Exhibit 10.1

 

CREDIT AGREEMENT

Dated as of October 11, 2006

among

K. HOVNANIAN ENTERPRISES, INC.,

as Borrower,

HOVNANIAN ENTERPRISES, INC.

and certain subsidiaries thereof,

as Guarantors

THE LENDERS PARTY HERETO,

CITICORP USA, INC.,

as Administrative Agent,

CITICORP USA, INC.,

as Issuing Bank,

and

THE BANK OF NEW YORK,

as Paying Agent

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$125,000,000 REVOLVING AND LETTER OF CREDIT FACILITY

 

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Table of Contents

 

 

Page

ARTICLE I         DEFINITIONS

1

SECTION 1.01.

Defined Terms

1

SECTION 1.02.

Terms Generally

18

SECTION 1.03.

Accounting Terms; GAAP

18

 

 

 

ARTICLE II         THE CREDITS

18

SECTION 2.01.

Commitments

18

SECTION 2.02.

Loans and Borrowings

19

SECTION 2.03.

Requests for Borrowings

19

SECTION 2.04.

The Letter of Credit

20

SECTION 2.05.

Funding of Borrowings

23

SECTION 2.06.

Interest Elections

24

SECTION 2.07.

Termination of Commitments; Reduction of Commitments

25

SECTION 2.08.

Repayment of Loans; Evidence of Debt; Obligations Absolute

26

SECTION 2.09.

Prepayment of Loans

27

SECTION 2.10.

Fees

28

SECTION 2.11.

Interest

28

SECTION 2.12.

Alternate Rate of Interest

29

SECTION 2.13.

Increased Costs or Reduced Return Resulting from Taxes, Reserves, Capital
Adequacy Requirements, Expenses, Etc.

29

SECTION 2.14.

Break Funding Payments

30

SECTION 2.15.

Payments Generally; Pro Rata Treatment; Sharing of Set-offs

31

SECTION 2.16.

Mitigation Obligations; Replacement of Lenders

33

 

 

 

ARTICLE III         REPRESENTATIONS AND WARRANTIES

33

SECTION 3.01.

Organization and Qualification

33

SECTION 3.02.

Subsidiaries

34

SECTION 3.03.

Power and Authority

34

SECTION 3.04.

Validity and Binding Effect

34

SECTION 3.05.

No Conflict

34

SECTION 3.06.

Litigation

35

SECTION 3.07.

Title to Properties

35

SECTION 3.08.

Financial Statements

35

SECTION 3.09.

Disclosure

36

SECTION 3.10.

Margin Stock

36

SECTION 3.11.

Taxes

36

SECTION 3.12.

Consents and Approvals

36

SECTION 3.13.

No Defaults; Compliance with Instruments

36

SECTION 3.14.

Investment Companies; Regulated Entities

37

 

 

 

ARTICLE IV         CONDITIONS

37

SECTION 4.01.

Conditions to Effective Date

37

SECTION 4.02.

Condition to Each Credit Event

38

 

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ARTICLE V         COVENANTS

38

SECTION 5.01.

Existence

38

SECTION 5.02.

Payment of Taxes and Other Claims

38

SECTION 5.03.

Maintenance of Properties and Insurance

39

SECTION 5.04.

Limitations on Liens

39

SECTION 5.05.

Limitations on Mergers, Consolidations and Sales of Assets

39

SECTION 5.06.

Cash Collateralization

40

 

 

 

ARTICLE VI         GUARANTEES

42

SECTION 6.01.

Guarantee

42

SECTION 6.02.

Obligations of Each Guarantor Unconditional; Savings Clause

43

SECTION 6.03.

Release of a Guarantor

43

SECTION 6.04.

Joinder of Additional Guarantors

44

 

 

 

ARTICLE VII         EVENTS OF DEFAULT

44

 

 

 

ARTICLE VIII         THE ADMINISTRATIVE AGENT AND THE PAYING AGENT

46

 

 

 

ARTICLE IX         MISCELLANEOUS

48

SECTION 9.01.

Notices

48

SECTION 9.02.

Waivers; Amendments

49

SECTION 9.03.

Expenses; Indemnity; Damage Waiver

50

SECTION 9.04.

Successors and Assigns

51

SECTION 9.05.

Survival

53

SECTION 9.06.

USA Patriot Act

54

SECTION 9.07.

Counterparts; Integration; Effectiveness

54

SECTION 9.08.

Severability

54

SECTION 9.09.

Right of Setoff

54

SECTION 9.10.

Governing Law; Jurisdiction; Consent to Service of Process; Process Agent;
Waiver of Immunity

55

SECTION 9.11.

WAIVER OF JURY TRIAL

55

SECTION 9.12.

Headings

56

SECTION 9.13.

Confidentiality

56

SECTION 9.14.

Tax Withholding Clause

57

 

SCHEDULES:

 

 

Schedule 1.01

Restricted and Unrestricted Subsidiaries

 

Schedule 2.01

Commitments

 

 

 

 

EXHIBITS:

 

 

 

 

 

Exhibit A

Form of Assignment and Acceptance

 

Exhibit B

Form of Notes

 

Exhibit C

Form of Notice of LC Request

 

Exhibit D

Form of Letter of Credit

 

Exhibit E

Form of Guarantee Joinder Agreement

 

 

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CREDIT AGREEMENT, dated as of October 11, 2006 (as amended, supplemented,
amended and restated or otherwise modified from time to time, this “Agreement”),
among K. HOVNANIAN ENTERPRISES, INC., a California corporation (the “Company”),
HOVNANIAN ENTERPRISES, INC., a Delaware corporation (“Hovnanian”), the other
GUARANTORS (as defined below) that become parties hereto from time to time, the
LENDERS party hereto (the “Lenders”), CITICORP USA, INC. (“CUSA”), as
Administrative Agent (in such capacity, the “Administrative Agent”), CUSA, as
Issuing Bank (in such capacity, the “Issuing Bank”), and THE BANK OF NEW YORK,
not in its individual capacity, but solely as Paying Agent (the “Paying Agent”).

The Company has requested the Lenders to extend credit to enable it to borrow on
a revolving credit basis on and after the date hereof and at any time and from
time to time during the Availability Period (such term and each other
capitalized term used and not otherwise defined herein having the meaning
assigned to it in Article I) a principal amount not in excess of $125,000,000 at
any time outstanding.  The Company has further requested the Issuing Bank to
issue the Letter of Credit to support other payment obligations of the Company. 
The proceeds of borrowings hereunder are to be used for general corporate
purposes of the Company, Hovnanian and its Subsidiaries and other purposes not
inconsistent with this Agreement.

The Guarantors expect to derive substantial direct and indirect benefits from
the credit to be extended by the Lenders and the Issuing Bank hereunder and are,
accordingly, willing to guaranty the obligations of the Company hereunder on the
terms set forth herein.

The Lenders and the Issuing Bank are willing to extend such credit to the
Company on the terms and subject to the conditions set forth herein.

Accordingly, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

SECTION 1.01.  DEFINED TERMS.

As used in this Agreement, the following terms have the meanings specified
below:

“ABR”, when used in reference to any Loan or Borrowing, means that such Loan, or
the Loans comprising such Borrowing, are bearing interest at a rate determined
by reference to the Alternate Base Rate.

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to (i) the LIBO Rate for such Interest Period
multiplied by (ii) the Statutory Reserve Rate.

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“Administrative Agent” has the meaning ascribed to it in the preamble to this
Agreement.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“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.

“Agents” means the Administrative Agent and the Paying Agent.

“Agreement” has the meaning ascribed to it in the preamble to this agreement.

“Alternate Base Rate” means, for any day, a rate per annum equal to the higher
of (i) the Base Rate in effect on such day and (ii) the Federal Funds Effective
Rate in effect on such day plus ½ of 1%.  Any change in the Alternate Base Rate
due to a change in the Base Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Base Rate
or the Federal Funds Effective Rate, respectively.

“Applicable Debt” means all Indebtedness of Hovnanian or any of its Restricted
Subsidiaries (i) under Credit Facilities or (ii) that is publicly traded
(including in the Rule 144A market), including without limitation the Company’s
senior notes and senior subordinated notes outstanding on the date hereof.

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment.  If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an assignee (with the consent of any party the consent of which is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

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

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination in
whole of the Commitments.

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

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“Base Rate” means the rate of interest per annum publicly announced from time to
time by Citibank, as its “base” rate; each change in the Base Rate shall be
effective from and including the date such change is publicly announced as being
effective.

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.

“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.

“Borrowing Request” means a request by the Company for Loans in accordance with
Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that the term “Business Day” shall also exclude, when
used in connection with a Eurodollar Loan, any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

“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.

“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 date hereof.

“Citibank” means Citibank, N.A.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and acquire participations in the Letter of Credit, as such
commitment may be (i) reduced or increased from time to time pursuant to
Section 2.07 and (ii) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.  The initial amount
of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment
and Acceptance pursuant to which such Lender shall have assumed its Commitment,
as applicable.

“Commitment Increase” has the meaning ascribed to it in Section 2.07(d).

“Common Equity” of any Person means Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing

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body, partners, managers or others that will control the management or policies
of such Person.

“Company” means K. Hovnanian Enterprises, Inc., a California corporation.

“Consolidated Adjusted Tangible Assets” of Hovnanian as of any date means the
Consolidated Tangible Assets of Hovnanian, the Company and the Restricted
Subsidiaries at the end of the fiscal quarter immediately preceding the date
less any assets securing any Non-Recourse Indebtedness, as determined in
accordance with GAAP.

“Consolidated Tangible Assets” of Hovnanian as of any date means the total
amount of assets of Hovnanian, the Company and the Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less
(i) Intangible Assets and (ii) appropriate adjustments on account of minority
interests of other Persons holding equity investments in Restricted
Subsidiaries.

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

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

“Credit Event” means each Borrowing and each issuance, renewal, extension or
increase of the Letter of Credit.

“Credit Facilities” means, collectively, each of the credit facilities and lines
of credit of Hovnanian or one or more Restricted Subsidiaries in existence on
the date hereof and one or more other facilities and lines of credit among or
between Hovnanian or one or more Restricted Subsidiaries and one or more lenders
pursuant to which Hovnanian or one or more Restricted Subsidiaries may incur
indebtedness for working capital and general corporate purposes (including
acquisitions), as any such facility or line of credit may be amended, restated,
supplemented or otherwise modified from time to time, and includes any agreement
extending the maturity of, increasing the amount of, or restructuring, all or
any portion of the Indebtedness under such facility or line of credit or any
successor facilities or lines of credit and includes any facility or line of
credit with one or more lenders refinancing or replacing all or any portion of
the Indebtedness under such facility or line of credit or any successor facility
or line of credit.

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“Currency Agreement” of any Person means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
such Person or any of its Subsidiaries against fluctuations in currency values.

“Default” means any event or condition that constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

“dollars” or “$” refers to lawful money of the United States of America.

“Effective Date” means the date on which the conditions set forth in Section
4.01 are satisfied or waived in accordance with Section 9.02.

“Environmental Laws” mean any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or the release of any
materials into the environment.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Hovnanian, the Company or any of its Restricted
Subsidiaries directly or indirectly resulting from or based upon (i) violation
of any Environmental Law, (ii) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials (iii) exposure to any
Hazardous Materials, (iv) the release or threatened release of any Hazardous
Materials into the environment or (v) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

“Eurodollar”, when used in reference to any Loan or Borrowing, means that such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

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

“Facility Fee” has meaning ascribed to it in Section 2.10.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

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“Fee Letter” means the fee letter, dated as of the date hereof, among the
Company, Hovnanian and CUSA, as amended, modified or supplemented from time to
time.

“Financial Officer” means, with respect to any Loan Party, the chief financial
officer, principal accounting officer, treasurer or controller of such Loan
Party.

“GAAP” or “generally accepted accounting principles” 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 May 4, 1999.

“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: (i) 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 (ii)
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.

“Guarantee Joinder Agreement” means an agreement substantially in the form of
Exhibit E, pursuant to which a Subsidiary of Hovnanian shall become a Guarantor
hereunder.

“Guarantors” means Hovnanian, each Restricted Subsidiary and each Unrestricted
Subsidiary that Hovnanian causes to be a “Guarantor” hereunder.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Increasing Lender” has the meaning ascribed to it in Section 2.07(d).

“Indemnitee” has the meaning ascribed to it in Section 9.03.

“Indebtedness” of any Person means, without duplication,

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(I)            ANY LIABILITY OF SUCH PERSON (A) 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 INSTRUMENT 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), (B) 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 (C) IN RESPECT OF CAPITALIZED LEASE OBLIGATIONS (TO THE EXTENT OF
THE ATTRIBUTABLE DEBT IN RESPECT THEREOF);

(II)           ANY INDEBTEDNESS OF OTHERS THAT SUCH PERSON HAS GUARANTEED TO THE
EXTENT OF THE GUARANTEE, PROVIDED, HOWEVER, THAT INDEBTEDNESS OF HOVNANIAN AND
ITS RESTRICTED SUBSIDIARIES WILL NOT INCLUDE THE OBLIGATIONS OF HOVNANIAN 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;

(III)          TO THE EXTENT NOT OTHERWISE INCLUDED, THE OBLIGATIONS OF SUCH
PERSON UNDER CURRENCY AGREEMENTS OR INTEREST PROTECTION AGREEMENTS TO THE EXTENT
RECORDED AS LIABILITIES NOT CONSTITUTING INTEREST INCURRED, NET OF AMOUNTS
RECORDED AS ASSETS IN RESPECT OF SUCH AGREEMENTS, IN ACCORDANCE WITH GAAP; AND

(IV)          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. The amount of Indebtedness of any Person at any date shall
be (A) 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, (B) the maximum liability of such Person for
any contingent obligations under clause (i) above at such date, net of an
unamortized discount to be accounted for as Interest Expense in accordance with
GAAP, and (C) in the case of clause (iv) 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.

“Indenture” means the Indenture, dated as of November 3, 2003, by and among the
Company, Hovnanian and Wachovia Bank, National Association, as supplemented by a
First Supplemental Indenture thereto, dated as of November 3, 2003, a Second
Supplemental Indenture thereto, dated as of March 18, 2004, a Third Supplemental
Indenture thereto, dated as of July 15, 2004, a Fourth Supplemental Indenture
thereto, dated as of April 19, 2005, a Fifth Supplemental Indenture thereto,
dated as of September 6, 2005, a Sixth Supplemental Indenture thereto, dated as
of February 27, 2006, and a Seventh Supplemental Indenture thereto, dated as of
June 12, 2006.

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“Information” has the meaning ascribed to it in Section 9.13.

“Intangible Assets” of Hovnanian means all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, write-ups of assets over their prior carrying
value (other than write-ups which occurred prior to the date hereof and other
than, in connection with the acquisition of an asset, the write-up of the value
of such asset (within one year of its acquisition) to its fair market value in
accordance with GAAP) and all other items that would be treated as intangible on
the consolidated balance sheet of Hovnanian, the Company and the Restricted
Subsidiaries prepared in accordance with GAAP.

“Interest Election Request” means a request by the Company to convert or
continue a Borrowing in accordance with Section 2.06.

“Interest Expense” of any Person for any period means, without duplication, the
aggregate amount of (i) interest that, 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 non-cash interest
expense (other than interest and other charges amortized to cost of sales), and
(ii) all interest actually paid by Hovnanian 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
Hovnanian, the Company 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 (i) Interest Expense and (ii) all capitalized interest and
amortized debt issuance costs.

“Interest Payment Date” means (i) with respect to any ABR Loan, the last day of
each March, June, September and December, and (ii) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months’ duration, each day during such
Interest Period that occurs at intervals of three months’ duration after the
first day of such Interest Period.

“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the day that is one day,
one week or two weeks thereafter, or the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as the Company
may elect; provided, that (i) if any Interest Period would end on a day other
than a Business Day,

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such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day,
(ii) any Interest Period of one month or more that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period and
(iii) any Interest Period that otherwise would extend beyond the second
anniversary of the date hereof shall end on the date of such second
anniversary.  For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.

“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.

“Investment Grade” means, with respect to a debt rating of any securities of
Hovnanian or the Company, a rating of Baa3 or higher by Moody’s together with a
rating of BBB- or higher by S&P or, in the event S&P or Moody’s or both shall
cease rating such securities (for reasons outside the control of Hovnanian or
the Company) and Hovnanian shall select any other Rating Agency, the equivalent
of such ratings by such other Rating Agency.

“Issuing Bank” has the meaning ascribed to it in the preamble to this Agreement.

“Law” means 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.

“LC Disbursement” means a payment made by the Issuing Bank pursuant to the
Letter of Credit.

“LC Exposure” means, at any time, the sum of (i) the undrawn amount of the
Letter of Credit at such time plus (ii) the aggregate amount of all LC
Disbursements that have not yet been reimbursed by or on behalf of the Company
at such time.  The LC Exposure of any Lender at any time shall be its Applicable
Percentage of the total LC Exposure at such time.

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Acceptance, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Acceptance.

“Letter of Credit” has the meaning ascribed to it in Section 2.04(a).

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“LIBO Rate” means, with respect to each Interest Period, the rate per annum
determined by the Administrative Agent to be the offered rate for deposits in
dollars with a term comparable to such Interest Period that appears on the
Telerate Page at approximately 11:00 a.m., London time, two Business Days prior
to the beginning of such Interest Period; provided, however, that if at any time
for any reason such offered rate does not appear on the Telerate Page, “LIBO
Rate” shall mean, with respect to each day during each Interest Period, the rate
per annum (rounded upward to the nearest 1/100 of 1%) at which dollar deposits
of $5,000,000 and for a maturity comparable to such Interest Period are offered
by the principal London office of Citibank or any of its Affiliates in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the beginning of such
Interest Period.  In the event the LIBO Rate is determined as set forth in the
next preceding sentence, the LIBO Rate shall be determined by the Administrative
Agent on the basis of the applicable rates furnished to and received by the
Administrative Agent from Citibank or any of its Affiliates on the second
Business Day prior to the commencement of such Interest Period.

“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 that it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such Property.

“Loan Documents” means, collectively, this Agreement, any Note, the Fee Letter
and any Guarantee Joinder Agreement.

“Loan Parties” means the Company and the Guarantors.

“Loans” means the loans made by the Lenders to the Company pursuant to Sections
2.03 and 2.04(e).

“Margin Stock” has the meaning ascribed to it in Regulation U of the Board.

“Material Adverse Change” means a set of circumstances or events that (i) has or
could reasonably be expected to have any material adverse effect whatsoever upon
the validity or enforceability of any Loan Document, (ii) is or could reasonably
be expected to be material and adverse to the business, properties, assets,
financial condition, results of operations or business prospects of the Loan
Parties taken as a whole, (iii) impairs materially or could reasonably be
expected to impair materially the ability of the Loan Parties taken as a whole
to duly and punctually pay or perform their material Indebtedness for borrowed
money, or (iv) impairs materially or could reasonably be expected to impair
materially the ability of the Administrative Agent, the Issuing Bank or any of
the Lenders, to the extent permitted, to enforce their legal remedies pursuant
to any Loan Document.

“Maturity Date” means September 20, 2009.

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

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

“Non-Recourse Indebtedness” with respect to any Person means Indebtedness of
such Person for which (i) the sole legal recourse for collection of principal
and interest on such Indebtedness is against the specific property identified in
the instruments evidencing or securing such Indebtedness and such property was
acquired with the proceeds of such Indebtedness or such Indebtedness was
incurred within 90 days after the acquisition of such property and (ii) no other
assets of such Person may be realized upon in collection of principal or
interest on such Indebtedness. Indebtedness that 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 (A)
environmental warranties and indemnities, or (B) indemnities for and liabilities
arising from fraud, misrepresentation, misapplication or non-payment of rents,
profits, 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.

“Note” has the meaning ascribed to it in Section 2.08(e).

“Notice of LC Request” means a notice substantially in the form of Exhibit C
hereto delivered by the Company to the Issuing Bank and the Administrative Agent
pursuant to Section 2.04(b) with respect to the Letter of Credit.

“Official Body” means any national, federal, state, local or other government 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.

“Participant” has the meaning ascribed to it in Section 9.04(e).

“Paying Agent” has the meaning ascribed to it in the preamble to this Agreement.

“Paying Agent’s Account” means the account of the Paying Agent maintained by the
Paying Agent at its office at 4 New York Plaza, 15th Floor, New York, New York
10004-2413, or such other account of the Paying Agent as is designated in
writing from time to time by the Paying Agent to the Company, the Administrative
Agent, the Issuing Bank and the Lenders for such purpose.

“Permitted Hovnanian Holders” means, collectively, Kevork S. Hovnanian, Ara K.
Hovnanian, the members of their immediate families, 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.

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“Permitted Liens” means:

(I)            LIENS FOR TAXES, ASSESSMENTS OR GOVERNMENTAL OR QUASI-GOVERNMENT
CHARGES OR CLAIMS THAT (A) ARE NOT YET DELINQUENT, (B) 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 (C) ENCUMBER SOLELY PROPERTY ABANDONED OR IN THE PROCESS OF BEING
ABANDONED;

(II)           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 (A) ARE NOT YET DELINQUENT OR (B) 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;

(III)          LIENS (OTHER THAN ANY LIEN IMPOSED BY THE EMPLOYER RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED) INCURRED OR DEPOSITS MADE IN THE
ORDINARY COURSE OF BUSINESS IN CONNECTION WITH WORKERS’ COMPENSATION,
UNEMPLOYMENT INSURANCE AND OTHER TYPES OF SOCIAL SECURITY;

(IV)          LIENS INCURRED OR DEPOSITS MADE TO SECURE THE PERFORMANCE OF
TENDERS, BIDS, LEASES, STATUTORY OBLIGATIONS, SURETY AND APPEAL BONDS,
DEVELOPMENT OBLIGATIONS, PROGRESS PAYMENTS, GOVERNMENT CONTACTS, 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 (I)(A) OF THE DEFINITION OF “INDEBTEDNESS”), IN EACH
CASE INCURRED IN THE ORDINARY COURSE OF BUSINESS OF HOVNANIAN, THE COMPANY AND
THE RESTRICTED SUBSIDIARIES;

(V)           ATTACHMENT OR JUDGMENT LIENS NOT GIVING RISE TO A DEFAULT OR AN
EVENT OF DEFAULT;

(VI)          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 HOVNANIAN, THE COMPANY AND THE RESTRICTED SUBSIDIARIES;

(VII)         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
HOVNANIAN, THE COMPANY AND THE RESTRICTED SUBSIDIARIES;

(VIII)        LIENS ON OFFICE BUILDINGS OWNED OR OCCUPIED BY HOVNANIAN OR ANY
RESTRICTED SUBSIDIARY SECURING INDEBTEDNESS THAT DOES NOT EXCEED $25,000,000
AGGREGATE PRINCIPAL AMOUNT OUTSTANDING AT ANY ONE TIME;

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(IX)           LIENS ON MORTGAGE LOANS AND RELATED ASSETS OF MORTGAGE LENDING
SUBSIDIARIES IN THE ORDINARY COURSE OF A MORTGAGE LENDING BUSINESS SECURING
INDEBTEDNESS;

(X)            LIENS SECURING INDEBTEDNESS OF HOVNANIAN, THE COMPANY OR ANY
RESTRICTED SUBSIDIARY; PROVIDED, THAT THE AGGREGATE AMOUNT OF ALL CONSOLIDATED
INDEBTEDNESS OF HOVNANIAN, THE COMPANY AND THE RESTRICTED SUBSIDIARIES
(INCLUDING, WITH RESPECT TO CAPITALIZED LEASE OBLIGATIONS, THE ATTRIBUTABLE DEBT
IN RESPECT THEREOF) SECURED BY LIENS (OTHER THAN NON-RECOURSE INDEBTEDNESS AND
INDEBTEDNESS UNDER CREDIT FACILITIES THAT DOES NOT EXCEED $1,500,000,000
PRINCIPAL AMOUNT OUTSTANDING AT ANY TIME) SHALL NOT EXCEED 40% OF CONSOLIDATED
ADJUSTED TANGIBLE ASSETS AT ANY ONE TIME OUTSTANDING (AFTER GIVING EFFECT TO THE
INCURRENCE OF SUCH INDEBTEDNESS AND THE USE OF THE PROCEEDS THEREOF);

(XI)           LIENS SECURING NON-RECOURSE INDEBTEDNESS OF HOVNANIAN, THE
COMPANY OR ANY RESTRICTED SUBSIDIARY; PROVIDED, THAT SUCH LIENS APPLY ONLY TO
THE PROPERTY FINANCED OUT OF THE NET PROCEEDS OF SUCH NON-RECOURSE INDEBTEDNESS
WITHIN 90 DAYS AFTER THE INCURRENCE OF SUCH NON-RECOURSE INDEBTEDNESS;

(XII)          LIENS SECURING PURCHASE MONEY INDEBTEDNESS; PROVIDED THAT SUCH
LIENS APPLY ONLY TO THE PROPERTY ACQUIRED, CONSTRUCTED OR IMPROVED WITH THE
PROCEEDS OF SUCH PURCHASE MONEY INDEBTEDNESS WITHIN 90 DAYS AFTER THE INCURRENCE
OF SUCH PURCHASE MONEY INDEBTEDNESS;

(XIII)         LIENS ON PROPERTY OR ASSETS OF HOVNANIAN, THE COMPANY OR ANY
RESTRICTED SUBSIDIARY SECURING INDEBTEDNESS OF HOVNANIAN, THE COMPANY OR ANY
RESTRICTED SUBSIDIARY OWING TO HOVNANIAN, THE COMPANY OR ONE OR MORE RESTRICTED
SUBSIDIARIES;

(XIV)        LEASES OR SUBLEASES GRANTED TO OTHERS NOT MATERIALLY INTERFERING
WITH THE ORDINARY COURSE OF BUSINESS OF HOVNANIAN AND THE RESTRICTED
SUBSIDIARIES;

(XV)         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 90 DAYS AFTER
THE ACQUISITION OF SUCH PROPERTY;

(XVI)        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 HEREUNDER;

(XVII)       ANY RIGHT OF A LENDER OR LENDERS TO WHICH HOVNANIAN, THE COMPANY OR
A RESTRICTED SUBSIDIARY MAY BE INDEBTED TO OFFSET AGAINST, OR APPROPRIATE AND
APPLY TO THE PAYMENT OF SUCH, INDEBTEDNESS ANY AND ALL BALANCES, CREDITS,
DEPOSITS, ACCOUNTS OR MONEY OF HOVNANIAN, THE COMPANY OR A RESTRICTED SUBSIDIARY
WITH OR HELD BY SUCH LENDER OR LENDERS OR ITS AFFILIATES;

(XVIII)      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 HOVNANIAN, THE COMPANY AND THE RESTRICTED SUBSIDIARIES;

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(XIX)         LIENS FOR HOMEOWNER AND PROPERTY OWNER ASSOCIATION DEVELOPMENTS
AND ASSESSMENTS;

(XX)          LIENS SECURING REFINANCING INDEBTEDNESS; PROVIDED, THAT SUCH LIENS
EXTEND ONLY TO THE ASSETS SECURING THE INDEBTEDNESS BEING REFINANCED;

(XXI)         LIENS INCURRED IN THE ORDINARY COURSE OF BUSINESS AS SECURITY FOR
THE OBLIGATIONS OF HOVNANIAN, THE COMPANY AND THE RESTRICTED SUBSIDIARIES WITH
RESPECT TO INDEMNIFICATION IN RESPECT OF TITLE INSURANCE PROVIDERS;

(XXII)        LIENS ON PROPERTY OF A PERSON EXISTING AT THE TIME SUCH PERSON IS
MERGED WITH OR INTO OR CONSOLIDATED WITH HOVNANIAN OR ANY SUBSIDIARY OF
HOVNANIAN OR BECOMES A SUBSIDIARY OF HOVNANIAN; 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 HOVNANIAN OR THE SUBSIDIARY OR ACQUIRED BY
HOVNANIAN OR ITS SUBSIDIARIES;

(XXIII)       LIENS ON PROPERTY EXISTING AT THE TIME OF ACQUISITION THEREOF BY
HOVNANIAN OR ANY SUBSIDIARY OF HOVNANIAN, PROVIDED THAT SUCH LIENS WERE IN
EXISTENCE PRIOR TO THE CONTEMPLATION OF SUCH ACQUISITION;

(XXIV)       LIENS EXISTING ON THE DATE HEREOF AND ANY EXTENSIONS, RENEWALS OR
REPLACEMENTS THEREOF; AND

(XXV)        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.

“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.

“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.

“Purchase Money Indebtedness” means Indebtedness of Hovnanian, the Company or
any Restricted Subsidiary incurred for the purpose of financing all or any part
of the purchase price, or the cost of construction or improvement, of any
property to be used in the ordinary course of business by Hovnanian, the Company
and the Restricted Subsidiaries; provided, however, that (i) the aggregate
principal amount of such Indebtedness shall not exceed such purchase price or
cost and (ii) such Indebtedness shall be incurred no later than 90 days after
the acquisition of such property or completion of such construction or
improvement.

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

“Refinancing Indebtedness” means Indebtedness that refunds, refinances or
extends any Indebtedness of Hovnanian, the Company or any Restricted Subsidiary
outstanding on the date hereof or other Indebtedness permitted to be incurred by
Hovnanian, the Company or any Restricted Subsidiary pursuant to the terms
hereof, but only to the extent that:

(I)            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,

(II)           THE REFINANCING INDEBTEDNESS IS SCHEDULED TO MATURE EITHER (A) NO
EARLIER THAN THE INDEBTEDNESS BEING REFUNDED, REFINANCED OR EXTENDED OR (B)
AFTER THE MATURITY DATE,

(III)          THE PORTION, IF ANY, OF THE REFINANCING INDEBTEDNESS THAT IS
SCHEDULED TO MATURE ON OR PRIOR TO THE MATURITY DATE 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, AND

(IV)          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.

“Register” has the meaning ascribed to it in Section 9.04(c).

“Regulation U” means Regulation U of the Board, as the same is from time to time
in effect, and all official rulings and interpretations thereunder or thereof.

“Regulation X” means Regulation X of the Board, as the same is from time to time
in effect, and all official rulings and interpretations thereunder or thereof.

“Reimbursement Agreement” means the Agreement for Letter of Credit, dated as of
October 11, 2006, between Citibank and the Company, as amended, modified or
supplemented from time to time.

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

“Required Lenders” means, (i) at any time prior to the termination of the
Commitments pursuant to Article VII, Lenders having Total Exposures and unused
Commitments representing more than 50% of the aggregate Total Exposures and
unused

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Commitments at such time, and (ii) for all purposes after the termination of the
Commitments pursuant to Article VII, Lenders having outstanding Loans and LC
Exposures representing more than 50% of the aggregate outstanding principal
amount of Loans and LC Exposures.

“Restricted Subsidiary” means any Subsidiary of Hovnanian that is not an
Unrestricted Subsidiary.

“S&P” means Standard and Poor’s Ratings Service, a division of The McGraw Hill
Companies, Inc., a New York corporation or any successor to its debt rating
business.

“SEC” means the Securities and Exchange Commission.

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

“Significant Subsidiary” means any Subsidiary of Hovnanian that 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 date
hereof.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such reserve percentages shall include those
imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

“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.

“Telerate Page” means the display designated as Page 3750 on the Dow Jones
Markets System (or such other page as may replace such page on such service for
the purpose of displaying the rates at which dollar deposits are offered by
leading banks in the London interbank deposit market).

“Total Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans and its LC Exposure at such
time.

“Transactions” means each of the execution, delivery and performance by each
Loan Party of each Loan Document to which such Loan Party is a party, the
borrowing of

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Loans hereunder and the issuance and modification of the Letter of Credit for
the account of the Company hereunder.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“Unrestricted Subsidiary” means any Subsidiary of Hovnanian so designated by a
resolution adopted by the Board of Directors of Hovnanian or a duly authorized
committee thereof as provided below; provided that (i) the holders of
Indebtedness thereof do not have direct or indirect recourse against Hovnanian,
the Company or any Restricted Subsidiary, and neither Hovnanian, the Company 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” as defined under and permitted
by the Indenture, 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 Hovnanian, the Company or a
Restricted Subsidiary and (ii) no holder of any Indebtedness of such Subsidiary
shall have a right to declare a default on such Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity as a
result of a default on any Indebtedness of Hovnanian, the Company or any
Restricted Subsidiary. As of the date hereof, the Unrestricted Subsidiaries will
be the Subsidiaries of Hovnanian designated as such on Schedule 1.01 hereto.

Subject to the foregoing, the Board of Directors of Hovnanian or a duly
authorized committee thereof may designate any Subsidiary in addition to those
named above to be an Unrestricted Subsidiary; provided, however, that after
giving effect to such designation, no Default or Event of Default shall have
occurred or be continuing.

The Board of Directors of Hovnanian or a duly authorized committee thereof may
also redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary.  Any
such designation or redesignation by the Board of Directors of Hovnanian or a
committee thereof will be evidenced to the Administrative Agent by delivering to
the Administrative Agent a certified copy of the resolution of the Board of
Directors of Hovnanian or a committee thereof giving effect to such designation
or redesignation and a Guarantee Joinder Agreement, duly executed by such
redesignated Subsidiary. 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
Hovnanian of which more than 95% of the equity interest is held by Hovnanian or
one or more Restricted Subsidiaries to be deemed an Unrestricted Subsidiary.

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“USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as
amended, supplemented, amended and restated or otherwise modified from time to
time.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness or
portion thereof at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (A) 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 (B) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment
by (ii) the sum of all such payments described in clause (i)(A) above.

SECTION 1.02.  TERMS GENERALLY.

The definitions of terms herein shall apply equally to 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”.  Unless the context requires
otherwise (i) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (ii) any reference herein to any Person
shall be construed to include such Person’s permitted successors and assigns,
(iii) 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 hereof, (iv) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (v) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

SECTION 1.03.  ACCOUNTING TERMS; GAAP.

All accounting terms used herein and not expressly defined shall have the
meanings assigned to such terms in accordance with GAAP.

ARTICLE II
THE CREDITS

SECTION 2.01.  COMMITMENTS.

Subject to the terms and conditions set forth herein and without limiting each
Lender’s obligation to make Loans pursuant to Section 2.04(e), each Lender
agrees to make Loans to the Company from time to time during the Availability
Period and to participate in the Letter of Credit in an aggregate principal
amount not exceeding the amount of such Lender’s Commitment; provided, that
after giving effect to each Credit Event (i) no Lender’s Total Exposure shall
exceed such Lender’s Commitment, and (ii) the sum of the Total Exposures of all
the Lenders shall not exceed the sum of the Commitments of all Lenders.  Within
the foregoing

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limits and subject to the terms and conditions set forth herein, the Company may
borrow, prepay and reborrow Loans and request the issuance, renewal, extension
and increase of the Letter of Credit.

SECTION 2.02.  LOANS AND BORROWINGS.

(A)           EACH LOAN SHALL BE MADE AS PART OF A BORROWING CONSISTING OF LOANS
MADE BY THE LENDERS, RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE COMMITMENTS. 
THE FAILURE OF ANY LENDER TO MAKE ANY LOAN REQUIRED TO BE MADE BY IT SHALL NOT
RELIEVE ANY OTHER LENDER OF ITS OBLIGATIONS HEREUNDER; PROVIDED THAT THE
COMMITMENTS OF THE LENDERS ARE SEVERAL, AND NO LENDER SHALL BE RESPONSIBLE FOR
ANY OTHER LENDER’S FAILURE TO MAKE LOANS AS REQUIRED.

(B)           SUBJECT TO SECTIONS 2.04(E) AND  2.12, EACH BORROWING SHALL BE
COMPRISED ENTIRELY OF ABR LOANS OR EURODOLLAR LOANS AS THE COMPANY MAY REQUEST
IN ACCORDANCE HEREWITH AND SHALL BE IN DOLLARS.  EACH LENDER AT ITS OPTION MAY
MAKE ANY LOAN BY CAUSING ANY DOMESTIC OR FOREIGN BRANCH OR AFFILIATE OF SUCH
LENDER TO MAKE SUCH LOAN; PROVIDED THAT ANY EXERCISE OF SUCH OPTION SHALL NOT
AFFECT THE OBLIGATION OF THE COMPANY TO REPAY SUCH LOAN IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT AND SHALL NOT BE INCONSISTENT WITH THE DUTY OF SUCH
LENDER UNDER SECTION 2.16(A) TO MINIMIZE THE AMOUNTS PAYABLE BY THE COMPANY
UNDER SECTION 2.13.

(C)           AT THE COMMENCEMENT OF EACH INTEREST PERIOD FOR ANY EURODOLLAR
BORROWING, SUCH BORROWING SHALL BE IN AN AGGREGATE AMOUNT THAT IS AN INTEGRAL
MULTIPLE OF $1,000,000 AND NOT LESS THAN $10,000,000; PROVIDED THAT A EURODOLLAR
BORROWING MAY BE IN AN AGGREGATE AMOUNT NOT LESS THAN $250,000 IF IT IS EQUAL TO
THE ENTIRE UNUSED BALANCE OF THE COMMITMENTS OR IF IT IS USED TO REFINANCE AN
ABR BORROWING THAT WAS REQUIRED TO FINANCE THE REIMBURSEMENT OF AN LC
DISBURSEMENT AS CONTEMPLATED BY SECTION 2.04(E).  AT THE TIME THAT EACH ABR
BORROWING IS MADE, SUCH BORROWING SHALL BE IN AN AGGREGATE AMOUNT THAT IS AN
INTEGRAL MULTIPLE OF $1,000,000 AND NOT LESS THAN $10,000,000; PROVIDED THAT AN
ABR BORROWING MAY BE IN AN AGGREGATE AMOUNT THAT IS EQUAL TO THE ENTIRE UNUSED
BALANCE OF THE TOTAL COMMITMENTS OR THAT IS REQUIRED TO FINANCE THE
REIMBURSEMENT OF AN LC DISBURSEMENT AS CONTEMPLATED BY SECTION 2.04(E). 
BORROWINGS OF MORE THAN ONE TYPE MAY BE OUTSTANDING AT THE SAME TIME; PROVIDED
THAT THERE SHALL NOT AT ANY TIME BE MORE THAN A TOTAL OF FIVE OUTSTANDING
EURODOLLAR BORROWINGS.

SECTION 2.03.  REQUESTS FOR BORROWINGS.

To request a Borrowing, except as otherwise provided with respect to Loans to be
made pursuant to Section 2.04(e), the Company shall notify the Administrative
Agent of such request by telephone (i) in the case of a Eurodollar Borrowing,
not later than 11:00 a.m., New York City time, three Business Days before the
date of the proposed Borrowing or (ii) in the case of any ABR Borrowing, not
later than 11:00 a.m., New York City time, on the Business Day of the proposed
Borrowing.  Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent at its office set forth in Section 9.01 of a written Borrowing Request in
a form approved by the Administrative Agent and signed by the Company, with a
copy to the Paying Agent.  Each such telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.02:

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(A)          THE AGGREGATE AMOUNT OF THE REQUESTED BORROWING;

(B)           THE DATE OF SUCH BORROWING, WHICH SHALL BE A BUSINESS DAY;

(C)           WHETHER SUCH BORROWING IS TO BE AN ABR BORROWING OR A EURODOLLAR
BORROWING;

(D)          IN THE CASE OF A EURODOLLAR BORROWING, THE INITIAL INTEREST PERIOD
TO BE APPLICABLE THERETO, WHICH SHALL BE A PERIOD CONTEMPLATED BY THE DEFINITION
OF THE TERM “INTEREST PERIOD”; AND

(E)           THE LOCATION AND NUMBER OF THE COMPANY’S ACCOUNT TO WHICH FUNDS
ARE TO BE DISBURSED, WHICH SHALL COMPLY WITH THE REQUIREMENTS OF SECTION 2.05.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Company shall be deemed
to have selected an Interest Period of one day’s duration.  Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04.  THE LETTER OF CREDIT.

(A)           GENERAL.  SUBJECT TO THE TERMS AND CONDITIONS SET FORTH HEREIN,
THE ISSUING BANK AGREES TO ISSUE AND AMEND (INCLUDING, WITHOUT LIMITATION, TO
INCREASE OR DECREASE THE STATED AMOUNT OF THE LETTER OF CREDIT) AT THE REQUEST
AND FOR THE ACCOUNT OF THE COMPANY, A STANDBY LETTER OF CREDIT SUBSTANTIALLY IN
THE FORM OF EXHIBIT D OR IN SUCH OTHER FORM AS MAY BE REASONABLY ACCEPTABLE TO
THE ISSUING BANK AND THE COMPANY (THE “LETTER OF CREDIT”), AT ANY TIME AND FROM
TIME TO TIME FROM THE EFFECTIVE DATE UNTIL THE LAST DAY OF THE AVAILABILITY
PERIOD; PROVIDED, HOWEVER, THE COMPANY MAY NOT REQUEST THAT THE STATED AMOUNT OF
THE LETTER OF CREDIT BE INCREASED AFTER THE 90TH DAY PRIOR TO THE MATURITY DATE
IF THE STATED EXPIRY DATE OF THE LETTER OF CREDIT IS A DATE LATER THAN THE
MATURITY DATE.  THE ISSUING BANK SHALL NOT BE UNDER ANY OBLIGATION TO ISSUE THE
LETTER OF CREDIT IF ANY ORDER, JUDGMENT OR DECREE OF ANY OFFICIAL BODY OR
ARBITRATOR BINDING UPON THE ISSUING BANK SHALL ENJOIN OR RESTRAIN THE ISSUING
BANK FROM ISSUING THE LETTER OF CREDIT, OR ANY LAW, RULE, REGULATION OR ORDERS
OF ANY OFFICIAL BODY APPLICABLE TO THE ISSUING BANK OR ANY REQUEST OR DIRECTIVE
(WHETHER OR NOT HAVING THE FORCE OF LAW) FROM ANY OFFICIAL BODY WITH
JURISDICTION OVER THE ISSUING BANK SHALL PROHIBIT THE ISSUANCE OF LETTERS OF
CREDIT GENERALLY OR THE LETTER OF CREDIT IN PARTICULAR OR SHALL IMPOSE UPON THE
ISSUING BANK WITH RESPECT TO THE LETTER OF CREDIT ANY RESTRICTION, RESERVE OR
CAPITAL REQUIREMENT (FOR WHICH THE ISSUING BANK IS NOT OTHERWISE COMPENSATED
HEREUNDER) NOT IN EFFECT ON THE DATE HEREOF, OR SHALL IMPOSE UPON THE ISSUING
BANK ANY UNREIMBURSED LOSS, COST OR EXPENSE THAT WAS NOT APPLICABLE ON THE DATE
HEREOF AND THAT THE ISSUING BANK IN GOOD FAITH DEEMS MATERIAL TO IT.

(B)           NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS.  TO REQUEST THE ISSUANCE OF THE LETTER OF CREDIT (OR THE AMENDMENT,
RENEWAL OR EXTENSION OF THE LETTER OF CREDIT), THE COMPANY SHALL HAND DELIVER OR
TELECOPY (OR TRANSMIT BY ELECTRONIC COMMUNICATION, IF ARRANGEMENTS FOR DOING SO
HAVE BEEN APPROVED BY THE ISSUING BANK) TO THE ISSUING BANK AND THE
ADMINISTRATIVE AGENT (AT LEAST ONE BUSINESS DAY IN ADVANCE OF THE REQUESTED DATE
OF

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ISSUANCE, AMENDMENT, RENEWAL OR EXTENSION) A NOTICE OF LC REQUEST REQUESTING THE
ISSUANCE OF THE LETTER OF CREDIT AND SPECIFYING THE REQUESTED DATE OF ISSUANCE
OF THE LETTER OF CREDIT (WHICH SHALL BE A BUSINESS DAY) AND, AS APPLICABLE,
SPECIFYING THE DATE OF AMENDMENT, RENEWAL OR EXTENSION (WHICH SHALL BE A
BUSINESS DAY), THE DATE ON WHICH THE LETTER OF CREDIT IS TO EXPIRE (WHICH SHALL
COMPLY WITH SUBSECTION (C) OF THIS SECTION), THE AMOUNT OF THE LETTER OF CREDIT,
THE NAME AND ADDRESS OF THE BENEFICIARY THEREOF AND SUCH OTHER INFORMATION AS
SHALL BE NECESSARY TO PREPARE, AMEND, RENEW OR EXTEND THE LETTER OF CREDIT.  THE
LETTER OF CREDIT SHALL BE ISSUED, AMENDED, RENEWED OR EXTENDED ONLY IF (AND UPON
ISSUANCE, AMENDMENT, RENEWAL OR EXTENSION OF THE LETTER OF CREDIT THE COMPANY
SHALL BE DEEMED TO REPRESENT AND WARRANT THAT), AFTER GIVING EFFECT TO SUCH
ISSUANCE, AMENDMENT, RENEWAL OR EXTENSION (I) THE AGGREGATE LC EXPOSURE SHALL
NOT EXCEED THE AGGREGATE COMMITMENTS, AND (II) THE TOTAL EXPOSURES SHALL NOT
EXCEED THE TOTAL COMMITMENTS. THE ISSUING BANK SHALL PROMPTLY (AND IN ANY EVENT
WITHIN ONE BUSINESS DAY) NOTIFY THE ADMINISTRATIVE AGENT OF EACH ISSUANCE,
AMENDMENT, RENEWAL, EXTENSION OR EXPIRY OF THE LETTER OF CREDIT, AND SHALL
PROVIDE TO THE ADMINISTRATIVE AGENT SUCH OTHER INFORMATION AS THE ADMINISTRATIVE
AGENT SHALL REASONABLY REQUEST AS TO THE LETTER OF CREDIT.

(C)           EXPIRATION DATE. THE LETTER OF CREDIT SHALL EXPIRE AT OR PRIOR TO
THE BUSINESS DAY IMMEDIATELY PRIOR TO THE SECOND ANNIVERSARY OF THE MATURITY
DATE.

(D)           PARTICIPATIONS.  BY THE ISSUANCE OF THE LETTER OF CREDIT (OR AN
AMENDMENT TO THE LETTER OF CREDIT INCREASING THE AMOUNT THEREOF) AND WITHOUT ANY
FURTHER ACTION ON THE PART OF THE ISSUING BANK OR THE LENDERS, THE ISSUING BANK
HEREBY GRANTS TO EACH LENDER, AND EACH LENDER HEREBY ACQUIRES FROM THE ISSUING
BANK, A PARTICIPATION IN THE LETTER OF CREDIT EQUAL TO SUCH LENDER’S APPLICABLE
PERCENTAGE OF THE AGGREGATE AMOUNT AVAILABLE TO BE DRAWN UNDER THE LETTER OF
CREDIT.  IN CONSIDERATION AND IN FURTHERANCE OF THE FOREGOING, EACH LENDER
HEREBY ABSOLUTELY AND UNCONDITIONALLY AGREES TO PAY TO THE ADMINISTRATIVE AGENT,
FOR THE ACCOUNT OF THE ISSUING BANK, SUCH LENDER’S APPLICABLE PERCENTAGE OF EACH
LC DISBURSEMENT MADE BY THE ISSUING BANK AND NOT REIMBURSED BY THE COMPANY ON
THE DATE DUE AS PROVIDED IN SUBSECTION (E) OF THIS SECTION, OR OF ANY
REIMBURSEMENT PAYMENT REQUIRED TO BE REFUNDED TO THE COMPANY FOR ANY REASON. 
EACH LENDER ACKNOWLEDGES AND AGREES THAT ITS OBLIGATION TO ACQUIRE
PARTICIPATIONS PURSUANT TO THIS SUBSECTION IN RESPECT OF THE LETTER OF CREDIT IS
ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE AFFECTED BY ANY CIRCUMSTANCE
WHATSOEVER, INCLUDING ANY AMENDMENT, RENEWAL OR EXTENSION OF THE LETTER OF
CREDIT OR THE OCCURRENCE AND CONTINUANCE OF A DEFAULT OR REDUCTION OR
TERMINATION OF THE COMMITMENTS, AND THAT EACH SUCH PAYMENT SHALL BE MADE WITHOUT
ANY OFFSET, ABATEMENT, WITHHOLDING OR REDUCTION WHATSOEVER.

(E)           REIMBURSEMENT.  IF THE ISSUING BANK SHALL MAKE ANY LC
DISBURSEMENT, THE ISSUING BANK SHALL PROMPTLY NOTIFY THE COMPANY BY TELEPHONE,
FACSIMILE OR OTHER TELECOMMUNICATION OF THE DATE AND AMOUNT OF SUCH LC
DISBURSEMENT.  THE COMPANY SHALL REIMBURSE SUCH LC DISBURSEMENT, WHETHER DRAWN
BEFORE, ON OR, TO THE EXTENT IN ACCORDANCE WITH APPLICABLE LAW, AFTER THE
EXPIRATION DATE OF THE LETTER OF CREDIT, AND PAYMENT OF EACH SUCH REIMBURSEMENT
OBLIGATION SHALL BE MADE ON DEMAND; PROVIDED THAT UNLESS THE COMPANY SHALL HAVE
NOTIFIED THE ADMINISTRATIVE AGENT OTHERWISE, THE COMPANY’S OBLIGATIONS SHALL BE
FINANCED WITH AN ABR BORROWING MADE UNDER THIS SUBSECTION (E) IN AN EQUIVALENT
AMOUNT AND, TO THE EXTENT SO FINANCED, THE COMPANY’S OBLIGATION TO MAKE SUCH
PAYMENT SHALL BE DISCHARGED AND REPLACED BY THE RESULTING ABR BORROWING.  IF THE
COMPANY FAILS TO MAKE SUCH PAYMENT WHEN DUE, THE ADMINISTRATIVE AGENT SHALL
NOTIFY EACH LENDER OF THE APPLICABLE LC DISBURSEMENT, THE

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PAYMENT THEN DUE FROM THE COMPANY IN RESPECT THEREOF AND SUCH LENDER’S
APPLICABLE PERCENTAGE THEREOF.  PROMPTLY FOLLOWING RECEIPT OF SUCH NOTICE, EACH
LENDER SHALL PAY TO THE ADMINISTRATIVE AGENT ITS APPLICABLE PERCENTAGE OF THE
PAYMENT THEN DUE FROM THE COMPANY, AND THE ADMINISTRATIVE AGENT SHALL PROMPTLY
PAY TO THE ISSUING BANK THE AMOUNTS SO RECEIVED BY IT FROM THE LENDERS.  EACH
LENDER AGREES TO FUND ITS APPLICABLE PERCENTAGE OF SUCH PAYMENT DUE FROM THE
COMPANY ON (I) THE BUSINESS DAY ON WHICH DEMAND THEREFORE IS MADE BY THE ISSUING
BANK, PROVIDED  THAT NOTICE OF SUCH DEMAND IS GIVEN NOT LATER THAN 11:00 A.M.
(NEW YORK TIME) ON SUCH BUSINESS DAY, OR (II) THE FIRST BUSINESS DAY NEXT
SUCCEEDING SUCH DEMAND IF NOTICE OF SUCH DEMAND IS GIVEN AFTER SUCH TIME.  IF
AND TO THE EXTENT THAT ANY LENDER SHALL NOT HAVE MADE SUCH AMOUNT AVAILABLE TO
THE ADMINISTRATIVE AGENT, SUCH LENDER AGREES TO PAY TO THE ADMINISTRATIVE AGENT
FORTHWITH ON DEMAND SUCH AMOUNT TOGETHER WITH INTEREST THEREON, FOR EACH DAY
FROM THE DATE OF DEMAND BY THE ISSUING BANK UNTIL THE DATE SUCH AMOUNT IS PAID
TO THE ADMINISTRATIVE AGENT, AT THE FEDERAL FUNDS RATE FOR ITS ACCOUNT OR THE
ACCOUNT OF THE ISSUING BANK, AS APPLICABLE.  IF SUCH LENDER SHALL PAY TO THE
ADMINISTRATIVE AGENT SUCH AMOUNT FOR THE ACCOUNT OF THE ISSUING BANK ON ANY
BUSINESS DAY, SUCH AMOUNT SO PAID IN RESPECT OF PRINCIPAL SHALL CONSTITUTE AN
ABR LOAN MADE BY SUCH LENDER ON SUCH BUSINESS DAY FOR PURPOSES OF THIS
AGREEMENT.

(F)            CERTAIN LIABILITIES RELATING TO THE LETTER OF CREDIT.  NONE OF
THE ADMINISTRATIVE AGENT, THE LENDERS OR THE ISSUING BANK, NOR ANY OF THEIR
RELATED PARTIES, SHALL HAVE ANY LIABILITY OR RESPONSIBILITY BY REASON OF OR IN
CONNECTION WITH THE ISSUANCE OR TRANSFER OF THE LETTER OF CREDIT OR ANY PAYMENT
OR FAILURE TO MAKE ANY PAYMENT THEREUNDER (IRRESPECTIVE OF ANY OF THE
CIRCUMSTANCES REFERRED TO IN SECTION 2.08(F)), OR ANY ERROR, OMISSION,
INTERRUPTION, LOSS OR DELAY IN TRANSMISSION OR DELIVERY OF ANY DRAFT, NOTICE OR
OTHER COMMUNICATION UNDER OR RELATING TO THE LETTER OF CREDIT (INCLUDING ANY
DOCUMENT REQUIRED TO MAKE A DRAWING THEREUNDER), ANY ERROR IN INTERPRETATION OF
TECHNICAL TERMS OR ANY CONSEQUENCE ARISING FROM CAUSES BEYOND THE CONTROL OF THE
ISSUING BANK; PROVIDED THAT, WITHOUT LIMITING SECTION 2.08(F), THE FOREGOING
SHALL NOT BE CONSTRUED TO EXCUSE THE ISSUING BANK FROM LIABILITY TO THE COMPANY
TO THE EXTENT OF ANY DIRECT DAMAGES (AS OPPOSED TO CONSEQUENTIAL DAMAGES, CLAIMS
IN RESPECT OF WHICH ARE HEREBY WAIVED BY THE COMPANY TO THE EXTENT PERMITTED BY
APPLICABLE LAW) SUFFERED BY THE COMPANY THAT ARE CAUSED BY THE ISSUING BANK’S
FAILURE TO EXERCISE CARE WHEN DETERMINING WHETHER DRAFTS AND OTHER DOCUMENTS
PRESENTED UNDER THE LETTER OF CREDIT COMPLY WITH THE TERMS THEREOF.  THE PARTIES
HERETO EXPRESSLY AGREE THAT, IN THE ABSENCE OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT ON THE PART OF THE ISSUING BANK (AS FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION), THE ISSUING BANK SHALL BE DEEMED TO HAVE EXERCISED CARE
IN EACH SUCH DETERMINATION.  IN FURTHERANCE OF THE FOREGOING AND WITHOUT
LIMITING THE GENERALITY THEREOF, THE PARTIES AGREE THAT, WITH RESPECT TO
DOCUMENTS PRESENTED THAT APPEAR ON THEIR FACE TO BE IN SUBSTANTIAL COMPLIANCE
WITH THE TERMS OF THE LETTER OF CREDIT, THE ISSUING BANK MAY, IN ITS SOLE
DISCRETION, EITHER ACCEPT AND MAKE PAYMENT UPON SUCH DOCUMENTS WITHOUT
RESPONSIBILITY FOR FURTHER INVESTIGATION, REGARDLESS OF ANY NOTICE OR
INFORMATION TO THE CONTRARY (OTHER THAN A VALID INJUNCTION ISSUED BY A COURT OF
COMPETENT JURISDICTION), OR REFUSE TO ACCEPT AND MAKE PAYMENT UPON SUCH
DOCUMENTS IF SUCH DOCUMENTS ARE NOT IN STRICT COMPLIANCE WITH THE TERMS OF THE
LETTER OF CREDIT.

(G)           DISBURSEMENT PROCEDURES.  THE ISSUING BANK SHALL, PROMPTLY
FOLLOWING ITS RECEIPT THEREOF, EXAMINE ALL DOCUMENTS PURPORTING TO REPRESENT A
DEMAND FOR PAYMENT UNDER  THE LETTER OF CREDIT.  THE ISSUING BANK SHALL PROMPTLY
NOTIFY THE ADMINISTRATIVE AGENT AND THE COMPANY BY TELEPHONE (CONFIRMED BY
TELECOPY) OF SUCH DEMAND FOR PAYMENT AND WHETHER THE

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ISSUING BANK HAS MADE OR WILL MAKE AN LC DISBURSEMENT THEREUNDER; PROVIDED THAT
ANY FAILURE TO GIVE OR DELAY IN GIVING SUCH NOTICE SHALL NOT RELIEVE THE COMPANY
OF ITS OBLIGATION TO REIMBURSE THE ISSUING BANK AND THE LENDERS WITH RESPECT TO
ANY SUCH LC DISBURSEMENT.

(H)           INTERIM INTEREST.  IF THE ISSUING BANK SHALL MAKE ANY LC
DISBURSEMENT, THEN, UNLESS THE COMPANY SHALL REIMBURSE SUCH LC DISBURSEMENT IN
FULL ON THE DATE SUCH LC DISBURSEMENT IS MADE, THE UNPAID AMOUNT THEREOF SHALL
BEAR INTEREST, FOR EACH DAY FROM AND INCLUDING THE DATE SUCH LC DISBURSEMENT IS
MADE TO BUT EXCLUDING THE DATE THAT THE COMPANY REIMBURSES SUCH LC DISBURSEMENT,
AT THE RATE PER ANNUM THEN APPLICABLE TO ABR LOANS; PROVIDED THAT, IF THE
COMPANY FAILS TO REIMBURSE SUCH LC DISBURSEMENT WHEN DUE PURSUANT TO
SUBSECTION (E) OF THIS SECTION, THEN SECTION 2.11(D) SHALL APPLY.  INTEREST
ACCRUED PURSUANT TO THIS SUBSECTION SHALL BE FOR THE ACCOUNT OF THE ISSUING
BANK, EXCEPT THAT INTEREST ACCRUED ON AND AFTER THE DATE OF PAYMENT BY ANY
LENDER PURSUANT TO SUBSECTION (E) OF THIS SECTION TO REIMBURSE THE ISSUING BANK
SHALL BE FOR THE ACCOUNT OF SUCH LENDER TO THE EXTENT OF SUCH PAYMENT.

SECTION 2.05.  FUNDING OF BORROWINGS.

(A)           EACH LENDER SHALL MAKE EACH LOAN TO BE MADE BY IT HEREUNDER ON THE
PROPOSED DATE THEREOF BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO THE
ACCOUNT OF THE ADMINISTRATIVE AGENT MOST RECENTLY DESIGNATED BY IT FOR SUCH
PURPOSE BY NOTICE TO THE LENDERS, WITH A COPY TO THE PAYING AGENT.; EXCEPT AS
PROVIDED OTHERWISE WITH RESPECT TO ABR LOANS MADE PURSUANT TO SECTION 2.04(E),
SUCH TRANSFERS SHALL BE MADE BY (X) 12:00 NOON, NEW YORK CITY TIME IN THE CASE
OF BORROWINGS OTHER THAN ABR BORROWINGS AND (Y) 2:00 P.M., NEW YORK CITY TIME IN
THE CASE OF ABR BORROWINGS ON THE DATE SUCH LOAN IS MADE.  THE ADMINISTRATIVE
AGENT WILL MAKE SUCH AMOUNTS AVAILABLE TO THE COMPANY BY PROMPTLY CREDITING THE
AMOUNTS SO RECEIVED, IN LIKE FUNDS, TO AN ACCOUNT OF THE COMPANY DESIGNATED BY
THE COMPANY IN THE APPLICABLE BORROWING REQUEST; PROVIDED THAT ABR LOANS MADE TO
REFINANCE THE REIMBURSEMENT OF AN LC DISBURSEMENT AS PROVIDED IN SECTION 2.04(E)
SHALL BE REMITTED BY THE ADMINISTRATIVE AGENT TO THE ISSUING BANK.

(B)           UNLESS THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED NOTICE FROM A
LENDER PRIOR TO THE PROPOSED TIME OF ANY BORROWING THAT SUCH LENDER WILL NOT
MAKE AVAILABLE TO THE ADMINISTRATIVE AGENT SUCH LENDER’S SHARE OF SUCH
BORROWING, THE ADMINISTRATIVE AGENT MAY ASSUME THAT SUCH LENDER HAS MADE SUCH
SHARE AVAILABLE ON SUCH DATE IN ACCORDANCE WITH SUBSECTION (A) OF THIS SECTION
AND MAY (BUT SHALL NOT BE REQUIRED TO), IN RELIANCE UPON SUCH ASSUMPTION, MAKE
AVAILABLE TO THE COMPANY A CORRESPONDING AMOUNT.  IN SUCH EVENT, IF A LENDER HAS
NOT IN FACT MADE ITS SHARE OF THE APPLICABLE BORROWING AVAILABLE TO THE
ADMINISTRATIVE AGENT, THEN THE APPLICABLE LENDER AND THE COMPANY SEVERALLY AGREE
TO PAY TO THE ADMINISTRATIVE AGENT FORTHWITH ON DEMAND SUCH CORRESPONDING AMOUNT
WITH INTEREST THEREON, FOR EACH DAY FROM AND INCLUDING THE DATE SUCH AMOUNT IS
MADE AVAILABLE TO THE COMPANY TO BUT EXCLUDING THE DATE OF PAYMENT TO THE
ADMINISTRATIVE AGENT, AT (I) IN THE CASE OF SUCH LENDER, THE FEDERAL FUNDS
EFFECTIVE RATE OR (II) IN THE CASE OF THE COMPANY, THE INTEREST RATE APPLICABLE
TO SUCH LOAN.  IF SUCH LENDER PAYS SUCH AMOUNT TO THE ADMINISTRATIVE AGENT, THEN
SUCH AMOUNT SHALL CONSTITUTE SUCH LENDER’S LOAN INCLUDED IN SUCH BORROWING.

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SECTION 2.06.  INTEREST ELECTIONS.

(A)                                  EACH BORROWING INITIALLY SHALL BE OF THE
TYPE SPECIFIED IN THE APPLICABLE BORROWING REQUEST AND, IN THE CASE OF A
EURODOLLAR BORROWING, SHALL HAVE AN INITIAL INTEREST PERIOD AS SPECIFIED IN SUCH
BORROWING REQUEST.  THEREAFTER, AT ANY TIME PRIOR TO THE MATURITY DATE, THE
COMPANY MAY ELECT TO CONVERT SUCH BORROWING TO A DIFFERENT TYPE OR TO CONTINUE
SUCH BORROWING AND, IN THE CASE OF A EURODOLLAR BORROWING, MAY ELECT INTEREST
PERIODS THEREFOR, ALL AS PROVIDED IN THIS SECTION.  THE COMPANY MAY ELECT
DIFFERENT OPTIONS WITH RESPECT TO DIFFERENT PORTIONS OF THE AFFECTED BORROWING,
IN WHICH CASE EACH SUCH PORTION SHALL BE ALLOCATED RATABLY AMONG THE LENDERS
HOLDING THE LOANS COMPRISING SUCH BORROWING, AND THE LOANS COMPRISING EACH SUCH
PORTION SHALL BE CONSIDERED A SEPARATE BORROWING.

(B)                                 TO MAKE AN ELECTION PURSUANT TO THIS
SECTION, THE COMPANY SHALL NOTIFY THE ADMINISTRATIVE AGENT OF SUCH ELECTION BY
TELEPHONE BY THE TIME THAT A BORROWING REQUEST WOULD BE REQUIRED UNDER
SECTION 2.03 IF THE COMPANY WERE REQUESTING A BORROWING OF THE TYPE RESULTING
FROM SUCH ELECTION TO BE MADE ON THE EFFECTIVE DATE OF SUCH ELECTION.  EACH SUCH
TELEPHONIC INTEREST ELECTION REQUEST SHALL BE IRREVOCABLE AND SHALL BE CONFIRMED
PROMPTLY BY HAND DELIVERY OR TELECOPY TO THE ADMINISTRATIVE AGENT OF A WRITTEN
INTEREST ELECTION REQUEST IN A FORM APPROVED BY THE ADMINISTRATIVE AGENT AND
SIGNED BY THE COMPANY.

(C)                                  EACH TELEPHONIC AND WRITTEN INTEREST
ELECTION REQUEST SHALL SPECIFY THE FOLLOWING INFORMATION IN COMPLIANCE WITH
SECTION 2.02:

(I)                                     THE BORROWING TO WHICH SUCH INTEREST
ELECTION REQUEST APPLIES AND, IF DIFFERENT OPTIONS ARE BEING ELECTED WITH
RESPECT TO DIFFERENT PORTIONS THEREOF, THE PORTIONS THEREOF TO BE ALLOCATED TO
EACH RESULTING BORROWING (IN WHICH CASE THE INFORMATION TO BE SPECIFIED PURSUANT
TO CLAUSES (III) AND (IV) BELOW SHALL BE SPECIFIED FOR EACH RESULTING
BORROWING);

(II)                                  THE EFFECTIVE DATE OF THE ELECTION MADE
PURSUANT TO SUCH INTEREST ELECTION REQUEST, WHICH SHALL BE A BUSINESS DAY;

(III)                               WHETHER THE RESULTING BORROWING IS TO BE AN
ABR BORROWING OR A EURODOLLAR BORROWING; AND

(IV)                              IF THE RESULTING BORROWING IS A EURODOLLAR
BORROWING, THE INTEREST PERIOD TO BE APPLICABLE THERETO AFTER GIVING EFFECT TO
SUCH ELECTION, WHICH SHALL BE A PERIOD CONTEMPLATED BY THE DEFINITION OF THE
TERM “INTEREST PERIOD”.

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Company shall be deemed to have
selected an Interest Period of one day’s duration.

(D)                                 PROMPTLY FOLLOWING RECEIPT OF AN INTEREST
ELECTION REQUEST, THE ADMINISTRATIVE AGENT SHALL ADVISE EACH LENDER OF THE
DETAILS THEREOF AND OF SUCH LENDER’S PORTION OF EACH RESULTING BORROWING.

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(E)                                  IF THE COMPANY FAILS TO DELIVER A TIMELY
INTEREST ELECTION REQUEST WITH RESPECT TO A EURODOLLAR BORROWING PRIOR TO THE
END OF THE INTEREST PERIOD APPLICABLE THERETO, THEN, UNLESS SUCH BORROWING IS
REPAID AS PROVIDED HEREIN, AT THE END OF SUCH INTEREST PERIOD SUCH BORROWING
SHALL BE CONVERTED TO A ONE DAY EURODOLLAR BORROWING.  NOTWITHSTANDING ANY
CONTRARY PROVISION HEREOF, IF AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING
AND THE ADMINISTRATIVE AGENT, AT THE REQUEST OF THE REQUIRED LENDERS, SO
NOTIFIES THE COMPANY, THEN, SO LONG AS AN EVENT OF DEFAULT IS CONTINUING (I) NO
OUTSTANDING BORROWING MAY BE CONVERTED TO OR CONTINUED AS A EURODOLLAR BORROWING
AND (II) UNLESS REPAID, EACH EURODOLLAR BORROWING SHALL BE CONVERTED TO AN ABR
BORROWING AT THE END OF THE INTEREST PERIOD APPLICABLE THERETO.

SECTION 2.07.  TERMINATION OF COMMITMENTS; REDUCTION OF COMMITMENTS.

(A)                                  UNLESS PREVIOUSLY TERMINATED, THE
COMMITMENTS SHALL TERMINATE ON THE LAST DAY OF THE AVAILABILITY PERIOD.

(B)                                 THE COMPANY MAY AT ANY TIME TERMINATE, OR
FROM TIME TO TIME REDUCE, THE AGGREGATE AMOUNT OF THE COMMITMENTS; PROVIDED THAT
(I) EACH REDUCTION OF THE COMMITMENTS SHALL BE IN AN AMOUNT THAT IS AN INTEGRAL
MULTIPLE OF $1,000,000 AND NOT LESS THAN $5,000,000, (II) THE COMPANY SHALL NOT
TERMINATE OR REDUCE THE COMMITMENTS IF, AFTER GIVING EFFECT TO ANY CONCURRENT
PREPAYMENT OF THE LOANS IN ACCORDANCE WITH SECTION 2.09, THE SUM OF THE TOTAL
EXPOSURES OF ALL THE LENDERS WOULD EXCEED THE TOTAL COMMITMENTS AND (III) THE
COMPANY SHALL SATISFY ALL ITS OBLIGATIONS UNDER SECTIONS 2.14 AND 9.03(D) IN
RESPECT OF SUCH TERMINATION OR REDUCTION AND ANY CONCURRENT REPAYMENT.

(C)                                  THE COMPANY SHALL NOTIFY THE ADMINISTRATIVE
AGENT OF ANY ELECTION TO TERMINATE OR REDUCE THE COMMITMENTS UNDER
SUBSECTION (B) OF THIS SECTION AT LEAST THREE BUSINESS DAYS PRIOR TO THE
EFFECTIVE DATE OF SUCH TERMINATION OR REDUCTION, SPECIFYING SUCH ELECTION AND
THE EFFECTIVE DATE THEREOF.  PROMPTLY FOLLOWING RECEIPT OF ANY NOTICE, THE
ADMINISTRATIVE AGENT SHALL ADVISE THE LENDERS OF THE CONTENTS THEREOF.  EACH
REDUCTION OF THE COMMITMENTS SHALL BE MADE RATABLY AMONG THE LENDERS BASED ON
THEIR RESPECTIVE COMMITMENTS.

(d)                                                     
(i)                                     The Company may request an increase,
which will be effective on any date during the Availability Period specified by
the Company, in the aggregate amount of the Commitments by any amount but to an
amount not greater than $250,000,000 (any such increase, a “Commitment
Increase”) by delivering notice of such proposed Commitment Increase to the
Administrative Agent.  The Administrative Agent shall promptly provide a copy of
such notice to the Lenders and the Paying Agent.  Each Lender shall, in its sole
discretion, determine whether and to what degree to participate in such
Commitment Increase and shall give prompt notice of such determination to the
Administrative Agent; provided, that failure by any Lender to provide any such
notice shall be deemed to be evidence of such Lender’s determination not to
participate in such Commitment Increase.  The Administrative Agent, in
consultation with the Company, shall allocate increases in the Commitments
pursuant to such Commitment Increase among the Lenders that have indicated that
they are willing to participate in such Commitment Increase (each such Lender
being an “Increasing Lender”).

(ii)                                  Any Commitment Increase shall become
effective upon (A) the receipt by the Administrative Agent of (1) an agreement
in form and substance satisfactory to the

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Administrative Agent signed by the Company and each Increasing Lender, setting
forth the new Commitments of such Lender, (2) an agreement in form and substance
satisfactory to the Administrative Agent and signed by the Company and each
Increasing Lender with respect to fees and such other matters as may be mutually
agreed by the parties, and (3) such opinions of counsel for the Company with
respect to the Commitment Increase as the Administrative Agent may reasonably
request, (B) the funding by each Lender of the Borrowing(s) to be made by each
such Lender described in paragraph (iii) below and (C) receipt by the
Administrative Agent of a certificate (the statements contained in which shall
be true) of a duly authorized officer of the Company stating that both before
and after giving effect to such Commitment Increase (1) no Event of Default has
occurred and is continuing, and (2) all representations and warranties made by
the Company in this Agreement are true and correct in all material respects.

(iii)                               Upon the effective date of any Commitment
Increase, the Company shall prepay the outstanding Borrowings (if any) in full,
and shall simultaneously make new Borrowings hereunder in an amount equal to
such prepayment, so that, after giving effect thereto, the Borrowings are held
ratably by the Lenders in accordance with their respective Commitments (after
giving effect to such Commitment Increase).  Prepayments made under this
paragraph (iii) shall not be subject to the notice requirements of Section 2.09.

(iv)                              Notwithstanding any provision contained herein
to the contrary, from and after the effective date of any Commitment Increase
and the making of any Borrowings on such date pursuant to paragraph (iii) above,
all calculations and payments of the Facility Fee and of interest on the
Borrowings shall take into account the actual Commitment of each Lender and the
principal amount outstanding of each Borrowing made by such Lender during the
relevant period of time.

SECTION 2.08.  REPAYMENT OF LOANS; EVIDENCE OF DEBT; OBLIGATIONS ABSOLUTE.

(A)                                  THE COMPANY HEREBY UNCONDITIONALLY PROMISES
TO PAY TO THE PAYING AGENT FOR APPLICATION IN ACCORDANCE WITH SECTION 2.15 THE
OUTSTANDING PRINCIPAL AMOUNT OF (I) EACH LOAN MADE PRIOR TO THE LAST DAY OF THE
AVAILABILITY PERIOD, ON SUCH LAST DAY, AND (II) EACH LOAN MADE ON OR AFTER THE
LAST DAY OF THE AVAILABILITY PERIOD, ON DEMAND.

(B)                                 EACH LENDER SHALL MAINTAIN IN ACCORDANCE
WITH ITS USUAL PRACTICE AN ACCOUNT OR ACCOUNTS EVIDENCING THE INDEBTEDNESS OF
THE COMPANY TO SUCH LENDER RESULTING FROM EACH LOAN MADE BY SUCH LENDER TO THE
COMPANY, INCLUDING THE AMOUNTS OF PRINCIPAL AND INTEREST PAYABLE AND PAID TO
SUCH LENDER BY THE COMPANY FROM TIME TO TIME HEREUNDER.

(C)                                  THE ADMINISTRATIVE AGENT SHALL MAINTAIN
ACCOUNTS IN WHICH IT SHALL RECORD (I) THE AMOUNT OF EACH LOAN MADE HEREUNDER,
THE TYPE THEREOF AND THE INTEREST PERIOD APPLICABLE THERETO, (II) THE AMOUNT OF
ANY PRINCIPAL OR INTEREST DUE AND PAYABLE OR TO BECOME DUE AND PAYABLE FROM THE
COMPANY TO EACH LENDER HEREUNDER AND (III) THE AMOUNT OF ANY SUM RECEIVED BY THE
ADMINISTRATIVE AGENT HEREUNDER FOR THE ACCOUNT OF THE LENDERS AND EACH LENDER’S
SHARE THEREOF.

(D)                                 THE ENTRIES MADE IN THE ACCOUNTS MAINTAINED
PURSUANT TO SUBSECTION (B) OR (C) OF THIS SECTION SHALL, ABSENT MANIFEST ERROR,
BE PRIMA FACIE EVIDENCE OF THE EXISTENCE AND AMOUNTS OF

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THE OBLIGATIONS RECORDED THEREIN; PROVIDED THAT THE FAILURE OF ANY LENDER OR THE
ADMINISTRATIVE AGENT TO MAINTAIN SUCH ACCOUNTS OR ANY ERROR THEREIN SHALL NOT IN
ANY MANNER AFFECT THE OBLIGATION OF THE COMPANY TO REPAY THE LOANS IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT.

(E)                                  ANY LENDER MAY REQUEST THAT LOANS MADE BY
IT BE EVIDENCED BY A PROMISSORY NOTE.  IN SUCH EVENT, THE COMPANY SHALL PREPARE,
EXECUTE AND DELIVER TO SUCH LENDER A NONNEGOTIABLE PROMISSORY NOTE SUBSTANTIALLY
IN THE FORM ATTACHED AS EXHIBIT B (A “NOTE”) PAYABLE TO THE ORDER OF SUCH LENDER
(OR, IF REQUESTED BY SUCH LENDER, TO SUCH LENDER AND ITS PERMITTED REGISTERED
ASSIGNS).  THEREAFTER, THE LOANS EVIDENCED BY SUCH NOTE AND INTEREST THEREON
SHALL AT ALL TIMES (INCLUDING AFTER ASSIGNMENT PURSUANT TO SECTION 9.04) BE
REPRESENTED BY ONE OR MORE NOTES PAYABLE TO THE ORDER OF THE PAYEE NAMED THEREIN
(OR, IF SUCH NOTE IS A REGISTERED NOTE, TO SUCH PAYEE AND ITS PERMITTED
REGISTERED ASSIGNS).

(F)                                      THE COMPANY’S OBLIGATION TO REPAY THE
LOANS, TO REIMBURSE LC DISBURSEMENTS AND TO MAKE THE OTHER PAYMENTS PROVIDED
HEREIN SHALL BE ABSOLUTE, UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PERFORMED
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT UNDER ANY AND ALL
CIRCUMSTANCES WHATSOEVER AND IRRESPECTIVE OF (I) ANY LACK OF VALIDITY OR
ENFORCEABILITY OF THE LETTER OF CREDIT OR THIS AGREEMENT, OR ANY TERM OR
PROVISION THEREIN, (II) THE EXISTENCE OF ANY CLAIM, SET-OFF, DEFENSE OR OTHER
RIGHT THAT THE COMPANY, OR ANY AFFILIATE OF THE COMPANY MAY HAVE AT ANY TIME
AGAINST THE BENEFICIARY OR ANY TRANSFEREE OF THE LETTER OF CREDIT (OR ANY
PERSONS OR ENTITIES FOR WHOM SUCH BENEFICIARY OR TRANSFEREE MAY BE ACTING), THE
ISSUING BANK OR ANY OTHER PERSON, WHETHER IN CONNECTION WITH THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREIN OR ANY UNRELATED TRANSACTION; (III) WITHOUT
LIMITING SECTION 2.04(F), ANY DRAFT, DEMAND CERTIFICATE OR ANY OTHER DOCUMENT
PRESENTED UNDER THE LETTER OF CREDIT PROVING TO BE FORGED, FRAUDULENT OR INVALID
IN ANY RESPECT OR ANY STATEMENT THEREIN BEING UNTRUE OR INACCURATE IN ANY
RESPECT, (IV) PAYMENT BY THE ISSUING BANK UNDER THE LETTER OF CREDIT AGAINST
PRESENTATION OF A DRAFT OR OTHER DOCUMENT THAT DOES NOT COMPLY WITH THE TERMS OF
THE LETTER OF CREDIT, (V) THE SURRENDER OR IMPAIRMENT OF ANY SECURITY FOR THE
PERFORMANCE OR OBSERVANCE OF ANY OF THE TERMS OF ANY OF THE LOAN DOCUMENTS; (VI)
ANY NON-APPLICATION OR MISAPPLICATION BY THE BENEFICIARY OF THE LETTER OF CREDIT
OF THE PROCEEDS OF ANY DRAWING UNDER THE LETTER OF CREDIT; (VII) THE FACT THAT A
DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING; OR (VIII) ANY OTHER EVENT OR
CIRCUMSTANCE WHATSOEVER, WHETHER OR NOT SIMILAR TO ANY OF THE FOREGOING, THAT
MIGHT, BUT FOR THE PROVISIONS OF THIS SECTION, CONSTITUTE A LEGAL OR EQUITABLE
DISCHARGE OF, OR PROVIDE A RIGHT OF SETOFF AGAINST, THE COMPANY’S OBLIGATIONS
HEREUNDER.

SECTION 2.09.  PREPAYMENT OF LOANS.

(A)                                  THE COMPANY SHALL HAVE THE RIGHT AT ANY
TIME AND FROM TIME TO TIME TO PREPAY ANY BORROWING MADE BY IT IN WHOLE OR IN
PART, SUBJECT TO PRIOR NOTICE IN ACCORDANCE WITH SUBSECTION (B) OF THIS SECTION.

(B)                                 THE COMPANY SHALL NOTIFY THE ADMINISTRATIVE
AGENT BY TELEPHONE (CONFIRMED BY TELECOPY) OF ANY PREPAYMENT HEREUNDER (I) IN
THE CASE OF PREPAYMENT OF A EURODOLLAR BORROWING, NOT LATER THAN 11:00 A.M.,
NEW YORK CITY TIME, THREE BUSINESS DAYS BEFORE THE DATE OF PREPAYMENT AND
(II) IN THE CASE OF PREPAYMENT OF AN ABR BORROWING, NOT LATER THAN 11:00 A.M.,
NEW YORK CITY TIME, ON THE DATE OF PREPAYMENT.  EACH SUCH NOTICE SHALL BE
IRREVOCABLE AND SHALL SPECIFY THE PREPAYMENT DATE AND THE PRINCIPAL AMOUNT OF
EACH BORROWING OR PORTION THEREOF TO BE

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PREPAID.  PROMPTLY FOLLOWING RECEIPT OF ANY SUCH NOTICE RELATING TO A BORROWING,
THE ADMINISTRATIVE AGENT SHALL ADVISE THE LENDERS AND THE PAYING AGENT OF THE
CONTENTS THEREOF.  EACH PARTIAL PREPAYMENT OF ANY BORROWING SHALL BE IN AN
AMOUNT THAT WOULD BE PERMITTED IN THE CASE OF AN ADVANCE OF A BORROWING OF THE
SAME TYPE AS PROVIDED IN SECTION 2.02.  EACH PREPAYMENT OF A BORROWING SHALL BE
APPLIED RATABLY TO THE LOANS INCLUDED IN THE PREPAID BORROWING.  PREPAYMENTS
SHALL BE ACCOMPANIED BY ACCRUED INTEREST TO THE EXTENT REQUIRED BY SECTION 2.11.

SECTION 2.10.  FEES.

The Company agrees to pay to the Paying Agent for application in accordance with
Section 2.15 a facility fee (the “Facility Fee”), payable in such amounts and at
the times specified in the Fee Letter. The Facility Fee shall be paid on the
dates due in immediately available funds.  Absent manifest error, once paid, the
Facility Fee shall not be refundable under any circumstances.

SECTION 2.11.  INTEREST.

(A)                                  THE LOANS COMPRISING EACH ABR BORROWING
SHALL BEAR INTEREST AT A RATE PER ANNUM EQUAL TO THE ALTERNATE BASE RATE.

(B)                                 THE LOANS COMPRISING EACH EURODOLLAR
BORROWING SHALL BEAR INTEREST AT A RATE PER ANNUM EQUAL TO THE ADJUSTED LIBO
RATE FOR THE INTEREST PERIOD IN EFFECT FOR SUCH BORROWING.

(C)                                  NOTWITHSTANDING THE FOREGOING, IF ANY
PRINCIPAL OF OR INTEREST ON ANY LOAN OR ANY FEE OR OTHER AMOUNT PAYABLE BY THE
COMPANY HEREUNDER IS NOT PAID WHEN DUE, WHETHER AT STATED MATURITY, UPON
ACCELERATION OR OTHERWISE, SUCH OVERDUE AMOUNT SHALL BEAR INTEREST, AFTER AS
WELL AS BEFORE JUDGMENT, AT A RATE PER ANNUM EQUAL TO (I) IN THE CASE OF OVERDUE
PRINCIPAL OF ANY LOAN, 2% PLUS THE RATE OTHERWISE APPLICABLE TO SUCH LOAN AS
PROVIDED ABOVE OR (II) IN THE CASE OF ANY OTHER AMOUNT, 2% PLUS THE RATE
APPLICABLE TO ABR LOANS AS PROVIDED ABOVE.

(D)                                 ACCRUED INTEREST ON EACH LOAN SHALL BE
PAYABLE IN ARREARS ON EACH INTEREST PAYMENT DATE FOR SUCH LOAN; PROVIDED THAT
(I) INTEREST ACCRUED PURSUANT TO SUBSECTION (C) OF THIS SECTION SHALL BE PAYABLE
ON DEMAND, (II) IN THE EVENT OF ANY REPAYMENT OR PREPAYMENT OF ANY LOAN (OTHER
THAN A PREPAYMENT OF AN ABR LOAN PRIOR TO THE END OF THE AVAILABILITY PERIOD),
ACCRUED INTEREST ON THE PRINCIPAL AMOUNT REPAID OR PREPAID SHALL BE PAYABLE ON
THE DATE OF SUCH REPAYMENT OR PREPAYMENT, (III) IN THE EVENT OF ANY CONVERSION
OF ANY EURODOLLAR LOAN PRIOR TO THE END OF THE CURRENT INTEREST PERIOD THEREFOR,
ACCRUED INTEREST ON SUCH LOAN SHALL BE PAYABLE ON THE EFFECTIVE DATE OF SUCH
CONVERSION AND (IV) ALL ACCRUED INTEREST SHALL BE PAYABLE UPON TERMINATION OF
THE COMMITMENTS.

(E)                                  ALL INTEREST HEREUNDER SHALL BE COMPUTED ON
THE BASIS OF A YEAR OF 360 DAYS, EXCEPT THAT INTEREST COMPUTED BY REFERENCE TO
THE ALTERNATE BASE RATE AT TIMES WHEN THE ALTERNATE BASE RATE IS BASED ON THE
BASE RATE SHALL BE COMPUTED ON THE BASIS OF A YEAR OF 365 DAYS (OR 366 DAYS IN A
LEAP YEAR), AND SHALL BE PAYABLE FOR THE ACTUAL NUMBER OF DAYS ELAPSED
(INCLUDING THE FIRST DAY BUT EXCLUDING THE LAST DAY).  THE APPLICABLE ALTERNATE
BASE RATE OR ADJUSTED LIBO RATE SHALL BE

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determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

SECTION 2.12.  ALTERNATE RATE OF INTEREST.

If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(A)                                  THE ADMINISTRATIVE AGENT DETERMINES (WHICH
DETERMINATION SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR) THAT ADEQUATE AND
REASONABLE MEANS DO NOT EXIST FOR ASCERTAINING THE ADJUSTED LIBO RATE FOR SUCH
INTEREST PERIOD; OR

(B)                                 THE ADMINISTRATIVE AGENT IS ADVISED BY THE
REQUIRED LENDERS THAT BECAUSE OF A CHANGE IN CIRCUMSTANCES AFFECTING THE
EURODOLLAR MARKET GENERALLY THE ADJUSTED LIBO RATE FOR SUCH INTEREST PERIOD WILL
NOT ADEQUATELY AND FAIRLY REFLECT THE COST TO SUCH LENDERS OF MAKING OR
MAINTAINING THEIR LOANS INCLUDED IN SUCH BORROWING FOR SUCH INTEREST PERIOD;

then the Administrative Agent shall give notice thereof to the Company and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Company and the Lenders that the
circumstances giving rise to such notice no longer exist (which the
Administrative Agent shall do as promptly as practicable after becoming aware
that such circumstances no longer exist), (i) any Interest Election Request that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.

SECTION 2.13.  INCREASED COSTS OR REDUCED RETURN RESULTING FROM TAXES, RESERVES,
CAPITAL ADEQUACY REQUIREMENTS, EXPENSES, ETC.

If any Law, guideline or interpretation or any change in any Law, guideline or
interpretation or application thereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or other
Official Body:

(I)                                     SUBJECTS ANY LENDER OR THE ISSUING BANK
TO ANY TAX OR CHANGES THE BASIS OF TAXATION (INCLUDING IN BOTH CASES WITHHOLDING
TAXES) WITH RESPECT TO THIS AGREEMENT, THE NOTES, THE LOANS OR PAYMENTS BY THE
COMPANY OF PRINCIPAL, INTEREST, FACILITY FEES OR OTHER AMOUNTS DUE FROM THE
COMPANY UNDER ANY LOAN DOCUMENT (EXCEPT FOR TAXES ON THE OVERALL NET INCOME OF
SUCH LENDER OR ISSUING BANK, FRANCHISE TAXES, ANY BRANCH PROFITS TAXES, ANY U.S.
WITHHOLDING TAXES IMPOSED ON A FOREIGN LENDER AT THE TIME SUCH LENDER BECOMES A
PARTY TO THIS AGREEMENT, AND ANY TAXES ATTRIBUTABLE TO A FAILURE OF SUCH LENDER
TO COMPLY WITH THE REQUIREMENTS OF SECTION 9.14 OF THIS AGREEMENT),

(II)                                  IMPOSES, MODIFIES OR DEEMS APPLICABLE ANY
RESERVE, SPECIAL DEPOSIT OR SIMILAR REQUIREMENT AGAINST CREDITS OR COMMITMENTS
TO EXTEND CREDIT EXTENDED BY, OR ASSETS (FUNDED OR CONTINGENT) OF, DEPOSITS WITH
OR FOR THE ACCOUNT OF, OR OTHER ACQUISITIONS OF FUNDS BY, ANY LENDER OR THE
ISSUING BANK, OR

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(III)                               IMPOSES, MODIFIES OR DEEMS APPLICABLE ANY
CAPITAL ADEQUACY OR SIMILAR REQUIREMENT (A) AGAINST ASSETS (FUNDED OR
CONTINGENT) OF, OR LETTERS OF CREDIT, OTHER CREDITS OR COMMITMENTS TO EXTEND
CREDIT EXTENDED BY, ANY LENDER OR THE ISSUING BANK, OR (B) OTHERWISE APPLICABLE
TO THE OBLIGATIONS OF ANY LENDER OR THE ISSUING BANK UNDER THIS AGREEMENT,

and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense upon any Lender or the Issuing Bank
with respect to this Agreement, or the making, maintenance or funding of any
part of the Loans or the issuance or maintenance of the Letter of Credit (or, in
the case of any capital adequacy or similar requirement, to have the effect of
reducing the rate of return on any Lender’s or the Issuing Bank’s capital,
taking into consideration such Lender’s or the Issuing Bank’s customary policies
with respect to capital adequacy) by an amount which such Lender or the Issuing
Bank in its sole discretion deems to be material, such Lender or the Issuing
Bank shall from time to time notify the Company and the Administrative Agent of
the amount determined in good faith (using any averaging and attribution methods
employed in good faith) by such Lender or the Issuing Bank to be necessary to
compensate such Lender or the Issuing Bank for such increase in cost, reduction
of income, additional expense or reduced rate of return.  Such notice shall set
forth in reasonable detail the basis for such determination, provided, however,
that any such determination shall be conclusive and binding absent manifest
error.  Such amount shall be due and payable by the Company to such Lender or
the Issuing Bank ten Business Days after such notice is given.

(IV)                              IF ANY LENDER OR THE ISSUING BANK RECEIVES A
REFUND IN RESPECT OF ANY AMOUNTS PAID BY THE COMPANY PURSUANT TO THIS
SECTION 2.13, WHICH REFUND IN GOOD FAITH JUDGMENT OF SUCH LENDER OR THE ISSUING
BANK IS ALLOCABLE TO SUCH PAYMENT, IT SHALL NOTIFY THE COMPANY OF SUCH REFUND
AND REPAY SUCH REFUND TO THE COMPANY NET OF ALL OUT-OF-POCKET EXPENSES OF SUCH
LENDER OR THE ISSUING BANK, PROVIDED, HOWEVER, THAT THE COMPANY, UPON THE
REQUEST OF SUCH LENDER OR THE ISSUING BANK, AGREES TO REPAY THE AMOUNT PAID OVER
TO THE COMPANY TO SUCH LENDER OR THE ISSUING BANK IN THE EVENT SUCH LENDER OR
THE ISSUING BANK IS REQUIRED TO REPAY SUCH REFUND.

SECTION 2.14.  BREAK FUNDING PAYMENTS.

In the event of (i) the payment of any principal of any Eurodollar Loan other
than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (ii) the conversion of any Eurodollar Loan other
than on the last day of the Interest Period applicable thereto, (iii) the
failure to borrow, convert, continue or prepay any Eurodollar Loan on the date
specified in any notice delivered pursuant hereto, or (iv)  the assignment of
any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Company pursuant to Section 2.16(b),
then, in any such event, the Company shall compensate each Lender for the loss,
cost and expense attributable to such event.  In the case of a Eurodollar Loan,
the loss to any Lender attributable to any such event shall be deemed to include
an amount determined by such Lender to be equal to the excess, if any, of
(A) the amount of interest that such Lender would pay for a deposit equal to the
principal amount of such Loan for the period from the date of such payment,
conversion, failure or assignment to the last day of the

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then current Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate
payable on such deposit were equal to the Adjusted LIBO Rate for such Interest
Period, over (B) the amount of interest that such Lender would earn on such
principal amount for such period if such Lender were to invest such principal
amount for such period at the interest rate that would be bid by such Lender (or
an affiliate of such Lender) for dollar deposits from other banks in the
eurodollar market at the commencement of such period.  A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section and explaining in reasonable detail the method
by which such amount or amounts shall have been determined shall be delivered to
the Company and shall be conclusive absent manifest error; provided that no
Lender or Issuing Bank shall be required to deliver information pursuant to this
Section relating to its business, other than any such information that is
available to the Company on a nonconfidential basis prior to the date of such
certificate.  The Company shall pay the amount shown as due on any such
certificate to the Paying Agent for distribution to the Administrative Agent for
the account of such Lender in accordance with Section 2.15 within ten days after
receipt of such certificate.

SECTION 2.15.  PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS.

(A)                                  THE COMPANY SHALL MAKE EACH PAYMENT
REQUIRED TO BE MADE BY IT HEREUNDER (WHETHER OF PRINCIPAL, INTEREST, FEES,
REIMBURSEMENT OF LC DISBURSEMENTS OR OF ANY AMOUNTS UNDER SECTION 2.13 OR 2.14,
OR OTHERWISE) PRIOR TO 12:00 NOON, NEW YORK CITY TIME, ON THE DATE WHEN DUE IN
IMMEDIATELY AVAILABLE FUNDS, WITHOUT SET-OFF OR COUNTERCLAIM.  ANY AMOUNTS
RECEIVED AFTER SUCH TIME ON ANY DATE MAY, IN THE DISCRETION OF THE
ADMINISTRATIVE AGENT, BE DEEMED TO HAVE BEEN RECEIVED ON THE NEXT SUCCEEDING
BUSINESS DAY FOR PURPOSES OF CALCULATING INTEREST THEREON.  ALL SUCH PAYMENTS
SHALL BE MADE TO THE PAYING AGENT TO BE CREDITED TO THE PAYING AGENT’S ACCOUNT. 
ALL PAYMENTS MADE BY THE COMPANY TO THE PAYING AGENT AS PROVIDED HEREIN OR IN
ANY NOTE SHALL BE DEEMED RECEIVED BY THE LENDERS OR THE ISSUING BANK FOR ALL
PURPOSES AS BETWEEN THE LENDERS OR THE ISSUING BANK AND THE COMPANY.  THE
ADMINISTRATIVE AGENT SHALL NOTIFY THE PAYING AGENT IN ADVANCE OF EACH SUCH
EXPECTED PAYMENT. THE PAYING AGENT WILL PROMPTLY THEREAFTER CAUSE TO BE
DISTRIBUTED LIKE FUNDS RELATING TO THE PAYMENT OF PRINCIPAL, INTEREST OR
FACILITY FEES TO THE ADMINISTRATIVE AGENT OR, WITH RESPECT TO PAYMENTS TO BE
MADE TO THE ISSUING BANK, THE ISSUING BANK, AND THE ADMINISTRATIVE AGENT OR THE
ISSUING BANK (AS THE CASE MAY BE) WILL PROMPTLY AFTER ANY SUCH PAYMENT CAUSE TO
BE DISTRIBUTED LIKE FUNDS RELATING TO THE PAYMENT OF PRINCIPAL OR INTEREST OR
FACILITY FEES (OTHER THAN AMOUNTS PAYABLE PURSUANT TO SECTION 2.04(F), 2.13,
2.14 OR 9.03(A), (B) OR (C)) (ACCORDING TO THE LENDERS’ RESPECTIVE COMMITMENTS)
TO THE LENDERS FOR THE ACCOUNT OF THEIR RESPECTIVE LENDING OFFICES, AND LIKE
FUNDS RELATING TO THE PAYMENT OF ANY OTHER AMOUNT PAYABLE TO ANY LENDER TO THE
ADMINISTRATIVE AGENT, AND THE ADMINISTRATIVE AGENT THEN SHALL CAUSE LIKE FUNDS
TO BE DISTRIBUTED TO SUCH LENDER FOR THE ACCOUNT OF ITS APPLICABLE LENDING
OFFICE, IN EACH CASE TO BE APPLIED IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT OR ANY NOTE.  THE ADMINISTRATIVE AGENT SHALL DISTRIBUTE ANY SUCH
PAYMENTS RECEIVED BY IT FOR THE ACCOUNT OF ANY OTHER PERSON TO THE APPROPRIATE
RECIPIENT PROMPTLY FOLLOWING RECEIPT THEREOF.  IF ANY PAYMENT HEREUNDER SHALL BE
DUE ON A DAY THAT IS NOT A BUSINESS DAY, THE DATE FOR PAYMENT SHALL BE EXTENDED
TO THE NEXT SUCCEEDING BUSINESS DAY, AND, IN THE CASE OF ANY PAYMENT ACCRUING
INTEREST, INTEREST THEREON SHALL BE PAYABLE FOR THE PERIOD OF SUCH EXTENSION. 
ALL PAYMENTS HEREUNDER SHALL BE MADE IN DOLLARS.

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(B)                                 IF AT ANY TIME INSUFFICIENT FUNDS ARE
RECEIVED BY AND AVAILABLE TO THE ADMINISTRATIVE AGENT TO PAY FULLY ALL AMOUNTS
OF PRINCIPAL, UNREIMBURSED LC DISBURSEMENTS, INTEREST AND FEES THEN DUE
HEREUNDER, SUCH FUNDS SHALL BE APPLIED (I) FIRST, TO PAY INTEREST AND FEES THEN
DUE HEREUNDER, RATABLY AMONG THE PARTIES ENTITLED THERETO IN ACCORDANCE WITH THE
AMOUNTS OF INTEREST AND FEES THEN DUE TO SUCH PARTIES, AND (II) SECOND, TO PAY
PRINCIPAL AND UNREIMBURSED LC DISBURSEMENTS THEN DUE HEREUNDER, RATABLY AMONG
THE PARTIES ENTITLED THERETO IN ACCORDANCE WITH THE AMOUNTS OF PRINCIPAL AND
UNREIMBURSED LC DISBURSEMENTS THEN DUE TO SUCH PARTIES.

(C)                                  IF ANY LENDER SHALL, BY EXERCISING ANY
RIGHT OF SET-OFF OR COUNTERCLAIM OR OTHERWISE, OBTAIN PAYMENT IN RESPECT OF ANY
PRINCIPAL OF OR INTEREST ON ANY OF ITS LOANS OR PARTICIPATIONS IN UNREIMBURSED
LC DISBURSEMENTS RESULTING IN SUCH LENDER RECEIVING PAYMENT OF A GREATER
PROPORTION OF THE AGGREGATE AMOUNT OF ITS LOANS OR PARTICIPATIONS IN
UNREIMBURSED LC DISBURSEMENTS AND ACCRUED INTEREST THEREON THAN THE PROPORTION
RECEIVED BY ANY OTHER LENDER, THEN THE LENDER RECEIVING SUCH GREATER PROPORTION
SHALL PURCHASE (FOR CASH AT FACE VALUE) PARTICIPATIONS IN THE LOANS OR
PARTICIPATIONS IN UNREIMBURSED LC DISBURSEMENTS OF OTHER LENDERS TO THE EXTENT
NECESSARY SO THAT THE BENEFIT OF ALL SUCH PAYMENTS SHALL BE SHARED BY THE
LENDERS RATABLY IN ACCORDANCE WITH THE AGGREGATE AMOUNT OF PRINCIPAL OF AND
ACCRUED INTEREST ON THEIR RESPECTIVE LOANS OR PARTICIPATIONS IN UNREIMBURSED LC
DISBURSEMENTS; PROVIDED THAT (I) IF ANY SUCH PARTICIPATIONS ARE PURCHASED AND
ALL OR ANY PORTION OF THE PAYMENT GIVING RISE THERETO IS RECOVERED, SUCH
PARTICIPATIONS SHALL BE RESCINDED AND THE PURCHASE PRICE RESTORED TO THE EXTENT
OF SUCH RECOVERY, WITHOUT INTEREST, AND (II) THE PROVISIONS OF THIS SUBSECTION
SHALL NOT BE CONSTRUED TO APPLY TO ANY PAYMENT MADE BY THE COMPANY PURSUANT TO
AND IN ACCORDANCE WITH THE EXPRESS TERMS OF THIS AGREEMENT OR 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, OTHER THAN TO
THE COMPANY, HOVNANIAN OR ANY SUBSIDIARY OR AFFILIATE THEREOF (AS TO WHICH THE
PROVISIONS OF THIS SUBSECTION SHALL APPLY).  EACH LOAN PARTY CONSENTS TO THE
FOREGOING AND AGREES, TO THE EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE
LAW, THAT ANY LENDER ACQUIRING A PARTICIPATION PURSUANT TO THE FOREGOING
ARRANGEMENTS MAY EXERCISE AGAINST SUCH LOAN PARTY RIGHTS OF SET-OFF AND
COUNTERCLAIM WITH RESPECT TO SUCH PARTICIPATION AS FULLY AS IF SUCH LENDER WERE
A DIRECT CREDITOR OF SUCH LOAN PARTY IN THE AMOUNT OF SUCH PARTICIPATION.

(D)                                 THE PAYING AGENT SHALL HAVE NO OBLIGATION TO
MAKE A PAYMENT DISTRIBUTION TO THE ADMINISTRATIVE AGENT OR THE LENDERS UNTIL IT
HAS RECEIVED THE REQUIRED PAYMENT FROM THE COMPANY.  UNLESS THE PAYING AGENT
SHALL HAVE RECEIVED NOTICE FROM THE COMPANY PRIOR TO THE DATE ON WHICH ANY
PAYMENT IS DUE TO THE PAYING AGENT FOR THE ACCOUNT OF THE LENDERS OR THE ISSUING
BANK THAT THE COMPANY WILL NOT MAKE SUCH PAYMENT, THE PAYING AGENT MAY ASSUME
THAT THE COMPANY HAS MADE SUCH PAYMENT ON SUCH DATE IN ACCORDANCE HEREWITH AND
MAY (BUT SHALL NOT BE REQUIRED TO), IN RELIANCE UPON SUCH ASSUMPTION, DISTRIBUTE
TO THE ADMINISTRATIVE AGENT, WHEREUPON THE ADMINISTRATIVE AGENT SHALL DISTRIBUTE
TO THE LENDERS OR THE ISSUING BANK, AS THE CASE MAY BE, THE AMOUNT DUE.  IN SUCH
EVENT, IF THE COMPANY HAS NOT IN FACT MADE SUCH PAYMENT, THEN EACH OF THE
LENDERS OR THE ISSUING BANK, AS THE CASE MAY BE, SEVERALLY AGREES TO REPAY TO
THE PAYING AGENT FORTHWITH ON DEMAND THE AMOUNT SO DISTRIBUTED TO SUCH LENDER OR
THE ISSUING BANK WITH INTEREST THEREON, FOR EACH DAY FROM AND INCLUDING THE DATE
SUCH AMOUNT IS DISTRIBUTED TO IT TO BUT EXCLUDING THE DATE OF PAYMENT TO THE
PAYING AGENT, AT THE FEDERAL FUNDS EFFECTIVE RATE.

(E)                                  IF ANY LENDER OR THE ISSUING BANK SHALL
FAIL TO MAKE ANY PAYMENT REQUIRED TO BE MADE BY IT PURSUANT TO SECTION 2.04(D),
2.05(B) OR 2.15(D), THEN THE ADMINISTRATIVE AGENT MAY, IN

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ITS DISCRETION (NOTWITHSTANDING ANY CONTRARY PROVISION HEREOF), APPLY ANY
AMOUNTS THEREAFTER RECEIVED BY THE ADMINISTRATIVE AGENT FOR THE ACCOUNT OF SUCH
LENDER OR THE ISSUING BANK TO SATISFY SUCH LENDER OR THE ISSUING BANK’S
OBLIGATIONS UNDER SUCH SECTIONS UNTIL ALL SUCH UNSATISFIED OBLIGATIONS ARE FULLY
PAID.

SECTION 2.16.  MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.

(A)                                  IF ANY LENDER REQUESTS COMPENSATION UNDER
SECTION 2.13, THEN SUCH LENDER SHALL USE REASONABLE EFFORTS TO DESIGNATE A
DIFFERENT LENDING OFFICE FOR FUNDING OR BOOKING ITS LOANS HEREUNDER OR TO ASSIGN
ITS RIGHTS AND OBLIGATIONS HEREUNDER TO ANOTHER OF ITS OFFICES, BRANCHES OR
AFFILIATES, IF, IN THE JUDGMENT OF SUCH LENDER, SUCH DESIGNATION OR ASSIGNMENT
(I) WOULD ELIMINATE OR REDUCE AMOUNTS PAYABLE PURSUANT TO SECTION 2.13, IN THE
FUTURE AND (II) WOULD NOT SUBJECT SUCH LENDER TO ANY UNREIMBURSED COST OR
EXPENSE AND WOULD NOT OTHERWISE BE DISADVANTAGEOUS TO SUCH LENDER.  THE COMPANY
HEREBY AGREES TO PAY ALL REASONABLE COSTS AND EXPENSES INCURRED BY ANY LENDER IN
CONNECTION WITH ANY SUCH DESIGNATION OR ASSIGNMENT.

(B)                                 IF ANY LENDER REQUESTS COMPENSATION UNDER
SECTION 2.13, OR IF ANY LENDER DEFAULTS IN ITS OBLIGATION TO FUND LOANS
HEREUNDER, OR IF IN CONNECTION WITH ANY PROPOSED AMENDMENT, MODIFICATION, WAIVER
OR CONSENT, THE CONSENT OF THE REQUIRED LENDERS HAS BEEN OBTAINED BUT THE
CONSENT OF A LENDER THE CONSENT OF WHICH IS REQUIRED SHALL NOT HAVE BEEN
OBTAINED, THEN THE COMPANY MAY, AT ITS SOLE EXPENSE AND EFFORT, UPON NOTICE TO
SUCH LENDER AND THE ADMINISTRATIVE AGENT, REQUIRE SUCH LENDER TO ASSIGN AND
DELEGATE, WITHOUT RECOURSE (IN ACCORDANCE WITH AND SUBJECT TO THE RESTRICTIONS
CONTAINED IN SECTION 9.04), ALL ITS INTERESTS, RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT TO AN ASSIGNEE THAT SHALL ASSUME SUCH OBLIGATIONS (WHICH ASSIGNEE MAY
BE ANOTHER LENDER, IF A LENDER ACCEPTS SUCH ASSIGNMENT); PROVIDED THAT (I) THE
COMPANY SHALL HAVE RECEIVED THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE
AGENT (AND IF A COMMITMENT IS BEING ASSIGNED, THE ISSUING BANK), WHICH CONSENT
SHALL NOT UNREASONABLY BE WITHHELD OR DELAYED, (II) SUCH LENDER SHALL HAVE
RECEIVED PAYMENT OF AN AMOUNT EQUAL TO THE OUTSTANDING PRINCIPAL OF ITS LOANS
AND PARTICIPATIONS IN LC DISBURSEMENTS, ACCRUED INTEREST THEREON, ACCRUED FEES
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 COMPANY (IN
THE CASE OF ALL OTHER AMOUNTS) AND (III) IN THE CASE OF ANY SUCH ASSIGNMENT
RESULTING FROM A CLAIM FOR COMPENSATION UNDER SECTION 2.13, SUCH ASSIGNMENT WILL
RESULT IN A REDUCTION IN SUCH COMPENSATION OR PAYMENTS.  A LENDER SHALL NOT BE
REQUIRED TO MAKE ANY SUCH ASSIGNMENT AND DELEGATION IF, PRIOR THERETO, AS A
RESULT OF A WAIVER BY SUCH LENDER OR OTHERWISE, THE CIRCUMSTANCES ENTITLING THE
COMPANY TO REQUIRE SUCH ASSIGNMENT AND DELEGATION CEASE TO APPLY.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

The Company and Hovnanian, jointly and severally, represent and warrant to the
Administrative Agent, each of the Lenders and the Issuing Bank as follows:

SECTION 3.01.  ORGANIZATION AND QUALIFICATION.

Each of the Company and Hovnanian is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and each other Loan Party

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is a corporation, partnership or limited liability company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization except to the extent the failure to do so could not, individually
or in the aggregate, reasonably be expected to cause a Material Adverse Change. 
Each Loan Party has the lawful power to own or lease its properties and to
engage in the business it presently conducts or proposes to conduct.  Each Loan
Party is duly licensed or qualified and in good standing in each jurisdiction
where the failure to do so could not, individually or in the aggregate,
reasonably be expected to cause a Material Adverse Change.

SECTION 3.02.  SUBSIDIARIES.

As of the date hereof, Schedule 1.01 states the name of each of Hovnanian’s
Subsidiaries and its jurisdiction of incorporation and designates each such
Subsidiary as either a Restricted Subsidiary or an Unrestricted Subsidiary. 
Hovnanian and each Loan Party has good and marketable title to all of the
Capital Stock in each Subsidiary it purports to own, free and clear in each case
of any Lien.

SECTION 3.03.  POWER AND AUTHORITY.

Each Loan Party has full power to enter into, execute, deliver and carry out
this Agreement and the other Loan Documents to which it is a party, to incur the
Indebtedness contemplated by the Loan Documents and to perform its obligations
under the Loan Documents to which it is a party, and all such actions have been
duly authorized by all necessary proceedings on its part.

SECTION 3.04.  VALIDITY AND BINDING EFFECT.

This Agreement has been duly and validly executed and delivered by the Company
and Hovnanian, and each other Loan Document that any Loan Party is required to
execute and deliver on or after the date hereof will have been duly executed and
delivered by such Loan Party on the required date of delivery of such Loan
Document.  This Agreement and each other Loan Document constitutes, or will
constitute, legal, valid and binding obligations of each Loan Party that is or
will be a party thereto on and after its date of delivery thereof, enforceable
against such Loan Party in accordance with its terms, except to the extent that
enforceability of any such Loan Document may be limited by bankruptcy,
insolvency, reorganization moratorium or other similar laws affecting the
enforceability of creditor’s rights generally or limiting the right of specific
performance.

SECTION 3.05.  NO CONFLICT.

Neither the execution and delivery of this Agreement or the other Loan Documents
by any Loan Party nor the consummation of the transactions herein or therein
contemplated or compliance with the terms and provisions hereof or thereof by
any of them will conflict with, constitute a default under or result in any
breach of (i) the terms and conditions of the certificate of incorporation,
bylaws, certificate of limited partnership, partnership agreement, certificate
of formation, limited liability company agreement or other organizational
documents of any Loan Party or (ii) any Law or any material agreement or
instrument or order, writ, judgment, injunction or decree to which any Loan
Party is a party or by which it is bound or to which it is

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subject, or result in the creation or enforcement of any Lien, charge or
encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan
Party (other than Liens granted under the Loan Documents) that could,
individually or in the aggregate, reasonably be expected to cause a Material
Adverse Change.

SECTION 3.06.  LITIGATION.

There are no actions, suits, proceedings or investigations pending or, to the
knowledge of any Loan Party, threatened against such Loan Party at law or equity
before any Official Body that individually or in the aggregate may result in any
Material Adverse Change.  None of the Loan Parties is in violation of any order,
writ, injunction or any decree of any Official Body that may result in any
Material Adverse Change.

SECTION 3.07.  TITLE TO PROPERTIES.

Each Loan Party has good and marketable title to or a valid leasehold interest
in all properties, assets and other rights that it purports to own or lease or
that are reflected as owned or leased on its books and records, free and clear
of all Liens and encumbrances, except Permitted Liens, and subject to the terms
and conditions of the applicable leases.  All leases of property are in full
force and effect without the necessity for any consent which has not previously
been obtained upon consummation of the transactions contemplated hereby.

SECTION 3.08.  FINANCIAL STATEMENTS.

(A)                                  HISTORICAL STATEMENTS.  THE COMPANY HAS
DELIVERED TO THE ADMINISTRATIVE AGENT COPIES OF HOVNANIAN’S AUDITED AND
CONSOLIDATED YEAR-END FINANCIAL STATEMENTS FOR AND AS OF THE END OF THE FISCAL
YEAR ENDED OCTOBER 31, 2005 (THE “ANNUAL STATEMENTS”) AND UNAUDITED CONSOLIDATED
QUARTER-END STATEMENTS FOR AND AS OF THE END OF THE FISCAL QUARTERS ENDED
JANUARY 31, 2006, APRIL 30, 2006 AND JULY 31, 2006 (THE “QUARTERLY STATEMENTS”,
AND, TOGETHER WITH THE ANNUAL STATEMENTS, THE “HISTORICAL STATEMENTS”).  THE
HISTORICAL STATEMENTS WERE COMPILED FROM THE BOOKS AND RECORDS MAINTAINED BY
HOVNANIAN’S MANAGEMENT, ARE CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS AND
FAIRLY REPRESENT (SUBJECT, IN THE CASE OF QUARTERLY STATEMENTS, TO YEAR-END
ADJUSTMENTS) IN ALL MATERIAL RESPECTS THE CONSOLIDATED FINANCIAL CONDITIONS OF
HOVNANIAN AND ITS SUBSIDIARIES AS OF THEIR DATES AND THE RESULTS OF OPERATIONS
FOR THE FISCAL PERIODS THEN ENDED AND HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP
CONSISTENTLY APPLIED.  THE HISTORICAL STATEMENTS ACCURATELY REFLECT THE
LIABILITIES IN ALL MATERIAL RESPECTS OF HOVNANIAN AND ITS SUBSIDIARIES AS OF THE
RESPECTIVE DATES OF THE HISTORICAL STATEMENTS.

(B)                                 ACCURACY OF FINANCIAL STATEMENTS.  AS OF THE
DATE HEREOF, NEITHER HOVNANIAN NOR ANY SUBSIDIARY OF HOVNANIAN HAS ANY
LIABILITIES, CONTINGENT OR OTHERWISE, OR FORWARD OR LONG-TERM COMMITMENTS THAT
ARE REQUIRED BY GAAP TO BE, BUT ARE NOT, DISCLOSED IN THE HISTORICAL STATEMENTS
OR IN THE NOTES THERETO, AND EXCEPT AS DISCLOSED THEREIN THERE ARE NO UNREALIZED
OR ANTICIPATED LOSSES FROM ANY COMMITMENTS OF HOVNANIAN OR ANY SUBSIDIARY OF
HOVNANIAN THAT MAY CAUSE A MATERIAL ADVERSE CHANGE.  EXCEPT AS DISCLOSED IN
REPORTS FILED BY THE COMPANY OR HOVNANIAN WITH THE SEC PRIOR TO THE DATE HEREOF,
SINCE OCTOBER 31, 2005, NO MATERIAL ADVERSE CHANGE HAS OCCURRED.

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SECTION 3.09.  DISCLOSURE.

Each of the reports required to be filed by the Company or Hovnanian under
Section 13(a) of the Exchange Act on or prior to the date hereof has been filed
and, as of the respective dates thereof and the date hereof, such reports, taken
as a whole, did not contain and do not contain an untrue statement of a material
fact and did not omit and do not omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading in any material respect.

SECTION 3.10.  MARGIN STOCK.

None of the Loan Parties engages or intends to engage principally, or as one of
its important activities, in the business of extending credit for the purpose,
immediately, incidentally or ultimately, of purchasing or carrying margin stock
(within the meaning of Regulation U).  No part of the proceeds of any Loan has
been or will be used, immediately, incidentally or ultimately, to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or to refund Indebtedness originally
incurred for such purpose, or for any purpose that entails a violation of or
which is inconsistent with the provisions of the regulations of the Board of
Governors of the Federal Reserve System.  None of the Loan Parties holds or
intends to hold margin stock in such amounts that more than 25% of the
reasonable value of the assets of such Loan Party are or will be represented by
margin stock.

SECTION 3.11.  TAXES.

All federal, state, local and other tax returns required to have been filed with
respect to the Loan Parties have been filed, and payment or adequate provision
has been made for the payment of all taxes, fees, assessments and other
governmental charges which have or may become due pursuant to said returns or to
assessments received, except to the extent that such taxes, fees, assessments
and other charges are not material or are being contested in good faith by
appropriate proceedings diligently conducted and for which such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made.  There are no agreements or waivers extending the statutory period of
limitations applicable to any federal income tax return of any Loan Party for
any period.

SECTION 3.12.  CONSENTS AND APPROVALS.

No consent, approval, exemption, order or authorization of, or a registration or
filing with, any Official Body or any other Person is required by any Law or any
agreement in connection with the execution, delivery and carrying out of this
Agreement and the other Loan Documents by any Loan Party.

SECTION 3.13.  NO DEFAULTS; COMPLIANCE WITH INSTRUMENTS.

No event has occurred and is continuing and no condition exists or will exist
after giving effect to the borrowings or other extensions of credit to be made
under or pursuant to the Loan Documents that constitutes a Default.  None of the
Loan Parties is in violation of (i) any term of its certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents

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or (ii) any material agreement or instrument to which it is a party or by which
it or any of its properties may be subject or bound where such violation would
constitute a Material Adverse Change.

SECTION 3.14.  INVESTMENT COMPANIES; REGULATED ENTITIES.

None of the Loan Parties is an “investment company” registered or required to be
registered under the Investment Company Act of 1940 or under the “control” of an
“investment company” as such terms are defined in the Investment Act of 1940 and
shall not become such an “investment company” or under such “control”.  None of
the Loan Parties is subject to any other Federal or state statute or regulation
limiting its ability to incur Indebtedness for borrowed money (other than
Regulation X of the Board of Governors of the Federal Reserve System).

ARTICLE IV
CONDITIONS

SECTION 4.01.  CONDITIONS TO EFFECTIVE DATE.

The obligations of the Lenders to make Loans to the Company and of the Issuing
Bank to issue the Letter of Credit for the account of the Company shall not
become effective until the date on which each of the following conditions are
satisfied (or waived in accordance with Section 9.02):

(A)                                  THE ADMINISTRATIVE AGENT SHALL HAVE
RECEIVED AT LEAST ONE EXECUTED COUNTERPART OF THIS AGREEMENT FROM THE COMPANY,
EACH GUARANTOR IN EXISTENCE ON THE DATE HEREOF, EACH AGENT, THE ISSUING BANK AND
EACH LENDER, AND ARRANGEMENTS SATISFACTORY TO THE ADMINISTRATIVE AGENT SHALL
HAVE BEEN MADE FOR THE DELIVERY OF ADDITIONAL EXECUTED COUNTERPARTS, SUFFICIENT
IN NUMBER FOR DISTRIBUTION TO THE AGENTS, THE ISSUING BANK, THE LENDERS AND THE
COMPANY, TOGETHER WITH ALL EXHIBITS AND SCHEDULES THERETO;

(B)                                 THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED
A FAVORABLE WRITTEN OPINION (ADDRESSED TO THE ADMINISTRATIVE AGENT, THE ISSUING
BANK AND THE LENDERS AND DATED THE EFFECTIVE DATE), COUNSEL TO THE LOAN PARTIES,
IN A FORM REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT;

(C)                                  THE ADMINISTRATIVE AGENT SHALL HAVE
RECEIVED DOCUMENTS AND CERTIFICATES RELATING TO THE ORGANIZATION, EXISTENCE AND
GOOD STANDING OF THE COMPANY AND HOVNANIAN, THE AUTHORIZATION OF THE
TRANSACTIONS, THE INCUMBENCY OF THE PERSONS EXECUTING EACH LOAN DOCUMENT ON
BEHALF OF EACH LOAN PARTY, ALL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ADMINISTRATIVE AGENT;

(D)                                 THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED
A CERTIFICATE, DATED THE EFFECTIVE DATE AND SIGNED BY THE PRESIDENT, A VICE
PRESIDENT OR A FINANCIAL OFFICER OF THE COMPANY, CONFIRMING AS OF THE EFFECTIVE
DATE, THAT (I) THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND HOVNANIAN
SET FORTH IN ARTICLE III OF THIS AGREEMENT ARE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS ON AND AS OF SUCH DATE AND (II) NO DEFAULT HAS OCCURRED AND IS
CONTINUING; AND

(E)                                  THE ADMINISTRATIVE AGENT AND EACH LENDER
(AND ITS AFFILIATES) SHALL HAVE RECEIVED ALL FEES AND OTHER AMOUNTS DUE AND
PAYABLE ON OR PRIOR TO THE EFFECTIVE DATE, INCLUDING, TO THE

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EXTENT INVOICED, REIMBURSEMENT OR PAYMENT OF ALL OUT-OF-POCKET EXPENSES REQUIRED
TO BE REIMBURSED OR PAID BY THE COMPANY HEREUNDER.

SECTION 4.02.  CONDITION TO EACH CREDIT EVENT.

The obligation of each Lender to make a Loan to the Company on the occasion of
any Borrowing (other than a Borrowing made to reimburse the Issuing Bank for any
LC Disbursement as provided in Sections 2.04(d) and (e)), and the obligation of
the Issuing Bank to issue, renew, extend or increase the amount of the Letter of
Credit, is subject to the satisfaction of the condition that, at the time of and
immediately after giving effect to such Credit Event, no Event of Default shall
have occurred and be continuing.  Each Credit Event shall be deemed to
constitute a representation and warranty by the Company on the date thereof as
to the satisfaction of the condition described in this Section.

ARTICLE V
COVENANTS

Until the Commitments have expired or been terminated, the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full, and the Letter of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Company and Hovnanian (as
applicable) covenant and agree with the Lenders and the Issuing Bank that:

SECTION 5.01.  EXISTENCE.

Each of Hovnanian and the Company will each do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and the
existence of each of its Restricted Subsidiaries in accordance with their
respective organizational documents, and the material rights, licenses and
franchises of Hovnanian, the Company and each Restricted Subsidiary, provided
that Hovnanian and the Company 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 Hovnanian and its Restricted Subsidiaries taken as a whole; and
provided further that this Section does not prohibit any transaction otherwise
permitted by Section 5.05.

SECTION 5.02.  PAYMENT OF TAXES AND OTHER CLAIMS.

Hovnanian will pay or discharge, and cause each of its Subsidiaries to pay or
discharge before the same become delinquent (i) all material taxes, assessments
and governmental charges levied or imposed upon Hovnanian or any Subsidiary or
its income or profits or property, and (ii) all material lawful claims for
labor, materials and supplies that, if unpaid, might by law become a Lien upon
the property of Hovnanian or any Subsidiary, other than any such tax,
assessment, charge or claim the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established.

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SECTION 5.03.  MAINTENANCE OF PROPERTIES AND INSURANCE.

(A)           HOVNANIAN WILL CAUSE ALL PROPERTIES USED OR USEFUL IN THE CONDUCT
OF ITS BUSINESS OR THE BUSINESS OF ANY OF ITS RESTRICTED SUBSIDIARIES TO BE
MAINTAINED AND KEPT IN GOOD CONDITION, REPAIR AND WORKING ORDER AS IN THE
JUDGMENT OF HOVNANIAN MAY BE NECESSARY SO THAT THE BUSINESS OF HOVNANIAN AND ITS
RESTRICTED SUBSIDIARIES MAY BE PROPERLY AND ADVANTAGEOUSLY CONDUCTED AT ALL
TIMES; PROVIDED THAT NOTHING IN THIS SECTION PREVENTS HOVNANIAN OR ANY
RESTRICTED SUBSIDIARY FROM DISCONTINUING THE USE, OPERATION OR MAINTENANCE OF
ANY OF SUCH PROPERTIES OR DISPOSING OF ANY OF THEM, IF SUCH DISCONTINUANCE OR
DISPOSAL IS, IN THE JUDGMENT OF HOVNANIAN, DESIRABLE IN THE CONDUCT OF THE
BUSINESS OF HOVNANIAN AND ITS RESTRICTED SUBSIDIARIES TAKEN AS A WHOLE.

(B)           HOVNANIAN WILL PROVIDE OR CAUSE TO BE PROVIDED, FOR ITSELF AND ITS
RESTRICTED SUBSIDIARIES, INSURANCE (INCLUDING APPROPRIATE SELF-INSURANCE)
AGAINST LOSS OR DAMAGE OF THE KINDS CUSTOMARILY INSURED AGAINST BY CORPORATIONS
SIMILARLY SITUATED AND OWNING LIKE PROPERTIES, INCLUDING, BUT NOT LIMITED TO,
PRODUCTS LIABILITY INSURANCE AND PUBLIC LIABILITY INSURANCE, WITH REPUTABLE
INSURERS, IN SUCH AMOUNTS, WITH SUCH DEDUCTIBLES AND BY SUCH METHODS AS ARE
CUSTOMARY FOR CORPORATIONS SIMILARLY SITUATED IN THE INDUSTRY IN WHICH HOVNANIAN
AND ITS RESTRICTED SUBSIDIARIES ARE THEN CONDUCTING BUSINESS.

SECTION 5.04.  LIMITATIONS ON LIENS.

Hovnanian and the Company will not, and will not cause or permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any Liens, other than
Permitted Liens, on any of its Property, or on any shares of Capital Stock or
Indebtedness of any Restricted Subsidiary, unless contemporaneously therewith or
prior thereto all payments due under this Agreement and the Notes are secured on
an equal and ratable basis with the obligation or liability so secured until
such time as such Indebtedness is no longer secured by a Lien.

SECTION 5.05.  LIMITATIONS ON MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.

Neither the Company nor any Guarantor 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 any 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
Hovnanian, the Company or a Restricted Subsidiary is the survivor of a
consolidation or merger, or the transferee in a sale, lease, conveyance or other
disposition) unless:

(I)            THE PERSON FORMED BY OR SURVIVING SUCH CONSOLIDATION OR MERGER
(IF OTHER THAN THE COMPANY, HOVNANIAN OR ANY OTHER GUARANTOR, 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 AN AGREEMENT
IN A FORM REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT ALL OF THE
OBLIGATIONS OF HOVNANIAN, THE COMPANY OR SUCH GUARANTOR, AS THE CASE MAY BE,
UNDER THE APPLICABLE LOAN DOCUMENTS, AND

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(II)           IMMEDIATELY AFTER GIVING EFFECT TO SUCH TRANSACTION, NO DEFAULT
HAS OCCURRED AND IS CONTINUING.

The foregoing provisions shall not apply to (i) 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 pursuant to Section 6.03
hereof, or (ii) a transaction the purpose of which is to change the state of
incorporation of the Company, Hovnanian or any other Guarantor.

SECTION 5.06.  Cash Collateralization.  In the event that on the 90th day prior
to the Maturity Date the Letter of Credit remains outstanding, and the stated
expiry date of the Letter of Credit is a date later than the Maturity Date, then
the Company shall (unless the Company has made other arrangements satisfactory
to the Lenders to secure the obligations of the Loan Parties under the Loan
Documents) immediately deposit with the Administrative Agent an amount in the
cash collateral account (the “Cash Collateral Account”) described below equal to
the undrawn amount of the Letter of Credit on such date.  Such Cash Collateral
Account shall at all times be free and clear of all rights or claims of third
parties.  The Cash Collateral Account shall be maintained with the
Administrative Agent in the name of, and under the sole dominion and control of,
the Administrative Agent, and amounts deposited in the Cash Collateral Account
shall bear interest at a rate equal to the rate generally offered by Citibank
for deposits equal to the amount deposited by the Company in the Cash Collateral
Account, for a term to be determined by the Administrative Agent in its sole
discretion.  The Company hereby grants to the Administrative Agent for the
benefit of the Administrative Agent, the Issuing Bank and the Lenders a Lien on,
and hereby assigns to the Administrative Agent for the benefit of the
Administrative Agent, the Issuing Bank and the Lenders all of its right, title
and interest in, the Cash Collateral Account and all funds from time to time on
deposit therein to secure its obligations under the Loan Documents.  If any LC
Disbursement is not reimbursed in full immediately upon demand or the principal
amount of any Loan is not paid when due, then, in any such event, the
Administrative Agent may, and, upon the Company’s request, shall, apply the
amounts then on deposit in the Cash Collateral Account, in such priority as the
Administrative Agent shall elect, toward the payment in full of any or all of
the Company’s obligations under the Loan Documents as and when such obligations
shall become due and payable.  Upon payment in full, after the termination of
the Letters of Credit and the Commitments, of all such obligations, the
Administrative Agent will repay and reassign to the Company any cash then on
deposit in the Cash Collateral Account, and the Lien of the Administrative Agent
on the Cash Collateral Account and the funds therein shall automatically
terminate.

SECTION 5.07.  REPORTING REQUIREMENTS. THE COMPANY AND HOVNANIAN SHALL DELIVER,
AND SHALL CAUSE EACH OTHER LOAN PARTY, TO THE EXTENT APPLICABLE, TO DELIVER OR
TO CAUSE TO BE DELIVERED TO THE ADMINISTRATIVE AGENT:

(A)           AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 55 CALENDAR DAYS
AFTER THE END OF EACH OF THE FIRST THREE FISCAL QUARTERS IN EACH FISCAL YEAR OF
HOVNANIAN, FINANCIAL STATEMENTS OF HOVNANIAN, CONSISTING OF A CONSOLIDATED
BALANCE SHEET AS OF THE END OF SUCH FISCAL QUARTER AND RELATED CONSOLIDATED
STATEMENTS OF INCOME, STOCKHOLDERS’ EQUITY AND CASH FLOWS FOR THE FISCAL

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QUARTER THEN ENDED AND THE FISCAL YEAR THROUGH THAT DATE, ALL IN REASONABLE
DETAIL AND CERTIFIED (SUBJECT TO NORMAL YEAR-END AUDIT ADJUSTMENTS) BY THE CHIEF
EXECUTIVE OFFICER, PRESIDENT, TREASURER OR CHIEF FINANCIAL OFFICER OR PRINCIPAL
ACCOUNTING OFFICER OF HOVNANIAN AS HAVING BEEN PREPARED IN ACCORDANCE WITH GAAP,
CONSISTENTLY APPLIED, AND SETTING FORTH IN COMPARATIVE FORM THE RESPECTIVE
FINANCIAL STATEMENTS FOR THE CORRESPONDING DATE AND PERIOD IN THE PREVIOUS
FISCAL YEAR.  THE LOAN PARTIES WILL BE DEEMED TO HAVE COMPLIED WITH THE DELIVERY
REQUIREMENTS OF THIS SECTION 5.07(A) IF WITHIN 55 DAYS AFTER THE END OF
HOVNANIAN’S FISCAL QUARTER, THE COMPANY DELIVERS TO THE ADMINISTRATIVE AGENT A
COPY OF HOVNANIAN’S FORM 10-Q AS FILED WITH THE SEC AND THE FINANCIAL STATEMENTS
CONTAINED THEREIN MEET THE REQUIREMENTS DESCRIBED IN THIS SECTION 5.07(A).

(B)           AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 90 DAYS AFTER THE END
OF EACH FISCAL YEAR OF HOVNANIAN, FINANCIAL STATEMENTS OF HOVNANIAN CONSISTING
OF A CONSOLIDATED BALANCE SHEET AS OF THE END OF SUCH FISCAL YEAR, AND RELATED
CONSOLIDATED STATEMENTS OF INCOME, STOCKHOLDERS’ EQUITY AND CASH FLOWS FOR THE
FISCAL YEAR THEN ENDED, ALL IN REASONABLE DETAIL AND SETTING FORTH IN
COMPARATIVE FORM THE FINANCIAL STATEMENTS AS OF THE END OF AND FOR THE PRECEDING
FISCAL YEAR, AND CERTIFIED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF
NATIONALLY RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE ADMINISTRATIVE
AGENT.  THE CERTIFICATE OR REPORT OF ACCOUNTANTS SHALL BE FREE OF QUALIFICATIONS
(OTHER THAN ANY CONSISTENCY QUALIFICATION THAT MAY RESULT FROM A CHANGE IN THE
METHOD USED TO PREPARE THE FINANCIAL STATEMENTS AS TO WHICH SUCH ACCOUNTANTS
CONCUR) AND SHALL NOT INDICATE THE OCCURRENCE OR EXISTENCE OF ANY EVENT,
CONDITION OR CONTINGENCY THAT WOULD MATERIALLY IMPAIR THE PROSPECT OF PAYMENT OR
PERFORMANCE OF ANY COVENANT, AGREEMENT OR DUTY OF ANY LOAN PARTY UNDER ANY OF
THE LOAN DOCUMENTS OR CAUSE OR CONSTITUTE AN EVENT OF DEFAULT.  THE LOAN PARTIES
WILL BE DEEMED TO HAVE COMPLIED WITH THE DELIVERY REQUIREMENTS OF THIS
SECTION 5.07(B) IF WITHIN 90 DAYS AFTER THE END OF HOVNANIAN’S FISCAL YEAR, THE
COMPANY DELIVERS TO THE ADMINISTRATIVE AGENT A COPY OF HOVNANIAN’S ANNUAL REPORT
AND FORM 10-K AS FILED WITH THE SEC AND THE FINANCIAL STATEMENTS AND SEPARATELY
DELIVERS THE ABOVE-REFERENCED CERTIFICATION OF PUBLIC ACCOUNTANTS.

(C)           PROMPTLY AFTER ANY OFFICER OF ANY LOAN PARTY HAS LEARNED OF THE
OCCURRENCE OF A DEFAULT, A CERTIFICATE SIGNED BY THE CHIEF EXECUTIVE OFFICER,
PRESIDENT OR CHIEF FINANCIAL OFFICER OR PRINCIPAL ACCOUNTING OFFICER OF SUCH
LOAN PARTY SETTING FORTH THE DETAILS OF SUCH DEFAULT AND THE ACTION THAT SUCH
LOAN PARTY PROPOSES TO TAKE WITH RESPECT THERETO.

(D)           PROMPTLY UPON THEIR BECOMING AVAILABLE TO ANY LOAN PARTY AND NOT
OTHERWISE PROVIDED TO THE ADMINISTRATIVE AGENT UNDER THIS SECTION 5.07: (I) ANY
REPORTS, NOTICES OR PROXY STATEMENTS GENERALLY DISTRIBUTED BY HOVNANIAN TO ITS
STOCKHOLDERS AND (II) REGULAR OR PERIODIC REPORTS, INCLUDING FORMS 10-K, 10-Q
AND 8-K, REGISTRATION STATEMENTS AND PROSPECTUSES, FILED BY HOVNANIAN WITH THE
SEC.

(E)           SUCH OTHER REPORTS AND INFORMATION AS THE  ADMINISTRATIVE AGENT
MAY FROM TIME TO TIME REASONABLY REQUEST.

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ARTICLE VI
GUARANTEES

SECTION 6.01.  Guarantee.  (a) Each Guarantor hereby unconditionally guarantees
(each such guarantee to be referred to herein as a “Guarantee”), jointly and
severally with each other Guarantor, (i) the due and punctual payment of the
principal of and any premium or interest on the Loans, whether at maturity or on
an Interest Payment Date, by acceleration, or otherwise, and interest on the
overdue principal of and interest, if any, on the Loans and all other
obligations of the Company hereunder and under any other Loan Document, all in
accordance with the terms hereof and of the other Loan Documents, and (ii) in
cases of any extension of time of payment or renewal of any such Loan or any of
such other obligations, the same shall be promptly paid in full when due or to
be performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise.

(B)           IF THE COMPANY FAILS TO MAKE ANY PAYMENT WHEN DUE OR ANY AMOUNT SO
GUARANTEED FOR WHATEVER REASON, EACH GUARANTOR SHALL BE OBLIGATED, JOINTLY AND
SEVERALLY WITH EACH OTHER GUARANTOR, IF ANY, 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, ANY LOAN DOCUMENT, THE
ABSENCE OF ANY ACTION TO ENFORCE THE SAME, ANY WAIVER OR CONSENT BY ANY LENDER,
THE ISSUING BANK OR THE ADMINISTRATIVE AGENT WITH RESPECT TO ANY PROVISIONS
HEREOF OR THEREOF, THE RECOVERY OF ANY JUDGMENT AGAINST THE COMPANY, ANY ACTION
TO ENFORCE THE SAME OR ANY OTHER CIRCUMSTANCE THAT MIGHT OTHERWISE CONSTITUTE A
LEGAL OR EQUITABLE DISCHARGE OR DEFENSE OF SUCH GUARANTOR.  EACH GUARANTOR
HEREBY WAIVES DILIGENCE, PRESENTMENT, DEMAND OF PAYMENT, DEMAND OF PERFORMANCE,
FILING OF CLAIMS WITH A COURT IN THE EVENT OF INSOLVENCY OR BANKRUPTCY OF THE
COMPANY, ANY RIGHT TO REQUIRE A PROCEEDING FIRST AGAINST THE COMPANY, THE
BENEFIT OF DISCUSSION, PROTEST, NOTICE AND ALL DEMAND WHATSOEVER AND COVENANTS
THAT ITS GUARANTEE SHALL NOT BE DISCHARGED EXCEPT BY COMPLETE PERFORMANCE OF THE
OBLIGATIONS GUARANTEED BY SUCH GUARANTEE IN THIS ARTICLE VI.  IF THE ISSUING
BANK, THE ADMINISTRATIVE AGENT OR ANY LENDER IS REQUIRED BY ANY COURT OR
OTHERWISE TO RETURN TO THE COMPANY OR ANY GUARANTOR, OR ANY CUSTODIAN, TRUSTEE,
LIQUIDATOR OR OTHER SIMILAR OFFICIAL ACTING IN RELATION TO THE COMPANY OR ANY
GUARANTOR, ANY AMOUNT PAID BY THE COMPANY OR SUCH GUARANTOR UNDER THIS
GUARANTEE, THEN THIS ARTICLE VI, 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
RESPECT OF ANY OBLIGATIONS GUARANTEED HEREBY UNTIL PAYMENT IN FULL OF ANY
OBLIGATIONS OF THE COMPANY HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS.  EACH
GUARANTOR FURTHER AGREES THAT, AS BETWEEN SUCH GUARANTOR, ON THE ONE HAND, AND
THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND THE LENDERS, ON THE OTHER HAND,
(I) THE MATURITY OF THE OBLIGATIONS GUARANTEED HEREBY MAY BE ACCELERATED AS
PROVIDED IN ARTICLE VII HEREOF, 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 ANY OTHER GUARANTOR, FOR THE PURPOSE OF THIS ARTICLE VI.  IN
ADDITION, WITHOUT LIMITING THE FOREGOING, UPON THE EFFECTIVENESS OF AN
ACCELERATION UNDER ARTICLE VII, THE ADMINISTRATIVE AGENT MAY MAKE A DEMAND FOR
PAYMENT UNDER ANY GUARANTEE PROVIDED HEREUNDER AND NOT DISCHARGED.

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(C)           WITH RESPECT TO EACH GUARANTEE BY A GUARANTOR, SUCH GUARANTOR
SHALL BE SUBROGATED TO ALL RIGHTS OF EACH BENEFICIARY OF SUCH GUARANTEE AGAINST
THE COMPANY IN RESPECT OF ANY AMOUNTS PAID TO SUCH BENEFICIARY BY SUCH GUARANTOR
PURSUANT TO THE PROVISIONS OF SUCH GUARANTEE; PROVIDED THAT THE GUARANTOR SHALL
NOT BE ENTITLED TO ENFORCE, OR TO RECEIVE ANY PAYMENTS ARISING OUT OF OR BASED
UPON, SUCH RIGHT OF SUBROGATION UNTIL ALL OBLIGATIONS OF THE COMPANY UNDER THE
LOAN DOCUMENTS SHALL HAVE BEEN PAID IN FULL AND THE LETTER OF CREDIT SHALL NO
LONGER BE OUTSTANDING.

SECTION 6.02.  Obligations of Each Guarantor Unconditional; Savings Clause. 
(a)Nothing contained in this Article VI or elsewhere in this Agreement is
intended to or shall impair, as between a Guarantor and the beneficiaries of
such Guarantor’s Guarantee, the obligations of such Guarantor, which are
absolute and unconditional, to pay to such beneficiaries the principal of and
interest on the Loans and all other amounts payable by the Company under each
Loan Document as and when the same shall become due and payable in accordance
with the provisions thereof or is intended to or shall affect the relative
rights of such beneficiaries and creditors of such Guarantor, nor shall anything
herein or therein prevent the Administrative Agent or such beneficiary from
exercising all remedies otherwise permitted by applicable law upon the
occurrence and during the continuation of an Event of Default in respect of
cash, property or securities of such Guarantor received upon the exercise of any
such remedy.

(B)           UPON ANY DISTRIBUTION OF ASSETS OF A GUARANTOR, THE ADMINISTRATIVE
AGENT AND THE OTHER BENEFICIARIES OF THIS GUARANTEE 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 BENEFICIARIES,
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 VI.

(C)           NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS ARTICLE, EACH
GUARANTOR, THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND EACH LENDER HEREBY
CONFIRM 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 BANKRUPTCY LAW OR ANY COMPARABLE PROVISION OF STATE
LAW.  TO THE EFFECTUATE THAT INTENTION, THE ADMINISTRATIVE AGENT, THE ISSUING
BANK, 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 BANKRUPTCY LAW OR ANY
COMPARABLE PROVISION OF STATE LAW.

SECTION 6.03.  Release of a Guarantor.  (a)  If all or substantially all of the
assets of any Guarantor other than Hovnanian or all of the Capital Stock of any
Guarantor other than Hovnanian is sold (including by consolidation, merger,
issuance or otherwise) or disposed of (including by liquidation, dissolution or
otherwise) by Hovnanian or any of its Subsidiaries, or, unless Hovnanian elects
otherwise, if any Guarantor other than Hovnanian is designated an Unrestricted
Subsidiary in accordance with the terms of this Agreement, then such Guarantor
(in the event of a sale or other disposition of all of the Capital Stock of such
Guarantor or a designation as an Unrestricted Subsidiary) or the Person
acquiring such assets (in the event of a

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sale or other disposition of all or substantially all of the assets of such
Guarantor) shall be deemed automatically and unconditionally released and
discharged from any of its obligations under this Guarantee without any further
action on the part of the Administrative Agent, the Issuing Bank or any Lender.

(B)           UPON THE RELEASE OF THE GUARANTEE BY A GUARANTOR OTHER THAN
HOVNANIAN UNDER ALL THEN OUTSTANDING APPLICABLE DEBT, THE GUARANTEE OF SUCH
GUARANTOR UNDER THIS AGREEMENT WILL BE RELEASED AND DISCHARGED, AND NO
RESTRICTED SUBSIDIARY THEREAFTER ACQUIRED OR CREATED WILL BE REQUIRED TO BE A
GUARANTOR. IN THE EVENT THAT ANY SUCH RELEASED GUARANTOR THEREAFTER GUARANTEES
ANY APPLICABLE DEBT (OR IF ANY RELEASED GUARANTEE UNDER ANY APPLICABLE DEBT IS
REINSTATED OR RENEWED), THEN ANY SUCH RELEASED GUARANTOR AND ANY OTHER
RESTRICTED SUBSIDIARY OF HOVNANIAN THEN EXISTING (OTHER THAN THE RESTRICTED
SUBSIDIARIES EXCLUDED FROM THE DEFINITION OF “GUARANTOR”) WILL GUARANTEE THE
OBLIGATIONS OF THE COMPANY UNDER THE LOAN DOCUMENTS ON THE TERMS AND CONDITIONS
SET FORTH IN THIS ARTICLE VI. FOR PURPOSES OF THIS CLAUSE (B), APPLICABLE DEBT
SECURED BY A LIEN ON SUCH RESTRICTED SUBSIDIARY’S PROPERTY OR ISSUED BY SUCH
RESTRICTED SUBSIDIARY SHALL BE DEEMED GUARANTEED BY SUCH RESTRICTED SUBSIDIARY.

(C)           AN UNRESTRICTED SUBSIDIARY THAT IS A GUARANTOR SHALL BE DEEMED
AUTOMATICALLY AND UNCONDITIONALLY RELEASED AND DISCHARGED FROM ALL OBLIGATIONS
UNDER ITS GUARANTEE UPON NOTICE FROM HOVNANIAN TO THE ADMINISTRATIVE AGENT TO
SUCH EFFECT, WITHOUT ANY FURTHER ACTION REQUIRED ON THE PART OF THE
ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER.

SECTION 6.04.  Joinder of Additional Guarantors.  The Company and Hovnanian will
cause each Restricted Subsidiary that is formed or acquired or otherwise comes
into existence after the date hereof to become a Guarantor by executing and
delivering to the Administrative a Guarantee Joinder Agreement, together with,
upon the reasonable request of the Administrative Agent, an opinion of counsel
to such Restricted Subsidiary reasonably satisfactory to the Administrative
Agent.  In addition, the Company and Hovnanian may cause any Subsidiary of
Hovnanian that is not required by the terms of this Agreement to become a
Guarantor to become a Guarantor by executing and delivering to the
Administrative a Guarantee Joinder Agreement.

ARTICLE VII
EVENTS OF DEFAULT

If any of the following events (“Events of Default”) shall occur:

(I)            THE FAILURE BY ANY LOAN PARTY TO PAY INTEREST ON ANY LOAN OR ANY
FEE OR ANY OTHER AMOUNT (OTHER THAN AMOUNTS DESCRIBED IN CLAUSE (II) BELOW)
PAYABLE UNDER ANY LOAN DOCUMENT WHEN THE SAME BECOMES DUE AND PAYABLE AND THE
CONTINUANCE OF ANY SUCH FAILURE FOR A PERIOD OF THREE BUSINESS DAYS;

(II)           THE FAILURE BY ANY LOAN PARTY TO PAY THE PRINCIPAL OF ANY LOAN OR
ANY REIMBURSEMENT OBLIGATION IN RESPECT OF ANY LC DISBURSEMENT WHEN THE SAME
BECOMES DUE AND PAYABLE AT MATURITY, UPON ACCELERATION OR OTHERWISE;

(III)          THE FAILURE BY ANY LOAN PARTY TO COMPLY WITH ANY OF ITS
AGREEMENTS OR COVENANTS IN, OR PROVISIONS OF ANY LOAN DOCUMENT AND SUCH FAILURE
CONTINUES FOR A PERIOD OF 30 DAYS AFTER WRITTEN NOTICE THEREOF FROM THE
ADMINISTRATIVE AGENT TO THE COMPANY

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(EXCEPT IN THE CASE OF A DEFAULT UNDER SECTION 5.05 OR 5.06 HEREOF, WHICH WILL
CONSTITUTE EVENTS OF DEFAULT WITHOUT NOTICE OR THE PASSAGE OF TIME);

(IV)          THE ACCELERATION OF ANY INDEBTEDNESS (OTHER THAN NON-RECOURSE
INDEBTEDNESS) OF ANY LOAN PARTY THAT HAS AN OUTSTANDING PRINCIPAL AMOUNT OF
$25,000,000 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 ANY LOAN PARTY TO MAKE ANY PRINCIPAL OR INTEREST
PAYMENT IN AN AMOUNT OF $25,000,000 OR MORE, INDIVIDUALLY OR IN THE AGGREGATE,
IN RESPECT OF INDEBTEDNESS (OTHER THAN NON-RECOURSE INDEBTEDNESS) OF SUCH LOAN
PARTY WITHIN 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 $25,000,000 OR MORE,
INDIVIDUALLY OR IN THE AGGREGATE, FOR THE PAYMENT OF MONEY HAVING BEEN ENTERED
BY A COURT OR COURTS OF COMPETENT JURISDICTION AGAINST ANY LOAN PARTY AND SUCH
JUDGMENT OR JUDGMENTS IS NOT SATISFIED, STAYED, ANNULLED OR RESCINDED WITHIN 60
DAYS OF BEING ENTERED;

(VII)         HOVNANIAN, THE COMPANY 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 CREDITORS;

(VIII)        A COURT OF COMPETENT JURISDICTION ENTERS AN ORDER OR DECREE UNDER
ANY BANKRUPTCY LAW THAT:

(A)          IS FOR RELIEF AGAINST HOVNANIAN, THE COMPANY OR ANY RESTRICTED
SUBSIDIARY THAT IS A SIGNIFICANT SUBSIDIARY AS DEBTOR IN AN INVOLUNTARY CASE,

(B)           APPOINTS A CUSTODIAN OF HOVNANIAN, THE COMPANY OR ANY RESTRICTED
SUBSIDIARY THAT IS A SIGNIFICANT SUBSIDIARY OR A CUSTODIAN FOR ALL OR
SUBSTANTIALLY ALL OF THE PROPERTY OF HOVNANIAN OR ANY RESTRICTED SUBSIDIARY THAT
IS A SIGNIFICANT SUBSIDIARY, OR

(C)           ORDERS THE LIQUIDATION OF HOVNANIAN, THE COMPANY OR ANY RESTRICTED
SUBSIDIARY THAT IS A SIGNIFICANT SUBSIDIARY,

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

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(IX)           ANY GUARANTEE OF A GUARANTOR THAT IS A SIGNIFICANT SUBSIDIARY
CEASES TO BE IN FULL FORCE AND EFFECT (OTHER THAN IN ACCORDANCE WITH THE TERMS
OF THIS AGREEMENT) OR IS DECLARED NULL AND VOID AND UNENFORCEABLE OR FOUND TO BE
INVALID, OR ANY GUARANTOR DENIES ITS LIABILITY UNDER ITS GUARANTEE (OTHER THAN
BY REASON OF RELEASE OF A GUARANTOR FROM ITS GUARANTEE IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT); OR

(X)            ANY REPRESENTATION OR WARRANTY MADE OR DEEMED MADE BY OR ON
BEHALF OF ANY LOAN PARTY IN OR IN CONNECTION WITH ANY LOAN DOCUMENT OR ANY
AMENDMENT OR MODIFICATION THEREOF OR WAIVER THEREUNDER, OR IN ANY CERTIFICATE
FURNISHED PURSUANT TO OR IN CONNECTION WITH ANY LOAN DOCUMENT OR ANY AMENDMENT
OR MODIFICATION THEREOF OR WAIVER THEREUNDER SHALL PROVE TO HAVE BEEN INCORRECT
IN ANY MATERIAL RESPECT WHEN MADE OR DEEMED MADE;

then, and in every such event (other than an event with respect to the Company
described in clause (vii) of this Article), and at any time thereafter during
the continuance of such event, the Paying Agent (in the case of an Event of
Default described in clause (i) or (ii) above) shall promptly provide notice of
such Event of Default to the Administrative Agent, and the Administrative Agent,
upon receipt of such notice from the Paying Agent, and in the case of any other
Event of Default, shall, at the request of the Required Lenders, by notice to
the Company, take either or both of the following actions, at the same or
different times: (A) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (B) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Company hereunder, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company; and in case of any event with respect to the
Company described in clause (vii) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Company hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company.

ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE PAYING AGENT

Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent and the Paying Agent as its agent and authorizes the
Administrative Agent and the Paying Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent or the
Paying Agent, as applicable, by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.

Any bank serving as the Administrative Agent or the Paying Agent hereunder shall
have the same rights and powers in its capacity as a Lender or the Issuing Bank
as any other Lender and may exercise the same as though it were not the
Administrative Agent or the Paying Agent, as applicable, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Company or any of its Subsidiaries thereof or

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other Affiliate thereof as if it were not the Administrative Agent or the Paying
Agent, as applicable, hereunder.

Neither Agent shall have any duties or obligations except those expressly set
forth for such Agent herein.  Without limiting the generality of the foregoing,
(a) neither Agent shall be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) neither
Agent shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that such Agent is required to exercise in writing as
directed by the Required Lenders, and (c) except as expressly set forth herein,
neither Agent shall not have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to the Company or any of its
Subsidiaries that is communicated to or obtained by the bank serving as such
Agent or any of its Affiliates in any capacity.  Neither Agent shall be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) to the extent
required by Section 9.02 or in the absence of its own gross negligence or
willful misconduct.  Neither Agent shall 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, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection herewith,
(iii) the performance or observance of any of the covenants, agreements or other
terms or conditions set forth herein, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article IV or elsewhere herein, other than, in the case of the Administrative
Agent, to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

Each 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 believed by it to be genuine and to have been signed
or sent by the proper Person.  Each Agent also may rely upon any statement made
to it orally or by telephone and believed by it to be made by the proper Person,
and shall not incur any liability for relying thereon.  Each Agent may consult
with legal counsel (who may be counsel for the Company), 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 or experts.

The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more subagents appointed by the
Administrative Agent.  The Administrative Agent and any such subagent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties.  The exculpatory provisions of the preceding
subsections shall apply to any such subagent and to the Related Parties of the
Administrative Agent and any such subagent, 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.

Subject to the appointment and acceptance of an appropriate successor Agent as
provided in this subsection, each Agent may resign at any time by notifying the
Lenders, the Issuing Bank and the Company.  Upon any such resignation, the
Required Lenders shall have the right, with

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the consent of the Company (not to be unreasonably withheld or delayed), to
appoint a successor, which must be a bank or trust company with an office in
New York, New York, or an Affiliate of any such bank.  If no such successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and in
consultation with the Company, appoint a successor Agent, which shall be a bank
with an office in New York, New York, or an Affiliate of any such bank.  Upon
the acceptance of its appointment as an Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder.  The fees payable by the
Company to a successor Agent shall be the same as those, if any, payable to its
predecessor unless otherwise agreed between the Company and such successor. 
After any Agent’s resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as such Agent.

Each Lender acknowledges that it has, independently and without reliance upon
any Agent, the Issuing Bank or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.  Each Lender also acknowledges that it
will, independently and without reliance upon any Agent, the Issuing Bank or any
other Lender 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 related agreement or any
document furnished hereunder or thereunder.

ARTICLE IX
MISCELLANEOUS

SECTION 9.01.  NOTICES.

Except in the case of notices and other communications expressly permitted to be
given by telephone, all 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 telecopy, as follows:

(A)           IF TO THE COMPANY, TO 110 WEST FRONT STREET, RED BANK, NEW JERSEY,
07701, TELECOPY:  (732) 747-6835, E-MAIL: KHAKE@KHOV.COM, ATTENTION: KEVIN HAKE,
SENIOR VICE PRESIDENT OF FINANCE AND TREASURER;

(B)           IF TO THE ADMINISTRATIVE AGENT, TO TWO PENNS WAY, SUITE 110, NEW
CASTLE, DELAWARE 19720, TELECOPY: (212) 994-0847, EMAIL:
PATRICIA.D.STEWART@CITIGROUP.COM, ATTENTION: PATRICIA D. STEWART.

(C)           IF TO THE PAYING AGENT, TO 4 NEW YORK PLAZA, NEW YORK, NY
10004-2413, ATTENTION: GLOBAL STRUCTURED FINANCE, TELECOPY: (212) 623-8251,
EMAIL: JOSEPH.G.POWELL@BANKOFNY.COM;

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(D)           IF TO ANY OTHER LENDER, TO IT AT ITS ADDRESS (OR TELECOPY NUMBER)
SET FORTH IN ITS ADMINISTRATIVE QUESTIONNAIRE (A COPY OF WHICH THE
ADMINISTRATIVE AGENT SHALL PROVIDE TO THE COMPANY, UNLESS SUCH NOTICE OR
COMMUNICATION WAS DELIVERED BY THE COMPANY); AND

(E)           IF TO THE ISSUING BANK, TO TWO PENNS WAY, SUITE 110, NEW CASTLE,
DELAWARE 19720, TELECOPY: (212) 994-0847, EMAIL:
PATRICIA.D.STEWART@CITIGROUP.COM, ATTENTION: PATRICIA D. STEWART.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  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.

SECTION 9.02.  WAIVERS; AMENDMENTS.

(A)           NO FAILURE OR DELAY BY ANY AGENT, THE ISSUING BANK OR ANY LENDER
IN EXERCISING ANY RIGHT OR POWER HEREUNDER SHALL OPERATE AS A WAIVER THEREOF,
NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH RIGHT OR POWER, OR ANY
ABANDONMENT OR DISCONTINUANCE OF STEPS TO ENFORCE SUCH A RIGHT OR POWER,
PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER
RIGHT OR POWER.  THE RIGHTS AND REMEDIES OF THE AGENTS, THE ISSUING BANK AND THE
LENDERS HEREUNDER ARE CUMULATIVE AND ARE NOT EXCLUSIVE OF ANY RIGHTS OR REMEDIES
THAT THEY WOULD OTHERWISE HAVE.  NO WAIVER OF ANY PROVISION OF THIS AGREEMENT OR
CONSENT TO ANY DEPARTURE BY THE COMPANY THEREFROM SHALL IN ANY EVENT BE
EFFECTIVE UNLESS THE SAME SHALL BE PERMITTED BY THIS SECTION, AND THEN SUCH
WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE
PURPOSE FOR WHICH GIVEN.

(B)           NEITHER THIS AGREEMENT NOR ANY PROVISION HEREOF MAY BE WAIVED,
AMENDED OR MODIFIED EXCEPT PURSUANT TO AN AGREEMENT OR AGREEMENTS IN WRITING
ENTERED INTO BY THE COMPANY AND THE REQUIRED LENDERS OR BY THE COMPANY AND THE
ADMINISTRATIVE AGENT WITH THE CONSENT OF THE REQUIRED LENDERS; PROVIDED THAT NO
SUCH AGREEMENT SHALL (I) INCREASE THE COMMITMENT OF ANY LENDER WITHOUT THE
WRITTEN CONSENT OF SUCH LENDER, (II) REDUCE THE PRINCIPAL AMOUNT OF ANY LOAN OR
LC DISBURSEMENT OR REDUCE THE RATE OF INTEREST THEREON, OR REDUCE ANY FEES
PAYABLE HEREUNDER, WITHOUT THE WRITTEN CONSENT OF EACH LENDER DIRECTLY AFFECTED
THEREBY AND THE ISSUING BANK, (III) POSTPONE THE SCHEDULED DATE OF PAYMENT OF
THE PRINCIPAL AMOUNT OF ANY LOAN OR LC DISBURSEMENT, OR ANY INTEREST THEREON, OR
ANY FEES OR ANY OTHER AMOUNT PAYABLE HEREUNDER, OR REDUCE THE AMOUNT OF, WAIVE
OR EXCUSE ANY SUCH PAYMENT, OR POSTPONE THE SCHEDULED DATE OF EXPIRATION OF ANY
COMMITMENT, WITHOUT THE WRITTEN CONSENT OF EACH LENDER DIRECTLY AFFECTED
THEREBY, (IV) CHANGE SECTION 2.15(B) OR (C) IN A MANNER THAT WOULD ALTER THE PRO
RATA SHARING OF PAYMENTS REQUIRED THEREBY WITHOUT THE WRITTEN CONSENT OF EACH
LENDER, OR (V) CHANGE ANY OF THE PROVISIONS OF THIS SECTION OR THE DEFINITION OF
“REQUIRED LENDERS” OR ANY OTHER PROVISION HEREOF SPECIFYING THE NUMBER OR
PERCENTAGE OF LENDERS REQUIRED TO WAIVE, AMEND OR MODIFY ANY RIGHTS HEREUNDER OR
MAKE ANY DETERMINATION OR GRANT ANY CONSENT HEREUNDER WITHOUT THE WRITTEN
CONSENT OF EACH LENDER; PROVIDED FURTHER THAT (A) NO SUCH AGREEMENT SHALL AMEND,
MODIFY OR OTHERWISE AFFECT THE RIGHTS OR DUTIES OF ANY AGENT HEREUNDER WITHOUT
THE PRIOR WRITTEN CONSENT OF SUCH AGENT AND (B) NO AMENDMENT, MODIFICATION OR
WAIVER OF THIS AGREEMENT OR ANY PROVISION HEREOF THAT WOULD ALTER THE RIGHTS OR
DUTIES OF THE ISSUING BANK HEREUNDER SHALL BE EFFECTIVE WITHOUT THE WRITTEN
CONSENT OF THE ISSUING BANK.

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SECTION 9.03.  EXPENSES; INDEMNITY; DAMAGE WAIVER.

(A)           THE COMPANY AGREES TO PAY (I) ALL REASONABLE OUT-OF-POCKET
EXPENSES INCURRED BY EACH AGENT AND ITS AFFILIATES, INCLUDING THE REASONABLE
FEES, CHARGES AND DISBURSEMENTS OF COUNSEL FOR EACH AGENT, IN CONNECTION WITH
THE PREPARATION AND ADMINISTRATION OF THIS AGREEMENT OR ANY AMENDMENTS,
MODIFICATIONS OR WAIVERS OF THE PROVISIONS HEREOF (WHETHER OR NOT THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY SHALL BE CONSUMMATED) AND (II) ALL
REASONABLE OUT-OF-POCKET EXPENSES INCURRED BY EACH AGENT, THE ISSUING BANK OR
ANY LENDER, INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ONE FIRM
OF COUNSEL FOR EACH AGENT, THE ISSUING BANK AND THE LENDERS, IN CONNECTION WITH
THE ENFORCEMENT OR PROTECTION OF ITS RIGHTS IN CONNECTION WITH THIS AGREEMENT,
INCLUDING ITS RIGHTS UNDER THIS SECTION, OR IN CONNECTION WITH THE LOANS MADE
HEREUNDER AND THE LETTER OF CREDIT, INCLUDING IN CONNECTION WITH ANY WORKOUT,
RESTRUCTURING OR NEGOTIATIONS IN RESPECT THEREOF; PROVIDED, HOWEVER THAT THE
COMPANY AGREES TO PAY THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF SEPARATE
COUNSEL OF EACH AGENT, THE ISSUING BANK OR ANY LENDER IF THE COUNSEL CHOSEN TO
REPRESENT SUCH PARTY WOULD PRESENT SUCH COUNSEL WITH A CONFLICT OF INTEREST.

(B)           THE COMPANY AGREES TO INDEMNIFY EACH AGENT, THE ISSUING BANK AND
EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH
PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS
FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES,
INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY
INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN
CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS
AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE PERFORMANCE BY
THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THE CONSUMMATION
OF THE TRANSACTIONS OR ANY OTHER TRANSACTIONS CONTEMPLATED HEREBY, (II) THE
REPRESENTATION OR WARRANTY SET FORTH IN SECTION 3.09 OF THIS AGREEMENT BEING
INCORRECT IN ANY MATERIAL RESPECT WHEN MADE OR DEEMED MADE UNDER THIS AGREEMENT,
(III) ANY LOAN OR THE LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREOF
(INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER
THE LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND
DO NOT STRICTLY COMPLY WITH THE TERMS OF THE LETTER OF CREDIT), (IV) ANY ACTUAL
OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY
OWNED OR OPERATED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, OR (V) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION
OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO;
PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO
THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES
ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE
JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH INDEMNITEE OR ITS AFFILIATES OR FROM A BREACH OF THIS AGREEMENT BY SUCH
INDEMNITEE.

(C)           TO THE EXTENT THAT THE COMPANY FAILS TO PAY ANY AMOUNT REQUIRED TO
BE PAID BY IT TO EACH AGENT OR THE ISSUING BANK UNDER SUBSECTION (A) OR (B) OF
THIS SECTION, EACH LENDER SEVERALLY AGREES TO PAY TO THE APPLICABLE AGENT OR THE
ISSUING BANK, AS THE CASE MAY BE, SUCH LENDER’S APPLICABLE PERCENTAGE
(DETERMINED AS OF THE TIME THAT THE APPLICABLE UNREIMBURSED EXPENSE OR INDEMNITY
PAYMENT IS SOUGHT) OF SUCH UNPAID AMOUNT; PROVIDED THAT THE UNREIMBURSED EXPENSE
OR INDEMNIFIED LOSS, CLAIM, DAMAGE, LIABILITY OR RELATED EXPENSE, AS THE CASE
MAY BE, WAS

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INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT OR THE ISSUING BANK IN
ITS CAPACITY AS SUCH.

(D)           THE COMPANY ACKNOWLEDGES AND AGREES THAT CITIBANK, CUSA AND THEIR
RESPECTIVE AFFILIATES (EACH, AN “INDEMNIFIED PARTY”) MAY ENTER INTO CERTAIN
TRANSACTIONS IN ORDER TO MITIGATE CREDIT RISK ARISING OUT OF THE FINANCING
CONTEMPLATED BY THIS AGREEMENT.  THE COMPANY AGREES TO INDEMNIFY EACH
INDEMNIFIED PARTY AGAINST, IN EACH CASE SUBJECT TO AND IN ACCORDANCE WITH THE
FEE LETTER, LOSSES, COSTS OR EXPENSES THAT SUCH INDEMNIFIED PARTY MAY SUSTAIN OR
INCUR AS A CONSEQUENCE OF (I) ANY REDUCTION OR TERMINATION OF THE COMMITMENTS
PRIOR TO THE MATURITY DATE, (II) THE ASSIGNMENT OF ANY INDEMNIFIED PARTY’S
COMMITMENT OR TOTAL EXPOSURE AS A RESULT OF A REQUEST BY THE COMPANY PURSUANT TO
SECTION 2.16 OR (III) THE OCCURRENCE OF ANY SUCCESSOR EVENT (AS DEFINED BELOW),
INCLUDING WITHOUT LIMITATION ANY SUCH LOSSES, COSTS OR EXPENSES SUSTAINED OR
INCURRED AS A CONSEQUENCE OF ANY EVENT DESCRIBED IN CLAUSE (I), (II) OR (III)
ABOVE IN CONNECTION WITH (A) THE TERMINATION OR ADJUSTMENT OF, OR (B)
DESIGNATION OF A “SUCCESSOR” (AS DEFINED IN THE 2003 ISDA CREDIT DERIVATIVES
DEFINITIONS) TO THE COMPANY OR HOVNANIAN UNDER, OR (C) ANY OTHER MODIFICATION
TO, ANY SUCH TRANSACTION ENTERED INTO BY AN INDEMNIFIED PARTY IN ORDER TO
MITIGATE CREDIT RISK ARISING OUT OF THE FINANCING CONTEMPLATED BY THIS
AGREEMENT.  FOR PURPOSES OF THIS SECTION 9.03(D), “SUCCESSOR EVENT” SHALL MEAN
ANY EVENT, SUCH AS A MERGER, CONSOLIDATION, AMALGAMATION, TRANSFER OF ASSETS OR
LIABILITIES, DEMERGER, SPIN-OFF OR OTHER SIMILAR EVENT, WHEREBY ANOTHER ENTITY
SHALL SUCCEED TO THE OBLIGATIONS OF THE COMPANY OR HOVNANIAN, WHETHER BY
OPERATION OF LAW OR PURSUANT TO ANY AGREEMENT.

(E)           TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY HERETO SHALL
ASSERT, AND EACH PARTY HERETO HEREBY WAIVES, ANY CLAIM AGAINST ANY OTHER PARTY,
ON ANY THEORY OF LIABILITY, FOR SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS
OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A
RESULT OF, ANY LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY,
THE TRANSACTIONS, ANY LOAN, THE LETTER OF CREDIT OR THE USE OF THE PROCEEDS
THEREOF.

(F)            ALL AMOUNTS DUE UNDER THIS SECTION SHALL BE PAYABLE PROMPTLY
AFTER WRITTEN DEMAND THEREFORE ACCOMPANIED BY THE APPROPRIATE INVOICE OR OTHER
DETAIL SUPPORTING SUCH AMOUNT.

SECTION 9.04.  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 (I) THE COMPANY MAY NOT ASSIGN OR OTHERWISE
TRANSFER ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN
CONSENT OF EACH LENDER (AND ANY ATTEMPTED ASSIGNMENT OR TRANSFER BY THE COMPANY
WITHOUT SUCH CONSENT SHALL BE NULL AND VOID) AND (II) NO LENDER MAY ASSIGN OR
OTHERWISE TRANSFER RIGHTS OR OBLIGATIONS HEREUNDER EXCEPT IN ACCORDANCE WITH
THIS SECTION.  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 AND, TO THE EXTENT EXPRESSLY
CONTEMPLATED HEREBY, PARTICIPANTS AND THE RELATED PARTIES OF THE AGENTS, THE
ISSUING BANK AND THE LENDERS) ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM
UNDER OR BY REASON OF THIS AGREEMENT.

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(B)           ANY LENDER MAY ASSIGN TO ONE OR MORE ASSIGNEES ALL OR A PORTION OF
ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT (INCLUDING ALL OR A PORTION OF
ITS COMMITMENT AND THE LOANS AND PARTICIPATIONS IN LC DISBURSEMENTS AT THE TIME
OWING TO IT); PROVIDED THAT (I) EACH OF THE COMPANY (EXCEPT THAT (A) IN THE CASE
OF AN ASSIGNMENT TO A LENDER OR AN AFFILIATE OF A LENDER OR (B) UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT OR AN “EVENT OF
DEFAULT” UNDER, AND AS DEFINED IN, THE REIMBURSEMENT AGREEMENT (WITHOUT REGARD
TO THE PROVISO AT THE END OF SECTION 14 OF THE REIMBURSEMENT AGREEMENT), THE
CONSENT OF THE COMPANY SHALL NOT BE REQUIRED), THE ADMINISTRATIVE AGENT AND IN
THE CASE OF ANY ASSIGNMENT OF A COMMITMENT, THE ISSUING BANK MUST GIVE ITS PRIOR
WRITTEN CONSENT TO SUCH ASSIGNMENT (WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD), (II) EXCEPT IN THE CASE OF AN ASSIGNMENT TO A LENDER OR AN AFFILIATE
OF A LENDER OR AN ASSIGNMENT OF THE ENTIRE REMAINING AMOUNT OF THE ASSIGNING
LENDER’S COMMITMENT, THE AMOUNT OF THE COMMITMENT OF THE ASSIGNING LENDER
SUBJECT TO EACH SUCH ASSIGNMENT (DETERMINED AS OF THE DATE THE ASSIGNMENT AND
ACCEPTANCE WITH RESPECT TO SUCH ASSIGNMENT IS DELIVERED TO THE ADMINISTRATIVE
AGENT) SHALL NOT BE LESS THAN $5,000,000 UNLESS EACH OF THE COMPANY AND THE
ADMINISTRATIVE AGENT OTHERWISE CONSENT OR UNLESS AN EVENT OF DEFAULT SHALL HAVE
OCCURRED AND BE CONTINUING, (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, (IV) THE PARTIES TO EACH ASSIGNMENT SHALL
EXECUTE AND DELIVER TO THE ADMINISTRATIVE AGENT AN ASSIGNMENT AND ACCEPTANCE,
TOGETHER (EXCEPT IN THE CASE OF AN ASSIGNMENT BY A LENDER TO ONE OF ITS
AFFILIATES OR AN ASSIGNMENT AS A RESULT OF ANY OF THE EVENTS CONTEMPLATED BY
SECTION 2.17) WITH A PROCESSING AND RECORDATION FEE OF $3,500, AND (V) THE
ASSIGNEE, IF IT SHALL NOT BE A LENDER, SHALL DELIVER TO THE ADMINISTRATIVE AGENT
AND THE PAYING AGENT AN ADMINISTRATIVE QUESTIONNAIRE.  UPON ACCEPTANCE AND
RECORDING PURSUANT TO SUBSECTION (D) OF THIS SECTION, FROM AND AFTER THE
EFFECTIVE DATE SPECIFIED IN EACH ASSIGNMENT AND ACCEPTANCE, THE ASSIGNEE
THEREUNDER SHALL BE A PARTY HERETO AND, TO THE EXTENT OF THE INTEREST ASSIGNED
BY SUCH ASSIGNMENT AND ACCEPTANCE, 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 ACCEPTANCE, BE RELEASED FROM ITS
OBLIGATIONS UNDER THIS AGREEMENT (AND, IN THE CASE OF AN ASSIGNMENT AND
ACCEPTANCE 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 SECTIONS 2.13, 2.14 AND 9.03).  ANY ASSIGNMENT
OR TRANSFER BY A LENDER OF RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT THAT DOES
NOT COMPLY WITH THIS SUBSECTION SHALL BE TREATED FOR PURPOSES OF THIS AGREEMENT
AS A SALE BY SUCH LENDER OF A PARTICIPATION IN SUCH RIGHTS AND OBLIGATIONS IN
ACCORDANCE WITH SUBSECTION (E) OF THIS SECTION.

(C)           THE ADMINISTRATIVE AGENT, ACTING FOR THIS PURPOSE AS AN AGENT OF
THE COMPANY, SHALL MAINTAIN AT ONE OF ITS OFFICES IN THE CITY OF NEW YORK A COPY
OF EACH ASSIGNMENT AND ACCEPTANCE DELIVERED TO IT AND A REGISTER FOR THE
RECORDATION OF THE NAMES AND ADDRESSES OF THE LENDERS, AND THE COMMITMENT OF,
AND PRINCIPAL AMOUNT OF THE LOANS AND LC DISBURSEMENTS 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 COMPANY, EACH
AGENT, THE LENDERS AND THE ISSUING BANK MAY TREAT EACH PERSON WHOSE NAME IS
RECORDED IN THE REGISTER PURSUANT TO THE TERMS HEREOF AS A LENDER HEREUNDER FOR
ALL PURPOSES OF THIS AGREEMENT, NOTWITHSTANDING NOTICE TO THE CONTRARY.  THE
REGISTER SHALL BE AVAILABLE FOR INSPECTION BY THE COMPANY, THE ISSUING BANK, THE
PAYING AGENT AND ANY LENDER, AT ANY REASONABLE TIME AND FROM TIME TO TIME UPON
REASONABLE PRIOR NOTICE.

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(D)           UPON ITS RECEIPT OF A DULY COMPLETED ASSIGNMENT AND ACCEPTANCE
EXECUTED BY AN ASSIGNING LENDER AND AN ASSIGNEE, THE ASSIGNEE’S COMPLETED
ADMINISTRATIVE QUESTIONNAIRE (UNLESS THE ASSIGNEE SHALL ALREADY BE A LENDER
HEREUNDER), THE PROCESSING AND RECORDATION FEE REFERRED TO IN SUBSECTION (B) OF
THIS SECTION AND ANY WRITTEN CONSENT TO SUCH ASSIGNMENT REQUIRED BY
SUBSECTION (B) OF THIS SECTION, THE ADMINISTRATIVE AGENT SHALL ACCEPT SUCH
ASSIGNMENT AND ACCEPTANCE AND RECORD THE INFORMATION CONTAINED THEREIN IN THE
REGISTER.  NO ASSIGNMENT SHALL BE EFFECTIVE FOR PURPOSES OF THIS AGREEMENT
UNLESS IT HAS BEEN RECORDED IN THE REGISTER AS PROVIDED IN THIS SUBSECTION.

(E)           ANY LENDER MAY, WITHOUT THE CONSENT OF ANY OF THE COMPANY, THE
ADMINISTRATIVE AGENT OR THE ISSUING BANK, SELL PARTICIPATIONS TO ONE OR MORE
BANKS OR OTHER ENTITIES (EACH A “PARTICIPANT”) IN ALL OR A PORTION OF SUCH
LENDER’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT (INCLUDING ALL OR A PORTION
OF ITS COMMITMENT AND 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 COMPANY, THE ADMINISTRATIVE AGENT, THE ISSUING
BANK 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 TO APPROVE ANY AMENDMENT, MODIFICATION OR WAIVER OF
ANY PROVISION OF THIS AGREEMENT; PROVIDED THAT SUCH AGREEMENT OR INSTRUMENT MAY
PROVIDE THAT SUCH LENDER WILL NOT, WITHOUT THE CONSENT OF THE PARTICIPANT, AGREE
TO ANY AMENDMENT, MODIFICATION OR WAIVER DESCRIBED IN THE FIRST PROVISO TO
SECTION 9.02(B) THAT AFFECTS SUCH PARTICIPANT.  SUBJECT TO SUBSECTION (F) OF
THIS SECTION, THE COMPANY AGREES THAT EACH PARTICIPANT SHALL BE ENTITLED TO THE
BENEFITS OF SECTIONS 2.13 AND 2.14 TO THE SAME EXTENT AS IF IT WERE A LENDER AND
HAD ACQUIRED ITS INTEREST BY ASSIGNMENT PURSUANT TO SUBSECTION (B) OF THIS
SECTION.

(F)            A PARTICIPANT SHALL NOT BE ENTITLED TO RECEIVE ANY GREATER
PAYMENT UNDER SECTION 2.13 THAN THE APPLICABLE LENDER WOULD HAVE BEEN ENTITLED
TO RECEIVE WITH RESPECT TO THE PARTICIPATIONS SOLD TO SUCH PARTICIPANT, UNLESS
THE SALE OF THE PARTICIPATIONS TO SUCH PARTICIPANT IS MADE WITH THE COMPANY’S
PRIOR WRITTEN CONSENT.

(G)           ANY LENDER MAY AT ANY TIME PLEDGE OR ASSIGN A SECURITY INTEREST IN
ALL OR ANY PORTION OF ITS RIGHTS UNDER THIS AGREEMENT TO SECURE OBLIGATIONS OF
SUCH LENDER, INCLUDING ANY SUCH PLEDGE OR ASSIGNMENT TO A FEDERAL RESERVE BANK,
AND THIS SECTION SHALL NOT APPLY TO ANY SUCH PLEDGE OR ASSIGNMENT OF A SECURITY
INTEREST; PROVIDED THAT NO SUCH PLEDGE OR ASSIGNMENT OF A SECURITY INTEREST
SHALL RELEASE A LENDER FROM ANY OF ITS OBLIGATIONS HEREUNDER OR SUBSTITUTE ANY
SUCH ASSIGNEE FOR SUCH LENDER AS A PARTY HERETO.

SECTION 9.05.  SURVIVAL.

All covenants, agreements, representations and warranties made by the Company
and Hovnanian herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that any Agent or any Lender may have had notice or knowledge of any Default

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or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments
have not expired or terminated.  The provisions of Sections 2.13, 2.14 and 9.03
shall survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the repayment of the Loans, the
expiration or termination of the Commitments or the termination of this
Agreement or any provision hereof.

SECTION 9.06.  USA PATRIOT ACT.

Each Lender hereby notifies each Loan Party that pursuant to the requirements of
the USA Patriot Act, it is required to obtain, verify and record information
that identifies the Loan Parties, which information includes the name and
address of each Loan Party and other information that will allow such Lender to
identify each Loan Party in accordance with its requirements.

SECTION 9.07.  COUNTERPARTS; INTEGRATION; EFFECTIVENESS.

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, the Fee Letter and any other separate letter agreements with respect
to fees payable to the Administrative Agent constitute the entire contract among
the parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the subject
matter hereof.  Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

SECTION 9.08.  SEVERABILITY.

Any provision of this Agreement held to be invalid, illegal or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

SECTION 9.09.  RIGHT OF SETOFF.

If an Event of Default shall have occurred and be continuing, each Lender is
hereby authorized at any time and from time to time, 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 and other indebtedness at
any time owing by such Lender to or for the credit or the account of any Loan
Party against any of and all the past-due obligations of such Loan Party now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such

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Lender shall have made any demand under this Agreement and although such
obligations may be unmatured.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.  Any Lender exercising any of its rights pursuant to
this Section shall provide notice of the same to the Company promptly after
exercising the same; provided, however, the failure to give such notice shall
not effect the validity of such setoff.

SECTION 9.10.  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS;
PROCESS AGENT; WAIVER OF IMMUNITY.

(A)           THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.

(B)           EACH LOAN PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME
COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE
COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. 
NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT
OR ANY LENDER OR THE ISSUING BANK MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES
IN THE COURTS OF ANY JURISDICTION.

(C)           EACH LOAN PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY 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 IN ANY COURT REFERRED TO
IN SUBSECTION (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

(D)           EACH LOAN PARTY AND EACH OTHER PARTY TO THIS AGREEMENT IRREVOCABLY
CONSENT TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES TO IT IN
SECTION 9.01.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO
THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

SECTION 9.11.  WAIVER OF JURY TRIAL.

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR

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ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWL­EDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.12.  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 shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement.

SECTION 9.13.  CONFIDENTIALITY.

Each of the Administrative Agent, the Paying Agent and the Lenders and the
Issuing Bank agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisers (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential) on a “need to
know” basis solely in connection with the Transactions, (b) to the extent
requested by any regulatory authority, provided, however, that, to the extent
legally permitted, the Company is promptly notified in order that it may seek a
protective order or take other appropriate action, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party to this Agreement, (e) to the extent reasonably required
or reasonably deemed advisable in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any securitization, swap or derivatives
transaction relating to the Company, Hovnanian, any Subsidiary of Hovnanian and
the obligations hereunder, (g) with the consent of the Company or (h) to the
extent such Information (i) becomes publicly available other than as a result of
a breach of this Section or (ii) becomes available to the Administrative Agent,
the Paying Agent, any Lender or the Issuing Bank on a nonconfidential basis from
a source other than the Company.  For the purposes of this Section,
“Information” means all information received from the Company in connection with
this Agreement relating to the Company or its business, other than any such
information that is available to the Administrative Agent, any Lender or the
Issuing Bank on a nonconfidential basis prior to disclosure by the Company.  Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

55

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SECTION 9.14.  TAX WITHHOLDING CLAUSE.

Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the United States of America or a state thereof (and, upon the
written request of the Administrative Agent, each other Lender or assignee or
participant of a Lender) agrees that it will deliver to each of the Company and
the Administrative Agent two duly completed appropriate valid Withholding
Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations
(the “Regulations”)) certifying its status (i.e., U.S. or foreign person) and,
if appropriate, making a claim of reduced, or exemption from, U.S. withholding
tax on the basis of an income tax treaty or an exemption provided by the Code. 
Such delivery may be made by electronic transmission as described in
§1.1441-1(e)(4)(iv) of the Regulations if the Administrative Agent establishes
an electronic delivery system.  The term “Withholding Certificate” means a Form
W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and
certifications as required under §1.1441-1(e)(3) of the Regulations; a statement
described in §1.871-14(c)(2)(v) of the Regulations; or any other certificates
under the Code or Regulations that certify or establish the status of a payee or
beneficial owner as a U.S. or foreign person.  Each Lender, assignee or
participant required to deliver to the Company and the Administrative Agent a
valid Withholding Certificate pursuant to the preceding sentence shall deliver
such valid Withholding Certificate as follows:  (A) each Lender that is a party
hereto on the date hereof shall deliver such valid Withholding Certificate at
least five Business Days prior to the first date on which any interest or fees
are payable by the Company hereunder for the account of such Lender; (B) each
assignee or participant shall deliver such valid Withholding Certificate at
least five Business Days before the effective date of such assignment or
participation (unless the Administrative Agent in its sole discretion shall
permit such assignee or participant to deliver such Withholding Certificate less
than five Business Days before such date, in which case it shall be due on the
date specified by the Administrative Agent).  Each Lender, assignee or
participant that so delivers a valid Withholding Certificate further undertakes
to deliver to each of the Company and the Administrative Agent two additional
copies of such Withholding Certificate (or a successor form) on or before the
date that such Withholding Certificate expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent Withholding
Certificate so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Company or the
Administrative Agent.  Notwithstanding the submission of a Withholding
Certificate claiming a reduced rate of, or exemption from, United States
withholding tax, the Administrative Agent shall be entitled to withhold United
States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements
imposed upon a withholding agent under §1.1441-7(b) of the Regulations. 
Further, the Administrative Agent is indemnified under §1.1461-1(e) of the
Regulations against any claims and demands of any Lender or assignee or
participant of a Lender for the amount of any tax it deducts and withholds in
accordance with regulations under §1441 of the Code.

[Remainder of page intentionally left blank]

57

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

 

 

By

 

 

 

Name:

 

Title:

 

 

 

 

 

 

 

HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

 

 

By

 

 

 

Name:

 

Title:

 

ARROW PROPERTIES, INC.

HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.

K. HOV INTERNATIONAL, INC.

K. HOV IP, II, INC.

K. HOV IP, INC.

K. HOVNANIAN ACQUISITIONS, INC.

K. HOVNANIAN AT BERNARDS IV, INC.

K. HOVNANIAN AT BRANCHBURG III, INC.

K. HOVNANIAN AT BRIDGEPORT, INC.

K. HOVNANIAN AT BRIDGEWATER VI, INC.

K. HOVNANIAN AT BURLINGTON III, INC.

K. HOVNANIAN AT BURLINGTON, INC.

K. HOVNANIAN AT CALABRIA, INC.

K. HOVNANIAN AT CARMEL DEL MAR, INC.

58

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K. HOVNANIAN AT CASTILE, INC.

K. HOVNANIAN AT CHAPARRAL, INC.

K. HOVNANIAN AT CLARKSTOWN, INC.

K. HOVNANIAN AT CRESTLINE, INC.

K. HOVNANIAN AT DOMINGUEZ HILLS, INC.

K. HOVNANIAN AT EAST WHITELAND I, INC.

K. HOVNANIAN AT FREEHOLD TOWNSHIP I, INC.

K. HOVNANIAN AT HERSHEY’S MILL, INC.

K. HOVNANIAN AT HACKETTSTOWN, INC.

K. HOVNANIAN AT HIGHLAND VINEYARDS, INC.

K. HOVNANIAN AT HOPEWELL IV, INC.

K. HOVNANIAN AT HOPEWELL VI, INC.

K. HOVNANIAN AT HOWELL TOWNSHIP, INC.

K. HOVNANIAN AT KINGS GRANT I, INC.

K. HOVNANIAN AT KLOCKNER FARMS, INC.

K. HOVNANIAN AT LA TERRAZA, INC.

K. HOVNANIAN AT LAKEWOOD, INC.

K. HOVNANIAN AT LOWER SAUCON, INC.

K. HOVNANIAN AT MAHWAH II, INC.

K. HOVNANIAN AT MAHWAH V, INC.

K. HOVNANIAN AT MAHWAH VI, INC.

K. HOVNANIAN AT MAHWAH VII, INC.

K. HOVNANIAN AT MANALAPAN, INC.

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K. HOVNANIAN AT MARLBORO II, INC.

K. HOVNANIAN AT MARLBORO TOWNSHIP IV, INC.

K. HOVNANIAN AT METRO DC SOUTH, INC.

K. HOVNANIAN AT MONTCLAIR NJ, INC.

K. HOVNANIAN AT MONTGOMERY I, INC.

K. HOVNANIAN AT MONROE II, INC.

K. HOVNANIAN AT NORTHERN WESTCHESTER, INC.

K. HOVNANIAN AT NORTHLAKE, INC.

K. HOVNANIAN AT OCEAN TOWNSHIP, INC.

K. HOVNANIAN AT OCEAN WALK, INC.

K. HOVNANIAN AT PERKIOMEN I, INC.

K. HOVNANIAN AT PERKIOMEN II, INC.

K. HOVNANIAN AT PLAINSBORO III, INC.

K. HOVNANIAN AT PRINCETON, INC.

K. HOVNANIAN AT RANCHO CRISTIANITOS, INC.

K. HOVNANIAN AT RESERVOIR RIDGE, INC.

K. HOVNANIAN AT SAN SEVAINE, INC.

K. HOVNANIAN AT SARATOGA, INC.

K. HOVNANIAN AT SAWMILL, INC.

K. HOVNANIAN AT SCOTCH PLAINS II, INC.

K. HOVNANIAN AT SMITHVILLE, INC.

K. HOVNANIAN AT SOUTH BRUNSWICK III, INC.

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K. HOVNANIAN AT SOUTH BRUNSWICK V, INC.

K. HOVNANIAN AT STONE CANYON, INC.

K. HOVNANIAN AT STONY POINT, INC.

K. HOVNANIAN AT SYCAMORE, INC.

K. HOVNANIAN AT TANNERY HILL, INC.

K. HOVNANIAN AT THE BLUFF, INC.

K. HOVNANIAN AT THE CEDARS, INC.

K. HOVNANIAN AT THORNBURY, INC.

K. HOVNANIAN AT TIERRASANTA, INC.

K. HOVNANIAN AT TROVATA, INC.

K. HOVNANIAN AT TUXEDO, INC.

K. HOVNANIAN AT UNION TOWNSHIP I, INC.

K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP I, INC.

K. HOVNANIAN AT UPPER MAKEFIELD I, INC.

K. HOVNANIAN AT VAIL RANCH, INC.

K. HOVNANIAN AT WALL TOWNSHIP VI, INC.

K. HOVNANIAN AT WALL TOWNSHIP VIII, INC.

K. HOVNANIAN AT WASHINGTONVILLE, INC.

K. HOVNANIAN AT WAYNE III, INC.

K. HOVNANIAN AT WAYNE V, INC.

K. HOVNANIAN AT WILDROSE, INC.

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K. HOVNANIAN COMPANIES NORTHEAST, INC.

K. HOVNANIAN COMPANIES OF CALIFORNIA, INC.

K. HOVNANIAN COMPANIES OF MARYLAND, INC.

K. HOVNANIAN COMPANIES OF METRO WASHINGTON, INC.

K. HOVNANIAN COMPANIES OF NEW YORK, INC.

K. HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.

K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.

K. HOVNANIAN CONSTRUCTION II, INC.

K. HOVNANIAN CONSTRUCTION III, INC.

K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC.

K. HOVNANIAN DEVELOPMENTS OF VIRGINIA, INC.

K. HOVNANIAN DEVELOPMENTS OF ARIZONA, INC.

K. HOVNANIAN DEVELOPMENTS OF CALIFORNIA, INC.

K. HOVNANIAN DEVELOPMENTS OF CONNECTICUT, INC.

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

K. HOVNANIAN DEVELOPMENTS OF DELAWARE, INC.

K. HOVNANIAN DEVELOPMENTS OF GEORGIA, INC.

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K. HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC.

K. HOVNANIAN DEVELOPMENTS OF INDIANA, INC.

K. HOVNANIAN DEVELOPMENTS OF MARYLAND, INC.

K. HOVNANIAN DEVELOPMENTS OF MICHIGAN, INC.

K. HOVNANIAN DEVELOPMENTS OF MINNESOTA, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY II, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.

K. HOVNANIAN DEVELOPMENTS OF NORTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF OHIO, INC.

K. HOVNANIAN DEVELOPMENTS OF PENNSYLVANIA, INC.

K. HOVNANIAN DEVELOPMENTS OF SOUTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.

K. HOVNANIAN DEVELOPMENTS OF WEST VIRGINIA, INC.

K. HOVNANIAN EQUITIES, INC.

K. HOVNANIAN FORECAST HOMES, INC.

K. HOVNANIAN HOMES OF NORTH CAROLINA, INC.

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K. HOVNANIAN HOMES OF VIRGINIA, INC.

K. HOVNANIAN INVESTMENT PROPERTIES OF NEW JERSEY, INC.

K. HOVNANIAN PA REAL ESTATE, INC.

K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.

K. HOVNANIAN PROPERTIES OF NEWARK URBAN RENEWAL CORPORATION, INC.

K. HOVNANIAN PROPERTIES OF NORTH BRUNSWICK V, INC.

K. HOVNANIAN PROPERTIES OF WALL, INC.

KHC ACQUISITION, INC.

LANDARAMA, INC.

M&M AT LONG BRANCH, INC.

MATZEL & MUMFORD OF DELAWARE, INC.

MCNJ, INC.

PINE BROOK COMPANY, INC.

REFLECTIONS OF YOU INTERIORS, INC.

SEABROOK ACCUMULATION CORPORATION

STONEBROOK HOMES, INC.

THE MATZEL & MUMFORD ORGANIZATION, INC.

WASHINGTON HOMES, INC.

WESTMINSTER HOMES OF TENNESSEE, INC.

WESTMINSTER HOMES, INC.

WH LAND I, INC.

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

 

WH PROPERTIES, INC.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

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

 

 

 

By:

K. Hovnanian Developments of D.C., Inc.,
as the sole member of the foregoing limited
liability company

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

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

HOVNANIAN LAND INVESTMENT GROUP, L.L.C.

K. HOVNANIAN AT KING FARM, L.L.C.

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

K. HOVNANIAN AT WILLOW BROOK, L.L.C.

K. HOVNANIAN COMPANIES OF METRO D.C. NORTH, L.L.C.

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

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

K. HOVNANIAN HOMES AT FOREST RUN, L.L.C.

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

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

K. HOVNANIAN HOMES AT RENAISSANCE PLAZA, L.L.C.

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

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

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

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

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

RIDGEMORE UTILITY, L.L.C.

WASHINGTON HOMES AT COLUMBIA TOWN CENTER, L.L.C.

WESTMINSTER HOMES OF ALABAMA, L.L.C.

WESTMINSTER HOMES OF MISSISSIPPI, L.L.C.

WOODLAND LAKES CONDOS AT BOWIE NEWTOWN, L.L.C.

By:

K. Hovnanian Developments of Maryland, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

ALFORD, L.L.C.

DULLES COPPERMINE, L.L.C.

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

K. HOVNANIAN AT LAKE RIDGE CROSSING, L.L.C.

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

K. HOVNANIAN COMPANIES OF METRO WASHINGTON, L.L.C.

K. HOVNANIAN FOUR SEASONS @ HISTORIC VIRGINIA, L.L.C.

K. HOVNANIAN FRANCUSCUS HOMES, L.L.C.

K. HOVNANIAN HOMES AT BANYON COVE, L.L.C.

K. HOVNANIAN HOMES AT CAMERON STATION, L.L.C.

K. HOVNANIAN HOMES AT LAUREL HIGHLANDS, L.L.C.

K. HOVNANIAN HOMES AT PAYNE STREET, L.L.C.

K. HOVNANIAN HOMES AT THE EASTON, L.L.C.

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

K. HOVNANIAN’S FOUR SEASONS AT ASHBURN VILLAGE, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT VINT HILL, L.L.C.

By:

K. Hovnanian Developments of Virginia, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

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HOVNANIAN LAND INVESTMENT GROUP OF NEW JERSEY, L.L.C.

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

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

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

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

K. HOVNANIAN AT BERKELEY, L.L.C.

K. HOVNANIAN AT BERNARDS V, L.L.C.

K. HOVNANIAN AT BLUE HERON PINES, L.L.C.

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

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

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

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

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

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

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

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

K. HOVNANIAN AT CLIFTON, L.L.C.

K. HOVNANIAN AT CRANBURY, L.L.C.

K. HOVNANIAN AT CURRIES WOODS, L.L.C.

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

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

K. HOVNANIAN AT DOVER, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN AT GUTTENBERG, L.L.C.

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

K. HOVNANIAN AT HAMBURG CONTRACTORS, L.L.C.

K. HOVNANIAN AT HAMBURG, L.L.C.

K. HOVNANIAN AT HAWTHORNE, L.L.C

K. HOVNANIAN AT HAZLET, L.L.C.

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

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

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

K. HOVNANIAN AT JERSEY CITY V URBAN RENEWAL COMPANY, L.L.C.

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

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K. HOVNANIAN AT LAWRENCE V, L.L.C.

K. HOVNANIAN AT LINWOOD, L.L.C.

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

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

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

K. HOVNANIAN AT LONG BRANCH I, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN AT MT. OLIVE TOWNSHIP, L.L.C.

K. HOVNANIAN AT NEW BRUNSWICK URBAN RENEWAL, L.L.C.

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

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

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

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

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

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

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

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

K. HOVNANIAN AT PARAMUS, L.L.C.

K. HOVNANIAN AT PARSIPPANY-TROY HILLS, L.L.C.

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

K. HOVNANIAN AT PRINCETON LANDING, L.L.C.

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

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

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

K. HOVNANIAN AT RED BANK, L.L.C.

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

K. HOVNANIAN AT SAYREVILLE, L.L.C.

K. HOVNANIAN AT SCOTCH PLAINS, L.L.C.

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

K. HOVNANIAN AT SOMERS POINT, L.L.C.

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

K. HOVNANIAN AT SPARTA, L.L.C.

K. HOVNANIAN AT SPRINCO, L.L.C.

K. HOVNANIAN AT SPRINGFIELD, L.L.C.

K. HOVNANIAN AT TEANECK, L.L.C.

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

K. HOVNANIAN AT TRENTON, L.L.C.

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

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

K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP II, L.L.C.

K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP III, L.L.C.

K. HOVNANIAN AT VINELAND, L.L.C.

K. HOVNANIAN AT WANAQUE, L.L.C.

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

K. HOVNANIAN AT WASHINGTON, L.L.C.

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

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

K. HOVNANIAN AT WEST FRONT STREET, L.L.C.

K. HOVNANIAN AT WEST MILFORD, L.L.C.

K. HOVNANIAN AT WEST WINDSOR, L.L.C.

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

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

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

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

K. HOVNANIAN CLASSICS, L.L.C.

K. HOVNANIAN CLASSICS CIP, L.L.C.

K. HOVNANIAN INVESTMENTS, L.L.C.

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

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

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

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

K. HOVNANIAN SOUTHERN NEW JERSEY, L.LC.

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

K. HOVNANIAN T&C INVESTMENT, L.L.C.

K. HOVNANIAN’S PRIVATE HOME PORTFOLIO, L.L.C.

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

TERRAPIN REALTY, L.L.C.

KHIP, L.L.C.

By:

K. Hovnanian Holdings NJ, L.L.C., as the sole

member of each of the foregoing limited liability companies.

 

 

By:

K. Hovnanian Developments of New Jersey, Inc., as member

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

AND

 

 

 

 

By:

K. Hovnanian Developments of New Jersey II, Inc., as member

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

K. HOVNANIAN AT 3 CHAPMAN, L.L.C.

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

K. HOVNANIAN AT 4S, L.L.C.

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

K. HOVNANIAN AT ACQUA VISTA, L.L.C.

K. HOVNANIAN AT ALISO, L.L.C.

K. HOVNANIAN AT ARBOR HEIGHTS, L.L.C.

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

K. HOVNANIAN AT BELLA LAGO, L.L.C.

K. HOVNANIAN AT BRIDLEWOOD, L.L.C.

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

K. HOVNANIAN AT CARMEL VILLAGE, L.L.C.

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

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

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

K. HOVNANIAN AT EASTLAKE, L.L.C.

K. HOVNANIAN AT ENCINITAS RANCH, L.L.C.

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

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

K. HOVNANIAN AT HIGHWATER, L.L.C.

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

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

K. HOVNANIAN AT LA HABRA KNOLLS, L.L.C.

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

K. HOVNANIAN AT LITTLE TOKYO, L.L.C.

K. HOVNANIAN AT MENIFEE, L.L.C.

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

K. HOVNANIAN AT MOCKINGBIRD CANYON, L.L.C.

K. HOVNANIAN AT MOSAIC, L.L.C.

K. HOVNANIAN AT OLDE ORCHARD, L.L.C.

K. HOVNANIAN AT PACIFIC BLUFFS, L.L.C.

K. HOVNANIAN AT PACIFICA SAN JUAN, L.L.C.

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

K. HOVNANIAN AT PIAZZA D’ORO, L.L.C.

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

K. HOVNANIAN AT RANCHO SANTA MARGARITA, L.L.C.

K. HOVNANIAN AT RIVERBEND, L.L.C.

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

K. HOVNANIAN AT ROWLAND HEIGHTS, L.L.C.

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

K. HOVNANIAN AT SKYE ISLE, L.L.C.

K. HOVNANIAN AT SUNSETS, L.L.C.

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

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

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

K. HOVNANIAN AT THOMPSON RANCH, L.L.C.

K. HOVNANIAN AT TOWNGATE, L.L.C.

K. HOVNANIAN AT TRAIL RIDGE, L.L.C.

K. HOVNANIAN AT WINCHESTER, L.L.C.

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

K. HOVNANIAN INTERNATIONAL, L.L.C.

K. HOVNANIAN T&C MANAGEMENT CO., L.L.C.

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

K. HOVNANIAN’S FOUR SEASONS AT HEMET, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT MENIFEE VALLEY, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT PALM SPRINGS, L.L.C.

K. HOVNANIAN’S FOUR SEASONS, L.L.C.

By:

K. Hovnanian Developments of California, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

 

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

 

 

 

By:

K. Hovnanian Developments of New Jersey, Inc., as member of the foregoing
limited liability company.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

AND

 

 

 

 

 

By:

K. Hovnanian Developments of New Jersey II, Inc., as member of the foregoing
limited liability company.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

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

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

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

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

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

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

K. HOVNANIAN AT RAPHO, L.L.C.

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

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

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

K. HOVNANIAN AT WEST BRADFORD, L.L.C.

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

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

RIDGEMORE UTILITY ASSOCIATES OF PENNSYLVANIA, L.L.C.

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

By:

K. Hovnanian Companies of Pennsylvania, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

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

K. HOVNANIAN FCS, L.L.C.

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

K. HOVNANIAN STANDING ENTITY, L.L.C.

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

K. HOVNANIAN WINDWARD HOMES, L.L.C.

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

 

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

 

 

 

By:

Hovnanian Developments of Florida, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

K. HOVNANIAN COMPANIES, LLC

 

 

 

By:

K. Hovnanian Enterprises, Inc., as member of the foregoing limited liability
company.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

AND

 

 

 

By:

K. Hovnanian Developments of New Jersey II, Inc., as member of the foregoing
limited liability company.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

 

 

 

By:

K. Hovnanian at Perkiomen II, Inc., as the sole member of the foregoing limited
liability company.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

K. HOVNANIAN FOUR SEASONS AT GOLD HILL, L.L.C.

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

By:

K. Hovnanian Developments of South Carolina, Inc., as the sole member of each of
the foregoing limited liability companies.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

K. HOVNANIAN GREAT WESTERN BUILDING COMPANY, L.L.C.

K. HOVNANIAN GREAT WESTERN HOMES, L.L.C.

By:

K. Hovnanian Developments of Arizona, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

K. HOVNANIAN AT HIGHLAND SHORES, L.L.C.

K. HOVNANIAN AT RIDGESTONE, L.L.C.

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

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

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

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

By:

K. Hovnanian Developments of Minnesota, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

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

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

 

 

 

By:

K. Hovnanian Developments of Ohio, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

K. HOVNANIAN’S FOUR SEASONS AT HUNTFIELD, L.L.C.

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

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

By:

K. Hovnanian Developments of West Virginia, Inc., as the sole member of each of
the foregoing limited liability companies.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

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

 

 

 

By:

K. Hovnanian Developments of Michigan, Inc., as the sole member of the foregoing
limited liability company.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

KINGS COURT AT MONTGOMERY, L.L.C.

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

M&M AT APPLE RIDGE, L.L.C.

M&M AT BROOKHILL, L.L.C.

M&M AT EAST MILL, L.L.C.

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

M&M AT MORRISTOWN, L.L.C.

M&M AT SHERIDAN, L.L.C.

M&M AT SPARTA, L.L.C.

M&M AT SPINNAKER POINTE, L.L.C.

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

 

M&M AT SPRUCE HOLLOW, L.L.C.

 

 

 

M&M AT SPRUCE MEADOWS, L.L.C.

 

 

 

M&M AT SPRUCE RUN, L.L.C.

 

 

 

M&M AT THE HIGHLANDS, L.L.C.

 

 

 

MATZEL & MUMFORD AT CRANBURY KNOLL, L.L.C.

 

 

 

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

 

 

 

MATZEL & MUMFORD AT FREEHOLD, L.L.C.

 

 

 

MATZEL & MUMFORD AT HERITAGE LANDING, L.L.C.

 

 

 

MATZEL & MUMFORD AT MONTGOMERY, L.L.C.

 

 

 

MATZEL & MUMFORD AT PHILLIPSBURG, L.L.C.

 

 

 

MATZEL & MUMFORD AT SOUTH BRUNSWICK, L.L.C.

 

 

 

MATZEL & MUMFORD AT WOODLAND CREST, L.L.C.

 

 

 

THE LANDINGS AT SPINNAKER POINTE, L.L.C.

 

 

 

MATZEL & MUMFORD OF DELAWARE, L,L.C.

 

 

 

By:

The Matzel & Mumford Organization, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

 

M&M AT EAST RUTHERFORD, L.L.C.

 

 

 

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

 

 

 

M&M AT ROBERT MORRIS, L.L.C.

 

 

 

M&M AT TAMARACK HOLLOW, L.L.C.

 

 

 

M&M AT THE CHATEAU, L.LC.

 

 

 

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

 

 

 

M&M AT WESTPORT, L.L.C.

 

 

 

M&M AT WHEATENA URBAN RENEWAL, L.L.C.

 

 

 

MATZEL & MUMFORD AT SOUTH BOUND BROOK URBAN RENEWAL, L.L.C.

 

 

 

MMIP, L.L.C.

 

 

 

By:

M&M Investments, L.P., as the sole member of each of the foregoing limited
liability companies.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

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

 

 

 

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

 

 

 

K. HOVNANIAN HOMES AT JONES STATION 2, L.L.C.

 

 

 

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

 

 

 

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

 

 

 

PADDOCKS, L.L.C.

 

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

 

PINE AYR, L.L.C.

 

 

 

By:

K. Hovnanian Homes of Maryland, L.L.C., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

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

 

 

 

By:

Goodman Family of Builders, L.P., as the sole member of the foregoing limited
liability company.

 

 

 

 

 

By:

K. Hovnanian Developments of Florida, as general partner of the foregoing
limited partnership.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

K. HOVNANIAN AT NEW WINDSOR, L.L.C.

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

By:

K. Hovnanian at Northern Westchester, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

 

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

 

 

 

K. HOVNANIAN’S FOUR SEASONS AT DULLES DISCOVERY CONDOMINIUM, L.L.C.

 

 

 

K. HOVNANIAN’S FOUR SEASONS AT DULLES DISCOVERY, L.L.C.

 

 

 

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

 

 

 

By:

K. Hovnanian Developments of Virginia, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

K. HOVNANIAN DELAWARE ACQUISITIONS, L.L.C.

 

 

 

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

 

 

 

By:

K. Hovnanian Developments of Delaware, Inc., as the sole member of the foregoing
limited liability company.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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

 

K. HOVNANIAN AT MENIFEE VALLEY CONDOMINIUMS, L.L.C.

 

 

 

By:

K. Hovnanian’s Four Seasons At Menifee Valley, L.L.C.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

HOVNANIAN LAND INVESTMENT GROUP OF NORTH CAROLINA, L.L.C.

 

 

 

By:

K. Hovnanian Developments of North Carolina, Inc., as the sole member of the
foregoing limited liability company.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

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

 

 

 

By:

K. Hovnanian Developments of Indiana, Inc., as the sole member of the foregoing
limited liability company.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

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

 

K. HOVNANIAN CONNECTICUT ACQUISITIONS, L.L.C.

 

 

 

By:

K. Hovnanian Developments of Connecticut, Inc., as the sole member of the
foregoing limited liability company.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

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

 

 

 

By:

K. Hovnanian at Raritan I, Inc., as the sole member of the foregoing limited
liability company.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

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

 

 

 

By:

K. Hovnanian Developments of Illinois, Inc., as the sole member of the foregoing
limited liability company.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

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

 

 

 

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

 

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

 

By:

K. Hovnanian Developments of Georgia, Inc., as the sole member of each of the
foregoing limited liability companies.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

HLIG INVESTMENT I, L.L.C.

 

 

 

By:

MSHOV Holding Company, L.L.C., as sole member of the foregoing limited liability
company.

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:      K. Hovnanian Holdings NJ, L.L.C., as the sole member of the foregoing
limited liability company.

 

 

 

 

 

By:

K. Hovnanian Developments of New Jersey, Inc., as member

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

AND

 

 

 

By:

K. Hovnanian Developments of New Jersey II, Inc., as member

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

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

 

GOODMAN FAMILY OF BUILDERS, L.P.

 

 

 

By:

K. Hovnanian Developments of Florida, Inc. as general partner of the foregoing
limited partnership.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

By:

K. Hovnanian Developments of Texas, Inc. as general partner of the foregoing
limited partnership.

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

K. HOVNANIAN OF HOUSTON II, L.P.

 

 

 

K. HOVNANIAN OF HOUSTON, L.P.

 

 

 

By:

K. Hovnanian Developments of California, Inc., as general partner of each of the
foregoing limited partnerships.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

By:

K. Hovnanian Developments of Texas, Inc. as limited partner of the foregoing
limited partnership

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

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

 

M&M INVESTMENTS, L.P.

 

 

 

By:

K. Hovnanian Holdings NJ, L.L.C., as general partner of the foregoing limited
partnership.

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

CITICORP USA, INC.,

 

individually, as Administrative Agent, as Issuing Bank and as Lender

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 

 

 

THE BANK OF NEW YORK,

 

not in its individual capacity,

 

but solely as Paying Agent

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 

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

EXHIBIT A
to Credit Agreement

FORM OF
ASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (the “Assignment and Acceptance”) 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”).  Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), 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 Acceptance 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 Credit Agreement (including any
letters of credit included in such facility) 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 contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity 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 Acceptance, without representation or warranty by the
Assignor.

1.

 

Assignor:

 

 

 

 

 

 

 

2.

 

Assignee:

 

 

 

 

 

 

[an Affiliate of [Lender]]

 

 

 

 

 

3.

 

Company:

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

4.

 

Administrative Agent:

 

CITICORP USA, INC., as the Administrative Agent under the Credit Agreement

 

A-1

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5.

 

Credit Agreement:

 

Credit Agreement, dated as of October 11, 2006, among K. HOVNANIAN ENTERPRISES,
INC., HOVNANIAN ENTERPRISES, INC., certain other guarantors named therein, the
Lenders party thereto, CITICORP USA, INC., as Administrative Agent, and the
other agents and the issuing bank parties thereto

 

 

 

 

 

6.

 

Assigned Interest:

 

 

 

Aggregate Amount of
Commitment/Loans/LC
Exposure for all Lenders

 

Amount of
Commitment/Loans/
LC Exposure Assigned

 

Percentage Assigned
of Commitment/
Loans/LC Exposure(1)

 

$

 

$

 

%

 

Effective Date:                                      , 20       [TO BE INSERTED
BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]

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(1)           Set forth, to at least 9 decimals, as a percentage of the
Commitment/Loans/LC Exposure of all Lenders thereunder.

A-2

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The terms set forth in this Assignment and Acceptance are hereby agreed to:

 

ASSIGNOR

 

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

ASSIGNEE

 

 

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

Consented to and accepted:

 

 

 

 

 

CITICORP USA, INC.,

 

 

as Administrative Agent

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

Title:

 

 

 

 

CITICORP USA, INC.,

 

 

as Issuing Bank

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

Title:

 

 

A-3

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

 

[Consented to:](2)

 

 

 

 

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

By

 

 

 

 

Name:

 

 

Title:

 

 

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

(2)                                  The Company’s consent will not be required
if an Event of Default has occurred and is continuing or the assignment is to an
Affiliate of the Assignor.

A-4

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ANNEX I

K. HOVNANIAN ENTERPRISES, INC.

CREDIT AGREEMENT

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE

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 Acceptance 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 financial
condition of the Company, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iii) the performance or
observance by the Company, any of its 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 Acceptance and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement and the other Loan Documents as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement and the other Loan Documents, together with copies of the most recent
financial statements delivered pursuant to Section 5.07 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
Acceptance 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, and (v) if it is a Lender organized
under the laws of a jurisdiction outside the United States, attached to this
Assignment and Acceptance is any documentation required to be delivered by it
pursuant to the terms 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, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement and the other Loan Documents are required to be performed by it
as a Lender.

2.             Payments.  From and after the Effective Date, 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 which have accrued to but excluding the

A-5

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

Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.

3.             General Provisions.  This Assignment and Acceptance shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.  This Assignment and Acceptance 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 Acceptance by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Acceptance.  This
Assignment and Acceptance shall be governed by, and construed in accordance
with, the law of the State of New York.

A-6

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

EXHIBIT B
to Credit Agreement

FORM OF NOTE

$,       

                        ,       

 

FOR VALUE RECEIVED, the undersigned, K. HOVNANIAN ENTERPRISES, INC., a
California corporation (the “Company”), unconditionally promises to pay to the
order of                                                  (the “Lender”) the
principal sum of                                            DOLLARS
($                  ) or, if less, the aggregate unpaid principal amount of all
Loans made by the Lender pursuant to the Credit Agreement, dated as of October
11, 2006 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the “Credit Agreement”), among the Company, Hovnanian
Enterprises, Inc., certain other guarantors parties thereto, the financial
institutions (including the Lender) from time to time parties thereto, Citicorp
USA, Inc., as the Administrative Agent, and each of the other agents and the
issuing bank party thereto, on such dates and in such amounts as are set forth
in the Credit Agreement.  The amounts payable under the Credit Agreement  may be
reduced only in accordance with the terms of the Credit Agreement. Unless
otherwise defined, capitalized terms used herein have the meanings provided in
the Credit Agreement.

The Company also promises to pay interest on the unpaid principal amount hereof
from time to time outstanding from and including the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.

Payments of both principal and interest are to be made without setoff or
counterclaim in lawful money of the United States of America in same day or
immediately available funds to the account designated by the Paying Agent.

This Note is one of the Notes referred to in, and evidences the Loans made by
the Lender under, the Credit Agreement, to which reference is made for a
statement of the terms and conditions on which the Company is permitted and
required to make prepayments and repayments of principal of the indebtedness
evidenced by this Note and on which such indebtedness may be declared to be or
shall automatically become immediately due and payable.

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

By

 

 

 

 

Name:

 

 

Title:

 

B-1

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

LOAN AND PRINCIPAL PAYMENTS

Date

 

Amount
of Loan

 

Amount of
Principal Repaid

 

Unpaid
Principal Balance

 

Notations
Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B-2

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

EXHIBIT C
to Credit Agreement

[Letterhead of Company]

FORM OF
NOTICE OF LC REQUEST

Certificate Date:                ,         

Citicorp USA, Inc.,
as the Issuing Bank
Facsimile: 
Attention: 

Citicorp USA, Inc.,
as the Administrative Agent
Facsimile:
Attention:

Re:          K. HOVNANIAN ENTERPRISES, INC. — NOTICE OF LC REQUEST

Ladies and Gentlemen:

This Notice of LC Request is delivered to Citicorp USA, Inc., as the issuing
bank (the “Issuing Bank”), pursuant to Section 2.04(b) of the Credit Agreement,
dated as of October 11, 2006 (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 “Company”), Hovnanian
Enterprises, Inc., certain other guarantors parties thereto, the financial
institutions from time to time parties thereto as lenders (the “Lenders”), the
Issuing Bank, and Citicorp USA, Inc., as the Administrative Agent.  Unless
otherwise defined herein, capitalized terms used herein have the meanings
provided in the Credit Agreement.

1.             [We request that the Letter of Credit (the “Letter of Credit”) be
issued as provided herein.  The amount of the Letter of Credit is $125,000,000. 
After giving effect to the issuance of the Letter of Credit, the Total Exposures
of all Lenders do not exceed the aggregate Commitments.] [We request that the
[identify Letter of Credit] (the “Letter of Credit”) be [amended] [renewed]
[extended] as provided herein.  After giving effect to the [amendment] [renewal]
[extension] of the Letter of Credit, the Total Exposures of all Lenders do not
exceed the aggregate Commitments.]

2.             The proposed date of the requested [issuance] [amendment]
[renewal] [extension] of the Letter of Credit is                          ,
         (which is a Business Day).

3.             The expiration date of the Letter of Credit
is                             ,             .(1)

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

(1)           Insert date which is at or prior
to                                             .

C-1

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

4.             [Company to add any other description necessary to prepare,
amend, renew or extend the Letter of Credit (including amount of Letter of
Credit, beneficiary thereof, drawing conditions, etc.).]

The undersigned Financial Officer of the Company certifies that each of the
conditions precedent to the proposed issuance set forth in Section 4.02 of the
Credit Agreement has been satisfied.

The Company has caused this Notice of LC Request to be executed and delivered by
a Financial Officer of the Company this        day of                     ,
          .

K. HOVNANIAN ENTERPRISES, INC.

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

C-2

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

EXHIBIT D
to Credit Agreement

FORM OF STANDBY LETTER OF CREDIT

Date:               , 200    

Beneficiary:

Citibank, N.A.
c/o Citicorp North America, Inc.
3800 Citibank Center
Building B 3rd Floor
Tampa, FL 33610

Letter of Credit No. [·]

Gentlemen:

By order of K. HOVNANIAN ENTERPRISES, INC. (the “Company”), we hereby open our
irrevocable Standby Letter of Credit No. [·] (this “Credit”), in your favor for
an amount of USD [·] and No Cents ([·] U.S. Dollars and 00/100), which may
adjust from time to time as provided in the next paragraph, effective
immediately and expiring at our office located at 399 Park Avenue, New York, NY
10022-4614 (the “Office”) on September 20, 2011.

This Credit has been issued in your favor as security in support of the letters
of credit already issued by you or to be issued by you on or after the date
hereof in the amounts notified to us by you or to be issued by you from time to
time hereafter for the account of the Company pursuant to the Agreement for
Letter of Credit, dated as of October 11, 2006, between the Company and you (the
“Reimbursement Agreement”) and any other written agreement between the Company
and you regarding the issuance of letters of credit for the account of the
Company that specifies that such letters of credit are to be considered Citibank
LCs, as hereinafter defined (such letters of credit being hereinafter referred
to collectively as the “Citibank LCs”).  The amount outstanding under this
Credit may adjust from time to time, without amendment, to account for (i)
drawings hereunder that we have honored (in the amount of such drawing), (ii)
cancellation, increase, reduction or expiration of Citibank LCs, upon receipt by
us of your notice describing such cancellation, increase, reduction or
expiration (in the amount of the available amount of the Citibank LCs that have
been cancelled or expired or in the amount of such reduction, as applicable),
and (iii) issuance by you from time to time after the date hereof of any
Citibank LC (in the amount of the available amount of such Citibank LC), subject
in the case of any increase described in clause (ii) or any issuance described
in clause (iii), to confirmation by us prior to such increase or issuance of the
available amount hereunder.  In no event shall the amount available hereunder
exceed $125,000,000.

Funds hereunder are available to you against your sending to us by courier or
facsimile either of the following written certifications:

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

“We hereby demand payment in the amount of USD                        because,
in connection with our Irrevocable Standby Letter of Credit
No.                                    (the “Credit”), the beneficiary has drawn
a draft under the Credit (the “Draft”), we did not receive payment when due for
the amount of such Draft.”

“We hereby demand payment in the amount of USD (which amount does not exceed the
aggregate outstanding undrawn amounts under the letters of credit issued under
the Agreement for Letter of Credit, dated as of October 11, 2006, as amended,
between K. Hovnanian Enterprises, Inc. and Citibank, N.A.” (the “Reimbursement
Agreement”) because there has been an Event of Default (without regard to the
proviso at the end of Section 15 of the Reimbursement Agreement) under the
Reimbursement Agreement.

Any number of multiple draws are permitted from time to time.

Presentation of drawing document(s) may also be made by fax transmission to
(212) 994-0847, or such other fax number identified by Citicorp USA, Inc. in a
written notice to you.  To the extent a presentation is made by fax
transmission, you must provide telephone notification thereof to Citicorp USA,
Inc. ([(302) 894-6035, Patricia D. Stewart]), prior to or simultaneously with
the sending of such fax transmission, provided, however, that Citicorp USA,
Inc.’s receipt of such telephone notice shall not be a condition to payment
hereunder.

We hereby agree to honor your drawing documents as specified above, if presented
in compliance with the terms and conditions of this Standby Letter of Credit.

Should you have occasion to communicate with us regarding this Standby Letter of
Credit, please direct your correspondence to our Office, making specific mention
of the Letter of Credit number indicated above.

[Remainder of page left intentionally blank.]

D-2

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Except as otherwise expressly stated herein, this Standby Letter of Credit is
subject to the International Standby Practices (“ISP98”), International Chamber
of Commerce, Publication No. 590, and as to matters not addressed by the ISP98,
shall be governed by and construed in accordance with the laws of the State of
New York and applicable U.S. Federal Law.

CITICORP USA, INC.

AUTHORIZED SIGNATURE

D-3

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Schedule 2.01
Commitments

Lender

 

Commitment

 

Citicorp USA, Inc.

 

$

125,000,000

 

 

 

 

 

Total

 

$

125,000,000

 

 

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

EXHIBIT E
to Credit Agreement

FORM OF GUARANTEE JOINDER AGREEMENT

This GUARANTEE JOINDER AGREEMENT is made [INSERT DATE] by
                                                            , a
                                                       (the “New Guarantor”).

Reference is made to (i) the Credit Agreement, dated as of October 11, 2006, as
modified, supplemented or amended from time to time, including as of the date
hereof (the “Credit Agreement”), among K. HOVNANIAN ENTERPRISES, INC. (the
“Company”), HOVNANIAN ENTERPRISES, INC. and the other guarantors now or
hereafter parties thereto, the Lenders now or hereafter party thereto, CITICORP
USA, INC., as letter of credit issuing bank and as administrative agent for
itself and the other Lenders under the Credit Agreement (the “Administrative
Agent”), and The Bank of New York, as paying agent thereunder, and (ii) the
other Loan Documents referred to in the Credit Agreement, as the same may be
modified, supplemented or amended from time to time.  Capitalized terms defined
in the Credit Agreement are used herein as defined therein.

In consideration of the substantial direct and indirect benefits received by the
New Guarantor as a result of the extensions of credit made by the Lenders and
the Issuing Bank under the Credit Agreement, the New Guarantor hereby agrees
that, effective as of the date hereof, it hereby is, and shall be deemed to be,
a Guarantor under the Credit Agreement and each of the other Loan Documents to
which the Guarantors are a party and agrees that, from the date hereof and so
long as the Commitment of any Lender shall remain outstanding and until the
payment in full of the Loans and the Notes and the performance of all other
obligations of the Company under the Loan Documents, the New Guarantor has
assumed the obligations of a Guarantor under, and the New Guarantor shall
perform, comply with and be subject to and bound by, jointly and severally with
the other Guarantors, each of the terms, provisions and waivers of the Credit
Agreement and each of the other Loan Documents that are stated to apply to or
are made by a Guarantor. Without limiting the generality of the foregoing, the
New Guarantor hereby represents and warrants that (i) each of the
representations and warranties set forth in Article III of the Credit Agreement
that applies to a Guarantor is true and correct in all material respects as to
the New Guarantor on and as of the date hereof as if made on and as of the date
hereof by the New Guarantor, and (ii) the New Guarantor has heretofore received
a true and correct copy of the Credit Agreement and each of the other Loan
Documents (including any modifications thereof or supplements or waivers
thereto) as in effect on the date hereof.

The New Guarantor hereby makes, affirms, and ratifies in favor of the Lenders,
the Issuing Bank and the Administrative Agent each of the terms, provisions and
waivers of the Credit Agreement and each of the other Loan Documents that are
stated to apply to or are made by a Guarantor.

In furtherance of the foregoing, the New Guarantor shall execute and deliver or
cause to be executed and delivered at any time and from time to time such
further instruments and

E-1

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

documents and do or cause to be done such further acts as may be reasonably
necessary or proper in the opinion of Administrative Agent to carry out more
effectively the provisions and purposes of this Guarantee Joinder Agreement.

IN WITNESS WHEREOF, the New Guarantor has duly executed this Guarantee Joinder
Agreement and delivered the same to the Administrative Agent for the benefit of
the Lenders and the Issuing Bank, as of the date and year first above written.

 

NEW GUARANTOR

 

 

 

[NAME OF NEW GUARANTOR]

 

 

 

 

 

By

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

Acknowledged and accepted:

 

 

 

 

 

CITICORP USA, INC.,

 

 

as Administrative Agent

 

 

 

 

 

 

 

 

By

 

 

 

 

 

Name

 

 

 

 

Title:

 

 

 

 

E-2

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