Administrative Agent and Other Lenders. Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement, made its own
independent investigation of the financial condition and affairs of Holdings and
its Subsidiaries in connection with Borrowings hereunder, and made and shall
continue to make its own appraisal of the creditworthiness of Holdings and its
Subsidiaries. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in taking
or not taking action under or based upon this Agreement, any other Loan Document
or any related agreement or any document furnished hereunder or thereunder. The
Administrative Agent shall not have any duty or responsibility, either initially
or on a continuing basis, or otherwise, to make any such investigation or any
such appraisal on behalf of the Lenders or to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter, and the
Administrative Agent shall not have any responsibility with respect to the
accuracy or completeness of any information provided to the Lenders. Except for
documents expressly required by this Agreement to be transmitted by the
Administrative Agent to the Lenders, the Administrative Agent shall not have any
duty or responsibility to provide any Secured Party with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any Loan Party or any Affiliate of
any Loan Party that may come in to the possession of the Administrative Agent or
any of its Related Parties.

 

Section 8.08     Collateral and Guarantee Matters. The Lenders irrevocably
authorize the Administrative Agent to, and the Administrative Agent shall:

 

(a)     release any Lien on any property granted to or held by the
Administrative Agent under any Loan Document (i) on the date upon which all of
the Loan Obligations (other than contingent obligations not yet accrued and
payable) have been paid in full in cash, the Aggregate Commitments have expired
or have been terminated (such date, the “Termination Date”), (ii) with respect
to any property constituting Collateral that (x) is sold, transferred or
otherwise disposed of by the Borrower, Holdings or any other Loan Party to any
Person other than a Loan Party (but excluding any transaction where the
recipient is required to become a Loan Party) in a transaction permitted by this
Agreement and the Collateral Documents, at the time of such sale or disposition,
to the extent of the interest sold or disposed of or (y) is owned or at any time
acquired by a Restricted Subsidiary that has been released from its Guarantee,
concurrently with the release of such Guarantee, (iii) subject to Section 9.01,
if approved, authorized or ratified in writing by the Required Lenders or such
other number or percentage of Lenders required by Section 9.01, (iv) owned by a
Guarantor upon release of such Guarantor from its obligations under its
Guarantee pursuant to clause (c) below or (v) as expressly provided in the
Collateral Documents;

 

(b)     [Reserved];

 

(c)     execute any documents and instruments reasonably requested by the
Borrower to evidence the release of any Guarantor from its obligations under the
Guarantee if (i) all or substantially all of the assets of any Guarantor other
than Holdings or all of the Capital Stock of any Guarantor other than Holdings
is sold (including by consolidation, merger, issuance or otherwise) or disposed
of (including by liquidation, dissolution or otherwise) by Holdings or any of
its Subsidiaries, (ii) unless Holdings elects otherwise, any Guarantor other
than Holdings is designated an Unrestricted Subsidiary in accordance with the
terms of this Agreement, (iii) such Person ceases to be a Restricted Subsidiary
or becomes an Excluded Subsidiary as a result of a transaction or designation
permitted hereunder (it being understood that, in each case under this clause
(c), any such Person shall be automatically and unconditionally released and
discharged from all obligations under its Guarantee upon notice from Borrower to
the Administrative Agent to such effect, without any further action required on
the part of the Administrative Agent or any Lender), in each case, only to the
extent such transaction is in compliance with the Loan Documents;

 

 
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(d)     upon receipt of an Officer’s Certificate stating that such Indebtedness
(or Liens securing such Indebtedness, if applicable) is permitted under the Loan
Documents, enter into intercreditor agreements or arrangements (including any
amendment, supplement or other modification of any Collateral Document to add or
provide for additional secured parties) with respect to Indebtedness (or Liens
securing such Indebtedness) that is required or permitted to be pari passu with
or subordinated to the Loan Obligations (or the Liens securing the Loan
Obligations) pursuant to Section 6.03; and

 

(e)     release the Borrower from its obligations under the Loan Documents,
without the consent of the Lenders, if: (1) Holdings or any successor to
Holdings has assumed the obligations of the Borrower under the Loan Documents,
by executing and delivering documentation that is reasonably satisfactory in
form to the Administrative Agent and the Required Lenders, (2) the Borrower
shall execute a Guarantee, (3) Holdings delivers an Opinion of Counsel to the
Administrative Agent and the Required Lenders that such Guarantee is permitted
by the terms of this Agreement, and has been duly authorized, executed and
delivered by the Borrower and constitutes a valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with its terms (subject
to customary exceptions), until such time, if any, such Guarantee may be
released pursuant to the terms of this Agreement, and that all conditions
precedent (if any) to the execution of such Guarantee provided for in this
Agreement have been complied with and (3) any other Loan party shall provide any
affirmation or Collateral Documents reasonably requested by the Administrative
Agent or the Required Lenders.

 

In each case as specified in this Section 8.08, upon receipt of an Officer’s
Certificate, the Administrative Agent will (and each Lender hereby authorizes
the Administrative Agent to), at the Borrower’s expense, deliver, upon the
request of the applicable Loan Party, to such Loan Party or any designee of such
Loan Party any certificates, powers or other physical collateral held by it and
relating to such item of Collateral (but subject to the requirements of any
applicable intercreditor agreement) and execute and deliver to the applicable
Loan Party such documents as such Loan Party may reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents, release such Guarantor from its
obligations under the Guarantee or execute and deliver the agreements described
in clause (d) above, in each case, in accordance with the terms of the Loan
Documents and this Section 8.08; provided that the Borrower shall have delivered
to the Administrative Agent (i) a certificate of a Responsible Officer of the
Borrower certifying that any such transaction has been consummated in compliance
with this Agreement and the other Loan Documents as the Administrative Agent
shall reasonably request and (ii) an Opinion of Counsel confirming that such
release is permitted by Section 8.08.

 

Each Secured Party hereby further authorizes the Administrative Agent on behalf
of and for the benefit of the Secured Parties, (a) to be the agent for and
representative of the Secured Parties with respect to the Collateral and the
Collateral Documents, (b) to enter into any applicable intercreditor agreement
contemplated hereby and (c) to take any actions thereunder as determined by the
Administrative Agent to be necessary or advisable. Each Secured Party hereby
further authorizes the Administrative Agent on behalf of and for the benefit of
the Secured Parties to enter into any other intercreditor agreement reasonably
required by the Loan Documents, and each Secured Party agrees to be bound by the
terms of such intercreditor agreement.

 

 
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Anything contained in any of the Loan Documents to the contrary notwithstanding,
the Borrower, the Administrative Agent and each Secured Party hereby agree that
(i) unless the Administrative Agent consents thereto, no Secured Party shall
have any right individually to realize upon any of the Collateral or to enforce
the Loan Documents, it being understood and agreed that all powers, rights and
remedies hereunder may be exercised solely by the Administrative Agent on behalf
of itself and the Lenders in accordance with the terms hereof and all powers,
rights and remedies under the Collateral Documents may be exercised solely by
the Administrative Agent on behalf of the Secured Parties, and (ii) in the event
of a foreclosure by the Administrative Agent on any of the Collateral pursuant
to a public or private sale or other disposition, the Administrative Agent or
any Lender may be the purchaser or licensor of any or all of such Collateral at
any such sale or other disposition and the Administrative Agent, as agent for
and representative of the Secured Parties (but not any Lender or Lenders in its
or their respective individual capacities unless the Administrative Agent shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Loan
Obligations as a credit on account of the purchase price for any collateral
payable by the Administrative Agent at such sale or other disposition.

 

Section 8.09     [Reserved]

 

Section 8.10     Appointment of Supplemental Administrative Agents.

 

(a)     It is the purpose of this Agreement and the other Loan Documents that
there shall be no violation of any Law of any jurisdiction denying or
restricting the right of banking corporations or associations to transact
business as agent or trustee in such jurisdiction. It is recognized that in case
of litigation under this Agreement or any of the other Loan Documents, and in
particular in case of the enforcement of any of the Loan Documents, or in case
the Administrative Agent deems that by reason of any present or future Law of
any jurisdiction it may not exercise any of the rights, powers or remedies
granted herein or in any of the other Loan Documents or take any other action
which may be desirable or necessary in connection therewith, the Administrative
Agent is hereby authorized to appoint an additional individual or institution
selected by the Administrative Agent in its sole discretion as a separate
trustee, co-trustee, administrative agent, collateral agent, administrative
sub-agent or administrative co-agent (any such additional individual or
institution being referred to herein individually as a “Supplemental
Administrative Agent” and collectively as “Supplemental Administrative Agents”).

 

(b)     In the event that the Administrative Agent appoints a Supplemental
Administrative Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to the
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Administrative Agent to the extent, and only to the
extent, necessary to enable such Supplemental Administrative Agent to exercise
such rights, powers and privileges with respect to such Collateral and to
perform such duties with respect to such Collateral, and every covenant and
obligation contained in the Loan Documents and necessary to the exercise or
performance thereof by such Supplemental Administrative Agent shall run to and
be enforceable by either the Administrative Agent or such Supplemental
Administrative Agent, and (ii) the provisions of this Article 8 and of Section
9.05 (obligating the Borrower to pay the Administrative Agent’s expenses and to
indemnify the Administrative Agent) that refer to the Administrative Agent shall
inure to the benefit of such Supplemental Administrative Agent and all
references therein to the Administrative Agent shall be deemed to be references
to the Administrative Agent and/or such Supplemental Administrative Agent, as
the context may require.

 

 
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(c)     Should any instrument in writing from the Borrower or any other Loan
Party be required by any Supplemental Administrative Agent so appointed by the
Administrative Agent for more fully and certainly vesting in and confirming to
it such rights, powers, privileges and duties, the Borrower shall, or shall
cause such Loan Party to, execute, acknowledge and deliver any and all such
instruments promptly upon request by the Administrative Agent. In case any
Supplemental Administrative Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Administrative Agent, to the extent permitted by
Law, shall vest in and be exercised by the Administrative Agent until the
appointment of a new Supplemental Administrative Agent.

 

(d)     No Administrative Agent shall be responsible for the actions of any
other administrative agent appointed pursuant to this Section 8.10.

 

Section 8.11     Administrative Agent May File Proofs of Claim. In case of the
pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)     to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Loan Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 2.07) allowed in such judicial proceeding;
and

 

(b)     to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such
payments to the Administrative Agent and, if the Administrative Agent shall
consent to the making of such payments directly to the Lenders, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Section 2.07.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the Loan
Obligations or the rights of any Lender to authorize the Administrative Agent to
vote in respect of the claim of any Lender or in any such proceeding.

 

Section 8.12     Indemnification of Administrative Agent. Each Lender, on a pro
rata basis, based on its Aggregate Exposure Percentage, severally (but not
jointly) agrees to indemnify the Administrative Agent and its Related Parties,
to the extent that the Administrative Agent or its Related Parties shall not
have been reimbursed by any Loan Party, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including Attorney Costs (which shall be limited to one (1) counsel,
at any given time, to the Administrative Agent, and if reasonably necessary, one
(1) local counsel, at any given time, to the Administrative Agent in each
relevant jurisdiction)) or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or on behalf of or asserted against the
Administrative Agent or its Related Parties (solely to the extent such Related
Party was performing services on behalf of the Administrative Agent) in
exercising its powers, rights and remedies or performing its duties hereunder or
under the other Loan Documents or otherwise in its capacity as the
Administrative Agent in any way relating to or arising out of this Agreement or
the other Loan Documents; provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent’s or its Related Parties’, as applicable, gross negligence
or willful misconduct, as determined by a court of competent jurisdiction in a
final and non-appealable judgment.

 

 
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In addition, each Lender hereby severally (but not jointly) agrees to reimburse
the Administrative Agent and each of its Related Parties promptly upon demand
for such Lender’s pro rata share based on its Aggregate Exposure Percentage of
any costs and expenses (including Attorney Costs (which shall be limited to one
(1) counsel, at any given time, to the Administrative Agent, and if reasonably
necessary, one (1) local counsel, at any given time, to the Administrative Agent
in each relevant jurisdiction)) that may be incurred by the Administrative Agent
or any of its Related Parties, to the extent not reimbursed by a Loan Party, in
connection with the preparation, syndication, execution, delivery,
administration, modification, consent, waiver or enforcement (whether through
negotiations, through any work-out, bankruptcy, restructuring or other legal or
other proceeding or otherwise) of, or legal advice in respect of its rights or
responsibilities under, any Loan Document.

 

Section 8.13     Agency for Perfection. The Administrative Agent hereby
appoints, authorizes and directs each Secured Party to act as collateral
sub-agent for the Administrative Agent and the other Secured Parties for
purposes of the perfection of all Liens with respect to the Collateral,
including any deposit account maintained by a Loan Party with, and cash and Cash
Equivalents held by, such Secured Party, and may further authorize and direct
such Secured Party to take further actions as collateral sub-agents for purposes
of enforcing such Liens or otherwise to transfer the Collateral subject thereto
to the Administrative Agent, and each Secured Party hereby agrees to take such
further actions to the extent, and only to the extent, so authorized and
directed. For the avoidance of doubt, nothing in this Section 8.13 is intended
to require the parties hereto to enter into any account control agreements not
otherwise required hereunder. For the avoidance of doubt, any Secured Party that
is appointed as a collateral sub-agent for the Administrative Agent shall be
entitled to the benefits set forth in Section 8.05.

 

Article IX

MISCELLANEOUS

 

Section 9.01     Amendments, Etc.. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders (or by the Administrative Agent with the
consent of the Required Lenders) and the Borrower or the applicable Loan Party,
as the case may be, and each such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided
that no such amendment, waiver or consent shall:

 

(a)     extend or increase the Term Commitment of any Lender without the written
consent of such Lender (it being understood that a waiver of any condition
precedent set forth in Section 4.02, or the waiver of any non-monetary Default
or Event of Default shall not constitute an extension or increase of any Term
Commitment of any Lender);

 

 
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(b)     postpone any date scheduled for any payment of principal, premium,
interest or fees, without the written consent of each Lender directly and
adversely affected thereby (it being understood that a waiver of any
non-monetary Default or Event of Default shall not constitute a postponement of
any date scheduled for any payment of principal, premium, interest or fees);

 

(c)     reduce or forgive the principal of, or the rate of interest specified
herein on, any Loan or (subject to clause (iii) of the second proviso to this
Section 9.01) reduce or forgive any fees or premium payable hereunder or under
any other Loan Document without the written consent of each Lender directly and
adversely affected thereby; provided that only the consent of the Required
Lenders shall be necessary to amend the definition of “Default Rate” or to waive
any obligation of the Borrower to pay interest at the Default Rate;

 

(d)     change any provision of this Section 9.01 without the written consent of
each Lender directly and adversely affected thereby; provided that the consent
of each Lender shall be required to reduce the voting percentage set forth in
the definition of “Required Lenders” or Section 9.07(a) (solely with regard to
the ability of the Borrower to assign or otherwise transfer any of its rights or
obligations hereunder);

 

(e)     release all or substantially all of the Collateral in any transaction or
series of related transactions (it being understood that a transaction permitted
under Section 6.07 or Section 6.11 shall not constitute the release of all or
substantially all of the Collateral); provided that the unused Term Commitment
and the portion of the Total Outstandings held or deemed held by any Defaulting
Lender shall be excluded for purposes of making such determination;

 

(f)     other than in connection with a transaction permitted under Section 6.07
or Section 6.11, release all or substantially all of the aggregate value of the
Guarantees; provided that the unused Term Commitment and the portion of the
Total Outstandings held or deemed held by any Defaulting Lender shall be
excluded for purposes of making such determination;

 

(g)     except as necessary or advisable to carry out the express intent of
sections of this Agreement (including, without limitation, Section 2.13, Section
2.14 and Section 9.01) permitting the addition of Classes of Loans or Term
Commitments that may be incurred on a pari passu or junior basis in right of
payment and/or Lien priority to the then-existing Loans and/or Term Commitments,
or amend Section 7.03 or Section 2.10(f) in a manner that directly and adversely
affects any Class without the consent of Lenders of such Class; and

 

(h)     except as expressly set forth herein (including, without limitation,
Section 2.13, Section 2.14 or this Section 9.01), amend Section 2.10(a) or
Section 2.11 without the consent of each Lender directly and adversely affected
thereby (it being understood that Section 2.13, Section 2.14 and Section 9.07
may be amended with the consent of the Required Lenders only).

 

and provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of, or any fees or other amounts
payable to, the Administrative Agent under this Agreement or any other Loan
Document (it being understood that the Required Lenders may agree to grant
forbearance without the consent of the Administrative Agent, so long as such
forbearance is not related to any rights of the Administrative Agent).
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that (x) the Term Commitment of such Lender may not be increased or
extended without the consent of such Lender and (y) the principal and accrued
and unpaid interest of such Lender’s Loans shall not be reduced or forgiven
without the consent of such Lender.

 

 
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Notwithstanding the foregoing, this Agreement may be amended (or amended and
restated) with the written consent of the Required Lenders, the Administrative
Agent and the Borrower (a) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof to
share ratably in the benefits of this Agreement and the other Loan Documents
with any Term Loans and the accrued interest and fees in respect thereof and
(b) to include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders.

 

In addition, notwithstanding the foregoing, this Agreement may be amended with
the written consent of the Administrative Agent, the Borrower and the
Refinancing Term Lenders (and no other Lenders) of the applicable Refinancing
Term Loan Series providing such Refinancing Term Loans in connection with any
refinancing facilities permitted pursuant to Section 2.14.

 

In addition, notwithstanding anything to the contrary contained in this Section
9.01 or any Loan Document, (a) the Borrower and the Administrative Agent may,
without the input or consent of any other Lender, (i) effect amendments to this
Agreement and the other Loan Documents as may be necessary in the reasonable
opinion of the Borrower and the Administrative Agent to effect the provisions of
Sections 2.13 or 2.14 (provided, that the consents of any applicable Lender
shall be required, to the extent specified in Sections 2.13, or 2.14), (ii)
evidence the succession of another Person to the Borrower or Holdings or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Borrower or Holdings herein, (iii)
add to the covenants of the Borrower or Holdings such further covenants,
restrictions, conditions or provisions for the protection of the Lenders, or to
surrender any right or power herein conferred upon the Borrower or Holdings, and
to make the occurrence, or the occurrence and continuance, of a default in any
such additional covenants, restrictions, conditions or provisions an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, however, that in
respect of any such additional covenants, restrictions, conditions or provisions
such amendment, supplemented Agreement or waiver may provide for a particular
period of grace after default (which period may be shorter or longer than that
allowed in the case of other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may limit the remedies available to
the Administrative Agent upon such an Event of Default or may limit the right of
Required Lenders to waive such an Event of Default, (iv) evidence and provide
for the acceptance of appointment hereunder by a successor or replacement
Administrative Agent or under the Collateral Documents, (v) to provide for any
Guarantee, (vi) to add security to or for the benefit of the Loans and, in the
case of the Collateral Documents, to or for the benefit of the other secured
parties named therein, or to confirm and evidence the release, termination or
discharge of any Guarantee of the Loans or Lien securing the Loans or any
Guarantee when such release, termination or discharge is permitted by this
Agreement and the Collateral Documents, (vi) [reserved], (b) if the
Administrative Agent and the Borrower have jointly identified an obvious error,
ambiguity, defect, inconsistency or any error or omission of a technical nature,
in each case, in any provision of the Loan Documents, then the Administrative
Agent and the Borrower shall be permitted to amend such provision and
(c) guarantees, collateral security documents and related documents executed by
Subsidiaries in connection with this Agreement may be in a form reasonably
determined by the Administrative Agent and may be amended, supplemented or
waived without the consent of any Lender if such amendment, supplement or waiver
is delivered in order to (x) comply with local Law, (y) cure ambiguities,
omissions, mistakes or defects or (z) cause such guarantee, collateral security
document or other document to be consistent with this Agreement and the other
Loan Documents.

 

 
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Section 9.02     Notices and Other Communications; Facsimile Copies.

 

(a)     General. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder or any other Loan Document shall be
in writing (including by facsimile or other electronic transmission). All such
written notices shall be mailed, faxed or delivered (including electronically)
to the applicable address, facsimile number or electronic mail address, as
follows:

 

(i)     if to the Borrower or the Administrative Agent, to the address,
facsimile number or electronic mail address specified for such Person on
Schedule 9.02 or to such other address, facsimile number or electronic mail
address as shall be designated by such party in a notice to the other parties;
and

 

(ii)     if to any other Lender, to the address, facsimile number or electronic
mail address specified in its Administrative Questionnaire or to such other
address, facsimile number or electronic mail address as shall be designated by
such party in a notice to the Borrower and the Administrative Agent.

 

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto, (B) if delivered by mail, four (4) Business Days
after deposit in the mail, postage prepaid, (C) if delivered by facsimile, when
sent and receipt has been confirmed, and (D) if delivered by electronic mail,
when delivered; provided that notices and other communications to the
Administrative Agent pursuant to Article 2 shall not be effective until actually
received by such Person. In no event shall a telephone or voice-mail message be
effective as a notice, communication or confirmation hereunder; provided,
however, this sentence shall not limit Section 8.04.

 

(b)     Effectiveness of Facsimile or Other Electronic Documents and Signatures.
Loan Documents may be transmitted and/or signed by facsimile or other electronic
transmission (including portable document format). The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually signed originals and shall be binding on all Loan
Parties, the Agents and the Lenders. The Administrative Agent may also require
that any such documents and signatures be confirmed by a manually signed
original thereof; provided that the failure to request or deliver the same shall
not limit the effectiveness of any facsimile or other electronic document or
signature.

 

(c)     Reliance by Agents and Lenders. The Administrative Agent and the Lenders
shall be entitled to rely and act upon any notices (including telephonic Loan
Notices) purportedly given by or on behalf of the Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrower shall indemnify each Agent-Related Person and each Lender
from all losses, costs, expenses and liabilities resulting from the reliance by
such Person on each notice purportedly given by or on behalf of the Borrower in
accordance with Section 9.05.

 

 
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Section 9.03     No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided, and provided under
each other Loan Document, are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by Law.

 

Section 9.04     Expenses. Holdings and the Borrower, jointly and severally,
agree to reimburse (a) the Administrative Agent in accordance with a separately
agreed to fee letter and (b) the Initial Term Lenders (i) promptly after the
date of this Agreement for all reasonable and documented costs and expenses
(including reasonable fees and expenses of one counsel and, if reasonably
required by the Initial Term Lenders, one local counsel in a jurisdiction)
incurred by the Initial Term Lenders in connection with the transactions
contemplated by this Agreement; provided that all costs, fees and expenses
payable by Holdings and the Borrower pursuant to this Section 9.04(b)(i),
Section 9.01(a) of the Note Purchase Agreement and Section 9.01(a) of the
Exchange Agreement shall not exceed, in the aggregate, $750,000, and (ii) within
ten (10) Business Days after written demand therefor all reasonable and
documented legal fees and expenses of one counsel (and, if reasonably required
by the Initial Term Lenders, one local counsel in a jurisdiction) incurred in
respect of post-closing collateral matters; provided that all fees and expenses
payable by Holdings and the Borrower pursuant to this Section 9.04(b)(ii),
Section 9.01(b) of the Note Purchase Agreement and Section 9.01(b) of the
Exchange Agreement shall not exceed, in the aggregate, $250,000.

 

 
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Section 9.05     Indemnification by the Borrower. The Borrower shall indemnify
and hold harmless the Administrative Agent, each Lender and their respective
Affiliates and their and their respective Affiliates’ directors, officers,
employees, controlling persons, counsel, agents, attorneys-in-fact, trustees and
advisors (collectively the “Indemnitees”) from and against any and all
liabilities, losses, damages, claims and expenses (including Attorney Costs
(which shall be limited to one (1) counsel, at any given time, to the
Administrative Agent and one (1) additional counsel for all other Indemnitees
taken as a whole and solely in the case of a conflict of interest among or
between Indemnitees, one (1) additional counsel to all similarly affected
Indemnitees taken as a whole, and if reasonably necessary, one (1) local
counsel, at any given time, to the Administrative Agent in each relevant
jurisdiction and one (1) additional local counsel for all other Indemnitees
taken as a whole in each relevant jurisdiction (which may include a single
special counsel acting in multiple jurisdictions), and solely in the case of a
conflict of interest, one (1) additional local counsel to all similarly affected
Person, taken as a whole)) of any kind or nature whatsoever which may at any
time be imposed on, incurred by or asserted against any such Indemnitee, in each
case, in any way relating to or arising out of or in connection with (a) the
execution, delivery, enforcement, performance or administration of any Loan
Document or any other agreement, letter or instrument delivered in connection
with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby (including the Tender Offer and Consent
Solicitation), (b) any Term Commitment or Loan or the use or proposed use of the
proceeds therefrom, or (c) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (and
regardless of whether such matter is instituted by a third party or by the
Borrower or any other Loan Party) (all the foregoing, collectively, the
“Indemnified Liabilities”), in all cases, whether or not caused by or arising,
in whole or in part, out of the negligence of the Indemnitee; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses or disbursements (x) have been determined in
the final, non-appealable judgment of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnitee (or
any of its Related Indemnitees) or (y) arise from claims of any of the
Indemnitees solely against one (1) or more Indemnitees (other than claims
against an Indemnitee in its capacity as Administrative Agent) that have not
resulted from the action, inaction, participation or contribution of the
Borrower, Holdings or any Affiliates of the foregoing or any of their respective
officers, directors, stockholders, partners, members, employees, agents,
representatives or advisors; provided further that Section 3.01 (instead of this
Section 9.05) shall govern indemnities with respect to Taxes, except that Taxes
representing losses, claims, damages, etc., with respect to a non-Tax claim
shall be governed by this Section 9.05 (without duplication of Section 3.01). No
Indemnitee shall be liable for any damages arising from the use by others of any
information or other materials obtained through Syndtrak, IntraLinks, the
internet, email or other similar information transmission systems in connection
with this Agreement, in each case, except to the extent any such damages are
found in a final non-appealable judgment of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such Indemnitee
nor shall any Indemnitee or any Loan Party have any liability for any special,
punitive, indirect or consequential damages relating to this Agreement or any
other Loan Document or arising out of its activities in connection herewith or
therewith (whether before or after the Closing Date); provided that nothing
contained in this sentence shall limit the Borrower’s indemnification and
reimbursement obligations under this Agreement. The Borrower shall not be liable
for any settlement in respect of any Indemnified Liabilities effected without
the Borrower’s consent (which consent shall not be unreasonably withheld), but
if settled with the Borrower’s written consent, or (without limitation of the
Borrower’s obligations set forth above) if there is a final judgment against an
Indemnitee, the Borrower agrees to indemnify and hold harmless each Indemnitee
in the manner set forth above. The Borrower shall not, without the prior written
consent of the affected Indemnitee (which consent shall not be unreasonably
withheld or delayed), effect any settlement of any pending or threatened
Indemnified Liability against such Indemnitee in respect of which indemnity
could have been sought hereunder by such Indemnitee unless such settlement
(a) includes an unconditional release of such Indemnitee from all liability or
claims that are the subject matter of such claimed or threatened Indemnified
Liability, (b) does not include any statement as to any admission of fault,
culpability or failure to act by or on behalf of such Indemnitee and (c)
includes customary confidentiality provisions reasonably acceptable to such
Indemnitee. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 9.05 applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by any Loan Party, its directors, shareholders or creditors or an Indemnitee or
any other Person, whether or not any Indemnitee is otherwise a party thereto and
whether or not any of the transactions contemplated hereunder or under any of
the other Loan Documents is consummated. All amounts due under this Section 9.05
shall be reimbursed within ten (10) Business Days of written demand therefor
(together with reasonable backup documentation). The agreements in this Section
9.05 shall survive the resignation of the Administrative Agent, the replacement
of any Lender and the Termination Date. For purposes hereof, “Related
Indemnitee” of an Indemnitee means (1) any Controlling Person or Controlled
affiliate of such Indemnitee, (2) the respective partners, directors, officers,
or employees of such Indemnitee or any of its Controlling Persons or Controlled
affiliates and (3) the respective agents, advisors or other representatives of
such Indemnitee or any of its Controlling Persons or Controlled affiliates, in
the case of this clause (3), acting on behalf of or at the instructions of such
Indemnitee, Controlling Person or such Controlled affiliate; provided that each
reference to a Related Indemnitee in this sentence pertains to a Related
Indemnitee involved in performing services under this Agreement and the
Facilities. Notwithstanding the foregoing, if it is found by a final,
non-appealable judgment of a court of competent jurisdiction in any such action,
proceeding or investigation that any loss, claim, damage or liability of any
Indemnitee has resulted from the gross negligence or willful misconduct of such
Indemnitee (or any of its Related Indemnitees), such Indemnitee will repay such
portion of the reimbursed amounts previously paid to such Indemnitee under this
Section that is attributable to expenses incurred in relation to the act or
omission of such Indemnitee which is the subject of such finding.

 

 
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Section 9.06     Marshalling; Payments Set Aside. Neither the Administrative
Agent nor any Lender shall be under any obligation to marshal any assets in
favor of any Loan Party or any other Person or against or in payment of any or
all of the Loan Obligations. To the extent that any payment by or on behalf of
the Borrower is made to any Agent or any Lender, or any Agent or any Lender
exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by such Agent or such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding under
any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor or related thereto, shall be revived and continued
in full force and effect as if such payment or payments had not been made or
such enforcement or setoff had not occurred, and (b) each Lender severally
agrees to pay to the Administrative Agent upon demand its applicable share of
any amount so recovered from or repaid by any Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the applicable Federal Funds Rate from time to time in effect.

 

Section 9.07     Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender and the acknowledgement of the
Administrative Agent, and any such assignment without such consent shall be null
and void (for the avoidance of doubt, any such transfer that occurs pursuant to
a transaction permitted under Section 6.11 is permitted hereunder without any
such consent), and no Lender may assign or otherwise transfer any of its rights
or obligations hereunder except (i) to an Eligible Assignee in accordance with
the provisions of Section 9.07(b), or (ii) by way of pledge or assignment of a
security interest subject to the restrictions of Section 9.07(g) or Section
9.07(i), as the case may be. Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in Section 9.07(e) and, to the extent expressly contemplated
hereby, the Indemnitees) any legal or equitable right, remedy or claim under or
by reason of this Agreement.

 

(b)     Any Lender may at any time assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Agreement; provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an Approved Fund with respect to a Lender, the aggregate amount of such
assignment, determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent shall not be less
than $1,000,000, in the case of any assignment in respect of any Term Loans
(provided, however, that concurrent assignments to or by Approved Funds will be
treated as a single assignment for the purpose of meeting the minimum transfer
requirements), (ii) except in the case of an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund (but subject to clause (iv) below),
each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, the Borrower consents to such assignment (such
consent not to be unreasonably withheld, conditioned or delayed), (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender’s rights and obligations under this Agreement with respect
to the Loans or the Term Commitment assigned, except that this clause (iii)
shall not prohibit any Lender from assigning all or a portion of its rights and
obligations among separate Facilities on a non-pro rata basis, (iv) the parties
(other than the Borrower unless its consent to such assignment is required
hereunder) to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption together with a processing and recordation
fee of $3,500 (which fee (x) the Borrower shall not have an obligation to pay
except as required in Section 3.07 and (y) may be waived or reduced by the
Administrative Agent in its discretion) and (v) the assigning Lender shall
deliver any Notes evidencing such Loans to the Borrower or the Administrative
Agent.

 

 
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Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 9.07(c), from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 3.01, Section 3.04, Section 3.05 and
Section 9.05 with respect to facts and circumstances occurring prior to the
effective date of such assignment and shall continue to be bound by Section
9.08). Upon request, the Borrower (at its expense) shall execute and deliver a
Note to the assignee Lender; provided that if the Borrower has previously issued
an assigning Lender a Note, then the Borrower shall have no obligation to
deliver a Note to the assignee Lender except upon the surrender by the assigning
Lender of its Note (or receipt by the Borrower of a certificate of loss
including reasonably satisfactory indemnification provisions).

 

(c)     The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Term Commitments of, and
principal amounts (and stated interest amounts) of the Loans, owing to each
Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive, absent manifest error, and the
Borrower, the Agents and the Lenders shall treat each Person whose name is
recorded in the Register pursuant to the terms hereof as the owner of its
interests in the Loans and amounts due under the Loan Documents as set forth in
the Register and as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, any Agent, any Lender (solely with respect to such
Lender’s interest), at any reasonable time and from time to time upon reasonable
prior notice. Notwithstanding anything to the contrary contained in this
Agreement, the Loans and Loan Obligations are intended to be treated as
registered obligations for U.S. federal income Tax purposes. Any right or title
in or to any Loans and Loan Obligations (including with respect to the principal
amount and any interest thereon) may only be assigned or otherwise transferred
through the Register. This Section 9.07 shall be construed so that the Loans and
Loan Obligations are at all times maintained in “registered form” within the
meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code, Treasury
Regulation Section 5f.103-1(c) and any other related regulations (or any
successor provisions of the Code or such regulations).

 

(d)     The words “execution,” “signed,” “signature” and words of like import in
any Assignment and Assumption shall be deemed to include electronic signatures
or the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or the
use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act or any other similar state laws based on the Uniform
Electronic Transactions Act.

 

 
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(e)     Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other
than a natural person, the Borrower, Holdings or any Affiliate of the Borrower
or Holdings or (unless a Default or Event of Default has occurred and is
continuing) a Competitor) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Term Commitment and/or the Loans owing to it); provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (iii) the Borrower, the Agents and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and the other Loan Documents and to approve any amendment,
modification or waiver of any provision of this Agreement or the other Loan
Documents; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
waiver or other modification described in the clauses (a) through (i) of the
first proviso to Section 9.01 that directly and adversely affects such
Participant. Subject to Section 9.07(f), the Borrower agrees that each
Participant shall be entitled to the benefits of Section 3.01, Section 3.04 and
Section 3.05 (subject to the requirements and limitations therein, including the
requirements under Section 3.01(f) and the requirements in Sections 3.06 read as
if a Participant was a Lender (it being understood that the documentation
required thereunder shall be delivered to the participating Lender and the
Administrative Agent)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 9.07(b); provided that
such Participant agrees to bound by such Sections, including for the avoidance
of doubt to be subject to the provisions of Sections 3.01(f) and 3.06 as if it
were an assignee under paragraph (b) of this Section. To the extent permitted by
Law, each Participant also shall be entitled to the benefits of Section 9.09 as
though it were a Lender; provided that such Participant agrees to be subject to
Section 2.11 as though it were a Lender. Each Lender that sells a participation
shall, acting solely for this purpose as an non-fiduciary agent of the Borrower,
maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest
in the Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any Term
Commitments or any Loans or its other obligations under any Loan Document) to
any Person except to the extent that such disclosure is necessary to establish
that such Term Commitment or Loan or other obligation is in registered form
under Section 5f.103-1(c) of the United States Treasury Regulations. The entries
in the Participant Register shall be conclusive absent manifest error, and such
Lender (and the Borrower, to the extent that the Participant requests payment
from the Borrower) shall treat each person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary.

 

(f)     A Participant shall not be entitled to receive any greater payment under
Section 3.01, Section 3.04 or Section 3.05 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant.

 

(g)     Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its Note,
if any) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank or any central bank having
jurisdiction over such Lender; provided that no such pledge or assignment shall
release such Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.

 

 
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(h)     [Reserved].

 

(i)     Notwithstanding anything to the contrary contained herein, any Lender
shall have the right from time to time in its discretion and without the consent
of Borrower to pledge, securitize, encumber, hypothecate, or otherwise transfer
(a “Pledge”) all or any portion of its interest in the Loan to an Eligible
Assignee (each, a “Pledgee”); provided that unless and until the applicable
Pledgee actually becomes a Lender in compliance with the other provisions of
this Section 9.07, (i) no such Pledge shall release the Pledging Lender from any
of its obligations under the Loan Documents and, (ii) such Pledgee shall not be
entitled to exercise any of the rights of a Lender under the Loan Documents even
though such Pledgee may have acquired ownership rights with respect to the
Pledged interest through foreclosure or otherwise (unless such Pledgee is an
Eligible Assignee which has complied with the requirements of Section 9.07(b)).

 

(j)     [Reserved].

 

(k)     Assignments of Term Loans to any Purchasing Borrower Party shall be
permitted through open market purchases and/or “Dutch auctions”, so long as any
offer to purchase or take by assignment (other than through open market
purchases) by such Purchasing Borrower Party shall have been made to all Term
Lenders, so long as (i) no Default or an Event of Default has occurred and is
continuing and (ii) the Term Loans purchased are immediately cancelled pursuant
to Section 9.08(l).

 

(l)     Upon any purchase of Loans by a Purchasing Borrower Party, such Loans
shall be immediately contributed to the Borrower, whereupon, (i) the aggregate
principal amount (calculated on the face amount thereof) of such Loans shall
automatically be cancelled and retired by the Borrower on the date of such
contribution or purchase (and, if requested by the Administrative Agent, with
respect to a contribution of Loans, any applicable contributing Lender shall
execute and deliver to the applicable Agent an Assignment and Assumption, or
such other form as may be reasonably requested by the Administrative Agent, in
respect thereof pursuant to which the respective Lender assigns its interest in
such Loans to the Borrower for immediate cancellation) and (ii) the applicable
Agent shall record such cancellation or retirement in the Register.

 

Section 9.08     [Reserved].

 

Section 9.09     Setoff. In addition to any rights and remedies of the Lenders
provided by Law, upon the occurrence and during the continuance of any Event of
Default, after obtaining the prior written consent of the Administrative Agent,
each Lender is authorized at any time and from time to time, without prior
notice to the Borrower or any other Loan Party, any such notice being waived by
the Borrower (on its own behalf and on behalf of each other Loan Party) to the
fullest extent permitted by Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other Indebtedness at any time owing by, such Lender to or for the credit or
the account of the respective Loan Parties against any and all Loan Obligations
owing to such Lender hereunder or under any other Loan Document, now or
hereafter existing, irrespective of whether or not such Lender shall have made
demand under this Agreement or any other Loan Document and although such Loan
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or Indebtedness; provided that in
the event that any Defaulting Lender shall exercise any such right of setoff,
(x) all amounts so set off shall be paid over immediately to the Administrative
Agent for further application in accordance with the provisions of Section 2.15
and, pending such payment, shall be segregated by such Defaulting Lender from
its other funds and deemed held in trust for the benefit of the Administrative
Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to
the Administrative Agent a statement describing in reasonable detail the Loan
Obligations owing to such Defaulting Lender as to which it exercised such right
of setoff. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set off and application made by such Lender;
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Administrative Agent and each
Lender under this Section 9.09 are in addition to other rights and remedies
(including, without limitation, other rights of setoff) that the Administrative
Agent and such Lender may have.

 

 
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Section 9.10     Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the “Maximum Rate”). If any Agent or any
Lender shall receive interest in an amount that exceeds the Maximum Rate, the
excess interest shall be applied to the principal of the Loans or, if it exceeds
such unpaid principal, refunded to the Borrower. In determining whether the
interest contracted for, charged, or received by an Agent or a Lender exceeds
the Maximum Rate, such Person may, to the extent permitted by applicable Law,
(a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the Loan
Obligations hereunder.

 

Section 9.11     Counterparts. This Agreement and each other Loan Document may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Delivery by telecopier or other electronic transmission (including
portable document format) of an executed counterpart of a signature page to this
Agreement and each other Loan Document shall be effective as delivery of an
original executed counterpart of this Agreement and such other Loan Document.
The Agents may also require that any such documents and signatures delivered by
telecopier or other electronic means be confirmed by a manually signed original
thereof; provided that the failure to request or deliver the same shall not
limit the effectiveness of any document or signature delivered by telecopier or
other electronic transmission.

 

Section 9.12     Integration. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements, written
or oral, on such subject matter. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Agents or the Lenders in any
other Loan Document shall not be deemed to be a conflict with this Agreement.
Each Loan Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any
party, but rather in accordance with the fair meaning thereof.

 

Section 9.13     Survival. All representations and warranties made hereunder and
in any other Loan Document or other document delivered pursuant hereto or
thereto or in connection herewith or therewith shall survive the execution and
delivery hereof and thereof. Such representations and warranties have been or
will be relied upon by each Agent and each Lender, regardless of any
investigation made by any Agent or any Lender or on their behalf and
notwithstanding that any Agent or any Lender may have had notice or knowledge of
any Default at the time of any Borrowing, and shall continue in full force and
effect until the Termination Date. The provisions of Article 3 and Article 8 and
Sections 9.05, 9.08, 9.15 and 9.16 shall survive and remain in full force and
effect following the Termination Date.

 

 
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Section 9.14     Severability. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby. The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without limiting
the foregoing provisions of this Section 9.14, if and to the extent that the
enforceability of any provisions in this Agreement relating to Defaulting
Lenders shall be limited by Debtor Relief Laws, as determined in good faith by
the Administrative Agent, then such provisions shall be deemed to be in effect
only to the extent not so limited.

 

Section 9.15     GOVERNING LAW.

 

(a)     THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT (OTHER THAN ANY LOAN
DOCUMENT EXPRESSLY GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

(b)     ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY IN THE BOROUGH OF MANHATTAN OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE BORROWER, EACH AGENT AND EACH LENDER CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS
AND APPELLATE COURTS FROM ANY THEREOF (OTHER THAN WITH RESPECT TO ACTIONS BY ANY
AGENT OR ANY LENDER IN RESPECT OF RIGHTS UNDER ANY COLLATERAL DOCUMENT GOVERNED
BY A LAW OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH RESPECT TO ANY
COLLATERAL SUBJECT THERETO). EACH OF THE BORROWER, EACH AGENT AND EACH LENDER
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

 

Section 9.16     WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION 9.16 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

 
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Section 9.17     Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent shall have
been notified by each Lender that each such Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
Agent and each Lender and their respective successors and permitted assigns.

 

Section 9.18     USA PATRIOT Act Notice. Each Lender that is subject to the
PATRIOT Act and the Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies the Borrower that pursuant to the requirements of the
PATRIOT Act, it is required to obtain, verify and record information that
identifies the Borrower and each other Loan Party, which information includes
the name and address of the Borrower and each other Loan Party and other
information that will allow such Lender or the Administrative Agent, as
applicable, to identify the Borrower and each other Loan Party in accordance
with the Act.

 

Section 9.19     No Advisory or Fiduciary Relationship. In connection with all
aspects of each transaction contemplated hereby, each of Holdings and the
Borrower acknowledge and agrees that (a) the Facilities provided for hereunder
and any related arranging or other services in connection therewith (including
in connection with any amendment, waiver or other modification hereof or of any
other Loan Document) are an arm’s-length commercial transaction between Holdings
and the Borrower, on the one hand, and the Agents and the Lenders, on the other
hand, and Holdings and the Borrower are capable of evaluating and understanding
and understand and accept the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (b) in connection with the
process leading to such transaction, each of the Agents and the Lenders is and
has been acting solely as a principal and is not the agent or fiduciary, for the
Borrower; and (c) the Agents and the Lenders have not provided and will not
provide any legal, accounting, regulatory or tax advice with respect to any of
the transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and Holdings and the Borrower
have consulted their own legal, accounting, regulatory and tax advisors to the
extent they have deemed appropriate.

 

Article X

GUARANTEES; RELEASE OF GUARANTOR

 

Section 10.01     Guarantee. Each of the Guarantors hereby unconditionally
guarantees, jointly and severally with each other Guarantor, to each Lender and
to the Administrative Agent and its successors and assigns, irrespective of the
validity and enforceability of this Agreement, any other Loan Document or the
obligations of the Borrower hereunder or thereunder, that: (i) the due and
punctual payment of the principal of, premium, if any, and interest on the
Loans, whether at maturity or on an interest payment date, by acceleration,
pursuant to any prepayment pursuant to Section 2.03, Change of Control Offer or
otherwise, to the extent lawful, and all other obligations of the Borrower to
the Lenders or the Administrative Agent hereunder or thereunder shall be
promptly paid in full when due, all in accordance with the terms hereof and
thereof, including all amounts payable to the Administrative Agent under Section
9.05 hereof, and (ii) in case of any extension of time of payment or renewal of
any Loans or any of such other obligations, the same shall be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.

 

 
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If the Borrower fails to make any payment when due of any amount so guaranteed
for whatever reason, each Guarantor shall be obligated, jointly and severally
with each other Guarantor, to pay the same immediately. Each Guarantor hereby
agrees that its obligations hereunder shall be continuing, absolute and
unconditional, irrespective of, and shall be unaffected by, the validity,
regularity or enforceability of the Loans, this Agreement, the Collateral
Documents, the absence of any action to enforce the same, any waiver or consent
by any Lender or the Administrative Agent with respect to any provisions hereof
or thereof, the recovery of any judgment against the Borrower, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of such Guarantor. If any Lender or the
Administrative Agent is required by any court or otherwise to return to the
Borrower or any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Borrower or such Guarantor, any
amount paid by the Borrower or any Guarantor to the Administrative Agent or such
Lender, this Article X, to the extent theretofore discharged with respect to any
Guarantee, shall be reinstated in full force and effect. Each Guarantor agrees
that it shall not be entitled to any right of subrogation in relation to the
Lenders in respect of any obligations guaranteed hereby by such Guarantor until
payment in full of all such obligations. Each Guarantor further agrees that, as
between such Guarantor, on the one hand, and the Lenders of Loans and the
Administrative Agent on the other hand, (i) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article VII hereof for the
purposes of such Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (ii) in the event of any acceleration of such obligations
as provided in Article VII hereof such obligations (whether or not due and
payable) shall forthwith become due and payable by such Guarantor, jointly and
severally with each other Guarantor, for the purpose of this Article X. In
addition, without limiting the foregoing, upon the effectiveness of an
acceleration under Article VII, the Administrative Agent may make a demand for
payment on the Loans under any Guarantee provided hereunder and not discharged.

 

Section 10.02     Obligations of each Guarantor Unconditional. Nothing contained
in this Article X or elsewhere in this Agreement or in any other Loan Document
is intended to or shall impair, as between each Guarantor and the Lenders, the
obligations of such Guarantor which are absolute and unconditional, to pay to
the Lenders the principal of, premium, if any, and interest on the Loans as and
when the same shall become due and payable in accordance with the provisions of
their Guarantee or is intended to or shall affect the relative rights of the
Lenders and creditors of such Guarantor, nor shall anything herein or therein
prevent the Administrative Agent or any Lender from exercising all remedies
otherwise permitted by applicable law upon any Default under this Agreement in
respect of cash, property or securities of such Guarantor received upon the
exercise of any such remedy.

 

Upon any distribution of assets of a Guarantor referred to in this Article X,
the Administrative Agent, subject to the provisions of Article VIII, and the
Lenders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Administrative
Agent or to such Lenders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of other indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article X.

 

Section 10.03     Release of a Guarantor. (a) If (i) all or substantially all of
the assets of any Guarantor other than Holdings or all of the Capital Stock of
any Guarantor other than Holdings is sold (including by consolidation, merger,
issuance or otherwise) or disposed of (including by liquidation, dissolution or
otherwise) by Holdings or any of its Subsidiaries, (ii) unless Holdings elects
otherwise, any Guarantor other than Holdings is designated an Unrestricted
Subsidiary in accordance with the terms of this Agreement or becomes an Excluded
Subsidiary, (iii) the Termination Date shall have occurred, or (iv) in
accordance with Section 9.01, then in each case such Guarantor or the Person
acquiring such assets (in the event of a sale or other disposition of all or
substantially all of the assets of a Guarantor), as the case may be, shall be
deemed automatically and unconditionally released and discharged from any of its
obligations under this Agreement without any further action on the part of the
Administrative Agent or any Lender.

 

 
119

--------------------------------------------------------------------------------

 

 

Section 10.04     Execution and Delivery of Guarantee. The execution by each
Guarantor of this Agreement (or a joinder to this Agreement) together with an
executed guarantee substantially in the form included in Exhibit I evidences the
Guarantee of such Guarantor.

 

Section 10.05     Limitation on Guarantor Liability. Notwithstanding anything to
the contrary in this Article X, each Guarantor, the Administrative Agent and
each Lender hereby confirms that it is the intention of all such parties that
the Guarantee of such Guarantor not constitute a fraudulent conveyance under
applicable fraudulent conveyance provisions of the Bankruptcy Law or any
comparable provision of state law. To effectuate that intention, the
Administrative Agent, the Lenders and the Guarantors hereby irrevocably agree
that the obligations of each Guarantor under its Guarantee are limited to the
maximum amount that would not render the Guarantor’s obligations subject to
avoidance under applicable fraudulent conveyance provisions of the Bankruptcy
Law or any comparable provision of state law.

 

Section 10.06     Article X not to Prevent Events of Default. The failure to
make a payment on account of principal, premium, if any, or interest, if any, on
the Loans by reason of any provision in this Article X shall not be construed as
preventing the occurrence of any Event of Default under Section 7.01 hereof.

 

Section 10.07     Waiver by the Guarantors. To the extent permitted by
applicable law, each Guarantor hereby irrevocably waives diligence, presentment,
demand of payment, demand of performance, filing of claims with a court in the
event of insolvency of bankruptcy of the Borrower, any right to require a
proceeding first against the Borrower, the benefit of discussion, protest,
notice and all demand whatsoever and covenants that this Guarantee shall not be
discharged except by complete performance of the obligations contained in this
Agreement, any other Loan Document and in this Article X.

 

Section 10.08     Subrogation and Contribution. Upon making any payment with
respect to any obligation of the Borrower under this Article, the Guarantor
making such payment shall be subrogated to the rights of the payee against the
Borrower with respect to such obligation; provided, that the Guarantor may not
enforce either any right of subrogation, or any right to receive payment in the
nature of contribution, or otherwise, from any other Guarantor, with respect to
such payment so long as any amount payable by the Borrower hereunder or under
any other Loan Document remains unpaid.

 

Each Guarantor that makes a payment under its Guarantee shall be entitled, upon
payment in full of all guaranteed obligations under this Agreement, to seek and
receive contribution from and against each other Guarantor in an amount equal to
such other Guarantor’s pro rata portion of such payment based on the respective
net assets of all the Guarantors at the time of such payment determined in
accordance with GAAP.

 

 
120

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Section 10.09     Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Borrower under this Agreement or any other Loan
Document is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement are nonetheless payable by the Guarantors hereunder forthwith on
demand by the Administrative Agent or the Lenders.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

 
121

--------------------------------------------------------------------------------

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

 

HOVNANIAN ENTERPRISES, INC., as Holdings

 

By:       /s/ J. Larry
Sorsby                                                                 
Name:  J. Larry
Sorsby                                                                       
Title:    Executive Vice President and Chief Financial Officer      

 

K. HOVNANIAN ENTERPRISES, INC., as Borrower

 

By:       /s/ J. Larry
Sorsby                                                                
Name:  J. Larry
Sorsby                                                                      
Title:    Executive Vice President and Chief Financial Officer     

 

K. HOV IP, II, INC.

 

By:        /s/ Michael
Discafani                                                            
Name:   Michael
Discafani                                                                 
Title:     Vice
President                                                                       

 

On behalf of each other entity named in Schedule 10.01 hereto 

 

By:        /s/ J. Larry
Sorsby                                                                   
Name:   J. Larry
Sorsby                                                                         
Title:     Executive Vice President and Chief Financial Officer          

 

Signature Page to Credit Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity, but solely in its capacity as Administrative
Agent

By:       /s/ Jeffrey Rose                                        
Name:  Jeffrey Rose                                              
Title:    Vice President                                          

 

 

Signature Page to Credit Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

On behalf of each of the Lenders named on Schedule I hereto

 

By:       /s/ Spencer B. Haber                                
Name:   Spencer B. Haber
Title:     Authorized Signatory

 

 

Signature Page to Credit Agreement

 

 
 

--------------------------------------------------------------------------------

 

 

EXHIBIT A-1

 

FORM OF LOAN NOTICE

 

Date: [●]

 

To:

Wilmington Trust, National Association, as Administrative Agent

  [●]   [●]1

 

[With a copy to:      [●]]2

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of July 29, 2016 (as amended,
restated, amended and restated, extended, supplemented or otherwise modified in
writing from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined), among Hovnanian Enterprises, Inc., a
Delaware corporation (“Holdings”), K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), each lender from time to time party thereto, and
Wilmington Trust, National Association, as Administrative Agent.

 

The Borrower hereby requests (select one):

 

A Borrowing of:

 

☐     Term Loans

 

OR

 

☐     A conversion or continuation of Term Loans

 

1.     On ____________________________________ (a Business Day).

 

2.     In the amount of $ ________________________.

 

3.     Comprised of _______________________________________.

 

(Class and Type of Loan requested)

 

4.     For Eurodollar Rate Loans: with an Interest Period of 1 month.

 

5.      To the account designated below:

 

Bank to be Credited:

 

Bank Address:

 

Account No.:

 

--------------------------------------------------------------------------------

1   NTD: Admin Agent to provide address.

2   NTD: Admin Agent to provide. 

 

 
 

--------------------------------------------------------------------------------

 

 

ABA No.:

 

Reference Information:

 

[Signature Page Follows]

 

 
Exhibit A-1-2 

--------------------------------------------------------------------------------

 

 

 

K. HOVNANIAN ENTERPRISES, INC.,
as Borrower

 

By:______________________________
Name:
Title:

 

 

 
 Exhibit A-1-3

--------------------------------------------------------------------------------

 

 

EXHIBIT A-2

 

FORM OF PREPAYMENT NOTICE

 

To:

Wilmington Trust, National Association, as Administrative Agent

  [●]   [●]3     With a copy to:  [●]4

 

Re:     Hovnanian Credit Agreement

 

Date: [●]

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of July 29, 2016 (as amended,
restated, amended and restated, extended, supplemented or otherwise modified in
writing from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined), among Hovnanian Enterprises, Inc., a
Delaware corporation (“Holdings”), K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), each lender from time to time party thereto, and
Wilmington Trust, National Association, as Administrative Agent.

 

The Borrower hereby gives you notice pursuant to Section 2.03(a)(i) of the
Credit Agreement that it shall be making a prepayment under the Credit
Agreement:

 

(A)    Type of Loans being repaid:

[Base Rate Loans] [Eurodollar Rate Loans]

   

(B)    Class of Loans being prepaid:

[Initial Term Loans] [Refinancing Term Loans] [Extended Term Loans]

   

(C)    Principal amount of Borrowing being prepaid:

$                                                                                                      

   

(D)    Date of prepayment:

                                                                                                        
   

[This prepayment notice and the obligation to make a prepayment pursuant to this
notice shall be conditioned upon the occurrence of [_].]

 

[Signature Page Follows]

 

 

--------------------------------------------------------------------------------

3      NTD: Admin Agent to provide address.

4      NTD: Admin Agent to provide.

 

 
 Exhibit  A-2-1

--------------------------------------------------------------------------------

 

 

 

K. HOVNANIAN ENTERPRISES, INC.,
as Borrower

 

 

By:______________________________
Name:
Title:

 

 
 Exhibit A-2-2

--------------------------------------------------------------------------------

 

 

EXHIBIT B

 

FORM OF TERM NOTE

 

Date: [●]

 

FOR VALUE RECEIVED, the undersigned, hereby promises to pay to
_____________________ or its registered assigns (the “Term Lender”), in
accordance with the provisions of the Credit Agreement (as hereinafter defined),
the aggregate unpaid principal amount of each Term Loan made by the Term Lender
to the Borrower (as defined below) on the Maturity Date or at such times as
provided under that certain Credit Agreement dated as of July 29, 2016 (as
amended, restated, amended and restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”; the terms defined
therein being used herein as therein defined), among Hovnanian Enterprises,
Inc., a Delaware corporation (“Holdings”), K. Hovnanian Enterprises, Inc., a
California corporation (the “Borrower”), each lender from time to time party
thereto, and Wilmington Trust, National Association, as Administrative Agent.

 

The Borrower promises to pay interest on the aggregate unpaid principal amount
of each Term Loan made by the Term Lender to the Borrower under the Credit
Agreement from the date of such Term Loan until such principal amount is paid in
full, at such interest rates and at such times as provided in the Credit
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Term Lender in Dollars and in
immediately available funds. While any Event of Default set forth in
Section 7.01 of the Credit Agreement exists, with respect to the payment of any
principal, interest or fees, the applicable unpaid amount shall bear interest,
to be paid upon demand, from the due date thereof until the date of actual
payment (and before as well as after judgment) computed at the per annum rate or
rates set forth in the Credit Agreement.

 

This Term Note (this “Term Note”) is one of the Term Notes referred to in the
Credit Agreement, is entitled to the benefits thereof and under the Loan
Documents, and may be prepaid in whole or in part subject to the terms and
conditions provided therein. This Term Note is also entitled to the benefits of
the Guarantee and is secured by the Collateral granted under the Collateral
Documents. Upon the occurrence and continuation of one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Term Note may become, or may be declared to be, as applicable, immediately
due and payable all as provided in the Credit Agreement.

 

Term Loans made by the Term Lender shall be evidenced by one or more loan
accounts or records maintained by the Term Lender in the ordinary course of
business, and the Term Lender may also attach schedules to this Term Note and
endorse thereon the date, amount and maturity of its Term Loans and payments
with respect thereto; provided, however, that the failure of any Term Lender to
make such endorsement, notation or record or any error in such endorsement,
notation or record shall not affect the obligation of the Borrower under this
Term Note.

 

The Borrower, for itself and its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Term Note.

 

THIS TERM NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

 

[Signature Page Follows]

 

 

 
 Exhibit B-1

--------------------------------------------------------------------------------

 

 

 

K. HOVNANIAN ENTERPRISES, INC.,
as Borrower

 

 

By:______________________________
Name:
Title:

 

 

 
Exhibit B-2 

--------------------------------------------------------------------------------

 

 

TERM LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

 

Type of Term

Loan Made

 

Amount of

Term Loan

Made

 

End of

Interest

Period

 

Amount of

Principal or

Interest Paid

This Date

 

Outstanding

Principal

Balance This

Date

 

Notation

Made By

                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                   

 

 
 Exhibit B-3

--------------------------------------------------------------------------------

 

 

EXHIBIT C

 

FORM OF
ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). It is understood and agreed that the rights and obligations of the
Assignor and the Assignee hereunder are several and not joint. Capitalized terms
used but not defined herein shall have the meanings given to them in the Credit
Agreement defined below, receipt of a copy of which is hereby acknowledged by
the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part
of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the facility identified below and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of the Assignor (in its capacity as
a Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any
way based on or related to any of the foregoing, including, but not limited to,
contract claims, tort claims, malpractice claims, statutory claims and all other
claims at law or in equity, in each case related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold
and assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as, the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

 

1. 

Assignor:           ______________________________________________

    2. Assignee:          ______________________________________________
                           [and is a Lender, an Affiliate/Approved Fund of
[identify Lender]]5    

3. 

 Borrower:           K. Hovnanian Enterprises, Inc.

    4. Administrative Agent:     Wilmington Trust, National Association, as the
administrative agent under the Credit Agreement    

5. 

 Credit Agreement:     Credit Agreement dated as of July 29, 2016 (as amended,
restated, amended and restated, extended, supplemented or otherwise modified in
writing from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined), among Hovnanian Enterprises, Inc., a
Delaware corporation (“Holdings”), K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), each lender from time to time party thereto, and
Wilmington Trust, National Association, as Administrative Agent.

 

--------------------------------------------------------------------------------

5     Select as applicable.

 

 
 Exhibit C-1

--------------------------------------------------------------------------------

 

 

 

6.

Assigned Interest:

 

Facility Assigned

Aggregate Amount of Commitment/Loans for all Lenders

Amount of Commitment/Loans Assigned

Percentage Assigned of Commitment/Loans6

Term Loan Facility

$

$

%

 

[7.     Trade Date:     __________________]7

 

Effective Date:     _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

 

[Signature Page Follows]

 

 

--------------------------------------------------------------------------------

6

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

7

To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date. 

 

 
 Exhibit C-2

--------------------------------------------------------------------------------

 

 

 

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

ASSIGNOR
[NAME OF ASSIGNOR]

 

 

 

 

 

 

  By:       Title:         ASSIGNEE
[NAME OF ASSIGNEE]               By:       Title:

 

 

[Consented to and]8 Accepted:

 

K. HOVNANIAN ENTERPRISES, INC.,
as Borrower

 

 

By:                                                                              
           Name:
           Title:

 

 

[WILMINGTON TRUST, NATIONAL ASSOCIATION, as Administrative Agent

 

 

By:                                                                             
           Name:
           Title: ]9

 

 

--------------------------------------------------------------------------------

8     To be included to the extent consent is required.

9     To be completed to the extent consent is otherwise required.

 

 
Exhibit C-3 

--------------------------------------------------------------------------------

 

 

ANNEX 1 to
Assignment and Assumption

 

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

 

1.     Representations and Warranties.

 

1.1     Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of
Holdings, the Borrower, any of their Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by Holdings, the Borrower, any of their Subsidiaries or Affiliates or
any other Person of any of their respective obligations under any Loan Document.

 

1.2.     Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement),
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it is
sophisticated with respect to decisions to acquire assets of the type
represented by the Assigned Interest and either it, or the Person exercising
discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the
Credit Agreement, and has received or has been accorded the opportunity to
receive copies of the most recent financial statements referred to in
Section 5.15 or delivered pursuant to Section 6.12 thereof, as applicable, and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Assumption
and to purchase the Assigned Interest on the basis of which it has made such
analysis and decision independently and without reliance on the Administrative
Agent or any other Lender, (vi) if it is not already a Lender under the Credit
Agreement, attached to the Assignment and Assumption an Administrative
Questionnaire in the form of Exhibit D to the Credit Agreement, and
(vii) attached to the Assignment and Assumption is any documentation required to
be delivered by it pursuant to Section 3.01 of the Credit Agreement, duly
completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations that by the terms of the Loan
Documents are required to be performed by it as a Lender.

 

2.     Payments. From and after the Effective Date referred to in this
Assignment and Assumption, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts that have accrued to but
excluding the Effective Date and to the Assignee for amounts that have accrued
from and after the Effective Date.

 

 
 Exhibit C-4

--------------------------------------------------------------------------------

 

 

3.     General Provisions. This Assignment and Assumption shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by facsimile or electronic transmission shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be construed in accordance with and governed by the law of
the State of New York.

 

 
Exhibit C-5 

--------------------------------------------------------------------------------

 

 

EXHIBIT D

 

ADMINISTRATIVE QUESTIONNAIRE

 

Deal Name:

Hovnanian Enterprises, Inc. and K. Hovnanian Enterprises, Inc. – Term Loan

Agent Address:

Wilmington Trust, N.A

Return To:

Loan Agency Middle Admin

 

50 South Sixth Street

Phone:

612-217-5649

 

Suite 1290

Fax:

612-217-5651

 

Minneapolis, MN 55402

E-mail:

LoanAgency@WilmingtonTrust.com 

 

LENDER INFORMATION:

Legal Name of Lender:

 

Legal Address:

 

Fund Manager:

         

 

 

ADMINISTRATIVE/OPERATIONS/NOTICES CONTACTS:

 

Primary Contact

Secondary Contact

Name:

   

Company:

   

Title:

   

Address:

                     

Phone:

   

Fax:

   

E-Mail Address:

   

 

 

CREDIT CONTACTS:

 

Primary Contact

Secondary Contact

Name:

   

Company:

   

Title:

   

Address:

                     

Phone:

   

Fax:

   

E-Mail Address:

   

 

 
Exhibit D-1 

--------------------------------------------------------------------------------

 

 

INTRALINKS CONTACTS:

Name:

 

Phone:

 

E-mail Address:

     

Name:

 

Phone:

 

E-mail Address:

     

Name:

 

Phone:

 

E-mail Address:

 

 

DOMESTIC WIRE INSTRUCTIONS:

Currency:

 

Bank Name:

 

Swift/Routing No.:

 

Account Name:

 

Account No.:

 

FCC Account Name:

 

FCC Account No.:

 

Attention:

 

 

FOREIGN WIRE INSTRUCTIONS:

Currency:

 

Bank Name:

 

Swift/Routing No.:

 

Account Name:

 

Account No.:

 

FCC Account Name:

 

FCC Account No.:

 

Attention:

 

Reference:

 

 

 

Currency:

 

Bank Name:

 

Swift/Routing No.:

 

Account Name:

 

Account No.:

 

FCC Account Name:

 

FCC Account No.:

 

Attention:

 

Reference:

 

 

 

Currency:

 

Bank Name:

 

Swift/Routing No.:

 

Account Name:

 

Account No.:

 

FCC Account Name:

 

FCC Account No.:

 

Attention:

 

Reference:

 

 

 
 Exhibit D-2

--------------------------------------------------------------------------------

 

 

TAX FORM PROVIDED:

 

W-9

☐

W-8BEN ☐ W-8IMY ☐ W-8ECI    ☐ W-8EXP ☐ Other   ☐

     

 
 Exhibit D-3

--------------------------------------------------------------------------------

 

 

EXHIBIT E-1

 

FORM OF
SECTION 3.01(f) US TAX CERTIFICATE
(For Non-US Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the Credit Agreement dated as of July 29, 2016 (as amended,
restated, amended and restated, extended, supplemented or otherwise modified in
writing from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined), among Hovnanian Enterprises, Inc., a
Delaware corporation (“Holdings”), K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), each lender from time to time party thereto, and
Wilmington Trust, National Association, as Administrative Agent.

 

Pursuant to the provisions of Section 3.01(f) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a 10-percent shareholder of
the Borrower within the meaning of Section 871(h)(3)(B) or 881(c)(3)(B) of the
Code and (iv) it is not a controlled foreign corporation related to the Borrower
as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent and the Borrower with a
certificate of its non-U.S. person status on IRS Form W-8BEN or W-8BEN-E. By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
the Borrower and the Administrative Agent in writing and (2) the undersigned
shall have at all times furnished the Borrower and the Administrative Agent with
a properly completed and currently effective certificate in either the calendar
year in which each applicable payment is to be made to the undersigned, or in
either of the two calendar years preceding any such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

 
Exhibit E-1-3 

--------------------------------------------------------------------------------

 

 

 

[NAME OF LENDER]

 

By:                                                              

           Name:

           Title:

 

 

Dated:                                                      

 

 
Exhibit E-1-4 

--------------------------------------------------------------------------------

 

 

EXHIBIT E-2

 

FORM OF
SECTION 3.01(f) US TAX CERTIFICATE
(For Non-US Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the Credit Agreement dated as of July 29, 2016 (as amended,
restated, amended and restated, extended, supplemented or otherwise modified in
writing from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined), among Hovnanian Enterprises, Inc., a
Delaware corporation (“Holdings”), K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), each lender from time to time party thereto, and
Wilmington Trust, National Association, as Administrative Agent.

 

Pursuant to the provisions of Section 3.01(f) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect to such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a 10-percent shareholder of the
Borrower within the meaning of Section 871(h)(3)(B) or 881(c)(3)(B) of the Code
and (v) none of its direct or indirect partners/members is a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members
claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E or
(ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each
of such partner’s/member’s beneficial owners that is claiming the portfolio
interest exemption. By executing this certificate, the undersigned agrees that
(1) if the information provided on this certificate changes, the undersigned
shall promptly so inform such Lender in writing and (2) the undersigned shall
have at all times furnished such Lender with a properly completed and currently
effective certificate in either the calendar year in which each applicable
payment is to be made to the undersigned, or in either of the two calendar years
preceding any such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

 
 Exhibit E-1-2

--------------------------------------------------------------------------------

 

 

 

 

[NAME OF PARTICIPANT]

 

By:                                                            

          Name:

          Title:

 

 

Dated:                                                

 

 
 Exhibit E-2-2

--------------------------------------------------------------------------------

 

 

EXHIBIT E-3

 

FORM OF
SECTION 3.01(f) US TAX CERTIFICATE
(For Non-US Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the Credit Agreement dated as of July 29, 2016 (as amended,
restated, amended and restated, extended, supplemented or otherwise modified in
writing from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined), among Hovnanian Enterprises, Inc., a
Delaware corporation (“Holdings”), K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), each lender from time to time party thereto, and
Wilmington Trust, National Association, as Administrative Agent.

 

Pursuant to the provisions of Section 3.01(f) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate, (ii)
it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii)
it is not a 10-percent shareholder of the Borrower within the meaning of Section
871(h)(3)(B) or 881(c)(3)(B) of the Code and (iv) it is not a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the
Code.

 

The undersigned has furnished its participating Lender with a certificate of its
non-U.S. person status on IRS Form W-8BEN or W-8BEN-E. By executing this
certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform such Lender in
writing and (2) the undersigned shall have at all times furnished such Lender
with a properly completed and currently effective certificate in either the
calendar year in which each applicable payment is to be made to the undersigned,
or in either of the two calendar years preceding any such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

 
 Exhibit E-3-1

--------------------------------------------------------------------------------

 

 

 

[NAME OF PARTICIPANT]

 

By:                                                         

            Name:

            Title:

 

 

Dated:                                                        

 

 
Exhibit E-3-2 

--------------------------------------------------------------------------------

 

 

EXHIBIT E-4

 

FORM OF
SECTION 3.01(F) US TAX CERTIFICATE
(For Non-US Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is made to the Credit Agreement dated as of July 29, 2016 (as amended,
restated, amended and restated, extended, supplemented or otherwise modified in
writing from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined), among Hovnanian Enterprises, Inc., a
Delaware corporation (“Holdings”), K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), each lender from time to time party thereto, and
Wilmington Trust, National Association, as Administrative Agent.

 

Pursuant to the provisions of Section 3.01(f) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members claiming the portfolio interest exemption is
a bank extending credit pursuant to a loan agreement entered into in the
ordinary course of its trade or business within the meaning of Section
881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members
claiming the portfolio interest exemption is a 10-percent shareholder of the
Borrower within the meaning of Section 871(h)(3)(B) or 881(c)(3)(B) of the Code
and (v) none of its direct or indirect partners/members claiming the portfolio
interest exemption is a “controlled foreign corporation related to the Borrower
as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent and the Borrower with IRS
Form W-8IMY accompanied by one of the following forms from each of its
partners/members claiming the portfolio interest exemption: (i) an IRS Form
W-8BEN or W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN
or W-8BEN-E from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the Borrower and the
Administrative Agent in writing and (2) the undersigned shall have at all times
furnished the Borrower and the Administrative Agent with a properly completed
and currently effective certificate in either the calendar year in which each
applicable payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

 
 Exhibit E-4-1

--------------------------------------------------------------------------------

 

 

 

[NAME OF LENDER]

 

By:                                              

            Name:

            Title:

 

 

 

Dated:                                                                 

 

 
Exhibit E-4-2 

--------------------------------------------------------------------------------

 

 

EXHIBIT F-1

 

FORM OF FIRST LIEN INTERCREDITOR AGREEMENT

 

[See attached.]

 

 
 

--------------------------------------------------------------------------------

 

 

EXHIBIT F-2

 

FORM OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT

 

[See attached.]

 

 
 

--------------------------------------------------------------------------------

 

 

EXHIBIT F-3

 

FORM OF AMENDED AND RESTATED COLLATERAL AGENCY AGREEMENT

 

[See attached.]

 

 
 

--------------------------------------------------------------------------------

 

 

EXHIBIT G-1

 

Form of Secretary’s Certificate for the Borrower

 

K. HOVNANIAN ENTERPRISES, INC.

 

Secretary’s Certificate

 

The undersigned hereby certifies that he is the Secretary of K. Hovnanian
Enterprises, Inc., a California corporation (the “Borrower”), and that as such
he is authorized to execute and deliver this certificate in connection with that
certain Credit Agreement dated as of July 29, 2016 (the “Credit Agreement”; the
terms defined therein being used herein as therein defined), among Hovnanian
Enterprises, Inc., a Delaware corporation (“Holdings”), the Borrower, the
Subsidiary Guarantors party thereto, each lender from time to time party
thereto, and Wilmington Trust, National Association, as Administrative Agent,
and further certifies in his capacity as Secretary of the Borrower, and not in
his individual capacity, as follows:

 

 

1.

Attached hereto as Exhibit A is a true, correct and complete copy of the
Articles of Incorporation of the Borrower, and such Articles of Incorporation
are in full force and effect as of the date hereof, there having been no
amendments or other documents filed affecting such Articles of Incorporation and
no such amendment has been authorized.

 

 

2.

Attached hereto as Exhibit B are true, correct and complete copies of the
By-Laws of the Borrower and such By-Laws are in full force and effect as of the
date hereof, there having been no amendments affecting such By-Laws and no such
amendment has been authorized.

 

 

3.

Attached hereto as Exhibit C is a true and correct copy of the certificate of
good standing or its equivalent, dated as of a recent date, as issued by the
competent authority of the State of California, certifying that the Borrower is,
as of the day of the date of issuance thereof, a valid and subsisting legal
entity.

 

 

4.

No action or proceeding for the dissolution, merger, sale, consolidation or
liquidation of the Borrower, or for the sale of all or substantially all of its
assets, is pending or, to the best of my knowledge, contemplated, and neither
the Board of Directors of the Borrower nor the stockholders of the Borrower have
taken any action in preparation for any such proceeding or action.

 

 

5.

Attached hereto as Exhibit D is a true, correct and complete copy of the
resolutions of the Board of Directors of the Borrower, from the meeting held on
June 28, 2016 authorizing the execution, delivery and performance of the Credit
Agreement and the other Loan Documents to which the Borrower is a party, with
the terms approved by officers authorized by the Board of Directors (each, an
“Authorized Officer”), and all other transactions and documents contemplated
thereby and all other necessary transactions of the Borrower in connection
therewith. Such resolutions are in full force and have not been amended or
modified, revoked or rescinded as of the date hereof and constitute the only
resolutions adopted by the Board of Directors of the Borrower with respect to
the Credit Agreement.

 

 

6.

Schedule A to this certificate sets forth each entity that is required under the
terms of the Credit Agreement to be a Guarantor of the Loans.

 

 
Exhibit G-1-1 

--------------------------------------------------------------------------------

 

 

 

7.

Each person who, as an Authorized Officer of the Borrower signed, as applicable,
the Credit Agreement, the Collateral Documents and any other Loan Document
delivered prior to or on the date of this Certificate in connection with the
Credit Agreement (including any amendments, agreements, undertakings or
certificates delivered pursuant thereto) was, at the respective times of such
signing and the delivery of such documents and is now, duly elected or
appointed, qualified and acting as such officer, and the signatures of such
persons appearing on such documents are their genuine signatures; and each
person named below has been duly elected and now holds the office set forth
opposite his or her name. Attached hereto as Exhibit E is a true, complete and
correct copy of the incumbency certificate of the each Authorized Officer that
has signed any of the documents referred to above.

 

Name

Title

   

Ara K. Hovnanian

Chief Executive Officer
and President

   

J. Larry Sorsby

Executive Vice President.
and Chief Financial Officer

   

Michael Discafani

Vice President, Corporate
Counsel and Secretary

   

Brad O’Connor

Vice President, Chief
Accounting Officer and
Corporate Controller

   

David Bachstetter

Vice President Finance and Treasurer

   

Capitalized terms used herein and not otherwise defined herein are used as
defined in the Credit Agreement.

 

 
Exhibit G-1-2 

--------------------------------------------------------------------------------

 

 

 

IN WITNESS WHEREOF, I have signed this certificate.

 

Dated: [●], 2016

 

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

By:     ___________________________

Name: Michael Discafani

Title:     Vice President, Corporate

               Counsel and Secretary

 

 

I, [●], [●] of K. Hovnanian Enterprises, Inc., certify that Michael Discafani is
the Vice President, Corporate Counsel and Secretary of K. Hovnanian Enterprises,
Inc., and that the signature appearing above is his genuine signature.

 

IN WITNESS WHEREOF, I have hereunto set my hand as of [●], 2016.

 

 

 

 

By:     ____________________________

           Name:

           Title:

 

 
 Exhibit G-1-3

--------------------------------------------------------------------------------

 

 

EXHIBIT G-2

 

Form of Secretary’s Certificate
for the OTHER LOAN PARTIES

 

HOVNANIAN ENTERPRISES, INC.

 

Secretary’s Certificate

 

The undersigned hereby certifies that he is the Secretary of Hovnanian
Enterprises, Inc., a Delaware corporation (“Holdings”), and each of the
subsidiary guarantors listed on Schedule 10.01 to the Credit Agreement (as
defined below) (the “Subsidiary Guarantors”, and together with Holdings, the
“Guarantors”), and that as such he is authorized to execute and deliver this
certificate in connection with that certain Credit Agreement dated as of July
29, 2016 (the “Credit Agreement”; the terms defined therein being used herein as
therein defined), among Holdings, K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), the Subsidiary Guarantors party thereto, each
lender from time to time party thereto, and Wilmington Trust, National
Association, as Administrative Agent, and further certifies in his capacity as
Secretary of Holdings and the Subsidiary Guarantors, and not in his individual
capacity, as follows:

 

 

1.

Attached hereto as Exhibit A are true, correct and complete copies of the
Certificate of Incorporation, Articles of Incorporation or Articles of
Organization, as applicable, for each of Holdings and the Subsidiary Guarantors
listed on Schedule A hereto (which includes all of Holdings’ significant
subsidiaries within the meaning set forth in Rule 1-02 of Regulation S-X under
the Exchange Act) (the “Significant Subsidiaries”) and each such Certificate of
Incorporation, Articles of Incorporation and Certificate of Formation is in full
force and effect as of the date hereof, there having been no amendments or other
documents filed affecting any such Certificate of Incorporation, Articles of
Incorporation or Articles of Organization of Holdings or the Significant
Subsidiaries and no such amendment has been authorized.

 

 

2.

Attached hereto as Exhibit B are true, correct and complete copies of the
By-Laws or the Limited Liability Company Agreements, as applicable, of Holdings
and the Significant Subsidiaries, and each such By-Laws and Limited Liability
Company Agreements is in full force and effect as of the date hereof, there
having been no amendments affecting any such By-Laws or Limited Liability
Company Agreements and no such amendment has been authorized.

 

 

3.

Attached hereto as Exhibit C are true and correct copies of the certificates of
good standing, or its equivalent, dated as of a recent date, as issued by the
competent authorities of the state of incorporation of Holdings and each
Significant Subsidiary, the Guarantors identified on Schedule B hereto and
certain other Guarantors identified by the Lenders on Schedule C hereto
(collectively, the “Specified Guarantors”), certifying that each of Holdings or
the Specified Guarantors, as applicable, is, as of the day of the date of
issuance, a valid and subsisting legal entity.

 

 

4.

No action or proceeding for the dissolution, merger, sale, consolidation or
liquidation of Holdings or the Specified Guarantors, or for the sale of all or
substantially all of its assets, is pending or, to the best of my knowledge,
contemplated, and neither the Board of Directors of Holdings or the Specified
Guarantors nor the stockholders of Holdings or the Specified Guarantors have
taken any action in preparation for any such proceeding or action.

 

 
Exhibit G-2-2 

--------------------------------------------------------------------------------

 

 

 

5.

Attached hereto as Exhibit D-1, D-2 and D-3, respectively, are true, correct and
complete copies of (a) the resolutions of the Board of Directors of Holdings,
dated June 28, 2016, (b) the resolutions of the Board of Directors of certain of
the Subsidiary Guarantors (or such Subsidiary Guarantors’ ultimate managing
member or sole member, as applicable), dated June 28, 2016 and (c) the
resolutions of K. HOV IP II, Inc., dated [●], 2016, in each case authorizing the
Guarantees of the Loan Obligations and the terms of the Guarantees, the
execution, delivery and performance of the Credit Agreement and the other Loan
Documents to which each applicable Guarantor is a party and all other
transactions and documents contemplated thereby, and all other necessary
transactions of Holdings and the Subsidiary Guarantors in connection therewith.
Such resolutions are in full force and have not been amended or modified,
revoked or rescinded as of the date hereof and constitute the only resolutions
adopted by the Board of Directors of Holdings and of such Subsidiary Guarantors
(or such Subsidiary Guarantors’ ultimate managing member or sole member, as
applicable), with respect to Guarantee of Loan Obligations under the Credit
Agreement.

 

 

6.

Each person who, as an authorized officer of Holdings and the Subsidiary
Guarantors signed, as applicable, the Credit Agreement, the Collateral Documents
and any other Loan Document delivered prior to or on the date of this
Certificate in connection with the Credit Agreement (including any amendments,
agreements, undertakings or certificates delivered pursuant thereto) (each, an
“Authorized Officer”) was, at the respective times of such signing and the
delivery of such documents and is now, duly elected or appointed, qualified and
acting as such officer, and the signatures of such persons appearing on such
documents are their genuine signatures; and each person named below has been
duly elected and now holds the office set forth opposite his or her name.
Attached hereto as Exhibit E is a true, complete and correct copy of the
incumbency certificate of each Authorized Officer that has signed any of the
documents referred to above.

 

Name

Title

   

Ara K. Hovnanian

Chief Executive Officer
and President

   

J. Larry Sorsby

Executive Vice President.
and Chief Financial Officer

   

Michael Discafani

Vice President, Corporate
Counsel and Secretary

   

Brad O’Connor

Vice President, Chief
Accounting Officer and
Corporate Controller

   

David Bachstetter

Vice President Finance and Treasurer

 

Capitalized terms used herein and not otherwise defined herein are used as
defined in the Credit Agreement.

 

 
 Exhibit G-2-3

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, I have signed this certificate.

 

Dated: [●], 2016

 

 

HOVNANIAN ENTERPRISES, INC.

 

 

 

By:     ___________________________

Name: Michael Discafani

Title:     Vice President, Corporate

              Counsel and Secretary

 

SUBSIDIARY GUARANTORS

 

 

By:     ___________________________

Name: Michael Discafani

Title:     Vice President, Corporate

              Counsel and Secretary

 

 

I, [●], [●] of Hovnanian Enterprises, Inc. and the Subsidiary Guarantors,
certify that Michael Discafani is the Vice President, Corporate Counsel and
Secretary of K. Hovnanian Enterprises, Inc., and that the signature appearing
above is his genuine signature.

 

IN WITNESS WHEREOF, I have hereunto set my hand as of [●], 2016.

 

 

 

 

By:     ____________________________

           Name:

           Title:

 

 
 Exhibit G-2-4

--------------------------------------------------------------------------------

 

 

EXHIBIT H-1

 

Form of RESPONSIBLE OFFICER’S CERTIFICATE

 

K. HOVNANIAN ENTERPRISES, INC.

 

Responsible Officer’s Certificate

 

The undersigned hereby certifies that he is a Responsible Officer of K.
Hovnanian Enterprises, Inc., a California corporation (the “Borrower”), and that
as such he is authorized to execute and deliver this certificate in connection
with Section 4.02(b) of that certain Credit Agreement dated as of July 29, 2016
(as amended, restated, amended and restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”; the terms defined
therein being used herein as therein defined), among Hovnanian Enterprises,
Inc., a Delaware corporation (“Holdings”), the Borrower, each lender from time
to time party thereto, and Wilmington Trust, National Association, as
Administrative Agent, and further certifies in his capacity as Responsible
Officer of the Borrower, and not in his individual capacity, as follows:

 

1.     (A) All representations and warranties in the Loan Documents are true and
correct in all material respects as of the Closing Date; provided that to the
extent any such representations and warranties are qualified by “materiality,”
“Material Adverse Effect” or similar language, such representations and
warranties (after giving effect to any qualification therein) are true and
correct in all respects as of the Closing Date, and (B) upon consummation of the
transactions contemplated by the Loan Documents, the Note Purchase Agreement and
the Exchange Agreement (and the application of the proceeds thereof), no Default
or Event of Default has occurred.

 

2.     Concurrently with the making of Loans on the Closing Date, (i) the
Borrower has issued the New Second Lien Notes in an aggregate principal amount
of $75,000,000 and (ii) the Borrower has issued to the purchasers under the
Exchange Agreement $75,000,000 aggregate principal amount of First Lien Exchange
Notes in exchange for $75,000,000 aggregate principal amount of such purchasers’
Existing Second Lien Notes, in each case subject to the terms and conditions set
forth in the Note Purchase Agreement and the Exchange Agreement, respectively.

 

3.     Concurrently with the borrowing of Initial Term Loans, either (i) the
Tender Offer has been consummated and the Borrower has accepted for purchase, in
each case on the terms of the Offer to Purchase Statement (subject to the right
of the Purchasers (as defined in the Note Purchase Agreement) to consent to
certain changes to such terms in accordance with Section 7.01 of the Note
Purchase Agreement), all January 2017 Notes validly tendered and not withdrawn;
provided that (x) at least 90% of the aggregate principal amount of the January
2017 Notes outstanding as of the date of this Agreement has been accepted for
purchase by the Borrower pursuant to the Tender Offer and (y) the Borrower has
received the Required Consents (as defined in the Offer to Purchase Statement),
or (ii) the Borrower has otherwise purchased or irrevocably called for
redemption, together with any January 2017 Notes accepted for purchase pursuant
to the terms of the Tender Offer and Consent Solicitation (subject to the right
of the Purchasers (as defined in the Note Purchase Agreement) to consent to
certain changes to such terms in accordance with Section 7.01 of the Note
Purchase Agreement), at least 90% of the aggregate principal amount of the
January 2017 Notes outstanding as of the date of this Agreement, provided that
either (i) the Borrower has received the Required Consents (as defined in the
Offer to Purchase Statement) or (ii) the liens covenant contained in the January
2017 Notes Indenture permit the incurrence of the liens securing the New Second
Lien Notes or are no longer operative.

 

 
Exhibit H-1-1 

--------------------------------------------------------------------------------

 

 

[Remainder of page intentionally left blank; signature page to follow]

 

 
 Exhibit H-1-2

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, I have signed this certificate.

 

Dated: [●], 2016

 

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

By:     ___________________________

           Name:

           Title:

 

 
Exhibit H-1-3 

--------------------------------------------------------------------------------

 

 

EXHIBIT H-2

 

Form of PERFECTION Certificate

 

[See attached.]

 

 
 

--------------------------------------------------------------------------------

 

 

EXHIBIT H-3

 

Form of Solvency Certificate

 

SOLVENCY CERTIFICATE

[ ], 2016

 

Reference is made to that certain Credit Agreement (the “Credit Agreement”),
dated as of July 29, 2016, among K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), Hovnanian Enterprises, Inc., a Delaware
Corporation (“Holdings”), the other guarantors listed on Schedule 10.01 thereto
(each a “Subsidiary Guarantor” and, together with Holdings, the “Guarantors”),
Wilmington Trust, National Association, as administrative agent (the
“Administrative Agent”) and each lender party thereto (each a “Lender” and
together, the “Lenders”). Unless otherwise defined herein, capitalized terms
used in this Certificate shall have the meanings set forth in the Credit
Agreement.

 

I, J. Larry Sorsby, solely in my capacity as the Chief Financial Officer of
Holdings and not in my individual capacity, do hereby certify on behalf of
Holdings that as of the date hereof and based upon facts and circumstances as
they exist as of the date hereof, after giving effect to the consummation of the
transactions contemplated by the Credit Agreement, the Exchange Agreement and
the Note Purchase Agreement:

 

1.     The present fair saleable value of the properties and assets of Holdings
and its Subsidiaries, on a consolidated basis, is not less than the total amount
that would be required to pay the probable liability of Holdings and its
subsidiaries, on a consolidated basis, on their total debts and liabilities
(including contingent liabilities) as they become absolute and matured.

 

2.      Holdings and its subsidiaries, on a consolidated basis, are able to
realize upon their properties and assets and generally pay their debts and other
liabilities, contingent obligations and commitments as they mature and become
due in the normal course of business.

 

3.      Holdings and its subsidiaries, on a consolidated basis, do not intend to
and do not believe that they will, incur debts or liabilities beyond their
ability to pay such debts and liabilities as they mature.

 

4.      Holdings and its subsidiaries, on a consolidated basis, are not engaged
in any business or transaction, and do not propose to engage in any business or
transaction, for which their properties and assets would constitute unreasonably
small capital after giving due consideration to the prevailing practices in the
industry in which they are engaged.

 

4.     For purposes of this Certificate, the amount of any contingent liability
has been computed in accordance with GAAP.

 

5.     In reaching the conclusions set forth in this Certificate, I have made
such investigations and inquiries as I have deemed appropriate, having taken
into account the nature of the particular business anticipated to be conducted
by Hovnanian and its subsidiaries after consummation of the transactions
contemplated by the Note Purchase Agreement, the Exchange Agreement and the Term
Loan Credit Agreement.

 

[Remainder of this page intentionally left blank.]

 

 
 Exhibit H-3-1

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, I HAVE EXECUTED THIS Certificate as of the date first
written above.

 

 

HOVNANIAN ENTERPRISES, INC.

 

 

 

By: ____________________________

Name: J. Larry Sorsby

Title: Chief Financial Officer

 

 
 Exhibit H-3-2

--------------------------------------------------------------------------------

 

 

EXHIBIT I

 

 

 

 

 

 

 

SUPPLEMENTAL GUARANTEE

 

dated as of __________, ____

 

among

 

K. HOVNANIAN ENTERPRISES, INC.,

 

HOVNANIAN ENTERPRISES, INC.,

 

The Other Guarantors Party Hereto

 

and

 

WILMINGTON TRUST, NATIONAL ASSOCIATION

 

as Administrative Agent

 

 
 

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THIS [          ] SUPPLEMENTAL GUARANTEE (this “[         ] Supplemental
Guarantee”), entered into as of __________, ____, among K. Hovnanian
Enterprises, Inc., a California corporation (the “Borrower”), Hovnanian
Enterprises, Inc., a Delaware corporation (“Holdings”), [list each new guarantor
and its jurisdiction of incorporation] (each an “Undersigned”) and Wilmington
Trust, National Association, a national banking association, as Administrative
Agent (the “Administrative Agent”).

 

RECITALS

 

WHEREAS, the Borrower, Holdings, the other Guarantors party thereto and the
Administrative Agent entered into a credit agreement, dated as of July 29, 2016
(the “Credit Agreement”);

 

WHEREAS, in consideration of the extensions of credit made pursuant to the
Credit Agreement, Holdings agreed pursuant to the Credit Agreement to cause any
newly acquired or created Restricted Subsidiaries (other than any Excluded
Subsidiary) to provide Guarantees.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and intending to be legally bound, the parties hereto hereby agree as
follows:

 

Section 1. Capitalized terms used herein and not otherwise defined herein are
used as defined in the Credit Agreement.

 

Section 2. Each Undersigned, by its execution of this [         ] Supplemental
Guarantee, agrees to be a Guarantor under the Credit Agreement and to be bound
by the terms of the Credit Agreement applicable to Guarantors, including, but
not limited to, Article X thereof.

 

Section 3. This [         ] Supplemental Guarantee shall be governed by and
construed in accordance with the laws of the State of New York.

 

Section 4. This [         ] Supplemental Guarantee may be signed in various
counterparts which together shall constitute one and the same instrument.

 

Section 5. This [         ] Supplemental Guarantee is an amendment supplemental
to the Credit Agreement and the Credit Agreement and this [         ]
Supplemental Guarantee shall henceforth be read together.

 

Section 6. The Administrative Agent shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Guarantee or for or in respect of the Recitals contained herein, all of which
are made solely by the Borrower, Holdings and each of the undersigned.

 

 
Exhibit I-2 

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IN WITNESS WHEREOF, the parties hereto have caused this [         ] Supplemental
Guarantee to be duly executed as of the date first above written.

 

 

K. HOVNANIAN ENTERPRISES, INC., as Issuer

          By:         Name:       Title:  

 

 

 

HOVNANIAN ENTERPRISES, INC.

          By:         Name:       Title:  

 

 

 

[GUARANTOR]

          By:         Name:       Title:  

 

 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Administrative Agent

          By:         Name:       Title:  

 

 
Exhibit I-3 

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EXHIBIT J

 

FORM OF OFFER TO PURCHASE STATEMENT

 

[See attached.]

 

 
 

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EXHIBIT K

 

FORM OF COLLATERAL PERFECTION OFFICER’S CERTIFICATE

 

[See attached.]