Exhibit 10.2

 Execution Version

 

 

 

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$125,000,000

CREDIT AGREEMENT

Dated as of January 29, 2018

 

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

1

SECTION 1.01

Defined Terms

1

SECTION 1.02

Rules of Construction

41

SECTION 1.03

Times of Day

41

SECTION 1.04

Timing of Payment or Performance

41

     

ARTICLE II

     

THE COMMITMENTS AND BORROWINGS

42

SECTION 2.01

Commitments

42

SECTION 2.02

Borrowings

42

SECTION 2.03

Prepayments

43

SECTION 2.04

Termination of Commitments

45

SECTION 2.05

Repayment of Loans

46

SECTION 2.06

Interest

46

SECTION 2.07

Fees

46

SECTION 2.08

Computation of Interest and Fees

47

SECTION 2.09

Evidence of Indebtedness

47

SECTION 2.10

Payments Generally

47

SECTION 2.11

Sharing of Payments

49

SECTION 2.12

[Reserved]

49

SECTION 2.13

Extensions of Loans

49

SECTION 2.14

Replacement and Refinancing Facilities

51

SECTION 2.15

Defaulting Lenders

54

SECTION 2.16

Term Loan Conversion; Repayment of Converted Term Loans

55

     

ARTICLE III

     

TAXES, INCREASED COSTS, PROTECTION AND ILLEGALITY

55

SECTION 3.01

Taxes

55

SECTION 3.02

[Reserved]

59

SECTION 3.03

[Reserved]

59

SECTION 3.04

Capital Adequacy

60

SECTION 3.05

[Reserved]

60

SECTION 3.06

Matters Applicable to All Requests for Compensation

60

 

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SECTION 3.07

Replacement of Lenders Under Certain Circumstances

61

SECTION 3.08

Survival

61

     

ARTICLE IV

     

CONDITIONS PRECEDENT

62

SECTION 4.01

Conditions to Effectiveness

62

SECTION 4.02

Conditions to Initial (Closing Date) Borrowing

62

SECTION 4.03

Conditions to All Credit Extensions After the Closing Date

64

     

ARTICLE V

     

REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND THE BORROWER

64

SECTION 5.01

Good Standing of the Borrower, Holdings and its Subsidiaries

64

SECTION 5.02

Loan Documents

65

SECTION 5.03

Absence of Defaults and Conflicts

65

SECTION 5.04

Authorization of this Agreement

65

SECTION 5.05

Environmental Laws and ERISA

65

SECTION 5.06

Litigation

65

SECTION 5.07

Financial Statements

65

SECTION 5.08

Investment Company Act

66

SECTION 5.09

Solvency

66

SECTION 5.10

Regulations T, U, X

66

SECTION 5.11

Sanctions

66

SECTION 5.12

Taxes

67

SECTION 5.13

Compliance with Laws

67

SECTION 5.14

Capital Stock

67

SECTION 5.15

Title to Properties

67

SECTION 5.16

Possession of Licenses and Permits

68

SECTION 5.17

Insurance

68

SECTION 5.18

No Material Adverse Change in Business

68

SECTION 5.19

Collateral

68

     

ARTICLE VI

     

COVENANTS

69

SECTION 6.01

Existence

69

SECTION 6.02

Payment of Taxes

69

SECTION 6.03

Limitations on Indebtedness

69

SECTION 6.04

Limitations on Restricted Payments

71

SECTION 6.05

Limitations on Liens

74

 

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SECTION 6.06

Limitations on Restrictions Affecting Restricted Subsidiaries

74

SECTION 6.07

Limitations on Dispositions of Assets

76

SECTION 6.08

Guarantees by Restricted Subsidiaries

77

SECTION 6.09

[Reserved]

77

SECTION  6.10

Limitations on Transactions with Affiliates

77

SECTION 6.11

Limitations on Mergers, Consolidations and Sales of Assets

79

SECTION 6.12

Reports to Lenders

80

SECTION 6.13

Notice of Other Defaults

81

SECTION 6.14

Collateral Requirement; Further Assurances; Costs

81

SECTION 6.15

Maintenance of Ratings

83

SECTION 6.16

Change of Control Offers

83

SECTION 6.17

Maintenance of Properties

84

SECTION 6.18

Insurance

84

SECTION 6.19

Use of Proceeds

84

     

ARTICLE VII

     

EVENTS OF DEFAULT AND REMEDIES

85

SECTION 7.01

Events of Default

85

SECTION 7.02

[Reserved]

88

SECTION 7.03

Application of Funds

88

     

ARTICLE VIII

     

ADMINISTRATIVE AGENT AND OTHER AGENTS

88

SECTION 8.01

Appointment and Authority

88

SECTION 8.02

Rights as a Lender

89

SECTION 8.03

Exculpatory Provisions

90

SECTION 8.04

Reliance by Administrative Agent

92

SECTION 8.05

Delegation of Duties

92

SECTION 8.06

Resignation of Administrative Agent: Appointment of Successor

93

SECTION 8.07

Non-Reliance on Administrative Agent and Other Lenders

93

SECTION 8.08

Collateral and Guarantee Matters

94

SECTION 8.09

[Reserved]

96

SECTION 8.10

Appointment of Supplemental Administrative Agents

96

SECTION 8.11

Administrative Agent May File Proofs of Claim

97

SECTION 8.12

Indemnification of Administrative Agent

97

SECTION 8.13

Agency for Perfection

98

 

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ARTICLE IX

     

MISCELLANEOUS

98

SECTION 9.01

Amendments, Etc

98

SECTION 9.02

Notices and Other Communications; Facsimile Copies

101

SECTION 9.03

No Waiver; Cumulative Remedies

101

SECTION 9.04

Expenses

102

SECTION 9.05

Indemnification by the Borrower

102

SECTION 9.06

Marshalling; Payments Set Aside

104

SECTION 9.07

Successors and Assigns

104

SECTION 9.08

[Reserved]

107

SECTION 9.09

Setoff

107

SECTION 9.10

Interest Rate Limitation

108

SECTION 9.11

Counterparts

108

SECTION 9.12

Integration

108

SECTION 9.13

Survival

108

SECTION 9.14

Severability

108

SECTION 9.15

GOVERNING LAW

108

SECTION 9.16

WAIVER OF RIGHT TO TRIAL BY JURY

109

SECTION 9.17

Binding Effect

109

SECTION 9.18

U.S.A PATRIOT Act Notice

109

SECTION 9.19

No Advisory or Fiduciary Relationship

110

     

ARTICLE X

     

GUARANTEES; RELEASE OF GUARANTOR

110

SECTION 10.01

Guarantee

110

SECTION 10.02

Obligations of each Guarantor Unconditional

111

SECTION 10.03

Release of a Guarantor

111

SECTION 10.04

Execution and Delivery of Guarantee

111

SECTION 10.05

Limitation on Guarantor Liability

111

SECTION 10.06

Article X not to Prevent Events of Default

111

SECTION 10.07

Waiver by the Guarantors

112

SECTION 10.08

Subrogation and Contribution

112

SECTION 10.09

Stay of Acceleration

112

 

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SCHEDULES

     

1.01

Unrestricted Subsidiaries

2.01

Initial Commitments

9.02

Administrative Agent’s Office, Certain Addresses for Notices

   

 

EXHIBITS

 

A-1

Form of Loan Notice

A-2

Form of Prepayment Notice

B

Form of Note

C

Form of Assignment and Assumption

D

Form of Administrative Questionnaire

E-1

U.S. Tax Certificate (For Non-U.S. Lenders that are not Partnerships For U.S.
Federal Income Tax Purposes)

E-2

U.S. Tax Certificate (For Non-U.S. Lenders that are Partnerships For U.S.
Federal Income Tax Purposes)

E-3

U.S. Tax Certificate (For Non-U.S. Participants that are not Partnerships For
U.S. Federal Income Tax Purposes)

E-4

U.S. Tax Certificate (For Non-U.S. Participants that are Partnerships For U.S.
Federal Income Tax Purposes)

F

[Reserved]

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-1

Form of Opinion of Simpson Thacher & Bartlett LLP

I-2

Form of General Counsel Opinion

J-1

J-2

Form of Security Agreement

Form of Pledge Agreement

K

Form of Supplemental Guarantee

L

Form of Note Purchase Agreement

M

Form of Joinder to Intercreditor Agreement and Mortgage Tax Collateral Agency
Agreement

 

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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 January 29,
2018 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 Lenders provide the Borrower with a secured
credit facility pursuant to which the Borrower may, from time to time prior to
December 28, 2019, borrow revolving loans in an aggregate principal amount not
to exceed $125,000,000 at any time outstanding and which outstanding principal
amount shall become due on December 28, 2022, subject to any extension of
maturity or acceleration of such amounts pursuant to the terms of this
Agreement.

 

The proceeds of the Loans made on the Closing Date will be used in accordance
with this Agreement to consummate the Existing Term Loan Refinancing.

 

The proceeds of any Loans made at any time after the Closing Date will be used
(i) to finance the ongoing working capital requirements of the Borrower and its
Subsidiaries, (ii) for general corporate purposes of the Borrower and its
Subsidiaries, including capital expenditures, Restricted Payments, permitted
acquisitions and any other Investments permitted hereunder and debt repayments
or repurchases permitted hereunder and (iii) for any other purpose not
prohibited by the Loan Documents.

 

The Loan Parties have agreed pursuant to this Agreement, the Security Agreement
and the other Collateral Documents to secure all of the Loan Obligations on and
after the Closing Date by granting to the Administrative Agent, for the benefit
of the Secured Parties, senior secured first priority Liens (subject only to
Permitted Liens) on all property and assets of the Loan Parties, whether now
owned or hereafter acquired, that constitute Collateral.

 

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

 

The Lenders have agreed to provide the Loans and other credit extensions
contemplated hereunder on the terms, and subject to the conditions set forth in,
this Agreement and the other Loan Documents.

 

In consideration of the mutual covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, 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:

 

“10.0% Notes” shall have the meaning assigned to such term in the definition of
“Existing Secured Notes”.

 

 

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“10.500% Notes” shall have the meaning assigned to such term in the definition
of “Existing Secured Notes”.

 

“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 (a) on the date hereof, 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 (b) at any time after the date
hereof, any permitted successor administrative agent or collateral agent, as the
case may be, appointed in accordance with the terms hereof.

 

“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 Fee Letter”: means that certain letter, dated as of the date hereof, by
and among the Borrower and the Administrative Agent.

 

“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 Commitments of all the Lenders.

 

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“Aggregate Exposure” means, with respect to a Lender at any time, an amount
equal to such Lender’s Total Outstandings at such time plus the amount of such
Lender’s unfunded Commitment then in effect (if any).

 

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

 

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

 

“Amended and Restated Collateral Agency Agreement” means the Second Amended and
Restated Mortgage Tax Collateral Agency Agreement dated as of July 27, 2017,
among the Borrower, Holdings, the other grantors party from time to time
thereto, the Administrative Agent, Wilmington Trust, National Association, as
Joint Collateral Agent (as defined therein) and the Mortgage Tax Collateral
Agent and the other parties thereto, as may be amended, restated, supplemented
or otherwise modified from time to time (including by joinders thereto).

 

“Amended and Restated Intercreditor Agreement” means the Amended and Restated
Intercreditor Agreement, dated as of September 8, 2016, among the Borrower,
Holdings, the other grantors party from time to time thereto, the Administrative
Agent, Wilmington Trust, National Association, as Junior Joint Collateral Agent
(as defined therein), the Mortgage Tax Collateral Agent and the other parties
thereto, as may be amended, restated, supplemented or otherwise modified from
time to time (including by joinders thereto).

 

“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 and the Exchange Notes.

 

“Applicable Rate” means a per annum rate of interest equal to the lesser of:

 

(a) 10.0%; and

 

(b) the volume-weighted average yield-to-maturity (the “VWAY”) of the 10.5%
Notes during the thirty (30) calendar day period ending on the date that is one
Business Day prior to the Closing Date (such period, the “Applicable Period”),
calculated by PJT Partners, Inc. or another designee of the Initial Lenders that
the Borrower consents to (such consent not to be unreasonably withheld) (the
“Applicable Rate Calculation Agent”) minus 0.50%; provided, that, if the
Applicable Rate Calculation Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the 10.5% Notes, adequate and reasonable means do not
exist for ascertaining the VWAY of the 10.5% Notes for the Applicable Period as
required by this clause (b), the rate for purposes of this clause (b) shall
instead be the rate calculated by the Applicable Rate Calculation Agent using
the VWAY during the Applicable Period of the Borrower’s secured debt securities
having the largest traded volume during the Applicable Period, as selected and
determined by the Applicable Rate Calculation Agent minus 0.50%; provided,
further, that, if the Applicable Rate Calculation Agent shall have determined
(which determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the 10.5% Notes and all other secured debt
securities issued by the Borrower, adequate and reasonable means do not exist
for ascertaining the rate pursuant to the foregoing proviso, the rate for
purposes of this clause (b) shall instead be the rate calculated by the
Applicable Rate Calculation Agent using the average of the quotations for the
10.5% Notes received by the Applicable Rate Calculation Agent from three (3)
brokers of recognized standing selected by it minus 0.50%.

 

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“Applicable Period” shall have the meaning assigned to such term in the
definition of “Applicable Rate”.

 

“Applicable Rate Calculation Agent” shall have the meaning assigned to such term
in the definition of “Applicable Rate”.

 

“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. 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),

 

(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,

 

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(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.

 

“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.

 

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

 

“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 delegated its authority.

 

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

 

“Borrowing” means a borrowing consisting of simultaneous Loans of the same Class
made by each of the Lenders pursuant to Section 2.01.

 

“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.

 

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“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.

 

“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 (10) Business Days
following the receipt of such amounts.

 

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“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;

 

(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; or

 

(c)     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 Initial Lenders, Replacement Lenders, Refinancing Lenders, Extending
Lenders, with Loans or Commitments hereunder with identical terms, (b) when used
with respect to Commitments, refers to whether such Commitments are Initial
Commitments, Extended Commitments, Replacement Commitments, Refinancing
Commitments or Commitments in respect of 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 the Initial Loans, Refinancing Loans,
Replacement Loans, Extended Loans, in each case, 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 Section 2.13,
Section 2.14 or 9.01, of which such Loan, Borrowing or 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.

 

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“Collateral” has the meaning specified in the Security Agreement.

 

“Collateral Documents” means, collectively, the Amended and Restated
Intercreditor Agreement, any other 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, perfects or
evidences, or purports to create, perfect or evidence, a Lien on any Collateral
in favor of the Administrative Agent for the benefit of the Secured Parties as
security for the Loan Obligations, in each case, to be entered on or after the
Closing Date.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

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

 

“Commitment Period” means, (a) with respect to the Initial Facility entered into
on the Effective Date, the period from and including the Closing Date to but not
including the Conversion Date or any earlier date on which the Commitments shall
terminate as provided herein and (b) with respect to any Replacement Facility
established hereunder, the period from and including the date that such Facility
is established to but not including the Conversion Date or any earlier date on
which the Commitments shall terminate as provided herein or therein.

 

“Commitment Termination Date” means the earliest of (i) March 1, 2018, if the
“Closing Date”, as defined in, and with respect to, the New Term Loan Credit
Agreement, shall not have occurred and (ii) September 30, 2018.

 

“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 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.

 

“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,

 

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(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 hereunder, incurrence of Indebtedness pursuant to
the New Term Loan Agreement and the issuance of the Exchange Notes and (ii) any
amendment or other modification of the Loans hereunder, the New Term Loan
Agreement, the Exchange Notes or other Indebtedness,

 

(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,

 

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(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).

 

“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 as if it 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.

 

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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,

 

(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,

 

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(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,

 

(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 the Effective
Date), 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 the Effective Date 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.

 

“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.

 

“Conversion Date” means December 28, 2019.

 

“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) 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.

 

“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.

 

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“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).

 

“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 January 29, 2018.

 

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“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 5.05.

 

“Equity Offering” means any public or private sale, after the Closing Date, of
Qualified Stock of Holdings, other than (a) an Excluded Contribution, (b) public
offerings registered on Form S-4 or S-8 or any successor form thereto or (c) 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.

 

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

 

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

 

“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.

 

“Exchange Notes” means the (i) 13.5% Senior Notes due 2026 of the Borrower and
(ii) 5.0% Senior Notes due 2040 of the Borrower issued under the Exchange Notes
Indenture.

 

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

 

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“Exchange Notes Indenture” means the Indenture, to be dated on or about February
1, 2018 (as it may be amended, supplemented or otherwise modified from time to
time), by and among the Borrower, Holdings, each of the guarantors party thereto
and the Exchange Notes Trustee, under which the Exchange Notes are issued.

 

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

 

“Excluded Contribution” means cash or Cash Equivalents received by Holdings as
capital contributions to its equity (other than through the issuance of
Disqualified Stock) or from the issuance or sale (other than to a Subsidiary) of
Qualified Stock of Holdings, in each case, after the Effective Date and to the
extent designated as an Excluded Contribution pursuant to an Officer’s
Certificate of the Company.

 

“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.

 

“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 Commitment pursuant to a law in effect on the date on which (i) such
Lender acquires such interest in the Loan or 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 Commitment or to such Lender immediately before it changed
its Lending Office, (c) Taxes attributable to such Lender’s or Agent’s failure
to comply with Section 3.01(f) and (d) any withholding Taxes imposed under
FATCA.

 

“Existing Revolving Credit Agreement” means 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.

 

“Existing Secured Notes” means the Borrower’s 10.000% Senior Secured Notes due
2022 (the “10.000% Notes”) and the Borrower’s 10.500% Senior Secured Notes due
2024 (the “10.500% Notes”), issued under the Existing Secured Notes Indenture.

 

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“Existing Secured Notes Indenture” means the Indenture, dated as of July 27,
2017, among the Borrower, Holdings and the other guarantors party thereto and
the trustee named therein and the collateral agent named therein, in each case
as amended and supplemented as of the date hereof and as further amended or
supplemented from time to time hereafter.

 

“Existing Term Loan Refinancing” shall have the meaning assigned to such term in
Section 4.02(d).

 

“Existing Unsecured Notes” means the Borrower’s 8.000% Senior Notes due 2019
issued under the Existing Unsecured Notes Indenture.

 

“Existing Unsecured Notes Exchange” means (a) the Borrower’s offer to exchange,
and subsequent exchange of, up to $185,000,000 aggregate principal amount of its
Existing Unsecured Notes for a combination of cash and Exchange Notes pursuant
to the terms and conditions set forth in the confidential offering memorandum of
the Borrower in respect of such offer and exchange, dated December 28, 2017, and
(b) all payments made and securities issued in connection with the foregoing.

 

“Existing Unsecured Notes Indenture” means the Indenture governing the Existing
Unsecured Notes, dated as of November 5, 2014, among the Borrower, the
guarantors party thereto and Wilmington Trust, National Association, as trustee,
as amended and supplemented as of the date hereof and as further amended or
supplemented from time to time hereafter.

 

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

 

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

 

“Extending 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, at any time, the aggregate amount of the Lenders’ unfunded
Commitments of a given Class at such time and the Loans made thereunder
outstanding at such time.

 

“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 of Directors 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 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, and any laws,
fiscal or regulatory legislation, rules, guidance notes and practices
implementing the foregoing.

 

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

 

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“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.

 

“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 the Effective Date.

 

“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 5.07.

 

“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, zero if permitted under clause
(f) of the definition of “Permitted Indebtedness” or, otherwise, 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.

 

“Initial Commitment” means, as to each Initial Lender, its obligation to make
one or more Initial Loans to the Borrower pursuant to Section 2.01 in an
aggregate principal amount not to exceed the amount set forth opposite such
Lender’s name on Schedule 2.01 under the caption “Initial Commitment” or in the
Assignment and Assumption pursuant to which such Initial Lender purchased
Commitments and became an Initial Lender under this Agreement, as applicable, as
such amount may be reduced or increased from time to time in accordance with
this Agreement (including pursuant to assignments made in accordance with the
provisions of Section 9.07). The aggregate amount of the Initial Commitments of
the Initial Lenders as of each of the Effective Date and the Closing Date is
$125,000,000. The Initial Lenders shall have the right, on or before the Closing
Date, to deliver an updated Schedule 2.01 to the Borrower providing for the
re-allocation of the Initial Commitments solely among the Initial Lenders, which
shall replace any existing Schedule 2.01 in its entirety; provided, that, in no
event shall the aggregate amount of the Initial Commitments of the Initial
Lenders as of the Closing Date be less than $125,000,000.

 

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“Initial Facility” means, at any time, the aggregate amount of the Initial
Lenders’ unfunded Initial Commitments at such time and the Initial Loans made
thereunder outstanding at such time.

 

“Initial Borrowing” has the meaning specified in Section 4.02.

 

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

 

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

 

“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 Agreement” means, as the context requires, (a) the Amended and
Restated Intercreditor Agreement, (b) an intercreditor agreement substantially
in the form of, and on terms at least as favorable to the Lenders as, the
Amended and Restated Intercreditor Agreement or (c) an intercreditor agreement
in form and substance reasonably satisfactory to the Required Lenders.

 

“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, as to each Loan, (a) the last Business Day of
each January, April, July and October to occur while such Loan is outstanding
commencing with the first such Interest Payment Date to occur immediately after
the Closing Date, (b) each date of any repayment or prepayment made in respect
thereof prior to the Termination Date of such Loan and (c) the Maturity Date of
such Loan.

 

“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.

 

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“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.

 

“JV Holdings Secured Group Notes” means the Borrower’s 2.00% Senior Secured
Notes due 2021, the Borrower’s 5.00% Senior Secured Notes due 2021 and the
Borrower’s 9.50% Senior Secured Notes due 2020, issued under the JV Holdings
Secured Group Notes Indentures.

 

“JV Holdings Secured Group Notes Indentures” means (i) the Indenture dated as of
November 1, 2011 among the Borrower, Holdings and the other guarantors party
thereto and the trustee named therein and the collateral agent named therein
relating to the Borrower’s 2.00% Senior Secured Notes due 2021 and 5.00% Senior
Secured Notes due 2021 and (ii) the Indenture dated as of September 8, 2016,
among the Borrower, Holdings, the other guarantors party thereto and the trustee
named therein and the collateral agent named therein relating to the Borrower’s
9.50% Senior Secured Notes due 2020, in each case as amended and supplemented as
of the date hereof and as further amended or supplemented from time to time
hereafter.

 

“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.”

 

“Latest Maturity Date” means, at any date of determination, the latest Maturity
Date 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 of 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.

 

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“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.

 

“Loans” means an extension of credit by a Lender to the Borrower in the form of
Initial Loans, Replacement Loans or Extended Loans.

 

“Loan Documents” means, collectively, (a) this Agreement, (b) the Notes, (c) the
Collateral Documents, (d) the Agent Fee Letter (for purposes of Section 9.05
only), (e) each other document, instrument or agreement entered into by a Loan
Party for the benefit of any Agent or any Lender in connection with the
foregoing and (f) any amendment, waiver, supplement or other modification to any
of the foregoing.

 

“Loan Notice” means a notice of a Borrowing delivered 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 a
national securities exchange and (b) debt securities that are rated by a
nationally recognized rating agency, listed on a national securities exchange or
covered by at least two reputable market makers.

 

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

 

“Maturity Date” means with respect to the Initial Facility, December 28, 2022;
provided that the reference to Maturity Date (i) with respect to Replacement
Loans shall be the final maturity date as specified in the applicable
Replacement Amendment and (ii) with respect to Extended 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.

 

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“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 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 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 or
issuance.

 

“New Term Loan Credit Agreement” means that certain term loan Credit Agreement,
dated as of the Effective Date, among the Borrower, Holdings, the other
guarantors party thereto and the Lenders (as defined therein) party thereto from
time to time and Wilmington Trust, National Association, as Administrative Agent
(as defined therein), as the same may be amended, restated, amended and
restated, replaced, supplemented or otherwise modified from time to time.

 

“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.

 

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

 

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

 

“Note Purchase Agreement” means the agreement to be entered into by and among
the Borrower, Holdings, the other guarantors named therein, and the Purchasers
(as defined therein) party thereto, attached hereto as Exhibit L.

 

“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 5.11.

 

“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).

 

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“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 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).

 

“Outstanding Amount” means, with respect to any Loans on any date of
determination, the aggregate outstanding principal amount thereof on such date,
after giving effect to any Borrowings, prepayments or repayments of Loans, as
the case may be, 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).

 

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

 

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“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.

 

“Permitted Indebtedness” means:

 

(a)     Indebtedness under (i) this Agreement and the other Loan Documents, (ii)
the Exchange Notes (and the Exchange Notes Guarantees), other than Additional
Notes (as defined in the Exchange Notes Indenture) and (iii) other Indebtedness,
including under the Existing Revolving Credit Agreement, in an aggregate amount
outstanding at any one time (including for purposes of determining amounts
outstanding under this clause (a)(iii), any Refinancing Indebtedness in respect
thereof, which Refinancing Indebtedness shall be deemed to have been incurred
under this clause (a)(iii)) not to exceed $75.0 million (and the guarantees
thereof);

 

(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;

 

(c)     Indebtedness outstanding on the Effective Date, excluding Indebtedness
constituting Permitted Indebtedness pursuant to clauses (b), (d) through (f),
(h), (j), (l), and (n) through (s) below, which shall instead be incurred under
such clauses;

 

(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 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, together with all other Indebtedness under this clause (k), does not
exceed $175.0 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);

 

(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 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); 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;

 

(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; and

 

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(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.

 

“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 Loans being of the
same priority with respect to the Loans 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) and (ii) 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;

 

(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;

 

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(i)     Investments in an aggregate amount at any time outstanding not to exceed
the greater of (i) $125.0 million and (ii) 5.0% of Consolidated Tangible Assets
(measured at the time made and without giving effect to subsequent changes in
value);

 

(j)     Guarantees issued in accordance with Section 6.03;

 

(k)     Investments existing on the Effective Date not otherwise constituting
Permitted Investments pursuant to clause (b) above;

 

(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;

 

(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;

 

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(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 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;

 

(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 (a), (i) or (j)
of the definition of “Permitted Indebtedness;”

 

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(i)     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 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
outstanding under the Existing Secured 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) $840.0 million and
(ii) 37.6% 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 (x) the Liens under
this clause (i) shall rank junior to the Liens securing the Loans and (y) any
Indebtedness incurred to refund, refinance or extend (including Refinancing
Indebtedness) Indebtedness secured by Liens pursuant to this clause (i) shall be
permitted to be secured by Liens pursuant to this clause (i) 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 (i)
due to a diminution in the amount of Consolidated Tangible Assets;

 

(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;

 

(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;

 

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(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 clause
(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;

 

(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 Effective Date (other than Liens securing
obligations under the Existing Secured Notes or the Senior Secured Super
Priority Term Loan Credit Agreement) 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;

 

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(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;

 

(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, (ii) attaching to pooling, commodity trading accounts or
other commodity brokerage accounts incurred in the ordinary course of business
and (iii) 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;

 

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(ll)     any Lien granted pursuant to a security agreement between Holdings, the
Borrower or any Restricted Subsidiary and a licensee of their intellectual
property to secure the damages, if any, of such licensee resulting from the
rejection by Holdings, the Borrower or such Restricted Subsidiary of such
licensee in a bankruptcy, reorganization or similar proceeding with respect to
the Holdings, the Borrower or such Restricted Subsidiary; provided that such
Liens do not cover any assets other than the intellectual property subject to
such license;

 

(mm)     Liens on the Equity Interests of Unrestricted Subsidiaries;

 

(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;

 

(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;

 

(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) 5.6% of Consolidated Tangible Assets 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) shall
have the same or junior priority as the Liens securing the Loans (or, if prior
to the Closing date, the Liens securing loans made pursuant to the Senior
Secured Super Priority Term Loan Credit Agreement); and

 

(rr)     Liens, including Liens on Collateral, securing obligations (including
Indebtedness and Refinancing Indebtedness) not to exceed $50.0 million at any
one time outstanding; provided that (x) any Liens on the Collateral incurred
under this clause (rr) securing Indebtedness (or Obligations in respect thereof)
in an amount up to $25.0 million at any one time outstanding shall have the same
or junior priority as the Liens securing the Loans and (y) any Liens on the
Collateral incurred under this clause (rr) securing Indebtedness (or Obligations
in respect thereof) in excess of $25.0 million shall have junior priority to the
Liens securing the Loans (or, in each case, if prior to the Closing date, the
Liens securing loans made pursuant to the Senior Secured Super Priority Term
Loan Credit Agreement);

 

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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.

 

To the extent that Liens on the Collateral permitted to be incurred under any of
clauses (i), (qq) or (rr) are required thereunder to be junior to the Liens
securing the Loans, such Liens shall be junior pursuant to an Intercreditor
Agreement.

 

“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).

 

“Pledge Agreement” means the Pledge Agreement among the Borrower, the other
Grantors named therein and the Administrative Agent, dated as of the Closing
Date, which shall be substantially in the form of Exhibit J-2.

 

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

 

“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), which shall be
substantially in the form of Exhibit A-2.

 

“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 Commitments of such Lender under the
applicable Facility or Facilities or the Outstanding Amount of such Lender’s
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 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, 2017, 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, 2017 under Section 13(a), 13(c), 14 and 15(d) of the Exchange Act on
or prior to the Effective Date (other than Items 2.02 and 7.01 of a Form 8-K).

 

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“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.

 

“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.

 

“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 (s) 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 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,

 

(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 (a)(iii), (b), (g), and (k) 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.

 

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“Refinancing Lender” has the meaning specified in Section 2.14(b)

 

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

 

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

 

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

 

“Refinancing Loans” has the meaning specified in Section 2.14(b).

 

“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.”

 

“Replacement Amendment” has the meaning specified in Section 2.14(a).

 

“Replacement Commitments” has the meaning specified in Section 2.14(a).

 

“Replacement Commitment Series” has the meaning specified in Section 2.14(a).

 

“Replacement Commitments” has the meaning specified in Section 2.14(a).

 

“Replacement Effective Date” has the meaning specified in Section 2.14(a).

 

“Replacement Lender” has the meaning specified in Section 2.14(a).

 

“Replacement Loans” has the meaning specified in Section 2.14(a).

 

“Required Lenders” means, as of any date of determination, (i) prior to the
Conversion Date, Lenders having more than 50% of the Aggregate Exposure of all
Lenders on such date; provided, that the Aggregate Exposure of any Defaulting
Lender shall be excluded for purposes of making a determination of Required
Lenders and (ii) on or after the Conversion Date, Lenders having more than 50%
of the Total Outstandings on such date; provided, that 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.

 

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“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

 

(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.

 

“S&P” means S&P Global Ratings, a division of S&P Global, Inc., and its
successors.

 

“Sanctioned Country” has the meaning specified in Section 5.11(a).

 

“Sanctions” has the meaning specified in Section 5. 11 (a).

 

“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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“Senior Secured Super Priority Term Loan Credit Agreement” means that certain
Credit Agreement, dated as of July 29, 2016, among the Borrower, Holdings, the
other guarantors party thereto, each lender from time to time party thereto and
Wilmington Trust, National Association, as administrative agent and as
collateral agent, as the same has or may be amended, amended and restated,
supplemented or otherwise modified from time to time.

 

“Security Agreement” means the Security Agreement among the Borrower, the other
Grantors named therein and the Administrative Agent, dated as of the Closing
Date, which shall be substantially in the form of Exhibit J-1.

 

“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.

 

“Specified Representations” means the representations and warranties set forth
in Section 5.01, Section 5.02, Section 5.03, Section 5.04, Section 5.06(a),
Section 5.08, Section 5.09, Section 5.10, Section 5.11 and 5.19.

 

“Specified Transactions” shall mean (1) the consummation of the Existing
Unsecured Notes Exchange, (2) the entry into and effectiveness of the New Term
Loan Credit Agreement, and the borrowing of the First Draw Term Loans (as
defined therein) thereunder, (3) the 7.000% Notes Refinancing (as defined in the
New Term Loan Credit Agreement), (4) the entry into and effectiveness of this
Agreement and the Initial Borrowing hereunder, (5) the refinancing of all
Obligations outstanding under the Senior Secured Super Priority Term Loan Credit
Agreement and (6) the entry into and effectiveness of the Note Purchase
Agreement and the consummation of transactions contemplated thereby.

 

“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.

 

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

 

“Supplemental Administrative Agent” has the meaning specified in Section 8.10(a)
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.

 

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

 

“Total Outstandings” means, as of any date of determination, the aggregate
Outstanding Amount of all Loans on such date.

 

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

 

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

 

“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 “U.S.” mean the United States of America.

 

“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 are 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.

 

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.

 

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

 

“U.S. 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;

 

(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.

 

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ARTICLE II

THE COMMITMENTS AND BORROWINGS

 

SECTION 2.01     Commitments and Loans. Subject to the terms and conditions set
forth herein, each Lender severally agrees to make revolving loans in Dollars to
the Borrower (each such loan, an “Initial Loan”) from time to time, on any
Business Day during the applicable Commitment Period, in an aggregate principal
amount not to exceed at any time outstanding the amount of such Lender’s Initial
Commitment; provided that, after giving effect to any Borrowing, the aggregate
Outstanding Amount of the Loans of any Lender shall not exceed such Lender’s
Initial Commitment. Within the limits of each Lender’s Initial Commitment, and
subject to the other terms and conditions hereof, the Borrower may borrow under
this Section 2.01, prepay under Section 2.05, and, prior to the Conversion Date,
reborrow under this Section 2.01. Amounts borrowed under this Section 2.01 and
repaid or prepaid may not be reborrowed on or after the Conversion Date.

 

SECTION 2.02     Borrowings.

 

(a)     Each Borrowing of 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 not later than 12:00 p.m. (noon) one (1) Business Day prior
to the requested date of any Borrowing of 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
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)  the requested date of the Borrowing, (which shall be a Business
Day), (ii) the principal amount of Loans to be borrowed and (iii)  the account
of the Borrower to be credited with the proceeds of such Borrowing.   

 

(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. 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. 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)     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 may, at its option, upon notice to the Administrative
Agent (a “Prepayment Notice”), at any time, voluntarily prepay the principal
outstanding amount of the Initial 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 (b) in the case of a
voluntary prepayment (other than in connection with a payment made in accordance
with Section 6.16(e) pursuant to a Change of Control Offer) made on or after the
Conversion Date but prior to the first anniversary of the Conversion Date, a
premium in an amount equal to 1.00% of the aggregate principal amount of the
Initial Loans so prepaid; provided, that (1) such notice must be received by the
Administrative Agent not later than 12:00 p.m., one (1) Business Day prior to
any date of prepayment; (2) any prepayment of Initial 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) of 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 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. The Administrative Agent shall have no obligation to calculate, or
confirm the accuracy of, any prepayment premium.

 

(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 hereunder, 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)     On and after the Conversion Date, 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,
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),

 

(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, or
(ii) Indebtedness of a Restricted Subsidiary that is not a Guarantor, or

 

(C)     be used to permanently prepay or permanently repay, subject to Section
2.03(b)(iii), the Loans, and, if Holdings or a Restricted Subsidiary elects or
is required to do so, to 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 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 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.

 

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(iv)     On or after the Conversion Date, 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, or (ii) Indebtedness of a Restricted Subsidiary that is not a Guarantor,
or

 

(C)     be used to permanently prepay or permanently repay, subject to Section
2.03(b)(iii), the Loans, and, if Holdings or a Restricted Subsidiary elects or
is required to do so, to 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 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 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)(iv), Net
Cash Proceeds may be used to temporarily reduce Indebtedness or otherwise be
invested in any manner not prohibited by this Agreement.

 

(v)     On or after the Conversion Date, 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 Loans equal to 100% of all Net Cash Proceeds realized or
received.

 

(vi)     In lieu of the prepayments set forth in clauses (iii), (iv) and (v)
above, 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 (to the extent the assets that were the subject of such
Asset Disposition or Casualty Event were Collateral, such reinvested assets
(other than Excluded Property) shall be pledged as Collateral under the
Collateral Documents to the extent required by Section 6.14(b) hereto, 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)     If, prior to the Conversion Date, for any reason the aggregate
Outstanding Amount of the Loans at any time exceeds the Aggregate Commitments
then in effect, the Borrower shall promptly prepay Loans in an aggregate amount
equal to such excess.

 

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(b)     Application of Prepayments.

 

(i)      All prepayments required to be made pursuant to Section 2.03(a)(iii),
(iv), (v), and (vii) shall be applied to prepay the Loans among the various
Classes thereof on a ratable basis (in accordance with the aggregate outstanding
principal amount of the Loans of each such Class) in order of maturity, unless
otherwise agreed among the Borrower and the lenders providing Extended Loans in
accordance with Section 2.13 (it being understood that, in any case, the Initial
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)     [Reserved].

 

(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
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, 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)     Optional. The Borrower may, prior to the Conversion Date, upon written
notice to the Administrative Agent, terminate the unused Commitments of any
Class, or from time to time permanently reduce the unused Commitments of any
Class; provided that (i) any such notice shall be received by the Administrative
Agent three (3) Business Days’ prior to the date of termination or reduction,
(ii) any such partial reduction shall be in an aggregate amount (A) of $250,000
or any whole multiple of $50,000 in excess thereof or (B) equal to the entire
remaining amount of the Commitments of any Class. Notwithstanding the foregoing,
the Borrower may rescind or postpone any notice of termination of the
Commitments if such termination would have resulted from the refinancing of all
of the Facilities, which issuance or refinancing shall not be consummated or
otherwise shall be delayed.

 

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(b)     Application of Commitment Reductions; Payment of Fees. The
Administrative Agent will promptly notify the Appropriate Lenders of any
termination or reduction of unused portions of the unused Commitments of any
Class under this Section 2.04(a). Upon any reduction of unused Commitments of
any Class, the Commitment of each Lender of such Class shall be reduced by such
Lender’s Pro Rata Share of the amount by which such Commitments are reduced
except as otherwise provided in this Agreement (including the termination of the
Commitment of any Lender as provided in Section 2.15 or Section 3.07). All
commitment fees accrued until the effective date of any termination of the
Commitments of any Class shall be paid to the Appropriate Lenders on the
effective date of such termination.

 

(c)     Conversion Date. The Initial Commitment of the Initial Lenders shall be
automatically and permanently reduced to $0 on the Conversion Date.

 

(d)     Closing Date. If the Closing Date does not occur on or prior to the
Commitment Termination Date, the Initial 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 ratable account of each Lender the then unpaid
principal amount of the Loans on the Maturity Date of the applicable Facility in
an amount equal to the aggregate principal amount of all Loans of such Class
outstanding on such date.

 

SECTION 2.06     Interest.

 

(a)     Subject to the provisions of Section 2.06(b),  each Initial Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to 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, or any Event of Default set forth in Sections 7.01(vii) or (viii), the
Borrower shall pay interest on all overdue amounts hereunder at an 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.

 

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SECTION 2.08     Computation of Interest and Fees. All computations of interest
and other fees shall be made on the basis of a year of three hundred and sixty
(360) days, as the case may be, and actual days elapsed. 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.

 

(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 Business Day
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.

 

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(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 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.

 

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.

 

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(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 2.13(a) 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.

 

SECTION 2.12     [Reserved].

 

SECTION 2.13     Extensions of Loans.

 

(a)     On and after the Conversion Date, 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
Loans with a like Maturity Date, in each case on a pro rata basis (based on the
aggregate outstanding principal amount of such 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 Loans
and otherwise modify the terms of such 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 Loans (and related outstandings) (each, an “Extension”, and
each group of Loans, in each case as so extended, as well as the original
Initial Loans (in each case not so extended), being a “tranche”; any Extended
Loans shall constitute a separate tranche of Loans from the tranche of Loans
from which they were converted), so long as the following terms are satisfied:

 

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(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 Loans of any Lender that agrees to an Extension with respect to such Loans
(an “Extending Lender”) extended pursuant to any Extension (“Extended Loans”)
shall have the same terms as the tranche of Loans subject to such Extension
Offer;

 

(iii)     the final Maturity Date of any Extended Loans shall be no earlier than
the Latest Maturity Date of the Loans extended thereby;

 

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

 

(v)     any Extended 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 Loans (calculated on the face
amount thereof), in respect of which Lenders shall have accepted the relevant
Extension Offer shall exceed the maximum aggregate principal amount of Loans
offered to be extended by the Borrower pursuant to such Extension Offer, then
the Loans of such 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 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 Loans shall be substantially identical to, or, taken as a whole, no
more favorable to the Lenders providing such Extended Loans than those
applicable to the Loans subject to such Extension Offer;

 

(viii)     the Extended 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.

 

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(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 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 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 Loans (or a portion thereof).
All Extended 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 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.

 

(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     Replacement and Refinancing Facilities.

 

(a)     Replacement of Commitments.

 

(i)     Prior to the Conversion Date, the Borrower may by written notice to
Administrative Agent elect to request the establishment of one or more
additional revolving facilities providing for revolving commitments
(“Replacement Commitments” and the revolving loans thereunder, “Replacement
Loans”) which Refinances one or more Classes of Commitments (and corresponding
Loans) under this Agreement; provided, that any such Replacement Commitments may
not be in an aggregate principal amount greater than the Commitments being
refinanced plus unpaid accrued interest, fees, expenses and premium (if any)
thereon and underwriting discounts, fees, commissions and expenses in connection
with the Replacement Commitments and/or Replacement Loans. Each such notice
shall specify the date (each, a “Replacement Effective Date”) on which the
Borrower proposes that the Replacement Commitments shall become effective (each
such date, the “Replacement Effective Date”), 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:

 

(A)     no Replacement Commitment shall have a scheduled principal installment
payment date or Commitment reduction or termination date prior to the Maturity
Date applicable to the Commitments being Refinanced;

 

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(B)     other than as provided in Section 2.14(a)(i) above, Replacement
Commitments shall have terms and conditions agreed to by the Borrower and the
lenders providing such Replacement Commitments, but shall be substantially the
same as (or, taken as a whole, no more favorable to, the lenders providing such
Replacement Commitments than) those applicable to the Commitments then
outstanding, except to the extent such covenants and other terms apply solely to
any period after the Latest Maturity Date;

 

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

 

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

 

(iii)     The Replacement Commitments shall be established pursuant to an
amendment to this Agreement among Holdings, the Borrower, the Replacement
Lenders providing such Replacement Loans (a “Replacement Amendment”) which shall
be consistent with the provisions set forth in paragraph (a)(i) above. Each
Replacement Amendment shall be binding on the Lenders (including the Replacement
Lenders), the Administrative Agent, the Loan Parties party thereto and the other
parties hereto. Upon receipt of an Officer’s Certificate certifying that such
Replacement 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 Replacement Commitment (and the
Loans made thereunder) made by a Replacement Lender pursuant to a Replacement
Amendment shall be deemed a “Commitment” and “ Loan,” as applicable, for all
purposes of this Agreement and each Lender with a Replacement Loan shall become
a Lender with respect to such Replacement Loans and all matters relating
thereto. Notwithstanding anything to the contrary herein, at no time shall there
be Loans or Commitments (including Replacement Loans, and Replacement
Commitments) which have more than five (5) different scheduled final maturity
dates or shall there be more than three different “Facilities.”

 

(iv)     On any Replacement Effective Date, subject to the satisfaction of the
foregoing terms and conditions, each of the Replacement Lenders with Replacement
Commitments of the same Class shall purchase from each of the other Lenders with
Replacement Commitments of such Class, at the principal amount thereof and in
the applicable currencies, such interests in the Replacement Loans under such
Replacement Commitments outstanding immediately prior to such Refinancing as
shall be necessary in order that, after giving effect to all such assignments
and purchases, the Replacement Loans of such Class will be held by Replacement
Lenders thereunder ratably in accordance with their Replacement Percentages.

 

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(v)     In the event that there are any Replacement Loans outstanding on the
Conversion Date, such Replacement Loans shall automatically convert to term
loans on such date and the Replacement Commitments shall automatically terminate
on the Conversion Date. Each such converted Loan shall continue to bear interest
at the same rate as, and contain such other terms that are identical to, the
Replacement Loan from which it was converted; provided, however that amounts
paid or prepaid in respect of the Loans on or after the Conversion Date may not
be reborrowed.

 

(b)     Refinancing of Loans.

 

(i)     After the Conversion Date, Borrower may by written notice to the
Administrative Agent elect to request the establishment of one or more
additional Classes of Loans under this Agreement (“Refinancing Loans”), which
refinance, renew, replace, defease or refund (collectively, “Refinance”), in
whole or in part, one or more Classes of Loans under this Agreement; provided,
that such Refinancing Loans may not be in an amount greater than the 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 Loans. Each such notice shall specify the date
(each, a “Refinancing Effective Date”) on which the Borrower proposes that the
Refinancing 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:

 

(A)     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 Loans being Refinanced and the Refinancing Loans
shall not have a final maturity before the Maturity Date of the Loans being
Refinanced;

 

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

 

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

 

(D)     the Refinancing Loan Amendment shall set forth the principal installment
payment dates of the Refinancing Loans, which dates may be delayed to later
dates than the corresponding scheduled principal installment payment dates of
the Loans being refinanced and, in any event, shall be no earlier than the
Maturity Date;

 

(E)     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 Loans (which shall not require any consent
from any Lender) in order to ensure that the Refinancing 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 Refinancing Lenders;

 

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

 

(G)     with respect to any Refinancing Loans made on and after the Conversion
Date, but prior to the first anniversary of the Conversion Date, a premium in an
amount equal to 1.0% of the aggregate principal amount of the Initial Loans
being Refinanced shall be paid to the Lenders holding such Initial Loans.

 

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

 

(iii)     The Refinancing Loans shall be established pursuant to an amendment to
this Agreement among Holdings, the Borrower and the Refinancing Lenders
providing such Refinancing Loans (a “Refinancing Loan Amendment”) which shall be
consistent with the provisions set forth in paragraph (b)(i) above. Each
Refinancing Loan Amendment shall be binding on the Lenders (including the
Refinancing 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 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 Loan made by a Lender pursuant to a Refinancing Loan
Amendment shall be deemed a “Loan” for all purposes of this Agreement and each
Lender with a Refinancing Loan shall become a Lender with respect to such
Refinancing Loans and all matters relating thereto. Notwithstanding anything to
the contrary herein, at no time shall there be Loans (including Refinancing
Loans and Extended Loans) which have more than five different scheduled final
maturity dates or shall there be more than five different “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
Lender to make 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 Commitments pursuant to Section 2.01 of the Lenders to be on a
pro rata basis in accordance with their respective Commitments, whereupon such
Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender
(and such Commitments and Loans of each 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.

 

SECTION 2.16     Term Loan Conversion; Repayment of Converted Term Loans. In the
event that there are any Loans outstanding on the Conversion Date, such Loans
shall automatically convert to term loans on such date and the Initial
Commitments shall automatically terminate on the Conversion Date. Each Loan
shall continue to bear interest at the same rate as, and contain such other
terms that are identical to, the Loan from which it was converted; provided,
however that (i) amounts paid or prepaid in respect of the Loans on or after the
Conversion Date may not be reborrowed (ii) and the Borrower shall be required to
repay the principal amount of the Loans in the amounts, and at such times, as
provided in Section 2.05.

 

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 U.S. 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-U.S. 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-U.S. 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:

 

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(1)     in the case of a Non-U.S. 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-U.S. 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-U.S. 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 “U.S. Tax Certificate”) and (y) executed originals
of IRS Form W-8BEN or IRS Form W-8BEN-E; or

 

(4)     to the extent a Non-U.S. 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 U.S. 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-U.S. Lender is a
partnership and one or more direct or indirect partners of such Non-U.S. Lender
are claiming the portfolio interest exemption, such Non-U.S. Lender may provide
a U.S. Tax Certificate substantially in the form of Exhibit E-4 on behalf of
each such direct and indirect partner;

 

(C)     any Non-U.S. 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-U.S. 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.

 

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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 reasonable 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.

 

(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 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     [Reserved].

 

SECTION 3.03     [Reserved].

 

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SECTION 3.04     Capital Adequacy.

 

(a)     [Reserved]

 

(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)     [Reserved]

 

(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(b).

 

(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     [Reserved].

 

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.

 

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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 (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
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.

 

(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 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 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.

 

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ARTICLE IV

CONDITIONS PRECEDENT

 

SECTION 4.01     Conditions to Effectiveness. The effectiveness of this
Agreement is subject solely to the satisfaction of the following conditions: (i)
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), duly executed and delivered by the Administrative Agent,
each Lender and a Responsible Officer of each of the Borrower and Holdings and
(ii) there shall not have been promulgated, enacted, entered, filed, enforced or
deemed applicable to the Specified Transactions a statute, rule, regulation,
judgment, order, stay, decree or injunction, by any court or governmental
regulatory or administrative agency or authority, tribunal, domestic or foreign,
that would prohibit or prevent consummation of the Specified Transactions (it
being understood that this clause (ii) shall be deemed satisfied upon the
release of each parties signature to this Agreement). 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.

 

SECTION 4.02     Conditions to Initial (Closing Date) Borrowing. The obligation
of each Lender to make the Loans hereunder on the Closing Date (the “Initial
Borrowing”) is subject solely to the satisfaction of the following conditions
precedent (or expressly waived in accordance with Section 9.01); provided that
such date shall not be earlier than (but, in any event, not later than thirty
(30) days after) the earliest to occur of (i) September 8, 2018 and (ii) the
acceleration of the Indebtedness under the Senior Secured Super Priority Term
Loan Credit Agreement in accordance with the terms thereof; 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 by the Commitment Termination Date 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 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 Joinder to the Amended and
Restated Intercreditor Agreement and Amended and Restated Collateral Agency
Agreement attached hereto as Exhibit M, (2) a Security Agreement in the form
attached as Exhibit J-1 hereto and (3) Pledge Agreement in the form attached as
Exhibit J-2 and (B) such evidence as the Administrative Agent and the Initial
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 which may occur after the Closing Date pursuant
to Section 6.14 of this Agreement), in the case of each document referred to in
this sub-clause (B), in a manner and scope consistent with and no less favorable
to the comparable documents agreed and delivered in connection with the prior
closing of the Existing Secured Notes Indenture;

 

(iii)     a certificate of the Borrower and each other Loan Party which would
have been required to deliver a comparable certificate in connection with the
prior closing of the Existing Secured Notes Indenture, dated the Closing Date
and executed by the secretary or assistant secretary of the Borrower and each
applicable Loan Party, respectively, in the form attached as Exhibit G-1 and
G-2, respectively, hereto;

 

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(iv)     a certificate signed by a Responsible Officer of the Borrower,
substantially in the form of Exhibit H-1 hereto;

 

(v)      a Perfection Certificate substantially in the form attached as Exhibit
H-2 hereto;

 

(vi)     a Solvency Certificate in the form attached as Exhibit H-3; and

 

(vii)     The receipt by the Administrative Agent and the Initial Lenders of (x)
a written opinion of Simpson Thacher & Bartlett LLP, special counsel for the
Borrower and Holdings, dated as of the Closing Date in the form attached as
Exhibit I-1 and (y) a written opinion of Michael Discafani, Vice President,
Corporate Counsel and Secretary of the Borrower and Holdings, dated as of the
Closing Date, in the form attached as Exhibit I-2.

 

(b)     To the extent requested by the Administrative Agent and/or the Initial
Lenders not less than ten (10) Business Days prior to the Closing Date, the
Administrative Agent and the Initial 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.

 

(c)     The Administrative Agent and Lenders shall have received a request for a
Borrowing of Initial Loans on the Closing Date, in the form of a Loan Notice
delivered in accordance with Section 2.02(a).

 

(d)     Substantially concurrently with the making of Loans on the Closing Date,
the proceeds of such Loans shall be used to repay in full the obligations
outstanding pursuant to Senior Secured Super Priority Term Loan Credit
Agreement, including all accrued and unpaid principal, interest, fees and
premiums and all costs and expenses related thereto (the “Existing Term Loan
Refinancing”).

 

(e)     (A) The Specified Representations 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 (except, in each case, where such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects as of such earlier date) and (B) upon consummation of the transactions
contemplated by the Loan Documents and the application of the proceeds thereof),
no Default or Event of Default shall have occurred.

 

(f)     There shall not have been promulgated, enacted, entered, filed, enforced
or deemed applicable to the Specified Transactions a statute, rule, regulation,
judgment, order, stay, decree or injunction, by any court or governmental
regulatory or administrative agency or authority, tribunal, domestic or foreign,
that would prohibit or prevent consummation of the Specified Transactions.

 

(g)     The Borrower shall have provided the Administrative Agent with written
notice of its consent to the Applicable Rate; which shall be acknowledged by the
Required Lenders.

 

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For purposes of determining satisfaction of the conditions specified in this
Section 4.02, by the making of Loans to the Borrower, the Administrative Agent
and each Lender 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.

 

SECTION  4.03     Conditions to All Credit Extensions After the Closing Date.
The obligation of each Lender to honor any request for Borrowings (other than
(i) in connection with a Borrowing in respect of Replacement Commitments,
Refinancing Loans or Extended Loans or (ii) the Initial Borrowing) on any date
after the Closing Date is subject to satisfaction or waiver by the Required
Lenders of solely the following conditions precedent prior to such Borrowing;
provided that such Borrowings shall only be made prior to the Conversion Date:

 

(a)     The representations and warranties of the Borrower and each other Loan
Party contained in Article V or any other Loan Document shall be true and
correct in all material respects (and in all respects if qualified by
materiality) on and as of the date of such Borrowing (except in the case of any
representation and warranty which expressly relates to a given date or period,
such representation and warranty shall be true and correct in all material
respects (and in all respects if qualified by materiality) as of the respective
date or for the respective period, as the case may be).

 

(b)     No Default or Event of Default shall exist or would result from such
proposed Borrowing or from the application of the proceeds therefrom.

 

(c)     The Administrative Agent and Lenders shall have received a request for a
Borrowing of the applicable Loans, in the form of a Loan Notice delivered in
accordance with Section 2.02(a), it being understood and agreed that delivery of
such Loan Notice shall be deemed to be a representation and warranty made by the
Borrower that the conditions specified in clauses (a) and (b) of this Section
4.03 have been satisfied on and as of the date of the applicable Borrowing.

 

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:

 

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, to own, lease and operate its properties and to enter
into and perform its obligations under this Agreement and the other Loan
Documents; 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 (a “Material Adverse Effect”).

 

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SECTION 5.02     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.

 

SECTION 5.03     Absence of Defaults and Conflicts . 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 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.

 

SECTION 5.04     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 5.05     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.

 

SECTION 5.06     Litigation. (a) There shall has not been promulgated, enacted,
entered, filed, enforced or deemed applicable to the Specified Transactions a
statute, rule, regulation, judgment, order, stay, decree or injunction, by any
court or governmental regulatory or administrative agency or authority,
tribunal, domestic or foreign, that would prohibit or prevent consummation of
the Specified Transactions or which makes the Loan Documents or any of the
Specified Transactions illegal, invalid or unenforceable; and (b) except as
disclosed in the Public Filings or, in any respect, relating to or arising from
the Specified Transactions, 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 5.07     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, 2017 (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.

 

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SECTION 5.08     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 and the
application of the net proceeds thereof, will not be, an “investment company,”
as such term is defined in the Investment Company Act.

 

SECTION 5.09     Solvency. On the Closing Date, immediately after the
consummation of the transactions contemplated by the Loan Documents (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 5.09, the amount of any contingent liability shall
be computed in accordance with GAAP.

 

SECTION 5.10     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 5.11     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 international economic
sanction administered or enforced by the United States Government (including
without limitation, the U.S. Department of Treasury’s Office of Foreign Assets
Control (“OFAC”) and the U.S. Department of State), the United Nations Security
Council, the European Union or Her Majesty’s Treasury (collectively,
“Sanctions”) or (B) located, organized or resident in the Crimea region of
Ukraine, Cuba, Iran, North Korea or Syria, or any other any country or territory
to the extent that such country or territory itself is the subject of any
comprehensive Sanction (each, a “Sanctioned Country”).

 

(b)     Each Loan Party is in compliance in all material respects with all Laws
concerning or relating to terrorism or money laundering (“Anti-Terrorism Laws”),
including the Patriot Act, the Trading with the Enemy Act of the United States
of America (50 U.S.C. App. §§1 et seq.), as amended (the “Trading with the Enemy
Act”), the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended), and Executive Order No.
13224 on Terrorism Financing, effective September 24, 2001 (the “Executive
Order”). No Loan Party or, to the knowledge of any Loan Party, other agents
acting or benefiting in any capacity in connection with the Term Loans is (i) a
Person with whom any Lender is prohibited from dealing or otherwise engaging in
any transaction by any Anti-Terrorism Law, or (ii) a Person that is named as a
“specially designated national and blocked person” on the most current list
published by the United States Treasury Department Office of Foreign Asset
Control at its official website or any replacement website or other replacement
official publication of such list.

 

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(c)     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, has taken any action in violation of any Law in furtherance of an
offer, payment, promise to pay or authorization or approval of the payment or
giving of money, property, gifts or anything else of value, directly or
indirectly, to any “government official” (including any officer or employee of a
government or a government-owned, government-controlled or other
quasi-governmental entity or of a public international organization, or any
Person acting in an official capacity for or on behalf of any of the foregoing,
or any political party or party official or candidate for political office) to
influence official action or secure an improper advantage, and each Loan Party
has conducted its businesses in compliance in all material respects with
applicable anti-corruption Laws and has instituted and maintained and will
continue to maintain adequate policies and procedures designed to promote and
achieve compliance with all such laws and with the representation and warranty
contained in this Section 5.11.

 

(d)     The Borrower will not, directly or, to its knowledge, indirectly, use
the proceeds of Loans, 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 unlawful activities or business of or
with any Person in any Sanctioned Country, or in any other manner that will
result in a violation by any party to this Agreement of Sanctions,
Anti-Terrorism Laws or anti-corruption Laws.

 

SECTION 5.12     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.

 

SECTION 5.13     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.

 

SECTION 5.14     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 Existing Secured Notes issued pursuant to
the Existing Secured Notes Indenture, (ii) prior to the Closing Date, the Senior
Secured Super Priority Term Loan Credit Agreement and (iii) Permitted Liens.

 

SECTION 5.15     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.

 

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SECTION 5.16     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 5.17     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 5.18     No Material Adverse Change in Business. Since October 31, 2017,
except as set forth in any of the Public Filings (including future events or
trends specifically identified in such Public Filings), or, in any respect,
relating to or arising from the Specified Transactions, (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 5.19     Collateral. The applicable Security Agreement and Pledge
Agreement, when duly executed and delivered by each of the Loan Parties party
thereto and upon completion of the filings and other actions specified therein,
will create valid and perfected (to the extent such security interest can be
perfected by such filings or actions) security interests in the Collateral to
which they relate, and are prior to all other Liens on such Collateral in
existence on the Effective Date except for Permitted Liens.

 

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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. (a) 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. 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,

 

(iv)     any Guarantee of Indebtedness represented by the Loans,

 

(v)     any guarantee of Indebtedness (other than the Loans) 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,

 

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(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.

 

(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.

 

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(i)     For purposes of determining compliance with this covenant, (i) all
Indebtedness outstanding on the Effective Date under the Existing Revolving
Credit Agreement shall be deemed to be incurred under clause (a)(iii) of the
definition of “Permitted Indebtedness” and (ii) all Existing Unsecured Notes, JV
Holdings Secured Group Notes, Existing Secured Notes and all Indebtedness
outstanding on the Effective Date under the Senior Secured Super Priority Term
Loan Credit Agreement 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 the Effective Date
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, 2018 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

 

(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 Effective Date or any issue or sale after the Effective Date of Qualified
Stock (other than (i) to any Subsidiary of Holdings or (ii) any Excluded
Contribution) and (2) the issue or sale on or after the Effective Date 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 the
Effective Date, that would have constituted a Restricted Payment if made after
the Effective Date, 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 the Effective Date, in accordance with the
definition of “Unrestricted Subsidiary” (so long as the designation of such
Subsidiary as an Unrestricted Subsidiary was treated under the Exchange Notes
Indenture or this Agreement as a Restricted Payment made after the Effective
Date, 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.

 

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(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 or
constituting an Excluded Contribution) of, shares of Qualified Stock;

 

(iii)     (A) 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 or (B) the making of any
Restricted Payments in an aggregate amount made under this clause (B) not to
exceed Excluded Contributions (after giving effect to all subsequent reductions
in the amount of any Restricted Investment outstanding pursuant to this clause
(B) as a result of the repayment or disposition thereof for cash);

 

(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 $5.0 million in any calendar
year (with unused amounts in any calendar year being carried over to succeeding
calendar years subject to a maximum (without giving effect to the following
proviso) of $10.0 million in any calendar year); provided that such amount in
any calendar year may be increased by an amount not to exceed: (A) the cash
proceeds from the sale of Qualified Stock of the Company to any future, present
or former officers, directors, managers, employees or consultants Holdings, any
of its Subsidiaries that occurs after the Effective Date, to the extent the cash
proceeds from the sale of such Qualified Stock have not otherwise been applied
to the payment of Restricted Payments by virtue of Section 6.04(a)(iii)(c)
above; plus (B) the cash proceeds of key man life insurance policies received by
Holdings and the Restricted Subsidiaries after the Effective Date; less (C) the
amount of any Restricted Payments previously made pursuant to clauses (A) and
(B) of this clause (v); provided that Holdings may elect to apply all or any
portion of the aggregate increase contemplated by clauses (A) and (B) of this
clause (v) in any calendar year);

 

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(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 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;

 

(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 $50.0 million (after giving effect to all subsequent reductions in the
amount of Restricted Investments outstanding pursuant to 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;

 

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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” 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 national securities exchange, 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 in good faith 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”, 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” in
a manner that otherwise complies with this covenant.

 

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 that secure obligations under any Indebtedness, other
than Permitted Liens, on any of its Property, including any shares of Capital
Stock or Indebtedness of any Person owned by the Borrower or such Loan Party.

 

SECTION 6.06     Limitations on Restrictions Affecting Restricted Subsidiaries.
Holdings and the Borrower will not, and will not cause or permit any Restricted
Subsidiary that is not a Loan Party, 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

 

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(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 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,

 

(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,

 

(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 this
Agreement and the other Loan Documents,

 

(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,

 

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(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

 

(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 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.

 

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(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.

 

(c)     The Net Cash Proceeds of an Asset Disposition shall be applied pursuant
to Section 2.03.

 

SECTION 6.08     Guarantees by Restricted Subsidiaries. Each Restricted
Subsidiary (other than the Borrower (for so long as it remains the Borrower) and
any Excluded Subsidiary) will become a Guarantor on the Closing Date by
executing a supplemental guarantee in the form of Exhibit K hereto. Holdings is
permitted to cause any Unrestricted Subsidiary to be a Guarantor. 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 in the
form of Exhibit K hereto, and deliver an Opinion of Counsel to the
Administrative Agent to the effect that such 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.

 

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(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.

 

(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;

 

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

 

(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:

 

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(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

 

(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.  (b) 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.

 

(c)     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.

 

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(d)     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).

 

SECTION 6.13     Notice of Other Defaults In the event that any Indebtedness
that has an outstanding principal amount of $40.0 million or more 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 their property (other than Excluded Property) and take all appropriate
steps to cause such Liens to be perfected first-priority liens (subject to
Permitted Liens), including through, 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; provided that the
recordation of mortgages and entry into control agreements will occur after the
Closing Date in such time periods as set forth in Section 6.14(c) or such longer
time period as reasonably agreed to by the Required Lenders.

 

(i)     [reserved]

 

(b)     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 on such Collateral (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(b)
including as necessary under the Collateral Documents and determining whether
Collateral constitutes Mortgage Tax Collateral (as defined in the Amended and
Restated Intercreditor Agreement) for purposes of the Amended and Restated
Intercreditor Agreements. 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)     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) 180 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, (B) 210 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 (C) in any event, 270 days after the Closing Date with respect to all real
property owned on the Closing Date to be pledged as Collateral;

 

(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 or such later date as may be
reasonably agreed by the Required Lenders;

 

(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.

 

(d)     The Initial Lenders will bear and pay all legal expenses, collateral
audit and valuation or appraisal 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.

 

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(e)     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.

 

(f)     On the Closing Date, Holdings is required to deliver to the
Administrative Agent, a Perfection Certificate.

 

SECTION 6.15     Maintenance of Ratings. The Borrower shall use commercially
reasonable efforts to, not later than sixty (60) days after the Conversion Date
(or such later date as may be agreed to by the Required Lenders), obtain and,
thereafter 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 the Borrower to purchase (the “Change
of Control Offer”) all or any part of such Lender’s Loans and terminate such
Lender’s Term Commitments on a date (the “Change of Control Repurchase Date”)
that is no later than 90 days after notice of the Change of Control, with such
purchase of Loans being at a price equal to 100% of the principal amount of the
Loans held by such Lender plus accrued and unpaid interest, if any, to, but
excluding, the Change of Control Repurchase Date.

 

(b)     On or before the thirtieth day after any Change of Control, the Borrower
shall provide written notice to the Administrative Agent and the Lenders,
regarding the Change of Control and the repurchase right. The notice shall state
the Change of Control Repurchase Date, the date by which the purchase right must
be exercised, the price for the Loans and the procedure which the Lender must
follow to exercise such right. To exercise such right, a Lender must deliver, at
least ten days prior to the Change of Control Repurchase Date, written notice to
the Borrower of the Lender’s exercise of such right; provided, however, that if
mandated by applicable Law, a Lender may be permitted to deliver such written
notice nearer to the Change of Control Repurchase Date than may be specified by
the Borrower.

 

(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 the Borrower’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.

 

(d)     The Borrower will not be required to make a Change of Control Offer
following a Change of Control if a third party makes the Change of Control Offer
in the manner, at the times and otherwise in compliance with the requirements
set forth in this Section 6.16 and purchases all such Loans validly tendered for
purchase and not validly withdrawn under such Change of Control Offer.

 

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(e)     If Lenders holding not less than 90% of the sum of the Total
Outstandings and unused Term Commitments then outstanding and which have not
terminated pursuant to Section 2.04 validly tender and do not validly withdraw
such Loans and Term Commitments in the Change of Control Offer and the Borrower,
or any third party making a Change of Control Offer in lieu of the Borrower as
permitted by this Section 6.16, purchases of all of the Loans validly tendered
and not validly withdrawn by such Lenders, the Borrower or such third party
shall have the right, upon not less than 10 nor more than 60 days’ prior notice
to the Lenders (with a copy to the Administrative Agent), given not more than 30
days following such purchase pursuant to the Change of Control Offer described
in this Section 6.16, to purchase all Loans that remain outstanding following
such repurchase at a price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to, but not including, the date of
repurchase, and to terminate all Term Commitments.

 

SECTION 6.17     Maintenance of Properties. Each of Holdings and the Borrower
will, and will cause each Loan Party 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 Loan Party 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     Use of Proceeds. The proceeds of the Initial Borrowing, will be
used on the Closing Date to pay all amounts due in connection with the Existing
Term Loan Refinancing in accordance with Section 4.02(d). After the Initial
Borrowing, the proceeds of the Initial Loans will be used to finance the working
capital and general corporate needs of Holdings, the Borrower and its
Subsidiaries.

 

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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 thirty (30) 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)     the acceleration of 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, and such acceleration does not cease to exist, or such Indebtedness
is not satisfied, in either case within 30 days after such acceleration;

 

(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 within thirty (30) days of such principal or interest becoming due
and payable (after giving effect to any applicable grace period set forth in the
documents governing such Indebtedness);

 

(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;

 

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(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 such
Guarantee and 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 and such Guarantee);

 

(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

 

(xi)     any representation, warranty or certification made or deemed made by or
on behalf of the Borrower or any other Loan Party herein, in any other Loan
Document, 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)     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; or

 

(xiii)     unless Holdings, the Borrower or a permitted third party has
consummated a Change of Control Offer in accordance with Section 6.16 and the
purchase of any Loans of Lenders exercising a repurchase right thereunder, the
occurrence of a Change of Control.

 

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.

 

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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 and all other Loan Obligations will be due and payable immediately.
If an Event of Default specified in subclauses (iv) or (v) of this Section 7.01
occurs, the declaration of acceleration of the amounts due and payable on the
Loans and all other Loan Obligations shall be automatically annulled if the
default triggering such Event of Default pursuant to subclauses (iv) or (v) of
this Section 7.01 shall be remedied or cured by Holdings, the Borrower or a
Restricted Subsidiary or waived by the holders of the relevant Indebtedness
within 20 days after the declaration of acceleration with respect thereto and if
(1) the annulment of the acceleration of the amounts due and payable on the
Loans would not conflict with any judgment or decree of a court of competent
jurisdiction and (2) all existing Events of Default, except nonpayment of
principal, premium, if any, or interest on the Loans that became due solely
because of the acceleration of the amounts due and payable on the Loans, have
been cured or waived. The Borrower shall provide the Administrative Agent with
notice of any such annulment of a declaration of acceleration of the Loans. 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 (including, but not limited
to, fees, expenses and disbursements of legal counsel) 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.

 

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.

 

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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 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.

 

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.

 

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(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.

 

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.

 

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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.

 

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.

 

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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.

 

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.

 

Knowledge of the Administrative Agent shall not be attributed or imputed to
Wilmington Trust, National Association’s other roles as trustee, administrative
agent or collateral agent for the Issuer, and knowledge of Wilmington Trust,
National Association in any other similar role for the Issuer shall not be
attributed or imputed to each other or to the Administrative Agent.

 

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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.

 

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.

 

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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;

 

(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

 

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(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 (4) 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. Additionally, with respect to
subordinating the Administrative Agent’s security interest in Collateral to a
Permitted Lien which is permitted pursuant to this agreement to rank senior to
the Loans, upon the request of the applicable Loan Party, execute and deliver to
the applicable Loan Party such documents as such Loan Party may reasonably
request to evidence the subordination of the Administrative Agent’s security
interest in the Collateral to such Permitted Lien; provided that the Borrower
shall have delivered to the Administrative Agent a certificate of a Responsible
Officer of the Borrower certifying that any such subordination 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 subordination is permitted by this Agreement..

 

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 by this agreement, including without limitation any Intercreditor
Agreement 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 (including without limitation, any Intercreditor
Agreement), and each Secured Party agrees to be bound by the terms of such
intercreditor agreement.

 

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.

 

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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.

 

(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.

 

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(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 (including in connection with enforcing a Lender’s
indemnification obligation hereunder); 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 Commitment of any Lender without the prior
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
Commitment of any Lender);

 

(b)     postpone any date scheduled for any payment of principal, premium,
interest or fees, without the prior 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 prior 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;

 

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(d)     change any provision of this Section 9.01 without the prior 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 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 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
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 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 holding more than
50% of the Commitments in respect of such Class;

 

(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

 

(i)     amend, modify or change any provision that provides for the pro rata
nature of disbursements by or payments to Lenders.

 

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 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.

 

Notwithstanding the foregoing, this Agreement may be amended (or amended and
restated) with the prior 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 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 prior written consent of the Administrative Agent, the Borrower and all of
the applicable Replacement Lenders (and no other Lenders) of the applicable
Replacement Commitment Series providing such Replacement Loans in connection
with any refinancing facilities permitted pursuant to Section 2.14(a).

 

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In addition, notwithstanding the foregoing, this Agreement may be amended with
the written consent of the Administrative Agent, the Borrower and all of the
applicable Refinancing Lenders (and no other Lenders) of the applicable
Refinancing Loan Series providing such Refinancing Loans in connection with any
refinancing facilities permitted pursuant to Section 2.14(b).

 

 

 

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 Section 2.13 or Section 2.14 (provided, that the consents of any
applicable Lender shall be required, to the extent specified in Section 2.13, or
Section 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 and (vii) (a) [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,
(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 and (d) the Borrower and the Administrative Agent may, with the
prior written consent of the Required Lenders, effect immaterial amendments to
the schedules and/or the exhibits to this Agreement and the other Loan
Documents, in each case, as in effect on the Closing Date, if the Required
Lenders have reasonably determined that such amendments are appropriate or to
account for events or circumstances occurring after the Effective Date, which
would have been included if such events or circumstances had occurred prior to
the Effective Date.

 

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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.

 

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.

 

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SECTION 9.04     Expenses. Holdings and the Borrower, jointly and severally,
agree to reimburse) (1) the Administrative Agent in accordance with the Agent
Fee Letter and (2) the Administrative Agent and the Lenders for all of their
costs, fees and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any other documents prepared in connection herewith or therewith, including in
each case the reasonable fees, disbursements and other charges of one outside
counsel to the Administrative Agent and one outside counsel to the Lenders as a
whole, and if reasonably necessary, one additional local counsel to the
Administrative Agent in each relevant jurisdiction and one local counsel to the
Lenders, taken as a whole, in each relevant jurisdiction (which may include a
single special counsel acting in multiple jurisdictions); provided, however,
that, with respect to the Lenders, the Borrower shall not at any time be
required to pay, or cause to be paid, costs, fees and expenses with respect to
any regulatory inquiry, third party claim or any claim, dispute or liability
arising in connection with, or in any way relating to, the Specified
Transactions or the making of the Initial Loans or the use of proceeds thereof.

 

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 after the Closing Date (or, in the case
of the Administrative Agent only, in its capacity as such, the Effective Date)
out of or in connection with (a) the 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 enforcing the Borrower’s
indemnification obligations hereunder), (b) any 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 notwithstanding anything herein to the contrary, the
Borrower shall not be required to indemnify and such indemnity shall not, as to
any Indemnitee (other than claims against an Indemnitee in its capacity as
Administrative Agent), be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses or disbursements, including with respect to regulatory
inquiries, arise in connection with, or relate in any way to, the Specified
Transactions, the making of Loans pursuant to the Initial Borrowing or the use
of proceeds of Initial Borrowing; 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 prior 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.

 

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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 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)  each of the Administrative Agent (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)), and, so long as no Event of Default has occurred
and is continuing, the Borrower consents to such assignment, (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 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 if requested.

 

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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 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 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, with the consent of the Borrower, so long as
no Event of Default has occurred and is continuing, but without the consent of,
or notice to, 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 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 and Section 3.04
(subject to the requirements and limitations therein, including the requirements
under Section 3.01(f) and Section 3.06 read as if a Participant were 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 Section 3.01(f) and Section 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
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 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 or Section 3.04 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.

 

(h)     [Reserved].

 

(i)     Notwithstanding anything to the contrary contained herein, any Lender (a
“Pledging 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)).

 

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(j)     [Reserved].

 

(k)     Assignments of 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 Lenders, so long as
(i) no Default or an Event of Default has occurred and is continuing and (ii)
the Loans purchased are immediately cancelled pursuant to Section 9.07(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
Section 9.05, 9.08, 9.15 and 9.16 shall survive and remain in full force and
effect following the Termination Date.

 

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.

 

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(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.

 

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     U.S.A 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 PATRIOT Act.

 

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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.

 

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.

 

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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. 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.

 

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.

 

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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.

 

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.]

 

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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  

 

 

Signature Page to Credit Agreement

 

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WILMINGTON TRUST, NATIONAL

ASSOCIATION,

 

  as Administrative Agent  

 

By:

/s/ Cora Holland Koller

 

 

Name:

Cora Holland-Koller

 

 

Title:

Banking Officer

 

 

 

Signature Page to Credit Agreement

 

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Signature page of Lenders on file with Administrative Agent.

 

 

Signature Page to Credit Agreement

 

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SCHEDULE 1.01

 

Unrestricted Subsidiaries

 

Amber Ridge, LLC

Fair Land Title Company, Inc.

GTIS-HOV Dulles Parkway Parent LLC

GTIS-HOV Festival Lakes LLC

GTIS-HOV Greenfield Crossing Parent LLC

GTIS-HOV Holdings LLC

GTIS-HOV Leeland Station LLC

GTIS-HOV Positano LLC

GTIS-HOV Rancho 79 LLC

GTIS-HOV Residences at Dulles Parkway LLC

GTIS-HOV Residences at Greenfield Crossing LLC

GTIS-HOV Villages at Pepper Mill LLC

GTIS-HOV Warminster LLC

Homebuyers Financial USA, LLC

HovSite Catalina LLC

HovSite Churchill Club LLC

HovSite Cider Grove LLC

HovSite Firenze LLC

HovSite Greenwood Manor LLC

HovSite Hunt Club LLC

HovSite Irish Prairie LLC

HovSite Liberty Lakes LLC

HovSite Monteverde 1 & 2 LLC

HovSite Monteverde 3 & 4 LLC

HovSite Providence LLC

HovSite Southampton LLC

HovWest Land Acquisition, LLC

K. Hovnanian Amber Glen, LLC

K. Hovnanian American Mortgage, L.L.C.

K. Hovnanian at Amberley Woods, LLC

K. Hovnanian at Bradwell Estates, LLC

K. Hovnanian at Cadence Park, LLC

K. Hovnanian at Canter V, LLC

K. Hovnanian at Cedar Lane Estates, LLC

K. Hovnanian at Dominion Crossing, LLC

K. Hovnanian at Eagle Heights, LLC

K. Hovnanian at Embrey Mill, LLC

K. Hovnanian at Hunter's Pond, LLC

K. Hovnanian at Knollac Acres, LLC

K. Hovnanian at Manalapan IV, LLC

K. Hovnanian at Maple Hill LLC

K. Hovnanian at Meridian Hills, LLC

K. Hovnanian at Morris Twp II, LLC

 

 

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K. Hovnanian at Mystic Dunes, LLC

K. Hovnanian at North Grove Crossing, LLC

K. Hovnanian at Orchard Meadows, LLC

K. Hovnanian at Pelham's Reach, LLC

K. HOVNANIAN AT PHILADELPHIA I, L.L.C.

K. Hovnanian at Pinckney Farm, LLC

K. Hovnanian at Port Imperial Urban Renewal II, L.L.C.

K. Hovnanian at Port Imperial Urban Renewal III, L.L.C.

K. Hovnanian at Randall Highlands, LLC

K. Hovnanian at Raymond Farm, LLC

K. Hovnanian at River Hills, LLC

K. Hovnanian at Silverwood Glen, LLC

K. Hovnanian at Solare, LLC

K. HOVNANIAN AT TAMARACK SOUTH LLC

K. Hovnanian at Tanglewood Oaks, LLC

K. Hovnanian at The Highlands at Summerlake Grove, LLC

K. Hovnanian at The Meadows, LLC

K. Hovnanian at Trenton II, L.L.C.

K. Hovnanian at Trenton Urban Renewal, L.L.C.

K. Hovnanian at Valletta, LLC

K. Hovnanian at Village of Round Hill, LLC

K. Hovnanian at Waterford, LLC

K. Hovnanian at Wellsprings, LLC

K. Hovnanian at Willowsford Greens III, LLC

K. Hovnanian Building Company, LLC

K. Hovnanian Companies of Arizona, LLC

K. Hovnanian Cypress Creek, LLC

K. Hovnanian DFW Bayside, LLC

K. Hovnanian DFW Berkshire II, LLC

K. Hovnanian DFW Berkshire, LLC

K. Hovnanian DFW Carillon, LLC

K. Hovnanian DFW Commodore at Preston, LLC

K. Hovnanian DFW Heron Pond, LLC

K. Hovnanian DFW High Pointe, LLC

K. Hovnanian DFW Maxwell Creek, LLC

K. Hovnanian DFW Mustang Lakes II, LLC

K. Hovnanian DFW Mustang Lakes, LLC

K. Hovnanian DFW Parkview, LLC

K. Hovnanian DFW Richwoods, LLC

K. Hovnanian DFW Watson Creek, LLC

K. Hovnanian Homes at Bock Farm, LLC

K. Hovnanian Homes at Parkside, LLC

K. Hovnanian Homes at Willowsford Grange, LLC

K. Hovnanian Homes at Willowsford New, LLC

K. Hovnanian Homes of Delaware I, LLC

K. Hovnanian Homes of Florida I, LLC

 

 

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K. Hovnanian Homes of Maryland I, LLC

K. Hovnanian Homes of Maryland II, LLC

K. Hovnanian Homes of Virginia I, LLC

K. Hovnanian Houston Lakes of Bella Terra West, LLC

K. Hovnanian Houston Laurel Glen, LLC

K. Hovnanian Houston Midtown Park I, LLC

K. Hovnanian Houston Park Lakes East, LLC

K. Hovnanian Houston Parkway Trails, LLC

K. Hovnanian Houston Property III, LLC

K. Hovnanian Houston Property IV, LLC

K. Hovnanian HovWest Holdings, L.L.C.

K. Hovnanian JV Holdings, L.L.C.

K. Hovnanian JV Services Company, L.L.C.

K. Hovnanian Lake Parker, LLC

K. Hovnanian Montclaire Estates, LLC

K. Hovnanian Parkside Holdings, LLC

K. Hovnanian Parkview at Sterling Meadows, LLC

K. Hovnanian Sereno, LLC

K. Hovnanian TBD, LLC

K. Hovnanian TerraLargo, LLC

K. Hovnanian's Four Seasons at Malind Bluff, LLC

K. Hovnanian's Sonata at The Preserve, LLC

 

 

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SCHEDULE 2.01

 

Initial Commitments

 

 

On file with Administrative Agent

 

 

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SCHEDULE 9.02

 

Administrative Agent’s Office, Certain Addresses for Notices

 

If to any Loan Party, to Borrower at:

 

K. Hovnanian Enterprises, Inc.

c/o Hovnanian Enterprises, Inc.

110 West Front Street

P.O. Box 500

Red Bank, New Jersey 07701

Facsimile:  (732) 383-2945

Attention:  Corporate Counsel

 

With copies (which shall not constitute notice) to:

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

Attention:  William B. Sheehan, Esq.

Facsimile: (212) 455-2502

 

and

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

Attention: Marisa D. Stavenas, Esq.

Facsimile: (212) 455-2502

 

If to the Administrative Agent, to Wilmington Trust, National Association at:

 

Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attention: K. Hovnanian Administrator
Facsimile: (612) 217-5651

 

If to any Lender, with a copy (which shall not constitute notice) to:

 

STROOCK & STROOCK & LAVAN LLP

180 Maiden Lane

New York, NY 10038

Attention: Kristopher M. Hansen, Esq.

Facsimile: (212) 806-6006

E-mail: khansen@stroock.com

 

 

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EXHIBIT A-1

 

FORM OF LOAN NOTICE

 

Date: [●]

 

To:

Wilmington Trust, National Association

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention: K. Hovnanian Administrator

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of January 29, 2018 (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 2.02(a) of the Credit
Agreement that it requests (select one):

 

A Borrowing of Loans:

 

1.     On ____________________________________ (a Business Day).

 

2.     In the amount of $ ________________________.

 

3.     Comprised of _______________________________________.

 

(Class of Loan requested)

 

4.      To the account designated below:

 

Bank to be Credited:                                                           
                    

 

Bank Address:                                                             

 

Account No.:                                                              

 

ABA No.:                                                                   

 

Reference Information:                                               

 

[Signature Page Follows]

 

 

--------------------------------------------------------------------------------

 

 

 

K. HOVNANIAN ENTERPRISES, INC.,
as Borrower

 

 

 

 

 

       

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Exhibit A-1-2

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EXHIBIT A-2

 

FORM OF PREPAYMENT NOTICE

 

To:

Wilmington Trust, National Association

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention: K. Hovnanian Administrator

 

Re:     Hovnanian Credit Agreement

 

Date: [●]

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of January 29, 2018 (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 the following prepayment of Loans in
accordance with the Credit Agreement:

 

(A)   Class(es) of Loans being prepaid:

[Initial Loans] [Refinancing Loans]

[Extended Loans]

   

(B)   Principal amount of Loans being prepaid:

$

     

(C)   Date of prepayment:

 

 

[This Prepayment Notice and the obligation to make a prepayment of Loans
pursuant to this Prepayment Notice shall be conditioned upon the occurrence of
[_].]

 

[Signature Page Follows]

 

Exhibit A-2-1

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K. HOVNANIAN ENTERPRISES, INC.,
as Borrower

 

 

 

 

 

       

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Exhibit A-2-2

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EXHIBIT B

 

FORM OF NOTE

 

Date: [●]

 

FOR VALUE RECEIVED, the undersigned, hereby promises to pay to
_____________________ or its registered assigns (the “Lender”), in accordance
with the provisions of the Credit Agreement (as hereinafter defined), the
aggregate unpaid principal amount of each Loan made by the 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 January 29, 2018 (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 Loan made by the Lender to the Borrower under the Credit Agreement from
the date of such 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 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 Note (this “Note”) is one of the 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 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 Note may become,
or may be declared to be, as applicable, immediately due and payable all as
provided in the Credit Agreement.

 

Loans made by the Lender shall be evidenced by one or more loan accounts or
records maintained by the Lender in the ordinary course of business, and the
Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Loans and payments with respect thereto; provided,
however, that the failure of any 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 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 Note.

 

THIS 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

--------------------------------------------------------------------------------

 

 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

   

Amount of

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]]1

 

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 January 29, 2018 (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.

 

 

--------------------------------------------------------------------------------

1               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/Loans2

 

Loan Facility

  $       $         %    

 

[7.     Trade Date:     __________________] 3

 

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]

--------------------------------------------------------------------------------

2          Set forth, to at least 9 decimals, as a percentage of the
Commitment/Loans of all Lenders thereunder.

3          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]4 Accepted:

 

 

K. HOVNANIAN ENTERPRISES, INC.,
as Borrower

 

 

By:                                                                            

Name: 
Title:

 

 

[WILMINGTON TRUST, NATIONAL

ASSOCIATION, as Administrative Agent

 

 

By:                                                                            
      Name:
      Title: ]5

 

 

--------------------------------------------------------------------------------

4           To be included to the extent consent is required.

5           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 5.07 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 is an Administrative
Questionnaire in the form of Exhibit D to the Credit Agreement, and
(vii) attached to the Assignment and Assumption is any other 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. – Revolver

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

--------------------------------------------------------------------------------

 

 

DEBTDOMAIN CONTACTS:

Name:

 

Phone:

 

E-mail Address:

     

Name:

 

Phone:

 

E-mail Address:

     

Name:

 

Phone:

 

E-mail Address:

 

 

DOMESTIC WIRE INSTRUCTIONS (USD):

Currency:

 

Bank Name:

 

Swift/Routing No.:

 

Account Name:

 

Account No.:

 

FCC Account Name:

 

FCC Account No.:

 

Attention:

 

 

 

 

TAX FORM PROVIDED:

 

W-9

☐

W-8BEN

☐

W-8BEN-E

☐

W-8IMY

☐

W-8ECI

☐

W-8EXP

☐

Other

☐

 

 

Exhibit D-2

--------------------------------------------------------------------------------

 

 

EXHIBIT E-1

 

FORM OF
SECTION 3.01(f) U.S. TAX CERTIFICATE
(For Non- U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the Credit Agreement dated as of January 29, 2018 (as
amended, restated, amended and restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”), 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 (or any
applicable successor forms). 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 the three 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.

 

3

--------------------------------------------------------------------------------

 

 

 

[NAME OF LENDER]

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Dated:                                                                          
                                         

 

4

--------------------------------------------------------------------------------

 

 

EXHIBIT E-2

 

FORM OF
SECTION 3.01(f) U.S. TAX CERTIFICATE
(For Non- U.S. Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the Credit Agreement dated as of January 29, 2018 (as
amended, restated, amended and restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”), 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 any applicable successor forms) or (ii) an IRS Form W-8IMY accompanied by an
IRS Form W-8BEN or W-8BEN-E (or, in each case, any applicable successor
forms)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 the three
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-2-1

--------------------------------------------------------------------------------

 

 

 

[NAME OF PARTICIPANT]

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Dated:                                                                          
                                         

 

Exhibit E-2-2

--------------------------------------------------------------------------------

 

 

EXHIBIT E-3

 

FORM OF
SECTION 3.01(f) U.S. TAX CERTIFICATE
(For Non- U.S. Participants That Are Not Partnerships For U.S. Federal Income
Tax Purposes)

 

Reference is made to the Credit Agreement dated as of January 29, 2018 (as
amended, restated, amended and restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”), 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 (or any applicable
successor forms). 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 the three 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) U.S. TAX CERTIFICATE
(For Non- U.S. Lenders That Are Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the Credit Agreement dated as of January 29, 2018 (as
amended, restated, amended and restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”), 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 the 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 any applicable successor forms) or (ii) an IRS Form
W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E (or, in each case, any
applicable successor forms) 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 the three
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-4-1

--------------------------------------------------------------------------------

 

 

 

[NAME OF LENDER]

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Dated:                                                                          
                                         

 

Exhibit E-4-2

--------------------------------------------------------------------------------

 

 

EXHIBIT G-1

 

Form of Secretary’s Certificate for the Borrower

 

K. HOVNANIAN ENTERPRISES, INC.

 

Secretary’s Certificate

 

[●], 2018

 

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 January 29, 2018 (the “Credit Agreement”),
among Hovnanian, the Issuer, the other 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
Issuer, 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.     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.

 

4.     Attached hereto as Exhibit C is a true, correct and complete copy of the
resolutions of the Board of Directors of the Borrower adopted by the Board of
Directors of the Issuer on December 22, 2017, authorizing, among other things
(i) the execution, delivery and performance of the Credit Agreement and the
other Loan Documents (as defined in the Credit Agreement) to which the Borrower
is a party, with the terms approved by officers authorized by the Board of
Directors and (ii) all other transactions and documents contemplated thereby and
all other necessary transactions of the Issuer in connection therewith. Such
resolutions and approvals are in full force and have not been amended or
modified, revoked or rescinded as of the date hereof and constitute the only
resolutions and approvals adopted by the Board of Directors of the Issuer, a
committee thereof, or of officers appointed by the Board of Directors of the
Issuer with respect to the Notes and the Credit Agreement.

 

 

--------------------------------------------------------------------------------

 

 

5.     Attached hereto as Exhibit D 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.

 

6.     Schedule A to this certificate sets forth each entity that is required to
be a Guarantor of the Loans (each capitalized term as defined in the Credit
Agreement) under the terms of the Credit Agreement.

 

7.     Each person who, as an officer of the Borrower, signed, as applicable,
(i)  the Credit Agreement and (ii) any other 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 name.

 

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

David Bachstetter

Vice President, Finance and Treasurer

Brad O’Connor

Vice President, Chief Accounting Officer and Corporate Controller

 

 

Capitalized terms used herein and not otherwise defined herein are used as
defined in the Credit Agreement.

 

[Signature page follows]

 

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, I have signed this Certificate as of the date first set
forth above.

 

K. HOVNANIAN ENTERPRISES, INC.

   

By:

   

Name: Michael Discafani

 

Title:   Secretary

 

I, David Bachstetter, Vice President, Finance and Treasurer of K. Hovnanian
Enterprises, Inc., certify that Michael Discafani is the 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 the date first set forth
above.

 

By:

   

Name: David Bachstetter

 

Title:   Vice President, Finance and Treasurer

 

 

[Signature page to K. Hovnanian’s Secretary’s Certificate]

 

--------------------------------------------------------------------------------

 

Exhibit A

 

Articles of Incorporation of the Borrower

 

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

Exhibit B

 

By-Laws of the Borrower

 

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

Exhibit C

 

Resolutions of the Board of Directors of the Borrower

 

 

[See attached]

 

 

 

--------------------------------------------------------------------------------

 

Exhibit D

 

Certificate of Good Standing of the Borrower

 

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE A

 

Guarantor of the Loans

 

[To be updated]

 

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT G-2

 

Form of Secretary’s Certificate
for the OTHER LOAN PARTIES

 

HOVNANIAN ENTERPRISES, INC.

 

Secretary’s Certificate

 

[●], 2018

 

The undersigned hereby certifies that he is the Secretary of Hovnanian
Enterprises, Inc., a Delaware corporation (“Hovnanian”), and of each of the
subsidiary guarantors listed on Schedule A hereto (the “Subsidiary Guarantors”
and, together with Hovnanian, 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 January 29, 2018 (the “Credit Agreement”),
among Hovnanian, the Borrower, the other 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
Hovnanian and the Subsidiary Guarantors, and not in his individual capacity, on
behalf of Hovnanian and the Subsidiary Guarantors, 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 Hovnanian and the Subsidiary Guarantors
listed on Schedule B hereto (the “Covered Guarantors”) and such Certificate of
Incorporation, Articles of Incorporation and Certificate of Formation are in
full force and effect as of the date hereof, there having been no amendments or
other documents filed affecting such Certificate of Incorporation, Articles of
Incorporation or Articles of Organization of Hovnanian or the Covered Guarantors
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 Hovnanian
and the Covered Guarantors, such By-Laws and Limited Liability Company
Agreements are in full force and effect as of the date hereof, there having been
no amendments affecting such By-Laws or Limited Liability Company Agreements and
no such amendment has been authorized.

 

3.     No action or proceeding for the dissolution, merger, sale, consolidation
or liquidation of Hovnanian or the Covered 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 Hovnanian or the Covered
Guarantors nor the stockholders of Hovnanian or the Covered Guarantors have
taken any action in preparation for any such proceeding or action.

 

 

--------------------------------------------------------------------------------

 

 

4.     Attached hereto as Exhibit C-1, Exhibit C-2 and Exhibit C-3,
respectively, are true, correct and complete copies of (i) the resolutions of
the Board of Directors of Hovnanian adopted on December 15, 2017, (ii) the
resolutions of the Board of Directors of the Subsidiary Guarantors, other than
K. HOV IP II, Inc., (or such Subsidiary Guarantors’ ultimate managing member or
sole member, as applicable) adopted on January 26, 2018 and (iii) the
resolutions of the Board of Directors of K. HOV IP II, Inc. adopted on January
[●], 2018, in each case authorizing the guarantees of the Loan Obligations (as
defined in the Credit Agreement) and the terms of such guarantees, other
transactions related to the foregoing, including the execution, delivery and
performance of the Credit Agreement and the other Loan Documents (as defined in
the Credit Agreement) to which each applicable Guarantor is a party and all
other transactions and documents contemplated thereby, and all other necessary
transactions of Hovnanian and the Subsidiary Guarantors in connection therewith
and contemplated thereby. Such resolutions and approvals are in full force and
have not been amended or modified, revoked or rescinded as of the date hereof
and constitute the only resolutions and approvals adopted by the Board of
Directors of Hovnanian, a committee thereof, or of officers appointed by the
Board of Directors of Hovnanian, and of such Subsidiary Guarantors (or such
Subsidiary Guarantors’ ultimate managing member or sole member, as applicable)
with respect to the Credit Agreement.

 

5.     Attached hereto as Exhibit D 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 Hovnanian
and each Covered Guarantor certifying that each of Hovnanian or the Covered
Guarantors, as applicable, is, as of the day of the date of issuance, a valid
and subsisting legal entity.

 

6.     Each person who, as an officer of the Guarantors signed, as applicable,
the Credit Agreement and any other 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.

 

Name

Title

Ara K. Hovnanian

Chief Executive Officer and President (in the case of Hovnanian and all
Subsidiary Guarantors except K. Hov IP II, Inc.)

J. Larry Sorsby

Executive Vice President and Chief Financial Officer (in the case of Hovnanian
and all Subsidiary Guarantors except K. Hov IP II, Inc.)

Michael Discafani

(i) Vice President, Corporate Counsel and Secretary (in the case of Hovnanian
and all Subsidiary Guarantors except K. Hov IP II, Inc.) and (ii) Vice President
and Secretary of K. Hov IP II, Inc.

David Bachstetter

(i) Vice President, Finance and Treasurer (in the case of Hovnanian and all
Subsidiary Guarantors except K. Hov IP II, Inc.) and (ii) Chief Executive
Officer and Treasurer of K. Hov IP II, Inc.

Brad O’Connor

(i) Vice President, Chief Accounting Officer and Corporate Controller (in the
case of Hovnanian and all Subsidiary Guarantors except K. Hov IP II, Inc.) and
(ii) Chief Financial Officer and President of K. Hov IP II, Inc.

 

Capitalized terms used herein and not otherwise defined herein are used as
defined in the Credit Agreement.

 

[Signature pages follow]

 

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, I have signed this Certificate as of the date first set
forth above.

 

HOVNANIAN ENTERPRISES, INC.

   

By:

   

Name: Michael Discafani

 

Title:   Secretary

 

 

SUBSIDIARY GUARANTORS (as listed on Schedule A hereto) (other than K. Hov IP II,
Inc.)

   

By:

   

Name: Michael Discafani

 

Title:   Secretary

 

 

K. HOV IP II, INC.

   

By:

   

Name: Michael Discafani

 

Title:   Secretary

 

 

--------------------------------------------------------------------------------

 

 

I, David Bachstetter, Vice President, Finance and Treasurer of Hovnanian
Enterprises, Inc. and of the Subsidiary Guarantors (other than K. Hov IP II,
Inc.) and Chief Executive Officer and Treasurer of K. Hov IP II, Inc., certify
that Michael Discafani is the Secretary of Hovnanian Enterprises, Inc. and of
each the Subsidiary Guarantors, and the signature appearing above is his genuine
signature.

 

IN WITNESS WHEREOF, I have signed this certificate as of the date first set
forth above.

 

HOVNANIAN ENTERPRISES, INC.

   

By:

   

Name: David Bachstetter

 

Title:   Vice President, Finance and Treasurer

 

 

SUBSIDIARY GUARANTORS (as listed on Schedule A hereto) (other than K. Hov IP II,
Inc.)

   

By:

   

Name: David Bachstetter

 

Title:   Vice President, Finance and Treasurer

 

 

K. HOV IP II, INC.

   

By:

   

Name: Brad O’Connor

 

Title:   Authorized Officer

 

 

[K. Hovnanian New Notes Issuance – Signature Page to Hovnanian’s Secretary’s
Certificate]

 

--------------------------------------------------------------------------------

 

Exhibit A

 

Articles of Incorporation or Articles of Organization of Hovnanian and the
Covered Guarantors

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

Exhibit B

 

By-Laws or Limited Liability Company Agreements of Hovnanian and the Covered
Guarantors

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

Exhibit C-1

 

Resolutions of the Board of Directors of Hovnanian

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

Exhibit C-2

 

Resolutions of the Board of Directors of the Subsidiary Guarantors

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

Exhibit C-3

 

Resolutions of the Board of Directors of K. HOV IP II, Inc.

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

Exhibit D

 

Certificates of Good Standing of Hovnanian and the Covered Guarantors

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE A

 

 

Subsidiary Guarantors

[To be updated]

 

--------------------------------------------------------------------------------

 

 

SCHEDULE B

 

Covered Guarantors

[To be updated]

 

 

--------------------------------------------------------------------------------

 

 

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(a)(iv) of that certain Credit Agreement dated as of January
29, 2018 (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) The Specified Representations 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 (except, in each case, where such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects as of such earlier date) and (B) upon consummation of the transactions
contemplated by the Loan Documents and the application of the proceeds thereof),
no Default or Event of Default has occurred.

 

2.     Substantially concurrently with the making of Loans on the Closing Date,
the proceeds of such Loans will be used to repay in full the outstanding
obligations under the Senior Secured Super Priority Term Loan Credit Agreement,
including all accrued and unpaid principal, interest, fees and premiums and all
costs and expenses incurred in connection therewith.

 

[Remainder of page intentionally left blank; signature page to follow]

 

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, I have signed this certificate.

 

Dated: [●]

 

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

       

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT H-2

 

FORM OF PERFECTION CERTIFICATE

 

The undersigned is a duly authorized officer of each of K. Hovnanian
Enterprises, Inc. (the “Borrower”) and the entities listed on Schedule 1 hereto
(each such entity together with the Borrower, a “Grantor”). With reference to
the Security Agreement dated as of [●] (the “Security Agreement”) among the
Borrower, the Guarantors party thereto and Wilmington Trust, National
Association, as Administrative Agent in its capacity as collateral agent (in
such capacity, the “Agent”) (terms defined in the Security Agreement being used
herein as therein defined), each of the undersigned certifies to the Agent and
each other Secured Party as follows:

 

1.      Names. (a) The exact legal name of each Grantor (for which certificate
or articles of incorporation, limited liability membership agreement or similar
organizational documents (the “Constituent Documents” were delivered to the
Agent, as it appears in each respective Constituent Document), the type of
organization and the jurisdiction of organization (or formation, as applicable)
for such Grantor is set forth in Schedule 1(a) hereto and (b) the exact legal
name (except with respect to capitalization) of each Grantor (other than a
Grantor set forth on Schedule 1(a) hereto), the type of organization and the
jurisdiction of organization (or formation, as applicable) for such Grantor is
set forth in Schedule 1(b) hereto

 

2.      Lien Search Grantors. (a) Set forth on Schedule 2(a) is the name of each
Grantor selected for lien searches (the “Lien Search Grantors”) and the county
in which each Lien Search Grantor’s chief executive office is located, if such
office is not located at 110 West Front Street, Red Bank, New Jersey 07701, as
applicable.

 

(b)     Set forth in Schedule 2(b) hereto is each other entity name (including
trade names or similar appellations) each Lien Search Grantor has had in the
last five years, together with the date of the relevant change.

 

(c)     Except as set forth in Schedule 2(c) hereto, no Lien Search Grantor has
changed its identity or entity structure in any way within the past five years.

 

3.      UCC Filings. In order to perfect the Liens granted by the Grantors, duly
completed financing statements on Form UCC-1 with respect to each Grantor, with
the collateral described as “All Personal Property” or “All Assets”, have been
delivered to the Agent for filing in the Uniform Commercial Code filing office
in each jurisdiction identified in paragraph 1 above, as applicable.

 

4.     Deposit Accounts and Securities Accounts. Set forth as Schedule 4 hereto
is a true and complete list of all Deposit Accounts and Securities Accounts
maintained by each Grantor, including the name of each institution where each
such account is held, the name of each Grantor that holds each account and
whether such Deposit Account or Securities Account is currently subject to a
control agreement as of the date hereof. Schedule 4 shall not include escrow
accounts (in which funds are held for or of others by virtue of customary real
estate practice or contractual or legal requirements).

 

 

--------------------------------------------------------------------------------

 

 

5.     Intellectual Property. (a)      Set forth as Schedule 5(a) hereto is a
true and complete list of all of each Grantor’s Patents, Patent Licenses,
Trademarks and Trademark Licenses (each as defined in the Security Agreement)
registered with the United States Patent and Trademark Office, and all other
Patents, Patent Licenses, Trademarks and Trademark Licenses, including the name
of the registered owner and the registration number of each Patent, Patent
License, Trademark and Trademark License owned by such Grantor.

 

(b)     Set forth as Schedule 5(b) hereto is a true and complete list of all of
each Grantor’s United States Copyrights and Copyright Licenses (each as defined
in the Security Agreement), and all Copyright Licenses, including the name of
the registered owner and the registration number of each Copyright or Copyright
License owned by such Grantor.

 

(c)     In order to preserve, protect and perfect the security interests in the
United Sates Trademarks, Trademark Licenses, Patents, Patent Licenses,
Copyrights and Copyright Licenses set forth on Schedule 5(a) and Schedule 5(b),
duly signed copies of the Intellectual Property Security Agreement by the
applicable Grantor have been delivered to the Agent for filing with the United
States Patent and Trademark Office and United States Copyright Office, as
applicable.

 

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, I have hereunto set my hand this [●].

 

 

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

__________________________________

 

Name:

Title:

 

 

--------------------------------------------------------------------------------

 

 

Schedule 1(a)

 

Names

 

 

Exact Legal Name of Each Grantor

Jurisdiction

of

Organization

Type of Organization

1.

     

2.

     

3.

     

 

 

--------------------------------------------------------------------------------

 

 

Schedule 1(b)

 

Names

 

 

Exact Legal Name of Each Grantor (except with respect to capitalization)

Jurisdiction

of

Organization

Type of Organization

1.

     

2.

     

3.

     

 

 

--------------------------------------------------------------------------------

 

 

Schedule 2(a)

 

Lien Search Guarantors

 

 

Lien Search Guarantor

Chief Executive Office, if not
110 West Front Street
Red Bank, New Jersey, 07701

1.

   

2.

   

3.

   

 

 

--------------------------------------------------------------------------------

 

 

Schedule 2(b)

 

Other Corporate Names of Lien Search Grantors, if Applicable

 

 

Lien Search Grantor

Name Change Note, including Date

1.

   

2.

   

3.

   

 

 

--------------------------------------------------------------------------------

 

 

Schedule 2(c)

 

Changes in Identity or Corporate Structure Within Past Five Years

 

Grantor

Changes in Identity or

Corporate Structure

Date of Change

                             

 

 

--------------------------------------------------------------------------------

 

 

Schedule 3

 

UCC-1 Financing Statements

 

See attached.

 

 

--------------------------------------------------------------------------------

 

 

Schedule 4

 

Deposit Accounts and Securities Accounts

 

 

Depository

Account #

Grantor

Control Agreement [Y/N]

                       

 

 

Securities Accounts

 

 

Securities Intermediary

Account #

Grantor

Control Agreement [Y/N]

                               

 

Schedule 5(a)

 

Intellectual Property

 

  Federal Trademarks  

Owner

Trademark

Application No. / Registration No.

     

 

 

--------------------------------------------------------------------------------

 

 

Patents

Registrant

Patent/Application Number

Title

     

 

Schedule 5(b)

 

 

 

Copyrights

Owner

Registration Number

Copyright

     

 

Exhibit H-3-1

--------------------------------------------------------------------------------

 

 

EXHIBIT H-3

 

Form of Solvency Certificate

 

SOLVENCY CERTIFICATE

[  ], 2018

 

Reference is made to that certain Credit Agreement (the “Credit Agreement”),
dated as of January 29, 2018, among K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), Hovnanian Enterprises, Inc., a Delaware
Corporation (“Holdings”), the other guarantors party thereto from time to time
(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:

 

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.

 

5.     For purposes of this Certificate, the amount of any contingent liability
has been computed in accordance with GAAP.

 

6.     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 Credit Agreement.

 

[Remainder of this page intentionally left blank.]

 

Exhibit H-3-2

--------------------------------------------------------------------------------

 

 

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-3-3

--------------------------------------------------------------------------------

 

 

EXHIBIT I-1

 

 

 

Form of Opinion of Simpson Thacher & Bartlett LLP

 

 

 

[●], 2018

 

Wilmington Trust, National Association, as Administrative
     Agent under the Credit Agreement, as hereinafter
     defined (in such capacity, the “Administrative Agent”)

 

and

 

The Lenders listed on Schedule I hereto

 

 

Re:

Credit Agreement, dated as of January 29, 2018 (the “Credit Agreement”) among K.
Hovnanian Enterprises, Inc., a California corporation (the “Borrower”),
Hovnanian Enterprises, Inc., a Delaware corporation (“Holdings”), the other
guarantors party thereto, the lending institutions identified in the Credit
Agreement (the “Lenders”) and the Administrative Agent

 

Ladies and Gentlemen:

 

We have acted as counsel to the Borrower, Holdings, the subsidiaries of Holdings
named on Part A of Schedule II attached hereto (each of Holdings and each such
subsidiary, a “Delaware Guarantor” and, collectively, the “Delaware
Guarantors”), the subsidiaries of Holdings named on Part B of Schedule II
attached hereto (each, a “New York Guarantor” and, collectively, the “New York
Guarantors”; the Delaware Guarantors and the New York Guarantors being referred
to herein collectively as the “Covered Guarantors”) and the subsidiaries of
Holdings named on Schedule III attached hereto (each, a “Non-Covered Guarantor”
and, collectively, the “Non-Covered Guarantors” (the Borrower, the Covered
Guarantors and the Non-Covered Guarantors being referred to herein collectively
as the “Credit Parties”)) in connection with the preparation, execution and
delivery of the following documents:

 

 

(i)

the Credit Agreement;

 

 

(ii)

the First Supplemental Guarantee to the Credit Agreement;

 

 

(iii)

the Security Agreement dated as of the date hereof;

 

 

(iv)

the Pledge Agreement dated as of the date hereof;

 

 

 

the Joinder to Intercreditor Agreement and Mortgage Tax Collateral Agency
Agreement dated as of the date hereof; and

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

[●]

The Lenders listed on Schedule I

 

 

 

 

the Intellectual Property Security Agreement, dated as of the date hereof (the
“IP Agreement”), between K. Hov IP, II, Inc. and the Administrative Agent.

 

The documents described in the foregoing clauses (i) through (vi) are
collectively referred to herein as the “Credit Documents,” and the documents
described in the foregoing clauses (iii), (iv) and (vi) are collectively
referred to herein as the “Security Documents.” Unless otherwise indicated,
capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Credit Agreement. This opinion letter is furnished to you
pursuant to [Section 4.02(a)(ii)] of the Credit Agreement.

 

We have examined the following:

 

 

(i)

the Credit Agreement, signed by each Credit Party that is a party thereto and by
the Administrative Agent and certain of the Lenders;

 

 

(ii)

the First Supplemental Guarantee to the Credit Agreement, signed by each Credit
Party that is a party thereto and by the Administrative Agent;

 

 

(iii)

each other Credit Document, signed by each Credit Party that is a party thereto;

 

 

 

unfiled copies of the financing statements listed on Schedule IV hereto (the
“New York Financing Statements”), naming the New York Guarantors indicated on
such Schedule IV as debtors and the Administrative Agent as secured party, which
we understand will be filed in the Office of the Secretary of State of the State
of New York (the “New York Filing Office”);

 

 

 

unfiled copies of the financing statements listed on Schedule V hereto (the
“Delaware Financing Statements”), naming the Delaware Guarantors indicated on
such Schedule V as debtors and the Administrative Agent as secured party, which
we understand will be filed in the Office of the Secretary of State of the State
of Delaware (the “Delaware Filing Office”);

 

 

 

unfiled copies of the financing statements listed on Schedule VI hereto (the
“California Financing Statements”), naming the Guarantors indicated on such
Schedule VI as debtors and the Administrative Agent as secured party, which we
understand will be filed in the Office of the Secretary of State of the State of
California (the “California Filing Office”);

 

 

 

unfiled copies of the financing statements listed on Schedule VII hereto (the
“District of Columbia Financing Statements”), naming the Guarantors indicated on
such Schedule VII as debtors and the Administrative Agent as secured party,
which we understand will be filed in the Office of the Recorder of Deeds (the
“District of Columbia Filing Office”); and

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

[●]

The Lenders listed on Schedule I

 

 

 

 

unfiled copies of the financing statements listed on Schedule VIII hereto (the
“Texas Financing Statements”), naming the Guarantors indicated on such Schedule
VIII as debtors and the Administrative Agent as secured party, which we
understand will be filed in the Office of the Secretary of State of the State of
Texas (the “Texas Filing Office”).

 

In addition, we have examined, and have relied as to matters of fact upon, the
documents delivered to you concurrently with this opinion, and upon originals,
or duplicates or certified or conformed copies, of such corporate and limited
liability company records, agreements, documents and other instruments and such
certificates or comparable documents of public officials and of officers and
representatives of the Credit Parties, and have made such other investigations,
as we have deemed relevant and necessary in connection with the opinions
hereinafter set forth.

 

In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as duplicates or certified or conformed copies and the
authenticity of the originals of such latter documents. In addition, we have
relied as to certain matters of fact upon the representations made in the Credit
Documents.

 

In addition, we have assumed that the Credit Parties have rights in the
Collateral (as defined in the Security Agreement) existing on the date hereof
and will have rights in property that becomes Collateral after the date hereof.

 

We have also assumed that, concurrently with the Initial Borrowing of the Loans,
the Credit Agreement, dated as of July 29, 2016, as amended, supplemented and/or
otherwise modified from time to time with respect to the $75,000,000 Term Loan,
among by and among the Borrower, Holdings, the subsidiary guarantors party
thereto, the lenders party thereto and Wilmington Trust, National Association,
as administrative agent, constituting the “Senior Secured Super Priority Term
Loan Credit Agreement” under the Credit Agreement, has been terminated in full
in accordance with its terms as of the date hereof.

 

Based upon the foregoing, and subject to the qualifications, assumptions and
limitations set forth herein, we are of the opinion that:

 

Each of the Covered Guarantors has duly authorized, executed and delivered each
Credit Document to which it is a party.

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

[●]

The Lenders listed on Schedule I

 

 

The execution and delivery by any Credit Party of the Credit Documents to which
it is a party, the Borrower’s borrowings in accordance with the terms of the
Credit Agreement, the performance of any Credit Party of its payment obligations
under the Credit Documents to which it is a party and the granting of the
security interests to be granted by any Credit Party pursuant to the Security
Documents (a) will not result in any violation of, assuming that the proceeds of
borrowings will be used in accordance with the terms of the Credit Agreement,
any federal or New York statute or the General Corporation Law of the State of
Delaware (the “DGCL”) or the Delaware Limited Liability Company Act (the
“DLLCA”) or any rule or regulation issued pursuant to any federal or New York
statute or the DGCL or the DLLCA or any order known to us issued by any court or
governmental agency or body acting pursuant to any federal or New York statute
or the DGCL or the DLLCA and (b) will not breach or result in a default under
any agreement or instrument identified on Schedule IX hereto.

 

No consent, approval, authorization, order, registration or qualification of or
with any federal or New York governmental agency or body or any Delaware
governmental agency or body acting pursuant to the DGCL or the DLLCA, is
required for the execution and delivery by any Credit Party of the Credit
Documents to which it is a party, the borrowings by the Borrower in accordance
with the terms of the Credit Agreement, the performance by any Credit Party of
its payment obligations under the Credit Documents to which it is a party or the
granting of any security interests under the Security Documents, except filings
required for the perfection of security interests granted pursuant to the
Security Documents.

 

Assuming that each of the Credit Documents is a valid and legally binding
obligation of each of the parties thereto (other than the Credit Parties) and
assuming that (a) the Borrower and each Non-Covered Guarantor is validly
existing and in good standing under the laws of the jurisdiction in which it is
organized, has the entity power and authority under such laws and its
organizational documents to execute, deliver and perform its obligations under
the Credit Documents to which it is a party, and has duly authorized, executed
and delivered the Credit Documents to which it is a party in accordance with its
organizational documents and the laws of the jurisdiction in which it is
organized, (b) execution, delivery and performance by each Credit Party of the
Credit Documents to which it is a party do not violate the organizational
documents of any Non-Covered Guarantor or the laws of the jurisdiction in which
it is organized or any other applicable laws (excepting the federal laws of the
United States, the law of the State of New York, the DGCL and the DLLCA) and (c)
the execution, delivery and performance by each Credit Party of the Credit
Documents to which it is a party do not constitute a breach of or default of its
organizational documents or under any agreement or instrument which is binding
upon such Credit Party (except that we do not make the assumption in the
foregoing clause (c) with respect to the agreements and instruments that are the
subject of opinion paragraph 2 of this opinion letter), each Credit Document
constitutes the valid and legally binding obligation of each Credit Party that
is a party thereto, enforceable against such Credit Party in accordance with its
terms.

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

[●]

The Lenders listed on Schedule I

 

 

No Credit Party is an “investment company” within the meaning of, and subject to
regulation under, the Investment Company Act of 1940, as amended.

 

Assuming that the Borrower will comply with the provisions of the Credit
Agreement relating to the use of proceeds, the execution and delivery of the
Credit Agreement by the Borrower and the making of the Loans under the Credit
Agreement will not violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System.

 

Each of the Security Agreement and the Pledge Agreement creates in favor of the
Administrative Agent for the benefit of the Secured Parties a security interest
in the Collateral described therein in which a security interest may be created
under Article 9 of the Uniform Commercial Code as in effect in the State of New
York (the “New York UCC”) (the “Article 9 Collateral”).

 

Upon the filing in the New York Filing Office of the New York Financing
Statements, the Administrative Agent will have a perfected security interest for
the benefit of the Secured Parties in that portion of the Article 9 Collateral
described in the New York Financing Statements in which a security interest is
perfected by filing a financing statement in the New York Filing Office.

 

Upon the filing in the Texas Filing Office of the Texas Financing Statements,
the Administrative Agent will have a perfected security interest for the benefit
of the Secured Parties in that portion of the Article 9 Collateral described in
the Texas Financing Statements in which a security interest is perfected by
filing a financing statement in the Texas Filing Office.

 

The Administrative Agent will have a perfected security interest for the benefit
of the Secured Parties in that portion of the Article 9 Collateral constituting
the U.S. trademark registrations and any trademark applications, as set forth in
the IP Agreement, of the applicable Credit Party listed, and correctly
identified, on Schedule A to the IP Agreement upon (a) the filing of UCC
financing statements under the laws of the jurisdiction in which such Credit
Party is located (as determined in accordance with Section 9-307 of the New York
UCC) and (b) the timely filing and recording of the IP Agreement, including
Schedule A to the IP Agreement, in the United States Patent and Trademark Office
in the manner specified by such office in accordance with its rules and
regulations.

 

Although we express no opinion as to the law of the State of Delaware (other
than the DGCL and the DLLCA), we have reviewed Article 9 of the Uniform
Commercial Code in effect in the State of Delaware as set forth in the Commerce
Clearing House, Inc. Secured Transactions Guide as supplemented through [_],
2018 (the “Delaware UCC”) and, based solely on such review, we advise you that
(a) the Delaware Financing Statements are in appropriate form for filing in the
Delaware Filing Office and (b) upon the filing of the Delaware Financing
Statements in the Delaware Filing Office, the Administrative Agent will have a
perfected security interest for the benefit of the Secured Parties in that
portion of the Article 9 Collateral described in the Delaware Financing
Statements in which a security interest is perfected by filing a financing
statement in the Delaware Filing Office.

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

[●]

The Lenders listed on Schedule I

 

 

Although we express no opinion as to the law of the State of California, we have
reviewed Division 9 of the Uniform Commercial Code in effect in the State of
California as set forth in the Commerce Clearing House, Inc. Secured
Transactions Guide as supplemented through [_], 2018 (the “California UCC”) and,
based solely on such review, we advise you that (a) the California Financing
Statements are in appropriate form for filing in the California Filing Office
and (b) upon the filing of the California Financing Statements in the California
Filing Office, the Administrative Agent will have a perfected security interest
for the benefit of the Secured Parties in that portion of the Article 9
Collateral described in the California Financing Statements in which a security
interest is perfected by filing a financing statement in the California Filing
Office.

 

Although we express no opinion as to the law of the District of Columbia, we
have reviewed Article 9 of the Uniform Commercial Code in effect in the District
of Columbia as set forth in the Commerce Clearing House, Inc. Secured
Transactions Guide as supplemented through [_], 2018 (the “District of Columbia
UCC”) and, based solely on such review, we advise you that (a) the District of
Columbia Financing Statements are in appropriate form for filing in the District
of Columbia Filing Office and (b) upon the filing of the District of Columbia
Financing Statements in the District of Columbia Filing Office, the
Administrative Agent will have a perfected security interest for the benefit of
the Secured Parties in that portion of the Article 9 Collateral described in the
District of Columbia Financing Statements in which a security interest is
perfected by filing a financing statement in the District of Columbia Filing
Office.

 

Our opinion in paragraphs 2 and 3 above are limited to our review of only those
statutes, regulations and rules that, in our experience, are customarily
applicable to transactions of the type contemplated by the Credit Agreement and
exclude statutes, rules and regulations that are part of a regulatory scheme
applicable to any party or any of their affiliates due to the specific assets or
business of such party or such affiliates. No opinion is expressed in paragraph
2 as to compliance with any financial or accounting test, or any limitation or
restriction expressed as a dollar (or other currency) amount, ratio or
percentage in any of the agreements or instruments identified in Schedule IX.

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

[●]

The Lenders listed on Schedule I

 

 

Our opinions in paragraphs 4 and 7 above are subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally,
(ii) general equitable principles (whether considered in a proceeding in equity
or at law) and (iii) an implied covenant of good faith and fair dealing.

 

Our opinion in paragraph 4 above also is subject to the qualification that
certain provisions of the Security Documents may not be enforceable in whole or
in part, although the inclusion of such provisions does not render the Security
Documents invalid, and the Security Documents and the law of the State of New
York contain adequate remedial provisions for the practical realization of the
rights and benefits afforded thereby.

 

Our opinions in paragraphs 7, 8 and 9, and our advice in the fourth, fifth and
sixth preceding paragraphs above, are limited to Article 9 of (x) the New York
UCC, (y) the Delaware UCC or (z) the District of Columbia UCC or, Chapter 9 of
the Uniform Commercial Code as in effect in the State of Texas (the “Texas
UCC”), or Division 9 of the California UCC, as the case may be, and therefore,
those opinions and advice paragraphs do not address collateral of a type not
subject to Article 9 of (x) the New York UCC, (y) the Delaware UCC or (z) the
District of Columbia UCC or Chapter 9 of the Texas UCC, or Division 9 of the
California UCC. In addition, we express no opinion and render no advice as to
what law governs perfection of the security interests granted in the collateral
covered by this opinion letter.

 

We express no opinion and render no advice with respect to:

 

(i)     perfection of any security interest in (1) any collateral of a type
represented by a certificate of title and (2) any collateral consisting of money
or cash equivalents;

 

(ii)     proceeds of Collateral to the extent a security interest therein is
limited by of Section 9-315 of the New York UCC, Section 9-315 of the Delaware
UCC, Section 9-315 of the District of Columbia UCC or Section 9.315 of the Texas
UCC or Section 9315 of the California UCC;

 

(iii)     perfection of any security interest the priority of which is subject
to Section 9-334 of the New York UCC, the Delaware UCC, or the District of
Columbia UCC, or Section 9.334 of the Texas UCC or Section 9334 of the
California UCC;

 

(iv)     the priority of any security interest;

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

[●]

The Lenders listed on Schedule I

 

 

(v)     the effect of Section 552 of the Bankruptcy Code (11 U.S.C. Section 552)
(relating to property acquired by a pledgor after the commencement of a case
under the Bankruptcy Code with respect to such pledgor) and Section 506(c) of
the Bankruptcy Code (11 U.S.C. Section 506(c)) (relating to certain costs and
expenses of a trustee in preserving or disposing of collateral);

 

(vi)     the effect of any provision of the Credit Documents that is intended to
establish any standard other than a standard set forth in the New York UCC as
the measure of the performance by any party thereto of such party’s obligations
of good faith, diligence, reasonableness or care or of the fulfillment of the
duties imposed on any secured party with respect to the maintenance, disposition
or redemption of collateral, accounting for surplus proceeds of collateral or
accepting collateral in discharge of liabilities;

 

(vii)     the effect of any provision of the Credit Documents that is intended
to permit modification thereof only by means of an agreement in writing signed
by the parties thereto;

 

(viii)     the effect of any provision of the Credit Documents insofar as it
provides that any Person purchasing a participation from a Lender or other
Person may exercise set-off or similar rights with respect to such participation
or that any Lender or other Person may exercise set-off or similar rights other
than in accordance with applicable law;

 

(ix)     the effect of any provision of the Credit Documents imposing penalties
or forfeitures;

 

(x)     the effect of any provision of the Credit Documents to the extent that
such provision constitutes a waiver of illegality as a defense to the
performance of contract obligations; and

 

(xi)     the effect of any provision of the Credit Documents relating to
indemnification or exculpation in connection with violations of any securities
laws or relating to indemnification, contribution or exculpation in connection
with willful, reckless or criminal acts or gross negligence of the indemnified
or exculpated Person or the Person receiving contribution.

 

In connection with the provisions of the Credit Documents whereby the parties
submit to the jurisdiction of the courts of the United States of America located
in the State and County of New York, we note the limitations of 28 U.S.C.
Sections 1331 and 1332 on subject matter jurisdiction of the federal courts. In
connection with the provisions of the Credit Documents that relate to forum
selection of the courts of the United States located in the State of New York
(including, without limitation, any waiver of any objection to venue or any
objection that a court is an inconvenient forum), we note that under NYCPLR
Section 510 a New York State court may have discretion to transfer the place of
trial, and under 28 U.S.C. Section 1404(a) a United States district court has
discretion to transfer an action from one federal court to another, and we also
note that a New York State court and a U.S. District Court may dismiss an action
on the ground that such court is an improper venue or inconvenient forum.

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

[●]

The Lenders listed on Schedule I

 

 

We do not express any opinion herein concerning any law other than the federal
law of the United States, the law of the State of New York, the DGCL, the DLLCA
and Chapter 9 of the Texas UCC.

 

We note that the Hague Convention on the Law Applicable to Certain Rights in
Respect of Securities Held with an Intermediary (the “Hague Convention”) sets
forth certain choice of law rules that apply to certain issues in respect of
securities held with a securities intermediary in a securities account. We
express no opinion as to the applicability to, or the effects on, the opinions
rendered herein of the Hague Convention’s choice of law rules with respect to
issues identified in Article 2 (1) of the Hague Convention.

 

This opinion letter is rendered to you in connection with the above described
transactions. This opinion letter may not be relied upon by you for any other
purpose, or relied upon by, or furnished to, any other person, firm or
corporation without our prior written consent; provided that this opinion letter
may be furnished to, but may not be relied upon by, any person that purchases an
interest or a participation in the Loans or Commitments.

 

Very truly yours,

 

 

 

SIMPSON THACHER & BARTLETT LLP

 

 

--------------------------------------------------------------------------------

 

 

Schedule I

 

The Lenders

 

On file with Administrative Agent

 

 

--------------------------------------------------------------------------------

 

 

Schedule II

 

Covered Guarantors

 

Part A

Delaware Subsidiaries

 

K. HOVNANIAN AT ASHBY PLACE, LLC

DE

K. HOVNANIAN AT BRENFORD STATION, LLC

DE

K. HOVNANIAN AT HIDDEN BROOK, LLC

DE

K. HOVNANIAN AT MANSFIELD II, L.L.C.

DE

K. HOVNANIAN AT NORTH BRUNSWICK VI, L.L.C.

DE

K. HOVNANIAN AT NOTTINGHAM MEADOWS, LLC

DE

K. HOVNANIAN AT OCEAN VIEW BEACH CLUB, LLC

DE

K. HOVNANIAN AT PLANTATION LAKES, L.L.C.

DE

K. HOVNANIAN CENTRAL ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN DEVELOPMENTS OF DELAWARE, INC.

DE

K. HOVNANIAN HAMPTONS AT OAK CREEK II, L.L.C.

DE

K. HOVNANIAN HOMES OF DELAWARE, L.L.C.

DE

K. HOVNANIAN HOMES OF LONGACRE VILLAGE, L.L.C.

DE

K. HOVNANIAN NORTH CENTRAL ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN NORTH JERSEY ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN AT SEABROOK, LLC

DE

K. HOVNANIAN SHORE ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN SOUTH JERSEY ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN'S FOUR SEASONS AT BAYMONT FARMS L.L.C.

DE

K. HOVNANIAN'S FOUR SEASONS AT SILVER MAPLE FARM, L.L.C.

DE

KHH SHELL HALL LOAN ACQUISITION, LLC

DE

WASHINGTON HOMES, INC.

DE

WOODMORE RESIDENTIAL, L.L.C.

DE

WTC VENTURES, L.L.C.

DE

K. HOVNANIAN'S FOUR SEASONS AT BELLE TERRE, LLC

DE

 

 

--------------------------------------------------------------------------------

 

 

Part B

New York Subsidiaries

 

 

K. HOVNANIAN AT NORTHERN WESTCHESTER INC.

NY

K. HOVNANIAN COMPANIES OF NEW YORK, INC.

NY

K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.

NY

 

 

--------------------------------------------------------------------------------

 

 

Schedule III

 

Non-Covered Guarantors

 

K. HOVNANIAN AT 240 MISSOURI, LLC

AZ

K. HOVNANIAN AT AIRE ON MCDOWELL, LLC

AZ

K. HOVNANIAN AT CATANIA, LLC

AZ

K. HOVNANIAN AT GALLERY, LLC

AZ

K. HOVNANIAN AT MONTANA VISTA, LLC

AZ

K. HOVNANIAN AT PALM VALLEY, L.L.C.

AZ

K. HOVNANIAN AT PARK PASEO, LLC

AZ

K. HOVNANIAN AT POINTE 16, LLC

AZ

K. HOVNANIAN AT QUAIL CREEK, L.L.C.

AZ

K. HOVNANIAN AT RANCHO CABRILLO, LLC

AZ

K. HOVNANIAN AT SIENNA HILLS, LLC

AZ

K. HOVNANIAN AT SILVERSTONE, LLC

AZ

K. HOVNANIAN AT SKYE ON MCDOWELL, LLC

AZ

K. HOVNANIAN AT SUNRISE TRAIL II, LLC

AZ

K. HOVNANIAN AT SUNRISE TRAIL III, LLC

AZ

K. HOVNANIAN AT VENTANA LAKES, LLC

AZ

K. HOVNANIAN AT VERRADO CASCINA, LLC

AZ

K. HOVNANIAN AT VERRADO MARKETSIDE, LLC

AZ

K. HOVNANIAN DEVELOPMENTS OF ARIZONA, INC.

AZ

K. HOVNANIAN GREAT WESTERN BUILDING COMPANY, LLC

AZ

K. HOVNANIAN GREAT WESTERN HOMES, LLC

AZ

K. HOVNANIAN LEGACY AT VIA BELLA, LLC

AZ

K. HOVNANIAN'S FOUR SEASONS AT THE MANOR II, LLC

AZ

K. HOVNANIAN'S FOUR SEASONS AT THE MANOR, LLC

AZ

NEW LAND TITLE AGENCY, L.L.C.

AZ

K. HOVNANIAN AT THE MEADOWS 9, LLC

AZ

K. HOVNANIAN AT SILVERSTONE G, LLC

AZ

K. HOVNANIAN AT MONTANA VISTA DOBBINS, LLC

AZ

K. HOVNANIAN AT VILLAGO, LLC

AZ

K. HOV IP, II, INC.

CA

K. HOVNANIAN’S ASPIRE AT UNION VILLAGE, LLC

CA

K. HOVNANIAN AT 4S, LLC

CA

K. HOVNANIAN AT ALISO, LLC

CA

K. HOVNANIAN AT ANDALUSIA, LLC

CA

K. HOVNANIAN AT AVENUE ONE, L.L.C.

CA

K. HOVNANIAN AT BAKERSFIELD 463, L.L.C.

CA

 

 

--------------------------------------------------------------------------------

 

 

K. HOVNANIAN AT BEACON PARK AREA 129 II, LLC

CA

K. HOVNANIAN AT BEACON PARK AREA 129, LLC

CA

K. HOVNANIAN AT BEACON PARK AREA 137, LLC

CA

K. HOVNANIAN AT BELLA LAGO, LLC

CA

K. HOVNANIAN AT BLACKSTONE, LLC

CA

K. HOVNANIAN AT BRIDGEPORT, INC.

CA

K. HOVNANIAN AT CAPISTRANO, L.L.C.

CA

K. HOVNANIAN AT CARLSBAD, LLC

CA

K. HOVNANIAN AT CEDAR LANE, LLC

CA

K. HOVNANIAN AT CHARTER WAY, LLC

CA

K. HOVNANIAN AT CIELO, L.L.C.

CA

K. HOVNANIAN AT COASTLINE, L.L.C.

CA

K. HOVNANIAN AT CORTEZ HILL, LLC

CA

K. HOVNANIAN AT EL DORADO RANCH II, L.L.C.

CA

K. HOVNANIAN AT EL DORADO RANCH, L.L.C.

CA

K. HOVNANIAN AT EVERGREEN, L.L.C.

CA

K. HOVNANIAN AT FIDDYMENT RANCH, LLC

CA

K. HOVNANIAN AT FRESNO, LLC

CA

K. HOVNANIAN AT GASLAMP SQUARE, L.L.C.

CA

K. HOVNANIAN AT GILROY 60, LLC

CA

K. HOVNANIAN AT GILROY, LLC

CA

K. HOVNANIAN AT JAEGER RANCH, LLC

CA

K. HOVNANIAN AT LA COSTA GREENS, L.L.C.

CA

K. HOVNANIAN AT LA LAGUNA, L.L.C.

CA

K. HOVNANIAN AT LAKE RANCHO VIEJO, LLC

CA

K. HOVNANIAN AT MALAN PARK, L.L.C.

CA

K. HOVNANIAN AT MANTECA, LLC

CA

K. HOVNANIAN AT MELANIE MEADOWS, LLC

CA

K. HOVNANIAN AT MUIRFIELD, LLC

CA

K. HOVNANIAN AT PARKSIDE, LLC

CA

K. HOVNANIAN AT PAVILION PARK, LLC

CA

K. HOVNANIAN AT PIAZZA D'ORO, L.L.C.

CA

K. HOVNANIAN AT PIAZZA SERENA, L.L.C

CA

K. HOVNANIAN AT POSITANO, LLC

CA

K. HOVNANIAN AT PRADO, L.L.C.

CA

K. HOVNANIAN AT ROSEMARY LANTANA, L.L.C.

CA

K. HOVNANIAN AT SAGE, L.L.C.

CA

K. HOVNANIAN AT SANTA NELLA, LLC

CA

K. HOVNANIAN AT SHELDON GROVE, LLC

CA

K. HOVNANIAN AT SKYE ISLE, LLC

CA

K. HOVNANIAN AT STANTON, LLC

CA

 

 

--------------------------------------------------------------------------------

 

 

K. HOVNANIAN AT SUNRIDGE PARK, LLC

CA

K. HOVNANIAN AT THE CROSBY, LLC

CA

K. HOVNANIAN AT THOMPSON RANCH, LLC

CA

K. HOVNANIAN AT TRAIL RIDGE, LLC

CA

K. HOVNANIAN AT VALLE DEL SOL, LLC

CA

K. HOVNANIAN AT VERONA ESTATES, LLC

CA

K. HOVNANIAN AT VICTORVILLE, L.L.C.

CA

K. HOVNANIAN AT VINEYARD HEIGHTS, LLC

CA

K. HOVNANIAN AT VISTA DEL SOL, L.L.C.

CA

K. HOVNANIAN AT WATERSTONE, LLC

CA

K. HOVNANIAN AT WEST VIEW ESTATES, L.L.C.

CA

K. HOVNANIAN AT WESTSHORE, LLC

CA

K. HOVNANIAN AT WHEELER RANCH, LLC

CA

K. HOVNANIAN AT WOODCREEK WEST, LLC

CA

K. HOVNANIAN COMMUNITIES, INC.

CA

K. HOVNANIAN COMPANIES OF CALIFORNIA, INC.

CA

K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.

CA

K. HOVNANIAN COMPANIES, LLC

CA

K. HOVNANIAN DEVELOPMENTS OF CALIFORNIA, INC.

CA

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY II, INC.

CA

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC.

CA

K. HOVNANIAN ENTERPRISES, INC.

CA

K. HOVNANIAN HOMES NORTHERN CALIFORNIA, INC.

CA

K. HOVNANIAN AT SIERRA VISTA, LLC

CA

K. HOVNANIAN AT VILLAGE CENTER, LLC

CA

K. HOVNANIAN'S FOUR SEASONS AT BAKERSFIELD, L.L.C.

CA

K. HOVNANIAN'S FOUR SEASONS AT BEAUMONT, LLC

CA

K. HOVNANIAN'S FOUR SEASONS AT HEMET, LLC

CA

K. HOVNANIAN'S FOUR SEASONS AT LOS BANOS, LLC

CA

K. HOVNANIAN'S FOUR SEASONS AT MORENO VALLEY, L.L.C.

CA

K. HOVNANIAN'S FOUR SEASONS AT PALM SPRINGS, LLC

CA

K. HOVNANIAN'S PARKSIDE AT TOWNGATE, L.L.C.

CA

K. HOVNANIAN'S VERANDA AT RIVERPARK II, LLC

CA

K. HOVNANIAN'S VERANDA AT RIVERPARK, LLC

CA

 

 

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SEABROOK ACCUMULATION CORPORATION

CA

STONEBROOK HOMES, INC.

CA

K. HOVNANIAN ASPIRE AT BELLEVUE RANCH, LLC

CA

K. HOVNANIAN MEADOW VIEW AT MOUNTAIN HOUSE, LLC

CA

K. HOVNANIAN DEVELOPMENTS OF D.C., INC.

DC

K. HOVNANIAN HOMES OF D.C., L.L.C.

DC

EASTERN NATIONAL TITLE AGENCY, LLC

FL

HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.

FL

HOVNANIAN LAND INVESTMENT GROUP OF FLORIDA, L.L.C.

FL

K. HOVNANIAN AT BOCA DUNES, LLC

FL

K. HOVNANIAN AT CORAL LAGO, LLC

FL

K. HOVNANIAN AT HAMPTON COVE, LLC

FL

K. HOVNANIAN AT HILLTOP RESERVE II, LLC

FL

K. HOVNANIAN AT HILLTOP RESERVE, LLC

FL

K. HOVNANIAN AT LAKE BURDEN, LLC

FL

K. HOVNANIAN AT LAKE LECLARE, LLC

FL

K. HOVNANIAN AT PICKETT RESERVE, LLC

FL

K. HOVNANIAN AT REDTAIL, LLC

FL

K. HOVNANIAN AT SPRING ISLE, LLC

FL

K. HOVNANIAN AT SUMMERLAKE, LLC

FL

K. HOVNANIAN AT TERRA BELLA TWO, LLC

FL

K. HOVNANIAN AT WALKERS GROVE, LLC

FL

K. HOVNANIAN BELMONT RESERVE, LLC

FL

K. HOVNANIAN CAMBRIDGE HOMES, L.L.C.

FL

K. HOVNANIAN CYPRESS KEY, LLC

FL

K. HOVNANIAN ESTATES AT WEKIVA, LLC

FL

K. HOVNANIAN FIRST HOMES, L.L.C.

FL

K. HOVNANIAN FLORIDA REALTY, L.L.C.

FL

K. HOVNANIAN GRAND CYPRESS, LLC

FL

K. HOVNANIAN GRANDEFIELD, LLC

FL

K. HOVNANIAN PRESERVE AT TURTLE CREEK LLC

FL

K. HOVNANIAN REYNOLDS RANCH, LLC

FL

K. HOVNANIAN RIVERSIDE, LLC

FL

K. HOVNANIAN SOUTH FORK, LLC

FL

K. HOVNANIAN STERLING RANCH, LLC

FL

K. HOVNANIAN T&C HOMES AT FLORIDA, L.L.C.

FL

K. HOVNANIAN UNION PARK, LLC

FL

K. HOVNANIAN WINDWARD HOMES, LLC

FL

K. HOVNANIAN MAGNOLIA AT WESTSIDE, LLC

FL

K. HOVNANIAN WINDING BAY PRESERVE, LLC

FL

 

 

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K. HOVNANIAN AT LAKE FLORENCE, LLC

FL

K. HOVNANIAN AT THE COMMONS AT RICHMOND HILL, LLC

GA

K. HOVNANIAN AT WESTBROOK, LLC

GA

K. HOVNANIAN DEVELOPMENTS OF GEORGIA, INC.

GA

K. HOVNANIAN HOMES AT CREEKSIDE, LLC

GA

K. HOVNANIAN HOMES OF GEORGIA, L.L.C.

GA

ARBOR TRAILS, LLC

IL

EASTERN TITLE AGENCY OF ILLINOIS, LLC

IL

GLENRISE GROVE, L.L.C.

IL

K. HOVNANIAN AT CHRISTINA COURT, LLC

IL

K. HOVNANIAN AT FAIRFIELD RIDGE, LLC

IL

K. HOVNANIAN AT HANOVER ESTATES, LLC

IL

K. HOVNANIAN AT ISLAND LAKE, LLC

IL

K. HOVNANIAN AT LINK FARM, LLC

IL

K. HOVNANIAN AT MEADOWRIDGE VILLAS, LLC

IL

K. HOVNANIAN AT NORTHRIDGE ESTATES, LLC

IL

K. HOVNANIAN AT NORTON LAKE LLC

IL

K. HOVNANIAN AT PRAIRIE POINTE, LLC

IL

K. HOVNANIAN AT SAGEBROOK, LLC

IL

K. HOVNANIAN AT SOMERSET, LLC

IL

K. HOVNANIAN AT TRAFFORD PLACE, LLC

IL

K. HOVNANIAN AT TRAMORE LLC

IL

K. HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC.

IL

K. HOVNANIAN ESTATES AT FOX CHASE, LLC

IL

K. HOVNANIAN ESTATES AT REGENCY, L.L.C.

IL

K. HOVNANIAN T&C HOMES AT ILLINOIS, L.L.C.

IL

K. HOVNANIAN'S FOUR SEASONS AT BRIARGATE, LLC

IL

K. HOVNANIAN DEVELOPMENTS OF KENTUCKY, INC.

KY

K. HOVNANIAN SUMMIT HOMES OF KENTUCKY, L.L.C.

KY

FOUNDERS TITLE AGENCY OF MARYLAND, L.L.C.

MD

HOMEBUYERS FINANCIAL SERVICES, L.L.C.

MD

HOVNANIAN LAND INVESTMENT GROUP OF MARYLAND, L.L.C.

MD

HOVNANIAN LAND INVESTMENT GROUP, L.L.C.

MD

K HOVNANIAN HOMES AT MAXWELL PLACE, L.L.C.

MD

K. HOVNANIAN AT CATON'S RESERVE, LLC

MD

 

 

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K. HOVNANIAN AT EDEN TERRACE, L.L.C.

MD

K. HOVNANIAN AT RODERUCK, L.L.C.

MD

K. HOVNANIAN COMPANIES OF MARYLAND, INC.

MD

K. HOVNANIAN DEVELOPMENTS OF MARYLAND, INC.

MD

K. HOVNANIAN HOMES AT CAMP SPRINGS, L.L.C.

MD

K. HOVNANIAN HOMES AT GREENWAY FARM PARK TOWNS, L.L.C.

MD

K. HOVNANIAN HOMES AT GREENWAY FARM, L.L.C.

MD

K. HOVNANIAN HOMES AT JONES STATION 1, L.L.C.

MD

K. HOVNANIAN HOMES AT RUSSETT, L.L.C.

MD

K. HOVNANIAN HOMES AT THE HIGHLANDS, LLC

MD

K. HOVNANIAN HOMES OF MARYLAND, L.L.C.

MD

K. HOVNANIAN'S FOUR SEASONS AT KENT ISLAND CONDOMINIUMS, L.L.C.

MD

K. HOVNANIAN'S FOUR SEASONS AT KENT ISLAND, L.L.C.

MD

K. HOVNANIAN'S FOUR SEASONS AT ST. MARGARETS LANDING, L.L.C.

MD

PADDOCKS, L.L.C.

MD

PINE AYR, LLC

MD

RIDGEMORE UTILITY, L.L.C.

MD

K. HOVNANIAN DEVELOPMENTS OF MINNESOTA, INC.

MN

K. HOVNANIAN HOMES OF MINNESOTA AT ARBOR CREEK, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT AUTUMN MEADOWS, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT BRYNWOOD, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT CEDAR HOLLOW, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT FOUNDER'S RIDGE, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT HARPERS STREET WOODS, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT OAKS OF OXBOW, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT REGENT'S POINT, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA, L.L.C.

MN

K. HOVNANIAN LIBERTY ON BLUFF CREEK, LLC

MN

 

 

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K. HOVNANIAN TIMBRES AT ELM CREEK, LLC

MN

K. HOVNANIAN'S FOUR SEASONS AT RUSH CREEK II, LLC

MN

K. HOVNANIAN'S FOUR SEASONS AT RUSH CREEK, L.L.C.

MN

K. HOVNANIAN AT BURCH KOVE, LLC

NC

K. HOVNANIAN AT INDIAN WELLS, LLC

NC

K. HOVNANIAN AT LILY ORCHARD, LLC

NC

K. HOVNANIAN AT MAIN STREET SQUARE, LLC

NC

K. HOVNANIAN AT OAK POINTE, LLC

NC

K. HOVNANIAN AT THE PROMENADE AT BEAVER CREEK, LLC

NC

K. HOVNANIAN AT WHEELER WOODS, LLC

NC

K. HOVNANIAN DEVELOPMENTS OF NORTH CAROLINA, INC.

NC

K. HOVNANIAN HOMES AT BROOK MANOR, LLC

NC

K. HOVNANIAN HOMES AT REEDY CREEK, LLC

NC

K. HOVNANIAN HOMES OF NORTH CAROLINA, INC.

NC

K. HOVNANIAN SHERWOOD AT REGENCY, LLC

NC

K. HOVNANIAN'S FOUR SEASONS AT RENAISSANCE, L.L.C.

NC

BUILDER SERVICES NJ, L.L.C.

NJ

EASTERN TITLE AGENCY, INC.

NJ

F&W MECHANICAL SERVICES, L.L.C.

NJ

K. HOVNANIAN ACQUISITIONS, INC.

NJ

K. HOVNANIAN AT ASBURY PARK URBAN RENEWAL, LLC

NJ

K. HOVNANIAN AT BARNEGAT I, L.L.C.

NJ

K. HOVNANIAN AT BARNEGAT II, L.L.C.

NJ

K. HOVNANIAN AT BRANCHBURG II, LLC

NJ

K. HOVNANIAN AT BRANCHBURG, L.L.C.

NJ

K. HOVNANIAN AT BRANCHBURG-VOLLERS, LLC

NJ

K. HOVNANIAN AT BRIDGEWATER I, L.L.C.

NJ

K. HOVNANIAN AT BRIDGEWATER II, LLC

NJ

K. HOVNANIAN AT CEDAR GROVE III, L.L.C.

NJ

HILLTOP AT CEDAR GROVE URBAN RENEWAL, LLC

NJ

K. HOVNANIAN AT CHESTERFIELD, L.L.C.

NJ

K. HOVNANIAN AT DENVILLE, L.L.C.

NJ

K. HOVNANIAN AT DEPTFORD TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT DUNELLEN URBAN RENEWAL, LLC

NJ

 

 

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K. HOVNANIAN AT EAST BRUNSWICK III, LLC

NJ

K. HOVNANIAN AT EAST BRUNSWICK, LLC

NJ

K. HOVNANIAN AT EAST WINDSOR, LLC

NJ

K. HOVNANIAN AT EDGEWATER II, L.L.C.

NJ

K. HOVNANIAN AT EDGEWATER, L.L.C.

NJ

K. HOVNANIAN AT EGG HARBOR TOWNSHIP II, L.L.C.

NJ

K. HOVNANIAN AT EGG HARBOR TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT FIFTH AVENUE, L.L.C.

NJ

K. HOVNANIAN AT FLORENCE I, L.L.C.

NJ

K. HOVNANIAN AT FLORENCE II, L.L.C.

NJ

K. HOVNANIAN AT FOREST MEADOWS, L.L.C.

NJ

K. HOVNANIAN AT FRANKLIN II, L.L.C.

NJ

K. HOVNANIAN AT FRANKLIN, L.L.C.

NJ

K. HOVNANIAN AT FREEHOLD TOWNSHIP III, LLC

NJ

K. HOVNANIAN AT GREAT NOTCH, L.L.C.

NJ

K. HOVNANIAN AT HACKETTSTOWN II, L.L.C.

NJ

K. HOVNANIAN AT HILLSBOROUGH, LLC

NJ

K. HOVNANIAN AT HOWELL FORT PLAINS, LLC

NJ

K. HOVNANIAN AT HOWELL II, LLC

NJ

K. HOVNANIAN AT HOWELL, LLC

NJ

K. HOVNANIAN AT HUDSON POINTE, L.L.C.

NJ

K. HOVNANIAN AT JACKSON I, L.L.C.

NJ

K. HOVNANIAN AT JACKSON, L.L.C.

NJ

K. HOVNANIAN AT JERSEY CITY IV, L.L.C.

NJ

K. HOVNANIAN AT KEYPORT, L.L.C.

NJ

K. HOVNANIAN AT LITTLE EGG HARBOR TOWNSHIP II, L.L.C.

NJ

K. HOVNANIAN AT LITTLE EGG HARBOR, L.L.C

NJ

K. HOVNANIAN AT MAHWAH VI, INC.

NJ

K. HOVNANIAN AT MANALAPAN II, L.L.C.

NJ

K. HOVNANIAN AT MANALAPAN III, L.L.C.

NJ

K. HOVNANIAN AT MANALAPAN V, LLC

NJ

K. HOVNANIAN AT MANALAPAN VI, LLC

NJ

K. HOVNANIAN AT MAPLE AVENUE, L.L.C.

NJ

K. HOVNANIAN AT MARLBORO TOWNSHIP IX, L.L.C.

NJ

K. HOVNANIAN AT MARLBORO TOWNSHIP V, L.L.C.

NJ

K. HOVNANIAN AT MARLBORO VI, L.L.C.

NJ

K. HOVNANIAN AT MENDHAM TOWNSHIP, L.L.C.

NJ

 

 

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K. HOVNANIAN AT MIDDLE TOWNSHIP II, L.L.C.

NJ

K. HOVNANIAN AT MIDDLE TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT MIDDLETOWN II, L.L.C.

NJ

K. HOVNANIAN AT MIDDLETOWN III, LLC

NJ

K. HOVNANIAN AT MILLVILLE I, L.L.C.

NJ

K. HOVNANIAN AT MILLVILLE II, L.L.C.

NJ

K. HOVNANIAN AT MONROE IV, L.L.C.

NJ

K. HOVNANIAN AT MONROE NJ II, LLC

NJ

K. HOVNANIAN AT MONROE NJ III, LLC

NJ

K. HOVNANIAN AT MONROE NJ, L.L.C.

NJ

K. HOVNANIAN AT MONTGOMERY, LLC

NJ

K. HOVNANIAN AT MONTVALE II, LLC

NJ

K. HOVNANIAN AT MONTVALE, L.L.C.

NJ

K. HOVNANIAN AT MORRIS TWP, LLC

NJ

K. HOVNANIAN AT NORTH BERGEN. L.L.C.

NJ

K. HOVNANIAN AT NORTH CALDWELL II, L.L.C.

NJ

K. HOVNANIAN AT NORTH CALDWELL III, L.L.C.

NJ

K. HOVNANIAN AT NORTH CALDWELL IV, L.L.C.

NJ

K. HOVNANIAN AT NORTH WILDWOOD, L.L.C.

NJ

K. HOVNANIAN AT NORTHFIELD, L.L.C.

NJ

K. HOVNANIAN AT OCEAN TOWNSHIP, INC

NJ

K. HOVNANIAN AT OCEANPORT, L.L.C.

NJ

K. HOVNANIAN AT OLD BRIDGE, L.L.C.

NJ

K. HOVNANIAN AT PARSIPPANY, L.L.C.

NJ

K. HOVNANIAN AT PITTSGROVE, L.L.C.

NJ

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL V, L.L.C.

NJ

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VIII, L.L.C.

NJ

K. HOVNANIAN AT RIDGEMONT, L.L.C.

NJ

K. HOVNANIAN AT ROCK LEDGE, LLC

NJ

K. HOVNANIAN AT SHREWSBURY, LLC

NJ

K. HOVNANIAN AT SMITHVILLE, INC.

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK II, LLC

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK III, LLC

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK, L.L.C.

NJ

K. HOVNANIAN AT STATION SQUARE, L.L.C.

NJ

K. HOVNANIAN AT THE MONARCH, L.L.C.

NJ

K. HOVNANIAN AT VERONA URBAN RENEWAL, L.L.C.

NJ

 

 

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K. HOVNANIAN AT WALDWICK, LLC

NJ

K. HOVNANIAN AT WALL DONATO, LLC

NJ

K. HOVNANIAN AT WARREN TOWNSHIP II, LLC

NJ

K. HOVNANIAN AT WARREN TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT WAYNE IX, L.L.C.

NJ

K. HOVNANIAN AT WILDWOOD BAYSIDE, L.L.C.

NJ

K. HOVNANIAN AT WOOLWICH I, L.L.C.

NJ

K. HOVNANIAN CLASSICS, L.L.C.

NJ

K. HOVNANIAN CONSTRUCTION II, INC

NJ

K. HOVNANIAN CONSTRUCTION III, INC

NJ

K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC.

NJ

K. HOVNANIAN HOLDINGS NJ, L.L.C.

NJ

K. HOVNANIAN MANALAPAN ACQUISITION, LLC

NJ

K. HOVNANIAN NORTHEAST SERVICES, L.L.C.

NJ

K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.

NJ

K. HOVNANIAN SOUTHERN NEW JERSEY, L.L.C.

NJ

K. HOVNANIAN VENTURE I, L.L.C.

NJ

LANDARAMA, INC.

NJ

M & M AT MONROE WOODS, L.L.C.

NJ

M&M AT CHESTERFIELD, L.L.C.

NJ

M&M AT CRESCENT COURT, L.L.C.

NJ

M&M AT WEST ORANGE, L.L.C.

NJ

MATZEL & MUMFORD AT EGG HARBOR, L.L.C.

NJ

MCNJ, INC.

NJ

MM-BEACHFRONT NORTH I, LLC

NJ

TERRAPIN REALTY, L.L.C.

NJ

THE MATZEL & MUMFORD ORGANIZATION, INC

NJ

K. HOVNANIAN AT MANALAPAN CROSSING, LLC

NJ

K. HOVNANIAN AT OAKLAND, LLC

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK IV, LLC

NJ

K. HOVNANIAN PROPERTIES OF RED BANK, LLC

NJ

ROUTE 1 AND ROUTE 522, L.L.C.

NJ

K. HOVNANIAN AT OLD BRIDGE II, LLC

NJ

K. HOVNANIAN ABERDEEN, LLC

OH

K. HOVNANIAN BELDEN POINTE, LLC

OH

K. HOVNANIAN CONTRACTORS OF OHIO, LLC

OH

 

 

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K. HOVNANIAN CORNERSTONE FARMS, LLC

OH

K. HOVNANIAN DEVELOPMENTS OF OHIO, INC.

OH

K. HOVNANIAN EDGEBROOK, LLC

OH

K. HOVNANIAN FALLS POINTE, LLC

OH

K. HOVNANIAN FOREST VALLEY, LLC

OH

K. HOVNANIAN HIDDEN HOLLOW, LLC

OH

K. HOVNANIAN HIGHLAND RIDGE, LLC

OH

K. HOVNANIAN INDIAN TRAILS, LLC

OH

K. HOVNANIAN LADUE RESERVE, LLC

OH

K. HOVNANIAN LAKES OF GREEN, LLC

OH

K. HOVNANIAN LANDINGS 40S, LLC

OH

K. HOVNANIAN MONARCH GROVE, LLC

OH

K. HOVNANIAN NORTHPOINTE 40S, LLC

OH

K. HOVNANIAN NORTON PLACE, LLC

OH

K. HOVNANIAN OF OHIO, LLC

OH

K. HOVNANIAN OHIO REALTY, L.L.C.

OH

K. HOVNANIAN RIVENDALE, LLC

OH

K. HOVNANIAN SCHADY RESERVE, LLC

OH

K. HOVNANIAN SUMMIT HOMES, L.L.C.

OH

K. HOVNANIAN VILLAGE GLEN, LLC

OH

K. HOVNANIAN WATERBURY, LLC

OH

K. HOVNANIAN WHITE ROAD, LLC

OH

K. HOVNANIAN WOODLAND POINTE, LLC

OH

K. HOVNANIAN WOODRIDGE PLACE, LLC

OH

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES, L.L.C.

OH

NEW HOME REALTY, LLC

OH

BUILDER SERVICES PA, L.L.C.

PA

GOVERNOR'S ABSTRACT CO., INC.

PA

K. HOVNANIAN AT ALLENTOWN, L.L.C.

PA

K. HOVNANIAN AT CAMP HILL, L.L.C.

PA

K. HOVNANIAN AT DOYLESTOWN, LLC

PA

K. HOVNANIAN AT EAST BRANDYWINE, L.L.C.

PA

K. HOVNANIAN AT HERSHEY'S MILL, INC.

PA

K. HOVNANIAN AT LOWER MACUNGIE TOWNSHIP I, L.L.C.

PA

K. HOVNANIAN AT LOWER MACUNGIE TOWNSHIP II, L.L.C.

PA

K. HOVNANIAN AT LOWER MAKEFIELD TOWNSHIP I, L.L.C.

PA

K. HOVNANIAN AT LOWER MORELAND II, L.L.C.

PA

K. HOVNANIAN AT MARPLE, LLC

PA

K. HOVNANIAN AT MIDDLETOWN, LLC

PA

K. HOVNANIAN AT NORTHAMPTON, L.L.C.

PA

K. HOVNANIAN AT RAPHO, L.L.C

PA

K. HOVNANIAN AT SAWMILL, INC.

PA

 

 

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K. HOVNANIAN AT SILVER SPRING, L.L.C.

PA

K. HOVNANIAN AT UPPER PROVIDENCE, LLC

PA

K. HOVNANIAN AT UPPER UWCHLAN II, L.L.C.

PA

K. HOVNANIAN AT UPPER UWCHLAN, L.L.C.

PA

K. HOVNANIAN AT WHITEMARSH, LLC

PA

K. HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.

PA

K. HOVNANIAN DEVELOPMENTS OF PENNSYLVANIA, INC.

PA

K. HOVNANIAN EASTERN PENNSYLVANIA, L.L.C.

PA

K. HOVNANIAN HOMES OF PENNSYLVANIA, L.L.C.

PA

K. HOVNANIAN PA REAL ESTATE, INC.

PA

K. HOVNANIAN PENNSYLVANIA ACQUISITIONS, L.L.C.

PA

K. HOVNANIAN SUMMIT HOMES OF PENNSYLVANIA, L.L.C.

PA

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF PENNSYLVANIA, L.L.C.

PA

K. HOVNANIAN AT COOSAW POINT, LLC

SC

K. HOVNANIAN AT FOX PATH AT HAMPTON LAKE, LLC

SC

K. HOVNANIAN AT HAMPTON LAKE, LLC

SC

K. HOVNANIAN AT MAGNOLIA PLACE, LLC

SC

K. HOVNANIAN CRAFTBUILT HOMES OF SOUTH CAROLINA, L.L.C.

SC

K. HOVNANIAN DEVELOPMENTS OF SOUTH CAROLINA, INC.

SC

K. HOVNANIAN HOMES AT SALT CREEK LANDING, LLC

SC

K. HOVNANIAN HOMES AT SHELL HALL, LLC

SC

K. HOVNANIAN HOMES AT ST. JAMES PLACE, LLC

SC

K. HOVNANIAN HOMES AT THE ABBY, LLC

SC

K. HOVNANIAN HOMES AT THE PADDOCKS, LLC

SC

K. HOVNANIAN HOMES OF SOUTH CAROLINA, LLC

SC

SHELL HALL CLUB AMENITY ACQUISITION, LLC

SC

SHELL HALL LAND ACQUISITION, LLC

SC

K. HOVNANIAN DFW BLUFF CREEK, LLC

TX

K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.

TX

K. HOVNANIAN DFW AUBURN FARMS, LLC

TX

K. HOVNANIAN DFW BELMONT, LLC

TX

K. HOVNANIAN DFW CREEKSIDE ESTATES II, LLC

TX

 

 

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K. HOVNANIAN DFW CREEKSIDE ESTATES, LLC

TX

K. HOVNANIAN DFW ENCORE OF LAS COLINAS II, LLC

TX

K. HOVNANIAN DFW ENCORE OF LAS COLINAS, LLC

TX

K. HOVNANIAN DFW HARMON FARMS, LLC

TX

K. HOVNANIAN DFW HERITAGE CROSSING, LLC

TX

K. HOVNANIAN DFW HOMESTEAD, LLC

TX

K. HOVNANIAN DFW INSPIRATION, LLC

TX

K. HOVNANIAN DFW LEXINGTON, LLC

TX

K. HOVNANIAN DFW LIBERTY CROSSING II, LLC

TX

K. HOVNANIAN DFW LIBERTY CROSSING, LLC

TX

K. HOVNANIAN DFW LIGHT FARMS II, LLC

TX

K. HOVNANIAN DFW LIGHT FARMS, LLC

TX

K. HOVNANIAN DFW MIDTOWN PARK, LLC

TX

K. HOVNANIAN DFW PALISADES, LLC

TX

K. HOVNANIAN DFW PARKSIDE, LLC

TX

K. HOVNANIAN DFW RIDGEVIEW, LLC

TX

K. HOVNANIAN DFW SEVENTEEN LAKES, LLC

TX

K. HOVNANIAN DFW TRAILWOOD, LLC

TX

K. HOVNANIAN DFW VILLAS AT MUSTANG PARK, LLC

TX

K. HOVNANIAN DFW WELLINGTON, LLC

TX

K. HOVNANIAN DFW WILDRIDGE, LLC

TX

K. HOVNANIAN HOMES - DFW, L.L.C.

TX

K. HOVNANIAN HOMES OF HOUSTON, L.L.C.

TX

K. HOVNANIAN HOUSTON BAYOU OAKS AT WEST OREM, LLC

TX

K. HOVNANIAN HOUSTON CAMBRIDGE HEIGHTS, LLC

TX

K. HOVNANIAN HOUSTON CITY HEIGHTS, LLC

TX

K. HOVNANIAN HOUSTON CREEK BEND, LLC

TX

K. HOVNANIAN HOUSTON DRY CREEK VILLAGE, LLC

TX

K. HOVNANIAN HOUSTON KATY POINTE, LLC

TX

K. HOVNANIAN HOUSTON PROPERTY I, LLC

TX

K. HOVNANIAN HOUSTON PROPERTY II, LLC

TX

K. HOVNANIAN HOUSTON RIVER FARMS, LLC

TX

K. HOVNANIAN HOUSTON SUNSET RANCH, LLC

TX

K. HOVNANIAN HOUSTON THUNDER BAY SUBDIVISION, LLC

TX

 

 

--------------------------------------------------------------------------------

 

 

K. HOVNANIAN HOUSTON TRANQUILITY LAKE ESTATES, LLC

TX

K. HOVNANIAN HOUSTON WOODSHORE, LLC

TX

K. HOVNANIAN OF HOUSTON II, L.L.C.

TX

PARK TITLE COMPANY, LLC

TX

K. HOVNANIAN DFW TRAILWOOD II, LLC

TX

K. HOVNANIAN DFW SANFORD PARK, LLC

TX

K. HOVNANIAN HOUSTON TERRA DEL SOL, LLC

TX

K. HOVNANIAN DFW LIBERTY, LLC

TX

FOUNDERS TITLE AGENCY, INC.

VA

K. HOVNANIAN AT ESTATES AT WHEATLANDS, LLC

VA

K. HOVNANIAN AT LAKE RIDGE ESTATES, LLC

VA

K. HOVNANIAN AT LAKE TERRAPIN, L.L.C.

VA

K. HOVNANIAN AT LEE SQUARE, L.L.C.

VA

K. HOVNANIAN AT LENAH WOODS, LLC

VA

K. HOVNANIAN AT RESERVES AT WHEATLANDS, LLC

VA

K. HOVNANIAN AT RESIDENCE AT DISCOVERY SQUARE, LLC

VA

K. HOVNANIAN AT SEASONS LANDING, LLC

VA

K. HOVNANIAN AT SIGNAL HILL, LLC

VA

K. HOVNANIAN DEVELOPMENTS OF VIRGINIA, INC.

VA

K. HOVNANIAN HOMES AT BURKE JUNCTION, LLC

VA

K. HOVNANIAN HOMES AT LEIGH MILL, LLC

VA

K. HOVNANIAN HOMES AT PENDER OAKS, LLC

VA

K. HOVNANIAN HOMES AT THOMPSON'S GRANT, LLC

VA

K. HOVNANIAN HOMES AT WILLOWSFORD GRANT, LLC

VA

K. HOVNANIAN HOMES AT WILLOWSFORD GREENS, LLC

VA

K. HOVNANIAN HOMES OF VIRGINIA, INC.

VA

K. HOVNANIAN SUMMIT HOLDINGS, L.L.C.

VA

K. HOVNANIAN HOMES AT WILLOWSFORD GRANT II, LLC

VA

K. HOVNANIAN'S FOUR SEASONS AT CHARLOTTESVILLE, L.L.C.

VA

K. HOVNANIAN'S FOUR SEASONS AT NEW KENT VINEYARDS, L.L.C.

VA

LAUREL HIGHLANDS, LLC

VA

K. HOVNANIAN AT EMBREY MILL VILLAGE, LLC

VA

K. HOVNANIAN AT HUNTFIELD, LLC

WV

K. HOVNANIAN DEVELOPMENTS OF WEST VIRGINIA, INC.

WV

K. HOVNANIAN HOMES AT SHENANDOAH SPRINGS, LLC

WV

K. HOVNANIAN HOMES OF WEST VIRGINIA, L.L.C.

WV

K. HOVNANIAN SUMMIT HOMES OF WEST VIRGINIA, L.L.C.

WV

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF WEST VIRGINIA, L.L.C.

WV

 

 

--------------------------------------------------------------------------------

 

 

Schedule IV6

 

New York Financing Statements

 

The following financing statements on form UCC-1, naming the Person listed below
as debtor and the Administrative Agent as secured party for the benefit of the
Secured Parties, to be filed in the New York Filing Office:

 

 

--------------------------------------------------------------------------------

6 To be updated.

 

--------------------------------------------------------------------------------

 

 

Schedule V7

 

Delaware Financing Statements

 

The following financing statements on form UCC-1, naming the Person listed below
as debtor and the Administrative Agent as secured party for the benefit of the
Secured Parties, to be filed in the Delaware Filing Office:

 

--------------------------------------------------------------------------------

7 To be updated.

 

--------------------------------------------------------------------------------

 

 

Schedule VI8

 

California Financing Statements

 

The following financing statements on form UCC-1, naming the Person listed below
as debtor and the Administrative Agent as secured party for the benefit of the
Secured Parties, to be filed in the California Filing Office:

 

--------------------------------------------------------------------------------

8 To be updated.

 

--------------------------------------------------------------------------------

 

 

Schedule VII9

 

District of Columbia Financing Statements

 

The following financing statements on form UCC-1, naming the Person listed below
as debtor and the Administrative Agent as secured party for the benefit of the
Secured Parties, to be filed in the District of Columbia Filing Office:

 

--------------------------------------------------------------------------------

9 To be updated.

 

--------------------------------------------------------------------------------

 

 

Schedule VIII10

 

Texas Financing Statements

 

The following financing statements on form UCC-1, naming the Person listed below
as debtor and the Administrative Agent as secured party for the benefit of the
Secured Parties, to be filed in the Texas Filing Office:

 

--------------------------------------------------------------------------------

10 To be updated.

 

--------------------------------------------------------------------------------

 

 

Schedule IX

 

Agreements and Instruments

 

I.

Senior Secured Notes

 

 

A.

Indenture dated as of July 27, 2017, among K. Hovnanian Enterprises, Inc.,
Hovnanian Enterprises, Inc., the other Guarantors party thereto and Wilmington
Trust, National Association as Trustee and Collateral Agent, relating to the
10.00% Senior Secured Notes due 2022 and the 10.50% Senior Secured Notes due
2024

 

II.

Senior Notes

 

 

A.

Indenture dated as of November 5, 2014, among K. Hovnanian Enterprises, Inc.,
Hovnanian Enterprises, Inc., the other Guarantors party thereto and Wilmington
Trust, National Association, as Trustee, relating to the 8.00% Senior Notes due
2019

 

 

 

B.

Indenture dated as of [February 1], 2018, among K. Hovnanian Enterprises, Inc.,
Hovnanian Enterprises, Inc., the other Guarantors party thereto and Wilmington
Trust, National Association, as Trustee, relating to the 13.50% Senior Notes due
2026 and the 5.00% Senior Notes due 2040

 

 

III.

Credit Agreements

 

 

A.

Credit Agreement, dated as of June 7, 2013, among K. Hovnanian Enterprises,
Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto, Citicorp.
USA, Inc. as administrative agent and issuing bank, and the lenders 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

 

 

B.

Credit Agreement, dated as of January 29, 2018, among K. Hovnanian Enterprises,
Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto,
Wilmington Trust, National Association, as administrative agent, and the lenders
party thereto

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

 

Lenders

[_], 2018

 

EXHIBIT I-2

 

 

 

Form of General Counsel Opinion

 

[hovlogo.jpg]

 

[●]

 

Wilmington Trust, National Association, as Administrative
     Agent under the Credit Agreement, as hereinafter
     defined (the “Administrative Agent”)

and

The Lenders listed on Schedule I hereto

 

 

Ladies and Gentlemen:

 

I am Vice President and Corporate Counsel of K. Hovnanian Enterprises, Inc., a
California corporation (the “Borrower”), and of Hovnanian Enterprises, Inc., a
Delaware corporation (“Holdings”), and of the subsidiary guarantors party to the
First Supplemental Guarantee to the Credit Agreement (each a “Guarantor,” and
together with Holdings, the “Guarantors”), and as such I am acting in connection
with the borrowing of up to $125,000,000 in revolving loans pursuant to the
Credit Agreement dated as of [●], 2018, among the Borrower, Holdings, the
Guarantors from time to time party thereto, the lenders from time to time party
thereto and the Administrative Agent (the “Credit Agreement”). Capitalized terms
used herein without definition have the meanings ascribed to such terms in the
Credit Agreement.

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

 

Lenders

[_], 2018

 

I have examined the following:

 

(i)     the Credit Agreement;

 

(ii)     the First Supplemental Guarantee to the Credit Agreement, dated the
date hereof (the “Credit Joinder”);

 

(iii)     the Security Agreement, dated as of the date hereof (the “Security
Agreement”), among the Borrower, the Guarantors and the Administrative Agent;

 

(iv)     the Pledge Agreement, dated as of the date hereof (the “Pledge
Agreement”), among the Borrower, the Guarantors and the Administrative Agent;

 

(v)     the Intellectual Property Security Agreement, dated as of the date
hereof (the “IP Security Agreement”), between a certain Guarantor and the Agent
(as therein defined);

 

(vi)     the Joinder to the Existing Intercreditor Agreement (as defined below),
dated as of the date hereof among the Company, the Guarantors, the Collateral
Agent, the Junior Joint Collateral Agent, the Mortgage Tax Collateral Agent and
the Administrative Agent (the “Intercreditor Agreement Joinder” and the Existing
Intercreditor Agreement, as amended by the Intercreditor Agreement Joinder, the
“Intercreditor Agreement”);

 

(vii) the Joinder to the Mortgage Tax Collateral Agency Agreement (as defined
below), dated as of the date hereof, among the Company, the Guarantors, the
Collateral Agent, the Junior Joint Collateral Agent, the Mortgage Tax Collateral
Agent and the Administrative Agent;

 

(viii)     the Second Amended and Restated Mortgage Tax Collateral Agency
Agreement, dated as of September 8, 2016, by and among the Company, the
Guarantors, the Joint Collateral Agent, the Mortgage Tax Collateral Agent and
the Administrative Agent, among others (the “Mortgage Tax Collateral Agency
Agreement”).

 

(ix)     the Amended and Restated Intercreditor Agreement, dated as of September
8, 2016, entered into by and among the Company, the Guarantors, Wilmington
Trust, National Association, in its capacity as collateral agent for the
Mortgage Tax Collateral (as defined in the Intercreditor Agreement) (in such
capacity, the “Mortgage Tax Collateral Agent”), Wilmington Trust, National
Association, in its capacity as junior joint collateral agent (in such capacity,
the “Junior Joint Collateral Agent”) and Wilmington Trust, National Association,
in its capacity as Senior Credit Agreement Administrative Agent (as defined in
the Intercreditor Agreement), among others (the “Existing Intercreditor
Agreement”);

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

 

Lenders

[_], 2018

 

The documents described in the foregoing clauses (i) through (ix) are
collectively referred to herein as the “Transaction Documents.” The documents
described in the foregoing clauses (i) and (ii) are collectively referred to
herein as the “Credit Documents.” The documents described in the foregoing
clauses (iii) through (vii) are collectively referred to herein as the “Security
Documents.”

 

In addition, I have examined, and have relied as to matters of fact upon, the
documents delivered to you concurrently with this opinion and upon originals, or
duplicates or certified or conformed copies, of such records, agreements,
documents and other instruments and such certificates or comparable documents of
public officials and of officers and representatives of the Borrower and the
Guarantors and have made such other investigations, as I have deemed relevant
and necessary in connection with the opinions hereinafter set forth.

 

In such examination, I have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to me
as originals, the conformity to original documents of all documents submitted to
me as duplicates or certified or conformed copies and the authenticity of the
originals of such latter documents.

 

Based upon the foregoing, and subject to the qualifications, assumptions and
limitations stated herein, I am of the opinion that:

 

(1)      Each of the Guarantors that is listed on Schedule II hereto (the
“Specified Subsidiaries”) and each of the Borrower and Holdings has been duly
incorporated or formed, as the case may be, is validly existing as a corporation
or limited liability company in good standing under the laws of its jurisdiction
of incorporation or formation and has the corporate power, or its equivalent in
the case of limited liability companies, and authority to carry on its business
as described in the Public Filings and to own, lease and operate its properties;

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

 

Lenders

[_], 2018

 

(2)      Each of the Borrower, Holdings and the Specified Subsidiaries is duly
qualified and is in good standing as a foreign corporation or limited liability
company 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;

 

(3)      All the outstanding shares of capital stock of the Borrower, Holdings
and the Specified Subsidiaries have been duly authorized and validly issued and,
except with respect to Holdings’ Rights Plan as described in the Public Filings,
are fully paid, non-assessable and not subject to any preemptive or similar
rights;

 

(4)      Each of the Credit Documents and each of the Security Documents has
been duly authorized, executed and delivered by the Borrower and each of the
each of the Guarantors listed on Schedule III hereto, to the extent party
thereto;

 

(5)      Neither the Borrower, Holdings nor any of the Specified Subsidiaries is
in violation of its respective charter, by-laws or formation or organization
documents, as applicable, and, to my knowledge after due inquiry, neither the
Borrower, Holdings, nor any of the Specified Subsidiaries is 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, Holdings and its subsidiaries, taken as a whole, to
which the Borrower, Holdings or any of the Specified Subsidiaries is a party or
by which the Borrower, Holdings or any of the Specified Subsidiaries or their
respective property is bound;

 

(6)      The prior execution and delivery of the Credit Agreement and
performance on the date hereof of the Credit Agreement, and the execution,
delivery and performance on the date hereof of the Security Documents by the
Borrower, the execution, delivery and performance on the date hereof of the
Credit Joinder and the Security Documents to which they are a party by the
Guarantors, the compliance by the Borrower and the Guarantors with all the
provisions hereof and thereof, as applicable, and the consummation of the
transactions contemplated hereby and thereby will not (A) require any consent,
approval, authorization or other order of, or qualification with, any California
or New Jersey State court or California or New Jersey State governmental body or
agency, (B) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter, or by-laws or formation or
organization documents, as applicable, of the Borrower or any of the Guarantors
or any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Borrower, Holdings and its subsidiaries,
taken as a whole, to which the Borrower, Holdings or the other Guarantors is a
party or by which the Borrower, Holdings or the other Guarantors or their
respective property is bound (except that no such opinion is given with respect
to the agreements and instruments listed on Schedule IV hereto), (C) violate or
conflict with any California or New Jersey State statute or any rule,
regulation, judgment, order or decree of any California or New Jersey State
court or any California or New Jersey State governmental body or agency having
jurisdiction over the Borrower, Holdings, any of its subsidiaries or their
respective property, (D) except pursuant to the transactions contemplated
thereby, 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 or (E) result in the
suspension, termination or revocation of any Authorization of the Borrower,
Holdings or any of its subsidiaries or any other impairment of the rights of the
holder of any such Authorization; except where the 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 or failure to have any such
Authorization (in each case, other than with respect to the charter or by-laws
or formation or organization documents) would not, singly or in the aggregate,
have a Material Adverse Effect, except filings required for the perfection of
security interests granted pursuant to the Security Documents and except that it
is understood that no opinion is given in this paragraph (6) with respect to any
federal or state securities law or any rule or regulation issued pursuant to any
federal or state securities law;

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

 

Lenders

[_], 2018

 

(7)      After due inquiry, I do not know of any legal or governmental
proceedings pending or threatened to which the Borrower, Holdings or any of
their 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, except as disclosed in the Public Filings; and

 

In addition, I express no opinion and render no advice with respect to:

 

 

i.

the effect of Section 552 of the Bankruptcy Code (11 U.S.C. Section 552)
(relating to property acquired by a pledgor after the commencement of a case
under the Bankruptcy Code with respect to such pledgor) and Section 506(c) of
the Bankruptcy Code (11 U.S.C. Section 506(c)) (relating to certain costs and
expenses of a trustee in preserving or disposing of collateral);

 

 

ii.

the effect of any provision of the Security Documents that is intended to
establish any standard other than a standard set forth in the New York UCC as
the measure of the performance by any party thereto of such party’s obligations
of good faith, diligence, reasonableness or care or of the fulfillment of the
duties imposed on any secured party with respect to the maintenance, disposition
or redemption of collateral, accounting for surplus proceeds of collateral or
accepting collateral in discharge of liabilities;

 

 

iii.

the effect of any provision of the Security Documents that is intended to permit
modification thereof only by means of an agreement in writing signed by the
parties thereto;

 

 

iv.

the effect of any provision of the Security Documents imposing penalties or
forfeitures;

 

 

v.

the effect of any provision of any of the Transaction Documents to the extent
that such provision constitutes a waiver of illegality as a defense to
performance of contract obligations; and

 

 

vi.

the effect of any provision of the Transaction Documents relating to
indemnification or exculpation in connection with violations of any securities
laws or relating to indemnification, contribution or exculpation in connection
with willful, reckless or criminal acts or gross negligence of the indemnified
or exculpated person or the person receiving contribution.

 

 

--------------------------------------------------------------------------------

 

Wilmington Trust, National Association

 

Lenders

[_], 2018

 

I am a member of the Bar of the State of New Jersey and the State of New York,
and I do not express any opinion herein concerning any law other than the laws
of the State of New Jersey, the State of New York and the State of California,
the federal law of the United States of America and the Delaware General
Corporation Law.

 

[I note that the Hague Convention on the Law Applicable to Certain Rights in
Respect of Securities Held with an Intermediary (the “Hague Convention”) sets
forth certain choice of law rules that apply to certain issues in respect of
securities held with a securities intermediary in a securities account. I
express no opinion as to the applicability to, or the effects on, the opinions
rendered herein of the Hague Convention’s choice of law rules with respect to
issues identified in Article 2 (1) of the Hague Convention.]

 

This opinion letter is rendered to you in connection with the above-described
transaction. This opinion letter may not be relied upon by you for any other
purpose, or relied upon by, or furnished to any other person, firm or
corporation without my prior written consent, except that Simpson Thacher &
Bartlett LLP shall be entitled to rely on the foregoing opinions.

 

 

Very truly yours,

 

 

 

 

 

 

 

 

 

       

 

By:

 

 

 

 

Name:

Michael Discafani

 

    Title: Vice-President and Corporate Counsel  

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE I

 

LENDERS

 

On file with Administrative Agent

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE II

 

Specified Subsidiaries

 

K. HOVNANIAN AT RANCHO CABRILLO, LLC

AZ

K. HOVNANIAN AT SUNRISE TRAIL II, LLC

AZ

K. HOVNANIAN AT SUNRISE TRAIL III, LLC

AZ

K. HOVNANIAN'S FOUR SEASONS AT THE MANOR, LLC

AZ

K. HOVNANIAN AT CEDAR LANE, LLC

CA

K. HOVNANIAN DEVELOPMENTS OF CALIFORNIA, INC.

CA

K. HOVNANIAN ENTERPRISES, INC.

CA

K. HOVNANIAN AT WESTSHORE, LLC

CA

K. HOVNANIAN'S FOUR SEASONS AT BEAUMONT, LLC

CA

K. HOVNANIAN'S VERANDA AT RIVERPARK, LLC

CA

STONEBROOK HOMES, INC.

CA

K. HOVNANIAN AT LAKE LECLARE, LLC

FL

K. HOVNANIAN STERLING RANCH, LLC

FL

K. HOVNANIAN AT HOWELL II, LLC

NJ

K. HOVNANIAN AT MONTGOMERY, LLC

NJ

K. HOVNANIAN AT MONTVALE II, LLC

NJ

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL V, L.L.C.

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK II, LLC

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK III, LLC

NJ

K. HOVNANIAN ABERDEEN, LLC

OH

K. HOVNANIAN WATERBURY, LLC

OH

K. HOVNANIAN AT HAMPTON LAKE, LLC

SC

SHELL HALL LAND ACQUISITION, LLC

SC

K. HOVNANIAN DFW INSPIRATION, LLC

TX

K. HOVNANIAN DFW LEXINGTON, LLC

TX

K. HOVNANIAN DFW LIBERTY CROSSING II, LLC

TX

K. HOVNANIAN DFW LIGHT FARMS II, LLC

TX

K. HOVNANIAN DFW PALISADES, LLC

TX

K. HOVNANIAN DFW SEVENTEEN LAKES, LLC

TX

K. HOVNANIAN DFW VILLAS MUSTANG PARK, LLC

TX

K. HOVNANIAN OF HOUSTON II, L.L.C.

TX

K. HOVNANIAN HOMES AT WILLOWSFORD GRANT, LLC

VA

K. HOVNANIAN AT LENAH WOODS, LLC

VA

K. HOVNANIAN AT RESERVES AT WHEATLANDS, LLC

VA

K. HOVNANIAN AT RESIDENCE AT DISCOVERY SQUARE, LLC

VA

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE III

 

K. HOVNANIAN AT 240 MISSOURI, LLC

AZ

K. HOVNANIAN AT AIRE ON MCDOWELL, LLC

AZ

K. HOVNANIAN AT CATANIA, LLC

AZ

K. HOVNANIAN AT GALLERY, LLC

AZ

K. HOVNANIAN AT MONTANA VISTA, LLC

AZ

K. HOVNANIAN AT PALM VALLEY, L.L.C.

AZ

K. HOVNANIAN AT PARK PASEO, LLC

AZ

K. HOVNANIAN AT POINTE 16, LLC

AZ

K. HOVNANIAN AT QUAIL CREEK, L.L.C.

AZ

K. HOVNANIAN AT RANCHO CABRILLO, LLC

AZ

K. HOVNANIAN AT SIENNA HILLS, LLC

AZ

K. HOVNANIAN AT SILVERSTONE, LLC

AZ

K. HOVNANIAN AT SKYE ON MCDOWELL, LLC

AZ

K. HOVNANIAN AT SUNRISE TRAIL II, LLC

AZ

K. HOVNANIAN AT SUNRISE TRAIL III, LLC

AZ

K. HOVNANIAN AT VENTANA LAKES, LLC

AZ

K. HOVNANIAN AT VERRADO CASCINA, LLC

AZ

K. HOVNANIAN AT VERRADO MARKETSIDE, LLC

AZ

K. HOVNANIAN DEVELOPMENTS OF ARIZONA, INC.

AZ

K. HOVNANIAN GREAT WESTERN BUILDING COMPANY, LLC

AZ

K. HOVNANIAN GREAT WESTERN HOMES, LLC

AZ

K. HOVNANIAN LEGACY AT VIA BELLA, LLC

AZ

K. HOVNANIAN'S FOUR SEASONS AT THE MANOR II, LLC

AZ

K. HOVNANIAN'S FOUR SEASONS AT THE MANOR, LLC

AZ

NEW LAND TITLE AGENCY, L.L.C.

AZ

K. HOVNANIAN AT THE MEADOWS 9, LLC

AZ

K. HOVNANIAN AT SILVERSTONE G, LLC

AZ

K. HOVNANIAN AT MONTANA VISTA DOBBINS, LLC

AZ

K. HOVNANIAN AT VILLAGO, LLC

AZ

K. HOV IP, II, INC.

CA

K. HOVNANIAN’S ASPIRE AT UNION VILLAGE, LLC

CA

K. HOVNANIAN AT 4S, LLC

CA

K. HOVNANIAN AT ALISO, LLC

CA

 

 

--------------------------------------------------------------------------------

 

 

K. HOVNANIAN AT ANDALUSIA, LLC

CA

K. HOVNANIAN AT AVENUE ONE, L.L.C.

CA

K. HOVNANIAN AT BAKERSFIELD 463, L.L.C.

CA

K. HOVNANIAN AT BEACON PARK AREA 129 II, LLC

CA

K. HOVNANIAN AT BEACON PARK AREA 129, LLC

CA

K. HOVNANIAN AT BEACON PARK AREA 137, LLC

CA

K. HOVNANIAN AT BELLA LAGO, LLC

CA

K. HOVNANIAN AT BLACKSTONE, LLC

CA

K. HOVNANIAN AT BRIDGEPORT, INC.

CA

K. HOVNANIAN AT CAPISTRANO, L.L.C.

CA

K. HOVNANIAN AT CARLSBAD, LLC

CA

K. HOVNANIAN AT CEDAR LANE, LLC

CA

K. HOVNANIAN AT CHARTER WAY, LLC

CA

K. HOVNANIAN AT CIELO, L.L.C.

CA

K. HOVNANIAN AT COASTLINE, L.L.C.

CA

K. HOVNANIAN AT CORTEZ HILL, LLC

CA

K. HOVNANIAN AT EL DORADO RANCH II, L.L.C.

CA

K. HOVNANIAN AT EL DORADO RANCH, L.L.C.

CA

K. HOVNANIAN AT EVERGREEN, L.L.C.

CA

K. HOVNANIAN AT FIDDYMENT RANCH, LLC

CA

K. HOVNANIAN AT FRESNO, LLC

CA

K. HOVNANIAN AT GASLAMP SQUARE, L.L.C.

CA

K. HOVNANIAN AT GILROY 60, LLC

CA

K. HOVNANIAN AT GILROY, LLC

CA

K. HOVNANIAN AT JAEGER RANCH, LLC

CA

K. HOVNANIAN AT LA COSTA GREENS, L.L.C.

CA

K. HOVNANIAN AT LA LAGUNA, L.L.C.

CA

K. HOVNANIAN AT LAKE RANCHO VIEJO, LLC

CA

K. HOVNANIAN AT MALAN PARK, L.L.C.

CA

K. HOVNANIAN AT MANTECA, LLC

CA

K. HOVNANIAN AT MELANIE MEADOWS, LLC

CA

K. HOVNANIAN AT MUIRFIELD, LLC

CA

K. HOVNANIAN AT PARKSIDE, LLC

CA

K. HOVNANIAN AT PAVILION PARK, LLC

CA

K. HOVNANIAN AT PIAZZA D'ORO, L.L.C.

CA

K. HOVNANIAN AT PIAZZA SERENA, L.L.C

CA

K. HOVNANIAN AT POSITANO, LLC

CA

K. HOVNANIAN AT PRADO, L.L.C.

CA

 

 

--------------------------------------------------------------------------------

 

 

K. HOVNANIAN AT ROSEMARY LANTANA, L.L.C.

CA

K. HOVNANIAN AT SAGE, L.L.C.

CA

K. HOVNANIAN AT SANTA NELLA, LLC

CA

K. HOVNANIAN AT SHELDON GROVE, LLC

CA

K. HOVNANIAN AT SKYE ISLE, LLC

CA

K. HOVNANIAN AT STANTON, LLC

CA

K. HOVNANIAN AT SUNRIDGE PARK, LLC

CA

K. HOVNANIAN AT THE CROSBY, LLC

CA

K. HOVNANIAN AT THOMPSON RANCH, LLC

CA

K. HOVNANIAN AT TRAIL RIDGE, LLC

CA

K. HOVNANIAN AT VALLE DEL SOL, LLC

CA

K. HOVNANIAN AT VERONA ESTATES, LLC

CA

K. HOVNANIAN AT VICTORVILLE, L.L.C.

CA

K. HOVNANIAN AT VINEYARD HEIGHTS, LLC

CA

K. HOVNANIAN AT VISTA DEL SOL, L.L.C.

CA

K. HOVNANIAN AT WATERSTONE, LLC

CA

K. HOVNANIAN AT WEST VIEW ESTATES, L.L.C.

CA

K. HOVNANIAN AT WESTSHORE, LLC

CA

K. HOVNANIAN AT WHEELER RANCH, LLC

CA

K. HOVNANIAN AT WOODCREEK WEST, LLC

CA

K. HOVNANIAN COMMUNITIES, INC.

CA

K. HOVNANIAN COMPANIES OF CALIFORNIA, INC.

CA

K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.

CA

K. HOVNANIAN COMPANIES, LLC

CA

K. HOVNANIAN DEVELOPMENTS OF CALIFORNIA, INC.

CA

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY II, INC.

CA

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC.

CA

K. HOVNANIAN ENTERPRISES, INC.

CA

K. HOVNANIAN HOMES NORTHERN CALIFORNIA, INC.

CA

K. HOVNANIAN AT SIERRA VISTA, LLC

CA

K. HOVNANIAN AT VILLAGE CENTER, LLC

CA

K. HOVNANIAN'S FOUR SEASONS AT BAKERSFIELD, L.L.C.

CA

K. HOVNANIAN'S FOUR SEASONS AT BEAUMONT, LLC

CA

K. HOVNANIAN'S FOUR SEASONS AT HEMET, LLC

CA

 

 

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K. HOVNANIAN'S FOUR SEASONS AT LOS BANOS, LLC

CA

K. HOVNANIAN'S FOUR SEASONS AT MORENO VALLEY, L.L.C.

CA

K. HOVNANIAN'S FOUR SEASONS AT PALM SPRINGS, LLC

CA

K. HOVNANIAN'S PARKSIDE AT TOWNGATE, L.L.C.

CA

K. HOVNANIAN'S VERANDA AT RIVERPARK II, LLC

CA

K. HOVNANIAN'S VERANDA AT RIVERPARK, LLC

CA

SEABROOK ACCUMULATION CORPORATION

CA

STONEBROOK HOMES, INC.

CA

K. HOVNANIAN ASPIRE AT BELLEVUE RANCH, LLC

CA

K. HOVNANIAN MEADOW VIEW AT MOUNTAIN HOUSE, LLC

CA

K. HOVNANIAN DEVELOPMENTS OF D.C., INC.

DC

K. HOVNANIAN HOMES OF D.C., L.L.C.

DC

HOVNANIAN ENTERPRISES, INC.

DE

K. HOVNANIAN AT ASHBY PLACE, LLC

DE

K. HOVNANIAN AT BRENFORD STATION, LLC

DE

K. HOVNANIAN AT HIDDEN BROOK, LLC

DE

K. HOVNANIAN AT MANSFIELD II, L.L.C.

DE

K. HOVNANIAN AT NORTH BRUNSWICK VI, L.L.C.

DE

K. HOVNANIAN AT NOTTINGHAM MEADOWS, LLC

DE

K. HOVNANIAN AT OCEAN VIEW BEACH CLUB, LLC

DE

K. HOVNANIAN AT PLANTATION LAKES, L.L.C.

DE

K. HOVNANIAN CENTRAL ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN DEVELOPMENTS OF DELAWARE, INC.

DE

K. HOVNANIAN HAMPTONS AT OAK CREEK II, L.L.C.

DE

K. HOVNANIAN HOMES OF DELAWARE, L.L.C.

DE

K. HOVNANIAN HOMES OF LONGACRE VILLAGE, L.L.C.

DE

 

 

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K. HOVNANIAN NORTH CENTRAL ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN NORTH JERSEY ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN AT SEABROOK, LLC

DE

K. HOVNANIAN SHORE ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN SOUTH JERSEY ACQUISITIONS, L.L.C.

DE

K. HOVNANIAN'S FOUR SEASONS AT BAYMONT FARMS L.L.C.

DE

K. HOVNANIAN'S FOUR SEASONS AT SILVER MAPLE FARM, L.L.C.

DE

KHH SHELL HALL LOAN ACQUISITION, LLC

DE

WASHINGTON HOMES, INC.

DE

WOODMORE RESIDENTIAL, L.L.C.

DE

WTC VENTURES, L.L.C.

DE

K. HOVNANIAN'S FOUR SEASONS AT BELLE TERRE, LLC

DE

EASTERN NATIONAL TITLE AGENCY, LLC

FL

HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.

FL

HOVNANIAN LAND INVESTMENT GROUP OF FLORIDA, L.L.C.

FL

K. HOVNANIAN AT BOCA DUNES, LLC

FL

K. HOVNANIAN AT CORAL LAGO, LLC

FL

K. HOVNANIAN AT HAMPTON COVE, LLC

FL

K. HOVNANIAN AT HILLTOP RESERVE II, LLC

FL

K. HOVNANIAN AT HILLTOP RESERVE, LLC

FL

K. HOVNANIAN AT LAKE BURDEN, LLC

FL

K. HOVNANIAN AT LAKE LECLARE, LLC

FL

K. HOVNANIAN AT PICKETT RESERVE, LLC

FL

K. HOVNANIAN AT REDTAIL, LLC

FL

K. HOVNANIAN AT SPRING ISLE, LLC

FL

K. HOVNANIAN AT SUMMERLAKE, LLC

FL

K. HOVNANIAN AT TERRA BELLA TWO, LLC

FL

K. HOVNANIAN AT WALKERS GROVE, LLC

FL

K. HOVNANIAN BELMONT RESERVE, LLC

FL

K. HOVNANIAN CAMBRIDGE HOMES, L.L.C.

FL

K. HOVNANIAN CYPRESS KEY, LLC

FL

K. HOVNANIAN ESTATES AT WEKIVA, LLC

FL

K. HOVNANIAN FIRST HOMES, L.L.C.

FL

K. HOVNANIAN FLORIDA REALTY, L.L.C.

FL

K. HOVNANIAN GRAND CYPRESS, LLC

FL

K. HOVNANIAN GRANDEFIELD, LLC

FL

K. HOVNANIAN PRESERVE AT TURTLE CREEK LLC

FL

 

 

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K. HOVNANIAN REYNOLDS RANCH, LLC

FL

K. HOVNANIAN RIVERSIDE, LLC

FL

K. HOVNANIAN SOUTH FORK, LLC

FL

K. HOVNANIAN STERLING RANCH, LLC

FL

K. HOVNANIAN T&C HOMES AT FLORIDA, L.L.C.

FL

K. HOVNANIAN UNION PARK, LLC

FL

K. HOVNANIAN WINDWARD HOMES, LLC

FL

K. HOVNANIAN MAGNOLIA AT WESTSIDE, LLC

FL

K. HOVNANIAN WINDING BAY PRESERVE, LLC

FL

K. HOVNANIAN AT LAKE FLORENCE, LLC

FL

K. HOVNANIAN AT THE COMMONS AT RICHMOND HILL, LLC

GA

K. HOVNANIAN AT WESTBROOK, LLC

GA

K. HOVNANIAN DEVELOPMENTS OF GEORGIA, INC.

GA

K. HOVNANIAN HOMES AT CREEKSIDE, LLC

GA

K. HOVNANIAN HOMES OF GEORGIA, L.L.C.

GA

ARBOR TRAILS, LLC

IL

EASTERN TITLE AGENCY OF ILLINOIS, LLC

IL

GLENRISE GROVE, L.L.C.

IL

K. HOVNANIAN AT CHRISTINA COURT, LLC

IL

K. HOVNANIAN AT FAIRFIELD RIDGE, LLC

IL

K. HOVNANIAN AT HANOVER ESTATES, LLC

IL

K. HOVNANIAN AT ISLAND LAKE, LLC

IL

K. HOVNANIAN AT LINK FARM, LLC

IL

K. HOVNANIAN AT MEADOWRIDGE VILLAS, LLC

IL

K. HOVNANIAN AT NORTHRIDGE ESTATES, LLC

IL

K. HOVNANIAN AT NORTON LAKE LLC

IL

K. HOVNANIAN AT PRAIRIE POINTE, LLC

IL

K. HOVNANIAN AT SAGEBROOK, LLC

IL

K. HOVNANIAN AT SOMERSET, LLC

IL

K. HOVNANIAN AT TRAFFORD PLACE, LLC

IL

K. HOVNANIAN AT TRAMORE LLC

IL

K. HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC.

IL

K. HOVNANIAN ESTATES AT FOX CHASE, LLC

IL

K. HOVNANIAN ESTATES AT REGENCY, L.L.C.

IL

 

 

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K. HOVNANIAN T&C HOMES AT ILLINOIS, L.L.C.

IL

K. HOVNANIAN'S FOUR SEASONS AT BRIARGATE, LLC

IL

K. HOVNANIAN DEVELOPMENTS OF KENTUCKY, INC.

KY

K. HOVNANIAN SUMMIT HOMES OF KENTUCKY, L.L.C.

KY

FOUNDERS TITLE AGENCY OF MARYLAND, L.L.C.

MD

HOMEBUYERS FINANCIAL SERVICES, L.L.C.

MD

HOVNANIAN LAND INVESTMENT GROUP OF MARYLAND, L.L.C.

MD

HOVNANIAN LAND INVESTMENT GROUP, L.L.C.

MD

K HOVNANIAN HOMES AT MAXWELL PLACE, L.L.C.

MD

K. HOVNANIAN AT CATON'S RESERVE, LLC

MD

K. HOVNANIAN AT EDEN TERRACE, L.L.C.

MD

K. HOVNANIAN AT RODERUCK, L.L.C.

MD

K. HOVNANIAN COMPANIES OF MARYLAND, INC.

MD

K. HOVNANIAN DEVELOPMENTS OF MARYLAND, INC.

MD

K. HOVNANIAN HOMES AT CAMP SPRINGS, L.L.C.

MD

K. HOVNANIAN HOMES AT GREENWAY FARM PARK TOWNS, L.L.C.

MD

K. HOVNANIAN HOMES AT GREENWAY FARM, L.L.C.

MD

K. HOVNANIAN HOMES AT JONES STATION 1, L.L.C.

MD

K. HOVNANIAN HOMES AT RUSSETT, L.L.C.

MD

K. HOVNANIAN HOMES AT THE HIGHLANDS, LLC

MD

K. HOVNANIAN HOMES OF MARYLAND, L.L.C.

MD

K. HOVNANIAN'S FOUR SEASONS AT KENT ISLAND CONDOMINIUMS, L.L.C.

MD

K. HOVNANIAN'S FOUR SEASONS AT KENT ISLAND, L.L.C.

MD

K. HOVNANIAN'S FOUR SEASONS AT ST. MARGARETS LANDING, L.L.C.

MD

PADDOCKS, L.L.C.

MD

PINE AYR, LLC

MD

 

 

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RIDGEMORE UTILITY, L.L.C.

MD

K. HOVNANIAN DEVELOPMENTS OF MINNESOTA, INC.

MN

K. HOVNANIAN HOMES OF MINNESOTA AT ARBOR CREEK, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT AUTUMN MEADOWS, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT BRYNWOOD, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT CEDAR HOLLOW, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT FOUNDER'S RIDGE, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT HARPERS STREET WOODS, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT OAKS OF OXBOW, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA AT REGENT'S POINT, LLC

MN

K. HOVNANIAN HOMES OF MINNESOTA, L.L.C.

MN

K. HOVNANIAN LIBERTY ON BLUFF CREEK, LLC

MN

K. HOVNANIAN TIMBRES AT ELM CREEK, LLC

MN

K. HOVNANIAN'S FOUR SEASONS AT RUSH CREEK II, LLC

MN

K. HOVNANIAN'S FOUR SEASONS AT RUSH CREEK, L.L.C.

MN

K. HOVNANIAN AT BURCH KOVE, LLC

NC

K. HOVNANIAN AT INDIAN WELLS, LLC

NC

K. HOVNANIAN AT LILY ORCHARD, LLC

NC

K. HOVNANIAN AT MAIN STREET SQUARE, LLC

NC

K. HOVNANIAN AT OAK POINTE, LLC

NC

K. HOVNANIAN AT THE PROMENADE AT BEAVER CREEK, LLC

NC

K. HOVNANIAN AT WHEELER WOODS, LLC

NC

K. HOVNANIAN DEVELOPMENTS OF NORTH CAROLINA, INC.

NC

K. HOVNANIAN HOMES AT BROOK MANOR, LLC

NC

K. HOVNANIAN HOMES AT REEDY CREEK, LLC

NC

K. HOVNANIAN HOMES OF NORTH CAROLINA, INC.

NC

 

 

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K. HOVNANIAN SHERWOOD AT REGENCY, LLC

NC

K. HOVNANIAN'S FOUR SEASONS AT RENAISSANCE, L.L.C.

NC

BUILDER SERVICES NJ, L.L.C.

NJ

EASTERN TITLE AGENCY, INC.

NJ

F&W MECHANICAL SERVICES, L.L.C.

NJ

K. HOVNANIAN ACQUISITIONS, INC.

NJ

K. HOVNANIAN AT ASBURY PARK URBAN RENEWAL, LLC

NJ

K. HOVNANIAN AT BARNEGAT I, L.L.C.

NJ

K. HOVNANIAN AT BARNEGAT II, L.L.C.

NJ

K. HOVNANIAN AT BRANCHBURG II, LLC

NJ

K. HOVNANIAN AT BRANCHBURG, L.L.C.

NJ

K. HOVNANIAN AT BRANCHBURG-VOLLERS, LLC

NJ

K. HOVNANIAN AT BRIDGEWATER I, L.L.C.

NJ

K. HOVNANIAN AT BRIDGEWATER II, LLC

NJ

K. HOVNANIAN AT CEDAR GROVE III, L.L.C.

NJ

HILLTOP AT CEDAR GROVE URBAN RENEWAL, LLC

NJ

K. HOVNANIAN AT CHESTERFIELD, L.L.C.

NJ

K. HOVNANIAN AT DENVILLE, L.L.C.

NJ

K. HOVNANIAN AT DEPTFORD TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT DUNELLEN URBAN RENEWAL, LLC

NJ

K. HOVNANIAN AT EAST BRUNSWICK III, LLC

NJ

K. HOVNANIAN AT EAST BRUNSWICK, LLC

NJ

K. HOVNANIAN AT EAST WINDSOR, LLC

NJ

K. HOVNANIAN AT EDGEWATER II, L.L.C.

NJ

K. HOVNANIAN AT EDGEWATER, L.L.C.

NJ

K. HOVNANIAN AT EGG HARBOR TOWNSHIP II, L.L.C.

NJ

K. HOVNANIAN AT EGG HARBOR TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT FIFTH AVENUE, L.L.C.

NJ

K. HOVNANIAN AT FLORENCE I, L.L.C.

NJ

K. HOVNANIAN AT FLORENCE II, L.L.C.

NJ

K. HOVNANIAN AT FOREST MEADOWS, L.L.C.

NJ

K. HOVNANIAN AT FRANKLIN II, L.L.C.

NJ

K. HOVNANIAN AT FRANKLIN, L.L.C.

NJ

 

 

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K. HOVNANIAN AT FREEHOLD TOWNSHIP III, LLC

NJ

K. HOVNANIAN AT GREAT NOTCH, L.L.C.

NJ

K. HOVNANIAN AT HACKETTSTOWN II, L.L.C.

NJ

K. HOVNANIAN AT HILLSBOROUGH, LLC

NJ

K. HOVNANIAN AT HOWELL FORT PLAINS, LLC

NJ

K. HOVNANIAN AT HOWELL II, LLC

NJ

K. HOVNANIAN AT HOWELL, LLC

NJ

K. HOVNANIAN AT HUDSON POINTE, L.L.C.

NJ

K. HOVNANIAN AT JACKSON I, L.L.C.

NJ

K. HOVNANIAN AT JACKSON, L.L.C.

NJ

K. HOVNANIAN AT JERSEY CITY IV, L.L.C.

NJ

K. HOVNANIAN AT KEYPORT, L.L.C.

NJ

K. HOVNANIAN AT LITTLE EGG HARBOR TOWNSHIP II, L.L.C.

NJ

K. HOVNANIAN AT LITTLE EGG HARBOR, L.L.C

NJ

K. HOVNANIAN AT MAHWAH VI, INC.

NJ

K. HOVNANIAN AT MANALAPAN II, L.L.C.

NJ

K. HOVNANIAN AT MANALAPAN III, L.L.C.

NJ

K. HOVNANIAN AT MANALAPAN V, LLC

NJ

K. HOVNANIAN AT MANALAPAN VI, LLC

NJ

K. HOVNANIAN AT MAPLE AVENUE, L.L.C.

NJ

K. HOVNANIAN AT MARLBORO TOWNSHIP IX, L.L.C.

NJ

K. HOVNANIAN AT MARLBORO TOWNSHIP V, L.L.C.

NJ

K. HOVNANIAN AT MARLBORO VI, L.L.C.

NJ

K. HOVNANIAN AT MENDHAM TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT MIDDLE TOWNSHIP II, L.L.C.

NJ

K. HOVNANIAN AT MIDDLE TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT MIDDLETOWN II, L.L.C.

NJ

K. HOVNANIAN AT MIDDLETOWN III, LLC

NJ

K. HOVNANIAN AT MILLVILLE I, L.L.C.

NJ

K. HOVNANIAN AT MILLVILLE II, L.L.C.

NJ

K. HOVNANIAN AT MONROE IV, L.L.C.

NJ

K. HOVNANIAN AT MONROE NJ II, LLC

NJ

K. HOVNANIAN AT MONROE NJ III, LLC

NJ

K. HOVNANIAN AT MONROE NJ, L.L.C.

NJ

K. HOVNANIAN AT MONTGOMERY, LLC

NJ

 

 

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K. HOVNANIAN AT MONTVALE II, LLC

NJ

K. HOVNANIAN AT MONTVALE, L.L.C.

NJ

K. HOVNANIAN AT MORRIS TWP, LLC

NJ

K. HOVNANIAN AT NORTH BERGEN. L.L.C.

NJ

K. HOVNANIAN AT NORTH CALDWELL II, L.L.C.

NJ

K. HOVNANIAN AT NORTH CALDWELL III, L.L.C.

NJ

K. HOVNANIAN AT NORTH CALDWELL IV, L.L.C.

NJ

K. HOVNANIAN AT NORTH WILDWOOD, L.L.C.

NJ

K. HOVNANIAN AT NORTHFIELD, L.L.C.

NJ

K. HOVNANIAN AT OCEAN TOWNSHIP, INC

NJ

K. HOVNANIAN AT OCEANPORT, L.L.C.

NJ

K. HOVNANIAN AT OLD BRIDGE, L.L.C.

NJ

K. HOVNANIAN AT PARSIPPANY, L.L.C.

NJ

K. HOVNANIAN AT PITTSGROVE, L.L.C.

NJ

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL V, L.L.C.

NJ

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VIII, L.L.C.

NJ

K. HOVNANIAN AT RIDGEMONT, L.L.C.

NJ

K. HOVNANIAN AT ROCK LEDGE, LLC

NJ

K. HOVNANIAN AT SHREWSBURY, LLC

NJ

K. HOVNANIAN AT SMITHVILLE, INC.

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK II, LLC

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK III, LLC

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK, L.L.C.

NJ

K. HOVNANIAN AT STATION SQUARE, L.L.C.

NJ

K. HOVNANIAN AT THE MONARCH, L.L.C.

NJ

K. HOVNANIAN AT VERONA URBAN RENEWAL, L.L.C.

NJ

K. HOVNANIAN AT WALDWICK, LLC

NJ

K. HOVNANIAN AT WALL DONATO, LLC

NJ

K. HOVNANIAN AT WARREN TOWNSHIP II, LLC

NJ

K. HOVNANIAN AT WARREN TOWNSHIP, L.L.C.

NJ

K. HOVNANIAN AT WAYNE IX, L.L.C.

NJ

K. HOVNANIAN AT WILDWOOD BAYSIDE, L.L.C.

NJ

 

 

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K. HOVNANIAN AT WOOLWICH I, L.L.C.

NJ

K. HOVNANIAN CLASSICS, L.L.C.

NJ

K. HOVNANIAN CONSTRUCTION II, INC

NJ

K. HOVNANIAN CONSTRUCTION III, INC

NJ

K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC.

NJ

K. HOVNANIAN HOLDINGS NJ, L.L.C.

NJ

K. HOVNANIAN MANALAPAN ACQUISITION, LLC

NJ

K. HOVNANIAN NORTHEAST SERVICES, L.L.C.

NJ

K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.

NJ

K. HOVNANIAN SOUTHERN NEW JERSEY, L.L.C.

NJ

K. HOVNANIAN VENTURE I, L.L.C.

NJ

LANDARAMA, INC.

NJ

M & M AT MONROE WOODS, L.L.C.

NJ

M&M AT CHESTERFIELD, L.L.C.

NJ

M&M AT CRESCENT COURT, L.L.C.

NJ

M&M AT WEST ORANGE, L.L.C.

NJ

MATZEL & MUMFORD AT EGG HARBOR, L.L.C.

NJ

MCNJ, INC.

NJ

MM-BEACHFRONT NORTH I, LLC

NJ

TERRAPIN REALTY, L.L.C.

NJ

THE MATZEL & MUMFORD ORGANIZATION, INC

NJ

K. HOVNANIAN AT MANALAPAN CROSSING, LLC

NJ

K. HOVNANIAN AT OAKLAND, LLC

NJ

K. HOVNANIAN AT SOUTH BRUNSWICK IV, LLC

NJ

K. HOVNANIAN PROPERTIES OF RED BANK, LLC

NJ

K. HOVNANIAN AT OLD BRIDGE II, LLC

NJ

K. HOVNANIAN AT NORTHERN WESTCHESTER INC.

NY

ROUTE 1 AND ROUTE 522, L.L.C.

NJ

K. HOVNANIAN COMPANIES OF NEW YORK, INC.

NY

K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.

NY

K. HOVNANIAN ABERDEEN, LLC

OH

K. HOVNANIAN BELDEN POINTE, LLC

OH

 

 

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K. HOVNANIAN CONTRACTORS OF OHIO, LLC

OH

K. HOVNANIAN CORNERSTONE FARMS, LLC

OH

K. HOVNANIAN DEVELOPMENTS OF OHIO, INC.

OH

K. HOVNANIAN EDGEBROOK, LLC

OH

K. HOVNANIAN FALLS POINTE, LLC

OH

K. HOVNANIAN FOREST VALLEY, LLC

OH

K. HOVNANIAN HIDDEN HOLLOW, LLC

OH

K. HOVNANIAN HIGHLAND RIDGE, LLC

OH

K. HOVNANIAN INDIAN TRAILS, LLC

OH

K. HOVNANIAN LADUE RESERVE, LLC

OH

K. HOVNANIAN LAKES OF GREEN, LLC

OH

K. HOVNANIAN LANDINGS 40S, LLC

OH

K. HOVNANIAN MONARCH GROVE, LLC

OH

K. HOVNANIAN NORTHPOINTE 40S, LLC

OH

K. HOVNANIAN NORTON PLACE, LLC

OH

K. HOVNANIAN OF OHIO, LLC

OH

K. HOVNANIAN OHIO REALTY, L.L.C.

OH

K. HOVNANIAN RIVENDALE, LLC

OH

K. HOVNANIAN SCHADY RESERVE, LLC

OH

K. HOVNANIAN SUMMIT HOMES, L.L.C.

OH

K. HOVNANIAN VILLAGE GLEN, LLC

OH

K. HOVNANIAN WATERBURY, LLC

OH

K. HOVNANIAN WHITE ROAD, LLC

OH

K. HOVNANIAN WOODLAND POINTE, LLC

OH

K. HOVNANIAN WOODRIDGE PLACE, LLC

OH

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES, L.L.C.

OH

NEW HOME REALTY, LLC

OH

BUILDER SERVICES PA, L.L.C.

PA

GOVERNOR'S ABSTRACT CO., INC.

PA

K. HOVNANIAN AT ALLENTOWN, L.L.C.

PA

K. HOVNANIAN AT CAMP HILL, L.L.C.

PA

K. HOVNANIAN AT DOYLESTOWN, LLC

PA

K. HOVNANIAN AT EAST BRANDYWINE, L.L.C.

PA

K. HOVNANIAN AT HERSHEY'S MILL, INC.

PA

K. HOVNANIAN AT LOWER MACUNGIE TOWNSHIP I, L.L.C.

PA

K. HOVNANIAN AT LOWER MACUNGIE TOWNSHIP II, L.L.C.

PA

K. HOVNANIAN AT LOWER MAKEFIELD TOWNSHIP I, L.L.C.

PA

K. HOVNANIAN AT LOWER MORELAND II, L.L.C.

PA

 

 

--------------------------------------------------------------------------------

 

 

K. HOVNANIAN AT MARPLE, LLC

PA

K. HOVNANIAN AT MIDDLETOWN, LLC

PA

K. HOVNANIAN AT NORTHAMPTON, L.L.C.

PA

K. HOVNANIAN AT RAPHO, L.L.C

PA

K. HOVNANIAN AT SAWMILL, INC.

PA

K. HOVNANIAN AT SILVER SPRING, L.L.C.

PA

K. HOVNANIAN AT UPPER PROVIDENCE, LLC

PA

K. HOVNANIAN AT UPPER UWCHLAN II, L.L.C.

PA

K. HOVNANIAN AT UPPER UWCHLAN, L.L.C.

PA

K. HOVNANIAN AT WHITEMARSH, LLC

PA

K. HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.

PA

K. HOVNANIAN DEVELOPMENTS OF PENNSYLVANIA, INC.

PA

K. HOVNANIAN EASTERN PENNSYLVANIA, L.L.C.

PA

K. HOVNANIAN HOMES OF PENNSYLVANIA, L.L.C.

PA

K. HOVNANIAN PA REAL ESTATE, INC.

PA

K. HOVNANIAN PENNSYLVANIA ACQUISITIONS, L.L.C.

PA

K. HOVNANIAN SUMMIT HOMES OF PENNSYLVANIA, L.L.C.

PA

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF PENNSYLVANIA, L.L.C.

PA

K. HOVNANIAN AT COOSAW POINT, LLC

SC

K. HOVNANIAN AT FOX PATH AT HAMPTON LAKE, LLC

SC

K. HOVNANIAN AT HAMPTON LAKE, LLC

SC

K. HOVNANIAN AT MAGNOLIA PLACE, LLC

SC

K. HOVNANIAN CRAFTBUILT HOMES OF SOUTH CAROLINA, L.L.C.

SC

K. HOVNANIAN DEVELOPMENTS OF SOUTH CAROLINA, INC.

SC

K. HOVNANIAN HOMES AT SALT CREEK LANDING, LLC

SC

K. HOVNANIAN HOMES AT SHELL HALL, LLC

SC

K. HOVNANIAN HOMES AT ST. JAMES PLACE, LLC

SC

K. HOVNANIAN HOMES AT THE ABBY, LLC

SC

K. HOVNANIAN HOMES AT THE PADDOCKS, LLC

SC

 

 

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K. HOVNANIAN HOMES OF SOUTH CAROLINA, LLC

SC

SHELL HALL CLUB AMENITY ACQUISITION, LLC

SC

SHELL HALL LAND ACQUISITION, LLC

SC

K. HOVNANIAN DFW BLUFF CREEK, LLC

TX

K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.

TX

K. HOVNANIAN DFW AUBURN FARMS, LLC

TX

K. HOVNANIAN DFW BELMONT, LLC

TX

K. HOVNANIAN DFW CREEKSIDE ESTATES II, LLC

TX

K. HOVNANIAN DFW CREEKSIDE ESTATES, LLC

TX

K. HOVNANIAN DFW ENCORE OF LAS COLINAS II, LLC

TX

K. HOVNANIAN DFW ENCORE OF LAS COLINAS, LLC

TX

K. HOVNANIAN DFW HARMON FARMS, LLC

TX

K. HOVNANIAN DFW HERITAGE CROSSING, LLC

TX

K. HOVNANIAN DFW HOMESTEAD, LLC

TX

K. HOVNANIAN DFW INSPIRATION, LLC

TX

K. HOVNANIAN DFW LEXINGTON, LLC

TX

K. HOVNANIAN DFW LIBERTY CROSSING II, LLC

TX

K. HOVNANIAN DFW LIBERTY CROSSING, LLC

TX

K. HOVNANIAN DFW LIGHT FARMS II, LLC

TX

K. HOVNANIAN DFW LIGHT FARMS, LLC

TX

K. HOVNANIAN DFW MIDTOWN PARK, LLC

TX

K. HOVNANIAN DFW PALISADES, LLC

TX

K. HOVNANIAN DFW PARKSIDE, LLC

TX

K. HOVNANIAN DFW RIDGEVIEW, LLC

TX

K. HOVNANIAN DFW SEVENTEEN LAKES, LLC

TX

K. HOVNANIAN DFW TRAILWOOD, LLC

TX

K. HOVNANIAN DFW VILLAS AT MUSTANG PARK, LLC

TX

K. HOVNANIAN DFW WELLINGTON, LLC

TX

K. HOVNANIAN DFW WILDRIDGE, LLC

TX

K. HOVNANIAN HOMES - DFW, L.L.C.

TX

K. HOVNANIAN HOMES OF HOUSTON, L.L.C.

TX

K. HOVNANIAN HOUSTON BAYOU OAKS AT WEST OREM, LLC

TX

 

 

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K. HOVNANIAN HOUSTON CAMBRIDGE HEIGHTS, LLC

TX

K. HOVNANIAN HOUSTON CITY HEIGHTS, LLC

TX

K. HOVNANIAN HOUSTON CREEK BEND, LLC

TX

K. HOVNANIAN HOUSTON DRY CREEK VILLAGE, LLC

TX

K. HOVNANIAN HOUSTON KATY POINTE, LLC

TX

K. HOVNANIAN HOUSTON PROPERTY I, LLC

TX

K. HOVNANIAN HOUSTON PROPERTY II, LLC

TX

K. HOVNANIAN HOUSTON RIVER FARMS, LLC

TX

K. HOVNANIAN HOUSTON SUNSET RANCH, LLC

TX

K. HOVNANIAN HOUSTON THUNDER BAY SUBDIVISION, LLC

TX

K. HOVNANIAN HOUSTON TRANQUILITY LAKE ESTATES, LLC

TX

K. HOVNANIAN HOUSTON WOODSHORE, LLC

TX

K. HOVNANIAN OF HOUSTON II, L.L.C.

TX

PARK TITLE COMPANY, LLC

TX

K. HOVNANIAN DFW TRAILWOOD II, LLC

TX

K. HOVNANIAN DFW SANFORD PARK, LLC

TX

K. HOVNANIAN HOUSTON TERRA DEL SOL, LLC

TX

K. HOVNANIAN DFW LIBERTY, LLC

TX

FOUNDERS TITLE AGENCY, INC.

VA

K. HOVNANIAN AT ESTATES AT WHEATLANDS, LLC

VA

K. HOVNANIAN AT LAKE RIDGE ESTATES, LLC

VA

K. HOVNANIAN AT LAKE TERRAPIN, L.L.C.

VA

K. HOVNANIAN AT LEE SQUARE, L.L.C.

VA

K. HOVNANIAN AT LENAH WOODS, LLC

VA

K. HOVNANIAN AT RESERVES AT WHEATLANDS, LLC

VA

K. HOVNANIAN AT RESIDENCE AT DISCOVERY SQUARE, LLC

VA

K. HOVNANIAN AT SEASONS LANDING, LLC

VA

K. HOVNANIAN AT SIGNAL HILL, LLC

VA

K. HOVNANIAN DEVELOPMENTS OF VIRGINIA, INC.

VA

K. HOVNANIAN HOMES AT BURKE JUNCTION, LLC

VA

 

 

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K. HOVNANIAN HOMES AT LEIGH MILL, LLC

VA

K. HOVNANIAN HOMES AT PENDER OAKS, LLC

VA

K. HOVNANIAN HOMES AT THOMPSON'S GRANT, LLC

VA

K. HOVNANIAN HOMES AT WILLOWSFORD GRANT, LLC

VA

K. HOVNANIAN HOMES AT WILLOWSFORD GREENS, LLC

VA

K. HOVNANIAN HOMES OF VIRGINIA, INC.

VA

K. HOVNANIAN SUMMIT HOLDINGS, L.L.C.

VA

K. HOVNANIAN HOMES AT WILLOWSFORD GRANT II, LLC

VA

K. HOVNANIAN'S FOUR SEASONS AT CHARLOTTESVILLE, L.L.C.

VA

K. HOVNANIAN'S FOUR SEASONS AT NEW KENT VINEYARDS, L.L.C.

VA

LAUREL HIGHLANDS, LLC

VA

K. HOVNANIAN AT EMBREY MILL VILLAGE, LLC

VA

K. HOVNANIAN AT HUNTFIELD, LLC

WV

K. HOVNANIAN DEVELOPMENTS OF WEST VIRGINIA, INC.

WV

K. HOVNANIAN HOMES AT SHENANDOAH SPRINGS, LLC

WV

K. HOVNANIAN HOMES OF WEST VIRGINIA, L.L.C.

WV

K. HOVNANIAN SUMMIT HOMES OF WEST VIRGINIA, L.L.C.

WV

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF WEST VIRGINIA, L.L.C.

WV

 

 

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SCHEDULE IV

 

Agreements and Instruments

 

I.       Senior Secured Notes

 

 

A.

Indenture dated as of July 27, 2017, among K. Hovnanian Enterprises, Inc.,
Hovnanian Enterprises, Inc., the other Guarantors party thereto and Wilmington
Trust, National Association as Trustee and Collateral Agent, relating to the
10.00% Senior Secured Notes due 2022 and the 10.50% Senior Secured Notes due
2024

 

II.     Senior Notes

 

 

A.

Indenture dated as of November 5, 2014, among K. Hovnanian Enterprises, Inc.,
Hovnanian Enterprises, Inc., the other Guarantors party thereto and Wilmington
Trust, National Association, as Trustee, relating to the 8.00% Senior Notes due
2019

 

 

B.

Indenture dated as of [February 1], 2018, among K. Hovnanian Enterprises, Inc.,
Hovnanian Enterprises, Inc., the other Guarantors party thereto and Wilmington
Trust, National Association, as Trustee, relating to the 13.50% Senior Notes due
2026 and the 5.00% Senior Notes due 2040

 

 

III.     Credit Agreements

 

 

A.

Credit Agreement, dated as of June 7, 2013, among K. Hovnanian Enterprises,
Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto, Citicorp.
USA, Inc. as administrative agent and issuing bank, and the lenders 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

 

 

B.

Credit Agreement, dated as of January 29, 2018, among K. Hovnanian Enterprises,
Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto,
Wilmington Trust, National Association, as administrative agent, and the lenders
party thereto

     

 

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SCHEDULE V

New Jersey Financing Statements

 

The following financing statements on form UCC-1 naming the Person (as defined
in the Credit Agreement) listed below as debtor and the Administrative Agent as
secured party for the benefit of the Secured Parties, have been filed in the
office of the Department of Treasury of the State listed opposite the name of
such party:

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT J-1

 

Form of SECURITY AGREEMENT

 

[See attached.]

 

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

SECURITY AGREEMENT

 

made by

 

K. HOVNANIAN ENTERPRISES, INC.,
HOVNANIAN ENTERPRISES, INC.

 

and certain of their respective Subsidiaries

 

in favor of

 

WILMINGTON TRUST, NATIONAL ASSOCIATION

 

as Agent

 

Dated as of [●]

 

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--------------------------------------------------------------------------------

 

 

 

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TABLE OF CONTENTS

 

--------------------------------------------------------------------------------

 

 

Page

 

Article 1

Defined Terms

 

 

 

 

Section 1.01.

Definitions

2

Section 1.02.

Other Definitional Provisions

6

     

Article 2

Grant of Security Interest

 

 

 

 

Article 3

Representations and Warranties

 

 

 

 

Section 3.01.

Title: No Other Liens

8

Section 3.02.

Perfected Priority Liens

9

Section 3.03.

Jurisdiction of Organization; Chief Executive Office

9

Section 3.04.

Farm Products

9

Section 3.05.

Investment Property

9

Section 3.06.

Receivables

9

Section 3.07.

Perfection Certificate.  The Perfection Certificate has been duly prepared,
completed and executed and the information set forth therein, including the
exact legal name and jurisdiction of organization of each Grantor, is correct
and complete in all material respects as of the Closing Date.

9

     

Article 4

Covenants

 

 

 

 

Section 4.01.

Maintenance of Perfected Security Interest; Further Documentation

9

Section 4.02.

Changes In Name, Etc

10

Section 4.03.

Delivery of Instruments, Certificated Securities and Chattel Paper

10

Section 4.04.

Intellectual Property

10

     

Article 5

Investing Amounts in the Securities Accounts

 

 

 

 

Section 5.01.

Investments

11

Section 5.02.

Liability

11

     

Article 6

Remedial Provisions

 

 

 

 

Section 6.01.

Certain Matters Relating to Receivables

11

Section 6.02.

Communications with Obligors: Grantors Remain Liable

12

 

i

--------------------------------------------------------------------------------

 

 

Section 6.03.

Proceeds to Be Turned Over to Agent

13

Section 6.04.

Application of Proceeds

13

Section 6.05.

Code and Other Remedies

13

Section 6.06.

Subordination

14

Section 6.07.

Deficiency

15

     

Article 7

The Agent

 

     

Section 7.01.

Agent’s Appointment as Attorney-in-fact, Etc

15

Section 7.02.

Duty of Agent

17

Section 7.03.

Execution of Financing Statements

17

Section 7.04.

Authority of Agent

17

     

Article 8

Miscellaneous

 

     

Section 8.01.

Amendments in Writing

17

Section 8.02.

Notices

18

Section 8.03.

No Waiver by Course of Conduct; Cumulative Remedies

18

Section 8.04.

Enforcement Expenses; Indemnification

19

Section 8.05.

Successors and Assigns

19

Section 8.06.

Set-off

19

Section 8.07.

Counterparts

19

Section 8.08.

Severability

19

Section 8.09.

Section Headings

19

Section 8.10.

Integration

19

Section 8.11.

Governing Law

20

Section 8.12.

Submission to Jurisdiction; Waivers

20

Section 8.13.

Acknowledgments

20

Section 8.14.

Additional Grantors

21

Section 8.15.

Releases

21

Section 8.16.

Waiver of Jury Trial

21

Section 8.17.

Control Agreements

21

Section 8.18.

Agent Privileges, Powers and Immunities

21

 

 

Schedule A – List of Entities

Schedule B – Commercial Tort Claims

Schedule C – Actions Required To Perfect

 

Exhibit A – Intellectual Property Security Agreement

Exhibit B – Joinder Agreement

Exhibit C – Perfection Certificate

 

ii

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SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (the “Agreement”), dated as of [●], is made by K.
Hovnanian Enterprises, Inc., a California corporation (the “Borrower”),
Hovnanian Enterprises, Inc., a Delaware corporation (“Holdings”), and each of
the signatories listed on Schedule A hereto (the Borrower, Holdings and such
signatories, together with any other entity that may become a party hereto as
provided herein, the “Grantors”), in favor of Wilmington Trust, National
Association, as Administrative Agent in its capacity as collateral agent (in
such capacity, the “Agent”) for the benefit of itself and the Lenders (as
defined below).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower, Holdings and each of the other Guarantors party thereto
have entered into the Credit Agreement dated as of [●] (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
“Credit Agreement”) with Wilmington Trust, National Association, as
Administrative Agent and the Lenders party thereto;

 

WHEREAS, the Borrower, Holdings, the Guarantors party thereto, Wilmington Trust,
National Association, in its capacity as Senior Credit Agreement Administrative
Agent (as defined therein), Wilmington Trust, National Association, in its
capacity as Mortgage Tax Collateral Agent (as defined therein) and Wilmington
Trust, National Association, in its capacity as the Junior Joint Collateral
Agent (as defined therein) have entered into the Amended and Restated
Intercreditor Agreement dated as of September 8, 2016 and the Borrower,
Holdings, the Subsidiary Guarantors named therein, Wilmington Trust, National
Association, as Trustee (as defined therein) and Notes Collateral Agent (as
defined therein), Wilmington Trust, National Association, as Senior Credit
Agreement Administrative Agent, Wilmington Trust, National Association, as
Junior Joint Collateral Agent and Wilmington Trust, National Association, as
Mortgage Tax Collateral Agent have entered into the Joinder to the Amended and
Restated Intercreditor Agreement, dated as of July 27, 2017 (as the same may be
amended, supplemented, amended or restated or otherwise modified from time to
time, the “Amended and Restated Intercreditor Agreement”);

 

WHEREAS, the Administrative Agent is entering into the Joinder to the Amended
and Restated Intercreditor Agreement dated as of the date hereof, pursuant to
which the Agent becomes party to the Amended and Restated Intercreditor
Agreement for the benefit of itself and the Lenders.

 

WHEREAS, the Loans constitute First-Lien Indebtedness under the Amended and
Restated Intercreditor Agreement;

 

WHEREAS, the Borrower is a member of an affiliated group of companies that
includes Holdings, the Borrower’s parent company, and each other Grantor;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses,
and each Grantor will derive substantial direct and indirect benefit from the
borrowing of Loans; and

 

 

--------------------------------------------------------------------------------

 

 

NOW, THEREFORE, in consideration of the premises and to induce Lenders to make
the extensions of credit contemplated by the Credit Agreement, each Grantor
hereby agrees with the Agent, for the ratable benefit of the Secured Parties, as
follows:

 

Article 1

Defined Terms

 

Section 1.01.     Definitions.  (a) Definitions set forth above are incorporated
herein and unless otherwise defined herein, terms defined in the Credit
Agreement and used herein (including the recitals above) shall have the meanings
respectively given to them in the Credit Agreement, and the following terms are
used herein as defined in the New York UCC: Accounts, Chattel Paper, Commercial
Tort Claims, Deposit Account, Documents, Equipment, Electronic Chattel Paper,
Farm Products, Fixtures, General Intangibles, Goods, Payment Intangibles,
Instruments, Inventory, Investment Property, Letter of Credit Rights, Payment
Intangibles, Securities Accounts, Software and Supporting Obligations.

 

(b)     The following terms shall have the following meanings:

 

“Additional Pari Passu Liens”: any liens on the Collateral which secure
Additional Secured Obligations on an equal and ratable basis with the Secured
Obligations, provided that such liens are permitted by the Credit Agreement.

 

“Additional Pari Passu Collateral Agent”: the agent or other representative with
respect to any Additional Secured Obligations in favor of which any Additional
Pari Passu Liens are granted.

 

“Additional Secured Obligations”: any obligations arising pursuant to any
Indebtedness permitted to be secured on a pari passu basis with the Loans
pursuant to the Credit Agreement (including for the avoidance of doubt any
guarantees with respect thereto).

 

“Agreement”: this Security Agreement, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Cash Equivalents”: (i) cash, marketable direct obligations of the United States
of America or any agency thereof, and certificates of deposit, demand deposits,
time deposits, or repurchase agreements issued by any bank with a capital and
surplus of at least $25,000,000 organized under the laws of the United States of
America or any state thereof, state or municipal securities with a rating of A-1
or better by Standard & Poor’s or by Moody’s or F-1 by Fitch, provided that such
obligations, certificates of deposit, demand deposits, time deposits, and
repurchase agreements have a maturity of less than one year from the date of
purchase, and (ii) investment grade commercial paper or debt or commercial paper
issued by any bank with a capital and surplus of at least $25,000,000 organized
under the laws of the United States of America or any state thereof having a
maturity date of one year or less from the date of purchase, and (iii) funds
holding assets primarily consisting of those described in clauses (i) and (ii).

 

2

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“Collateral”: as defined in Article 2.

 

“Collateral Account”: any collateral account established by the Agent as
provided in Section 6.01 or 6.03.

 

“Collateral Agency Agreement”: an intercreditor or collateral agency agreement
entered into between the Additional Pari Passu Collateral Agent(s) and the Agent
on terms reasonably satisfactory to the Agent, the Borrower and Holdings,
setting forth the respective rights of the Secured Parties and the Additional
Pari Passu Collateral Agent(s) and the holders of Additional Secured Obligations
with respect to the Collateral and providing, among other things, that (x) the
Additional Pari Passu Liens shall rank equally with the liens securing the
Secured Obligations, (y) any proceeds of the Collateral shall be applied ratably
to the Secured Obligations and the Additional Secured Obligations and (z) the
Agent, including at the direction of the Lenders, shall be entitled to take such
actions, or to direct any agent appointed pursuant to the Collateral Agency
Agreement to take such actions, as are permitted hereby, by the Credit
Agreement, by the Amended and Restated Intercreditor Agreement; provided that
any such intercreditor or collateral agency agreement shall provide that in the
event of any conflicting instructions from the Lenders and any holders of the
Additional Secured Obligations, the instruction of the holders of the series
with the greatest principal amount of outstanding Obligations shall prevail.

 

“Contracts”: any contracts and agreements for the purchase, acquisition or sale
of real or personal property or the receipt or performance of services, any
contract rights relating thereto, and all other rights to such contract or
agreements and any right to payment for or to receive moneys due or to become
due for items sold or leased or for services rendered, together with all rights
of any Grantor to damages arising thereunder or to perform and to exercise all
remedies thereunder.

 

“Copyright Licenses”: any written agreement naming any Grantor as licensor or
licensee, granting any right under any Copyright, including, without limitation,
the grant of rights to distribute, exploit and sell materials derived from any
Copyright.

 

“Copyrights”: (i) all copyrights arising under the laws of the United States,
any other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.

 

“Deposit Accounts”: the collective reference to each Deposit Account (as such
term is defined in Section 1.01(a) hereof) in the name of the applicable
Grantor, together with any one or more securities accounts into which any monies
on deposit in any such Deposit Account may be swept or otherwise transferred now
or hereafter and from time to time, and any additional, substitute or successor
Deposit Account.

 

3

--------------------------------------------------------------------------------

 

 

“Excluded Accounts” shall mean at any time those deposit, checking or securities
accounts of any of the Grantors (i) that individually have an average monthly
balance (over the most recent ended 3-month period) less than $250,000 and which
together do not have an average monthly balance (for such 3-month period) in
excess of $2,000,000 in the aggregate, (ii) all escrow accounts (in which funds
are held for or of others by virtue of customary real estate practice or
contractual or legal requirements), (iii) the account holding amounts dedicated
to the “Marie Fund” established by the Grantors for the benefit of their
employees (so long as the Grantors’ deposits therein and withdrawals therefrom
are consistent with past practice) and (iv) such other accounts with respect to
which Holdings determines that the cost of perfecting a Lien thereon is
excessive in relation to the benefit thereof (as reasonably determined by
Holdings’ Board of Directors in a board resolution delivered to the Agent).

 

“Guarantors”: the collective reference to each Grantor other than the Borrower.

 

“Intellectual Property”: the collective reference to all rights, priorities and
privileges, whether arising under United States, multinational or foreign laws,
in, to and under the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at
law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.

 

“Investment Property”: the collective reference to (i) all “investment property”
as such term is defined in Section 9-102(a)(49) of the New York UCC, and (ii)
whether or not constituting “investment property” as so defined, all Pledged
Notes.

 

“Law”: any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ,
decree, bond, judgment, authorization or approval, lien or award of or
settlement agreement with any Official Body.

 

“New York UCC”: the Uniform Commercial Code as from time to time in effect in
the State of New York.

 

“Official Body”: any national, federal, state, local or other governmental or
political subdivision or any agency, authority, board, bureau, central bank,
commission, department or instrumentality of either, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic.

 

“Patent License”: all written agreements providing for the grant by or to any
Grantor of any right to manufacture, use or sell any invention covered in whole
or in part by a Patent.

 

“Patents”: (i) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof, (ii) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, and (iii) all
rights to obtain any reissues or extensions of the foregoing.

 

4

--------------------------------------------------------------------------------

 

 

“Perfection Certificate”: with respect to any Grantor, a certificate
substantially in the form of Exhibit C, completed and supplemented with the
schedules contemplated thereby, and signed by an officer of such Grantor.

 

“Pledged Notes”: all promissory notes issued to or held by any Grantor.

 

“Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of
the New York UCC and, in any event, shall include, without limitation, all
dividends or other income from the Investment Property, collections thereon or
distributions or payments with respect thereto.

 

“Receivable”: any right to payment for real or personal property sold or leased
or for services rendered, whether or not such right is evidenced by a Contract,
an Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).

 

“Secured Obligations”: 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.

 

“Secured Parties”: the collective reference to the Administrative Agent, the
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 of the Credit
Agreement.

 

“Securities Accounts”: the collective reference to the securities accounts in
the name of the applicable Grantor and any additional, substitute or successor
account.

 

“Trademark License”: any written agreement providing for the grant by or to any
Grantor of any right to use any Trademark.

 

“Trademarks”: (i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos
and other source or business identifiers, and all goodwill associated therewith,
now owned or hereafter acquired, all registrations and recordings thereof, and
all applications in connection therewith, whether in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof, and
all common-law rights related thereto, and (ii) the right to obtain all renewals
thereof.

 

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“Vehicles”: all cars, trucks, trailers, construction and earth moving equipment
and other vehicles covered by a certificate of title law of any state and all
tires and other appurtenances to any of the foregoing.

 

Section 1.02.     Other Definitional Provisions.

 

(a)     The words “hereof,” “herein”, “hereto” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.

 

(b)     The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.

 

(c)     Where the context requires, terms relating to the Collateral or any part
thereof, when used in relation to a Grantor, shall refer to such Grantor’s
Collateral or the relevant part thereof.

 

Article 2

   
Grant of Security Interest

 

Each Grantor hereby grants to the Agent, for the ratable benefit of the Secured
Parties, a security interest in, all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations:

 

(a)     all Accounts;

 

(b)     all Chattel Paper (including, Electronic Chattel Paper);

 

(c)     all Commercial Tort Claims (including those claims listed on Schedule B
hereto, in which the claim amount individually exceeds $2,000,000, as such
schedule is amended or supplemented from time to time);

 

(d)     all Contracts;

 

(e)     all Securities Accounts;

 

(f)     all Deposit Accounts;

 

(g)     all Documents (other than title documents with respect to vehicles);

 

(h)     all Equipment;

 

(i)     all Fixtures;

 

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(j)     all General Intangibles;

 

(k)     all Goods;

 

(l)     all Instruments;

 

(m)     all Intellectual Property;

 

(n)     all Inventory;

 

(o)     all Investment Property;

 

(p)     all letters of credit;

 

(q)     all Letter of Credit Rights;

 

(r)     all Payment Intangibles;

 

(s)     all Vehicles and title documents with respect to Vehicles;

 

(t)     all Receivables;

 

(u)     all Software;

 

(v)     all Supporting Obligations;

 

(w)     to the extent, if any, not included in clauses (a) through (v) above,
each and every other item of personal property whether now existing or hereafter
arising or acquired;

 

(x)     all books and records pertaining to any of the Collateral; and

 

(y)     to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing;

 

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provided, however, that notwithstanding any of the other provisions set forth in
this Article 2 (and notwithstanding any recording of the Agent’s Lien in the
U.S. Patent and Trademark Office or other registry office in any jurisdiction),
this Agreement shall not constitute a grant of a security interest in, and the
Collateral shall not include, (i) any property or assets constituting “Excluded
Property” (as defined in the Credit Agreement) or (ii) any property to the
extent that such grant of a security interest is prohibited by any applicable
Law of an Official Body, requires a consent not obtained of any Official Body
pursuant to such Law or is prohibited by, or constitutes a breach or default
under or results in the termination of or gives rise to any right of
acceleration, modification or cancellation or requires any consent not obtained
under, any contract, license, agreement, instrument or other document evidencing
or giving rise to such property or, in the case of any Investment Property, or
Pledged Note, any applicable shareholder or similar agreement, except to the
extent that such Law or the term in such contract, license, agreement,
instrument or other document or shareholder or similar agreement providing for
such prohibition, breach, default or termination or requiring such consent is
ineffective under applicable Law including Sections 9-406, 9-407, 9-408 or 9-409
of the New York UCC (or any successor provision or provisions); provided,
further, that no security interest shall be granted in United States
“intent-to-use” trademark or service mark applications unless and until
acceptable evidence of use of the trademark or service mark has been filed with
and accepted by the U.S. Patent and Trademark Office pursuant to Section 1(c) or
Section 1(d) of the Lanham Act (U.S.C. 1051, et. seq.), and to the extent that,
and solely during the period in which, the grant of a security interest therein
would impair the validity or enforceability of such intent-to-use trademark or
service mark applications under applicable federal Law. After such period and
after such evidence of use has been filed and accepted, each Grantor
acknowledges that such interest in such trademark or service mark applications
will become part of the Collateral. The Agent agrees that, at any Grantor’s
reasonable request and expense, it will provide such Grantor confirmation that
the assets described in this paragraph are in fact excluded from the Collateral
during such limited period only upon receipt of an Officers’ Certificate or an
Opinion of Counsel to that effect. Notwithstanding the foregoing, in the event
that Rule 3-16 of Regulation S-X under the Securities Act requires (or is
replaced with another rule or regulation, or any other law, rule or regulation
is adopted, which would require) the filing with the SEC of separate financial
statements (including if the Loans were “Securities” under the Securities Act)
of the Borrower, any Guarantor or of K. Hovnanian JV Holdings, L.L.C., then the
capital stock or other securities of the Borrower, such Guarantor or of K.
Hovnanian JV Holdings, L.L.C., as applicable, shall automatically be deemed
released and not to be and not to have been part of the Collateral but only to
the extent necessary to not be subject to such requirement. In such event, this
Agreement may be amended or modified, without the consent of any Lender, upon
the Agent’s receipt of a written authorization from the Borrower stating that
such amendment is permitted hereunder, which the Agent shall be entitled to
conclusively rely upon, to the extent necessary to evidence the release of the
lien created hereby on the shares of capital stock or other securities that are
so deemed to no longer constitute part of the Collateral.

 

Article 3

Representations and Warranties

 

To induce the Lenders to make the extensions of credit contemplated by the
Credit Agreement, each Grantor hereby represents and warrants to the Agent and
each other Secured Party that:

 

Section 3.01.     Title: No Other Liens. Except for the security interest
granted to the Agent for the ratable benefit of the Secured Parties pursuant to
this Agreement, such Grantor owns each item of the Collateral free and clear of
any and all Liens or claims of others except for the Permitted Liens. None of
the Grantors has filed or consented to the filing of any financing statement or
other public notice with respect to all or any part of the Collateral in any
public office, except with respect to Permitted Liens.

 

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Section 3.02.     Perfected Priority Liens. The security interests granted
pursuant to this Agreement upon completion of the filings and other actions
specified on Schedule C (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered, or will be delivered within
the time periods set forth in Schedule C, to the Agent in completed form) (a)
will constitute valid perfected (to the extent such security interest can be
perfected by such filings or actions) security interests in all of the
Collateral in favor of the Agent, for the ratable benefit of the Secured
Parties, as collateral security for the Secured Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and any
Persons purporting to purchase any Collateral from such Grantor and (b) are
prior to all other Liens on the Collateral in existence on the date hereof
except for Permitted Liens.

 

Section 3.03.     Jurisdiction of Organization; Chief Executive Office. On the
date hereof, such Grantor’s exact legal name, jurisdiction of organization, and,
to the extent required to be listed therein, the location of such Grantor’s
chief executive office or sole place of business or principal residence, as the
case may be, are specified in the Perfection Certificate.

 

Section 3.04.     Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.

 

Section 3.05.     Investment Property. Such Grantor is the record and beneficial
owner of, and has good title to, the Investment Property pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of, any
other Person, except the Permitted Liens.

 

Section 3.06.     Receivables. No amount payable in excess of $2,000,000 in the
aggregate to all Grantors under or in connection with any Receivables is
evidenced by any Instrument or Chattel Paper which has not been delivered to the
Agent.

 

Section 3.07.     Perfection Certificate. The Perfection Certificate has been
duly prepared, completed and executed and the information set forth therein,
including the exact legal name and jurisdiction of organization of each Grantor,
is correct and complete in all material respects as of the Closing Date.

 

Article 4

Covenants

 

Each Grantor covenants and agrees with the Agent and the other Secured Parties
that, from and after the date of this Agreement until the payment in full of all
outstanding Secured Obligations:

 

Section 4.01.     Maintenance of Perfected Security Interest; Further
Documentation.   (a) Such Grantor shall maintain the security interest created
by this Agreement as a perfected security interest to the extent required by
this Agreement having at least the priority described in Section 3.02 and shall
defend such security interest against the claims and demands of all Persons
whomsoever other than any holder of Permitted Liens.

 

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(b)     At any time and from time to time, and at the sole expense of such
Grantor, such Grantor will promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further actions
as shall be required by applicable law for the purpose of obtaining, perfecting
or preserving the security interests purported to be granted under this
Agreement and of the rights and remedies herein granted, including, without
limitation, (i) filing any financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby and (ii) subject to
Section 6.14(c) of the Credit Agreement, in the case of the Deposit Accounts,
Investment Property, Letter of Credit Rights and the Securities Accounts and any
other relevant Collateral, taking any actions necessary to enable the Agent to
obtain “control” (within the meaning of the applicable Uniform Commercial Code)
with respect thereto, provided that the Grantor shall not be required to take
any of the actions set forth in this clause (ii) with respect to Excluded
Accounts.

 

(c)     If any Grantor shall at any time acquire a Commercial Tort Claim, in
which the claim amount individually exceeds $2,000,000, such Grantor shall
promptly notify the Agent in a writing signed by such Grantor of the details
thereof and grant to the Agent for the benefit of the Secured Parties in such
writing a security interest therein and in the Proceeds thereof, with such
writing to be in form and substance required by applicable law and such writing
shall constitute a supplement to Schedule B hereto.

 

Section 4.02.     Changes In Name, Etc. Such Grantor will, within thirty (30)
calendar days after any change its jurisdiction of organization or change its
name, provide written notice thereof to the Agent.

 

Section 4.03.     Delivery of Instruments, Certificated Securities and Chattel
Paper. If any amount in excess of $2,000,000 in the aggregate payable under or
in connection with any of the Collateral shall be or become evidenced by any
Instrument, certificated security or Chattel Paper, such Instrument,
certificated security or Chattel Paper shall be promptly delivered to the Agent,
duly indorsed, to be held as Collateral pursuant to this Agreement.

 

Section 4.04.     Intellectual Property.  (a) Whenever such Grantor, either by
itself or through any agent, employee, licensee or designee, shall file an
application for the registration of any Intellectual Property with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or any political subdivision thereof, such Grantor shall report
such filing to the Agent on or before the date upon which Holdings is required
to file reports with the Administrative Agent pursuant to Section 6.12 of the
Credit Agreement for the fiscal quarter in which such filing occurs. Such
Grantor shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as may be necessary to create and perfect the
Agent’s and the other Secured Parties’ security interest in any registered or
applied for Copyright, Patent or Trademark and the goodwill and General
Intangibles of such Grantor relating thereto or represented thereby. Nothing in
this Agreement prevents any Grantor from discontinuing the use or maintenance of
its Intellectual Property if such Grantor determines in its reasonable business
judgment that such discontinuance is desirable in the conduct of its business.

 

(b)     Such Grantor’s obligations under Section 4.04(a) above shall include
executing and delivering, and having recorded, with respect to such Collateral,
an agreement substantially in the form of the Intellectual Property Security
Agreement attached hereto as Exhibit A.

 

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Article 5

     
Investing Amounts in the Securities Accounts

 

Section 5.01.     Investments. If requested by the Borrower in writing, the
Agent will, from time to time, invest amounts on deposit in the Deposit Accounts
or Securities Accounts in which the Agent for the benefit of the Secured Parties
holds a first priority, perfected security interest, in Cash Equivalents
pursuant to the written instructions of the Borrower. All investments may, at
the option of the Agent, be made in the name of the Agent or a nominee of the
Agent and in a manner that preserves the Borrower’s ownership of, and the
Agent’s perfected first priority Lien on, such investments. All income received
from such investments shall accrue for the benefit of the Borrower and shall be
credited (promptly upon receipt by the Agent) to a Deposit Account or Securities
Account, in which the Agent for the benefit of the Secured Parties holds a first
priority, perfected security interest. The Borrower will only direct the Agent
to make investments in which the Agent can obtain a first priority, perfected
security interest, and the Borrower hereby agrees to execute promptly any
documents which may be required to implement or effectuate the provisions of
this Section.

 

Section 5.02.     Liability. The Agent shall have no responsibility to the
Borrower for any loss or liability arising in respect of the investments in the
Deposit Accounts or Securities Accounts in which the Agent for the benefit of
the Secured Parties holds a first priority, perfected security interest
(including, without limitation, as a result of the liquidation of any thereof
before maturity), except to the extent that such loss or liability is found to
be based on the Agent’s gross negligence or willful misconduct as determined by
a final and nonappealable decision of a court of competent jurisdiction.

 

Article 6

 
Remedial Provisions

 

Section 6.01.     Certain Matters Relating to Receivables.

 

(a)     At any time during the continuance of an Event of Default, the Agent
shall have the right to make test verifications of the Receivables in any manner
and through any medium that it reasonably considers advisable, and each Grantor
shall furnish all such assistance and information as the Agent may require in
connection with such test verifications. The Agent shall endeavor to provide the
Borrower with notice at or about the time of such verifications, provided that
the failure to provide such notice shall not in any way compromise or adversely
affect the exercise of such remedy or the Agent’s rights hereunder.

 

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(b)     The Agent hereby authorizes each Grantor to collect such Grantor’s
Receivables and the Agent may curtail or terminate said authority at any time
after the occurrence and during the continuance of an Event of Default. The
Agent shall endeavor to provide the Borrower with notice at or about the time of
the exercise of its rights pursuant to the preceding sentence, provided that the
failure to provide such notice shall not in any way compromise or adversely
affect the exercise of any rights or remedies hereunder. If requested in writing
by the Agent at any time after the occurrence and during the continuance of an
Event of Default, any payments of Receivables, when collected by any Grantor,
(i) shall be forthwith (and, in any event, within two Business Days) deposited
by such Grantor in the exact form received, duly indorsed by such Grantor to the
Agent if required, in a Collateral Account maintained under the sole dominion
and control of the Agent, subject to withdrawal by the Agent for the account of
the Secured Parties only as provided in Section 6.04 and (ii) until so turned
over, shall be held by such Grantor in trust for the Agent and the Secured
Parties, segregated from other funds of such Grantor.

 

(c)     At the Agent’s written request at any time after the occurrence and
during the continuance of an Event of Default, each Grantor shall deliver to the
Agent all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Receivables, including
without limitation, all original orders, invoices and shipping receipts.

 

Section 6.02.     Communications with Obligors: Grantors Remain Liable.

 

(a)     The Agent in its own name or in the name of others may after the
occurrence and during the continuance of an Event of Default communicate with
obligors under the Receivables and parties to the Contracts to verify with them
to the Agent’s satisfaction the existence, amount and terms of any Receivables
or Contracts. The Agent shall endeavor to provide the Borrower with notice at or
about the time of the exercise of its rights pursuant to the preceding sentence,
provided that the failure to provide such notice shall not in any way compromise
or adversely affect the exercise of any rights or remedies hereunder.

 

(b)     Upon the written request of the Agent at any time after the occurrence
and during the continuance of an Event of Default, each Grantor shall notify
obligors on the Receivables and parties to the Contracts that the Receivables
and the Contracts, as the case may be, have been assigned to the Agent for the
ratable benefit of the Secured Parties and that payments in respect thereof
shall be made directly to the Agent.

 

(c)     Anything herein to the contrary notwithstanding, each Grantor shall
remain liable under each of the Receivables and Contracts to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Agent nor any Secured Party shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) or
Contract by reason of or arising out of this Agreement or the receipt by the
Agent or any Secured Party of any payment relating thereto, nor shall the Agent
or any Secured Party be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Receivable (or any agreement
giving rise thereto) or Contract, to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.

 

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Section 6.03.     Proceeds to Be Turned Over to Agent. In addition to the rights
of the Agent and the Secured Parties specified in Section 6.01 with respect to
payments of Receivables, if an Event of Default shall occur and be continuing,
upon written request from the Agent, all Proceeds received by any Grantor
consisting of cash, checks and other near-cash items shall be held by such
Grantor in trust for the Agent and the Secured Parties, segregated from other
funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Agent, if requested). All Proceeds received by
the Agent hereunder shall be held by the Agent in a Collateral Account
maintained under its sole dominion and control. All such Proceeds while held by
the Agent in a Collateral Account (or by such Grantor in trust for the Agent and
the Secured Parties) shall continue to be held as collateral security for all
the Secured Obligations and shall not constitute payment thereof until applied
as provided in Section 6.04.

 

Section 6.04.     Application of Proceeds. If an Event of Default shall have
occurred and be continuing, at any time at the Agent’s election, subject to any
Collateral Agency Agreement and any other intercreditor agreement entered into
in connection with Indebtedness permitted under the Credit Agreement, the Agent
may apply all or any part of the Collateral, whether or not held in the Deposit
Accounts, the Securities Accounts or any other Collateral Account, in payment of
the Secured Obligations in the order set forth in the Credit Agreement.

 

Section 6.05.     Code and Other Remedies. If an Event of Default shall occur
and be continuing, the Agent, on behalf of the Secured Parties, may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under the New
York UCC or any other applicable law. Without limiting the generality of the
foregoing, the Agent, without prior demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any prior
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances, forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker’s board or office of the Agent or any Secured Party or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Agent shall endeavor to provide the Borrower
with notice at or about the time of the exercise of remedies in the proceeding
sentence, provided that the failure to provide such notice shall not in any way
compromise or adversely affect the exercise of such remedies or the Agent’s
rights hereunder. The Agent or any Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in any Grantor, which right or
equity is hereby waived and released. Each Grantor further agrees, at the
Agent’s request, to assemble the Collateral and make it available to the Agent
at places which the Agent shall reasonably select, whether at such Grantor’s
premises or elsewhere. The Agent shall apply the net proceeds of any action
taken by it pursuant to this Section 6.05, after deducting all reasonable costs
and expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Agent and the Secured Parties hereunder,
including, without limitation, reasonable attorneys’ fees and disbursements as
provided in Section 9.04 of the Credit Agreement, to the payment in whole or in
part of the Secured Obligations, in such order as is provided in Section 7.03 of
the Credit Agreement, and only after such application and after the payment by
the Agent of any other amount required by any provision of law, including,
without limitation, Section 9-615(a)(3) of the New York UCC, need the Agent
account for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Agent or any Secured Party arising out of the exercise by
them of any rights hereunder. If any prior notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.

 

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The Agent shall incur no liability as a result of the sale of the Collateral, or
any part thereof, at any private sale pursuant to this Article 6 conducted in
accordance with the requirements of applicable laws and provided such sale shall
not have resulted from the gross negligence, willful misconduct or fraud of the
Agent. Each Grantor hereby waives any claims against the Agent and the other
Secured Parties arising by reason of the fact that the price at which the
Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale or was less than the aggregate
amount of the Secured Obligations, even if the Agent accepts the first offer
received and does not offer the Collateral to more than one offeree, provided
that such private sale is conducted in accordance with applicable laws and this
Agreement. Each Grantor hereby agrees that in respect of any sale of any of the
Collateral pursuant to the terms hereof, the Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
laws, or in order to obtain any required approval of the sale or of the
purchaser by any governmental authority or official, nor shall the Agent be
liable or accountable to any Grantor for any discount allowed by reason of the
fact that such Collateral is sold in compliance with any such limitation or
restriction.

 

Section 6.06.     Subordination. Each Grantor hereby agrees that, upon the
occurrence and during the continuance of an Event of Default, unless otherwise
agreed by the Agent, all Indebtedness owing to it by the Borrower or any
Subsidiary of the Borrower shall be fully subordinated to the indefeasible
payment in full in cash of the Secured Obligations.

 

Section 6.07.     Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Secured Obligations and the fees and disbursements
of any attorneys employed by the Agent or any Secured Party to collect such
deficiency (which shall be limited to one (1) counsel, at any given time, to the
Agent and one (1) additional counsel for all other Secured Parties taken as a
whole, and if reasonably necessary, one (1) local counsel, at any given time, to
the Agent in each relevant jurisdiction and one (1) additional local counsel for
all other Secured Parties taken as a whole in each relevant jurisdiction (which
may include a single special counsel acting in multiple jurisdictions).

 

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Article 7

The Agent

 

Section 7.01.     Agent’s Appointment as Attorney-in-fact, Etc. (a) Each Grantor
hereby irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Agent the power and right, on behalf of such Grantor, without prior notice to or
assent by such Grantor, to do any or all of the following:

 

(i)     following the occurrence of an Event of Default, in the name of such
Grantor or its own name, or otherwise, take possession of and indorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable or Contract or with respect to any
other Collateral and file any claim or take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by the Agent for the
purpose of collecting any and all such moneys due under any Receivable or
Contract or with respect to any other Collateral whenever payable;

 

(ii)     in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the Agent
may request to evidence the Agent’s and the Secured Parties’ security interest
in such Intellectual Property and the goodwill and General Intangibles of such
Grantors relating thereto or represented thereby;

 

(iii)      pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by the
terms of this Agreement and pay all or any part of the premiums therefor and the
costs thereof;

 

(iv)     execute, in connection with any sale provided for in Section 6.05, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral; and

 

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(v)     (A) direct any party liable for any payment under any of the Collateral
to make payment of any and all moneys due or to become due thereunder directly
to the Agent or as the Agent shall direct; (B) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out of any Collateral;
(C) sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (D) commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any Collateral;
(E) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (F) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Agent may deem appropriate; (G) assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such Copyright,
Patent or Trademark pertains), through the world for such term or terms, on such
conditions, in such manner, as the Agent (in its discretion or at the direction
of the Required Lenders) shall determine is necessary; and (H) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and do, at the Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things which
the Agent deems necessary to protect, preserve or realize upon the Collateral
and the Agent’s and the Secured Parties’ security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.

 

The Agent shall endeavor to provide the Borrower with notice at or about the
time of the exercise of its rights in the preceding clause (a), provided that
the failure to provide such notice shall not in any way compromise or adversely
affect the exercise of any rights or remedies hereunder.

 

(b)     If any Grantor fails to perform or comply with any of its agreements
contained herein, the Agent, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or compliance, with such
agreement.

 

(c)     The expenses of the Agent incurred in connection with actions undertaken
as provided in this Section 7.01, together with, if past due, interest thereon
at a rate per annum equal to the interest rate applicable at such time to Base
Rate Loans, from the date when due to the Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Agent upon not less
than five (5) Business Days’ notice.

 

(d)     Each Grantor hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.

 

Section 7.02.     Duty of Agent. Except for the safe custody of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, the Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. Neither the Agent, any Secured Party nor
any of their respective officers, directors, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Agent and the Secured Parties hereunder are solely
to protect the Agent’s and the Secured Parties’ interests in the Collateral and
shall not impose any duty upon the Agent or any Secured Party to exercise any
such powers. The Agent and the Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall
be responsible to any Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.

 

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Section 7.03.     Execution of Financing Statements. Pursuant to any applicable
law, each Grantor authorizes the Agent to file or record financing statements
and other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such
offices as required by applicable law to perfect the security interests of the
Agent under this Agreement. Each Grantor authorizes the Agent to use the
collateral description “all personal property” or “all assets” in any such
financing statements.

 

Section 7.04.     Authority of Agent. Each Grantor acknowledges that the rights
and responsibilities of the Agent under this Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the Agent
and the Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Grantors, the Agent shall be conclusively presumed
to be acting as agent for the Secured Parties with full and valid authority so
to act or refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.

 

Article 8

Miscellaneous

 

Section 8.01.     Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with the Credit Agreement. For the avoidance of doubt, the Borrower
and the Agent may, without the consent of the Lenders, enter into amendments or
other modifications of this Agreement or any other Collateral Document
(including by entering into any Collateral Agency Agreement or any other new or
supplemental agreements) to the extent contemplated by Section 9.01 of the
Credit Agreement.

 

Section 8.02.     Notices. All notices, requests and demands to or upon the
Agent or any Grantor hereunder shall be effected in the manner provided for in
Section 9.02 of the Credit Agreement.

 

Section 8.03.     No Waiver by Course of Conduct; Cumulative Remedies. Neither
the Agent nor any Secured Party shall by any act (except by a written instrument
pursuant to Section 8.01), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default. No failure to exercise, nor any delay in exercising, on the
part of the Agent or any Secured Party, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Agent or any Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Agent or such
Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.

 

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Section 8.04.     Enforcement Expenses; Indemnification. (a) Each Grantor agrees
to pay, indemnify against or reimburse each Secured Party and the Agent for all
its costs and expenses incurred in enforcing or preserving any rights under this
Agreement and the other Loan Documents to which such Grantor is a party,
including, without limitation, the reasonable fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to the Agent and
the Secured Parties.

 

(b)     Each Grantor agrees to pay, and to save the Agent and the Secured
Parties harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.

 

(c)     Each Grantor agrees to pay, and to save the Agent and the Secured
Parties harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 9.04 of the Credit Agreement
except those resulting from the Agent’s or any Secured Party’s willful
misconduct or gross negligence.

 

(d)     The agreements in this Section 8.04 shall survive repayment of the
Secured Obligations, termination of the Loan Documents and resignation or
removal of the Agent.

 

Section 8.05.     Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of the
Agent and the Secured Parties and their successors and assigns; provided that
except as permitted by the Credit Agreement, no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the Agent.

 

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Section 8.06.     Set-off. Each Grantor hereby irrevocably authorizes the Agent
and each other Secured Party at any time and from time to time while an Event of
Default has occurred and is continuing, without notice to such Grantor or any
other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Agent or such other Secured Party to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the Agent or
such other Secured Party may elect, against and on account of the obligations
and liabilities of such Grantor to the Agent or such other Secured Party
hereunder and claims of every nature and description of the Agent or such other
Secured Party against such Grantor, in any currency, whether arising hereunder,
under the Credit Agreement or any other Loan Document, as the Agent or such
other Secured Party may elect, whether or not the Agent or any other Secured
Party has made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. The Agent and each other Secured
Party shall endeavor to notify the Borrower promptly of any such set-off and the
application made by the Agent or such other Secured Party of the proceeds
thereof, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Agent and each other
Secured Party under this Section 8.06 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Agent or such other Secured Party may have.

 

Section 8.07.     Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

 

Section 8.08.     Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

Section 8.09.     Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.

 

Section 8.10.     Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Agent and the Secured Parties with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Agent or any Secured Parties
relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.

 

Section 8.11.     Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

Section 8.12.     Submission to Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:

 

(a)     submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

 

(b)     consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

 

19

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(c)     agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.02 or at such other address of which the Agent
shall have been notified pursuant thereto;

 

(d)     agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

 

(e)     waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

 

Section 8.13.     Acknowledgments. Each Grantor hereby acknowledges that:

 

(a)     it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;

 

(b)     neither the Agent nor any Secured Party has any fiduciary relationship
with or duty to any Grantor arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between the Grantors,
on the one hand, and the Agent and Secured Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and

 

(c)     no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Grantors and the Secured Parties; and

 

(d)     the Agent may at any time and from time to time appoint a collateral
agent to maintain any of the Collateral, maintain books and records regarding
any Collateral, release Collateral, and assist in any aspect arising in
connection with the Collateral as the Agent may desire; and the Agent may
appoint itself, any affiliate or a third party as the collateral agent, and all
reasonable costs of the collateral agent shall be borne by the Grantors;

 

Section 8.14.     Additional Grantors. Each Restricted Subsidiary (as defined in
the Credit Agreement) of Holdings shall become a Grantor for all purposes of
this Agreement upon execution and delivery by such Subsidiary of a Joinder
Agreement, substantially in the form of Exhibit B hereto.

 

Section 8.15.     Releases. (a) Upon the indefeasible payment in full of all
outstanding Secured Obligations, the Collateral shall be automatically released
from the Liens created hereby, and this Agreement and all obligations (other
than those expressly stated to survive such termination) of the Agent and each
Grantor hereunder shall automatically terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors.

 

20

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(b)     All or a portion of the Collateral shall be released from the Liens
created hereby, and a Grantor may be released from its obligations hereunder, in
each case pursuant to and as provided in Section 8.08 of the Credit Agreement.
At the request and sole expense of such Grantor, upon the Agent’s receipt of the
documents required by Section 8.08 of the Credit Agreement, the Agent shall
deliver to such Grantor any Collateral held by the Agent hereunder, and execute
and deliver to such Grantor such documents as the Grantor shall reasonably
request to evidence such termination or release.

 

Section 8.16.     Waiver of Jury Trial. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

Section 8.17.     Control Agreements. In connection with each agreement made at
any time pursuant to Sections 9-104 or 8-106 of the Uniform Commercial Code
among the Agent, any one or more Grantors, and any depository financial
institution or issuer of uncertificated mutual fund shares or other
uncertificated securities and any other Person party thereto, the Agent shall
not deliver to any such depository or issuer, instructions directing the
disposition of the deposit or uncertificated fund shares or other securities
unless an Event of Default has occurred and is continuing at such time.

 

Section 8.18.     Agent Privileges, Powers and Immunities. In the performance of
its obligations, powers and rights hereunder, the Agent shall be entitled to the
rights, benefits, privileges, powers and immunities afforded to it as Agent
under the Credit Agreement. The Agent shall take or refrain from taking any
discretionary action or exercise any discretionary powers set forth in this
Agreement in accordance with, and subject to, the Credit Agreement.
Notwithstanding anything to the contrary contained herein and notwithstanding
anything contained in Section 9-207 of the New York UCC, the Agent shall have no
responsibility for the creation, perfection, priority, sufficiency or protection
of any liens securing Secured Obligations (including, but not limited to, no
obligation to prepare, record, file, re-record or re-file any financing
statement, continuation statement or other instrument in any public office). The
permissive rights and authorizations of the Agent hereunder shall not be
construed as duties. The Agent shall be entitled to exercise its powers and
duties hereunder through designees, specialists, experts or other appointees
selected by it in good faith.

 

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Security Agreement
to be duly executed and delivered as of the date first above written.

 

 

Secured Party:    

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Agent

 

By:

 

Name:

Title:

 

 

K. HOVNANIAN ENTERPRISES, INC., as Borrower

 

By:

 

Name:

Title:

 

 

HOVNANIAN ENTERPRISES, INC.

 

By:

 

Name:

Title:

 

 

Signature Page to Security Agreement

 

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K. HOV IP, II, INC.

By:

 

Name:

Title:

 

On behalf of each other entity named in Schedule A hereto

By:

 

Name:

Title:

 

 

Signature Page to Security Agreement

 

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SCHEDULE A – LIST OF ENTITIES1

 

 

 

 

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1 To be updated.

 

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SCHEDULE B

 

COMMERCIAL TORT CLAIMS2

 

 

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2 To be updated.

 

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SCHEDULE C

 

ACTIONS REQUIRED TO PERFECT

 

1.

With respect to each Grantor organized under the laws of the state of Arizona as
identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the filing
of a Uniform Commercial Code Financing Statement that identifies the Collateral
with the Arizona Secretary of State.

 

2.

With respect to each Grantor organized under the laws of the state of California
as identified on Schedule 1(a) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Collateral with
the California Secretary of State.

 

3.

With respect to each Grantor organized under the laws of the state of Delaware
as identified on Schedule 1(a) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Collateral with
the Delaware Secretary of State.

 

4.

With respect to each Grantor organized under the laws of the District of
Columbia as identified on Schedule 1(a) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the District of Columbia Recorder of Deeds.

 

5.

With respect to each Grantor organized under the laws of the state of Florida as
identified on Schedule 1(b) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Collateral with
the Florida Secured Transaction Registry.

 

6.

With respect to each Grantor organized under the laws of the state of Georgia as
identified on Schedule 1(b) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Collateral with
the Office of the Clerk of Superior Court of any County of Georgia.

 

7.

With respect to each Grantor organized under the laws of the state of Illinois
as identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the Illinois Secretary of State.

 

8.

With respect to each Grantor organized under the laws of the state of Kentucky
as identified on Schedule 1(b) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Collateral with
the Kentucky Secretary of State.

 

9.

With respect to each Grantor organized under the laws of the state of Maryland
as identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the Maryland State Department of Assessments and Taxation.

 

 

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10.

With respect to each Grantor organized under the laws of the state of Minnesota
as identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the Minnesota Secretary of State.

 

11.

With respect to each Grantor organized under the laws of the state of New Jersey
as identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the New Jersey Division of Commercial Recording.

 

12.

With respect to each Grantor organized under the laws of the state of New York
as identified on Schedule 1(a) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Collateral with
the New York Secretary of State.

 

13.

With respect to each Grantor organized under the laws of the state of North
Carolina as identified on Schedules 1(a) and 1(b) of the Perfection Certificate,
the filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the North Carolina Secretary of State.

 

14.

With respect to each Grantor organized under the laws of the state of Ohio as
identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the filing
of a Uniform Commercial Code Financing Statement that identifies the Collateral
with the Ohio Secretary of State.

 

15.

With respect to each Grantor organized under the laws of the state of
Pennsylvania as identified on Schedule 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the Pennsylvania Secretary of the Commonwealth.

 

16.

With respect to each Grantor organized under the laws of the state of South
Carolina as identified on Schedule 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the South Carolina Secretary of State.

 

17.

With respect to each Grantor organized under the laws of the state of Texas as
identified on Schedule 1(a) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Collateral with
the Texas Secretary of State.

 

18.

With respect to each Grantor organized under the laws of the state of Virginia
as identified on Schedule 1(b) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Collateral with
the Virginia State Corporation Commission.

 

19.

With respect to each Grantor organized under the laws of the state of West
Virginia as identified on Schedule 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Collateral with the West Virginia Secretary of State.

 

 

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20.

With respect to the Securities Accounts and the Deposit Accounts (other than the
Excluded Accounts), the bank with which such Securities Account and such Deposit
Account are maintained agreeing that it will comply with instructions originated
by the Agent directing disposition of the funds in such Securities Account and
such Deposit Account without further consent of the relevant Grantor; provided
that the Grantors shall not be required to deliver any such agreements on the
Closing Date, but will deliver such agreements as soon as commercially
reasonable thereafter, but in no event later than 90 days following the Closing
Date.

 

21.

With respect to each Grantor that owns registered or applied for Intellectual
Property, the filing of an Intellectual Property Security Agreement that
identifies such Grantor’s registered and applied for Trademarks, Patents and
Copyrights with the United States Patent and Trademark Office or the United
States Copyright Office, as applicable.

 

22.

With respect to the Pledged Collateral (as defined in the Pledge Agreement)
constituting certificated securities, delivery of the certificates representing
such Pledged Collateral to the Agent in registered form, indorsed in blank, by
an effective endorsement or accompanied by undated stock powers with respect
thereto duly indorsed in blank by an effective endorsement.

 

 

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EXHIBIT A

 

Form of Intellectual Property Security Agreement

 

TRADEMARK / PATENT / COPYRIGHT SECURITY AGREEMENT

 

 

This Trademark / Patent / Copyright Security Agreement (the “Agreement”), dated
as of [_______], [____] is made by [     ], a [     ] (the “Grantor”) in favor
of Wilmington Trust, National Association, as Agent (as defined below) for the
benefit of itself, the Secured Parties (as defined below).

 

WHEREAS, the Borrower, Holdings and each of the other Guarantors party thereto
have entered into the Credit Agreement dated as of [●] (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
“Credit Agreement”) with Wilmington Trust, National Association, as
Administrative Agent (in such capacity, the “Administrative Agent”) and the
Lenders party thereto;

 

WHEREAS, the Borrower, Holdings, the Guarantors party thereto, Wilmington Trust,
National Association, in its capacity as Senior Credit Agreement Administrative
Agent (as defined therein), Wilmington Trust, National Association, in its
capacity as Mortgage Tax Collateral Agent (as defined therein) and Wilmington
Trust, National Association, in its capacity as the Junior Joint Collateral
Agent (as defined therein) have entered into the Amended and Restated
Intercreditor Agreement dated as of September 8, 2016 and the Borrower,
Holdings, the Subsidiary Guarantors named therein, Wilmington Trust, National
Association, as Trustee (as defined therein) and Notes Collateral Agent (as
defined therein), Wilmington Trust, National Association, as Senior Credit
Agreement Administrative Agent, Wilmington Trust, National Association, as
Junior Joint Collateral Agent and Wilmington Trust, National Association, as
Mortgage Tax Collateral Agent have entered into the Joinder to the Amended and
Restated Intercreditor Agreement, dated as of July 27, 2017 (as the same may be
amended, supplemented, amended or restated or otherwise modified from time to
time, the “Amended and Restated Intercreditor Agreement”);

 

WHEREAS, the Agent is entering into the Joinder to the Amended and Restated
Intercreditor Agreement dated as of the date hereof, pursuant to which the Agent
becomes party to the Amended and Restated Intercreditor Agreement for the
benefit of itself and the Lenders.

 

WHEREAS, the Loans constitute First-Lien Indebtedness under the Amended and
Restated Intercreditor Agreement;

 

WHEREAS, the Borrower is a member of an affiliated group of companies that
includes Holdings, the Borrower’s parent company, and each other Grantor;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses,
and each Grantor will derive substantial direct and indirect benefit from the
borrowing of Loans; and

 

 

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WHEREAS, pursuant to and under the Credit Agreement and the Security Agreement
dated as of [_], 2018 (the “Security Agreement”) among the Grantors party
thereto (together with any other entity that may become a party thereto) and the
Administrative Agent, in its capacity as collateral agent (in such capacity, the
“Agent”), the Grantor has agreed to enter into this Agreement in order to grant
a security interest to the Agent in certain Intellectual Property as security
for such loans and other obligations as more fully described herein; and

 

NOW, THEREFORE, intending to be legally bound hereby, the parties hereto agree
as follows:

 

1.     Defined Terms. Except as otherwise expressly provided herein, (i)
capitalized terms used in this Agreement shall have the respective meanings
assigned to them in the Security Agreement and (ii) the rules of construction
set forth in Section 1. 2 of the Credit Agreement and the comparable provisions
of any other Loan Documents shall apply to this Agreement. Where applicable and
except as otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code as enacted in New York as amended from time to time (the
“Code”).

 

2.     To secure the full payment and performance of all Secured Obligations,
the Grantor hereby grants to the Agent a security interest in the entire right,
title and interest of such Grantor in and to all of its
[Trademark/Patent/Copyrights], including those set forth on Schedule A;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 2 (and notwithstanding any recording of the Agent’s Lien made in
the U.S. Patent and Trademark Office, U.S. Copyright Office, or other registry
office in any other jurisdiction), this Agreement shall not constitute a grant
of a security interest in any property to the extent that such grant of a
security interest is prohibited by any applicable Law of an Official Body,
requires a consent not obtained of any Official Body pursuant to such Law or is
prohibited by, or constitutes a breach or default under or results in the
termination of or gives rise to any right of acceleration, modification or
cancellation or requires any consent not obtained under, any contract, license,
agreement, instrument or other document evidencing or giving rise to such
property, except to the extent that such Law or the term in such contract,
license, agreement, instrument or other document or similar agreement providing
for such prohibition, breach, default or termination or requiring such consent
is ineffective under applicable Law including Sections 9-406, 9-407, 9-408 or
9-409 of the New York UCC (or any successor provision or provisions); provided,
further, that no security interest shall be granted in any United States
“intent-to-use” trademark or service mark applications unless and until
acceptable evidence of use of the trademark or service mark has been filed with
and accepted by the U.S. Patent and Trademark Office pursuant to Section 1(c) or
Section 1(d) of the Lanham Act (U.S.C. 1051, et seq.), and to the extent that,
and solely during the period in which, the grant of a security interest therein
would impair the validity or enforceability of such “intent-to-use” trademark or
service mark applications under applicable federal Law. After such period and
after such evidence of use has been filed and accepted, the Grantor acknowledges
that such interest in such trademark or service mark applications will become
part of the Collateral. The Agent agrees that, at the Grantor’s reasonable
request and expense, it will provide such Grantor confirmation that the assets
described in this paragraph are in fact excluded from the Collateral during such
limited period only upon receipt of an Officer’s Certificate or an Opinion of
Counsel to that effect.

 

 

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3.     The Grantor covenants and warrants that:

 

(a)     To the knowledge of the Grantor, on the date hereof, all material
Intellectual Property owned by the Grantor is valid, subsisting and unexpired,
has not been abandoned and does not, to the knowledge of the Grantor, infringe
the intellectual property rights of any other Person;

 

(b)     The Grantor is the owner of each item of Intellectual Property listed on
Schedule A, free and clear of any and all Liens or claims of others except for
the Permitted Liens. No financing statement or other public notice with respect
to all or any part of the Collateral is on file or of record in any public
office, except as permitted pursuant to this Agreement or as permitted by the
Credit Agreement and any other applicable Loan Documents;

 

4.     The Grantor agrees that, until all of the Secured Obligations shall have
been indefeasibly satisfied in full, it will not enter into any agreement (for
example, a license agreement) which is inconsistent with the Grantor’s
obligations under this Agreement, without the Agent’s prior written consent
which shall not be unreasonably withheld except that the Grantor may license
technology in the ordinary course of business without the Agent’s consent to
suppliers and customers to facilitate the manufacture and use of the Grantor’s
products.

 

5.     The Agent shall have, in addition to all other rights and remedies given
it by this Agreement and those rights and remedies set forth in the Security
Agreement and the Credit Agreement and any other applicable Loan Documents,
those allowed by applicable Law and the rights and remedies of a secured party
under the Uniform Commercial Code as enacted in any jurisdiction in which the
Intellectual Property may be located and, without limiting the generality of the
foregoing, solely if an Event of Default has occurred and is continuing, the
Agent may immediately, without demand of performance and without other notice
(except as set forth below) or demand whatsoever to the Grantor, all of which
are hereby expressly waived, and without advertisement, sell at public or
private sale or otherwise realize upon, in a city that the Agent shall designate
by notice to the Grantor, the whole or from time to time any part of the
Intellectual Property, or any interest which the Grantor may have therein and,
after deducting from the proceeds of sale or other disposition of the
Intellectual Property all expenses (including fees and expenses for brokers and
attorneys), shall apply the remainder of such proceeds toward the payment of the
Secured Obligations as the Agent, in its sole discretion, shall determine. Any
remainder of the proceeds after payment in full of the Secured Obligations shall
be paid over to the Grantor. Notice of any sale or other disposition of the
Intellectual Property shall be given to the Grantor at least ten (10) days
before the time of any intended public or private sale or other disposition of
the Intellectual Property is to be made, which the Grantor hereby agrees shall
be reasonable notice of such sale or other disposition. At any such sale or
other disposition, the Agent may, to the extent permissible under applicable
Law, purchase the whole or any part of the Intellectual Property sold, free from
any right of redemption on the part of the Grantor, which right is hereby waived
and released. The Agent shall endeavor to provide the Grantor with notice at or
about the time of the exercise of remedies in the preceding sentence, provided
that the failure to provide such notice shall not in any way compromise or
adversely affect the exercise of such remedies or the Agent’s rights hereunder.

 

 

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6.      All of the Agent’s rights and remedies with respect to the Intellectual
Property, whether established hereby, by the Security Agreement or by the Credit
Agreement or any other applicable Loan Documents or by any other agreements or
by Law, shall be cumulative and may be exercised singularly or concurrently. In
the event of any irreconcilable inconsistency in the terms of this Agreement and
the Security Agreement, the Security Agreement shall control.

 

7.      The provisions of this Agreement are severable, and if any clause or
provision shall be held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other jurisdiction, or any clause
or provision of this Agreement in any jurisdiction.

 

8.      The benefits and burdens of this Agreement shall inure to the benefit of
and be binding upon the respective successors and permitted assigns of the
parties, provided, however, that except as permitted by the Credit Agreement and
any other applicable Loan Documents, the Grantor may not assign or transfer any
of its rights or obligations hereunder or any interest herein and any such
purported assignment or transfer shall be null and void.

 

9.      This Agreement and the rights and obligations of the parties under this
agreement shall be governed by, and construed and interpreted in accordance
with, the Law of the State of New York.

 

10.     The Grantor (i) hereby irrevocably submits to the nonexclusive general
jurisdiction of the courts of the State of New York and the courts of the United
States of America for the Southern District of New York, or any successor to
said court (hereinafter referred to as the “New York Courts”) for purposes of
any suit, action or other proceeding which relates to this Agreement or any
other Loan Document, (ii) to the extent permitted by applicable Law, hereby
waives and agrees not to assert by way of motion, as a defense or otherwise in
any such suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of the New York Courts, that such suit, action or proceeding
is brought in an inconvenient forum, that the venue of such suit, action or
proceeding is improper, or that this Agreement or any Loan Document may not be
enforced in or by the New York Courts, (iii) hereby agrees not to seek, and
hereby waives, any collateral review by any other court, which may be called
upon to enforce the judgment of any of the New York Courts, of the merits of any
such suit, action or proceeding or the jurisdiction of the New York Courts, and
(iv) waives personal service of any and all process upon it and consents that
all such service of process be made by certified or registered mail addressed as
provided in Section 13 hereof or at such other address of which the Agent shall
have been notified pursuant thereto and service so made shall be deemed to be
completed upon actual receipt thereof. Nothing herein shall limit any Secured
Party’s right to bring any suit, action or other proceeding against the Grantor
or any of any of the Grantor’s assets or to serve process on the Grantor by any
means authorized by Law.

 

 

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11.     This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.

 

12.     THE GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY A
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

13.     All notices, requests and demands to or upon the Agent or the Grantor
shall be effected in the manner provided for in Section 9.02 of the Credit
Agreement and the related provisions of any other applicable Loan Documents.

 

14.     In the performance of its obligations, powers and rights hereunder, the
Agent shall be entitled to the rights, benefits, privileges, powers and
immunities afforded to it as Agent under the Credit Agreement and the other
applicable Loan Documents. The Agent shall be entitled to refuse to take or
refrain from taking any discretionary action or exercise any discretionary
powers set forth in the Security Agreement unless it has received with respect
thereto written direction of the Borrower or Required Lenders in accordance with
the Credit Agreement. Notwithstanding anything to the contrary contained herein,
the Agent shall have no responsibility for the creation, perfection, priority,
sufficiency or protection of any liens securing Secured Obligations (including,
but not limited to, no obligation to prepare, record, file, re-record or re-file
any financing statement, continuation statement or other instrument in any
public office). The permissive rights and authorizations of the Agent hereunder
shall not be construed as duties. The Agent shall be entitled to exercise its
powers and duties hereunder through designees, specialists, experts or other
appointees selected by it in good faith.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Trademark / Patent /
Copyright Security Agreement to be duly executed and delivered as of the date
first above written.

 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Agent

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

 

 

 

 

 

Grantor:

 

[Name of Grantor]

                    By:        

Name:

Title:

 

 

 

Signature Page to Security Agreement

 

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Schedule A

 

 

 

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EXHIBIT B

 

Form of Joinder Agreement

 

This JOINDER AND ASSUMPTION AGREEMENT is made ___________ by
___________________________, a __________________________ (the “New Grantor”).

 

Reference is made to (i) the Credit Agreement dated as of [●] (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
“Credit Agreement”) among K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), Hovnanian Enterprises, Inc., a Delaware
corporation (“Holdings”), each of the other Guarantors party thereto, each of
the Lenders party thereto and Wilmington Trust, National Association, as
Administrative Agent (in such capacity, the “Administrative Agent”), (ii) the
Joinder to the Credit Agreement dated [__] pursuant to which the New Grantor
became party to the Credit Agreement as a Guarantor, (iii) the Security
Agreement dated as of [●] by each of the Grantors (as defined therein) in favor
of the Administrative Agent, in its capacity as collateral agent (in such
capacity, the “Agent”) for the benefit of itself and the Lenders (as the same
may be modified, supplemented, amended or restated, the “Security Agreement”),
(iv) the Pledge Agreement dated as of [●] by each of the Pledgors (as defined
therein) in favor of the Agent for the benefit of itself and the Lenders (as the
same may be modified, supplemented, amended or restated, the “Pledge
Agreement”), (v) the Amended and Restated Intercreditor Agreement, dated as of
September 8, 2016 among the Borrower, Holdings, the guarantors party thereto,
Wilmington Trust, National Association, in its capacity as Senior Credit
Agreement Administrative Agent (as defined therein), Wilmington Trust, National
Association, in its capacity as Mortgage Tax Collateral Agent (as defined
therein) and Wilmington Trust, National Association, in its capacity as the
Junior Joint Collateral Agent (as defined therein) and the Joinder to the
Amended and Restated Intercreditor Agreement, dated as of July 27, 2017 among
the Borrower, Holdings, the subsidiary guarantors named therein, Wilmington
Trust, National Association, as Trustee (as defined therein) and Notes
Collateral Agent (as defined therein), Wilmington Trust, National Association,
as Senior Credit Agreement Administrative Agent, Wilmington Trust, National
Association, as Junior Joint Collateral Agent and Wilmington Trust, National
Association, as Mortgage Tax Collateral Agent (as the same may be amended,
supplemented, amended or restated or otherwise modified from time to time,
collectively the “Amended and Restated Intercreditor Agreement”); and (vi) the
Joinder to the Amended and Restated Intercreditor Agreement dated [●], pursuant
to which the Administrative Agent became party to the Amended and Restated
Intercreditor Agreement for the benefit of itself and the Lenders party to the
Credit Agreement. Capitalized terms used but not otherwise defined herein shall
have the meaning set forth in the Credit Agreement or the Security Agreement or,
if not defined therein, the Pledge Agreement.

 

 

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The New Grantor hereby agrees that effective as of the date hereof it hereby is,
and shall be deemed to be, a Grantor under the Security Agreement and the
Amended and Restated Intercreditor Agreement and a Pledgor under the Pledge
Agreement and agrees that from the date hereof until the payment in full of the
Secured Obligations and the performance of all other obligations of the Borrower
under the Loan Documents, New Grantor has assumed the obligations of a Grantor
and Pledgor under, and New Grantor shall perform, comply with and be subject to
and bound by, jointly and severally, each of the terms, provisions and waivers
of, the Security Agreement, the Pledge Agreement, and each of the other Loan
Documents which are stated to apply to or are made by a Grantor. Without
limiting the generality of the foregoing, the New Grantor hereby represents and
warrants that each of the representations and warranties set forth in the
Security Agreement and the Pledge Agreement is true and correct as to New
Grantor on and as of the date hereof as if made on and as of the date hereof by
New Grantor.

 

New Grantor hereby makes, affirms, and ratifies in favor of the Secured Parties
and the Agent, the Security Agreement, the Pledge Agreement and each of the
other Loan Documents given by the Grantors to the Agent. In furtherance of the
foregoing, New Grantor shall execute and deliver or cause to be executed and
delivered at any time and from time to time such further instruments and
documents and do or cause to be done such further acts as may be reasonably
necessary to carry out more effectively the provisions and purposes of this
Joinder Agreement (including, for the avoidance of doubt, the actions described
in Section 10.04 of the Credit Agreement).

 

New Grantor has attached hereto Schedule 1 that supplements Schedules 1(a),
2(b), 2(c), 4, 5(a), and 5(b) to the Perfection Certificate and certifies, as of
the date hereof, that the supplemental information set forth therein has been
prepared by the New Grantor in substantially the form of the equivalent
Schedules to the Perfection Certificate, and is complete and correct in all
material respects.

 

IN WITNESS WHEREOF, the New Grantor has duly executed this Joinder Agreement and
delivered the same to the Agent for the benefit of the Secured Parties, as of
the date and year first written above.

 

[NAME OF NEW GRANTOR]

By:____________________________

Title:__________________________

 

 

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Schedule 13

 

 

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3 Schedules 1(a), 2(b), 2(c), 4, 5(a) and 5(b) of the Perfection Certificate to
be updated as necessary.

 

 

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EXHIBIT C

 

FORM OF PERFECTION CERTIFICATE

 

[Please see attached.]

 

 

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EXHIBIT J-2

 

Form of PLEDGE AGREEMENT

 

[See attached.]

 

 

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PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT, dated as of [●] (as restated, amended, modified or
supplemented from time to time, the “Agreement”), is given by K. HOVNANIAN
ENTERPRISES, INC., a California corporation (the “Borrower”), HOVNANIAN
ENTERPRISES, INC., a Delaware corporation (“Holdings”), each of the undersigned
parties listed on SCHEDULE A hereto AND EACH OF THE OTHER PERSONS AND ENTITIES
THAT BECOME BOUND HEREBY FROM TIME TO TIME BY JOINDER, ASSUMPTION OR OTHERWISE
(together with the Borrower and Holdings, each a “Pledgor” and collectively the
“Pledgors”), as a Pledgor of the equity interests in the Companies (as defined
herein), as more fully set forth herein, to WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Administrative Agent in its capacity as collateral agent (in
such capacity, the “Agent”), for the benefit of itself and the Lenders.

 

WHEREAS, the Borrower, Holdings, and each of the other Pledgors have entered
into the Credit Agreement dated as of [●] (as amended, supplemented, amended and
restated or otherwise modified from time to time, the “Credit Agreement”) with
Wilmington Trust, National Association, as Administrative Agent, and the Lenders
from time to time party thereto;

 

WHEREAS, the Borrower, Holdings, the Guarantors party thereto, Wilmington Trust,
National Association, in its capacity as Senior Credit Agreement Administrative
Agent (as defined therein), Wilmington Trust, National Association, in its
capacity as Mortgage Tax Collateral Agent (as defined therein) and Wilmington
Trust, National Association, in its capacity as the Junior Joint Collateral
Agent (as defined therein) have entered into the Amended and Restated
Intercreditor Agreement dated as of September 8, 2016 and the Borrower,
Holdings, the Subsidiary Guarantors named therein, Wilmington Trust, National
Association, as Trustee (as defined therein) and Notes Collateral Agent (as
defined therein), Wilmington Trust, National Association, as Senior Credit
Agreement Administrative Agent, Wilmington Trust, National Association, as
Junior Joint Collateral Agent and Wilmington Trust, National Association, as
Mortgage Tax Collateral Agent have entered into the Joinder to the Amended and
Restated Intercreditor Agreement dated as of July 27, 2017 (as amended,
supplemented, amended or restated or otherwise modified from time to time, the
“Amended and Restated Intercreditor Agreement”);

 

WHEREAS, the Administrative Agent is entering into the Joinder to the Amended
and Restated Intercreditor Agreement dated as of the date hereof, pursuant to
which the Agent becomes party to the Amended and Restated Intercreditor
Agreement for the benefit of itself and the Lenders.

 

WHEREAS, the Loans constitute First-Lien Indebtedness under the Amended and
Restated Intercreditor Agreement;

 

WHEREAS, in connection with the Credit Agreement, the Pledgors are required to
execute and deliver this Agreement to secure their obligations with respect to
the Credit Agreement and the Loans; and

 

WHEREAS, each Pledgor owns the outstanding capital stock, shares, securities,
member interests, partnership interests and other ownership interests of the
Companies.

 

 

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NOW, THEREFORE, intending to be legally bound hereby, the parties hereto hereby
agree as follows:

 

1.     Defined Terms.

 

(a)     Except as otherwise expressly provided herein, capitalized terms used in
this Agreement (including the recitals above) shall have the respective meanings
assigned to them in the Credit Agreement. Where applicable and except as
otherwise expressly provided herein, terms used herein (whether or not
capitalized) that are defined in Article 8 or Article 9 of the Uniform
Commercial Code as enacted in the State of New York, as amended from time to
time (the “Code”), and are not otherwise defined herein or in the Credit
Agreement shall have the same meanings herein as set forth therein.

 

(b)     “Agreement” shall mean this Pledge Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time.

 

(c)      “Collateral” shall have the meaning ascribed to such term in Article 2
of the Security Agreement.

 

(d)     “Company” shall mean individually each Restricted Subsidiary, and
“Companies” shall mean, collectively, all Restricted Subsidiaries.

 

(e)     “Guarantors” shall mean the collective reference to each Pledgor other
than the Borrower.

 

(f)     “Law” shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree, bond, judgment, authorization or approval, lien or
award of or settlement agreement with any Official Body.

 

(g)     “Loan Document” shall mean collectively (a) the Credit Agreement and the
Collateral Documents and (b) any other related document or instrument executed
and delivered pursuant to any Loan Document described in clause (a) above
evidencing or governing any Secured Obligations as the same may be amended,
restated or otherwise modified from time to time.

 

(h)     “Margin Stock” shall have the meaning specified in Section 4(a).

 

(i)     “Official Body” shall mean any national, federal, state, local or other
governmental or political subdivision or any agency, authority, board, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

 

(j)     “Perfection Certificate” shall mean with respect to any Pledgor, a
certificate substantially in the form of Schedule C to the Security Agreement,
completed and supplemented with the schedules contemplated thereby, and signed
by an officer of such Pledgor.

 

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(k)     “Pledged Collateral” shall mean and include the following with respect
to each Company: (i) the capital stock, shares, securities, investment property,
member interests, partnership interests, warrants, options, put rights, call
rights, similar rights, and all other ownership or participation interests, in
any Company and K. Hovnanian JV Holdings, L.L.C. owned or held by any Pledgor at
any time including those in any Company hereafter formed or acquired, and
(ii) all rights and privileges pertaining thereto, including without limitation,
all present and future securities, shares, capital stock, investment property,
dividends, distributions and other ownership interests receivable in respect of
or in exchange for any of the foregoing, all present and future rights to
subscribe for securities, shares, capital stock, investment property or other
ownership interests incident to or arising from ownership of any of the
foregoing, all present and future cash, interest, stock or other dividends or
distributions paid or payable on any of the foregoing, and all present and
future books and records (whether paper, electronic or any other medium)
pertaining to any of the foregoing, including, without limitation, all stock
record and transfer books and (iii) whatever is received when any of the
foregoing is sold, exchanged, replaced or otherwise disposed of, including all
proceeds, as such term is defined in the Code, thereof; provided, however, that
notwithstanding any of the other provisions set forth in this Agreement, this
Agreement shall not constitute a grant of a security interest in, and the
Pledged Collateral shall not include, (A) any property or assets constituting
“Excluded Property” (as defined in the Credit Agreement) or (B) any property to
the extent that such grant of a security interest is prohibited by any
applicable Law of an Official Body, requires a consent not obtained of any
Official Body pursuant to such Law or is prohibited by, or constitutes a breach
or default under or results in the termination of or gives rise to any right of
acceleration, modification or cancellation or requires any consent not obtained
under, any contract, license, agreement, instrument or other document evidencing
or giving rise to such property or any applicable shareholder or similar
agreement, except to the extent that such Law or the term in such contract,
license, agreement, instrument or other document or shareholder or similar
agreement providing for such prohibition, breach, default or termination or
requiring such consent is ineffective under applicable Law including Sections
9-406, 9-407, 9-408 or 9-409 of the New York UCC (or any successor provision or
provisions). The Agent agrees that, at any Pledgor’s reasonable request and
expense, it will provide such Pledgor confirmation that the assets described in
this paragraph are in fact excluded from the Pledged Collateral during such
limited period only upon receipt of an Officers’ Certificate and an Opinion of
Counsel to that effect. Notwithstanding the foregoing, in the event that Rule
3-16 of Regulation S-X under the Securities Act requires (or is replaced with
another rule or regulation, or any other law, rule or regulation is adopted,
which would require) the filing with the SEC of separate financial statements
(including if the Loans were “Securities” under the Securities Act) of the
Borrower, any Guarantor or K. Hovnanian JV Holdings, L.L.C., then the capital
stock or other securities of the Borrower, such Guarantor or K. Hovnanian JV
Holdings, L.L.C., as applicable, shall automatically be deemed released and not
to be and not to have been part of the Pledged Collateral but only to the extent
necessary to not be subject to such requirement. In such event, this Agreement
may be amended or modified, without the consent of any Lender upon the Agent’s
receipt of a written authorization from the Borrower stating that such amendment
is permitted hereunder, which the Agent shall be entitled to conclusively rely
upon, to the extent necessary to evidence the release of the lien created hereby
on the shares of capital stock or other securities that are so deemed to no
longer constitute part of the Pledged Collateral.

 

(l)     “Secured Obligations” shall mean 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.

 

(m)     “Secured Parties” shall mean, collectively, the Administrative Agent,
the 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 of the Credit
Agreement.

 

(n)     “Security Agreement” shall mean the Security Agreement dated as [●]
among the Borrower, Holdings and the Grantors party thereto and the Agent, as
amended, supplemented, amended and restated or otherwise modified from time to
time.

 

3

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(o)     “Security Documents” shall have the meaning specified in Section 3.

 

2.     Grant of Security Interests.

 

(a)     To secure on a first priority perfected basis the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of all Secured Obligations, in full, each Pledgor hereby grants to
the Agent a continuing first priority security interest under the Code in and
hereby pledges to the Agent, in each case for its benefit and the ratable
benefit of the Secured Parties, all of such Pledgor’s now existing and hereafter
acquired or arising right, title and interest in, to, and under the Pledged
Collateral, whether now or hereafter existing and wherever located.

 

(b)     Upon the execution and delivery of this Agreement, each Pledgor shall
deliver to the Agent (or with a Person designated by the Agent to hold the
Pledged Collateral on behalf of the Agent) in pledge, all of such Pledgor’s
certificates, instruments or other documents comprising or evidencing the
Pledged Collateral, together with undated stock powers or similar transfer
documents signed in blank by such Pledgor. In the event that any Pledgor should
ever acquire or receive certificates, securities, instruments or other documents
evidencing the Pledged Collateral, such Pledgor shall deliver to the Agent in
pledge, all such certificates, securities, instruments or other documents which
evidence the Pledged Collateral.

 

3.     Further Assurances.

 

Prior to or concurrently with the execution of this Agreement, and thereafter at
any time and from time to time, each Pledgor (in its capacity as a Pledgor and
in its capacity as a Company) shall execute and deliver to the Agent all
financing statements, continuation financing statements, assignments,
certificates and documents of title, affidavits, reports, notices, schedules of
account, letters of authority, further pledges, powers of attorney and all other
documents (collectively, the “Security Documents”) as may be required under
applicable law to perfect and continue perfecting and to create and maintain the
first priority status of the Agent’s security interest in the Pledged Collateral
and to fully consummate the transactions contemplated under this Agreement. Each
Pledgor authorizes the Agent to record any one or more financing statements
under the applicable Uniform Commercial Code with respect to the pledge and
security interest herein granted. Each Pledgor hereby irrevocably makes,
constitutes and appoints the Agent (and any of the Agent’s officers or employees
or agents designated by the Agent) as such Pledgor’s true and lawful attorney
with power to sign the name of such Pledgor on all or any of the Security
Documents which, pursuant to applicable law, must be executed, filed, recorded
or sent in order to perfect or continue perfecting the Agent’s security interest
in the Pledged Collateral in any jurisdiction. Such power, being coupled with an
interest, is irrevocable until all of the Secured Obligations have been
indefeasibly paid, in cash, in full.

 

4.     Representations and Warranties.

 

Each Pledgor hereby, jointly and severally, represents and warrants to the Agent
as follows:

 

(a)     The Pledged Collateral of such Pledgor does not include Margin Stock.
“Margin Stock” as used in this clause (a) shall have the meaning ascribed to
such term by Regulation U of the Board of Governors of the Federal Reserve
System of the United States;

 

(b)     The Pledgor has and will continue to have (or, in the case of
after-acquired Pledged Collateral, at the time such Pledgor acquires rights in
such Pledged Collateral, will have and will continue to have), title to its
Pledged Collateral, free and clear of all Liens other than Permitted Liens;

 

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(c)     The capital stock, shares, securities, member interests, partnership
interests and other ownership interests constituting the Pledged Collateral of
such Pledgor have been duly authorized and validly issued to such Pledgor, are
fully paid and nonassessable and constitute one hundred percent (100%) of the
issued and outstanding capital stock, member interests or partnership interests
of each Company;

 

(d)     Upon the completion of the filings and other actions specified on
Schedule B attached hereto, the security interests in the Pledged Collateral
granted hereunder by such Pledgor shall be valid, perfected and of first
priority, subject to the Lien of no other Person (other than Permitted Liens);

 

(e)     There are no restrictions upon the transfer of the Pledged Collateral
(other than restrictions that have been waived pursuant to Section 24 hereof)
and such Pledgor has the power and authority and unencumbered right to transfer
the Pledged Collateral owned by such Pledgor free of any Lien (other than
Permitted Liens) and without obtaining the consent of any other Person;

 

(f)     Such Pledgor has all necessary power to execute, deliver and perform
this Agreement;

 

(g)     This Agreement has been duly executed and delivered and constitutes the
valid and legally binding obligation of each Pledgor, enforceable in accordance
with its terms, except to the extent that enforceability of this Agreement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting the enforceability of creditors’ rights generally
or limiting the right of specific performance;

 

(h)     Neither the execution or delivery by each Pledgor of this Agreement, nor
the compliance with the terms and provisions hereof, will violate any provision
of any Law or conflict with or result in a breach of any of the terms,
conditions or provisions of any judgment, order, injunction, decree or ruling of
any Official Body to which any Pledgor or any of its property is subject or any
provision of any material agreement or instrument to which Pledgor is a party or
by which such Pledgor or any of its property is bound;

 

(i)     Each Pledgor’s exact legal name is as set forth on such Pledgor’s
signature page hereto;

 

(j)     The jurisdiction of incorporation, formation or organization, as
applicable, of each Pledgor is as set forth on Schedule 1(a) and Schedule 1(b)
to the Perfection Certificate;

 

(k)     Such Pledgor’s chief executive office is as set forth on Schedule 2(a)
to the Perfection Certificate; and

 

(l)     All rights of such Pledgor in connection with its ownership of each of
the Companies are evidenced and governed solely by the stock certificates,
instruments or other documents (if any) evidencing ownership of each of the
Companies and the organizational documents of each of the Companies, and no
shareholder, voting, or other similar agreements are applicable to any of the
Pledged Collateral or any of any Pledgor’s rights with respect thereto, and no
such certificate, instrument or other document provides that any member
interest, partnership interest or other intangible ownership interest in any
limited liability company or partnership constituting Pledged Collateral is a
“security” within the meaning of and subject to Article 8 of the Code, except
pursuant to Section 5(f) hereof; and the organizational documents of each
Company contain no restrictions (other than restrictions that have been waived
pursuant to Section 24 hereof) on the rights of shareholders, members or
partners other than those that normally would apply to a company organized under
the laws of the jurisdiction of organization of each of the Companies.

 

5

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5.     General Covenants.

 

Each Pledgor, jointly and severally, hereby covenants and agrees as follows:

 

(a)     Each Pledgor shall do all reasonable acts that may be necessary and
appropriate to maintain, preserve and protect the Pledged Collateral; and each
Pledgor shall be responsible for the risk of loss of, damage to, or destruction
of the Pledged Collateral owned by such Pledgor, unless such loss is the result
of the gross negligence or willful misconduct of the Agent;

 

(b)     Each Pledgor shall appear in and defend any action or proceeding of
which such Pledgor is aware which could reasonably be expected to affect, in any
material respect, any Pledgor’s title to, or the Agent’s interest in, the
Pledged Collateral or the proceeds thereof; provided, however, that with the
prior written consent of the Agent, such Pledgor may settle such actions or
proceedings with respect to the Pledged Collateral;

 

(c)     The books and records of each of the Pledgors and Companies, as
applicable, shall disclose the Agent’s security interest in the Pledged
Collateral;

 

(d)     To the extent, following the date hereof, any Pledgor acquires capital
stock, shares, securities, member interests, partnership interests, investment
property and other ownership interests of any of the Companies or any other
Restricted Subsidiary or any of the rights, property or securities, shares,
capital stock, member interests, partnership interests, investment property or
any other ownership interests described in the definition of Pledged Collateral
with respect to any of the Companies or any other Restricted Subsidiary, all
such ownership interests shall be subject to the terms hereof and, upon such
acquisition, shall be deemed to be hereby pledged to the Agent; and each Pledgor
thereupon, in confirmation thereof, shall promptly deliver all such securities,
shares, capital stock, member interests, partnership interests, investment
property and other ownership interests (to the extent such items are
certificated), to the Agent, together with undated stock powers or other similar
transfer documents, and all such control agreements, financing statements, and
any other documents necessary to implement the provisions and purposes of this
Agreement and any other documents as the Agent may request related thereto;

 

(e)     Each Pledgor shall notify the Agent in writing within thirty (30)
calendar days after any change in any Pledgor’s chief executive office address,
legal name, or state of incorporation, formation or organization; and

 

(f)     During the term of this Agreement, no Pledgor shall permit or cause any
Company which is a limited liability company or a limited partnership to (and no
Pledgor (in its capacity as Company) shall) issue any certificates evidencing
the ownership interests of such Company or elect to treat any ownership
interests as securities that are subject to Article 8 of the Code unless such
securities are immediately delivered to the Agent upon issuance, together with
all evidence of such election and issuance and all Security Documents as set
forth in Section 3 hereof.

 

6.     Other Rights With Respect to Pledged Collateral.

 

In addition to the other rights with respect to the Pledged Collateral granted
to the Agent hereunder, at any time and from time to time, after and during the
continuation of an Event of Default, the Agent, at its option and at the expense
of the Pledgors, may, subject to the Amended and Restated Intercreditor
Agreement, any collateral agency agreement and any other intercreditor agreement
entered into in connection with Indebtedness permitted under the Credit
Agreement, (a) transfer into its own name, or into the name of its nominee, all
or any part of the Pledged Collateral, thereafter receiving all dividends,
income or other distributions upon the Pledged Collateral; (b) take control of
and manage all or any of the Pledged Collateral; (c) apply to the payment of any
of the Secured Obligations, whether any be due and payable or not, any moneys,
including cash dividends and income from any Pledged Collateral, now or
hereafter in the hands of the Agent or any Affiliate of the Agent, on deposit or
otherwise, belonging to any Pledgor, as the Agent in its sole discretion shall
determine; and (d) do anything which any Pledgor is required but fails to do
hereunder. The Agent shall endeavor to provide the Borrower with notice at or
about the time of the exercise of its rights pursuant to the preceding sentence,
provided that the failure to provide such notice shall not in any way compromise
or adversely affect the exercise of any rights or remedies hereunder.

 

6

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7.     Additional Remedies Upon Event of Default.

 

Upon the occurrence of any Event of Default and while such Event of Default
shall be continuing, the Agent shall have, in addition to all rights and
remedies of a secured party under the Code or other applicable Law, and in
addition to its rights under Section 6 above and under the other Loan Documents,
the following rights and remedies, in each case subject to the Amended and
Restated Intercreditor Agreement, any collateral agency agreement and any other
intercreditor agreement entered into in connection with Indebtedness permitted
under the Credit Agreement:

 

(a)     The Agent may, after ten (10) days’ advance notice to a Pledgor, sell,
assign, give an option or options to purchase or otherwise dispose of such
Pledgor’s Pledged Collateral or any part thereof at public or private sale, at
any of the Agent’s offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Agent may deem commercially
reasonable. Each Pledgor agrees that ten (10) days’ advance notice of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Agent shall not be obligated
to make any sale of Pledged Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Pledgor recognizes that the Agent may be compelled to resort to one or more
private sales of the Pledged Collateral to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities,
shares, capital stock, member interests, partnership interests, investment
property or ownership interests for their own account for investment and not
with a view to the distribution or resale thereof.

 

(b)     The proceeds of any collection, sale or other disposition of the Pledged
Collateral, or any part thereof, shall, after the Agent has made all deductions
of expenses, including, without limitation, reasonable attorneys’ fees and
disbursements as provided in Section 9.05 of the Credit Agreement, and other
expenses incurred in connection with repossession, collection, sale or
disposition of such Pledged Collateral or in connection with the enforcement of
the Agent’s rights with respect to the Pledged Collateral, including in any
insolvency, bankruptcy or reorganization proceedings, be applied against the
Secured Obligations, whether or not all the same be then due and payable, as
provided in the Credit Agreement. The Agent shall incur no liability as a result
of the sale of the Pledged Collateral, or any part thereof, at any private sale
pursuant to this Section 7 conducted in accordance with the requirements of
applicable laws and provided such sale shall not have resulted from the gross
negligence, willful misconduct or fraud of the Agent. Each Pledgor hereby waives
any claims against the Agent and the other Secured Parties arising by reason of
the fact that the price at which the Pledged Collateral may have been sold at
such a private sale was less than the price that might have been obtained at a
public sale or was less than the aggregate amount of the Secured Obligations,
even if the Agent accepts the first offer received and does not offer the
Pledged Collateral to more than one offeree, provided that such private sale is
conducted in accordance with applicable laws and this Agreement. Each Pledgor
hereby agrees that in respect of any sale of any of the Pledged Collateral
pursuant to the terms hereof, the Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable laws, or in
order to obtain any required approval of the sale or of the purchaser by any
governmental authority or official, nor shall the Agent be liable or accountable
to any Pledgor for any discount allowed by reason of the fact that such Pledged
Collateral is sold in compliance with any such limitation or restriction.

 

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8.     Agent’s Duties.

 

The powers conferred on the Agent hereunder are solely to protect its interest
(on behalf of itself and the Lenders) in the Pledged Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Pledged Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty as to any
Pledged Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Pledged Collateral.

 

9.     Additional Pledgors.

 

It is anticipated that additional persons may from time to time become
Subsidiaries of the Borrower or a Guarantor, each of whom will be required to
join this Agreement as a Pledgor hereunder to the extent that such new
Subsidiary is required to become a Guarantor under the Credit Agreement and owns
equity interests in any other Person that is a Restricted Subsidiary. It is
acknowledged and agreed that such new Subsidiaries of the Borrower or a
Guarantor may become Pledgors hereunder and will be bound hereby simply by
executing and delivering to the Agent a Supplemental Guarantee (in the form of
Exhibit I to the Credit Agreement) and a Joinder Agreement in the form of
Exhibit B to the Security Agreement. No notice of the addition of any Pledgor
shall be required to be given to any pre-existing Pledgor, and each Pledgor
hereby consents thereto.

 

10.     No Waiver; Cumulative Remedies.

 

No failure to exercise, and no delay in exercising, on the part of the Agent,
any right, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any further exercise thereof or the exercise of any other right, power
or privilege. No waiver of a single Event of Default shall be deemed a waiver of
a subsequent Event of Default. The remedies herein provided are cumulative and
not exclusive of any remedies provided under the other Loan Documents or by Law,
rule or regulation and the Agent may enforce any one or more remedies hereunder
successively or concurrently at its option. Each Pledgor waives any right to
require the Agent to proceed against any other Person or to exhaust any of the
Pledged Collateral or other security for the Secured Obligations or to pursue
any remedy in the Agent’s power.

 

11.     Waivers.

 

Each Pledgor hereby waives any and all defenses which any Pledgor may now or
hereafter have based on principles of suretyship, impairment of collateral, or
the like and each Pledgor hereby waives any defense to or limitation on its
obligations under this Agreement arising out of or based on any event or
circumstance referred to in the immediately preceding Section hereof. Without
limiting the generality of the foregoing and to the fullest extent permitted by
applicable law, each Pledgor hereby further waives each of the following:

 

(i)     All notices, disclosures and demands of any nature which otherwise might
be required from time to time to preserve intact any rights against such
Pledgor, including the following: any notice of any event or circumstance
described in the immediately preceding Section hereof; any notice required by
any law, regulation or order now or hereafter in effect in any jurisdiction; any
notice of nonpayment, nonperformance, dishonor, or protest under any Loan
Document or any of the Secured Obligations; any notice of the incurrence of any
Secured Obligation; any notice of any default or any failure on the part of such
Pledgor or the Borrower or any other Person to comply with any Loan Document or
any of the Secured Obligations or any requirement pertaining to any direct or
indirect security for any of the Secured Obligations; and any notice or other
information pertaining to the business, operations, condition (financial or
otherwise), or prospects of the Borrower or any other Person;

 

8

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(ii)     Any right to any marshalling of assets, to the filing of any claim
against such Pledgor or the Borrower or any other Person in the event of any
bankruptcy, insolvency, reorganization, or similar proceeding, or to the
exercise against such Pledgor or the Borrower, or any other Person of any other
right or remedy under or in connection with any Loan Document or any of the
Secured Obligations or any direct or indirect security for any of the Secured
Obligations; any requirement of promptness or diligence on the part of the
Agent, the Administrative Agent, the Lenders or any other Person; any
requirement to exhaust any remedies under or in connection with, or to mitigate
the damages resulting from default under, any Loan Document or any of the
Secured Obligations or any direct or indirect security for any of the Secured
Obligations; any benefit of any statute of limitations; and any requirement of
acceptance of this Agreement or any other Loan Document, and any requirement
that any Pledgor receive notice of any such acceptance; and

 

(iii)     Any defense or other right arising by reason of any Law now or
hereafter in effect in any jurisdiction pertaining to election of remedies
(including anti-deficiency laws, “one action” laws, or the like), or by reason
of any election of remedies or other action or inaction by the Agent, the
Administrative Agent or the Lenders (including commencement or completion of any
judicial proceeding or nonjudicial sale or other action in respect of collateral
security for any of the Secured Obligations), which results in denial or
impairment of the right of the Agent, the Administrative Agent or the Lenders to
seek a deficiency against the Borrower or any other Person or which otherwise
discharges or impairs any of the Secured Obligations.

 

12.     Assignment.

 

All rights of the Agent under this Agreement shall inure to the benefit of its
successors and assigns. All obligations of each Pledgor shall bind its
successors and assigns; provided, however, that no Pledgor may assign or
transfer any of its rights and obligations hereunder or any interest herein, and
any such purported assignment or transfer shall be null and void.

 

13.     Severability.

 

Any provision (or portion thereof) of this Agreement which shall be held invalid
or unenforceable shall be ineffective without invalidating the remaining
provisions hereof (or portions thereof).

 

14.     Governing Law.

 

This Agreement and the rights and obligations of the parties under this
Agreement shall be governed by, and construed and interpreted in accordance
with, the Law of the State of New York, except to the extent the Law of the
State of New York provides for perfection of the security interests or the
remedies hereunder in respect of any Pledged Collateral are to be governed by
the law of a jurisdiction other than the State of New York.

 

9

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15.     Notices.

 

All notices, requests, demands, directions and other communications
(collectively, “notices”) given to or made upon any party hereto under the
provisions of this Agreement shall be given or made as set forth in Section 9.02
of the Credit Agreement, and the Pledgors (in their capacity as Pledgors and in
their capacity as Companies) shall simultaneously send to the Agent any notices
such Pledgor or such Company delivers to each other regarding any of the Pledged
Collateral.

 

16.     Specific Performance.

 

Each Pledgor acknowledges and agrees that, in addition to the other rights of
the Agent hereunder and under the other Loan Documents, because the Agent’s
remedies at law for failure of any Pledgor to comply with the provisions hereof
relating to the Agent’s rights (i) to inspect the books and records related to
the Pledged Collateral, (ii) to receive the various notifications any Pledgor is
required to deliver hereunder, (iii) to obtain copies of agreements and
documents as provided herein with respect to the Pledged Collateral, (iv) to
enforce the provisions hereof pursuant to which any Pledgor has appointed the
Agent its attorney-in-fact, and (v) to enforce the Agent’s remedies hereunder,
would be inadequate and that any such failure would not be adequately
compensable in damages, such Pledgor agrees that each such provision hereof may
be specifically enforced.

 

17.     Voting Rights in Respect of the Pledged Collateral.

 

So long as no Event of Default shall occur and be continuing under the Credit
Agreement, each Pledgor may exercise any and all voting and other consensual
rights pertaining to the Pledged Collateral or any part thereof for any purpose
not inconsistent with the terms of this Agreement or the other Loan Documents;
provided, however, that such Pledgor will not exercise or will refrain from
exercising any such voting and other consensual right pertaining to the Pledged
Collateral, as the case may be, if such action would have a material adverse
effect on the value of any Pledged Collateral. At any time and from time to
time, after and during the continuation of an Event of Default, no Pledgor shall
be permitted to exercise any of its respective voting and other consensual
rights whatsoever pertaining to the Pledged Collateral or any part thereof;
provided, however, in addition to the other rights with respect to the Pledged
Collateral granted to the Agent, the Administrative Agent and the Lenders for
the benefit of itself and the Lenders, hereunder, at any time and from time to
time, after and during the continuation of an Event of Default and subject to
the Amended and Restated Intercreditor Agreement, any collateral agency
agreement and any other intercreditor agreement entered into in connection with
Indebtedness permitted under the Credit Agreement, the Agent may exercise any
and all voting and other consensual rights of each and every Pledgor pertaining
to the Pledged Collateral or any part thereof. The Agent shall endeavor to
provide the Borrower with notice at or about the time of the exercise by Agent
of the voting or other consensual rights of such Pledgor pertaining to the
Pledged Collateral, provided that the failure to provide such notice shall not
in any way compromise or adversely affect the exercise of Agent’s rights or
remedies hereunder. Without limiting the generality of the foregoing and in
addition thereto, Pledgors shall not vote to enable, or take any other action to
permit, any Company to: (i) issue any other ownership interests of any nature or
to issue any other securities, investment property or other ownership interests
convertible into or granting the right to purchase or exchange for any other
ownership interests of any nature of any such Company, except as permitted by
the Credit Agreement; or (ii) enter into any agreement or undertaking
restricting the right or ability of such Pledgor or the Agent to sell, assign or
transfer any of the Pledged Collateral without the Agent’s prior written
consent, except as permitted by the Credit Agreement.

 

10

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18.     Consent to Jurisdiction.

 

Each Pledgor (as a Pledgor and as a Company) hereby irrevocably and
unconditionally:

 

(a)     submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

 

(b)     consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

 

(c)     agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Pledgor at its
address referred to in Schedule 9.02 of the Credit Agreement or at such other
address of which the Agent shall have been notified pursuant thereto;

 

(d)     agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

 

(e)     waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

 

19.     Waiver of Jury Trial.

 

EXCEPT AS PROHIBITED BY LAW, EACH PLEDGOR (AS A PLEDGOR AND AS A COMPANY), EACH
OF THE COMPANIES AND THE AGENT, ON BEHALF OF ITSELF, THE ADMINISTRATIVE AGENT
AND THE LENDERS, HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS OR TRANSACTIONS RELATING
THERETO.

 

20.     Entire Agreement; Amendments.

 

(a)     This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements
relating to a grant of a security interest in the Pledged Collateral by any
Pledgor to the Agent.

 

(b)     Except as expressly provided in (i) Section 9.01 of the Credit
Agreement, (ii) Section 9 with respect to additional Pledgors, (iii) Section 21
with respect to the release of Pledgors and Companies, (iv) Section 10.03 of the
Credit Agreement and (v) Section 8.01 of the Security Agreement, this Agreement
may not be amended or supplemented except by a writing signed by the Agent and
the Pledgors.

 

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21.     Automatic Release of Related Collateral and Equity.

 

At any time after the initial execution and delivery of this Agreement to the
Agent, the Pledgors and their respective Pledged Collateral and the Companies
and K. Hovnanian JV Holdings, L.L.C. may be released from this Agreement in
accordance with and pursuant to Section 10.03 of the Credit Agreement. No notice
of such release of any Pledgor or such Pledgor’s Pledged Collateral shall be
required to be given to any other Pledgor and each Pledgor hereby consents
thereto.

 

22.     Counterparts; Telecopy Signatures.

 

This Agreement may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument. Each Pledgor acknowledges and agrees that a telecopy or
electronic (i.e., “e-mail” or “portable document folio” (“pdf”)) transmission to
the Agent of the signature pages hereof purporting to be signed on behalf of any
Pledgor shall constitute effective and binding execution and delivery hereof by
such Pledgor.

 

23.     Construction.

 

The rules of construction contained in Section 1.02 of the Credit Agreement
apply to this Agreement.

 

24.     Waiver of Restrictions.

 

Each Pledgor agrees that any restriction on transfer (if any) of the Pledged
Collateral contained in the organizational documents to which such Pledgor is a
party, is hereby waived, and further agrees that any such restriction does not
apply to the grant of security interest made hereunder or to any transfer of the
Pledged Collateral to a Secured Party or any third party in connection with an
exercise of remedies hereunder.

 

25.     Agent Privileges, Powers and Immunities.

 

In the performance of its obligations, powers and rights hereunder, the Agent
shall be entitled to the rights, benefits, privileges, powers and immunities
afforded to it as Administrative Agent under the Credit Agreement. The Agent
shall take or refrain from taking any discretionary action or exercise any
discretionary powers set forth in this Agreement in accordance with, and subject
to, the Credit Agreement. Notwithstanding anything to the contrary contained
herein and notwithstanding anything contained in Section 9-207 of the New York
UCC, the Agent shall have no responsibility for the creation, perfection,
priority, sufficiency or protection of any liens securing Secured Obligations
(including, but not limited to, no obligation to prepare, record, file,
re-record or re-file any financing statement, continuation statement or other
instrument in any public office). The permissive rights and authorizations of
the Agent hereunder shall not be construed as duties. The Agent shall be
entitled to exercise its powers and duties hereunder through designees,
specialists, experts or other appointees selected by it in good faith.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have
caused this Agreement to be duly executed as of the date first above written.

 

 

WILMINGTON TRUST, NATIONAL

ASSOCIATION, as Agent

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

 

 

[Signature Page to Pledge Agreement]

 

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Pledgors:

 

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

       

 

By:

 

 

 

Name:

Title:

 

 

 

 

 

          HOVNANIAN ENTERPRISES, INC.                     By:        

Name:

Title:

                   

K. HOV IP, II, INC.

                    By:        

Name:

Title:

                   

ON BEHALF OF EACH OTHER ENTITY NAMED

IN SCHEDULE A HERETO

                            By:        

Name:

Title:

 

 

 

[Signature Page to Pledge Agreement]

 

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A-1

 

SCHEDULE A – LIST OF ENTITIES1

 

 

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1 To be updated.

 

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B-1

 

SCHEDULE B

 

Actions to Perfect

 

1.

With respect to each Pledgor organized under the laws of the state of Arizona as
identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the filing
of a Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the Arizona Secretary of State.

 

2.

With respect to each Pledgor organized under the laws of the state of California
as identified on Schedule 1(a) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the California Secretary of State.

 

3.

With respect to each Pledgor organized under the laws of the state of Delaware
as identified on Schedule 1(a) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the Delaware Secretary of State.

 

4.

With respect to each Pledgor organized under the laws of the District of
Columbia as identified on Schedule 1(a) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the District of Columbia Recorder of Deeds.

 

5.

With respect to each Pledgor organized under the laws of the state of Florida as
identified on Schedule 1(b) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the Florida Secured Transaction Registry.

 

6.

With respect to each Pledgor organized under the laws of the state of Georgia as
identified on Schedule 1(b) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the Office of the Clerk of Superior Court of any County of
Georgia.

 

7.

With respect to each Pledgor organized under the laws of the state of Illinois
as identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the Illinois Secretary of State.

 

8.

With respect to each Pledgor organized under the laws of the state of Kentucky
as identified on Schedule 1(b) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the Kentucky Secretary of State.

 

9.

With respect to each Pledgor organized under the laws of the state of Maryland
as identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the Maryland State Department of Assessments and
Taxation.

 

10.

With respect to each Pledgor organized under the laws of the state of Minnesota
as identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the Minnesota Secretary of State.

 

11.

With respect to each Pledgor organized under the laws of the state of New Jersey
as identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the New Jersey Division of Commercial Recording.

 

 

--------------------------------------------------------------------------------

 

B-2

 

12.

With respect to each Pledgor organized under the laws of the state of New York
as identified on Schedule 1(a) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the New York Secretary of State.

 

13.

With respect to each Pledgor organized under the laws of the state of North
Carolina as identified on Schedules 1(a) and 1(b) of the Perfection Certificate,
the filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the North Carolina Secretary of State.

 

14.

With respect to each Pledgor organized under the laws of the state of Ohio as
identified on Schedules 1(a) and 1(b) of the Perfection Certificate, the filing
of a Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the Ohio Secretary of State.

 

15.

With respect to each Pledgor organized under the laws of the state of
Pennsylvania as identified on Schedule 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the Pennsylvania Secretary of the Commonwealth.

 

16.

With respect to each Pledgor organized under the laws of the state of South
Carolina as identified on Schedule 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the South Carolina Secretary of State.

 

17.

With respect to each Pledgor organized under the laws of the state of Texas as
identified on Schedule 1(a) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the Texas Secretary of State.

 

18.

With respect to each Pledgor organized under the laws of the state of Virginia
as identified on Schedule 1(b) of the Perfection Certificate, the filing of a
Uniform Commercial Code Financing Statement that identifies the Pledged
Collateral with the Virginia State Corporation Commission.

 

19.

With respect to each Pledgor organized under the laws of the state of West
Virginia as identified on Schedule 1(b) of the Perfection Certificate, the
filing of a Uniform Commercial Code Financing Statement that identifies the
Pledged Collateral with the West Virginia Secretary of State.

 

20.

With respect to the Pledged Collateral constituting certificated securities,
delivery of the certificates representing such Pledged Collateral to the Agent
in registered form, indorsed in blank, by an effective endorsement or
accompanied by undated stock powers with respect thereto duly indorsed in blank
by an effective endorsement.

 

 

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EXHIBIT K

 

Form of SUPPLEMENTAL GUARANTEE

 

 

 

 

 

 

 

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

 

 

--------------------------------------------------------------------------------

 

 

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 January 29,
2018 (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.

 

 

--------------------------------------------------------------------------------

 

 

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 L

 

Form of NOTE PURCHASE AGREEMENT

 

[See attached]

 

 

--------------------------------------------------------------------------------

 

 

NOTE PURCHASE AGREEMENT

 

by and among

 

K. HOVNANIAN ENTERPRISES, INC.,

 

as Issuer

 

HOVNANIAN ENTERPRISES, INC.,

 

as Parent Guarantor,

 

THE OTHER GUARANTORS PARTY HERETO

 

and

 

THE PURCHASERS PARTY HERETO

 

 

 

 

 

 

 

[ ]

 

 

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TABLE OF CONTENTS

 

 

ARTICLE I DEFINED TERMS

2

1.01

Defined Terms

2

1.02

Terms Generally

5

1.03

Times of Day

5

     

ARTICLE II SALE AND PURCHASE OF THE ADDITIONAL 10.5% NOTES

5

2.01

Authorization, Purchase and Sale of the Additional 10.5% Notes

5

     

ARTICLE III TERMS OF THE 10.5% NOTES

6

3.01

Indenture

6

     

ARTICLE IV CLOSING; CONDITIONS

6

4.01

Closing

6

4.02

Closing Conditions

6

     

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND HOVNANIAN

8

5.01

Good Standing of the Issuer, Hovnanian and its Subsidiaries

8

5.02

Capital Stock

8

5.03

Indenture

8

5.04

The Additional 10.5% Notes and the Additional Guarantees

8

5.05

Collateral Documents

9

5.06

Absence of Further Requirements

9

5.07

Absence of Defaults and Conflicts Resulting from the Transactions

9

5.08

Authorization of this Agreement

9

5.09

Environmental Laws and ERISA

10

5.10

Financial Statements

10

5.11

Investment Company Act

10

5.12

Regulations T,U,X

10

5.13

Sanctions

10

5.14

Class of Securities Not Listed

10

5.15

No Registration

11

5.16

No General Solicitation; No Directed Selling Efforts

11

5.17

Accounting Controls

11

     

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

11

6.01

Nature of Purchase

11

6.02

No Registration

12

6.03

Power and Authority

12

6.04

Authorization

12

6.05

No Conflicts

12

6.06

Governmental Consents

12

6.07

Information

13

6.08

Investment Experience

13

6.09

Source of Funds

13

 

i

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ARTICLE VII COVENANTS

14

7.01

Mortgage Amendments

14

     

ARTICLE VIII EXPENSES

14

8.01

Expenses

14

     

ARTICLE IX MISCELLANEOUS

14

9.01

Amendments, Consents and Waivers

14

9.02

Notices

14

9.03

Binding Effect; Counterparts

15

9.04

Successors and Assigns

15

9.05

Applicable Law

16

9.06

Entire Agreement

16

9.07

Severability

16

9.08

Headings

17

9.09

Several Obligations of the Purchasers

17

9.10

No Personal Liability

17

 

 

Schedules

 

Schedule I – Schedule of Guarantors

Schedule II – Schedule of Purchasers

Schedule III – Closing Date Collateral Documents

 

Exhibits

 

Exhibit A – Indenture, dated as of July 27, 2017, and any supplemental indenture
thereto as of the Closing Date

Exhibit B – Form of Supplemental Indenture

Exhibit C – Form of Confirmation and Acknowledgment (Amended and Restated
Intercreditor Agreement and Second Amended and Restated Mortgage Tax Collateral
Agency Agreement)

Exhibit D – Form of Confirmation and Acknowledgment (Collateral Agency
Agreement)

 

ii

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NOTE PURCHASE AGREEMENT

 

THIS NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of [ ], by and among
K. Hovnanian Enterprises, Inc., a California corporation (the “Issuer”),
Hovnanian Enterprises, Inc., a Delaware Corporation (“Hovnanian” or the “Parent
Guarantor”), the other guarantors listed on Schedule I hereto (each a
“Subsidiary Guarantor” and, together with the Parent Guarantor, the
“Guarantors”), and each of the other persons listed on the signature pages
attached hereto (each a “Purchaser” and together, the “Purchasers”).

 

Reference is made to that certain Indenture, dated as of July 27, 2017 (as
amended and supplemented to the date hereof, the “Existing 10.5% Notes
Indenture”), among the Issuer, Hovnanian, as guarantor, the other guarantors
party thereto, and Wilmington Trust, National Association, as trustee (in such
capacity, the “Trustee”) and collateral agent (in such capacity, the “Collateral
Agent”), under which the 10.000% Senior Secured Notes due 2022 and 10.500%
Senior Secured Notes due 2024 (the “Existing 10.5% Notes”) were issued.

 

W I T N E S E T H

 

WHEREAS, the Issuer has previously issued and sold $400,000,000 aggregate
principal amount of the Issuer’s Existing 10.5% Notes on July 27, 2017 pursuant
to the Existing 10.5% Notes Indenture;

 

WHEREAS, pursuant to that certain Commitment Letter, dated as of December 28,
2017, by and among the Issuer, Hovnanian and GSO Capital Partners LP (“GSO”), on
behalf of itself and certain funds managed, advised or sub-advised by it (the
“Commitment Letter”), GSO on its behalf and on behalf of the Purchasers has
agreed, among other things, to purchase, upon the terms and subject to the
conditions set forth therein and herein, $25,000,000 aggregate principal amount
of the Issuer’s 10.500% Senior Secured Notes due 2024 (the “Additional 10.5%
Notes” and, together with the Existing 10.5% Notes, the “10.5% Notes”);

 

WHEREAS, the Issuer has duly authorized an additional issuance of the Additional
10.5% Notes;

 

WHEREAS, the Additional 10.5% Notes shall be “Additional Notes” as defined in
and for all purposes under the Existing 10.5% Notes Indenture; and

 

WHEREAS, the Issuer and each of the Guarantors has duly authorized the execution
and delivery of this Agreement and the supplemental indenture to the Existing
10.5% Notes Indenture (the “Additional 10.5% Notes Supplemental Indenture”) in
the form attached hereto as Exhibit B, in connection with sale and issuance of
the Additional 10.5% Notes and the Additional Guarantees (as defined below) to
the Purchasers.

 

NOW, THEREFORE, in consideration of the mutual promises made herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

 

1

--------------------------------------------------------------------------------

 

 

ARTICLE I

DEFINED TERMS

 

1.01     Defined Terms. For the purposes of this Agreement, the following terms
have the meanings set forth below.

 

“10.5% Notes” shall have the meaning set forth in the preamble to this
Agreement.

 

“Additional Collateral Documents” means (i) the Acknowledgment and Confirmation
(Amended and Restated Intercreditor Agreement and Second Amended and Restated
Mortgage Tax Collateral Agency Agreement), substantially in the form attached
hereto as Exhibit C, (ii) Acknowledgment and Confirmation (Collateral Agency
Agreement), substantially in the form attached hereto as Exhibit D and (iii) the
Mortgage Amendments.

 

“Additional Guarantees” means the guarantees of the Additional 10.5% Notes
provided by the Guarantors pursuant to the Indenture.

 

“Additional 10.5% Notes” shall have the meaning set forth in the preamble to
this Agreement.

 

“Additional 10.5% Notes Supplemental Indenture” has the meaning set forth in the
preamble to this Agreement.

 

“Agreement” shall have the meaning set forth in the preamble to this Agreement.

 

“Amended and Restated Intercreditor Agreement” shall mean the Amended and
Restated Intercreditor Agreement, dated as of September 8, 2016, by and among
Hovnanian, the Issuer, each other guarantor from time to time party thereto,
Wilmington Trust, National Association, in its capacity as Senior Credit
Agreement Administrative Agent (as defined therein), Wilmington Trust, National
Association, in its capacity as Mortgage Tax Collateral Agent (as defined
therein) and Wilmington Trust, National Association, in its capacity as the
Junior Joint Collateral Agent (as defined therein), among others, together with
the Joinder to the Amended and Restated Intercreditor Agreement, dated as of
July 27, 2017, among the Issuer, Hovnanian, the subsidiary guarantors named
therein, Wilmington Trust, National Association, as Trustee and Collateral
Agent, Wilmington Trust, National Association, as Senior Credit Agreement
Administrative Agent, Wilmington Trust, National Association, as Junior Joint
Collateral Agent and Wilmington Trust, National Association, as Mortgage Tax
Collateral Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

 

“Business Day” means any day that is not a Saturday, a Sunday, or a day on which
banks are required or permitted to be closed in the City of New York.

 

“Closing” shall have the meaning set forth in Section 4.01.

 

“Closing Date” shall have the meaning set forth in Section 4.01.

 

2

--------------------------------------------------------------------------------

 

 

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

 

“Collateral” shall have the meaning set forth in the Collateral Documents.

 

“Collateral Agent” shall have the meaning set forth in the preamble to this
Agreement.

 

“Collateral Agency Agreement” means the Collateral Agency Agreement, dated as of
July 27, 2017 among the Issuer, Hovnanian, Wilmington Trust, National
Association, as Collateral Agent and Wilmington Trust, National Association as
the Collateral Agent (as defined therein), as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Collateral Documents” means, collectively, the Existing Collateral Documents
and the Additional Collateral Documents.

 

“Commitment Letter” shall have the meaning set forth in the preamble to this
Agreement.

 

“DTC” shall have the meaning set forth in Section 4.01(a).

 

“Enforceability Exceptions” shall have the meaning set forth in Section 5.03.

 

“Environmental Laws” shall have the meaning set forth in Section 5.09.

 

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

 

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

 

“Existing Collateral Documents” means the documents set forth on Schedule IIIA
and Schedule IIIB hereto.

 

“Existing 10.5% Notes” shall have the meaning set forth in the preamble to this
Agreement.

 

“Existing 10.5% Notes Indenture” shall have the meaning set forth in the
preamble to this Agreement.

 

“Existing Mortgages” shall mean the Mortgages with respect to which the Issuer
is advised by its local counsel in the jurisdiction where such Mortgages are
recorded that no further action is necessary to secure the Additional 10.5%
Notes by the properties subject to such Mortgages.

 

“GAAP” means generally accepted accounting principles in the United States of
America.

 

“Guarantees” means the guarantees provided by the Guarantors pursuant to the
Indenture, including the Additional Guarantees.

 

“Guarantors” shall have the meaning set forth in the preamble to this Agreement.

 

3

--------------------------------------------------------------------------------

 

 

“Historical Financial Statements” shall have the meaning set forth in Section
5.10.

 

“Indenture” shall mean the Existing 10.5% Notes Indenture, as amended and
supplemented as of the date hereof and by the Additional 10.5% Notes
Supplemental Indenture.

 

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

 

“Issuer” shall have the meaning set forth in the preamble to this Agreement.

 

“Lien” shall have the meaning set forth in Section 5.02.

 

“Material Adverse Effect” shall have the meaning set forth in Section 5.07.

 

“Mortgage Amendments” shall have the meaning set forth in Section 7.01.

 

“Mortgages” shall mean mortgages, deeds of trust and deeds securing the 10.5%
Notes.

 

“OFAC” means the U.S. Department of Treasury’s Office of Foreign Assets Control.

 

“Permitted Liens” shall have the meaning given in the Indenture.

 

“Person” shall have the meaning set forth in Section 5.13.

 

“Public Filings” means Hovnanian’s annual report on Form 10-K for the most
recently completed fiscal year, each subsequently filed quarterly report on Form
10-Q and current report on Form 8-K and all other documents filed by Hovnanian
with the SEC since the beginning of the most recently completed fiscal year
under Section 13(a), 13(c), 14 and 15(d) of the Exchange Act on or prior to the
Closing Date.

 

“Purchaser(s)” shall have the meaning set forth in the preamble to this
Agreement.

 

“Purchase Price” shall have the meaning set forth in Section 2.01.

 

“QIBs” means a qualified institutional buyer as defined in rule 144A under the
Securities Act.

 

“Regulation S” means Regulation S promulgated under the Securities Act.

 

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

 

“Sanctions” shall have the meaning set forth in Section 5.13.

 

“Sanctioned Country” shall have the meaning set forth in Section 5.13.

 

“SEC” means the United States Securities and Exchange Commission.

 

4

--------------------------------------------------------------------------------

 

 

“Second Amended and Restated Mortgage Tax Collateral Agency Agreement” means the
Second Amended and Restated Mortgage Tax Collateral Agency Agreement, dated as
of July 27, 2017, among the Issuer, Hovnanian, each other guarantor from time to
time party thereto, Wilmington Trust, National Association, in its capacity as
the Senior Credit Agreement Administrative Agent (as defined therein),
Wilmington Trust, National Association, in its capacity as the Mortgage Tax
Collateral Agent (as defined therein), Wilmington Trust, National Association,
as Collateral Agent and Wilmington Trust, National Association, in its capacity
as the Junior Joint Collateral Agent (as defined therein), as the same may be
amended, restated, supplemented or otherwise modified from time to time.

 

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

 

“Security Agreement” means the Security Agreement, dated as of July 27, 2017, by
and among the Issuer, Hovnanian, the guarantors named therein, and Wilmington
Trust, National Association, as collateral agent, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

 

“Transaction Documents” shall have the meaning set forth in Section 5.06.

 

“Trustee” shall have the meaning set forth in the preamble to this Agreement.

 

1.02     Terms Generally. The definitions in Section 1.01 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall.” The words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision of this Agreement unless the context shall otherwise require. All
references herein to Articles, Sections, paragraphs, clauses, subclauses,
Exhibits and Schedules shall be deemed references to Articles, Sections,
paragraphs, clauses and subclauses of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require.

 

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

 

ARTICLE II     

SALE AND PURCHASE OF THE ADDITIONAL 10.5% NOTES

 

2.01     Authorization, Purchase and Sale of the Additional 10.5% Notes. On the
basis of the representations, warranties, covenants and agreements and subject
to the terms and conditions set forth herein, the Issuer agrees to issue and
sell to the Purchasers, and subject to the conditions set forth herein, each of
the Purchasers agrees, severally and not jointly, to purchase from the Issuer,
the aggregate principal amount of the Additional 10.5% Notes set forth opposite
its name on Schedule II hereto at a purchase price (the “Purchase Price”), for
each $1,000 principal amount of Additional 10.5% Notes, that would imply a yield
to maturity equal to (a) the volume weighted average yield to maturity
(calculated based on the yield to maturity during the thirty (30) calendar day
period ending on one Business Day prior to the Closing Date, “VWAY”) for the
10.5% Notes, minus (b) 0.50% (the “Required Yield”). Illustrative calculation of
the Purchase Price is attached as Schedule IV hereto. The obligations of the
Purchasers to purchase and pay for the Additional 10.5% Notes hereunder are
several and not joint and no Purchaser shall have any liability to any Person
(as defined below) for the performance or non-performance by any other Purchaser
in connection therewith; provided, however, that if any Purchaser defaults on
its obligation to purchase the Additional 10.5% Notes that it has agreed to
purchase hereunder, the Issuer shall have the right to terminate this Agreement
without any liability on its or the Guarantors’ part or the part of the
non-defaulting Purchasers. Nothing contained herein shall relieve a defaulting
Purchaser of any liability it may have to the Issuer, the Guarantors or any
non-defaulting Purchaser for damages caused by its default.

 

5

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ARTICLE III     

TERMS OF THE 10.5% NOTES

 

3.01     Indenture. The Additional 10.5% Notes shall be issued pursuant to, and
be issued as Global Notes (as defined in the Indenture) and be in the form
prescribed by, the Indenture.

 

ARTICLE IV     

CLOSING; CONDITIONS

 

4.01     Closing. The closing of the purchase and sale of the Additional 10.5%
Notes described in Section 2.01 (the “Closing”) shall take place at the offices
of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, NY 10017 at
10:00 a.m. New York City time on January 15, 2019 (or such later date within 5
Business Days as mutually agreed by the parties working in good faith) (the time
and date of such closing are called the “Closing Date”). At the Closing:

 

(a)     the Issuer shall deliver, or cause to be delivered, to the Purchasers
one or more certificates in global form for the Additional 10.5% Notes, in each
case, for the account of such Purchaser or its designated member at The
Depository Trust Company (the “DTC”) in the principal amount (in minimum
denominations of $2,000 and $1,000 principal amount in excess thereof) set forth
opposite the name of such Purchaser on Schedule II against payment by each
Purchaser identified on Schedule II by wire transfer of immediately available
funds to an account designated by the Issuer in writing at least three Business
Days prior to the Closing Date, the amount payable set forth opposite the name
of such Purchaser on Schedule II; and

 

(b)     the Issuer shall deliver to the Purchasers the other instruments and
documents required to be delivered to them pursuant to the provisions of Section
4.02.

 

4.02     Closing Conditions. The obligation of each Purchaser to purchase the
Additional 10.5% Notes on the Closing Date is subject at the time of the making
of such purchase solely to the satisfaction or waiver in accordance with Section
9.01 of the following conditions:

 

(a)     Representations and Warranties. The representations and warranties set
forth in this Agreement (other than Section 5.09, Section 5.10 and Section 5.17)
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.

 

6

--------------------------------------------------------------------------------

 

 

(b)     Additional 10.5% Notes Supplemental Indenture. The Purchasers (or their
counsel) shall have received duly executed copies of the Additional 10.5% Notes
Supplemental Indenture.

 

(c)     Legal Opinions. The Purchasers shall have received on the Closing Date
an opinion of (i) Simpson Thacher & Bartlett LLP, counsel for the Issuer and the
Parent Guarantor, dated as of the Closing Date and consistent in all material
respects with the opinion delivered to the initial purchasers in connection with
the purchase of the Existing 10.5% Notes and (ii) Michael Discafani,
Vice-President, Corporate Counsel and Secretary of the Issuer and the Parent
Guarantor, dated as of the Closing Date and consistent in all material respects
with the opinion delivered to the initial purchasers in connection with the
purchase of the Existing 10.5% Notes.

 

(d)     Closing Certificates. The Purchasers shall have received a certificate
of each of the Issuer and the Guarantors, dated the Closing Date and executed by
their respective Secretary or Assistant Secretary, consistent in all material
respects with the certificate delivered to the initial purchasers in connection
with the purchase of the Existing 10.5% Notes.

 

(e)     Compliance Certificate. The Purchasers shall have received a
certificate, signed by the chief executive officer, the president, any vice
president or the chief financial officer of Hovnanian, dated the Closing Date,
stating that the conditions specified in this Section 4.02 have been fulfilled.

 

(f)     Performance. The Issuer and each Guarantor have performed and complied
with all the agreements and satisfied all the conditions on their part to be
performed or satisfied pursuant to this Agreement at or prior to the Closing
Date, in each case in all material respects.

 

(g)     Collateral Documents. On the Closing Date, (i) the Existing Collateral
Documents shall remain in full force and effect at such time and the Purchasers
shall have received a copy of the Existing Collateral Document set forth on
Schedule IIIA hereto, (ii) the Additional Collateral Documents other than the
Mortgage Amendments shall have been executed by the parties thereto, and (iii)
the Purchasers shall have received copies of the Existing Collateral Documents
set forth on Schedule IIIB hereto.

 

7

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ARTICLE V     

REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND HOVNANIAN

 

The Issuer and Hovnanian, jointly and severally, represent and warrant to, and
agree with each Purchaser that as of the Closing Date:

 

5.01     Good Standing of the Issuer, Hovnanian and its Subsidiaries. Each of
the Issuer, Hovnanian and the Subsidiary Guarantors 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.

 

5.02     Capital Stock. All outstanding shares of capital stock of the Issuer
and Hovnanian 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 Hovnanian, as
described in the Public Filings. All of the outstanding shares of capital stock
of each of Hovnanian’s direct and indirect subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable and such
shares that are owned by Hovnanian are owned by Hovnanian, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature (each, a
“Lien”) other than Liens securing obligations (A) as described in the Public
Filings and (B) Permitted Liens.

 

5.03     Indenture. The Existing 10.5% Notes Indenture has been duly authorized,
executed and delivered by the Issuer and each Guarantor, and the Additional
10.5% Notes Supplemental Indenture has been duly authorized by the Issuer and
each Guarantor. When the Additional 10.5% Notes Supplemental Indenture has been
duly executed and delivered by the Issuer and each Guarantor, and, assuming that
the Indenture is a valid and binding obligation of the Trustee and the
Collateral Agent, the Indenture will be, a valid and binding agreement of the
Issuer and each Guarantor, enforceable against the Issuer and each Guarantor 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
“Enforceability Exceptions”).

 

5.04     The Additional 10.5% Notes and the Additional Guarantees. The
Additional 10.5% Notes have been duly authorized and, on the Closing Date, will
have been validly executed and delivered by the Issuer. When the Additional
10.5% Notes have been issued, executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Purchasers in
accordance with the terms of this Agreement, the Additional 10.5% Notes will be
entitled to the benefits of the Indenture, and will be valid and binding
obligations of the Issuer, enforceable in accordance with their terms except as
the enforceability thereof may be limited by the Enforceability Exceptions. Each
Additional Guarantee to be endorsed on the Additional 10.5% Notes by each
Guarantor has been duly authorized by such Guarantor; when the Additional 10.5%
Notes have been issued, executed and authenticated in accordance with the
Indenture and delivered to and paid for by the Purchasers in accordance with the
terms of this Agreement, the Additional Guarantee of each Guarantor endorsed
thereon will be entitled to the benefits of the Indenture and will be the valid
and binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as the enforceability thereof may be limited
by the Enforceability Exceptions.

 

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5.05     Collateral Documents. Each of the Existing Collateral Documents (to the
extent applicable) has been duly authorized, executed and delivered by the
Issuer (if it is a party thereto) and the applicable Guarantors that are parties
thereto; on the Closing Date, the Additional Collateral Documents to be entered
into on the Closing Date will have been duly executed and delivered by the
Issuer (if it is a party thereto) and each Guarantor that is a party thereto;
and the Collateral Documents constitute or will constitute, as applicable, valid
and binding obligations of the Issuer and Guarantors parties thereto,
enforceable in accordance with their respective terms except as the
enforceability thereof may be limited by the Enforceability Exceptions. The
Collateral Documents, after giving effect to the Additional Collateral
Documents, create valid and perfected security interests in or mortgage liens on
the Collateral to which they relate, subject to no prior Liens other than
Permitted Liens.

 

5.06     Absence of Further Requirements. The execution, delivery and
performance of this Agreement, the Additional 10.5% Notes Supplemental
Indenture, the Additional 10.5% Notes, the Additional Guarantees and the
Additional Collateral Documents (collectively, the “Transaction Documents”) by
the Issuer and each of the Guarantors, as applicable, will not require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency except for (i) such filings as may be
required under the securities or Blue Sky laws of the various states and (ii)
the recording of any Mortgage Amendments, and any other filing or recording as
may be necessary to perfect the interest in the Collateral pursuant to the
Collateral Documents.

 

5.07     Absence of Defaults and Conflicts Resulting from the Transactions. The
execution, delivery and performance of the Transaction Documents by the Issuer
and each of the Guarantors, as applicable, compliance by the Issuer and each of
the Guarantors 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 Issuer or any Guarantor, (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 Issuer or Hovnanian and its subsidiaries,
taken as a whole, to which the Issuer or the Guarantors is a party or by which
the Issuer or the Guarantors 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 Issuer, Hovnanian or any of its subsidiaries or their
respective property, or (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 Issuer, Hovnanian or any of its subsidiaries is a party or by which
the Issuer, Hovnanian or any of its subsidiaries or their respective property is
bound, other than as contemplated by the Transaction Documents, except in the
case of clauses (ii), (iii) and (iv), 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 on the business, prospects, financial condition or results of operations
of Hovnanian and its subsidiaries, taken as a whole (a “Material Adverse
Effect”).

 

5.08     Authorization of this Agreement. This Agreement has been duly
authorized, executed and delivered by the Issuer, Hovnanian and each other
Guarantor and is the legal, valid and binding obligation of the Issuer,
Hovnanian and each other Guarantor, enforceable against the Issuer, Hovnanian
and each other Guarantor in accordance with the terms hereof except as the
enforceability thereof may be limited by the Enforceability Exceptions.

 

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5.09     Environmental Laws and ERISA. Except as disclosed in the Public
Filings, neither the Issuer, Hovnanian 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 Issuer and Hovnanian, 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.

 

5.10     Financial Statements. The historical financial statements, together
with related notes, included in Hovnanian’s annual reports on Form 10-K for the
latest completed fiscal year prior to the Closing Date (collectively, the
“Historical Financial Statements”), (1) were prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as may be
disclosed therein) and (2) present fairly the consolidated financial position,
results of operations and changes in financial position of Hovnanian and its
subsidiaries, on the basis stated therein and at the respective dates or for the
respective periods to which they apply.

 

5.11     Investment Company Act. Each of the Issuer and the Guarantors is not
and, after giving effect to the sale of the Additional 10.5% Notes and the
application of the net proceeds thereof, will not be, an “investment company,”
as such term is defined in the Investment Company Act.

 

5.12     Regulations T,U,X. Neither the Issuer nor any Guarantor nor 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
issuance and sale of the Additional Notes to violate Regulation T, Regulation U
or Regulation X of the Board of Governors of the Federal Reserve System.

 

5.13     Sanctions. (c) Neither the Issuer or Hovnanian and its subsidiaries,
nor any director or officer thereof, nor, to the Issuer’s or Hovnanian’s
knowledge, any employee or agent of the Issuer or Hovnanian and its
subsidiaries, is an individual or entity (“Person”) that is, or is 50% or more
owned by one or more Persons that is: (A) the target of any sanctions
administered or enforced by OFAC (“Sanctions”), or (B) located, organized or
resident in Crimea, Cuba, Iran, North Korea, Sudan and Syria (each, a
“Sanctioned Country”); and

 

(ii)     The Issuer will not, directly or indirectly, use the proceeds of the
sale of the Additional 10.5% 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.

 

5.14     Class of Securities Not Listed. When the Additional 10.5% Notes and the
Additional Guarantees are issued and delivered pursuant to this Agreement, none
of the Additional 10.5% Notes or the Additional Guarantees will be of the same
class (within the meaning of Rule 144A) as any security of the Issuer or
Hovnanian that is listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United States automated
inter-dealer quotation system.

 

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5.15     No Registration. No registration under the Securities Act of the
Additional 10.5% Notes or the Additional Guarantees is required for the sale of
the Additional 10.5% Notes and the Additional Guarantees to the Purchasers in
the manner contemplated by this Agreement, assuming the accuracy of the
Purchasers’ representations and warranties and agreements set forth in Article
VI hereof; and it is not necessary to qualify an indenture in respect of the
10.5% Notes under the Trust Indenture Act of 1939, as amended.

 

5.16     No General Solicitation; No Directed Selling Efforts. Neither the
Issuer, nor any Guarantor, nor any of their respective affiliates, nor any
person acting on its or their behalf (i) has, within the six-month period prior
to the date hereof, offered or sold in the United States or to any U.S. person
(as such terms are defined in Regulation S under the Securities Act) the
Additional 10.5% Notes or any security of the same class or series as the
Additional 10.5% Notes, (ii) has offered or will offer or sell the Additional
10.5% Notes (A) in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) or (B) by
means of any directed selling efforts within the meaning of Rule 902(c) of
Regulation S or (iii) has, directly or indirectly, solicited any offer to buy,
sold, or offered to sell any security which is or would be integrated with the
sale of the Additional 10.5% Notes in a manner that would require the Additional
10.5% Notes to be registered under the Securities Act.

 

5.17     Accounting Controls. The Issuer and Hovnanian and its subsidiaries (i)
maintain systems of internal control over financial reporting (as such term is
defined in Rule 13a-15(f) under the Exchange Act) that comply with the
requirements of the Exchange Act and have been designed by, or under the
supervision of, their principal executive and principal financial officers, or
persons performing similar functions, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP and Hovnanian’s
internal control over financial reporting is effective in all material respects
to perform the functions for which it was established and Hovnanian is not aware
of any material weaknesses in its internal control over financial reporting.

 

ARTICLE VI     

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

 

Each Purchaser, severally for itself only and not with respect to any other
Purchaser, hereby represents and warrants to the Issuer and each of the
Guarantors that:

 

6.01     Nature of Purchase. It is acquiring the Additional 10.5% Notes for
investment, solely for its own account (or for the account of those for whom or
for which, as the case may be, it is acting as investment advisor, sub-advisor,
manager or in a similar capacity) and not with a view to, or for resale in
connection with, the distribution thereof in violation of applicable securities
laws. Such Purchaser will not resell, transfer, assign or distribute the
Additional 10.5% Notes acquired by it, except in compliance with this Agreement,
the registration requirements of the Securities Act, and applicable state
securities laws or pursuant to an available exemption therefrom.

 

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6.02     No Registration. Such Purchaser understands that it must bear the
economic risk of its investment for an indefinite period of time because the
Additional 10.5% Notes will not be registered under the Securities Act or any
applicable state securities laws and may not be resold unless subsequently
registered under the Securities Act or unless an exemption from such
registration is available. Such Purchaser further understands that the exemption
from registration afforded by Rule 144 depends on the satisfaction of various
conditions, and that, if applicable, Rule 144 may afford the basis for sales
only in limited amounts. Such Purchaser acknowledges that the Issuer is relying
on the representations and warranties of such Purchaser in this Article VI and
such Purchaser agrees to notify any subsequent purchaser of the Additional 10.5%
Notes from it of the resale restrictions referred to herein, as applicable. Such
Purchaser, also acknowledges that there is no established public market for the
Additional 10.5% Notes and there can be no assurance that there will be any
public market for the Additional 10.5% Notes in the foreseeable future. Each
Purchaser acknowledges that the Additional 10.5% Notes shall bear legends upon
issuance and as and when required by the Indenture.

 

6.03     Power and Authority. Such Purchaser has all requisite power and
authority to enter into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under, this Agreement.

 

6.04     Authorization. The execution and delivery of this Agreement and the
performance of its obligations hereunder have been duly authorized by all
necessary action on its part. This Agreement is the legally valid and binding
obligation of it and enforceable against it in accordance with its terms, except
as enforceability may be limited by the Enforceability Exceptions.

 

6.05     No Conflicts. The execution, delivery and performance of this Agreement
by such Purchaser, compliance by such Purchaser 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 such
Purchaser, (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 such Purchaser, to
which such Purchaser is a party or by which such Purchaser or its respective
property is bound, or (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 such Purchaser or its property, except
in the case of clauses (ii) and (iii), for such conflicts, breaches or defaults
that would not, singly or in the aggregate, have a material adverse effect on
such Purchaser’s ability to perform its obligations under this Agreement.

 

6.06     Governmental Consents. The execution, delivery and performance by it of
this Agreement do not and will not require any registration or filing with,
consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body, assuming the
accuracy of the representations of the Issuer and Hovnanian in Article V hereof
and the Purchasers’ representations in Article VI hereof, other than any filings
with the SEC required to be made by the Issuer and Hovnanian.

 

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6.07     Information. Such Purchaser acknowledges that (a) it has conducted its
own investigation of the Issuer, Hovnanian and its subsidiaries and the terms of
the Additional 10.5% Notes and the Additional Guarantees, (b) it has had access
to such financial and other information as it deems necessary to make its
decision to purchase the Additional 10.5% Notes and the Additional Guarantees,
(c) it has been offered the opportunity to ask questions of the Issuer,
Hovnanian and its subsidiaries and received answers thereto, as it deemed
necessary in connection with the decision to purchase the Additional 10.5% Notes
and the Additional Guarantees and (d) it has not relied on the advice of, or any
representations by, any third party in making such decision.

 

6.08     Investment Experience. Each Purchaser is an “Accredited Investor” (as
such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act) and a “Qualified Institutional Buyer” (as such term is defined
in Rule 144A promulgated under the Securities Act). It is a sophisticated
institutional investor and its knowledge and experience in financial and
business matters is such that it, together with the assistance of professional
and legal advisors of its choosing, is capable of evaluating the merits and
risks of an investment in the Additional 10.5% Notes. Such Purchaser
acknowledges that no representations, express or implied, are being made with
respect to the Issuer and Hovnanian, the Additional 10.5% Notes or otherwise,
other than those expressly set forth herein. In making its decision to purchase
the Additional 10.5% Notes, such Purchaser has relied upon the information and
representations referred to in the preceding sentence and independent
investigations made by such Purchaser and, to the extent believed by such
Purchaser to be appropriate, such Purchaser’s representatives, including such
Purchaser’s own professional, tax and other advisors, but otherwise has not
relied upon on any person or entity (including any of the Issuer and Hovnanian’s
advisors) in its evaluation and decision with respect to the purchase of the
Additional 10.5% Notes. Such Purchaser and its representatives have been given
the opportunity to examine all documents and to ask questions of, and to receive
answers from, the Issuer and Hovnanian and their respective representatives
concerning the terms and conditions of the purchase of the Additional 10.5%
Notes.

 

6.09     Source of Funds. The source of funds to be used by such Purchaser to
pay the Purchase Price does not include assets of (i) any employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the fiduciary
responsibility provisions of Title I of ERISA, (ii) any plan, individual
retirement account or arrangement that constitutes a “plan” within the meaning
of Section 4975(e)(1) of the Code subject to Section 4975 of the Code, (iii) any
other entity the assets of which are deemed to be “plan assets” of employee
benefit plans or plans for purposes of Department of Labor regulation Section
2510.3-101, as modified by Section 3(42) of ERISA or (iv) an arrangement subject
to provisions under state, local, non-U.S. or other laws or regulations that are
substantially similar to Section 406 of ERISA or Section 4975 of the Code which
could cause such assets to constitute the assets of any US state, local or
non-U.S. governmental plan.

 

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ARTICLE VII
COVENANTS

 

7.01     Mortgage Amendments. If Issuer is advised by its local counsel in a
jurisdiction where Mortgages are recorded that further action is necessary to
secure the Additional 10.5% Notes, then the Issuer shall deliver to the
Collateral Agent an amendment to any such Mortgage in accordance with the
requirements under the Additional 10.5% Notes Supplemental Indenture (each, a
“Mortgage Amendment” and, collectively, the “Mortgage Amendments”).

 

ARTICLE VIII

EXPENSES

 

8.01     Expenses. Each party hereto understands and agrees that it shall be
responsible for its own fees and expenses incurred in connection with the
transactions contemplated by this Agreement, including the fees and expenses of
its counsel and other representatives engaged by it in connection with the
transactions contemplated hereby.

 

ARTICLE IX

MISCELLANEOUS

 

9.01     Amendments, Consents and Waivers. This Agreement and any provision
hereof may not be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Issuer, the Guarantors and the
Purchasers.

 

9.02     Notices. Notices and other communications provided for herein shall be
in writing and shall be delivered by hand or overnight courier service, mailed
by certified or registered mail or sent by fax or electronic mail, as follows:

 

If to the Issuer and/or any Guarantor:

 

K. Hovnanian Enterprises, Inc.

c/o Hovnanian Enterprises, Inc.
110 West Front Street, P.O. Box 500
Red Bank, New Jersey 07701
Attention: Corporate Counsel
Fax.: 732-383-2945
Email: mdiscafani@khov.com

 

with copies to (which shall not constitute notice):

 

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: Marisa Stavenas
Fax: 212-455-2505
Email: mstavenas@stblaw.com

 

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If to Purchasers:

 

c/o GSO Capital Partners LP
345 Park Ave

New York, NY 10154
Attention: Ryan Mollett and Jacob Gladstone
Email:   Ryan.Mollett@gsocap.com,

Jacob.Gladstone@gsocap.com and

GSOLegal@blackstone.com

 

with copies to (which shall not constitute notice):

 

Stroock & Stroock & Lavan LLP

180 Maiden Lane

New York, New York 10038
Attention: Kristopher M. Hansen, Jeffrey Lowenthal and Jonathan D. Canfield
Email: khansen@stroock.com

jlowenthal@stroock.com

jcanfield@stroock.com

 

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
or electronic mail or on the date three Business Days after dispatch by
certified or registered mail if mailed, in each case, delivered, sent or mailed
(properly addressed) to such party as provided in this Section 9.02 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.02; provided, that if any fax or electronic mail
is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on
the next Business Day for the recipient.

 

9.03     Binding Effect; Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract. This Agreement shall become effective when it
shall have been executed by the Issuer, the Guarantors and each of the
Purchasers, and when each such person shall have received counterparts hereof
(including delivery via facsimile or by electronic mail in .pdf, .tif, or
similar format) which, when taken together, bear the signatures of each of the
other parties hereto. Delivery of an executed signature page to this Agreement
by facsimile transmission or other electronic means shall be as effective as
delivery of a manually signed counterpart of this Agreement.

 

9.04     Successors and Assigns. All covenants, promises and agreements by or on
behalf of the Issuer, Hovnanian or any Purchaser that are contained in this
Agreement shall bind and inure to the benefit of their respective successors.
Neither the Issuer, nor Hovnanian, nor any of the Purchasers shall assign or
delegate any of their respective rights or duties hereunder without the prior
written consent of the other party hereto, and any attempted assignment without
such consent shall be null and void.

 

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9.05     Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to such
state’s choice of law provisions which would require the application of the law
of any other jurisdiction. By its execution and delivery of this Agreement, each
of the Parties hereto hereby irrevocably and unconditionally (a) consents to
submit to the exclusive jurisdiction of the courts of the State of New York
sitting in New York County and of the United States of America located in the
Southern District of New York for any actions, suits or proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby or
thereby in the Transaction Documents, or for recognition or enforcement of any
judgment, and agrees that all claims in respect of any such action or proceeding
may be heard and determined in such New York State court or, to the extent
permitted by law, in such Federal court, and further agrees that service of any
process, summons, notice or document by U.S. registered mail to the respective
addresses set forth above shall be effective service of process for any action,
suit or proceeding brought against the parties in any such court, (b) waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated herby or thereby in the Transaction Documents in any such New York
State court or in any such Federal court and (c) waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action, suit or proceeding in any such court. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY IN THE TRANSACTION DOCUMENTS. FURTHERMORE, EACH
PARTY WAIVES ANY RIGHT TO CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL HAS BEEN
WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO
THIS AGREEMENT.

 

9.06     Entire Agreement. This Agreement, the Commitment Letter and the other
Transaction Documents constitute the entire contract between the parties
relative to sale of the Additional 10.5% Notes to the Purchasers. Any other
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement and the other Transaction Documents. Nothing in
this Agreement or in the other Transaction Documents, expressed or implied, is
intended to confer upon any person (other than the parties hereto and thereto,
their respective successors and assigns permitted hereunder) any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Transaction Documents.

 

9.07     Severability. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.

 

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9.08     Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.

 

9.09     Several Obligations of the Purchasers. Except as otherwise provided for
in this Agreement, the obligations of the Purchasers hereunder are several and
no Purchaser shall be responsible for the obligations of any other Purchaser
hereunder.

 

9.10     No Personal Liability. Notwithstanding anything to the contrary
contained herein, it is expressly understood and the Purchasers expressly agree
that nothing contained herein or in any other document contemplated hereby
(whether from a covenant, representation, warranty or other provision herein or
therein) shall create, or be construed as creating, any personal liability of
any stockholder, director, officer, member, partner, manager or employee of
Hovnanian, the Issuer and their respective subsidiaries (excluding any such
person which is a Guarantor or other express obligor on the Additional 10.5%
Notes) in such person’s capacity as such, with respect to (a) any payment
obligation of Hovnanian, the Issuer or any of their subsidiaries, (b) any
obligation of Hovnanian, the Issuer or any of their respective subsidiaries to
perform any covenant, undertaking, indemnification or agreement, either express
or implied, contained herein, (c) any representation or warranty contained
herein, (d) any other claim or liability to the Purchasers under or arising
under this Agreement or in any other document contemplated hereby, or (e) any
credit extended or loan made; provided that nothing herein shall be deemed to be
a waiver of claims arising from fraud.

 

* * * * * *

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above.

 

 

K. HOVNANIAN ENTERPRISES, Inc.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:  

 

 

 

Title:

 

                  HOVNANIAN ENTERPRISES, INC.                     By:        
Name:       Title:                    

K. HOV IP, II, INC.

                    By:         Name:       Title:                    

On behalf of each other entity named in

Schedule I hereto

                    By:         Name:       Title:  

 

 

Note Purchase Agreement Signature Page

 

--------------------------------------------------------------------------------

 

 

 

THE PURCHASERS1:

 

 

[GSO CAPITAL PARTNERS LP]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

 

 

 

 

          [Purchaser]                     By:        

Name:

Title:

                    [Purchaser]                     By:        

Name:

Title:

 

 

 

--------------------------------------------------------------------------------

1 To be updated.

 

 

Note Purchase Agreement Signature Page

 

--------------------------------------------------------------------------------

 

 

SCHEDULE I

 

Schedule of Guarantors

 

[To be included at the Closing Date]

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE II

 

Schedule of Purchasers

 

Purchaser

 

Principal Amount of Notes

   

Total Purchase Price

      $       $                           $       $                           $
      $                      

Total

  $ 25,000,000     $    

 

 

--------------------------------------------------------------------------------

 

 

SCHEDULE IIIA

 

Existing Collateral Documents

 

1. Second Amended and Restated Mortgage Tax Collateral Agency Agreement,
including any joinders thereto on or prior to the date of this Agreement

 

2. Amended and Restated Intercreditor Agreement, including any joinders thereto
on or prior to the date of this Agreement

 

3. Security Agreement, including any joinders thereto

 

4. Pledge Agreement, dated as of July 27, 2017, by and among the Issuer,
Hovnanian, the guarantors named therein, and Wilmington Trust, National
Association, as collateral agent, including any joinders thereto

 

5. Collateral Agency Agreement

 

6. Trademark Security Agreement, dated as of July 27, 2017, by and between K.
HOV IP, II, Inc. and Wilmington Trust, National Association, as collateral agent
and any additional intellectual property security agreements executed prior to
the date of this Agreement

 

7. Control agreements in respect of Deposit Accounts (as defined in the Security
Agreement) and Securities Accounts (as defined in the Security Agreement) except
with respect to Excluded Accounts (as defined in the Security Agreement)

 

i

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SCHEDULE IIIB

 

Existing Collateral Documents

 

1. Recorded UCC financing statements

 

2. Existing Mortgages

 

3. Confirmation of receipt of certificated securities by the applicable first
lien collateral agent as of the date of this Agreement

 

i

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SCHEDULE IV

 

Purchase Price Calculation

 

(For Illustrative Purposes Only)

 

 

 

Coupon

    10.50 %

Maturity

 

7/15/2024

 

Settlement Date

 

1/15/2019

 

Assumed VWAY2

    8.00 %

Less 50 bps

    0.50 %

Required Yield

    7.50 %

Price to attain Required Yield

    113.320  

Price per $1,000 principal amount of Additional 10.5% Notes

  $ 1,133.20  

 

 

--------------------------------------------------------------------------------

2

Based on an assumed VWAY of 8.00% (for illustrative purposes only), the Required
Yield (as defined in the Agreement) was 7.50%.

 

ii

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EXHIBIT A

 

Indenture

 

See Exhibit 4(f) to Hovnanian’s Annual Report on Form 10-K for the fiscal year
ended October 31, 2017.

 

i

--------------------------------------------------------------------------------

 

 

EXHIBIT B

 

Form of Additional 10.5% Notes Supplemental Indenture

 

 

ii

--------------------------------------------------------------------------------

 

 

 

 

 

 

[●] SUPPLEMENTAL INDENTURE

 

dated as of January 15, 2019

 

among

 

K. HOVNANIAN ENTERPRISES, INC.

 

HOVNANIAN ENTERPRISES, INC.

 

The Other Guarantors Party Hereto

 

and

 

WILMINGTON TRUST, NATIONAL ASSOCIATION

 

as Trustee and Collateral Agent

 

____________________________

 

10.500% Senior Secured Notes due 2024

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

THIS [●] SUPPLEMENTAL INDENTURE (this “[●] Supplemental Indenture”), entered
into as of January 15, 2019 (the “Additional Securities Issue Date”), among K.
Hovnanian Enterprises, Inc., a California corporation (the “Issuer”), Hovnanian
Enterprises, Inc. (the “Company”), each of the other guarantors listed on
Schedule I hereto (the “Subsidiary Guarantors” and, together with the Company,
the “Guarantors”) and Wilmington Trust, National Association, a national banking
association, as Trustee (the “Trustee”) and as Collateral Agent (the “Collateral
Agent”).

 

RECITALS

 

WHEREAS, the Issuer, the Company, the subsidiary guarantors party thereto, the
Trustee and the Collateral Agent entered into an indenture, dated as of July 27,
2017 (as amended and supplemented to the date hereof, the “Indenture”),
providing for the issuance of the Issuer’s 10.500% Senior Secured Notes due 2024
(the “Notes”), initially in the aggregate principal amount of $400,000,000;

 

WHEREAS, the issuance and sale of Additional Notes in the aggregate principal
amount of $25,000,000 (the “Additional Securities”) and the execution and
delivery of this [●] Supplemental Indenture have been authorized by resolutions
adopted by the Board of Directors of the Issuer and all things necessary to make
this [●] Supplemental Indenture a valid agreement of the Issuer, in accordance
with its terms, have been done, and the Issuer has done all things necessary to
make the Additional Securities, when duly issued and executed by the Issuer and
authenticated and delivered by the Trustee, the valid obligations of the Issuer
as hereinafter provided;

 

WHEREAS, the guarantees of the Additional Securities and the execution and
delivery of this [●] Supplemental Indenture by the Company and the Subsidiary
Guarantors have been duly authorized by the Boards of Directors of the Company
and such Subsidiary Guarantors (or the ultimate managing member or sole member
of such Subsidiary Guarantors, as applicable) and all things necessary to make
this [●] Supplemental Indenture a valid agreement of each Guarantor, in
accordance with its terms, have been done, and each Guarantor has done all
things necessary to make the Guarantees of the Additional Securities when duly
issued and executed by each Guarantor and when the Additional Securities have
been authenticated and delivered by the Trustee, the valid obligation of such
Guarantor as hereinafter provided;

 

WHEREAS, Sections 2.2 and 9.1 of the Indenture provide that the Issuer, the
Company, the Subsidiary Guarantors, the Trustee and the Collateral Agent are
authorized to execute and deliver this [●] Supplemental Indenture to provide for
the issuance of the Additional Securities without notice to or the consent of
any Holder;

 

 

--------------------------------------------------------------------------------

 

 

WHEREAS, the Issuer and the Company have complied with all conditions precedent
provided for in the Indenture relating to this [●] Supplemental Indenture;

 

WHEREAS, the Additional Securities and the Notes shall vote together and shall
be treated as a single class for all purposes under the Indenture (as
supplemented by this [●] Supplemental Indenture, including, without limitation,
waivers, amendments, redemptions and offers to purchase); and

 

WHEREAS, the Issuer and the Company have requested that the Trustee and the
Collateral Agent execute and deliver this [●] Supplemental Indenture.

 

 

--------------------------------------------------------------------------------

 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Issuer, the Company, the Subsidiary Guarantors, the Trustee
and the Collateral Agent mutually covenant and agree for the equal and ratable
benefit of the holders of the Additional Securities as follows:

 

Section 1. Capitalized terms used herein and not otherwise defined herein are
used as defined in the Indenture.

 

Section 2. The following terms relating to the Additional Securities are hereby
established:

 

(a)     The aggregate principal amount of the Additional Securities that may be
authenticated and delivered under this [●] Supplemental Indenture shall be
$25,000,000.

 

(b)     The issue price of the Additional Securities shall be [●]%3 of the
aggregate principal amount of the Additional Securities and the issuance date of
the Additional Securities shall be the Issue Date. The date from which interest
shall accrue on the Additional Securities shall be January 15, 2019.

 

(c)     The Additional Securities shall have the other terms set forth in the
form of global note attached hereto as Exhibit A and shall be issued as one or
more Global Notes.

 

(d)     The Additional Securities shall be considered Additional Notes issued
pursuant to Section 2.2 of the Indenture.

 

Section 3. The Additional Securities and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit A attached hereto.
The Additional Securities shall be executed on behalf of each of the Issuer, the
Company and the Subsidiary Guarantors and authenticated by the Trustee pursuant
to Section 2.2 of the Indenture.   Section 4. The Issuer and each Guarantor
shall take all appropriate steps to cause the Liens on the Collateral to be
perfected Pari Passu Liens (subject to Permitted Liens) with respect to the
Additional Securities, pursuant to, and to the extent required by, the Security
Documents and the Indenture as supplemented by this [●] Supplemental Indenture.
[Without limiting the generality of the foregoing, within 145 days following the
Additional Securities Issue Date, the Issuer and each Guarantor shall execute
and deliver to the Trustee, and cause to be recorded, one or more mortgage
amendments or modifications in any jurisdiction where local counsel in such
jurisdiction advises that without recording amendments or modification in the
real property records, the Additional Securities will not be secured by the
existing mortgage(s) recorded in such jurisdiction. Neither the Trustee nor the
Collateral Agent shall be responsible for filing any financing or continuation
statements or recording any documents or instruments in any public office at any
time or times or otherwise perfecting or maintaining the perfection of any
security interest.

 

--------------------------------------------------------------------------------

3 To be determined in accordance with the Note Purchase Agreement

 

--------------------------------------------------------------------------------

 

 

Section 5. This [●] Supplemental Indenture shall be governed by and construed in
accordance with the laws of the State of New York.   Section 6. This [●]
Supplemental Indenture may be signed in various counterparts which together will
constitute one and the same instrument.   Section 7. This [●] Supplemental
Indenture is an amendment supplemental to the Indenture (as amended and
supplemented to the date hereof) and the Indenture and this [●] Supplemental
Indenture will henceforth be read together.   Section 8. Except as expressly
provided herein, all of the terms, provisions and conditions of the Indenture
and the Notes shall remain in full force and effect.   Section 9. The Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this [●] Supplemental Indenture or for or in respect
of the Recitals contained herein, all of which are made solely by the Issuer,
the Company and each of the Subsidiary Guarantors.

 

[Signature page follows]

 

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the parties hereto have caused this [●] Supplemental
Indenture 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:

 

 

On behalf of each of the entities listed on Schedule I hereto

   

By:

 

Name:

Title:

 

 

 

[Signature page to [●] Supplemental Indenture]

 

--------------------------------------------------------------------------------

 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee

   

By:

 

Name:

Title:

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Collateral Agent

   

By:

 

Name:

Title:

 

 

 

[Signature page to [●] Supplemental Indenture]

 

--------------------------------------------------------------------------------

 

 

SCHEDULE I

 

Subsidiary Guarantors

 

[To be provided at Closing Date]

 

S-1

--------------------------------------------------------------------------------

 

 

EXHIBIT A

 

[FACE OF NOTE]

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED. TRANSFERS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER
NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY AND TRANSFERS OF PORTIONS OF THIS GLOBAL
NOTE ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE TRANSFER PROVISIONS OF
THE INDENTURE.

 

THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER:

 

(1)     REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) (A “QIB”), (B) IT HAS ACQUIRED THIS NOTE
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT OR (C) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN “IAI”),

 

A-1

--------------------------------------------------------------------------------

 

 

(2)     AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH
IT HAS PURCHASED NOTES, NOT TO OFFER, SELL, OR OTHERWISE TRANSFER THIS NOTE OR
ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE (THE “RESALE RESTRICTION
TERMINATION DATE”) THAT IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE
LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF
THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE ISSUER, THE COMPANY
OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER AND THE TRUSTEE THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER AND THE TRUSTEE) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION (THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE); AND

 

(3)     AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.

 

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTIONS” AND “UNITED STATES” HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.

 

A-2

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K. HOVNANIAN ENTERPRISES, INC.

 

10.500% Senior Secured Notes Due 2024

 

  CUSIP No.: 442488CE0    

No. 144A-2

$25,000,000, or such other amount as is provided in the schedule of exchanges of
interests in global notes attached hereto

 

K. Hovnanian Enterprises, Inc., a California corporation (the “Issuer,” which
term includes any successor under the Indenture hereinafter referred to), for
value received, promises to pay to Cede & Co., or its registered assigns, the
principal sum of TWENTY-FIVE MILLION DOLLARS ($25,000,000), or such other amount
as is provided in the schedule of exchanges of interests in global notes
attached hereto, on July 15, 2024.

 

Interest Rate:     10.500% per annum.

 

Interest Payment Dates: January 15 and July 15, commencing July 15, 2019.

 

Record Dates: January 1 and July 1.

 

Reference is hereby made to the further provisions of this Note set forth on the
reverse hereof, which will for all purposes have the same effect as if set forth
at this place.

 

A-3

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IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by
facsimile by its duly authorized officer.

 

Dated: [●]

K. HOVNANIAN ENTERPRISES, INC.

   

By:

 

Name:

Title:

 

A-4

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Trustee’s Certificate of Authentication

 

This is one of the 10.500% Senior Secured Notes Due 2024 described in the
Indenture referred to in this Note.

 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee

   

By:

 

Authorized Signatory

 

A-5

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[REVERSE SIDE OF NOTE]

 

K. HOVNANIAN ENTERPRISES, INC.

 

10.500% Senior Secured Notes Due 2024

 

Capitalized terms used herein are used as defined in the Indenture referred to
below unless otherwise indicated. References to “Notes” or “Note” herein refer
to only the 10.500% Senior Secured Notes due 2024.

 

 

1.

Principal and Interest.

 

K. Hovnanian Enterprises, Inc. (the “Issuer,” which term includes any successor
under the Indenture hereinafter referred to), a California corporation, promises
to pay the principal of this Note on July 15, 2024.

 

The Issuer promises to pay interest on the principal amount of this Note (which
represents Additional Notes) on each Interest Payment Date, as set forth on the
face of this Note, at the rate of 10.500% per annum.

 

Interest will be payable semiannually (to the holders of record of the Notes at
the close of business on the January 1 or July 1 immediately preceding the
Interest Payment Date) on each Interest Payment Date, commencing July 15, 2019.

 

Interest on this Note will accrue from the most recent date to which interest
has been paid on this Note or the Note surrendered in exchange for this Note
(or, if there is no existing default in the payment of interest and if this Note
is authenticated between a regular record date and the next Interest Payment
Date, from such Interest Payment Date) or, if no interest has been paid, from
January 15, 2019. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

 

2.

Paying Agent and Registrar.

 

Initially, Wilmington Trust, National Association (the “Trustee”) will act as
Paying Agent and Registrar. The Issuer may change or appoint any Paying Agent,
Registrar or co-Registrar without notice to any Holder. The Issuer or any of its
Subsidiaries may act as Paying Agent, Registrar or co-Registrar.

 

3.

Indenture; Liens; Guarantees.

 

This is one of the 10.500% Senior Secured Notes due 2024 issued under an
Indenture dated as of July 27, 2017 (as amended, restated, supplemented or
otherwise modified from time to time, the “Indenture”), among the Issuer, the
Guarantors party thereto, the Trustee and the Collateral Agent. The terms of the
Notes include those stated in the Indenture and only those expressly made part
of the Indenture by reference to the Trust Indenture Act, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of such
terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Note and the terms of the Indenture, the
terms of the Indenture will control.

 

i

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The Notes are general obligations of the Issuer, secured by Liens on the
Collateral as described in the Indenture and the Security Documents. The
Indenture limits the original aggregate principal amount of the Notes issued
thereunder to $400,000,000 but Additional Notes of the same series may be issued
pursuant to the Indenture (subject to the conditions stated therein), and the
originally issued Notes and all such Additional Notes vote together for all
purposes as a single class. This Note is guaranteed by the Guarantors as set
forth in the Indenture and the Guarantee endorsed hereon.

 

Reference is hereby made to the Indenture for a statement of the respective
rights, duties and obligations thereunder of the Issuer, the Guarantors, the
Trustee, the Collateral Agent and the Holders.

 

4.

Optional Redemption; Redemption with Proceeds of Equity Offering.

 

(a)     The Issuer may, at its option, redeem the Notes, in whole, at any time,
or in part, from time to time, prior to July 15, 2020, at a redemption price
equal to the sum of:

 

(i)     100% of the principal amount thereof, plus accrued and unpaid interest
thereon to, but excluding, the redemption date, if any (subject to the right of
Holders of record on the relevant Record Date to receive interest on the
relevant Interest Payment Date); plus

 

(ii)     the Make-Whole Amount.

 

The term “Make-Whole Amount” shall mean, in connection with any optional
redemption of any Note, the excess, if any, of:

 

(i) the present value at such redemption date of (i) the redemption price of the
Note at July 15, 2020 (such redemption price being set forth in the table
appearing in 4(b) below) plus (ii) all required interest payments due on the
Note through July 15, 2020 (excluding accrued but unpaid interest), computed
using a discount rate equal to the Treasury Rate as of such redemption date plus
50 basis points; over

 

(ii) the principal amount of the Note being redeemed.

 

In no case shall the Trustee be responsible for calculating or determining the
Make-Whole Amount.

 

“Treasury Rate” means, in connection with the calculation of any Make-Whole
Amount with respect to any Note, as calculated by the Company, the yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity, as compiled by and published in the most recent Federal
Reserve Statistical Release H.15 (519) that has become publicly available at
least two Business Days prior to the redemption date (or, if such Statistical
Release is no longer published, any publicly available source or similar market
data), most nearly equal to the period from the redemption date to July 15,
2020; provided, however, that if the period from the redemption date to July 15,
2020 is not equal to the constant maturity of a United States Treasury security
for which a weekly average yield is given, the Treasury Rate shall be obtained
by linear interpolation (calculated to the nearest one-twelfth of a year) from
the weekly average yields of United States Treasury securities for which such
yields are given, except that if the period from the redemption date to July 15,
2020 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year will be
used.

 

ii

--------------------------------------------------------------------------------

 

 

(b)     At any time and from time to time on or after July 15, 2020, the Issuer
may redeem the Notes, in whole or in part, at a redemption price equal to the
percentage of the principal amount set forth below for the period during which
the redemption date falls plus accrued and unpaid interest thereon, if any, to,
but excluding, the applicable redemption date (subject to the right of Holders
of record on the relevant Record Date to receive interest on the relevant
Interest Payment Date).

 

Period Commencing

 

Percentage

July 15, 2020

 

100.525%

July 15, 2021

 

102.625%

July 15, 2022 and thereafter

 

100.000%

 

(c)     At any time and from time to time prior to July 15, 2020, the Issuer may
redeem Notes with the net cash proceeds received by the Issuer from any Equity
Offering at a redemption price equal to 110.500% of the principal amount plus
accrued and unpaid interest to, but excluding, the applicable redemption date
(subject to the right of Holders of record on the relevant Record Date to
receive interest on the relevant Interest Payment Date), in an aggregate
principal amount for all such redemptions not to exceed 35% of the original
aggregate principal amount of the Notes (including Additional Notes of the same
series), provided that:

 

(i)     in each case the redemption takes place not later than 60 days after the
closing of the related Equity Offering, and

 

(ii)     not less than 65% of the original aggregate principal amount of the
Notes (including Additional Notes of the same series) remains outstanding
immediately thereafter.

 

(d)     If Holders of not less than 90% in aggregate principal amount of the
outstanding Notes of a series validly tender and do not validly withdraw such
Notes in a Change of Control Offer in connection with a Change of Control and
the Issuer, or any third party making a Change of Control Offer in lieu of the
Issuer as permitted by Section 4.12 of the Indenture, purchases of all of the
Notes validly tendered and not validly withdrawn by such Holders, the Issuer or
such third party shall have the right, upon not less than 10 nor more than 60
days’ prior notice to the Holders (with a copy to the Trustee), given not more
than 30 days following such purchase pursuant to the Change of Control Offer
described in Section 4.12 of the Indenture, to redeem all Notes that remain
outstanding following such purchase at a redemption price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to,
but not including, the date of redemption.

 

iii

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If fewer than all of the Notes are being redeemed, the Notes to be redeemed
shall be selected by the Trustee by lot, pro rata or such other method as the
Trustee deems fair and appropriate in consultation with the Issuer, subject to
applicable DTC procedures and compliance with the rules of any securities
exchange on which the Notes may be listed.

 

Notes shall be redeemed in denominations of $2,000 principal amount or any
multiple of $1,000 in excess thereof. Notices of any redemption may be given
prior to the completion thereof, and may, at the Issuer’s discretion, be subject
to one or more conditions precedent, including, but not limited to, completion
of a related Equity Offering. If a redemption is subject to one or more
conditions precedent, such notice shall describe each condition precedent.

 

If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion of
the original Note will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions thereof called for redemption. Any notice of
redemption will be given in accordance with Article III of the Indenture.

 

5.

Repurchase Provisions.

 

If a Change of Control occurs, each Holder shall have the right, at such
Holder’s option, to require the Issuer to purchase all or any part (equal to
$2,000 principal amount or any multiple of $1,000 in excess thereof) of such
Holder’s Notes on a date that is no later than 90 days after notice of the
Change of Control, at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase as
provided in, and subject to the terms of, the Indenture.

 

6.

Mandatory Redemption.

 

There is no sinking fund for, or mandatory redemption of, the Notes.

 

7.

Discharge and Defeasance.

 

If the Issuer deposits with the Trustee money in U.S. dollars and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, interest and accrued interest on the Notes to redemption or maturity,
as the case may be, the Issuer, the Company and the Guarantors may in certain
circumstances be discharged from the Indenture, the Notes, the Guarantees and
the Security Documents or may be discharged from certain of their obligations
under certain provisions of the Indenture. In such circumstances, the Liens
securing the Notes and the Guarantees will also be released.

 

8.

Registered Form; Denominations; Transfer; Exchange.

 

The Notes are in registered form only without coupons in denominations of $2,000
principal amount and any multiple of $1,000 in excess thereof. A Holder may
register the transfer or exchange of Notes in accordance with the Indenture. The
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. Pursuant to the Indenture, there are certain
periods during which the Trustee will not be required to issue, register the
transfer of, or exchange any Note or certain portions of a Note.

 

iv

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9.

Persons Deemed Owners.

 

The registered Holder of this Note shall be treated as the owner of it for all
purposes.

 

10.

Defaults and Remedies.

 

If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the Notes may declare all the Notes to be
due and payable immediately. If a bankruptcy or insolvency default with respect
to the Issuer or the Company occurs and is continuing, the Notes automatically
become immediately due and payable. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may require reasonable
indemnity or security satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of a majority in principal amount
of the Notes then outstanding may direct the Trustee in its exercise of
remedies; provided, that for purposes of directing the Collateral Agent with
respect to the Collateral under Section 5.4(b) of the Indenture, Holders of a
majority in aggregate principal amount of the Notes and the Issuer’s 10.000%
Senior Secured Notes due 2022 then outstanding shall vote, act and be treated
together as a single series for purposes of Section 5.4(b) of the Indenture and
the determination of such majority.

 

11.

Amendment, Supplement and Waiver.

 

Subject to certain exceptions, the Indenture, the Notes, the Guarantees and the
Security Documents may be amended or supplemented, or future compliance
therewith may be waived, with the consent of the Holders of a majority in
principal amount of the outstanding Notes. Without notice to or the consent of
any Holder, the Company, the Issuer, the Guarantors, the Trustee, the Collateral
Agent, the Joint Collateral Agent and the Mortgage Tax Collateral Agent, as
applicable, may amend or supplement the Indenture, the Notes, the Guarantees or
the Security Documents to, among other things, cure any ambiguity, defect or
inconsistency or if such amendment or supplement does not adversely affect the
legal rights of any Holder. Without the consent of the Holders of at least 66⅔%
in principal amount of the Notes, the Company, the Issuer, the Guarantors, the
Trustee, the Collateral Agent, the Joint Collateral Agent and the Mortgage Tax
Collateral Agent may not effect a release of all or substantially all of the
Collateral other than pursuant to the terms of the Security Documents or as
otherwise permitted under the Indenture.

 

12.

Trustee Dealings With Issuer.

 

The Trustee, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Issuer or its affiliates, with
the same rights as if it were not Trustee; however, if it acquires any
conflicting interest (as defined in the Trust Indenture Act), it must eliminate
such conflict or resign.

 

v

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13.

No Recourse Against Others.

 

An incorporator, and any past, present or future director, officer, partner,
employee or stockholder, as such, of the Issuer, the Company or the Guarantors
shall not have any liability for any obligations of the Issuer, the Company or
the Guarantors under the Notes, the Indenture or the Guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Notes.

 

14.

Governing Law.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

 

15.

CUSIP Numbers.

 

Pursuant to a recommendation promulgated by the Committee on Uniform Note
Identification Procedures, the Issuer has caused CUSIP numbers to be printed on
the Notes, and the Trustee may use CUSIP numbers in notices as a convenience to
Holders. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice and reliance may be placed
only on the other identification numbers placed thereon.

 

16.

Authentication.

 

This Note is not valid until the Trustee (or Authenticating Agent) manually
signs the certificate of authentication on the other side of this Note.

 

17.

Abbreviations.

 

Customary abbreviations may be used in the name of a Holder or an assignee, such
as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act).

 

The Issuer will furnish a copy of the Indenture to any Holder upon written
request and without charge.

 

vi

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[FORM OF TRANSFER NOTICE]

 

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto

 

Insert Social Security or Taxpayer Identification No.

 

   

Please print or typewrite name and address, including zip code, of assignee

     

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

   

 

 

 

agent to transfer this Note on the books of the Issuer with full power of
substitution in the premises.

 

 

 

 

Dated:_________________________________________

Signed:___________________________________________

 

(sign exactly as name appears on the other side of this Note)

 

Signature Guarantee4:__________________________________________________________

 

 

 

--------------------------------------------------------------------------------

4 Signatures must be guaranteed by an “eligible guarantor institution” meeting
the requirements of the Trustee, which requirements include membership or
participation in the Note Transfer Agent Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Trustee in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

 

vii

--------------------------------------------------------------------------------

 

 

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES BEARING A RESTRICTED
LEGEND]

 

In connection with any transfer of this Note occurring prior to the Resale
Restriction Termination Date (as defined in this Note), the undersigned confirms
that such transfer is made without utilizing any general solicitation or general
advertising in connection with the transfer and further as follows:

 

Check One

 

□     (1) This Note is being transferred to a “qualified institutional buyer” in
compliance with Rule 144A under the Securities Act of 1933, as amended, and
certification in the form of Exhibit F to the Indenture is being furnished
herewith.

 

□     (2) This Note is being transferred to a non-“U.S. Person,” as defined in
Rule 902 of Regulation S under the Securities Act in compliance with the
exemption from registration under the Securities Act of 1933, as amended,
provided by Regulation S thereunder, and certification in the form of Exhibit E
to the Indenture is being furnished herewith.

 

or

 

□     (3) This Note is being transferred other than in accordance with (1) or
(2) above and documents are being furnished herewith which comply with the
conditions of transfer set forth in this Note and the Indenture.

 

If none of the foregoing boxes is checked, the Trustee is not obligated to
register this Note in the name of any Person other than the Holder hereof unless
and until the conditions to any such transfer of registration set forth herein
and in the Indenture have been satisfied.

 

Dated:____________________

 

 

Transferor

 

 

Signed:

 

 

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within-mentioned instrument in every particular,
without alteration or any change whatsoever.

 

viii

--------------------------------------------------------------------------------

 

 

Signature Guarantee5: _______________________________

 

By:_____________________________

(To be executed by an executive officer)

 

 

--------------------------------------------------------------------------------

5 Signatures must be guaranteed by an “eligible guarantor institution” meeting
the requirements of the Registrar, which requirements include membership or
participation in the Note Transfer Agent Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

 

ix

--------------------------------------------------------------------------------

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you wish to have all of this Note purchased by the Issuer pursuant to Section
4.10 or Section 4.12 of the Indenture, check the box: □

 

If you wish to have a portion of this Note purchased by the Issuer pursuant to
Section 4.10 or Section 4.12 of the Indenture, state the amount (in original
principal amount) below:

 

$_____________________.

 

Date:____________

 

Your Signature:__________________________

 

(Sign exactly as your name appears on the other side of this Note)

 

Signature Guarantee6: _____________________________

 

 

--------------------------------------------------------------------------------

6 Signatures must be guaranteed by an “eligible guarantor institution” meeting
the requirements of the Trustee, which requirements include membership or
participation in the Note Transfer Agent Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Trustee in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

x

--------------------------------------------------------------------------------

 

 

SCHEDULE OF EXCHANGES OF INTERESTS IN GLOBAL NOTES

 

The following exchanges of a part of this Global Note for Certificated Notes or
an interest in another Global Note, or exchanges of a part of another Global
Note or Certificated Note for an interest in this Global Note, have been made:

 

 

Date of Exchange

 

Amount of

decrease in

principal amount

of this Global Note

 

Amount of

increase in

principal amount

of this Global Note

 

Principal amount

of this Global Note

following such

decrease or

increase

 

Signature of

authorized officer

of Trustee

                                   

 

xi

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[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]

 

GUARANTEE

 

The undersigned (the “Guarantors”) have unconditionally guaranteed, jointly and
severally (such guarantee by each Guarantor being referred to herein as the
“Guarantee”) (i) the due and punctual payment of the principal of and interest
on the Issuer’s 10.500% Senior Secured Notes due 2024 (the “Notes”), whether at
maturity or on an Interest Payment Date, by acceleration or otherwise, on the
Notes, to the extent lawful, and of all other obligations of the Issuer to the
Holders or the Trustee all in accordance with the terms set forth in Article VI
of the Indenture and (ii) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that the same will 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. This
Guarantee is secured by Liens on the Collateral as described in the Indenture
and the Security Documents.

 

No past, present or future stockholder, officer, director, employee, partner or
incorporator, as such, of any of the Guarantors shall have any liability under
the Guarantee evidenced hereby by reason of such person’s status as stockholder,
officer, director, employee, partner or incorporator. Each Holder of a Note by
accepting a Note waives and releases all such liability. This waiver and release
are part of the consideration for the issuance of the Guarantee.

 

Each Holder of a Note by accepting a Note agrees that any Guarantor named below
shall have no further liability with respect to its Guarantee if such Guarantor
otherwise ceases to be liable in respect of its Guarantee in accordance with the
terms of the Indenture.

 

The Guarantee evidenced hereby shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.

 

This Guarantee shall be governed by, and construed in accordance with, the laws
of the State of New York.

 

[List of guarantors to be provided at Closing Date]

 

 

 

 

 

By:

 

Name:

Title:Authorized Officer

 

This Guarantee relates to K. Hovnanian Enterprises, Inc.’s 10.500% Senior
Secured Notes due 2024– CUSIP No.: 442488CE0                          

 

xii

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EXHIBIT C

 

Form of Confirmation and Acknowledgment

 

(Amended and Restated the Intercreditor Agreement and Second Amended and
Restated Mortgage Tax Collateral Agency Agreement)

 

xiii

--------------------------------------------------------------------------------

 

 

CONFIRMATION AND ACKNOWLEDGEMENT

 

(Amended and Restated Intercreditor Agreement and Second Amended and Restated
Mortgage Tax Collateral Agency Agreement)

 

Reference is made to (a) the Amended and Restated Intercreditor Agreement, dated
as of September 8, 2016 (as amended, restated, supplemented or otherwise
modified from time to time, the “Intercreditor Agreement”), by and among
Hovnanian Enterprises, Inc. (the “Company”), K. Hovnanian Enterprises, Inc. (the
“Issuer”), each other Grantor from time to time party thereto, Wilmington Trust,
National Association, in its capacity as the Senior Credit Agreement
Administrative Agent under the Senior Credit Agreement Documents, Wilmington
Trust, National Association, in its capacity as the Mortgage Tax Collateral
Agent, and Wilmington Trust, National Association, in its capacity as the Junior
Joint Collateral Agent, among others, (b) the Second Amended and Restated
Mortgage Tax Collateral Agency Agreement, dated as of July 27, 2017 (as amended,
restated, supplemented or otherwise modified from time to time, the “Mortgage
Tax Collateral Agency Agreement”), among the Company, each other Grantor from
time to time party thereto, Wilmington Trust, National Association, in its
capacity as the Senior Credit Agreement Administrative Agent under the Senior
Credit Agreement Documents, Wilmington Trust, National Association, in its
capacity as the Mortgage Tax Collateral Agent, and Wilmington Trust, National
Association, in its capacity as the Junior Joint Collateral Agent, and (c) the
Indenture, dated as of July 27, 2017 (as amended, supplemented or otherwise
modified from time to time, the “Indenture”), among the Company, the Issuer,
each other Guarantor (as defined therein) from time to time party thereto, and
Wilmington Trust, National Association, in its capacity, as trustee (in such
capacity, the “Trustee”) and as collateral agent (in such capacity, the
“Collateral Agent”), pursuant to which the Company issued, and may from time to
time issue, (a) 10.000% Senior Secured Notes due 2022 (the “10.000% Notes”) and
(b) 10.500% Senior Secured Notes due 2024 (the “10.500% Notes” and together with
the 10.000% Notes, the “Senior Secured Notes”). Capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Intercreditor
Agreement and the Mortgage Tax Collateral Agency Agreement, as applicable.

 

This Confirmation and Acknowledgement, dated as of January 15, 2019 (this
“Confirmation”), is being delivered in connection with the execution and
delivery of that certain Supplemental Indenture dated as of the date hereof,
among the Company, the Issuer, each other Guarantor (as defined therein) party
thereto, the Trustee and the Collateral Agent, pursuant to which the Issuer is
issuing additional 10.500% Senior Secured Notes due 2024 (the “Additional
10.500% Notes”). The parties hereto hereby acknowledge that any Senior Secured
Notes (including without limitation, the Additional 10.500% Notes) issued on the
date hereof or issued after the date hereof shall constitute Secured Notes and
Junior Claims, and the holders of such Secured Notes and Junior Claims
constitute Noteholders and Junior Creditors, in each case for all purposes under
the Intercreditor Agreement (subject to the terms and conditions therein) and
the Mortgage Tax Collateral Agency Agreement.

 

 

--------------------------------------------------------------------------------

 

 

 

This Confirmation may be executed in two or more counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute one contract. THIS CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

[Signature Pages Follow]

 

2

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the parties caused this Confirmation to be duly executed and
delivered as of the day and year first above written.

 

 

 

 

Collateral Agent

 

WILMINGTON TRUST, NATIONAL

ASSOCIATION

not in its individual capacity but solely in its capacity

as Collateral Agent

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

                  Trustee          

WILMINGTON TRUST, NATIONAL ASSOCIATION

not in its individual capacity but solely in its capacity

as Trustee

                    By:        

Name:

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

 

WILMINGTON TRUST, NATIONAL

ASSOCIATION

not in its individual capacity but solely as Junior

Joint Collateral Agent

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

                             

WILMINGTON TRUST, NATIONAL

ASSOCIATION

not in its individual capacity but solely as Senior

Credit Agreement Administrative Agent

                    By:        

Name:

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION

not in its individual capacity but solely as Mortgage Tax Collateral Agent

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

K. HOVNANIAN ENTERPRISES, INC.    

By:

 

Name:

Title:

 

 

HOVNANIAN ENTERPRISES, INC.    

By:

 

Name:

Title:

 

K. HOV IP, II, Inc.

   

By:

 

Name:

Title:

 

 

On behalf of each other entity named in Schedule A hereto    

By:

 

Name:

Title:

 

 

--------------------------------------------------------------------------------

 

 

Schedule A

 

[To be included at the Closing Date]

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT D

 

Form of Confirmation and Acknowledgment

 

(Collateral Agency Agreement)

 

 

--------------------------------------------------------------------------------

 

 

CONFIRMATION AND ACKNOWLEDGEMENT

 

(Collateral Agency Agreement)

 

Reference is made to (a) the Collateral Agency Agreement, dated as of July 27,
2017 (as amended, restated, supplemented or otherwise modified from time to
time, the “Collateral Agency Agreement”), among Hovnanian Enterprises, Inc. (the
“Company”), K. Hovnanian Enterprises, Inc. (the “Issuer”) and each other Grantor
from time to time party thereto, Wilmington Trust, National Association, in its
capacity as the Collateral Agent, and (b) the Indenture, dated as of July 27,
2017 (as amended, supplemented or otherwise modified from time to time, the
“Indenture”), among the Company, the Issuer, each other Guarantor (as defined
therein) from time to time party thereto, and Wilmington Trust, National
Association, in its capacity, as trustee (in such capacity, the “Trustee”) and
as collateral agent (in such capacity, the “Collateral Agent”), pursuant to
which the Company issued, and may from time to time issue, (a) 10.000% Senior
Secured Notes due 2022 (the “10.000% Notes”) and (b) 10.500% Senior Secured
Notes due 2024 (the “10.500% Notes” and together with the 10.000% Notes, the
“Senior Secured Notes”). Capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Collateral Agency Agreement.

 

This Confirmation and Acknowledgement, dated as of January 15, 2019 (this
“Confirmation”), is being delivered in connection with the execution and
delivery of that certain Supplemental Indenture dated as of the date hereof,
among the Company, the Issuer, each other Guarantor (as defined therein) party
thereto, the Trustee and the Collateral Agent, pursuant to which the Issuer is
issuing additional 10.500% Senior Secured Notes due 2024 (the “Additional
10.500% Notes”). The parties hereto hereby acknowledge that any Senior Secured
Notes (including without limitation, the Additional 10.500% Notes) issued on the
date hereof or issued after the date hereof shall constitute Secured Notes, and
the holders of such Secured Notes constitute Secured Noteholder Parties, in each
case for all purposes under the Collateral Agency Agreement.

 

 

--------------------------------------------------------------------------------

 

 

 

This Confirmation may be executed in two or more counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute one contract. THIS CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

[Signature Pages Follow]

 

2

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the parties caused this Confirmation to be duly executed and
delivered as of the day and year first above written.

 

 

 

 

Collateral Agent

 

WILMINGTON TRUST, NATIONAL

ASSOCIATION

not in its individual capacity but solely in its capacity

as Collateral Agent

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

 

WILMINGTON TRUST, NATIONAL

ASSOCIATION

not in its individual capacity but solely as Collateral

Agent under the Junior Collateral Documents

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Title:

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

K. HOVNANIAN ENTERPRISES, INC.    

By:

 

Name:

Title:

 

 

 

HOVNANIAN ENTERPRISES, INC.    

By:

 

Name:

Title:

 

K. HOV IP, II, Inc.    

By:

 

Name:

Title:

 

 

On behalf of each other entity named in Schedule A hereto    

By:

 

Name:

Title:

 

 

--------------------------------------------------------------------------------

 

 

Schedule A

 

[To be included at the Closing Date]

 

 

Schedule A-1

--------------------------------------------------------------------------------

 

 

EXHIBIT M

 

Form of JOINDER TO INTERCREDITOR AGREEMENT AND MORTGAGE TAX COLLATERAL AGENCY
AGREEMENT

 

Reference is made to (a) that certain Amended and Restated Intercreditor
Agreement, dated as of September 8, 2016 (as amended, restated, supplemented or
otherwise modified from time to time, the “Intercreditor Agreement”), by and
among Hovnanian Enterprises, Inc. (“Holdings”), K. Hovnanian Enterprises, Inc.
(the “Borrower”), each other Grantor from time to time party thereto, Wilmington
Trust, National Association, in its capacity as the Senior Credit Agreement
Administrative Agent under the Senior Credit Agreement Documents, Wilmington
Trust, National Association, in its capacity as the Mortgage Tax Collateral
Agent, and Wilmington Trust, National Association, in its capacity as the Junior
Joint Collateral Agent, among others and (b) that certain Second Amended and
Restated Mortgage Tax Collateral Agency Agreement, dated as of July 27, 2017 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Mortgage Tax Collateral Agency Agreement”), among Holdings, the Borrower, each
other Grantor from time to time party thereto, Wilmington Trust, National
Association, in its capacity as the Senior Credit Agreement Administrative Agent
under the Senior Credit Agreement Documents, Wilmington Trust, National
Association, in its capacity as the Mortgage Tax Collateral Agent, and
Wilmington Trust, National Association, in its capacity as the Junior Joint
Collateral Agent. Capitalized terms used herein without definition shall have
the meaning assigned thereto in the Intercreditor Agreement (as supplemented by
this Joinder (as defined below)) and the Mortgage Tax Collateral Agency
Agreement (as supplemented by this Joinder).

 

This Joinder to Intercreditor Agreement and Mortgage Tax Collateral Agency
Agreement, dated as of [_____], 2018 (this “Joinder”), is being delivered in
connection with the closing of that certain Credit Agreement dated as of January
29, 2018 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”) among Holdings, the Borrower, each other Guarantor (as
defined therein) from time to time party thereto, and Wilmington Trust, National
Association, in its capacity as administrative agent (in such capacity, the
“Revolving Loan Agent”) and acting in such capacity as collateral agent.

 

Pursuant to the Credit Agreement the Lenders (as defined therein) have agreed to
provide to the Borrower a $125,000,000 revolving loan facility (the “Revolving
Loan Facility”), the loans and other obligations under which constitute (x)
Refinancing Indebtedness in respect of the Senior Credit Agreement, (y) Senior
Credit Agreement Claims and (z) First-Lien Indebtedness and Future First-Lien
Indebtedness and the Revolving Loan Agent including in such capacity as
collateral agent and the Lenders in respect thereof constitute Senior Creditors,
in each case, under the Intercreditor Agreement.

 

In connection with the transactions contemplated by the Intercreditor Agreement,
certain of the parties thereto are parties to the Mortgage Tax Collateral Agency
Agreement to provide for the Mortgage Tax Collateral Agent (as defined in the
Mortgage Tax Collateral Agency Agreement) to enter into mortgages in certain
jurisdictions for the benefit of all Senior Creditors and Junior Creditors (each
as defined in the Intercreditor Agreement).

 

 

--------------------------------------------------------------------------------

 

 

In connection with the closing of the Credit Agreement, Holdings, the Borrower
and each other Grantor party thereto are entering into (a) that certain Security
Agreement dated as of the date hereof among Holdings, the Borrower, each other
Grantor party thereto and the Revolving Loan Agent acting in such capacity as
collateral agent (as amended, supplemented or otherwise modified from time to
time, the “Security Agreement”), and (b) that certain Pledge Agreement dated as
of the date hereof among Holdings, the Borrower, each other Grantor party
thereto and the Revolving Loan Agent acting in such capacity as collateral agent
(as amended, supplemented or otherwise modified from time to time, the “Pledge
Agreement”).

 

NOW, THEREFORE, each of the parties signatory hereto hereby agree as follows:

 

1.     Appointment of Senior Credit Agreement Collateral Agent. The New Senior
Representative (as defined below), on behalf of itself and the New Senior
Creditors (as defined below), confirms that (a) pursuant to the Credit Agreement
it has been appointed as Revolving Loan Agent acting in such capacity as
collateral agent and as such constitutes the Senior Credit Agreement Collateral
Agent for purposes of the Intercreditor Agreement and the Senior Credit
Agreement Collateral Documents, and (b) the Revolving Loan Agent acting in such
capacity as collateral agent is irrevocably authorized, pursuant to the Credit
Agreement and the other Loan Documents (as defined in the Credit Agreement) to
take such actions on behalf of the New Senior Creditors (as defined below) and
to exercise such powers as are delegated to the Senior Credit Agreement
Collateral Agent in the Intercreditor Agreement, the Senior Credit Agreement and
the Senior Credit Agreement Collateral Documents, together with such actions and
powers as are reasonably incidental thereto, and that the Senior Credit
Agreement Collateral Agent is authorized to execute any Senior Credit Agreement
Collateral Documents on behalf of all Senior Creditors and to take such other
actions to maintain and preserve the security interests granted pursuant to the
Senior Credit Agreement and any Senior Credit Agreement Collateral Documents.

 

2.     Joinder. The undersigned, Wilmington Trust, National Association (the
“New Senior Representative”) in its capacity as the Revolving Loan Agent and
acting in such capacity as collateral agent hereby joins (a) the Intercreditor
Agreement as Senior Representatives, as Senior Credit Agreement Administrative
Agent and as Senior Credit Agreement Collateral Agent, acting for and behalf of
themselves and the Lenders as Senior Creditors under, and as defined in, the
Intercreditor Agreement for all purposes thereof on the terms set forth therein,
and agrees to be bound by the terms, conditions and provisions of the
Intercreditor Agreement as fully as if the undersigned had executed and
delivered the Intercreditor Agreement as of the date thereof, (b) the Mortgage
Tax Collateral Agency Agreement as Senior Credit Agreement Collateral Agent and
appoints the Mortgage Tax Collateral Agent to act for and behalf of itself and
the Lenders as Secured Parties under, and as defined in, the Mortgage Tax
Collateral Agency Agreement for all purposes thereof on the terms set forth
therein, and agrees to be bound by the terms, conditions and provisions of the
Mortgage Tax Collateral Agency Agreement as fully as if the undersigned had
executed and delivered the Mortgage Tax Collateral Agency Agreement as of the
date thereof and (c) irrevocably authorizes the Mortgage Tax Collateral Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Mortgage Tax Collateral Agent in the Intercreditor Agreement in relation to
the Revolving Loan Facility and the Senior Credit Agreement Collateral
Documents, together with such actions and powers as are reasonably incidental
thereto.

 

3

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3.     Lien Sharing and Priority Confirmation. The New Senior Representative, on
behalf of itself and each Lender (together with the New Senior Representative,
the “New Senior Creditors”), hereby agrees, as a condition to having the
obligations in respect of the loans made under the Revolving Loan Facility being
treated as Future First-Lien Indebtedness, Senior Claims and Senior Credit
Agreement Claims under the Intercreditor Agreement that (a) the New Senior
Representative and each other New Senior Creditor are bound by the terms,
conditions and provisions of the Intercreditor Agreement, including, without
limitation, the provisions relating to the ranking of Liens and the order of
application of proceeds from the enforcement of Liens; and (b) the New Senior
Representative shall perform its obligations under the Intercreditor Agreement.

 

4.     Authority as Agent. The New Senior Representative represents, warrants
and acknowledges that, pursuant to the authorizations set forth in the Credit
Agreement and the Senior Credit Agreement Collateral Documents, it has the
authority to bind each of the New Senior Creditors to the Intercreditor
Agreement and the Mortgage Tax Collateral Agency Agreement.

 

5.     Construction. (a) From this date hereof, references to the Intercreditor
Agreement shall mean and include the Intercreditor Agreement as supplemented by
this Joinder and references in the Intercreditor Agreement to the following
shall be interpreted to mean as follows:

 

“Mortgage Tax Collateral Agent” shall include Wilmington Trust, National
Association, as the Mortgage Tax Collateral Agent appointed pursuant to this
Joinder in respect of the Revolving Loan Facility for all purposes thereof and
under the Intercreditor Agreement;

 

“Senior Credit Agreement” shall mean the Credit Agreement;

 

“Senior Credit Agreement Administrative Agent” shall mean the Revolving Loan
Agent, including any successors thereto in such capacity;

 

“Senior Credit Agreement Collateral Agent” shall refer to the Revolving Loan
Agent acting in such capacity as collateral agent in lieu of the reference to
the Senior Credit Agreement Collateral Agent therein; and

 

“Senior Credit Agreement Documents” shall include the Intercreditor Agreement
(as supplemented by this Joinder) and the Mortgage Tax Collateral Agency
Agreement (as supplemented by this Joinder).

 

(b)     From this date hereof, references to the Mortgage Tax Collateral Agency
Agreement shall mean and include the Mortgage Tax Collateral Agency Agreement as
supplemented by this Joinder and references in the Mortgage Tax Collateral
Agency Agreement to the following shall be interpreted to mean as follows:

 

“Secured Parties” shall include the Revolving Loan Agent including in such
capacity as collateral agent;

 

“Senior Credit Agreement” shall mean the Credit Agreement; and

 

4

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“Senior Credit Agreement Administrative Agent” shall mean the Revolving Loan
Agent, including any successors thereto in such capacity.

 

6.     Notices. All notices to be delivered to the Revolving Loan Agent
including in its capacity as collateral agent under the Intercreditor Agreement
and the Mortgage Tax Collateral Agency Agreement, as applicable, shall be
delivered in accordance with such agreement to the address listed on the
signature pages hereto for the New Senior Representative.

 

7.     Counterparts. This Joinder may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute one contract.

 

8.     Governing Law. THIS JOINDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

9.     Miscellaneous. The provisions of Section 8 of the Intercreditor Agreement
and Article III of the Mortgage Tax Collateral Agency Agreement shall apply with
like effect to this Joinder.

 

 

[Signature Pages Follow]

 

5

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IN WITNESS WHEREOF, the parties caused this Joinder to be duly executed and
delivered as of the day and year first above written.

 

Notice Address:

 

Wilmington Trust, National Association

 

50 South Sixth Street, Suite 1290

Minneapolis, MN 55402

Attention: K. Hovnanian

Administrator

Facsimile: (612) 217-5651

Revolving Loan Agent

 

WILMINGTON TRUST, NATIONAL

ASSOCIATION

not in its individual capacity but solely in its capacity

as Revolving Loan Agent and acting in such capacity

as collateral agent

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

Notice Address:

 

Wilmington Trust, National Association

 

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1600

Attention: K. Hovnanian Administrator

Telecopy: 302-636-4149

WILMINGTON TRUST, NATIONAL

ASSOCIATION

not in its individual capacity but solely as Junior

Joint Collateral Agent

 

 

 

 

 

 

 

 

 

 

  By:    

 

 

Name:

 

 

 

Title:

 

 

 

 

--------------------------------------------------------------------------------

 

 

Notice Address:

 

Wilmington Trust, National Association

 

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1600

Attention: K. Hovnanian Administrator

Telecopy: 302-636-4149

WILMINGTON TRUST, NATIONAL

ASSOCIATION

not in its individual capacity but solely as Mortgage T

ax Collateral Agent

 

 

 

 

 

 

 

 

 

 

  By:    

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

 

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

K. HOV IP, II, Inc.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

On behalf of each other entity named in Schedule A hereto

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

9

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Schedule A11

 

 

 

 

 

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11 To be completed.