Exhibit 4.1






 


K. HOVNANIAN ENTERPRISES, INC.,

as Issuer


 


HOVNANIAN ENTERPRISES, INC.

and

the other Guarantors party hereto


 


and


 


DEUTSCHE BANK NATIONAL TRUST COMPANY,

as Trustee


 






 


Indenture


 


Dated as of May 27, 2008


 






 


111/2% Senior Secured Notes Due
2013


 






 
















 


CROSS-REFERENCE TABLE


 


	
  TIA Sections

  	
   

  	
  Indenture Sections

  
	
   

  	
   

  	
   

  	
   

  
	
  310

  	
  (a)

  	
   

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.03, 7.08(a)(iii), 7.08(e)

  
	
   

  	
  (c)

  	
   

  	
   

  	
  Inapplicable

  
	
  311

  	
   

  	
   

  	
   

  	
  7.03

  
	
  312

  	
  (a)

  	
   

  	
   

  	
  13.02

  
	
  313

  	
  (a)

  	
   

  	
   

  	
  7.06

  
	
   

  	
  (c)

  	
   

  	
  5.10(b),

  	
  7.06

  
	
  314

  	
  (a)

  	
   

  	
   

  	
  4.15(c), 4.16(c)

  
	
   

  	
  (b)

  	
   

  	
  6.10, 11.05(a), 13.01

  
	
   

  	
  (c)

  	
   

  	
   

  	
  Inapplicable

  
	
   

  	
  (d)

  	
   

  	
  6.10, 11.05(a), 11.05(b), 13.01

  
	
   

  	
  (e)

  	
   

  	
   

  	
  Inapplicable

  
	
   

  	
  (f)

  	
   

  	
   

  	
  Inapplicable

  
	
  315

  	
  (a)

  	
   

  	
   

  	
  7.02

  
	
   

  	
  (b)

  	
   

  	
   

  	
  7.02

  
	
   

  	
  (c)

  	
   

  	
   

  	
  7.02

  
	
   

  	
  (d)

  	
   

  	
   

  	
  7.02

  
	
   

  	
  (e)

  	
   

  	
   

  	
  Inapplicable

  
	
  316

  	
  (a)

  	
   

  	
   

  	
  Inapplicable

  
	
   

  	
  (b)

  	
   

  	
   

  	
  Inapplicable

  
	
   

  	
  (c)

  	
   

  	
   

  	
  13.02(d)

  
	
  317

  	
  (a)(1)

  	
   

  	
   

  	
  Inapplicable

  
	
   

  	
  (a)(2)

  	
   

  	
   

  	
  Inapplicable

  
	
   

  	
  (b)

  	
   

  	
   

  	
  Inapplicable

  
	
  318

  	
   

  	
   

  	
   

  	
  Inapplicable

  
								



 


i

















 


TABLE OF CONTENTS


 


	
   

  	
  PAGE

  
	
   

  	
   

  
	
  RECITALS

  	
   

  
	
   

  	
   

  
	
  ARTICLE 1

  	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  
	
  Section 1.01. Definitions

  	
  1

  
	
  Section 1.02. Rules of Construction

  	
  31

  
	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
  THE NOTES

  	
   

  
	
   

  	
   

  
	
  Section 2.01. Form, Dating and Denominations; Legends

  	
  31

  
	
  Section 2.02. Execution and Authentication; Exchange Notes

  	
  32

  
	
  Section 2.03. Registrar, Paying Agent and Authenticating

  	
  33

  
	
   

  	
  Agent; Paying Agent
  to Hold Money in Trust

  	
   

  
	
  Section 2.04. Replacement Notes

  	
  34

  
	
  Section 2.05. Outstanding Notes

  	
  34

  
	
  Section 2.06. Temporary Notes

  	
  35

  
	
  Section 2.07. Cancellation

  	
  35

  
	
  Section 2.08. CUSIP and ISIN Numbers

  	
  36

  
	
  Section 2.09. Registration, Transfer and Exchange

  	
  36

  
	
  Section 2.10. Restrictions on Transfer and Exchange

  	
  39

  
	
  Section 2.11. Regulation S Temporary Global Notes

  	
  41

  
	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
  REDEMPTION; OFFER TO PURCHASE

  	
   

  
	
   

  	
   

  
	
  Section 3.01. Optional
  Redemption

  	
  42

  
	
  Section 3.02. Redemption with Proceeds of Equity Offering

  	
  42

  
	
  Section 3.03. Sinking Fund; Mandatory Redemption

  	
  43

  
	
  Section 3.04. Method and Effect of Redemption

  	
  43

  
	
  Section 3.05. Offer to Purchase

  	
  44

  
	
   

  	
   

  
	
  ARTICLE 4

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 4.01. Payment of Notes

  	
  46

  
	
  Section 4.02. Maintenance of Office or Agency

  	
  47

  
	
  Section 4.03. Existence

  	
  48

  
	
  Section 4.04. Payment of Taxes and Other Claims

  	
  48

  
			



 


ii

















 


	
  Section 4.05. Maintenance of Properties and Insurance

  	
  48

  
	
  Section 4.06. Limitations on Indebtedness

  	
  49

  
	
  Section 4.07. Limitations on Restricted Payments

  	
  50

  
	
  Section 4.08. Limitations on Liens

  	
  54

  
	
  Section 4.09. Limitations on
  Restrictions Affecting Restricted Subsidiaries

  	
  54

  
	
  Section 4.10. Limitations on
  Dispositions of Assets

  	
  56

  
	
  Section 4.11. Guarantees by Restricted Subsidiaries

  	
  58

  
	
  Section 4.12. Repurchase of Notes
  upon a Change of Control

  	
  58

  
	
  Section 4.13. Limitations on Transactions with Affiliates

  	
  59

  
	
  Section 4.14. Limitations on
  Mergers, Consolidations and Sales of Assets

  	
  60

  
	
  Section 4.15. Reports to Holders of Notes

  	
  61

  
	
  Section 4.16. Reports to Trustee

  	
  62

  
	
  Section 4.17. Notice of Other Defaults

  	
  62

  
	
  Section 4.18. Further Assurances; Costs

  	
  63

  
	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
  REMEDIES

  	
   

  
	
   

  	
   

  
	
  Section 5.01. Events of Default

  	
  65

  
	
  Section 5.02. Other Remedies

  	
  69

  
	
  Section 5.03. Waiver of Defaults by Majority of Holders

  	
  69

  
	
  Section 5.04. Direction of Proceedings

  	
  69

  
	
  Section 5.05. Application of Moneys Collected by Trustee

  	
  70

  
	
  Section 5.06. Proceedings by Holders

  	
  71

  
	
  Section 5.07. Proceedings by Trustee

  	
  72

  
	
  Section 5.08. Remedies Cumulative and Continuing

  	
  72

  
	
  Section 5.09. Undertaking to Pay Costs

  	
  72

  
	
  Section 5.10. Notice of Defaults

  	
  72

  
	
  Section 5.11. Waiver of Stay, Extension or Usury Laws

  	
  73

  
	
  Section 5.12. Trustee May File Proof of Claim

  	
  73

  
	
  Section 5.13. Payment of Notes on Default; Suit Therefor

  	
  74

  
	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
  GUARANTEES; RELEASE OF GUARANTOR

  	
   

  
	
   

  	
   

  
	
  Section 6.01. Guarantee

  	
  75

  
	
  Section 6.02. Obligations of each Guarantor Unconditional

  	
  77

  
	
  Section 6.03. Release of a Guarantor

  	
  77

  
	
  Section 6.04. Execution and Delivery of Guarantee

  	
  78

  
	
  Section 6.05. Limitation on Guarantor Liability

  	
  78

  
	
  Section 6.06. Article 6 not to Prevent Events of Default

  	
  78

  
	
  Section 6.07. Waiver by the Guarantors

  	
  78

  
	
  Section 6.08. Subrogation and Contribution

  	
  78

  
	
  Section 6.09. Stay of Acceleration

  	
  79

  



 


iii

















 


	
  Section 6.10. Guarantors as “obligors” for Provisions Included in the

  	
   

  
	
   

  	
  Indenture Pursuant
  to the Trust Indenture Act

  	
  79

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  
	
  THE TRUSTEE

  	
   

  
	
   

  	
   

  
	
  Section 7.01. General

  	
  79

  
	
  Section 7.02. Certain Rights of
  the Trustee

  	
  79

  
	
  Section 7.03. Individual Rights
  of the Trustee

  	
  81

  
	
  Section 7.04. Trustee’s Disclaimer

  	
  81

  
	
  Section 7.05. Reserved

  	
  81

  
	
  Section 7.06. Reports by Trustee to Holders

  	
  81

  
	
  Section 7.07. Compensation and Indemnity

  	
  81

  
	
  Section 7.08. Replacement of Trustee

  	
  82

  
	
  Section 7.09. Successor Trustee by Merger

  	
  83

  
	
  Section 7.10. Eligibility

  	
  83

  
	
  Section 7.11. Money Held in Trust

  	
  83

  
	
   

  	
   

  
	
  ARTICLE 8

  	
   

  
	
  DEFEASANCE AND DISCHARGE

  	
   

  
	
   

  	
   

  
	
  Section 8.01. Legal Defeasance and Discharge

  	
  84

  
	
  Section 8.02. Covenant Defeasance

  	
  84

  
	
  Section 8.03. Conditions to Legal or Covenant Defeasance

  	
  85

  
	
  Section 8.04. Deposited Money and Government Securities to be Held in

  	
   

  
	
   

  	
  Trust; Other
  Miscellaneous Provisions

  	
  86

  
	
  Section 8.05. Repayment to Issuer

  	
  87

  
	
  Section 8.06. Reinstatement

  	
  87

  
	
  Section 8.07. Survival

  	
  88

  
	
  Section 8.08. Satisfaction and Discharge of Indenture

  	
  88

  
	
   

  	
   

  
	
  ARTICLE 9

  	
   

  
	
  AMENDMENTS, SUPPLEMENTS AND WAIVERS

  	
   

  
	
   

  	
   

  
	
  Section 9.01. Amendments Without Consent of Holders

  	
  89

  
	
  Section 9.02. Amendments with Consent of Holders

  	
  90

  
	
  Section 9.03. Effect of Consent

  	
  91

  
	
  Section 9.04. Trustee’s Rights and Obligations

  	
  92

  
	
  Section 9.05. Conformity with Trust Indenture Act

  	
  92

  
	
  Section 9.06. Payments for Consents

  	
  92

  
	
   

  	
   

  
	
  ARTICLE 10

  	
   

  
	
  RANKING OF LIENS

  	
   

  
	
   

  	
   

  
	
  Section 10.01. Agreement for the Benefit of Holders of First-Priority Liens

  	
  93

  
				



 


iv

















 


	
  Section 10.02. Notes, Guarantees and Other Second-Priority Lien

  	
   

  
	
   

  	
  Obligations not
  Subordinated

  	
  94

  
	
  Section 10.03. Relative Rights

  	
  94

  
	
   

  	
   

  
	
  ARTICLE 11

  	
   

  
	
  COLLATERAL AND SECURITY

  	
   

  
	
   

  	
   

  
	
  Section 11.01. Security Documents

  	
  95

  
	
  Section 11.02. Collateral Agent

  	
  96

  
	
  Section 11.03. Authorization of Actions to be Taken

  	
  97

  
	
  Section 11.04. Release of Second-Priority Liens

  	
  98

  
	
  Section 11.05. Filing, Recording and Opinions

  	
  100

  
	
   

  	
   

  
	
  ARTICLE 12

  	
   

  
	
  RELEASE OF ISSUER AND GUARANTORS

  	
   

  
	
   

  	
   

  
	
  Section 12.01. Release of Issuer

  	
  100

  
	
   

  	
   

  
	
  ARTICLE 13

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Section 13.01. Trust Indenture Act of 1939

  	
  101

  
	
  Section 13.02. Holder Communications; Holder Actions

  	
  101

  
	
  Section 13.03. Notices

  	
  102

  
	
  Section 13.04. Certificate and Opinion as to Conditions Precedent

  	
  103

  
	
  Section 13.05. Statements Required in Certificate or Opinion

  	
  104

  
	
  Section 13.06. Payment Date Other Than a Business Day

  	
  105

  
	
  Section 13.07. Governing Law

  	
  105

  
	
  Section 13.08. No Adverse Interpretation
  of Other Agreements

  	
  105

  
	
  Section 13.09. Successors

  	
  105

  
	
  Section 13.10. Duplicate Originals

  	
  105

  
	
  Section 13.11. Separability

  	
  105

  
	
  Section 13.12. Table of Contents and Headings

  	
  105

  
	
  Section 13.13. No Liability of Directors, Officers, Employees,
  Partners,

  	
   

  
	
   

  	
  Incorporators and
  Stockholders

  	
  106

  
	
  Section 13.14. Provisions of Indenture for the Sole Benefit of Parties and

  	
   

  
	
   

  	
  Holders of Notes

  	
  106

  
					



 


v

















 


EXHIBITS


 


	
  EXHIBIT A

  	
   

  	
  Form of Note

  
	
  EXHIBIT B

  	
   

  	
  Form of Supplemental Indenture

  
	
  EXHIBIT C

  	
   

  	
  Restricted Legend

  
	
  EXHIBIT D

  	
   

  	
  DTC Legend

  
	
  EXHIBIT E

  	
   

  	
  Regulation S Certificate

  
	
  EXHIBIT F

  	
   

  	
  Rule 144A Certificate

  
	
  EXHIBIT G

  	
   

  	
  Institutional Accredited Investor Certificate

  
	
  EXHIBIT H

  	
   

  	
  Certificate of Beneficial Ownership

  
	
  EXHIBIT I

  	
   

  	
  Regulation S Temporary Global Note Legend

  
	
  EXHIBIT J

  	
   

  	
  Unrestricted Subsidiaries

  



 


vi
















 


INDENTURE, dated as of May 27, 2008,
among K. HOVNANIAN ENTERPRISES, INC., a California corporation (the “Issuer”), HOVNANIAN ENTERPRISES, INC., a
Delaware corporation (the “Company”),
each of the other Guarantors (as defined hereafter) and DEUTSCHE BANK NATIONAL
TRUST COMPANY, a national banking association, as Trustee (the “Trustee”).


 


RECITALS


 


The Issuer has duly authorized the execution
and delivery of the Indenture to provide for the issuance of up to $600,000,000
aggregate principal amount of the Issuer’s 111/2%
Senior Secured Notes Due 2013 (together with any Exchange Notes issued therefor
as provided herein, the “Notes”).  All things necessary to make the Indenture a
valid agreement of the Issuer, in accordance with its terms, have been done,
and the Issuer has done all things necessary to make the Notes, when duly
issued and executed by the Issuer and authenticated and delivered by the
Trustee, the valid obligations of the Issuer as hereinafter provided.


 


In addition, the Guarantors party hereto have
duly authorized the execution and delivery of the Indenture as guarantors of
the Notes.  All things necessary to make
the Indenture a valid agreement of each Guarantor, in accordance with its
terms, have been done, and each Guarantor has done all things necessary to make
the Guarantees, when duly issued and executed by each Guarantor and when the
Notes have been authenticated and delivered by the Trustee, the valid
obligation of such Guarantor as hereinafter provided.


 


This Indenture is subject to, and will be
governed by, the provisions of the Trust Indenture Act that are required to be
a part of, and govern indentures qualified under, the Trust Indenture Act, provided that in each case the provisions of TIA §314(b) and
§314(d) shall only apply following qualification of this Indenture under
the TIA.


 


THIS INDENTURE WITNESSETH


 


For and in consideration of the premises and
the purchase of the Notes by the Holders thereof, the parties hereto covenant
and agree, for the equal and proportionate benefit of all Holders, as follows:


 


ARTICLE
1

DEFINITIONS AND INCORPORATION BY REFERENCE


 


Section 1.01.  Definitions.


 


“Acquired
Indebtedness” means (a) with respect to any Person that becomes
a Restricted Subsidiary (or is merged into the Company, the Issuer or any Restricted
Subsidiary) after the Issue Date, Indebtedness of such Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted


 


1

















 


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


 


“Additional
Interest” means additional interest or liquidated damages owed to
the Holders pursuant to a Registration Rights Agreement.


 


“Administrative Agent”
means the administrative agent under the Revolving Credit Agreement (and any
successor thereto).


 


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


 


“Affiliate Transaction”
has the meaning ascribed to it in Section 4.13 hereof.


 


“Agent”
means any Registrar, Paying Agent or Authenticating Agent.


 


“Agent
Member” means a member of, or a participant in, the Depositary.


 


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


 


“Asset
Disposition” means any sale, transfer, conveyance, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale


 


2

















 


and leaseback or sale of shares of Capital
Stock in any Subsidiary) (each, a “transaction”)
by the Company, the Issuer or any Restricted Subsidiary to any Person of any
Property having a Fair Market Value in any transaction or series of related
transactions of at least $5 million. The term “Asset
Disposition” shall not include:


 


(a)        a transaction between the Company, the
Issuer and any Restricted Subsidiary or a transaction between Restricted
Subsidiaries,


 


(b)        a transaction in the ordinary course of
business, including, without limitation, sales (directly or indirectly),
dedications and other donations to governmental authorities, leases and sales
and leasebacks of (i) homes, improved land and unimproved land and (ii) real
estate (including related amenities and improvements),


 


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


 


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


 


(e)        any sale, transfer, conveyance, lease or
other disposition of assets and properties that is governed by Section 4.14
hereof,


 


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


 


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


 


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


 


“Authenticating
Agent” refers to a Person engaged to authenticate the Notes in the
stead of the Trustee.


 


3

















 


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


 


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


 


“Business
Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York City or in the city where the Corporate Trust
Office of the Trustee is located are authorized or required by law or
regulation to close.


 


“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 Issue Date, including, without limitation, all
Disqualified Stock and Preferred Stock.


 


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


 


“Cash
Equivalents” means


 


(a)           U.S.
dollars;


 


(b)           securities
issued or directly and fully guaranteed or insured by the U.S. government or
any agency or instrumentality thereof having maturities of one year or less
from the date of acquisition;


 


(c)           certificates
of deposit and eurodollar time deposits with maturities of one year or less
from the date of acquisition, bankers’ acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million;


 


(d)           repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (b) and (c) entered into with any
financial institution meeting the qualifications specified in clause (c) above;


 


4

















 


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


 


(f)            investments
in money market funds substantially all of the assets of which consist of
securities described in the foregoing clauses (a) through (e).


 


“cash transaction”
has the meaning ascribed to it in Section 7.03 hereof.


 


“Certificate
of Beneficial Ownership” means a certificate substantially in the
form of Exhibit H.


 


“Certificated
Note” means a Note in registered individual form without interest
coupons.


 


“Change of
Control” means


 


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


 


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


 


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


 


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


 


(e)           a
change of control shall occur as defined in the instrument governing any
publicly traded debt securities of the Company or the Issuer which requires the
Company or the Issuer to repay or repurchase such debt securities.


 


“Clearstream”
means Clearstream Banking, société anonyme, Luxembourg, formerly Cedelbank.


 


5

















 


“Collateral”
means all property or assets of the Issuer and the Guarantors (whether now
owned or hereafter arising or acquired) that secures Second-Priority Lien
Obligations under the Security Documents.


 


“Collateral Agent”
means the Trustee acting as the collateral agent for the holders of the
Second-Priority Lien Obligations under the Security Documents and any successor
acting in such capacity.


 


“Collateralized Debt”
means (i) the aggregate principal amount of all Indebtedness and all
letters of credit secured by Liens on the Collateral and (ii) the
aggregate amount of all unfunded commitments under all credit facilities or
lines of credit secured by Liens on the Collateral but excluding Indebtedness,
letters of credit and unfunded commitments secured by Liens on the Collateral
that rank junior to the Liens on the Collateral securing the Notes.


 


“Commission”
means the Securities and Exchange Commission.


 


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


 


“Company”
has the meaning ascribed to it in the preamble hereof and shall also refer to
any successor obligor under the Indenture and its Guarantee(s).


 


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


 


(a)           income
taxes,


 


(b)           Consolidated
Interest Expense,


 


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


 


(d)           interest
and financing fees and expenses which were previously capitalized and which are
amortized to cost of sales, minus


 


all other non-cash items (other
than the receipt of notes receivable) increasing such Consolidated Net Income.


 


“Consolidated
Fixed Charge Coverage Ratio” means, with respect to any
determination date, the ratio of (x) Consolidated Cash Flow Available for


 


6

















 


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


 


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


 


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


 


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


 


7

















 


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


 


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


 


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


 


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


 


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


 


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


 


(a)           the
net income (or loss) of (x) any Unrestricted Subsidiary (other than a
Mortgage Subsidiary) or (y) any Person (other than a Restricted Subsidiary
or a Mortgage Subsidiary) in which any Person other than the Company, the
Issuer or any Restricted Subsidiary has an ownership interest, except, in each
case, to the extent that any such income has actually been received by the
Company, the Issuer or any Restricted Subsidiary in the form of cash dividends
or similar cash distributions during such period, which dividends or
distributions are not in excess of the Company’s, the Issuer’s or such
Restricted Subsidiary’s (as applicable) pro rata share of such Unrestricted
Subsidiary’s or such other Person’s net income earned during such period,


 


(b)           except
to the extent includable in Consolidated Net Income pursuant to the foregoing
clause (a), the net income (or loss) of any Person that accrued prior to the
date that (i) such Person becomes a Restricted Subsidiary or is


 


8

















 


merged with or into or consolidated with the
Company, the Issuer or any of its Restricted Subsidiaries (except, in the case
of an Unrestricted Subsidiary that is redesignated a Restricted Subsidiary during
such period, to the extent of its retained earnings from the beginning of such
period to the date of such redesignation) or (ii) the assets of such
Person are acquired by the Company or any Restricted Subsidiary,


 


(c)           the
net income of any Restricted Subsidiary to the extent that (but only so long
as) the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of that income is not permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary during such
period,


 


(d)           the
gains or losses, together with any related provision for taxes, realized during
such period by the Company, the Issuer or any Restricted Subsidiary resulting
from (i) the acquisition of securities, or extinguishment of Indebtedness,
of the Company or any Restricted Subsidiary or (ii) any Asset Disposition
by the Company or any Restricted Subsidiary, and


 


(e)           any
extraordinary gain or loss together with any related provision for taxes,
realized by the Company, the Issuer or any Restricted Subsidiary;


 


provided, further, that for purposes of
calculating Consolidated Net Income solely as it relates to clause (iii) of
Section 4.07(a) hereof, clause (d)(ii) above shall not be
applicable.


 


“Continuing
Director” means a director who either was a member of the Board of
Directors of the Company on the Issue Date or who became a director of the
Company subsequent to such date and whose election or nomination for election
by the Company’s stockholders was duly approved by a majority of the Continuing
Directors on the Board of Directors of the Company at the time of such
approval, either by a specific vote or by approval of the proxy statement
issued by the Company on behalf of the entire Board of Directors of the Company
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.


 


“Corporate
Trust Office” means the office of the Trustee at which the corporate
trust business of the Trustee is principally administered, which at the date of
the Indenture is located at 222 South Riverside Plaza, 25 Floor, MS CH 105-2502
Chicago, IL 60606-5808.


 


9

















 


“Covenant Defeasance”
has the meaning ascribed to it in Section 8.02 hereof.


 


“Credit
Facilities” means, collectively, each of the credit facilities and
lines of credit of the Company or one or more Restricted Subsidiaries in
existence, or entered into, on the Issue Date, including, without limitation,
the Revolving Credit Agreement, and one or more other facilities and lines of
credit among or between the Company or one or more Restricted Subsidiaries and
one or more lenders pursuant to which the Company 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.


 


“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.


 


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


 


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


 


“Depositary”
means the depositary of each Global Note, which will initially be DTC.


 


“Designation
Amount” has the meaning provided in the definition of “Unrestricted
Subsidiary.”


 


“Disqualified
Stock” means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, (a) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final maturity date of the Notes or (b) is convertible into
or exchangeable or exercisable for (whether at the option of the issuer or the
holder thereof) (i) debt securities or (ii) any Capital Stock
referred to in (a) above, in each case, at any time prior to the final
maturity date of the Notes; provided,
however, that any Capital Stock
that would not


 


10

















 


constitute Disqualified Stock but for
provisions thereof giving holders thereof (or the holders of any security into
or for which such Capital Stock is convertible, exchangeable or exercisable)
the right to require the Company to repurchase or redeem such Capital Stock
upon the occurrence of a change in control or asset disposition occurring prior
to the final maturity date of the Notes shall not constitute Disqualified Stock
if the change in control or asset disposition provision applicable to such
Capital Stock are no more favorable to such holders than Section 4.10 or Section 4.12
hereof (as applicable) and such Capital Stock specifically provides that the
Company will not repurchase or redeem any such Capital Stock pursuant to such
provisions prior to the Company’s repurchase of the Notes as are required
pursuant to Section 4.10 or Section 4.12 hereof (as applicable).


 


“DTC”
means The Depository Trust Company, a New York corporation.


 


“DTC Legend”
means the legend set forth in Exhibit D.


 


“Equity Offering”
means any public or private sale, after the Issue Date, of Qualified Stock of
the Company, other than (i) an Excluded Contribution, (ii) public
offerings registered on Form S-4 or S-8 or any successor form thereto or (iii) any
issuance pursuant to employee benefit plans or otherwise in compensation to
officers, directors or employees.


 


“Euroclear”
means Euroclear Bank S.A./N.V. and its successors or assigns, as operator of
the Euroclear System.


 


“Event of
Default” has the meaning ascribed to such term in Section 5.01.


 


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


 


“Exchange
Notes” means the notes of the Issuer issued under the Indenture in
exchange for, and in an aggregate principal amount equal to, the Initial Notes
in compliance with the terms of a Registration Rights Agreement and containing
terms substantially identical to the Initial Notes (except that (i) such
Exchange Notes will be registered under the Securities Act and will not be
subject to transfer restrictions or bear the Restricted Legend, and (ii) the
provisions relating to Additional Interest will be eliminated).


 


“Exchange
Offer” means an offer by the Issuer to the Holders of the Initial
Notes to exchange such Notes for Exchange Notes, as provided for in a
Registration Rights Agreement.


 


“Exchange
Offer Registration Statement” means the Exchange Offer Registration
Statement as defined in a Registration Rights Agreement.


 


11
















 


“Excluded Contribution”
means cash or Cash Equivalents received by the Company as capital contributions
to its equity (other than through the issuance of Disqualified Stock) or from
the issuance or sale (other than to a Subsidiary) of Qualified Stock of the
Company, in each case, after January 31, 2008 and to the extent designated
as an Excluded Contribution pursuant to an Officer’s Certificate of the
Company.


 


“Excluded Property”
means (a) any pledges of stock of a Guarantor to the extent that Rule 3-16
of Regulation S-X under the Securities Act requires or would require (or is
replaced with another rule or regulation, or any other law, rule or
regulation is adopted, that would require) the filing with the Commission of
separate financial statements of such Guarantor that are not otherwise required
to be filed, but only to the extent necessary to not be subject to such
requirement, (b) up to $50.0 million of assets received in connection with
Asset Dispositions and asset swaps or exchanges as permitted by paragraph (c) of
the definition of “Permitted Investment,” (c) personal property where the
cost of obtaining a security interest or perfection thereof exceeds its
benefits, (d) real property subject to a Lien securing Indebtedness
incurred for the purpose of financing the acquisition thereof, (e) real
property located outside the United States, (f) unentitled land, (g) real
property that is leased or held for the purpose of leasing to unaffiliated
third parties, (h) equity interests in Unrestricted Subsidiaries (subject
to future grants under the terms of the Indenture), (i) any real property
in a community under development with a dollar amount of investment as of the
most recent month-end (as determined in accordance with GAAP) of less than $2.0
million or with less than 10 lots remaining), (j) assets, with respect to
which any applicable law or contract prohibits the creation or perfection of
security interests therein, and (k) any other assets excluded from the
Collateral securing the First-Priority Lien Obligations, if any.


 


“expiration date”
has the meaning ascribed to it in Section 3.05(b) hereof.


 


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


 


“First-Priority Lien
Obligations” has the meaning ascribed to it under the definition of
“Permitted Liens”.


 


“First-Priority Liens”
means all Liens that secure the First-Priority Lien Obligations.


 


12

















 


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


 


“Global
Note” means a Note in registered, global form without interest
coupons.


 


“Guarantee”
means the guarantee of the Notes by each Guarantor under the Indenture.


 


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


 


“Guarantors”
means (a) initially, the Company and each of the other Guarantors signatory
hereto as set forth on Schedule A hereto, which includes each of the Company’s
Restricted Subsidiaries in existence on the Issue Date, other than the Issuer
and K. Hovnanian Poland, sp.zo.o. and (b) each of the Company’s
Subsidiaries that becomes a Guarantor of the Notes pursuant to the provisions
of this Indenture, and their successors, in each case until released from its
respective Guarantee pursuant to this Indenture.


 


“Holder”
or “Holder(s) of Notes” means the
Person in whose name a Note is registered in the books of the Registrar for the
Notes.


 


“incurrence” has
the meaning ascribed to it in Section 4.06(a) hereof.


 


“Indebtedness”
of any Person means, without duplication,


 


(a)           any
liability of such Person (i) for borrowed money or under any reimbursement
obligation relating to a letter of credit or other similar instruments (other
than standby letters of credit or similar instruments issued for the benefit


 


13

















 


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


 


(b)           any
Indebtedness of others that such Person has guaranteed to the extent of the
guarantee; provided,  however,
that Indebtedness of the Company and its Restricted Subsidiaries will not
include the obligations of the Company or a Restricted Subsidiary under
warehouse lines of credit of Mortgage Subsidiaries to repurchase mortgages at
prices no greater than 98% of the principal amount thereof, and upon any such
purchase the excess, if any, of the purchase price thereof over the Fair Market
Value of the mortgages acquired, will constitute Restricted Payments subject to
Section 4.07 hereof,


 


(c)           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


 


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


 


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


 


“Indenture”
means this indenture, as amended or supplemented from time to time.


 


14

















 


“Initial
Notes” means the notes of the Issuer issued under the Indenture on
the Issue Date and any Notes issued in replacement thereof, but not including
any Exchange Notes issued in exchange therefor.


 


“Initial
Purchasers” means the initial purchasers party to a purchase
agreement with the Issuer, the Company and the Guarantors party thereto
relating to the sale of the Initial Notes by the Issuer.


 


“Institutional
Accredited Investor Certificate” means a certificate substantially
in the form of Exhibit G hereto.


 


“Intercreditor Agreement”
means the Intercreditor Agreement dated on or about the Issue Date among the
Collateral Agent, the Administrative Agent, the Trustee, Wilmington Trust
Company, the Issuer, the Company and each other Guarantor named therein, as
such agreement may be amended, restated, supplemented or otherwise modified
from time to time.


 


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


 


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


 


“Interest
Payment Date” means each May 1 and November 1 of each
year, commencing November 1, 2008.


 


“Interest
Protection Agreement” of any Person means any interest rate swap
agreement, interest rate collar agreement, option or futures contract or other


 


15

















 


similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in interest rates with respect to Indebtedness permitted to be
incurred under the Indenture.


 


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


 


“Issue Date”
means May 27, 2008.


 


“Issuer” has the
meaning ascribed to it in the preamble hereof and shall also refer to any
successor obligor under the Indenture.


 


“Legal Defeasance”
has the meaning ascribed to it in Section 8.01 hereof.


 


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


 


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


 


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


 


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


 


“Net Cash
Proceeds” means with respect to an Asset Disposition, payments
received in cash (including any such payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
(including any cash received upon sale or disposition of such note or
receivable), but only as and when received), excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or


 


16

















 


other obligations relating to
the Property disposed of in such Asset Disposition or received in any other
non-cash form unless and until such non-cash consideration is converted into
cash therefrom, in each case, net of all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, and all federal,
state and local taxes required to be accrued as a liability under GAAP as a
consequence of such Asset Disposition, and in each case net of a reasonable
reserve for the after-tax cost of any indemnification or other payments (fixed
and contingent) attributable to the seller’s indemnities or other obligations
to the purchaser undertaken by the Company, the Issuer or any of its Restricted
Subsidiaries in connection with such Asset Disposition, and net of all payments
made on any Indebtedness which is secured by or relates to such Property (other
than Indebtedness secured by Liens on the Collateral) in accordance with the
terms of any Lien or agreement upon or with respect to such Property or which
such Indebtedness must by its terms or by applicable law be repaid out of the
proceeds from such Asset Disposition, and net of all contractually required
distributions and payments made to minority interest holders in Restricted
Subsidiaries or joint ventures as a result of such Asset Disposition.


 


“Non-Recourse
Indebtedness” with respect to any Person means Indebtedness of such
Person for which (a) the sole legal recourse for collection of principal
and interest on such Indebtedness is against the specific property 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 (b) no
other assets of such Person may be realized upon in collection of principal or
interest on such Indebtedness. Indebtedness which is otherwise Non-Recourse
Indebtedness will not lose its character as Non-Recourse Indebtedness because
there is recourse to the borrower, any guarantor or any other Person for (i) environmental
warranties and indemnities, or (ii) 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.


 


“Non-U.S.
Person” means a Person that is not a “U.S. person,” as such term is
defined in Regulation S.


 


“Notes”
has the meaning ascribed to such term in the Recitals.


 


“offer” has the
meaning ascribed to such term in Section 3.05(a).


 


“Obligations”
means with respect to any Indebtedness, all obligations (whether in existence
on the Issue Date or arising afterwards, absolute or contingent, direct or
indirect) for or in respect of principal (when due, upon acceleration, upon
redemption, upon mandatory repayment or repurchase pursuant


 


17

















 


to a mandatory offer to
purchase, or otherwise), premium, interest, penalties, fees, indemnification,
reimbursement and other amounts payable and liabilities with respect to such
Indebtedness, including all interest accrued or accruing after the commencement
of any bankruptcy, insolvency or reorganization or similar case or proceeding
at the contract rate (including, without limitation, any contract rate applicable
upon default) specified in the relevant documentation, whether or not the claim
for such interest is allowed as a claim in such case or proceeding.


 


“Offer to
Purchase” has the meaning ascribed to such term in Section 3.05(a).


 


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


 


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


 


“Opinion of
Counsel” means a written opinion signed by legal counsel of the
Issuer or the Company, who may be an employee of, or counsel to, the Issuer or
the Company, and who shall be reasonably satisfactory to the Trustee.


 


“Paying
Agent” refers to a Person engaged to perform the obligations of the
Trustee in respect of payments made or funds held hereunder in respect of the
Notes.


 


“Permanent
Regulation S Global Note” means a Regulation S Global Note that does
not bear the Regulation S Temporary Global Note Legend.


 


“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.


 


“Permitted
Indebtedness” means


 


18

















 


(a)           Indebtedness
under Credit Facilities which does not exceed $300.0 million principal amount
outstanding at any one time;


 


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


 


(c)           intercompany
debt obligations of (i) the Company to the Issuer, (ii) the Issuer to
the Company, (iii) the Company or the Issuer to any Restricted Subsidiary
and (iv) any Restricted Subsidiary to the Company or the Issuer or any
other Restricted Subsidiary; provided,
however, that any Indebtedness of
any Restricted Subsidiary or the Issuer or the Company owed to any Restricted
Subsidiary or the Issuer that ceases to be a Restricted Subsidiary shall be
deemed to be incurred and shall be treated as an incurrence for purposes of Section 4.06(a) hereof
at the time the Restricted Subsidiary in question ceases to be a Restricted
Subsidiary;


 


(d)           Indebtedness
of the Company or the Issuer or any Restricted Subsidiary under any Currency
Agreements or Interest Protection Agreements in a notional amount no greater
than the payments due (at the time the related Currency Agreement or Interest
Protection Agreement is entered into) with respect to the Indebtedness or
currency being hedged;


 


(e)           Purchase
Money Indebtedness and Capitalized Lease Obligations in an aggregate principal
amount outstanding at any one time not to exceed $25.0 million;


 


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


 


(g)           Indebtedness
secured only by office buildings owned or occupied by the Company or any Restricted
Subsidiary, which Indebtedness does not exceed $10 million aggregate principal
amount outstanding at any one time;


 


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


 


(i)            Indebtedness
of the Company or any Restricted Subsidiary which, together with all other
Indebtedness under this clause (i), does not exceed $50 million aggregate
principal amount outstanding at any one time.


 


“Permitted
Investment” means


 


(a)           Cash
Equivalents;


 


19

















 


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


 


(c)           any
receivables, loans or other consideration taken by the Company, the Issuer or
any Restricted Subsidiary in connection with any asset sale otherwise permitted
by the Indenture; provided that non-cash
consideration received in an Asset Disposition or an exchange or swap of assets
shall be pledged as Collateral under the Security Documents to the extent the
assets subject to such Asset Disposition or exchange or swap of assets
constituted Collateral, with the Lien on such Collateral securing the Notes
being of the same priority with respect to the Notes as the Lien on the assets
disposed of; provided further that
notwithstanding the foregoing clause, up to an aggregate of $50.0 million of (x) non-cash
consideration and consideration received as referred to in Section 4.10(b)(ii),
(y) assets invested in pursuant to Section 4.10(c) and (z) assets
received pursuant to clause (d) under the definition of “Asset
Disposition” may be designated by the Company or the Issuer as Excluded
Property not required to be pledged as Collateral;


 


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


 


(e)           Investments
in Currency Agreements or Interest Protection Agreements described in the
definition of “Permitted Indebtedness”;


 


(f)            any
loan or advance to an executive officer, director or employee of the Company or
any Restricted Subsidiary made in the ordinary course of business or in
accordance with past practice; provided,
however, that any such loan or
advance exceeding $1 million shall have been approved by the Board of Directors
of the Company or a committee thereof consisting of disinterested members;


 


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


 


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


 


20

















 


(i)            Investments
in an aggregate amount outstanding not to exceed $10 million.


 


“Permitted
Liens” means


 


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


 


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


 


(c)           Liens
(other than any Lien imposed by the Employer Retirement Income Security Act of
1974, as amended) incurred or deposits made in the ordinary course of business
in connection with workers’ compensation, unemployment insurance and other
types of social security,


 


(d)           Liens
incurred or deposits made to secure the performance of tenders, bids, leases,
statutory obligations, surety and appeal bonds, development obligations,
progress payments, government 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 (a)(i) of the definition
of “Indebtedness”), in each case incurred in the ordinary course of business of
the Company, the Issuer and the Restricted Subsidiaries,


 


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


 


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


 


(g)           zoning
restrictions, licenses, restrictions on the use of real property or minor
irregularities in title thereto, which do not materially impair the use of


 


21

















 


such real property in the
ordinary course of business of the Company, the Issuer and the Restricted
Subsidiaries,


 


(h)           Liens
securing Indebtedness incurred pursuant to clause (g) or (h) of the
definition of “Permitted Indebtedness”,


 


(i)            Liens
on the Collateral and other assets not constituting Collateral pursuant to
clauses (a) and (b) of the definition of ‘‘Excluded Property’’
securing: (a) the Notes, the Guarantees thereof and other Obligations
under the Indenture and the Security Documents and in respect thereof and any
obligations owing to the Trustee or the Collateral Agent under the Indenture or
the Security Documents; (b) (i) Indebtedness incurred under clause (a) of
the definition of “Permitted Indebtedness” (and all Obligations, including
letters of credit and similar instruments, incurred, issued or arising under
such secured Credit Facilities that permit borrowings not in excess of the
limit set out in such clause (a)) and Liens securing Refinancing Indebtedness
in respect thereof (which Refinancing Indebtedness is incurred under such
clause (a)), (ii) up to an additional $25.0 million of Indebtedness
otherwise permitted to be incurred under the Indenture (and all Obligations,
including letters of credit and similar instruments, incurred, issued or
arising thereunder) and Liens securing Refinancing Indebtedness in respect
thereof and (iii) Obligations under Currency Agreements and Interest
Protection Agreements entered into with agents or lenders under the
Indebtedness referred to in clause (i) or their affiliates, which Liens
incurred under this clause (b) may be on a first-lien priority basis
compared to the Notes on terms as set forth in the Intercreditor Agreement
(collectively, “First-Priority Lien Obligations”);
and (c) other Indebtedness permitted to be incurred under the Indenture
(and all Obligations in respect thereof); provided that (i) such
Indebtedness is Refinancing Indebtedness issued in exchange for or to refinance
Indebtedness of the Issuer outstanding on the Issue Date and (ii) the
Liens securing such Indebtedness rank junior to the Liens on the Collateral
securing the Notes on a basis substantially the same as the basis on which the
Liens securing the Notes are treated under the Intercreditor Agreement with respect
to the First-Priority Liens,


 


(j)            Liens
securing Non-Recourse Indebtedness of the Company, the Issuer 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,


 


(k)           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,


 


22

















 


(l)            Liens
on property or assets of the Company, the Issuer or any Restricted Subsidiary
securing Indebtedness of the Company, the Issuer or any Restricted Subsidiary
owing to the Company, the Issuer or one or more Restricted Subsidiaries (other
than K. Hovnanian Poland, sp.z.o.o.),


 


(m)          leases
or subleases granted to others not materially interfering with the ordinary
course of business of the Company and the Restricted Subsidiaries,


 


(n)           purchase
money security interests (including, without limitation, Capitalized Lease
Obligations); provided, that such
Liens apply only to the Property acquired and the related Indebtedness is
incurred within 90 days after the acquisition of such Property,


 


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


 


(p)           any
right of a lender or lenders to which the Company, the Issuer 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 the Company, the Issuer or a Restricted Subsidiary with or held by
such lender or lenders or its Affiliates,


 


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


 


(r)            Liens
for homeowner and property owner association developments and assessments,


 


(s)           Liens
securing Refinancing Indebtedness; provided,
that such Liens extend only to the assets securing the Indebtedness being
refinanced and have the same or junior priority as the initial Liens; provided  further that no
Liens may be incurred under this clause (s) in respect of Refinancing
Indebtedness incurred to refinance Indebtedness that is secured by Liens
incurred under clause (i)(b)(i) or (ii) above (it being understood
that Liens incurred in respect of such Indebtedness may only be refinanced
under such clause (i)(b)(i) or (ii)),


 


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


 


23
















 


(u)           Liens
on property of a Person existing at the time such Person is merged with or into
or consolidated with the Company or any Subsidiary of the Company or becomes a
Subsidiary of the Company; 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 the Company or the Subsidiary or
acquired by the Company or its Subsidiaries,


 


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


 


(w)          Liens
existing on the Issue Date (other than Liens securing Obligations under the
Revolving Credit Agreement or the Notes) and any extensions, renewals or
replacements thereof, and


 


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


 


“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.


 


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


 


“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 amount”
has the meaning ascribed to it in Section 3.05(b) hereof.


 


“purchase date”
has the meaning ascribed to it in Section 3.05(b) hereof.


 


“Purchase
Money Indebtedness” means Indebtedness of the Company, the Issuer 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 the Company, the
Issuer and the Restricted Subsidiaries; provided,
however, that (a) the
aggregate principal amount of such Indebtedness shall not exceed such purchase
price or


 


24

















 


cost and (b) such
Indebtedness shall be incurred no later than 90 days after the acquisition of
such property or completion of such construction or improvement.


 


“Qualified Collateral
Appraisal” has the meaning ascribed to it in Section 4.07(d) hereof.


 


“Qualified
Stock” means Capital Stock of the Company other than Disqualified
Stock.


 


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


 


“Record
Date” for the interest payable on any Interest Payment Date means
the April 15 or October 15 (whether or not a Business Day) next
preceding such Interest Payment Date.


 


“Refinancing
Indebtedness” means Indebtedness (to the extent not Permitted Indebtedness)
that refunds, refinances or extends any Indebtedness of the Company, the Issuer
or any Restricted Subsidiary (to the extent not Permitted Indebtedness)
outstanding on the Issue Date or other Indebtedness (to the extent not
Permitted Indebtedness) permitted to be incurred by the Company, the Issuer or
any Restricted Subsidiary pursuant to the terms of the Indenture, but only to
the extent that:


 


(a)           the
Refinancing Indebtedness is subordinated, if at all, to the Notes or the
Guarantees, as the case may be, to the same extent as the Indebtedness being
refunded, refinanced or extended (provided that
Refinancing Indebtedness issued to refund, refinance or extend Subordinated
Indebtedness outstanding as of the Issue Date (“Existing
Subordinated Debt”) need not be subordinated to the Notes or the
Guarantees, as the case may, so long as any Liens securing such Indebtedness
are junior to the Liens securing the Notes or the Guarantees, as the case may
be),


 


(b)           the
Refinancing Indebtedness is scheduled to mature either (i) no earlier than
the Indebtedness being refunded, refinanced or extended or (ii) after the
maturity date of the Notes (unless the Refinancing Indebtedness is in respect
of Existing Subordinated Debt and is secured by Liens on the Collateral, in
which case the Refinancing Indebtedness must be scheduled to mature after the
maturity date of the Notes),


 


(c)           the
portion, if any, of the Refinancing Indebtedness that is scheduled to mature on
or prior to the maturity date of the Notes 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


 


25

















 


portion of the Indebtedness
being refunded, refinanced or extended that is scheduled to mature on or prior
to the maturity date of the Notes, and


 


(d)           such
Refinancing Indebtedness is in an aggregate principal amount that is equal to
or less than the aggregate principal amount then outstanding under the
Indebtedness being refunded, refinanced or extended.


 


“Register”
has the meaning ascribed to such term in Section 2.09.


 


“Registrar”
means a Person engaged to maintain the Register.


 


“Registration
Rights Agreement” means the Registration Rights Agreement dated the
Issue Date among the Company, the Issuer, the other Guarantors party thereto
and the Initial Purchasers with respect to the Initial Notes.


 


“Regulation
S” means Regulation S under the Securities Act.


 


“Regulation
S Certificate” means a certificate substantially in the form of Exhibit E
hereto.


 


“Regulation
S Global Note” means a Global Note representing Notes issued and
sold pursuant to Regulation S.


 


“Regulation
S Temporary Global Note” means an Regulation S Global Note that
bears the Regulation S Temporary Global Note Legend.


 


“Regulation
S Temporary Global Note Legend” means the legend set forth in Exhibit I.


 


“Repurchase Date”
has the meaning ascribed to it in Section 4.12(a) hereof.


 


“Responsible Officer,”
when used with respect to the Trustee, means any officer of the Trustee with
direct responsibility for the administration of the trust created by this
Indenture.


 


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


 


“Restricted
Legend” means the legend set forth in Exhibit C.


 


“Restricted
Payment” means any of the following:


 


(a)           the
declaration or payment of any dividend or any other distribution on Capital
Stock of the Company, the Issuer or any Restricted


 


26

















 


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


 


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


 


(c)           any
Investment (other than any Permitted Investment), including any Investment in
an Unrestricted Subsidiary (including by the designation of a Subsidiary of the
Company as an Unrestricted Subsidiary) and any amounts paid in accordance with
clause (b) of the definition of “Indebtedness”;


 


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


 


“Restricted
Period” means the relevant 40-day “distribution compliance period”
as such term is defined in Regulation S, which, for each relevant Note, commences
on the date such Note is issued.


 


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


 


“Revolving Credit Agreement”
means that certain Seventh Amended and Restated Credit Agreement dated as of March 7,
2008, as amended by Amendment No. 1 thereto dated May 16, 2008, among
the Issuer, the Company, the Administrative Agent, and a syndicate of lenders,
as may be amended, restated, renewed, modified, refunded, replaced, revised,
restructured or refinanced in whole or in part from time to time, including to
extend the maturity thereof, to increase the amount of commitments thereunder (provided that any such increase is permitted under Section 4.06,
or to add Restricted Subsidiaries as additional borrowers or guarantors
thereunder, whether by the same or any other agent, lender or group of lenders
or investors and whether such revision, restructuring, amendment, restatement,
refunding, renewal, modification, replacement or refinancing is under one or
more credit facilities or commercial


 


27

















 


paper facilities, indentures or
other agreements, in each case with banks or other institutional lenders or
trustees or investors providing for revolving credit loans, term loans, notes
or letters or credit, together with related documents thereto (including,
without limitation, any guaranty agreements and security documents).


 


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


 


“Rule 144A
Certificate” means a certificate substantially in the form of Exhibit F
hereto.


 


“Rule 144A
Global Note” means a Global Note that bears the Restricted Legend
representing Notes issued and sold pursuant to Rule 144A.


 


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


 


“Second-Priority Liens”
means all Liens that secure the Second-Priority Lien Obligations.


 


“Second-Priority Lien
Obligations” means all Indebtedness and other Obligations under the
Indenture, the Notes, the Guarantees and the Security Documents.


 


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


 


“Security Documents”
means (i) the Intercreditor Agreement and (ii) the security documents
granting a security interest in any assets of any Person to secure the
Obligations under the Notes and the Guarantees as each may be amended,
restated, supplemented or otherwise modified from time to time.


 


“self-liquidating paper”
has the meaning ascribed to it in Section 7.03 hereof.


 


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


 


“Subordinated Indebtedness”
means Indebtedness subordinated in right of payment to the Notes pursuant to a
written agreement and includes any Indebtedness ranking equally in right of
payment to the Notes but unsecured or secured by the Collateral on a basis
entirely junior to that of the Notes.


 


“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


 


28

















 


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.


 


“Successor” has
the meaning ascribed to it in Section 4.14 hereof.


 


“Trustee”
means the party named as such in the preamble of this Indenture until
such time, if any, a successor replaces such party in accordance with the applicable
provisions of the Indenture and thereafter means the
successor serving hereunder.


 


“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended.


 


“U.S. Government Obligations” means non-callable,
non-payable bonds, notes, bills or other similar obligations issued or
guaranteed by the United States government or any agency thereof the full and
timely payment of which are backed by the full faith and credit of the United
States.


 


“Unrestricted
Subsidiary” means any Subsidiary of the Company so designated by a
resolution adopted by the Board of Directors of the Company or a duly
authorized committee thereof as provided below; provided, that (a) the holders of Indebtedness thereof
do not have direct or indirect recourse against the Company, the Issuer or any
Restricted Subsidiary, and neither the Company, the Issuer 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 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 the Company, the Issuer or a Restricted
Subsidiary and (b) 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 the Company, the Issuer or any Restricted
Subsidiary. As of the Issue Date, the Unrestricted Subsidiaries will be the
subsidiaries of the Company named in Exhibit J hereto.


 


Subject to the foregoing, the Board of
Directors of the Company or a duly authorized committee thereof may designate
any Subsidiary in addition to those named above to be an Unrestricted
Subsidiary; provided,  however,
that (a) the net amount (the “Designation
Amount”) then outstanding of all previous Investments by the Company
and the Restricted Subsidiaries in such Subsidiary will be deemed to be a
Restricted Payment at the time of such designation and will reduce the amount
available for Restricted Payments under Section 4.07


 


29

















 


hereof to the extent provided
therein, (b) the Company must be permitted under Section 4.07 hereof
to make the Restricted Payment deemed to have been made pursuant to clause (a),
and (c) after giving effect to such designation, no Default or Event of
Default shall have occurred or be continuing. In accordance with the foregoing,
and not in limitation thereof, Investments made by any Person in any Subsidiary
of such Person prior to such Person’s merger with the Company or any Restricted
Subsidiary (but not in contemplation or anticipation of such merger) shall not
be counted as an Investment by the Company or such Restricted Subsidiary if
such Subsidiary of such Person is designated as an Unrestricted Subsidiary.


 


The Board of Directors of the Company or a
duly authorized committee thereof may also redesignate an Unrestricted
Subsidiary to be a Restricted Subsidiary; provided,
however, that (a) the
Indebtedness of such Unrestricted Subsidiary as of the date of such
redesignation could then be incurred under Section 4.06 hereof and (b) immediately
after giving effect to such redesignation and the incurrence of any such
additional Indebtedness, the Company and the Restricted Subsidiaries could
incur $1.00 of additional Indebtedness under Section 4.06(a) hereof.
Any such designation or redesignation by the Board of Directors of the Company
or a committee thereof will be evidenced to the Trustee by the filing with the
Trustee of a certified copy of the resolution of the Board of Directors of the
Company or a committee thereof giving effect to such designation or
redesignation and an Officers’ Certificate certifying that such designation or
redesignation complied with the foregoing conditions and setting forth the
underlying calculations of such Officers’ Certificate. The designation of any
Person as an Unrestricted Subsidiary shall be deemed to include a designation
of all Subsidiaries of such Person as Unrestricted Subsidiaries; provided, however,
that the ownership of the general partnership interest (or a similar member’s
interest in a limited liability company) by an Unrestricted Subsidiary shall
not cause a Subsidiary of the Company of which more than 95% of the equity
interest is held by the Company or one or more Restricted Subsidiaries to be
deemed an Unrestricted Subsidiary.


 


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


 


“Wilmington Trust Company”
means Wilmington Trust Company in its capacity as Mortgage Tax Collateral Agent
with respect to Liens granted on real


 


30

















 


property located in certain
states identified under the Intercreditor Agreement and any successor thereto.


 


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


 


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


 


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


 


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


 


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


 


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


 


ARTICLE 2

THE NOTES


 


Section 2.01.  Form,
Dating and Denominations; Legends.  (a) The
Notes and the Trustee’s certificate of authentication will be substantially in
the form attached as Exhibit A.  The
terms and provisions contained in the form of the Note annexed as Exhibit A
constitute and are hereby expressly made a part of the Indenture.  The Notes may have notations, legends or
endorsements required by this Indenture, law, rules of or agreements with
national securities exchanges to which the Issuer is subject, or usage.  Each Note will be dated the date of its
authentication.  The Notes will be
issuable in denominations of $2,000 in principal amount and any multiple of
$1,000 in excess thereof.


 


(b)                                 (i)                                     Except
as otherwise provided in paragraph (c) or Section 2.09(b)(iv) or
Sections 2.10(b)(iii), (b)(v), or (c), each Initial Note will bear the
Restricted Legend.


 


(ii)                                  Each
Global Note will bear the DTC Legend.


 


(iii)                               Each
Regulation S Temporary Global Note will bear the Regulation S Temporary Global
Note Legend.


 


31

















 


(iv)                              Initial
Notes offered and sold in reliance on Regulation S will be issued as provided
in Section 2.11(a).


 


(v)                                 Initial
Notes offered and sold in reliance on any exception under the Securities Act
other than Regulation S and Rule 144A will be issued, and upon the request
of the Issuer to the Trustee, Initial Notes offered and sold in reliance on Rule 144A
may be issued, in the form of Certificated Notes.


 


(vi)                              Exchange
Notes will be issued, subject to Section 2.09(b), in the form of one or
more Global Notes.


 


(c)                                  (i)                                     If
the Issuer determines (upon the advice of counsel and after consideration of
other certifications and evidence as the Issuer may reasonably require) that a
Note is eligible for resale pursuant to Rule 144 under the Securities Act
(or a successor provision) without being subject to any conditions as provided
in such Rule and that the Restricted Legend is no longer necessary or
appropriate in order to ensure that subsequent transfers of the Note (or a
beneficial interest therein) are effected in compliance with the Securities
Act, or


 


(ii)                                  after
an Initial Note is


 


(A)                              sold
pursuant to an effective registration statement under the Securities Act, filed
pursuant to a Registration Rights Agreement or otherwise, or


 


(B)                                is
validly tendered for an Exchange Note pursuant to an Exchange Offer


 


then, the Issuer may instruct
the Trustee to cancel the Note and issue to the Holder thereof (or to its
transferee) a new Note of like tenor and amount, registered in the name of the
Holder thereof (or its transferee), that does not bear the Restricted Legend,
and the Trustee will comply with such instruction.


 


(d)                       By
its acceptance of any Note bearing the Restricted Legend (or any beneficial
interest in such a Note), each Holder thereof and each owner of a beneficial
interest therein acknowledges the restrictions on transfer of such Note (and
any such beneficial interest) set forth in this Indenture and in the Restricted
Legend and agrees that it will transfer such Note (and any such beneficial
interest) only in accordance with the Indenture and such legend.


 


Section 2.02.  Execution
and Authentication; Exchange Notes.  (a)  An Officer shall execute
the Notes for the Issuer by facsimile or manual signature in the name and on
behalf of the Issuer.  If an Officer
whose signature is on a Note


 


32

















 


no longer holds that office at
the time the Note is authenticated, the Note will still be valid.


 


(b)        A
Note will not be valid until the Trustee manually signs the certificate of
authentication on the Note, with the signature conclusive evidence that the
Note has been authenticated under the Indenture.


 


(c)        At
any time and from time to time after the execution and delivery of the
Indenture, the Issuer may deliver Notes executed by the Issuer to the Trustee
for authentication.  The Trustee will
authenticate and deliver:


 


(i)            Initial
Notes for original issue in the aggregate principal amount not to exceed
$600,000,000, and


 


(ii)           Exchange
Notes from time to time for issue in exchange for a like principal amount of
Initial Notes


 


after the following conditions
have been met:


 


(A)          Receipt
by the Trustee of a certificate, executed by an Officer specifying


 


(1)       the
amount of Notes to be authenticated and the date on which the Notes are to be
authenticated,


 


(2)       whether
the Notes are to be Initial Notes or Exchange Notes,


 


(3)       whether
the Notes are to be issued as one or more Global Notes or Certificated Notes,
and


 


(4)       other
information the Issuer may determine to include or the Trustee may reasonably
request.


 


(B)           In
the case of Exchange Notes, effectiveness of an Exchange Offer Registration
Statement and Consummation (as defined in the Registration Rights Agreement) of
the exchange offer thereunder (and receipt by the Trustee of an Officers’
Certificate to that effect).  Initial
Notes exchanged for Exchange Notes will be cancelled by the Trustee, who will
dispose of them in accordance with its normal procedures or the written
instructions of the Issuer.


 


Section 2.03.  Registrar,
Paying Agent and Authenticating Agent; Paying Agent to Hold Money in Trust.  (a) The Issuer
may appoint one or more Registrars


 


33

















 


and one or more Paying Agents,
and the Trustee may appoint an Authenticating Agent, in which case each
reference in the Indenture to the Trustee in respect of the obligations of the
Trustee to be performed by that Agent will be deemed to be references to the
Agent.  The Issuer may act as Registrar
or (except for purposes of Article 8) Paying Agent.  In each case, the Issuer and the Trustee will
enter into an appropriate agreement with the Agent implementing the provisions
of the Indenture relating to the obligations of the Trustee to be performed by
the Agent and the related rights.


 


(b)        The Issuer will require each Paying
Agent other than the Trustee to agree in writing that the Paying Agent will
hold in trust for the benefit of the Holders or the Trustee all money held by
the Paying Agent for the payment of principal of, premium, if any, and interest
and Additional Interest, if any, on, the Notes and will promptly notify the
Trustee of any default by the Issuer in making any such payment.  The Issuer at any time may require a Paying
Agent to pay all money held by it to the Trustee and account for any funds
disbursed, and the Trustee may at any time during the continuance of any
payment default, upon written request to a Paying Agent, require the Paying
Agent to pay all money held by it to the Trustee and to account for any funds
disbursed.  Upon doing so, the Paying
Agent will have no further liability for the money so paid over to the Trustee.


 


Section 2.04.  Replacement Notes.  If
a mutilated Note is surrendered to the Trustee or if a Holder claims that its
Note has been lost, destroyed or wrongfully taken, the Issuer will issue and the
Trustee will authenticate a replacement Note of like tenor and principal amount
and bearing a number not contemporaneously outstanding.  Every replacement Note is an additional
obligation of the Issuer and entitled to the benefits of the Indenture.  If required by the Trustee or the Issuer, an
indemnity must be furnished that is sufficient in the judgment of both the
Trustee and the Issuer to protect the Issuer and the Trustee from any loss they
may suffer if a Note is replaced.  The
Issuer may charge the Holder for the expenses of the Issuer and the Trustee in
replacing a Note.  In case the mutilated,
lost, destroyed or wrongfully taken Note has become or is about to become due
and payable, the Issuer in its discretion may pay the Note instead of issuing a
replacement Note.


 


Section 2.05.  Outstanding
Notes.  (a)  Notes
outstanding at any time are all Notes that have been authenticated by the
Trustee except for:


 


(i)         Notes
cancelled by the Trustee or delivered to it for cancellation;


 


(ii)        any
Note which has been replaced pursuant to Section 2.04 unless and until the
Trustee and the Issuer receive proof satisfactory to them that the replaced
Note is held by a bona  fide purchaser; and


 


34
















 


(iii)      on
or after the maturity date or any redemption date or date for purchase of the
Notes pursuant to an Offer to Purchase, those Notes payable or to be redeemed
or purchased on that date for which the Trustee (or Paying Agent, other than
the Issuer or an Affiliate of the Issuer) holds money sufficient to pay all
amounts then due.


 


(b)        A Note does not
cease to be outstanding because the Issuer or one of its Affiliates holds the
Note; provided, that in
determining whether the Holders of the requisite principal amount of the
outstanding Notes have given or taken any request, demand, authorization,
direction, notice, consent, waiver or other action hereunder, Notes owned by
the Issuer or any Affiliate of the Issuer will be disregarded and deemed not to
be outstanding (it being understood that in determining whether the Trustee is
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Notes which the Trustee knows to
be so owned will be so disregarded). 
Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee’s right so to act with respect to such Notes and that the pledgee is
not the Issuer or any Affiliate of the Issuer.


 


Section 2.06.  Temporary Notes.  Until
definitive Notes are ready for delivery, the Issuer may prepare and the Trustee
will authenticate temporary Notes. 
Temporary Notes will be substantially in the form of definitive Notes
but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the Officer executing the temporary Notes, as
evidenced by the execution of the temporary Notes.  If temporary Notes are issued, the Issuer
will cause definitive Notes to be prepared without unreasonable delay.  After the preparation of definitive Notes,
the temporary Notes will be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of the Issuer designated for the
purpose pursuant to Section 4.02 without charge to the Holder.  Upon surrender for cancellation of any
temporary Notes, the Issuer will execute and the Trustee will authenticate and
deliver in exchange therefor a like principal amount of definitive Notes of
authorized denominations.  Until so
exchanged, the temporary Notes will be entitled to the same benefits under the
Indenture as definitive Notes.


 


Section 2.07.  Cancellation.  The Issuer at any time may deliver
to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and may deliver to the Trustee for cancellation any Notes
previously authenticated hereunder which the Issuer has not issued and sold.  Any Registrar or the Paying Agent will
forward to the Trustee any Notes surrendered to it for transfer, exchange or
payment.  The Trustee will cancel all
Notes surrendered for transfer, exchange, payment or cancellation and dispose
of them in accordance with its normal procedures or the written instructions of
the Issuer.  The Issuer may not


 


35

















 


issue new Notes to replace Notes that it has
paid in full or delivered to the Trustee for cancellation, except for Exchange
Notes.


 


Section 2.08.  CUSIP and
ISIN Numbers.  The Issuer in
issuing the Notes may use “CUSIP” and “ISIN” numbers, and the Trustee will use
CUSIP numbers or ISIN numbers in notices of redemption or exchange or in Offers
to Purchase as a convenience to Holders, the notice to state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of redemption or exchange or Offer
to Purchase.  The Issuer will promptly
notify the Trustee of any change in the CUSIP or ISIN numbers.


 


Section 2.09.  Registration,
Transfer and Exchange.  (a)  The Notes will be issued
in registered form only, without coupons, and the Issuer shall cause the
Trustee to maintain a register (the “Register”)
of the Notes, for registering the record ownership of the Notes by the Holders
and transfers and exchanges of the Notes.


 


(b)              (i) Each
Global Note will be registered in the name of the Depositary or its nominee
and, so long as DTC is serving as the Depositary thereof, will bear the DTC
Legend.


 


(ii)       Each
Global Note will be delivered to the Trustee as custodian for the
Depositary.  Transfers of a Global Note
(but not a beneficial interest therein) will be limited to transfers thereof in
whole, but not in part, to the Depositary, its successors or their respective
nominees, except (A) as set forth in Section 2.09(b)(iv) and (B) transfers
of portions thereof in the form of Certificated Notes may be made upon request
of an Agent Member (for itself or on behalf of a beneficial owner) by 20 days’
prior written notice given to the Trustee by or on behalf of the Depositary in
accordance with customary procedures of the Depositary and in compliance with
this Section and Section 2.10.


 


(iii)      Agent
Members will have no rights under the Indenture with respect to any Global Note
held on their behalf by the Depositary, and the Depositary may be treated by
the Issuer, the Trustee and any agent of the Issuer or the Trustee as the
absolute owner and Holder of such Global Note for all purposes whatsoever.  Notwithstanding the foregoing, the Depositary
or its nominee may grant proxies and otherwise authorize any Person (including
any Agent Member and any Person that holds a beneficial interest in a Global
Note through an Agent Member) to take any action which a Holder is entitled to
take under the Indenture or the Notes, and nothing herein will impair, as
between the Depositary and its Agent Members, the operation of customary
practices governing the exercise of the rights of a holder of any security.


 


36

















 


(iv)     If
(x) the Depositary (i) notifies the Issuer that it is unwilling or
unable to continue as Depositary for a Global Note and a successor depositary
is not appointed by the Issuer within 90 days of the notice or (ii) has
ceased to be a clearing agency registered under the Exchange Act, (y) the
Issuer, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Certificated Notes or (z) a Default or an Event of Default
with respect to the Notes has occurred and is continuing, the Trustee will
promptly exchange each beneficial interest in the Global Note for one or more
Certificated Notes in authorized denominations having an equal aggregate
principal amount registered in the name of the owner of such beneficial
interest, as identified to the Trustee by the Depositary, and thereupon the
Global Note will be deemed canceled.  If
such Note does not bear the Restricted Legend, then the Certificated Notes
issued in exchange therefor will not bear the Restricted Legend.  If such Note bears the Restricted Legend,
then the Certificated Notes issued in exchange therefor will bear the
Restricted Legend; provided, that
any Holder of any such Certificated Note issued in exchange for a beneficial
interest in a Regulation S Temporary Global Note will have the right upon
presentation to the Trustee of a duly completed Certificate of Beneficial
Ownership after the Restricted Period to exchange such Certificated Note for a
Certificated Note of like tenor and amount that does not bear the Restricted
Legend, registered in the name of such Holder.


 


(c)        Each Certificated Note will be registered in the name of the
holder thereof or its nominee.


 


(d)        A Holder may transfer a Note (or a beneficial interest
therein) to another Person or exchange a Note (or a beneficial interest
therein) for another Note or Notes of any authorized denomination by presenting
to the Trustee a written request therefor stating the name of the proposed
transferee or requesting such an exchange, accompanied by any certification,
opinion or other document required by Section 2.10.  The Trustee will promptly register any
transfer or exchange that meets the requirements of this Section and Section 2.10
noting the same in the register maintained by the Trustee for the purpose; provided, that


 


(i)        no
transfer or exchange will be effective until it is registered in such register,
and


 


(ii)       the
Trustee will not be required (x) to issue, register the transfer of or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed or purchased pursuant to an Offer to Purchase, (y) to register
the transfer of or exchange any Note so selected for redemption or purchase in
whole or in part, except, in the case of a partial redemption or purchase, that
portion of any Note not being redeemed or


 


37

















 


purchased, or (z) if a redemption or a purchase pursuant to an
Offer to Purchase is to occur after a Record Date but on or before the
corresponding Interest Payment Date, to register the transfer of or exchange
any Note on or after the Record Date and before the date of redemption or
purchase.  Prior to the registration of
any transfer, the Issuer, the Trustee and their agents will treat the Person in
whose name the Note is registered as the owner and Holder thereof for all
purposes (whether or not the Note is overdue), and will not be affected by
notice to the contrary.


 


From time to time the Issuer will execute and the Trustee
will authenticate additional Notes as necessary in order to permit the
registration of a transfer or exchange in accordance with this Section.


 


No service charge will be imposed in connection with
any transfer or exchange of any Note, but the Issuer may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than a transfer tax or other similar
governmental charge payable upon exchange pursuant to subsection (b)(iv)).


 


(e)         (i) 
Global Note to Global Note.  If a beneficial interest in a Global Note is
transferred or exchanged for a beneficial interest in another Global Note, the
Trustee will (x) record a decrease in the principal amount of the Global
Note being transferred or exchanged equal to the principal amount of such
transfer or exchange and (y) record a like increase in the principal
amount of the other Global Note.  Any
beneficial interest in one Global Note that is transferred to a Person who
takes delivery in the form of an interest in another Global Note, or exchanged
for an interest in another Global Note, will, upon transfer or exchange, cease
to be an interest in such Global Note and become an interest in the other
Global Note and, accordingly, will thereafter be subject to all transfer and
exchange restrictions, if any, and other procedures applicable to beneficial
interests in such other Global Note for as long as it remains such an interest.


 


(ii)           Global Note to Certificated Note.  If a beneficial interest in a Global Note is
transferred or exchanged for a Certificated Note, the Trustee will (x) record
a decrease in the principal amount of such Global Note equal to the principal
amount of such transfer or exchange and (y) deliver one or more new
Certificated Notes in authorized denominations having an equal aggregate
principal amount to the transferee (in the case of a transfer) or the owner of
such beneficial interest (in the case of an exchange), registered in the name
of such transferee or owner, as applicable.


 


38

















 


(iii)          Certificated Note to Global Note.  If a Certificated Note is transferred or
exchanged for a beneficial interest in a Global Note, the Trustee will (x) cancel
such Certificated Note, (y) record an increase in the principal amount of
such Global Note equal to the principal amount of such transfer or exchange and
(z) in the event that such transfer or exchange involves less than the
entire principal amount of the canceled Certificated Note, deliver to the
Holder thereof one or more new Certificated Notes in authorized denominations
having an aggregate principal amount equal to the untransferred or unexchanged
portion of the canceled Certificated Note, registered in the name of the Holder
thereof.


 


(iv)          Certificated Note to Certificated Note.  If a Certificated Note is transferred or
exchanged for another Certificated Note, the Trustee will (x) cancel the
Certificated Note being transferred or exchanged, (y) deliver one or more
new Certificated Notes in authorized denominations having an aggregate
principal amount equal to the principal amount of such transfer or exchange to
the transferee (in the case of a transfer) or the Holder of the canceled
Certificated Note (in the case of an exchange), registered in the name of such
transferee or Holder, as applicable, and (z) if such transfer or exchange
involves less than the entire principal amount of the canceled Certificated
Note, deliver to the Holder thereof one or more Certificated Notes in
authorized denominations having an aggregate principal amount equal to the
untransferred or unexchanged portion of the canceled Certificated Note,
registered in the name of the Holder thereof.


 


Section 2.10.  Restrictions
on Transfer and Exchange.  (a) The transfer or exchange
of any Note (or a beneficial interest therein) may only be made in accordance
with this Section and Section 2.09 and, in the case of a Global Note
(or a beneficial interest therein), the applicable rules and procedures of
the Depositary.  The Trustee shall refuse
to register any requested transfer or exchange that does not comply with the
preceding sentence.


 


(b)      Subject to paragraph (c), the transfer or exchange of any Note
(or a beneficial interest therein) of the type set forth in column A below for a
Note (or a beneficial interest therein) of the type set forth opposite in
column B below may only be made in compliance with the certification
requirements (if any) described in the clause of this paragraph set forth
opposite in column C below.


 


	
  A

  	
   

  	
  B

  	
   

  	
  C

  
	
  Rule 144A
  Global Note

  	
   

  	
  Rule 144A
  Global Note

  	
   

  	
  (i)

  
	
  Rule 144A
  Global Note

  	
   

  	
  Regulation
  S Global Note

  	
   

  	
  (ii)

  
	
  Rule 144A
  Global Note

  	
   

  	
  Certificated
  Note

  	
   

  	
  (iii)

  
	
  Regulation
  S Global Note

  	
   

  	
  Rule 144A
  Global Note

  	
   

  	
  (iv)

  
	
  Regulation
  S Global Note

  	
   

  	
  Regulation
  S Global Note

  	
   

  	
  (i)

  



 


39

















 


	
  A

  	
   

  	
  B

  	
   

  	
  C

  
	
  Regulation
  S Global Note

  	
   

  	
  Certificated
  Note

  	
   

  	
  (v)

  
	
  Certificated
  Note

  	
   

  	
  Rule 144A
  Global Note

  	
   

  	
  (iv)

  
	
  Certificated
  Note

  	
   

  	
  Regulation
  S Global Note

  	
   

  	
  (ii)

  
	
  Certificated
  Note

  	
   

  	
  Certificated
  Note

  	
   

  	
  (iii)

  



 






	
  (i)

  	
   

  	
  No certification is required.

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  The Person requesting the transfer or exchange
  must deliver or cause to be delivered to the Trustee a duly 

  
	
  completed Regulation S Certificate; provided, that if the requested transfer
  or exchange is made by the Holder of a Certificated Note that does not bear
  the Restricted Legend, then no certification is required.

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  The Person requesting the transfer or exchange
  must deliver or cause to be delivered to the Trustee (x) a 

  
	
  duly completed Rule 144A Certificate,
  (y) a duly completed Regulation S Certificate or (z) a duly
  completed Institutional Accredited Investor Certificate, and/or an opinion of
  counsel and such other certifications and evidence as the Issuer or the Trustee
  may reasonably require in order to determine that the proposed transfer or
  exchange is being made in compliance with the Securities Act and any
  applicable securities laws of any state of the United States; provided, that if the requested transfer
  or exchange is made by the Holder of a Certificated Note that does not bear
  the Restricted Legend, then no certification is required. In the event that a
  Rule 144A Global Note or a Certificated Note that does not bear the
  Restricted Legend is surrendered for transfer or exchange, upon transfer or
  exchange the Trustee will deliver a Certificated Note that does not bear the
  Restricted Legend.

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  The Person requesting the transfer or exchange
  must deliver or cause to be delivered to the Trustee a duly 

  
	
  completed Rule 144A Certificate and must
  comply with all applicable securities laws of any state of the United States
  or any other jurisdiction.

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  If the requested transfer involves a beneficial
  interest in a Regulation S Temporary Global Note, the 

  
	
  Person requesting the registration of transfer
  must deliver or cause to be delivered to the Trustee (x) a duly
  completed Rule 144A Certificate or (y) a duly completed
  Institutional Accredited Investor Certificate and/or an opinion of counsel
  and such other certifications and evidence as the Issuer or the Trustee may
  reasonably require in order to determine that the proposed transfer is being
  made in compliance with the Securities Act and any applicable securities laws
  of any state of the United States. If the requested transfer or

  



 


40

















 


exchange involves a beneficial interest in a Permanent Regulation S
Global Note, no certification is required and the Trustee will deliver a
Certificated Note that does not bear the Restricted Legend.  Notwithstanding anything to the contrary
contained herein, no such exchange is permitted if the requested exchange
involves a beneficial interest in a Regulation S Temporary Global Note.


 


(c)        No certification is
required in connection with any transfer or exchange of any Note (or a
beneficial interest therein)


 


(i)        after
such Note is eligible for resale pursuant to Rule 144 under the Securities
Act (or a successor provision) without being subject to any conditions as
provided in such Rule; provided,
that the Issuer has provided the Trustee with a certificate to that effect, and
the Issuer or the Trustee may require from any Person requesting a transfer or
exchange in reliance upon this clause (i) an opinion of counsel and any
other reasonable certifications and evidence in order to support such
certificate; or


 


(ii)       (A) sold
pursuant to an effective registration statement under the Securities Act, filed
pursuant to a Registration Rights Agreement or otherwise (B) which is
validly tendered for exchange into an Exchange Note pursuant to an Exchange
Offer.


 


Any Certificated Note delivered in reliance upon
this paragraph will not bear the Restricted Legend.


 


(d)        The Trustee will retain copies of all certificates, opinions
and other documents received in connection with the transfer or exchange of a
Note (or a beneficial interest therein), and the Issuer will have the right to
inspect and make copies thereof at any reasonable time upon written notice to
the Trustee.


 


Section 2.11.  Regulation
S Temporary Global Notes.  (a) Each Note originally sold
by the Initial Purchasers in reliance upon Regulation S will be evidenced by
one or more Regulation S Global Notes that bear the Regulation S Temporary
Global Note Legend.


 


(b)        An owner of a beneficial interest in a Regulation S Temporary
Global Note (or a Person acting on behalf of such an owner) may provide to the
Trustee (and the Trustee will accept) a duly completed Certificate of
Beneficial Ownership at any time after the Restricted Period (it being understood
that the Trustee will not accept any such certificate during the Restricted
Period).  Promptly after acceptance of a
Certificate of Beneficial Ownership with respect to such a beneficial interest,
the Trustee will cause such beneficial interest to be exchanged for an
equivalent beneficial interest in a Permanent Regulation S


 


41

















 


Global Note, and will (x) permanently
reduce the principal amount of such Regulation S Temporary Global Note by the
amount of such beneficial interest and (y) increase the principal amount
of such Permanent Regulation S Global Note by the amount of such beneficial
interest.


 


(c)        Notwithstanding anything to the contrary contained herein,
beneficial interests in a Regulation S Temporary Global Note may be held
through the Depositary only through Euroclear or Clearstream and their
respective direct and indirect participants.


 


(d)        Notwithstanding paragraph (b), if after the Restricted Period
any Initial Purchaser owns a beneficial interest in a Regulation S Temporary
Global Note, such Initial Purchaser may, upon written request to the Trustee
accompanied by a certification as to its status as an Initial Purchaser,
exchange such beneficial interest for an equivalent beneficial interest in a
Permanent Regulation S Global Note, and the Trustee will comply with such
request and will (x) permanently reduce the principal amount of such
Regulation S Temporary Global Note by the amount of such beneficial interest
and (y) increase the principal amount of such Permanent Regulation S
Global Note by the amount of such beneficial interest.


 


ARTICLE 3

REDEMPTION; OFFER TO PURCHASE


 


Section 3.01.  Optional
Redemption.  At any time and from time to time on or
after November 1, 2010, the Issuer may redeem the Notes, in whole or in
part, at a redemption price equal to the percentage of principal amount set
forth below plus accrued and unpaid interest and Additional Interest thereon,
if any, to the applicable redemption date.


 


	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  November 1, 2010

  	
   

  	
  102

  	
  %

  
	
  May 1, 2011

  	
   

  	
  101

  	
  %

  
	
  May 1, 2012

  	
   

  	
  100

  	
  %

  



 


Section 3.02.  Redemption with Proceeds of
Equity Offering.  At any time
and from time to time prior to May 1, 2011, the Issuer may redeem Notes
with the net cash proceeds received by the Issuer from any Equity Offering at a
redemption price equal to 111.50% of the principal amount plus accrued and
unpaid interest to the redemption date, in an aggregate principal amount for
all such redemptions not to exceed 35% of the original aggregate principal
amount of the Notes, provided that:


 


42

















 


(i)            in each case the redemption takes
place not later than 60 days after the closing of the related Equity Offering,
and


 


(ii)           not less than 65% of the original
aggregate principal amount of the Notes remains outstanding immediately
thereafter.


 


Section 3.03.  Sinking Fund; Mandatory
Redemption.  There is no
sinking fund for, or mandatory redemption of, the Notes.


 


Section 3.04.  Method and Effect of
Redemption.  (a) If the
Issuer elects to redeem Notes, it must notify the Trustee of the redemption
date and the principal amount of Notes to be redeemed by delivering an Officers’
Certificate at least 45 days before the redemption date (unless a shorter
period is satisfactory to the Trustee). 
If fewer than all of the Notes are being redeemed, the Officers’
Certificate must also specify a record date not less than 15 days after the
date of the notice of redemption is given to the Trustee, and the Trustee will
select the Notes to be redeemed pro rata, or as nearly a pro rata basis as is
practicable (subject to the procedures of DTC), unless such method is otherwise
prohibited, in which case, by lot or by any other method the Trustee in its
sole discretion deems fair and appropriate, in denominations of $2,000
principal amount and multiples of $1,000 in excess thereof.  The Trustee will notify the Issuer promptly
of the Notes or portions of Notes to be called for redemption.  Notice of redemption must be sent by the
Issuer or, at the Issuer’s request, by the Trustee in the name and at the
expense of the Issuer to Holders whose Notes are to be redeemed at least 30
days but not more than 60 days before the redemption date.  Notices of redemption may not be conditional.


 


(b)        The notice of redemption will identify the Notes to be
redeemed and will include or state the following:


 


(i)                       the redemption
date;


 


(ii)                    the redemption
price, including the portion thereof representing any accrued interest or
Additional Interest, if any;


 


(iii)                 the place or
places where Notes are to be surrendered for redemption (Notes called for
redemption must be so surrendered in order to collect the redemption price);


 


(iv)                that on the
redemption date, the redemption price will become due and payable on Notes
called for redemption, and interest on Notes called for redemption will cease
to accrue on and after the redemption date;


 


43
















 


(v)                   that
if any Note is redeemed in part, the portion of the principal amount thereof to
be redeemed, and that on and after the redemption date, upon surrender of such
Note, new Notes equal in principal amount to the unredeemed portion will be
issued; and


 


(vi)                if
any Note contains a CUSIP or ISIN number, no representation is being made as to
the correctness of the CUSIP or ISIN number either as printed on the Notes or
as contained in the notice of redemption and that the Holder should rely only
on the other identification numbers printed on the Notes.


 


(c)                        Once
notice of redemption is sent to the Holders, Notes called for redemption become
due and payable at the redemption price on the redemption date, and upon
surrender of the Notes called for redemption, the Issuer shall redeem such
Notes at the redemption price. 
Commencing on the redemption date, Notes redeemed will cease to accrue
interest.  Upon surrender of any Note
redeemed in part, the Holder will receive a new Note equal in principal amount
to the unredeemed portion of the surrendered Note.


 


Section 3.05.  Offer to
Purchase.  (a) An “Offer to Purchase” means an offer by the
Issuer to purchase Notes as required by the Indenture.  An Offer to Purchase must be made by written
offer (the “offer”) sent to the
Holders.  The Issuer will notify the
Trustee at least 15 days (or such shorter period as is acceptable to the
Trustee) prior to sending the offer to Holders of its obligation to make an
Offer to Purchase, and the offer will be sent by the Issuer or, at the Issuer’s
request, by the Trustee in the name and at the expense of the Issuer.


 


(b)                       The offer
must include or state the following as to the terms of the Offer to Purchase:


 


(i)                       the
provision of the Indenture pursuant to which the Offer to Purchase is being
made;


 


(ii)                    the
aggregate principal amount of the outstanding Notes offered to be purchased by
the Issuer pursuant to the Offer to Purchase (including, if less than 100%, the
manner by which such amount has been determined pursuant to the Indenture) (the
“purchase amount”);


 


(iii)                 the
purchase price, including the portion thereof representing accrued interest and
Additional Interest, if any;


 


(iv)                an
expiration date (the “expiration date”)
not less than 30 days or more than 60 days after the date of the offer, and a
settlement date for purchase (the “purchase
date”) not more than five Business Days after the expiration date;


 


44

















 


(v)                   information
concerning the business of the Company, the Issuer and its Subsidiaries which
the Issuer in good faith believes will enable the Holders to make an informed
decision with respect to the Offer to Purchase, at a minimum to include:


 


(A)                    the
most recent annual and quarterly financial statements and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” for
the Company,


 


(B)                      a
description of material developments in the Company’s business subsequent to
the date of the latest of the financial statements (including a description of
the events requiring the Issuer to make the Offer to Purchase), and


 


(C)                      if
applicable, appropriate pro forma
financial information concerning the Offer to Purchase and the events requiring
the Issuer to make the Offer to Purchase;


 


(vi)                a
Holder may tender all or any portion of its Notes, subject to the requirement
that any portion of a Note tendered must be in denominations of $2,000
principal amount and any multiple of $1,000 in excess thereof;


 


(vii)             the
place or places where Notes are to be surrendered for tender pursuant to the
Offer to Purchase;


 


(viii)          each
Holder electing to tender a Note pursuant to the offer will be required to
surrender such Note at the place or places specified in the offer prior to the
close of business on the expiration date (such Note being, if the Issuer or the
Trustee so requires, duly endorsed or accompanied by a duly executed written
instrument of transfer);


 


(ix)                  interest
on any Note not tendered, or tendered but not purchased by the Issuer pursuant
to the Offer to Purchase, will continue to accrue;


 


(x)                     on
the purchase date the purchase price will become due and payable on each Note
accepted for purchase, and interest on Notes purchased will cease to accrue on
and after the purchase date;


 


(xi)                  Holders
are entitled to withdraw Notes tendered by giving notice, which must be
received by the Issuer or the Trustee not later than the close of business on
the expiration date, setting forth the name of the Holder, the principal amount
of the tendered Notes, the certificate number 


 


45

















 


of the tendered Notes and a statement that the Holder is withdrawing
all or a portion of the tender;


 


(xii)               (A) if
Notes in an aggregate principal amount less than or equal to the purchase
amount are duly tendered and not withdrawn pursuant to the Offer to Purchase,
the Issuer will purchase all such Notes, and (B) if the Offer to Purchase
is for less than all of the outstanding Notes and Notes in an aggregate
principal amount in excess of the purchase amount are tendered and not
withdrawn pursuant to the offer, the Issuer will purchase Notes having an
aggregate principal amount equal to the purchase amount on a pro rata basis, with adjustments so that
only Notes in denominations of $2,000 principal amount and any multiples of
$1,000 in excess thereof will be purchased;


 


(xiii)            if
any Note is purchased in part, new Notes equal in principal amount to the
unpurchased portion of the Note will be issued; and


 


(xiv)           if
any Note contains a CUSIP or ISIN number, no representation is being made as to
the correctness of the CUSIP or ISIN number either as printed on the Notes or
as contained in the offer and that the Holder should rely only on the other
identification numbers printed on the Notes.


 


(c)                        Prior to
the purchase date, the Issuer will accept tendered Notes for purchase as
required by the Offer to Purchase and deliver to the Trustee all Notes so
accepted together with an Officers’ Certificate specifying which Notes have
been accepted for purchase.  On the purchase
date, the purchase price will become due and payable on each Note accepted for
purchase, and interest on Notes purchased will cease to accrue on and after the
purchase date.  The Trustee will promptly
return to Holders any Notes not accepted for purchase and send to Holders new
Notes equal in principal amount to any unpurchased portion of any Notes
accepted for purchase in part.


 


(d)                       The Issuer
will comply with Rule 14e-1 under the Exchange Act and all other
applicable laws in making any Offer to Purchase, and the above procedures will
be deemed modified as necessary to permit such compliance.


 


ARTICLE 4

COVENANTS


 


Section 4.01.  Payment of
Notes.   (a)  The
Issuer agrees to pay the principal of, premium, if any, and interest and
Additional Interest, if any, on the Notes on the dates and in the manner
provided in the Notes and the Indenture. 



 


46

















 


The Issuer shall pay Additional Interest in
the amounts set forth in the Registration Rights Agreement.  Not later than 9:00 A.M. (New York City
time) on the due date of any principal of, premium, if any, or interest and
Additional Interest, if any, on, any Notes, or any redemption or purchase price
of the Notes, the Issuer will deposit with the Trustee (or Paying Agent) money
in immediately available funds sufficient to pay such amounts; provided, that if the Issuer or any
Affiliate of the Issuer is acting as Paying Agent, it will, on or before each
due date, segregate and hold in a separate trust fund for the benefit of the
Holders a sum of money sufficient to pay such amounts until paid to such
Holders or otherwise disposed of as provided in the Indenture.  In each case the Issuer will promptly notify
the Trustee of its compliance with this paragraph.


 


(b)        An installment of
principal, premium, if any, or interest and Additional Interest, if any, will
be considered paid on the date due if the Trustee (or Paying Agent, other than
the Issuer or any Affiliate of the Issuer) holds on that date money designated
for and sufficient to pay the installment. 
If the Issuer or any Affiliate of the Issuer acts as Paying Agent, an
installment of principal, premium, if any, or interest and Additional Interest,
if any, will be considered paid on the due date only if paid to the Holders.


 


(c)        The Issuer agrees to
pay interest on overdue principal, and, to the extent lawful, overdue
installments of interest and Additional Interest at the rate per annum
specified in the Notes.


 


(d)        Payments in respect of
the Notes represented by the Global Notes are to be made by wire transfer of
immediately available funds to the accounts specified by the Holders of the
Global Notes. With respect to Certificated Notes, the Issuer will make all
payments by wire transfer of immediately available funds to the accounts
specified by the Holders thereof or, if no such account is specified, by
mailing a check to each Holder’s registered address.


 


Section 4.02.  Maintenance
of Office or Agency.  The
Company and the Issuer will maintain an office or agency where Notes may be
surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company and the Issuer in
respect of the Notes and the Indenture may be served.  The Issuer and the Company hereby initially
designate the Corporate Trust Office of the Trustee as such office of the
Issuer and the Company.  The Issuer will
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. 
If at any time the Issuer and the Company fail to maintain any such
required office or agency or fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served to the Trustee.


 


47

















 


The Issuer may
also from time to time designate one or more other offices or agencies where
the Notes may be surrendered or presented for any of such purposes and may from
time to time rescind such designations. 
The Issuer will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.


 


Section 4.03.  Existence.  The Company and the Issuer will
each do or cause to be done all things necessary to preserve and keep in full
force and effect their existence and the existence of each of the Restricted
Subsidiaries in accordance with their respective organizational documents, and
the material rights, licenses and franchises of the Company, the Issuer and
each Restricted Subsidiary; provided,
that the Company and the Issuer 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 the Company and its Restricted Subsidiaries taken as a whole;
and provided, further, that this Section not
prohibit any transaction otherwise permitted by Section 4.10 or Section 4.14.


 


Section 4.04.  Payment of
Taxes and Other Claims.  The
Company will pay or discharge, and cause each of its Subsidiaries to pay or
discharge before the same become delinquent (a) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Subsidiary or its income or profits or property, and (b) all material
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a Lien upon the property of the Company 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.


 


Section 4.05.  Maintenance
of Properties and Insurance. (a)  The Company 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 the Company may be necessary so
that the business of the Company and its Restricted Subsidiaries may be
properly and advantageously conducted at all times; provided, that nothing in this Section prevents the
Company 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 the Company, desirable in the
conduct of the business of the Company and its Restricted Subsidiaries taken as
a whole.


 


(b)        The Company 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 


 


48

















 


amounts, with such deductibles and by such
methods as are customary for corporations similarly situated in the industry in
which the Company and its Restricted Subsidiaries are then conducting business.


 


Section 4.06.  Limitations
on Indebtedness.  (a) 
The Company and the Issuer will not, and will not cause or permit any
Restricted Subsidiary, directly or indirectly, to create, incur, assume, become
liable for or guarantee the payment of (collectively, an “incurrence”) any Indebtedness (including
Acquired Indebtedness) unless, after giving effect thereto and the application
of the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio on the
date thereof would be at least 2.0 to 1.0.


 


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


 


(i)        Permitted
Indebtedness,


 


(ii)       Refinancing
Indebtedness,


 


(iii)      Non-Recourse
Indebtedness,


 


(iv)     any
Guarantee of Indebtedness represented by the Notes, and


 


(v)      any
guarantee of Indebtedness incurred under Credit Facilities in compliance with
the Indenture.


 


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


 


(i)        may
classify such item of Indebtedness under and comply with either of such
paragraphs (or any of such definitions), as applicable,


 


(ii)       may
classify and divide such item of Indebtedness into more than one of such
paragraphs (or definitions), as applicable, and


 


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


 


(d)        The Company and the
Issuer will not, and will not cause or permit any Guarantor to, directly or
indirectly, in any event incur any Indebtedness that purports to be by its
terms (or by the terms of any agreement governing such Indebtedness)
subordinated to any other Indebtedness of the Company or of such 


 


49

















 


Guarantor, as the case may be, unless such
Indebtedness is also by its terms (or by the terms of any agreement governing
such Indebtedness) made expressly subordinated to the Notes or the Guarantee of
such Guarantor, as the case may be, to the same extent and in the same manner
as such Indebtedness is subordinated to such other Indebtedness of the Company
or such Guarantor, as the case may be.


 


Section 4.07.  Limitations
on Restricted Payments.  (a) The
Company and the Issuer will not, and will not cause or permit any Restricted
Subsidiary to, directly or indirectly, make any Restricted Payment unless:


 


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


 


(ii)      immediately
after giving effect to such Restricted Payment, the Company could incur at
least $1.00 of Indebtedness pursuant to Section 4.06(a) hereof; and


 


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


 


(A)       50%
of the Consolidated Net Income of the Company on a cumulative basis during the
period (taken as one accounting period) from and including May 1, 2008 and
ending on the last day of the Company’s fiscal quarter immediately preceding
the date of such Restricted Payment (or in the event such Consolidated Net
Income shall be a deficit, minus 100% of such deficit), plus


 


(B)       100%
of the aggregate net cash proceeds of and the Fair Market Value of Property
received by the Company from (1) any capital contribution to the Company
after the Issue Date or any issue or sale after the Issue Date of Qualified
Stock (other than (x) to any Subsidiary of the Company or (y) any
Excluded Contribution) and (2) the issue or sale after the Issue Date of
any Indebtedness or other securities of the Company convertible into or
exercisable for Qualified Stock of the Company that have been so converted or
exercised, as the case may be, plus


 


(C)       in
the case of the disposition or repayment of any Investment constituting a
Restricted Payment (or if the Investment was made prior to the Issue Date, that
would have constituted a Restricted Payment if made after the Issue Date, if
such 


 


50

















 


disposition or repayment results in cash received by the Company, the
Issuer or any Restricted Subsidiary), an amount (to the extent not included in
the calculation of Consolidated Net Income referred to in (A)) equal to the
lesser of (x) the return of capital with respect to such Investment
(including by dividend, distribution or sale of Capital Stock) and (y) the
amount of such Investment that was treated (or would have been treated when
made) as a Restricted Payment, in either case, less the cost of the disposition
or repayment of such Investment (to the extent not included in the calculation
of Consolidated Net Income referred to in (A)), plus


 


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


 


(b)        clauses (ii) and (iii) of
paragraph (a) will not prohibit:


 


(i)       the
payment of any dividend within 60 days of its declaration if such dividend
could have been made on the date of its declaration without violation of the
provisions of the Indenture;


 


(ii)      the
purchase, repayment, repurchase, redemption, defeasance or other acquisition or
retirement of any Subordinated Indebtedness of the Issuer, the Company or any
Restricted Subsidiary or shares of Capital Stock of the Company in exchange
for, or out of the net proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Company or constituting an Excluded Contribution)
of, other shares of Qualified Stock;


 


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


 


51

















 


(B)         the
purchase, repayment, redemption, repurchase, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness of the Issuer, the Company or
any Restricted Subsidiary or the making of Restricted Investments in joint
ventures:


 


(1)     in
an aggregate amount not to exceed $50.0 million (after giving effect to all
subsequent reductions in the amount of any Restricted Investment in a joint
venture made pursuant to this clause (B)(1) as a result of the repayment
or disposition thereof for cash, not to exceed the amount of such Restricted
Investment previously made pursuant to this clause (B)(1)); or


 


(2)     in
an aggregate amount made under this clause (B)(2) not to exceed Excluded
Contributions (after giving effect to all subsequent reductions in the amount
of any Restricted Investment in a joint venture made pursuant to this clause
(B)(2) as a result of the repayment or disposition thereof for cash, not
to exceed the amount of such Restricted Investment previously made pursuant to
this clause (B)(2)); and


 


(C)         following
receipt of a Qualified Collateral Appraisal (as defined below), the purchase,
repayment, redemption, repurchase, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness of the Issuer, the Company or
any Restricted Subsidiary or the making of Restricted Investments in joint
ventures (after giving effect to all subsequent reductions in the amount of any
Restricted Investment in a joint venture made pursuant to this clause (C) as
a result of the repayment or disposition thereof for cash, not to exceed the
amount of such Restricted Investment previously made pursuant to this clause
(C)), in an aggregate amount not to exceed $400.0 million less the aggregate
amount of Restricted Payments previously made under clause (iii)(B)(1) above;
provided that, on a pro forma
basis after giving effect to any such Restricted Payment, the aggregate fair
market value of the Collateral (as determined in good faith by the Company’s
chief financial officer) is equal to at least 200% of the aggregate principal
amount of Collateralized Debt as of such date (or, in the case of a Restricted
Investment in a joint venture, on the date the Company determines to make such
Investment, so long as the Investment is completed within 120 days of such
determination date), such fair market value to be determined by the most recent
appraisal of the 


 


52

















 


Collateral required to be provided under the Revolving Credit
Agreement;


 


(iv)        the
payment of dividends on Preferred Stock and Disqualified Stock up to an
aggregate amount of $10 million in any fiscal year; provided that immediately after giving effect to any
declaration of such dividend, the Company could incur at least $1.00 of
Indebtedness pursuant to Section 4.06(a); and


 


(v)         the
purchase, redemption or other acquisition, cancellation or retirement for value
of Capital Stock, or options, warrants, equity appreciation rights or other
rights to purchase or acquire Capital Stock, of the Company or any Subsidiary
held by officers or employees or former officers or employees of the Company or
any Subsidiary (or their estates or beneficiaries under their estates) not to
exceed $10 million in the aggregate since the Issue Date;


 


provided, however,
that each Restricted Payment described in clauses (i) and (ii) of
this sentence shall be taken into account for purposes of computing the
aggregate amount of all Restricted Payments pursuant to clause (iii) of
paragraph (a) of this Section 4.07.


 


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


 


(d)        In determining the “Fair
Market Value of Property” for purposes of clause (iii) of paragraph (a) of
this Section 4.07, Property other than cash, Cash Equivalents and
Marketable Securities shall be deemed to be equal in value to the “equity value”
of the Capital Stock or other securities issued in exchange therefor.  The equity value of such Capital Stock or
other securities shall be equal to (i) the number of shares of Common
Equity issued in the transaction (or issuable upon conversion or exercise of
the Capital Stock or other securities issued in the transaction) multiplied by
the closing sale price of the Common Equity on its principal market on the date
of the transaction (less, in the case of Capital Stock or other securities
which require the payment of consideration at the time of conversion or
exercise, the aggregate consideration payable thereupon) or (ii) if the
Common Equity is not then traded on the New York Stock Exchange, American Stock
Exchange or Nasdaq Stock Market, or if the Capital Stock or other securities
issued in the transaction do not consist of Common Equity (or Capital Stock or
other securities convertible into or exercisable for Common Equity), the value
(if more than $10 million) of such Capital Stock or other 


 


53

















 


securities as determined by a nationally
recognized investment banking firm retained by the Board of Directors of the
Company.


 


Solely for the
purpose of permitting Restricted Payments under clause (iii)(C) of
paragraph (b) of this Section 4.07, as soon as commercially
reasonable, but in no event later than 180 days from Issue Date, the Company
shall have received appraisals from an independent appraiser.  Such appraisal must establish that the
Collateral includes at least $1.8 billion of market value of Collateral (an
appraisal establishing such value, a “Qualified
Collateral Appraisal”).  If
the initial Qualified Collateral Appraisal does not establish such market value
but the Company determines, at its option, to obtain additional appraisals from
an independent appraiser at a later date that do establish such valuation, then
from and after receipt of such new appraisals (which shall be deemed Qualified
Collateral Appraisals), the Company shall be permitted to utilize clause (iii)(C) of
paragraph (b) of this Section 4.07.


 


Section 4.08.  Limitations
on Liens.  The Company and the
Issuer will not, and will not cause or permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist any Liens, other than Permitted Liens,
on any of its Property, or on any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary.


 


Section 4.09.  Limitations
on Restrictions Affecting Restricted Subsidiaries.  The Company and the Issuer will
not, and will not cause or permit any Restricted Subsidiary to, create, assume
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction (other than encumbrances or restrictions imposed by
law or by judicial or regulatory action or by provisions of agreements that
restrict the assignability thereof) on the ability of any Restricted Subsidiary
to:


 


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


 


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


 


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


 


except for:


 


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


 


54

















 


(ii)                    contractual
encumbrances or restrictions in effect at or entered into on the Issue Date and
any amendments, modifications, restatements, renewals, supplements, refundings,
replacements or refinancings thereof; provided,
that such amendments, modifications, restatements, renewals, supplements,
refundings, replacements or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than those
contained in such contractual encumbrances or restrictions, as in effect at or
entered into on the Issue Date,


 


(iii)                 any
restrictions or encumbrances arising under Acquired Indebtedness; provided, that such encumbrance or
restriction applies only to either the assets that were subject to the
restriction or encumbrance at the time of the acquisition or the obligor on
such Indebtedness and its Subsidiaries prior to such acquisition,


 


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


 


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


 


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


 


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


 


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


 


(ix)                  encumbrances
or restrictions existing under or by reason of the Indenture, the Notes or the
Guarantees,


 


55
















 


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


 


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


 


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


 


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


 


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


 


(xv)      any
encumbrance or restrictions of the type referred to in clauses (a), (b) or
(c) of the first paragraph of this section imposed by any amendments,
modifications, restatements, renewals, supplements, refinancings, replacements
or refinancings of the contracts, instruments or obligations referred to in
clauses (i) through (xiv) of this paragraph; provided, that such amendments, modifications, restatements,
renewals, supplements, refundings, replacements or refinancings are, in the
good faith judgment of the Company’s Board of Directors, no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the dividend or other payment restrictions prior to such
amendment, modification, restatement, renewal, supplement, refunding,
replacement or refinancing.


 


Section 4.10.  Limitations
on Dispositions of Assets.  (a) The
Company and the Issuer will not, and will not cause or permit any Restricted
Subsidiary to, make any Asset Disposition unless: (x) the Company (or such
Restricted Subsidiary, as the case may be) receives consideration at the time
of such Asset Disposition at least equal to the Fair Market Value thereof, and (y) not
less than 70% of the consideration received by the Company (or such Restricted
Subsidiary, as the case may be) is in the form of cash, Cash Equivalents and
Marketable Securities (which must be pledged as Collateral if the assets
disposed of constituted Collateral).


 


(b)        The amount of (i) any
Indebtedness (other than any Subordinated Indebtedness) of the Company or any
Restricted Subsidiary that is actually assumed by the transferee in such Asset
Disposition and (ii) the fair market value (as determined in good faith by
the Board of Directors of the Company) of any 


 


56

















 


property or assets (including Capital Stock
of any Person that will be a Restricted Subsidiary following receipt thereof)
received that are used or useful in a Real Estate Business (provided that (except as permitted by
clause (c) under the definition of “Permitted Investment”) to the extent
that the assets disposed of in such Asset Disposition were Collateral, such
property or assets are pledged as Collateral under the Security Documents
substantially simultaneously with such sale, with the Lien on such Collateral
securing the Notes being of the same priority with respect to the Notes as the
Lien on the assets disposed of), shall be deemed to be consideration required
by clause (y) of Section 4.10(a) for purposes of determining the
percentage of such consideration received by the Company or the Restricted
Subsidiaries.


 


(c)        The Net Cash Proceeds
of an Asset Disposition shall, within one year, at the Company’s election, (1) be
used by the Company or a Restricted Subsidiary to invest in assets (including
Capital Stock of any Person that is or will be a Restricted Subsidiary
following investment therein) used or useful in the business of the
construction and sale of homes conducted by the Company and the Restricted
Subsidiaries (provided that
(except as permitted by clause (c) under the definition of “Permitted
Investment” to the extent that the assets disposed of in such Asset Disposition
were Collateral, such assets are pledged as Collateral under the Security
Documents with the Lien on such Collateral securing the Notes being of the same
priority with respect to the Notes as the Lien on the assets disposed of), (2) be
used to permanently prepay or permanently repay any (i) Indebtedness (or
cash collateralize letters of credit) constituting First-Priority Lien
Obligations, (ii) Indebtedness which had been secured by the assets sold
in the relevant Asset Disposition, to the extent the assets sold were not
Collateral or (iii) Indebtedness of a Restricted Subsidiary that is not a
Guarantor, to the extent the assets sold were not Collateral, or (3) be
applied to make an Offer to Purchase Notes and, if the Company or a Restricted
Subsidiary elects or is required to do so and the assets disposed of were not
Collateral repay, purchase or redeem any other unsubordinated Indebtedness (on
a pro rata basis if the amount available for such repayment, purchase or
redemption is less than the aggregate amount of (x) the principal amount
of the Notes tendered in such Offer to Purchase and (y) the lesser of the
principal amount, or accreted value, of such other unsubordinated Indebtedness,
plus, in each case accrued interest to the date of repayment, purchase or
redemption) at 100% of the principal amount or accreted value thereof, as the
case may be, plus accrued and unpaid interest, if any, to the date of repurchase
or repayment. Pending any such application under this Section 4.10(c), Net
Cash Proceeds may be used to temporarily reduce Indebtedness or otherwise be
invested in any manner not prohibited by the Indenture.


 


(d)        Notwithstanding the
foregoing, (A) the Company will not be required to apply such Net Cash
Proceeds in accordance with clauses (2) and (3) of the preceding
paragraph except to the extent that such Net Cash Proceeds, together with the
aggregate Net Cash Proceeds of prior Asset Dispositions (other 


 


57

















 


than those so used) which have not been
applied in accordance with this provision and as to which no prior prepayments
or repayments shall have been made and no Offer to Purchase shall have been
made, exceed $25 million and (B) in connection with an Asset Disposition,
the Company and the Restricted Subsidiaries will not be required to comply with
the requirements of clause (y) of Section 4.10(a) to the extent
that the non-cash consideration received in connection with such Asset
Disposition, together with the sum of all non-cash consideration received in
connection with all prior Asset Dispositions that has not yet been converted
into cash, Cash Equivalents or Marketable Securities, does not exceed $25 million;
provided, however, that when any
non-cash consideration is converted into cash, Cash Equivalents or Marketable
Securities, such cash shall constitute Net Cash Proceeds and be subject to the
preceding sentence.


 


Section 4.11.  Guarantees
by Restricted Subsidiaries.  Each
existing Restricted Subsidiary (other than the Issuer (for so long as it
remains the Issuer) and K. Hovnanian Poland, sp.zo.o.) will be a Guarantor. The
Company is permitted to cause any Unrestricted Subsidiary to be a Guarantor.  If the Issuer, the Company or any of its
Restricted Subsidiaries acquires or creates a Restricted Subsidiary after the
Issue Date, such Restricted Subsidiary shall execute a guarantee substantially
in the form included in Exhibit A, execute a supplemental indenture in the
form of Exhibit B, and deliver an Opinion of Counsel to the Trustee to the
effect that the supplemental indenture has been duly authorized, executed and
delivered by the new Restricted Subsidiary and constitutes a valid and binding
obligation of the new Restricted Subsidiary, enforceable against the new
Restricted Subsidiary in accordance with its terms (subject to customary
exceptions).


 


Section 4.12.  Repurchase
of Notes upon a Change of Control.  (a) In
the event that there shall occur a Change of Control, each Holder of Notes
shall have the right, at such Holder’s option, to require the Issuer to
purchase all or any part of such Holder’s Notes on a date (the “Repurchase Date”) that is no later than 90
days after notice of the Change of Control, at 101% of the principal amount
thereof plus accrued and unpaid interest and Additional Interest, if any, to
the Repurchase Date.


 


(b)        On or before the
thirtieth day after any Change of Control, the Issuer is obligated to mail, or
cause to be mailed, to all Holders of record of Notes and the Trustee a notice
regarding the Change of Control and the repurchase right. The notice shall
state the Repurchase Date, the date by which the repurchase right must be
exercised, the price for the Notes and the procedure which the Holder must
follow to exercise such right. 
Substantially simultaneously with mailing of the notice, the Issuer
shall cause a copy of such notice to be published in a newspaper of general
circulation in the Borough of Manhattan, The City of New York.  To exercise such right, the Holder of such
Note must deliver at least ten days prior to the Repurchase Date written notice
to the Issuer (or an agent 


 


58

















 


designated by the Issuer for such purpose) of
the Holder’s exercise of such right, together with the Note with respect to
which the right is being exercised, duly endorsed for transfer; provided, however,
that if mandated by applicable law, a Holder may be permitted to deliver such
written notice nearer to the Repurchase Date than may be specified by the
Issuer.


 


(c)        The Issuer will comply
with applicable law, including Section 14(e) of Exchange Act and Rule 14e-1
thereunder, if applicable, if the Issuer is required to give a notice of a
right of repurchase as a result of a Change of Control.


 


Section 4.13.  Limitations
on Transactions with Affiliates.  (a) The
Company and the Issuer will not, and will not cause or permit any Restricted
Subsidiary to, make any loan, advance, guarantee or capital contribution to, or
for the benefit of, or sell, lease, transfer or otherwise dispose of any
property or assets to or for the benefit of, or purchase or lease any property
or assets from, or enter into or amend any contract, agreement or understanding
with, or for the benefit of, any Affiliate of the Company or any Affiliate of
any of the Company’s Subsidiaries or any holder of 10% or more of the Common
Equity of the Company (including any Affiliates of such holders), in a single
transaction or series of related transactions (each, an “Affiliate Transaction”), except for any
Affiliate Transaction the terms of which are at least as favorable as the terms
which could be obtained by the Company, the Issuer or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an arm’s-length
basis with Persons who are not such a holder, an Affiliate of such a holder or
an Affiliate of the Company or any of the Company’s Subsidiaries.


 


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


 


(i)                           with
respect to any such Affiliate Transaction involving or having a value of more
than $1 million, the Company shall have (x) obtained the approval of a
majority of the Board of Directors of the Company and (y) either obtained
the approval of a majority of the Company’s disinterested directors or obtained
an opinion of a qualified independent financial advisor to the effect that such
Affiliate Transaction is fair to the Company, the Issuer or such Restricted
Subsidiary, as the case may be, from a financial point of view, and


 


(ii)                        with
respect to any such Affiliate Transaction involving or having a value of more
than $10 million, the Company shall have (x) obtained the approval of a
majority of the Board of Directors of the Company and (y) delivered to the
Trustee an opinion of a qualified independent financial advisor to the effect
that such Affiliate Transaction is fair to the Company, the Issuer or such
Restricted Subsidiary, as the case may be, from a financial point of view.


 


59

















 


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


 


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


 


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


 


(iii)                     any
Restricted Payment otherwise permitted under Section 4.07 hereof,


 


(iv)                    any
transaction between or among the Company and one or more Restricted
Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction
shall involve any other Affiliate of the Company (other than an Unrestricted
Subsidiary to the extent the applicable amount constitutes a Restricted Payment
permitted by this Indenture)),


 


(v)                       any
transaction between one or more Restricted Subsidiaries and one or more
Unrestricted Subsidiaries where all of the payments to, or other benefits
conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously
dividended, or otherwise distributed or transferred without charge, to the
Company or a Restricted Subsidiary,


 


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


 


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


 


Section 4.14.  Limitations
on Mergers, Consolidations and Sales of Assets. 
Neither the Issuer 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 the Notes,
the Guarantees or the Indenture (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 the 


 


60

















 


Company, the Issuer 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, the Issuer or the 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 supplemental
indenture in a form reasonably satisfactory to the Trustee all of the
obligations of the Company, the Issuer or the Guarantor, as the case may be,
under the Notes or a Guarantee, as the case may be, and the Indenture and the
Security Documents,


 


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


 


(iii)                     immediately
after giving effect to such transaction, the Company (or its Successor) could
incur at least $1.00 of Indebtedness pursuant to Section 4.06(a) hereof.


 


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,
or (ii) a transaction the purpose of which is to change the state of
incorporation of the Company, the Issuer or any Guarantor.


 


Section 4.15.  Reports to
Holders of Notes.   (a) 
The Company shall file with the Commission the annual reports and the
information, documents and other reports required to be filed pursuant to Section 13
or 15(d) of the Exchange Act. The Company shall file with the Trustee and
mail to each Holder of record of Notes such reports, information and documents
within 15 days after it files them with the Commission.  In the event that the Company is no longer
subject to these periodic reporting requirements of the Exchange Act, it will
nonetheless continue to file reports with the Commission and the Trustee and
mail such reports to each Holder of Notes as if it were subject to such
reporting requirements.  Regardless of
whether the Company is required to furnish such reports to its stockholders
pursuant to the Exchange Act, the Company will cause its consolidated financial
statements and a “Management’s Discussion and Analysis of Results of Operations
and Financial Condition” written report, similar to those that would have been
required to appear in annual or quarterly reports, to be delivered to Holders
of Notes.


 


61

















 


(b)        For so long as any of
the Notes remain outstanding and constitute “restricted securities” under Rule 144,
the Company will furnish to the Holders of Notes and prospective investors,
upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.


 


(c)        All “obligors,” as that
term is defined under the Trust Indenture Act, on the Notes, including the
Issuer and the Guarantors, will comply with Section 314(a) of the
Trust Indenture Act.


 


(d)        Delivery of these
reports and information to the Trustee is for informational purposes only and
the Trustee’s receipt of them will not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Issuer’s and/or the Company’s compliance with any of its
covenants hereunder (as to which the Trustee is entitled to rely exclusively on
Officers’ Certificates).


 


Section 4.16.  Reports to
Trustee.  (a) The Company
will deliver to the Trustee within 120 days after the end of each fiscal year a
written statement by the Company’s independent public accountants stating (i) that
their audit examination has included a review of the terms of this Indenture
and the Notes as they relate to accounting matters, and (ii) whether, in
connection with their audit examination, any Default has come to their
attention and, if a Default has come to their attention, specifying the nature
and period of the existence thereof.


 


(b)        The Company shall
deliver to the Trustee, on or prior to each Interest Payment Date, an Officer’s
Certificate setting forth the amount of Additional Interest, if any, the Issuer
is required to pay on that Interest Payment Date.  If no Additional Interest are required to be
paid on a given Interest Payment Date, no such Officer’s Certificate is required
to be delivered to the Trustee for that Interest Payment Date.


 


(c)        All “obligors,” as that
term is defined under the Trust Indenture Act, on the Notes, including the
Issuer and the Guarantors, will comply with Section 314(a) of the
Trust Indenture Act.  The Company will
notify the Trustee when any Notes are listed on any national securities
exchange and of any delisting.


 


Section 4.17.  Notice of
Other Defaults.  In the event
that any Indebtedness of the Issuer or any Guarantor is declared due and payable
before its maturity because of the occurrence of any default under such
Indebtedness, the Issuer or the relevant Guarantor, as the case may be, shall
promptly deliver to the Trustee an Officers’ Certificate stating such
declaration; provided, that the term
“Indebtedness” as used in this Section 4.17 shall not include Non-Recourse
Indebtedness.


 


62

















 


Section 4.18.  Further
Assurances; Costs.


 


(a)        If the Issuer or any of
the Guarantors at any time grants, assumes, perfects or becomes subject to any
Lien upon any of its property (other than Excluded Property of the type
referred to in clauses (a) and (b) of the definition thereof) then
owned or thereafter acquired as security for any First-Priority Lien Obligation,
the Issuer will, or will cause such Guarantor to, as promptly as practical
(subject to the requirements of the Intercreditor Agreement):


 


(i)         grant
a Lien on such property to the Collateral Agent for the benefit of the holders
of Second-Priority Lien Obligations and, to the extent such grant would require
the execution and delivery of a Security Document, the Issuer or such Guarantor
shall execute and deliver a Security Document on substantially the same terms
as the agreement or instrument executed and delivered to secure the
First-Priority Lien Obligations, with changes to reflect the subordination of
the Liens securing the Second-Priority Lien Obligations, including the changes
made to the Security Documents executed and delivered on the Issue Date (as
compared to the comparable security documents securing First-Priority Lien
Obligations entered into or in existence on the Issue Date); and


 


(ii)        cause
the Lien granted in such Security Document to be duly perfected in any manner
permitted by law to the same extent as the Liens granted for the benefit of the
First-Priority Lien Obligations are perfected (but junior to such Lien pursuant
to the Intercreditor Agreement).


 


If the Issuer
or such Guarantor delivers an Opinion of Counsel to the holders of First-Priority
Lien Obligations in respect of the validity, perfection or priority of any Lien
grant referred to in this clause (a), the Issuer or such Guarantor shall also
deliver an Opinion of Counsel (of no greater scope) with respect to such
matters to the Trustee and Collateral Agent.


 


(b)        In addition, if the
Issuer or any Guarantor at any time after the Issue Date acquires any new
property (other than Excluded Property) that is not automatically subject to a
Lien under the Security Documents, or a Restricted Subsidiary becomes a
Guarantor, the Issuer will, or will cause such Guarantor, subject to the
requirements of the Security Documents, to as soon as practical after such
property’s acquisition or it no longer being Excluded Property:


 


(i)         grant
a Lien on such property (or, in the case of a new Guarantor, all of its assets
except Excluded Property) to the Collateral Agent for the benefit of the
holders of Second-Priority Lien Obligations (and, to the extent such grant
would require the execution and delivery of a Security Document, the Issuer or
such Guarantor shall execute and 


 


63

















 


deliver a Security Document on substantially the same terms as the
Security Documents executed and delivered on the Issue Date); and


 


(ii)        cause
the Lien granted in such Security Document to be duly perfected in any manner
permitted by law to the same extent as the Liens granted on the Issue Date are
perfected.


 


The Issuer or
such Guarantor shall deliver an Opinion of Counsel to the Trustee in respect of
the validity, perfection or priority of any Lien grant referred to in this
clause (b), addressing customary matters (and containing customary exceptions)
consistent with the Opinion of Counsel delivered on the Issue Date in respect
of such matters.  For the avoidance of
doubt, while the First-Priority Lien Obligations are outstanding and the
Intercreditor Agreement is in effect:  (i) any
waiver or other determination by the holders of the First-Priority Lien
Obligations (or the Administrative Agent if so permitted) with respect to an
obligation to grant Liens on any assets subject to this Section 4.18(b) shall
also be applicable to the Second-Priority Lien Obligations, and if applicable,
to the extent provided by the Intercreditor Agreement (ii) any such
Opinion of Counsel to the Trustee shall only be required to the extent that an
Opinion of Counsel is delivered to the holders of the First-Priority Lien
Obligations (and shall be of no greater scope).


 


(c)        Notwithstanding
anything to the contrary set forth in clause (a) or elsewhere in this
Indenture or any Security Document:


 


(i)         any
mortgages (and any related Security Documents) required to be granted pursuant
to clause (a) on the Issue Date with respect to real property that is securing
First-Priority Lien Obligations on the Issue Date shall be granted as soon as
commercially reasonable following the Issue Date, but in no event later than 45
days following the Issue Date, and with respect to any real property that is
not securing First-Priority Lien Obligations on the Issue Date, mortgages shall
be provided by July 31, 2008, which date may be extended for up to 60 days
by the Administrative Agent; and


 


(ii)        in
the event that Rule 3-16 of Regulation S-X under the Securities Act
requires or would require (or is replaced with another rule or regulation,
or any other law, rule or regulation is adopted, which would require) the
filing with the Commission of separate financial statements of a Guarantor that
are not otherwise required to be filed, then the capital stock or other
securities of such Guarantor need not be pledged pursuant to clauses (a) or
(d) of this Section 4.18 and shall automatically be deemed released
and to not be and to not have been part of the Collateral, but only to the
extent necessary to not be subject to such requirement. In such event, the
Security Documents may be amended or modified, without the consent of any
Holder of Notes, to the extent necessary to evidence the 


 


64

















 


release of Liens securing the Second-Priority Lien Obligations on the
shares of capital stock or other securities that are so deemed to no longer
constitute part of the Collateral.


 


(d)        If, after the
Collateral is released in full as contemplated by Section 5.1 of the
Intercreditor Agreement and, thereafter, the Issuer subsequently incurs
Obligations under a new Credit Facility or other First-Priority Lien
Obligations that are secured by Liens on assets of the Issuer or any Guarantor
of the type constituting Collateral, then the Issuer and the Guarantors shall
be required to secure the Notes and the Guarantees at such time by a
Second-Priority Lien on the collateral securing such Obligations under the new
Credit Facility or other First-Priority Lien Obligations to the same extent
provided by clause (a) above on the terms and conditions of the security
documents relating to the new Credit Facility or such other First-Priority Lien
Obligations, with the Liens on the Collateral granted in favor either of the
administrative agent under such new Credit Facility or a collateral agent
designated by the Issuer to hold the Liens for the benefit of the holders of
Second-Priority Lien Obligations and subject to an intercreditor agreement that
provides the administrative agent under such new Credit Facility substantially
the same rights and powers as afforded under the Security Documents entered
into on the Issue Date.


 


(e)        The Issuer will bear
and pay all legal expenses, collateral audit and valuation costs, filing fees,
insurance premiums and other costs associated with the performance of the
obligations of the Issuer and the Guarantors set forth in this Section 4.18
and will also pay or reimburse the Trustee and Collateral Agent for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by the Trustee and Collateral Agent in connection therewith, including the
reasonable compensation and expenses of the Trustee and Collateral Agent’s
agents and counsel.


 


(f)         Neither the Issuer nor
any of the Guarantors will be permitted to take any action, or knowingly or
negligently omit to take any action, which action or omission might or would
have the result of materially impairing the security interest with respect to
the Collateral for the benefit of the Trustee and the Holders of the Notes.


 


ARTICLE 5

REMEDIES


 


Section 5.01.  Events of
Default.  “Event of Default” means any one or more of
the following events:


 


(i)         the
failure by the Company, the Issuer and the Guarantors to pay interest on, or
Additional Interest, if any, with respect to, any Note 


 


65

















 


when the same becomes due and payable and the continuance of any such
failure for a period of 30 days;


 


(ii)        the
failure by the Company, the Issuer and the Guarantors to pay the principal or
premium of any Note when the same becomes due and payable at maturity, upon
acceleration or otherwise;


 


(iii)       the
failure by the Company, the Issuer or any Restricted Subsidiary to comply with
any of its agreements or covenants in, or provisions of, the Notes, the
Guarantees or the Indenture and such failure continues for the period and after
the notice specified below (except in the case of a default under Section 4.12
and 4.14, which will constitute Events of Default with notice but without
passage of time);


 


(iv)       the
acceleration of any Indebtedness (other than Non-Recourse Indebtedness) of the
Company, the Issuer or any Restricted Subsidiary that has an outstanding
principal amount of $10 million or more, individually or in the aggregate, and
such acceleration does not cease to exist, or such Indebtedness is not
satisfied, in either case within 30 days after such acceleration;


 


(v)        the
failure by the Company, the Issuer or any Restricted Subsidiary to make any
principal or interest payment in an amount of $10 million or more, individually
or in the aggregate, in respect of Indebtedness (other than Non-Recourse
Indebtedness) of the Company or any Restricted Subsidiary 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 $10 million or more, individually or in
the aggregate, for the payment of money having been entered by a court or
courts of competent jurisdiction against the Company, the Issuer or any of its
Restricted Subsidiaries and such judgment or judgments is not satisfied,
stayed, annulled or rescinded within 60 days of being entered;


 


(vii)      the
Company, the Issuer 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,


 


66
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(ix)       any
Guarantee of a Guarantor which is a Significant Subsidiary ceases to be in full
force and effect (other than in accordance with the terms of such Guarantee and
this Indenture) 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 the Indenture and the Guarantee); or


 


(x)        the
Liens created by the Security Documents shall at any time not constitute a
valid and perfected Lien on any material portion of the Collateral intended to
be covered thereby (to the extent perfection by filing, registration,
recordation or possession is required by this Indenture or the Security
Documents) other than in accordance with the terms of the relevant Security
Document and this Indenture and other than the satisfaction in full of all
Obligations under this Indenture or the release or amendment of any such Lien
in accordance with the terms of this Indenture or the Security Documents, or,
except for expiration in accordance with its terms or amendment, modification,
waiver, termination or release in accordance with the terms of this Indenture
and the relevant Security Document, any of the Security Documents shall for
whatever reason be terminated or cease to be in full force and effect, if in 


 


67

















 


either case, such default continues for 30 days after notice, or the
enforceability thereof shall be contested by the Issuer or any Guarantor.


 


A Default as
described in subclause (iii) above will not be deemed an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25 percent
in principal amount of the then outstanding Notes notify the Company and the
Trustee, of the Default and (except in the case of a default with respect to Section 4.12
and 4.14 hereof) the Company does not cure the Default within 60 days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a “Notice of Default.” If such a Default
is cured within such time period, it ceases.


 


If an Event of
Default (other than an Event of Default with respect to the Company or the
Issuer resulting from subclauses (vii) or (viii) above), shall have
occurred and be continuing under the Indenture, the Trustee by notice to the
Company, or the Holders of at least 25 percent in principal amount of the Notes
then outstanding by notice to the Company and the Trustee, may declare all
Notes to be due and payable immediately. 
Upon such declaration of acceleration, the amounts due and payable on
the Notes will be due and payable immediately. 
If an Event of Default with respect to the Company or the Issuer
specified in subclauses (vii) or (viii) above occurs, such an amount
will ipso facto become and be
immediately due and payable without any declaration, notice or other act on the
part of the Trustee and the Company or any Holder.  This provision, however, is subject to the
condition that, if at any time after the unpaid principal amount (or such
specified amount) of the Notes shall have been so declared due and payable and
before any judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Issuer shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest and Additional Interest, if any, upon all of the Notes and the
principal of all the Notes which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest and Additional
Interest, if any, to the extent that payment of such interest is enforceable
under applicable law and on such principal at the rate borne by the Notes to
the date of such payment or deposit) and the reasonable compensation,
disbursements, expenses and advances of the Trustee and all other amounts due
the Trustee under Section 7.07, and any and all defaults under this
Indenture, other than the nonpayment of such portion of the principal amount of
and accrued interest and Additional Interest, if any, on Notes which shall have
become due by acceleration, shall have been cured or shall have been waived in
accordance with Section 5.03 or provision deemed by the Trustee to be
adequate shall have been made therefor, then and in every such case the Holders
of a majority in aggregate principal amount of the Notes then outstanding, by
written notice to the Issuer and to the Trustee, may rescind and annul such
declaration and its consequences; but no such rescission and annulment shall
extend to or shall affect any subsequent default, or shall impair any right
consequent thereon.  Notwithstanding the
previous sentence, no waiver 


 


68

















 


shall be
effective against any Holder for any Event of Default or event which with
notice or lapse of time or both would be an Event of Default with respect to
any covenant or provision which cannot be modified or amended without the
consent of the Holder of each outstanding Note affected thereby, unless all
such affected Holders agree, in writing, to waive such Event of Default or
other event.


 


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


 


Except with
respect to an Event of Default pursuant to clauses (i) or (ii) of
this Section 5.01, the Trustee shall not be charged with knowledge of any
Event of Default unless written notice thereof shall have been given to the
Trustee by the Issuer, a Paying Agent or any Holder.


 


Section 5.02.  Other
Remedies.  If an Event of
Default occurs and is continuing, the Trustee may pursue, in its own name or as
trustee of an express trust, any available remedy by proceeding at law or in
equity to collect the payment of principal of, premium, if any, and interest or
Additional Interest, if any, on the Notes or to enforce the performance of any
provision of the Notes or the Indenture. 
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding.


 


Section 5.03.  Waiver of
Defaults by Majority of Holders.  By
written notice to the Trustee and the Company, the Holders of a majority in
aggregate principal amount of the Notes then outstanding may on behalf of the
Holders of all of the Notes waive any past Default or Event of Default
hereunder and its consequences, except a Default in the payment of interest and
Additional Interest, if any, on, or the principal of, the Notes.  Upon any such waiver, the Issuer, the Trustee
and the Holders of Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.  Whenever any Default or Event of Default
hereunder shall have been waived as permitted by this Section 5.03, said
Default or Event of Default shall for all purposes of the Notes and this
Indenture be deemed to have been cured and to be not continuing.


 


Section 5.04.  Direction of
Proceedings.  The Holders of a
majority in aggregate principal amount of the outstanding Notes shall have the
right to direct the time, method, and place of conducting any proceeding for
any remedy 


 


69

















 


available to
the Trustee, or exercising any trust or power conferred on the Trustee with
respect to the Notes; provided, however, that (subject to the provisions
of Section 7.01) the Trustee shall have the right to decline to follow any
such direction if the Trustee shall determine upon advice of counsel that the
action or proceeding so directed may not lawfully be taken or if the Trustee in
good faith by its board of directors, its executive committee, or a trust
committee of directors or Responsible Officers or both shall determine that the
action or proceeding so directed would involve the Trustee in personal
liability.


 


Section 5.05.  Application
of Moneys Collected by Trustee. 
Any moneys collected by the Trustee pursuant to this Article (including
any proceeds from Collateral received pursuant to the terms of the Security
Documents) with respect to outstanding Notes shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys, upon presentation of the Notes and stamping thereon the payment,
if only partially paid, and upon surrender thereof, if fully paid:


 


FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee pursuant to Section 7.07 except as a result of its negligence or
bad faith;


 


SECOND: If the principal of the Notes shall not have become due and be
unpaid, to the payment of interest or Additional Interest, if any, on the
Notes, in the order of the maturity of the installments of such interest or
Additional Interest, if any, with interest (to the extent that such interest
has been collected by the Trustee) upon the overdue installments of interest
and Additional Interest, if any, at the rate borne by the Notes, such payment
to be made ratably to the Persons entitled thereto;


 


THIRD: If the principal of the Notes shall have become due, by
declaration or otherwise, to the payment of the whole amount then owing and
unpaid upon the Notes for principal, interest and Additional Interest, if any,
with interest on the overdue principal and (to the extent that such interest has
been collected by the Trustee) upon overdue installments of interest and
Additional Interest, if any, at the rate borne by the Notes, and in case such
moneys shall be insufficient to pay in full the whole amounts so due and unpaid
upon the Notes, then to the payment of such principal and interest and
Additional Interest, if any, without preference or priority of principal over
interest or Additional Interest, if any, or of interest or Additional 


 


70

















 


Interest, if
any, over principal, or of interest over Additional Interest, if any, or of any
installment of interest, if any, or Additional Interest, if any, over any other
installment of interest or Additional Interest, if any, ratably to the
aggregate of such principal and accrued and unpaid interest and Additional
Interest, if any; and


 


FOURTH: To the payment of any surplus then remaining to the Issuer, its
successors or assigns, or to whomsoever may be lawfully entitled to receive the
same.


 


No claim for
interest which in any manner at or after maturity shall have been transferred
or pledged separate or apart from the Notes to which it relates, or which in
any manner shall have been kept alive after maturity by an extension (otherwise
than pursuant to an extension made pursuant to a plan proposed by the Issuer to
the Holders of all Notes), purchase, funding or otherwise by or on behalf or
with the consent or approval of the Issuer shall be entitled, in case of a
default hereunder, to any benefit of this Indenture, except after prior payment
in full of the principal of all Notes and of all claims for interest not so
transferred, pledged, kept alive, extended, purchased or funded.


 


Section 5.06.  Proceedings
by Holders.  No holder of any
Notes shall have any right by virtue of or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture for the appointment of a receiver or
trustee or similar official, or for any other remedy hereunder, unless such
Holder previously shall have given to the Trustee written notice of default and
of the continuance thereof, as hereinbefore provided, and unless the Holders of
not less than 25% in aggregate principal amount of the Notes then outstanding
shall have made written request to the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee for
60 days after its receipt of such notice, request and offer of indemnity shall
have neglected or refused to institute any such action, suit or proceeding, it
being understood and intended, and being expressly covenanted by the Holder of
every Note with every other Holder and the Trustee, that no one or more Holders
of Notes shall have any right in any manner whatever by virtue of or by
availing of any provision of this Indenture or of the Notes to affect, disturb
or prejudice the rights of any other Holder of Notes, or to obtain or seek to
obtain priority over or preference as to any other such Holder, or to enforce
any right under this Indenture or the Notes, except in the manner herein provided
and for the equal, ratable and common benefit of all Holders of Notes.


 


Notwithstanding
any other provisions in this Indenture, however, the right of any Holder of any
Note to receive payment of the principal of, premium, if any, and interest and
Additional Interest, if any, on such Note, on or after the maturity thereof, or
to institute suit for the enforcement of any such payment on or after such
respective dates shall not be impaired or affected without the consent of such
Holder.


 


71

















 


Section 5.07.  Proceedings
by Trustee.  In case of an
Event of Default hereunder, the Trustee may in its discretion proceed to
protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either by suit in equity or by action
at law or by proceedings in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.


 


Section 5.08.  Remedies
Cumulative and Continuing. 
All powers and remedies given by this Article 5 to the Trustee or
to the Holders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any thereof or of any other powers and remedies available to
the Trustee or the Holders, by judicial proceedings or otherwise, to enforce
the performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any Holder to exercise
any right or power accruing upon any default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.06, every power and remedy given by this Article 5
or by law to the Trustee or to the Holders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the Holders.


 


Section 5.09.  Undertaking
to Pay Costs.  All parties to
this Indenture agree, and each Holder of any Note by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
or in any suit for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the cost of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees and expenses, against
any party litigant in such suit, having due regard to the merits and good faith
of the claims or defenses made by such party litigant; but the provisions of
this Section 5.09 shall not apply to any suit instituted by the Trustee,
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the then outstanding Notes, or
to any suit instituted by any Holders for the enforcement of the payment of the
principal of, premium, if any, or interest or Additional Interest, if any, on
any Note against the Issuer on or after the due date of such Note.


 


Section 5.10.  Notice of
Defaults.  (a) The
Company is required to deliver to the Trustee an annual statement regarding
compliance with the Indenture, and include in such statement, if any officer of
the Company is aware of any Default or Event of Default, a statement specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto. In 


 


72

















 


addition, the
Company is required to deliver to the Trustee prompt written notice of the
occurrence of any Default or Event of Default.


 


(b)      The Trustee shall, within
90 days after the occurrence of a default known to the Trustee, with respect to
the Notes, mail to all Holders of Notes, as the names and the addresses of such
Holders appear upon the Register, notice of all defaults, unless such defaults
shall have been cured before the giving of such notice (the term “default” for the purpose of this Section 5.10(b) being
hereby defined to be the events specified in clauses (i), (ii), (iii), (iv),
(v), (vi), (vii), (viii), (ix) and (x) of Section 5.01, not
including periods of grace, if any, provided for therein and irrespective of
the giving of the written notice specified in said clause (iii) but in the
case of any default of the character specified in said clause (iii) no
such notice to Holders shall be given until at least 60 days after the giving
of written notice thereof to the Company pursuant to said clause (iii)); provided, however,
that, except in the case of default in the payment of the principal of,
premium, if any, or interest and Additional Interest, if any, on any of the
Notes, or in the payment or satisfaction of a purchase obligation, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee, a trust committee of directors or a
Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the best interests of the Holders. Notice to
Holders under this Section shall be given in the manner and to the extent
provided in Trust Indenture Act Section 313(c).


 


Section 5.11.  Waiver of
Stay, Extension or Usury Laws.  The
Company, the Issuer and each Guarantor covenants, to the extent permitted by
applicable law, that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company, the Issuer or the Guarantor from paying all or any portion of the
principal of, premium, if any, or interest or Additional Interest, if any, on
the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or that may affect the covenants or the performance of the
Indenture.  The Company, the Issuer and
each Guarantor hereby expressly waives, to the extent that it may lawfully do
so, all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.


 


Section 5.12.  Trustee May File
Proof of Claim.  The Trustee
may file proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee hereunder) and the
Holders allowed in any judicial proceedings relating to the Company, the Issuer
or any Guarantor or their respective creditors or property, and is entitled and
empowered 


 


73

















 


to collect,
receive and distribute any money, securities or other property payable or
deliverable upon conversion or exchange of the Notes or upon any such
claims.  Any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, if the Trustee consents to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee
hereunder.  Nothing in the Indenture will
be deemed to empower the Trustee to authorize or consent to, or accept or adopt
on behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.


 


Section 5.13.  Payment of
Notes on Default; Suit Therefor.  The
Issuer covenants that (a) if default shall be made in the payment of any
installment of interest and Additional Interest, if any, upon the Notes as and
when the same shall become due and payable, and such default shall have
continued for a period of 30 days, or (b) if default shall be made in the
payment of the principal of, and premium, if any, on the Notes as and when the
same shall have become due and payable, whether at maturity of the Notes or
upon redemption or by declaration or otherwise, then, upon demand of the
Trustee, the Issuer will pay to the Trustee, for the benefit of the Holders,
the whole amount that then shall have become due and payable on all such Notes
for principal, and premium, if any, or interest and Additional Interest, if
any, or both, as the case may be, with interest upon the overdue principal and
(to the extent that payment of such interest is enforceable under applicable
law) upon the overdue installments of interest and Additional Interest, if any,
at the rate borne by the Notes; and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
a reasonable compensation to the Trustee, its agent, attorneys and counsel, and
any expenses or liabilities incurred by the Trustee hereunder other than
through its negligence or bad faith.


 


If the Issuer
shall fail forthwith to pay such amounts upon such demand, the Trustee, in its
own name and as trustee of an express trust, shall be entitled and empowered to
institute any actions or proceedings at law or in equity for the collection of
the sums so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final decree
against the Issuer or any other obligor on the Notes and collect in the manner
provided by law out of the property of the Issuer or any other obligor on the
Notes, wherever situated, the moneys adjudged or decreed to be payable.


 


If there shall
be pending proceedings for the bankruptcy or for the reorganization of the
Issuer or any other obligor on the Notes under any bankruptcy, insolvency or
other similar law now or hereafter in effect, or if a 


 


74

















 


receiver or
trustee or similar official shall have been appointed for the property of the
Issuer or such other obligor, or in the case of any other similar judicial
proceedings relative to the Issuer or other obligor on the Notes, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.13, shall be entitled and empowered by intervention in such
proceedings or otherwise to file and prove a claim or claims for the whole
amount of principal, premium, if any, interest and Additional Interest, if any,
owing and unpaid in respect of the Notes, and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee and of the
Holders allowed in such judicial proceedings relative to the Issuer or any
other obligor on the Notes, its or their creditors, or its or their property,
and to collect and receive any moneys or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of its
charges and expenses, and any receiver, assignee or trustee or similar official
in bankruptcy or reorganization is hereby authorized by each of the Holders to
make such payments to the Trustee, and, if the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for compensation and expenses or otherwise pursuant to Section 7.07,
including counsel fees and expenses incurred by it up to the date of such distribution.  To the extent that such payment of reasonable
compensation, expenses and counsel fees and expenses out of the estate in any
such proceedings shall be denied for any reason, payment of the same shall be
secured by a lien on, and shall be paid out of, any and all distributions,
dividends, moneys, securities and other property which the Holders of Notes may
be entitled to receive in such proceedings, whether in liquidation or under any
plan of reorganization or arrangement or otherwise.


 


All rights of
action and of asserting claims under this Indenture, or under any of the Notes,
may be enforced by the Trustee without the possession of any of the Notes, or
the production thereof at any trial or other proceeding relative thereto, and
any such suit or proceeding instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall be
for the ratable benefit of the Holders of Notes in respect of which such
judgment has been recovered.


 


ARTICLE 6

GUARANTEES; RELEASE OF GUARANTOR


 


Section 6.01.  Guarantee.
Each of the Guarantors hereby unconditionally guarantees, jointly
and severally with each other Guarantor, to each Holder and to 


 


75

















 


the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, the Notes or the obligations of the Issuer hereunder or
thereunder, that:  (i) the due and
punctual payment of the principal of, premium, if any, and interest or
Additional Interest, if any, on the Notes, whether at maturity or on an
interest payment date, by acceleration, pursuant to an Offer to Purchase or
otherwise, to the extent lawful, and all other obligations of the Issuer to the
Holders or the Trustee hereunder or thereunder shall be promptly paid in full
when due, all in accordance with the terms hereof and thereof, including all
amounts payable to the Trustee under Section 7.07 hereof, and (ii) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.


 


If the Issuer
fails to make any payment when due of any amount so guaranteed for whatever
reason, each Guarantor shall be obligated, jointly and severally with each
other Guarantor, to pay the same immediately. 
Each Guarantor hereby agrees that its obligations hereunder shall be
continuing, absolute and unconditional, irrespective of, and shall be
unaffected by, the validity, regularity or enforceability of the Notes, this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder or the Trustee with respect to any provisions hereof or thereof,
the recovery of any judgment against the Issuer, any action to enforce the same
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of such Guarantor. 
If any Holder or the Trustee is required by any court or otherwise to
return to the Issuer or any Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Issuer or such Guarantor, any
amount paid by the Issuer or any Guarantor to the Trustee or such Holder, this Article 6,
to the extent theretofore discharged with respect to any Guarantee, shall be
reinstated in full force and effect. 
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby by such Guarantor until payment in full of all such obligations.  Each Guarantor further agrees that, as
between such Guarantor, on the one hand, and the Holders of Notes and the
Trustee on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 5 hereof for the purposes
of such Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby
and (ii) in the event of any acceleration of such obligations as provided
in Article 5 hereof such obligations (whether or not due and payable)
shall forthwith become due and payable by such Guarantor, jointly and severally
with each other Guarantor, for the purpose of this Article 6.  In addition, without limiting the foregoing,
upon the effectiveness of an acceleration under Article 5, the Trustee may
make a demand for payment on the Notes under any Guarantee provided hereunder
and not discharged.


 


76

















 


The Guarantee
set forth in this Section 6.01 shall not be valid or become obligatory for
any purpose with respect to a Note until the certificate of authentication on
such Note shall have been signed by the Trustee or any duly appointed agent.


 


Section 6.02.  Obligations
of each Guarantor Unconditional. 
Nothing contained in this Article 6 or elsewhere in this Indenture
or in any Note is intended to or shall impair, as between each Guarantor and
the Holders, the obligations of such Guarantor which are absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest and Additional Interest, if any, on the Notes as and when the same
shall become due and payable in accordance with the provisions of their
Guarantee or is intended to or shall affect the relative rights of the Holders
and creditors of such Guarantor, nor shall anything herein or therein prevent
the Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon any Default under this Indenture in respect of cash,
property or securities of such Guarantor received upon the exercise of any such
remedy.


 


Upon any
distribution of assets of a Guarantor referred to in this Article 6 the
Trustee, subject to the provisions of Article 7, the Holders 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 Trustee or to
such Holders 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 6.


 


Section 6.03.  Release of
a Guarantor.  (a) If all
or substantially all of the assets of any Guarantor other than the Company or
all of the Capital Stock of any Guarantor other than the Company is sold
(including by consolidation, merger, issuance or otherwise) or disposed of
(including by liquidation, dissolution or otherwise) by the Company or any of
its Subsidiaries, or, unless the Company elects otherwise, if any Guarantor
other than the Company is designated an Unrestricted Subsidiary in accordance
with the terms of the Indenture, 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 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 the Indenture without
any further action on the part of the Trustee or any Holder of Notes.


 


77
















 


(b)           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 the
Company to the Trustee to such effect, without any further action required on
the part of the Trustee or any Holder.


 


Section 6.04.  Execution
and Delivery of Guarantee.  The
execution by each Guarantor of the Indenture (or a supplemental indenture in
the form of Exhibit B) together with an executed guarantee substantially
in the form included in Exhibit A evidences the Guarantee of such
Guarantor, whether or not the person signing as an officer of the Guarantor
still holds that office at the time of authentication of any Note.  The delivery of any Note by the Trustee after
authentication constitutes due delivery of the Guarantee on behalf of each
Guarantor.


 


Section 6.05.  Limitation
on Guarantor Liability. 
Notwithstanding anything to the contrary in this Article 6, each
Guarantor, and by its acceptance of a Note, each Holder, hereby confirms that
it is the intention of all such parties that the Guarantee of such Guarantor
not constitute a fraudulent conveyance under applicable fraudulent conveyance
provisions of the United States Bankruptcy Code or any comparable provision of
state law.  To effectuate that intention,
the Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of each Guarantor under its Guarantee are limited to the maximum
amount that would not render the Guarantor’s obligations subject to avoidance
under applicable fraudulent conveyance provisions of the United States
Bankruptcy Code or any comparable provision of state law.


 


Section 6.06.  Article 6
not to Prevent Events of Default. 
The failure to make a payment on account of principal, premium, if any,
or interest or Additional Interest, if any, on the Notes by reason of any
provision in this Article 6 shall not be construed as preventing the
occurrence of any Event of Default under Section 5.01.


 


Section 6.07.  Waiver by
the Guarantors.  To the extent
permitted by applicable law, each Guarantor hereby irrevocably waives
diligence, presentment, demand of payment, demand of performance, filing of
claims with a court in the event of insolvency of bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, the benefit of
discussion, protest, notice and all demand whatsoever and covenants that this
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes, in this Indenture and in this Article 6.


 


Section 6.08.  Subrogation
and Contribution.   Upon
making any payment with respect to any obligation of the Issuer under this
Article, the Guarantor making such payment will be subrogated to the rights of
the payee against the Issuer with respect to such obligation; provided, that the Guarantor may not 


 


78

















 


enforce either any right of subrogation, or
any right to receive payment in the nature of contribution, or otherwise, from
any other Guarantor, with respect to such payment so long as any amount payable
by the Issuer hereunder or under the Notes remains unpaid.


 


Section 6.09.  Stay of
Acceleration.  If acceleration
of the time for payment of any amount payable by the Issuer under the Indenture
or the Notes is stayed upon the insolvency, bankruptcy or reorganization of the
Issuer, all such amounts otherwise subject to acceleration under the terms of
the Indenture are nonetheless payable by the Guarantors hereunder forthwith on
demand by the Trustee or the Holders.


 


Section 6.10.  Guarantors
as “obligors” for Provisions Included in the Indenture Pursuant to the Trust
Indenture Act.  Each provision
included in the Indenture which is required to be included by any of Sections
310 to 317 of the Trust Indenture Act, inclusive, or is deemed applicable to
the Indenture by virtue of the provisions of the Trust Indenture Act, and which
applies to an “obligor,” as that term is defined under the Trust Indenture Act,
shall apply to each of the Guarantors; provided
that in each case the provisions of TIA §314(b) and §314(d) shall
only apply following qualification of this Indenture under the TIA.


 


ARTICLE 7

THE TRUSTEE


 


Section 7.01.  General.  (a) The duties and
responsibilities of the Trustee are as provided by the Trust Indenture Act and
as set forth herein.  Whether or not
expressly so provided, every provision of the Indenture relating to the conduct
or affecting the liability of, or affording protection to, the Trustee is subject
to this Article.


 


(b)      Except during the
continuance of an Event of Default, the Trustee need perform only those duties
that are specifically set forth in the Indenture and no others, and no implied
covenants or obligations will be read into this Indenture against the
Trustee.  In case an Event of Default has
occurred and is continuing, the Trustee shall exercise those rights and powers
vested in it by this Indenture, and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.


 


Section 7.02.  Certain
Rights of the Trustee.  Subject
to Trust Indenture Act Sections 315(a) through (d):


 


(a)       The
Trustee may rely, and will be protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, 


 


79

















 


bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper Person.  The Trustee need not
investigate any fact or matter stated in the document, but the Trustee, in its
discretion, may make further inquiry or investigation into such facts or
matters as it sees fit.


 


(b)      Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel conforming to Section 13.05 and the
Trustee will not be liable for any action it takes or omits to take in good
faith in reliance on such a certificate or opinion.  Unless otherwise specifically provided in
this Indenture, any demand, request, direction or notice from the Issuer or the
Company, as applicable, shall be sufficient if signed by an Officer of the
Issuer or the Company, as applicable.


 


(c)       The
Trustee may act through its attorneys and agents and will not be responsible
for the misconduct or negligence of any agent appointed with due care.


 


(d)      The
Trustee will be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction.


 


(e)       The
Trustee will not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within its rights or powers or for
any action it takes or omits to take in accordance with the direction of the
Holders in accordance with Section 5.04 relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under the Indenture.


 


(f)       The
Trustee may consult with counsel, and the written advice of such counsel or any
Opinion of Counsel will be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.


 


(g)      No
provision of the Indenture will require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of its
duties hereunder, or in the exercise of its rights or powers, unless it
receives indemnity satisfactory to it against any loss, liability or expense.


 


80

















 


Section 7.03.  Individual
Rights of the Trustee.  The
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not the Trustee.  Any Agent may do the same with like rights.  However, the Trustee is subject to Trust
Indenture Act Sections 310(b) and 311. 
For purposes of Trust Indenture Act Section 311(b)(4) and (6):


 


(a)       “cash transaction” means any transaction in
which full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other orders
drawn upon banks or bankers and payable upon demand; and


 


(b)      “self-liquidating paper” means any draft,
bill of exchange, acceptance or obligation which is made, drawn, negotiated or
incurred for the purpose of financing the purchase, processing, manufacturing,
shipment, storage or sale of goods, wares or merchandise and which is secured
by documents evidencing title to, possession of, or a lien upon, the goods,
wares or merchandise or the receivables or proceeds arising from the sale of
the goods, wares or merchandise previously constituting the security, provided
the security is received by the Trustee simultaneously with the creation of the
creditor relationship arising from the making, drawing, negotiating or
incurring of the draft, bill of exchange, acceptance or obligation.


 


Section 7.04.  Trustee’s
Disclaimer.  The Trustee (a) makes
no representation as to the validity or adequacy of this Indenture or the
Notes, (b) is not accountable for the Company’s use or application of the
proceeds from the Notes and (c) is not responsible for any statement in
the Notes other than its certificate of authentication.


 


Section 7.05.  Reserved.


 


Section 7.06.  Reports by
Trustee to Holders.  Within 60
days after each May 1, beginning with May 1, 2009, the Trustee will
mail to each Holder, as provided in Trust Indenture Act Section 313(c) a
brief report dated as of such May 1, if required by Trust Indenture Act Section 313(a).


 


Section 7.07.  Compensation
and Indemnity.  (a) The
Company will pay the Trustee compensation as agreed upon in writing for its
services.  The compensation of the
Trustee is not limited by any law on compensation of a trustee of an express
trust.  The Company will reimburse the
Trustee upon request for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by the Trustee, including the reasonable
compensation and expenses of the Trustee’s agents and counsel.


 


81

















 


(b)   In addition to any other indemnity
provided to the Trustee hereunder, the Company will indemnify the Trustee for,
and hold it harmless against, any loss or liability or expense incurred by it
without negligence or bad faith on its part arising out of or in connection
with the acceptance or administration of the Indenture and its duties under the
Indenture and the Notes, including the costs and expenses of defending itself
against any claim or liability and of complying with any process served upon it
or any of its officers in connection with the exercise or performance of any of
its powers or duties under the Indenture and the Notes.


 


(c)   To secure the Company’s
payment obligations in this Section or as otherwise provided in the
Indenture, the Trustee will have a lien prior to the Notes on all money or
property held or collected by the Trustee, in its capacity as Trustee, except
money or property held in trust to pay principal of, premium, if any, and
interest or Additional Interest, if any, on particular Notes.


 


Section 7.08.  Replacement
of Trustee.   (a) (i) 
The Trustee may resign at any time by written notice to the Issuer.


 


(ii)   The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by written notice to the Trustee.


 


(iii)  If
the Trustee is no longer eligible under Section 7.10 or in the
circumstances described in Trust Indenture Act Section 310(b),  any Holder that satisfies the requirements of
Trust Indenture Act Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.


 


(iv)  The
Issuer may remove the Trustee if: (A) the Trustee is no longer eligible
under Section 7.10; (B) the Trustee is adjudged bankrupt or an
insolvent; (C) a receiver or other public officer takes charge of the
Trustee or its property; or (D) the Trustee becomes incapable of acting.


 


A resignation
or removal of the Trustee and appointment of a successor Trustee will become
effective only upon the successor Trustee’s acceptance of appointment as
provided in this Section.


 


(b)   If the Trustee has been
removed by the Holders, Holders of a majority in principal amount of the Notes
may appoint a successor Trustee with the consent of the Issuer.  Otherwise, if the Trustee resigns or is
removed, or if a vacancy exists in the office of Trustee for any reason, the
Issuer will promptly appoint a successor Trustee.  If the successor Trustee does not deliver its
written acceptance within 30 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Issuer or the Holders of a majority in
principal amount of the 


 


82

















 


outstanding Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.


 


(c)   Upon delivery by the
successor Trustee of a written acceptance of its appointment to the retiring
Trustee and to the Issuer, (i) the retiring Trustee will transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07, (ii) the resignation or removal of the
retiring Trustee will become effective, and (iii) the successor Trustee
will have all the rights, powers and duties of the Trustee under the
Indenture.  Upon request of any successor
Trustee, the Issuer will execute any and all instruments for fully and vesting
in and confirming to the successor Trustee all such rights, powers and
trusts.  The Issuer will give notice of
any resignation and any removal of the Trustee and each appointment of a
successor Trustee to all Holders, and include in the notice the name of the
successor Trustee and the address of its Corporate Trust Office.


 


(d)   Notwithstanding replacement
of the Trustee pursuant to this Section, Issuer’s obligations under Section 7.07
will continue for the benefit of the retiring Trustee.


 


(e)       The Trustee agrees to give
the notices provided for in, and otherwise comply with, Trust
Indenture Act Section 310(b).


 


Section 7.09.  Successor
Trustee by Merger.  If the
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation or
national banking association, the resulting, surviving or transferee
corporation or national banking association without any further act will be the
successor Trustee with the same effect as if the successor Trustee had been
named as the Trustee in the Indenture.


 


Section 7.10.  Eligibility.  The Indenture must always have a
Trustee that satisfies the requirements of Trust Indenture Act Section 310(a) and
has a combined capital and surplus of at least $25,000,000 as set forth in its
most recent published annual report of condition.


 


Section 7.11.  Money Held
in Trust.  The Trustee will
not be liable for interest on any money received by it except as it may agree
with the Issuer.  Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law and except for money held in trust under Article 8.


 


83

















 


ARTICLE 8

DEFEASANCE AND DISCHARGE


 


Section 8.01.  Legal
Defeasance and Discharge.  The
Issuer, the Company and the Guarantors shall, subject to the satisfaction of
the conditions set forth in Section 8.03 hereof, be deemed to have been
discharged from their respective obligations with respect to the Notes, the
Guarantees and under the Security Documents and cause the release of all Liens
on the Collateral granted under the Security Documents, on the date the
conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that
the Issuer shall be deemed to have paid and discharged the entire Indebtedness
represented by the Notes, which shall thereafter be deemed to be outstanding
only for the purposes of Section 8.04 hereof and the other Sections of
this Indenture referred to in clauses (a) through (f) below, and the
Issuer, the Company and the Guarantors shall be deemed to have satisfied all of
their respective obligations under the Notes, the Guarantees, this Indenture
and the Security Documents (and the Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments delivered to it by the Issuer
acknowledging the same), except of the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of
Holders of Notes to receive payments in respect of the principal, premium, if
any, and interest and Additional Interest, if any, on the Notes when such
payments are due from the trust referred to below; (b) the Issuer’s
obligations with respect to the Notes concerning mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payment and money
for security payments held in trust; (c) the rights, powers, trusts,
duties and immunities of the Trustee, and the Issuer’s and the Guarantors’
obligations in connection therewith; (d) the Legal Defeasance provisions
of this Indenture; (e) the rights of registration of transfer and exchange
of the Notes; and (f) the rights of Holders that are beneficiaries with
respect to property so deposited with the Trustee payable to all or any of
them.


 


Section 8.02.  Covenant
Defeasance.  The Issuer, the
Company and the Guarantors shall, subject to the satisfaction of the conditions
set forth in Section 8.03 hereof, be released from their obligations with
respect to the Notes and the Guarantees under the covenants contained in
Sections 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, clause (iii) of Section 4.14,
4.18 and Article 6 (except for Sections 6.03 and 6.10) and each Guarantor’s
obligation under its Guarantee, on and after the date that the conditions set
forth in Section 8.03 are satisfied and the Liens on the Collateral
granted under the Security Documents will be released (hereinafter, “Covenant Defeasance”), and the Notes shall
thereafter be deemed not outstanding for the purposes of any direction, waiver,
consent or declaration or act of Holders (and the consequences of any thereof)
in connection with such covenants, but shall continue to be deemed outstanding
for all other purposes hereunder (it being understood that the Notes shall not
be deemed outstanding for accounting purposes). 
For this purpose, Covenant Defeasance means that, with 


 


84

















 


respect to the Notes and the Guarantees, the
Issuer, the Company and the Guarantors may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under Section 5.01
hereof, but, except as specified above, the remainder of this Indenture and the
Notes shall be unaffected thereby. 
Subject to the satisfaction of the conditions set forth in Section 8.03
hereof, Sections 5.01(iii) (with respect to the covenants so defeased),
5.01(iv), 5.01(v), 5.01(vi), 5.01(ix) and 5.01(x) shall not
constitute Events of Default or Defaults hereunder.


 


Section 8.03.  Conditions
to Legal or Covenant Defeasance.  The
following shall be the conditions to the application of either Section 8.01
or Section 8.02 hereof to the Notes:


 


In order to
exercise either Legal Defeasance or Covenant Defeasance:


 


(a)      the Issuer must
irrevocably deposit, or cause to be deposited, with the Trustee, in trust, for
the benefit of the Holders of Notes, cash in U.S. dollars, U.S. Government
Obligations, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay, without reinvestment, the principal of, premium, if any,
and interest and Additional Interest, if any, on the Notes on the stated
maturity thereof or on the applicable redemption date, as the case may be, and
the Issuer must specify whether the Notes are being defeased to maturity or to
a particular redemption date;


 


(b)      in the case of Legal
Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that the Issuer has received
from, or there has been published by, the Internal Revenue Service a ruling, or
there has been a change in the applicable United States federal income tax law
after the date of this Indenture, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of Notes will
not recognize income, gain or loss for United States federal income tax
purposes as a result of such Legal Defeasance, and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;


 


(c)      in the case of Covenant
Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that the Holders of Notes will
not recognize income, gain or loss for United States federal income tax
purposes as a result of such Covenant Defeasance, and such Holders will be
subject to United States federal income tax on the same amounts, 


 


85

















 


in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;


 


(d)      no Default or Event of
Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit;


 


(e)      such Legal Defeasance or
Covenant Defeasance will not result in a breach or violation of, or constitute
a default under, any material agreement or instrument (other than the
Indenture) to which the Issuer or any of its Restricted Subsidiaries is a party
or by which the Issuer or any of its Restricted Subsidiaries is bound;


 


(f)       the Issuer must deliver
to the Trustee an Officers’ Certificate stating that the deposit was not made
by the Issuer with the intent of preferring the Holders of Notes over other
creditors of the Issuer, or with the intent of defeating, hindering, delaying
or defrauding creditors of the Issuer or others; and


 


(g)      the Issuer must deliver
to the Trustee an Officers’ Certificate and an Opinion of Counsel in the United
States reasonably acceptable to the Trustee, each stating that the conditions
precedent provided for or relating to Legal Defeasance or Covenant Defeasance,
as applicable, in the case of the Officer’s Certificate, in clauses (a) through
(f) and, in the case of the Opinion of Counsel, in clauses (b) and (c) of
this paragraph, have been complied with.


 


Section 8.04.  Deposited
Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions.  Subject to Section 8.05
hereof, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively,
and solely for purposes of this Section 8.04, the “Trustee”) pursuant to Section 8.03
or Section 8.08 hereof in respect of the Notes shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or indirectly or through any paying
agent (including the Issuer acting as paying agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, interest and Additional
Interest, if any, but such money need not be segregated from other funds except
to the extent required by law.


 


The Company
shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or non-callable U.S. Government
Obligations deposited pursuant to Section 8.03 or Section 8.08 hereof
or the principal, premium, if any, interest and Additional Interest, if any, 


 


86

















 


received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
Notes.


 


Subject to the
preceding paragraph and Section 7.07 herein, anything in this Article 8
to the contrary notwithstanding, the Trustee shall deliver or pay, solely to
the extent available in such trust, to the Issuer from time to time upon the
request of the Issuer any money or non-callable U.S. Government Obligations
held by it as provided in Section 8.03 or Section 8.08 hereof which,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.03(a) hereof),
are in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.


 


Section 8.05.  Repayment to
Issuer.  Any money deposited
with the Trustee or any paying agent, or then held by the Issuer, in trust for
the payment of the principal, premium, if any, interest and Additional
Interest, if any, on the Notes and remaining unclaimed for two years after such
principal, premium, if any, interest and Additional Interest, if any, has
become due and payable shall be paid to the Issuer on its request or (if then
held by the Issuer) shall be discharged from such trust; and the Holder of such
Note shall thereafter, as an unsecured creditor, look only to the Issuer for payment
thereof, and all liability of the Trustee or such paying agent with respect to
such trust money, and all liability of the Issuer as trustee thereof, shall
thereupon cease; provided, however,
that the Trustee or such paying agent, before being required to make any such
repayment, may at the expense of the Issuer cause to be published once, in The New York Times and The Wall Street Journal (national
editions), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer.


 


Section 8.06. 
Reinstatement.  If the
Trustee or paying agent is unable to apply any money or non-callable U.S.
Government Obligations in accordance with Section 8.01, Section 8.02
or Section 8.08 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Issuer’s obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01, Section 8.02 or Section 8.08
hereof until such time as the Trustee or paying agent is permitted to apply all
such money in accordance with Section 8.01, Section 8.02 or Section 8.08
hereof, as the case may be; provided,
however, that, if the Issuer
makes any payment of principal of, premium, if any, or interest or Additional
Interest, if any, on any Note following the reinstatement of its obligations,
the Issuer shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or paying agent.


 


87

















 


Section 8.07. 
Survival.  The Trustee’s
rights under Article 7 and this Article 8 shall survive termination
of this Indenture.


 


Section 8.08.  Satisfaction
and Discharge of Indenture.  If
at any time (a) (i) the Issuer shall have paid or caused to be paid
the principal of, premium, if any, and interest and Additional Interest, if
any, on all the outstanding Notes (other than Notes which have been destroyed,
lost or stolen and which have been replaced or paid as provided in Section 2.04)
as and when the same shall have become due and payable, or (ii) the Issuer
shall have delivered to the Trustee for cancellation all Notes theretofore
authenticated (other than Notes which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.04), or (b) (i) the
Notes mature within one year, or all of them are to be called for redemption
within one year under arrangements satisfactory to the Trustee for giving the
notice of redemption, (ii) the Issuer irrevocably deposits in trust with
the Trustee, as trust funds solely for the benefit of the Holders, money or
U.S. Government Obligations or a combination thereof sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certificate delivered to the Trustee, without consideration of any
reinvestment, to pay principal of and premium, interest and Additional
Interest, if any, on the Notes to maturity or redemption, as the case may be,
and to pay all other sums payable by it hereunder, (iii) no Default has
occurred and is continuing on the date of the deposit, (iv) the deposit
will not result in a breach or violation of, or constitute a default under, the
Indenture or any other agreement or instrument to which the Issuer is a party
or by which it is bound, and (v) the Issuer delivers to the Trustee an
Officers’ Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the satisfaction and
discharge of the Indenture have been complied with; and if, in any such case,
the Issuer shall also pay or cause to be paid all other sums payable hereunder
by the Issuer (including all amounts, payable to the Trustee pursuant to Section 7.07),
then, (x) after satisfying the conditions in clause (a), only the Company’s
obligations under Sections 7.07 and 8.04 will survive or (y) after
satisfying the conditions in clause (b), only the Issuer’s or the Company’s, as
applicable, obligations in Article 2 and Sections 4.01, 4.02, 7.07, 7.08,
8.04, 8.05 and 8.06 will survive, and, in either case, the Trustee, on demand
of the Issuer accompanied by an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent relating to the
satisfaction and discharge contemplated by this provision have been complied
with, and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction and discharging of this Indenture
and the Security Documents and cause the release of all Liens on the Collateral
granted under the Security Documents. 
The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred, and to compensate the Trustee for
any services thereafter reasonably and properly rendered, by the Trustee in
connection with this Indenture or the Notes.


 


88
















 


ARTICLE 9

AMENDMENTS, SUPPLEMENTS AND WAIVERS


 


Section 9.01.  Amendments
Without Consent of Holders.  The
Company, the Issuer, the Guarantors and the Trustee and the Collateral Agent,
Wilmington Trust Company and the Administrative Agent (with respect to the
Security Documents) may amend, supplement or waive the Indenture, the Notes or
the Security Documents without notice to or the consent of any Holder:


 


(a)      to
evidence the succession of another Person to the Issuer or the Company or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Issuer or the Company herein and
in the Notes or the Guarantees;


 


(b)      to
add to the covenants of the Issuer or the Company such further covenants,
restrictions, conditions or provisions for the protection of the Holders of
Notes, or to surrender any right or power herein conferred upon the Issuer or
the Company, and to make the occurrence, or the occurrence and continuance, of
a default in any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided, however,
that in respect of any such additional covenants, restrictions, conditions or
provisions such amendment, supplemented indenture or waiver may provide for a
particular period of grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may limit the remedies available
to the Trustee upon such an Event of Default or may limit the right of the
Holders of a majority in aggregate principal amount of the Notes to waive such
an Event of Default;


 


(c)      to
cure any ambiguity, defect or inconsistency in the Indenture, the Notes, the
Guarantees or the Security Documents;


 


(d)      to
comply with any requirements of the Commission in connection with the
qualification of the Indenture under the Trust Indenture Act;


 


(e)      to
evidence and provide for the acceptance of appointment hereunder by a successor
or replacement Trustee or under the Security Documents of a successor or
replacement Collateral Agent;


 


(f)       to
provide for uncertificated Notes in addition to, or in place of, Certificated
Notes;


 


(g)      to
provide for any Guarantee of the Notes, to add security to or for the benefit
of the Notes and, in the case of the Security Documents, to or for the 


 


89

















 


benefit of the other secured parties named
therein, or to confirm and evidence the release, termination or discharge of
any Guarantee of or Lien securing the Notes when such release, termination or
discharge is permitted by the Indenture and the Security Documents;


 


(h)      to
evidence compliance with Section 4.14;


 


(i)       to
make any other change that does not adversely affect the legal rights of any
Holder; or


 


(j)       to
conform any provision of the Indenture, the Notes, the Guarantees or the
Security Documents to the ‘‘Description of Notes’’ contained in the Issuer’s
Confidential Offering Circular dated May 16, 2008 to the extent that the ‘‘Description
of Notes’’ was intended to be a verbatim recitation of a provision in the
Indenture, the Notes, the Guarantees or the Security Documents.


 


In addition,
the Collateral Agent, the Administrative Agent, Wilmington Trust Company and
the Trustee (as applicable) may amend the Security Documents to add additional
secured parties to the extent Liens securing Obligations held by such parties
are permitted under the Indenture, including that after so securing any such
additional secured parties, the amount of First-Priority Lien Obligations does
not exceed the amount set forth under clause (i)(b) of the definition of “Permitted
Liens.”


 


Section 9.02.  Amendments
with Consent of Holders.  (a) Except
as otherwise provided in Sections 5.01, 5.03 and 5.06 or paragraph (b), the
Company, the Issuer, the Guarantors and the Trustee and the Collateral Agent,
Wilmington Trust Company, the Administrative Agent (with respect to the
Security Documents) may amend or supplement the Indenture, the Notes, the
Guarantees and the Security Documents with the written consent of the Holders
of a majority in principal amount of the outstanding Notes (which may include
consents obtained in connection with a tender offer or exchange offer), and the
Holders of a majority in principal amount of the outstanding Notes by written
notice to the Trustee may waive future compliance by the Company, the Issuer
and the Guarantors with any provision of the Indenture, the Notes, the
Guarantees or the Security Documents (which may include waivers obtained in
connection with a tender offer or exchange offer).


 


(b)      Notwithstanding
the provisions of paragraph (a), without the consent of each Holder affected,
an amendment or waiver may not:


 


(i)       reduce
the amount of Notes whose Holders must consent to an amendment, supplement or
waiver,


 


90

















 


(ii)      reduce the rate of, or
change the time for payment of, any interest, including default interest, on
any Note,


 


(iii)     reduce
principal of, or change the fixed maturity of, any Note or alter the provisions
(including related definitions) with respect to redemptions described under Article 3
or with respect to mandatory offers to repurchase Notes described under Section 4.10
and Section 4.12,


 


(iv)     make
any Note payable in money other than that stated in the Note,


 


(v)      modify
the ranking or priority of the Notes or any Guarantee,


 


(vi)     make
any change in Sections 5.03 or 5.06,


 


(vii)    release
any Guarantor from any of its obligations under its Guarantee or the Indenture
otherwise than in accordance with the Indenture,


 


(viii)   waive
a continuing Default or Event of Default in the payment of principal of,
premium, if any, or interest or Additional Interest, if any, on the Notes, or


 


(ix)     effect
a release of all or substantially all of the Collateral other than pursuant to
the terms of the Security Documents or as otherwise permitted under this Indenture.


 


(c)        It
is not necessary for Holders to approve the particular form of any proposed
amendment, supplement or waiver, but is sufficient if their consent approves
the substance thereof.


 


(d)        An
amendment, supplement or waiver under this Section will become effective
on receipt by the Trustee of written consents from the Holders of the requisite
percentage in principal amount of the outstanding Notes.  After an amendment, supplement or waiver
under this Section becomes effective, the Issuer (or the Trustee at the
request and expense of the Issuer) will send to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver.  The Issuer will send supplemental indentures
to Holders upon request.  Any failure of
the Issuer to send such notice, or any defect therein, will not, however, in
any way impair or affect the validity of any such supplemental indenture,
amendment or waiver.


 


Section 9.03.  Effect of
Consent.  (a) After an
amendment, supplement or waiver becomes effective, it will bind every Holder
unless it is of the type requiring the consent of each Holder affected.  If the amendment, supplement or 


 


91

















 


waiver is of the type requiring the consent
of each Holder affected, the amendment, supplement or waiver will bind each
Holder that has consented to it and every subsequent Holder of a Note that
evidences the same debt as the Note of the consenting Holder.


 


(b)        If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee so that the Trustee may place an
appropriate notation of the changed terms on the Note and return it to the
Holder, or exchange it for a new Note that reflects the changed terms.  The Trustee may also place an appropriate
notation on any Note thereafter authenticated. 
However, the effectiveness of the amendment, supplement or waiver shall
not be affected or impaired by any failure to annotate or exchange Notes in
this fashion.


 


Section 9.04.  Trustee’s
Rights and Obligations.  The
Trustee is entitled to receive, and will be fully protected in relying upon, an
Opinion of Counsel stating (i) that the execution of any amendment,
supplement or waiver authorized pursuant to this Article is authorized or
permitted by the Indenture and (ii) in the case of an amendment,
supplement or waiver in connection with Section 9.01(i) that such
amendment, supplement or waiver does not adversely affect the legal rights of
any Holder of Notes affected by such change. 
If the Trustee has received such an Opinion of Counsel, it shall sign
the amendment, supplement or waiver so long as the same does not adversely
affect the rights of the Trustee.  The
Trustee may, but is not obligated to, execute any amendment, supplement or
waiver that affects the Trustee’s own rights, duties or immunities under the
Indenture.


 


Section 9.05.  Conformity
with Trust Indenture Act.  Every
supplemental indenture executed pursuant to this Article shall conform to
the requirements of the Trust Indenture Act.


 


Section 9.06.  Payments
for Consents.  Neither the
Issuer, the Company nor any of its Subsidiaries or Affiliates may, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of the Indenture
or the Notes unless such consideration is offered to be paid or agreed to be
paid to all Holders of Notes that consent, waive or agree to amend such term or
provision within the time period set forth in the solicitation documents
relating to the consent, waiver or amendment.


 


92

















 


ARTICLE 10

RANKING OF LIENS


 


Section 10.01.  Agreement
for the Benefit of Holders of First-Priority Liens.  The Trustee and the Collateral
Agent agree, and each Holder of Notes by accepting a Note agrees, that:


 


(a)      the
Liens securing the Second-Priority Lien Obligations upon any and all Collateral
are, to the extent and in the manner provided in the Intercreditor Agreement,
subordinate in ranking to all present and future First-Priority Liens; and


 


(b)      the agreements as to the
ranking of the Second-Priority Liens set forth in the Intercreditor Agreement:


 


(1)           are
enforceable by the holders of First-Priority Liens, for the benefit of the
holders of First-Priority Lien Obligations secured thereby; and


 


(2)           will
remain enforceable by the holders of First-Priority Liens until the Discharge
of Senior Lender Claims (as defined in the Intercreditor Agreement).


 


(c)      without the necessity of
any consent of, or notice to, the Trustee or any holder of Second-Priority Lien
Obligations, the Issuer, the Restricted Subsidiaries and the Administrative
Agent may amend, modify, supplement or terminate any Security Document, subject
to the limitations set forth in the Intercreditor Agreement;  provided that the Issuer will use
commercially reasonable efforts to notify the Trustee and the Collateral Agent
of any such amendment, modification, supplement or termination (but the failure
to provide such notice shall not affect the applicability, validity or
enforceability of such amendment);


 


(d)      as among the Collateral
Agent, the Trustee and the holders of Second-Priority Lien Obligations and the
holders of the First-Priority Lien Obligations, the holders of the
First-Priority Lien Obligations and the Administrative Agent will have the sole
ability to control and obtain remedies with respect to all Collateral without
the necessity of any consent of or notice to the Collateral Agent, the Trustee
or any such holder, as set forth in more detail in the Intercreditor Agreement;


 


(e)      any or all Liens as set
forth in, and granted under the Security Documents for the benefit of the
Holders will be automatically and unconditionally released, without the
necessity of any consent of the Collateral Agent, the Trustee or any Holders,
upon a release of the First-Priority Liens on 


 


93

















 


such Collateral, but will not be so released
upon payment in full of the First-Priority Lien Obligations, subject, in each
case, to the exceptions set forth in Section 5.1 of the Intercreditor
Agreement; and


 


(f)       the Indenture, Notes,
Guarantees and Security Documents are subject to the Intercreditor Agreement.


 


Section 10.02.  Notes,
Guarantees and Other Second-Priority Lien Obligations not Subordinated.  The provisions of this Article 10
are intended solely to set forth the relative ranking, as Liens, of the
Second-Priority Liens as against the First-Priority Liens.  The Notes and Guarantees are senior
non-subordinated obligations of the Issuer and Guarantors.  Neither the Notes, the Guarantees and other Second-Priority
Lien Obligations nor the exercise or enforcement of any right or remedy for the
payment or collection thereof (other than the exercise of rights and remedies
of a secured party, which are subject to the Intercreditor Agreement) are
intended to be, or will ever be by reason of the provisions of this Article 10,
in any respect subordinated, deferred, postponed, restricted or prejudiced.


 


Section 10.03.  Relative
Rights.  The Intercreditor
Agreement defines the relative rights, as lienholders, of holders of
Second-Priority Liens and holders of First-Priority Liens.  Nothing in this Indenture or the
Intercreditor Agreement will:


 


(a)      impair, as between the
Issuer and Holders of Notes, the obligation of the Issuer, which is absolute
and unconditional, to pay principal of, premium and interest on the Notes in
accordance with their terms or to perform any other obligation of the Issuer or
any other obligor under the Indenture, Notes, Guarantees and Security
Documents;


 


(b)      restrict the right of any
Holder of Notes to sue for payments that are then due and owing;


 


(c)      prevent the Trustee, the
Collateral Agent or any Holder of Notes from exercising against the Issuer or
any other obligor any of its other available remedies upon a Default or Event
of Default (other than its rights as a secured party, which are subject to the
Intercreditor Agreement); or


 


(d)      restrict the right of the
Trustee, the Collateral Agent or any Holder of Notes:


 


(1)           to
file and prosecute a petition seeking an order for relief in an involuntary
bankruptcy case as to any obligor or otherwise to commence, or seek relief
commencing, any insolvency or liquidation proceeding involuntarily against any
obligor;


 


94

















 


(2)           to
make, support or oppose any request for an order for dismissal, abstention or
conversion in any insolvency or liquidation proceeding;


 


(3)           to
make, support or oppose, in any insolvency or liquidation proceeding, any
request for an order extending or terminating any period during which the
debtor (or any other Person) has the exclusive right to propose a plan of
reorganization or other dispositive restructuring or liquidation plan therein;


 


(4)           to
seek the creation of, or appointment to, any official committee representing
creditors (or certain of the creditors) in any insolvency or liquidation
proceedings and, if appointed, to serve and act as a member of such committee
without being in any respect restricted or bound by, or liable for, any of the
obligations under this Article 10;


 


(5)           to
seek or object to the appointment of any professional person to serve in any
capacity in any insolvency or liquidation proceeding or to support or object to
any request for compensation made by any professional person or others therein;


 


(6)           to
make, support or oppose any request for order appointing a trustee or examiner
in any insolvency or liquidation proceedings; or


 


(7)           otherwise
to make, support or oppose any request for relief in any insolvency or
liquidation proceeding that it is permitted by law to make, support or oppose:


 


(x)            if
it were a holder of unsecured claims; or


 


(y)           as
to any matter relating to any plan of reorganization or other restructuring or
liquidation plan or as to any matter relating to the administration of the
estate or the disposition of the case or proceeding;


 


in each case,
except as set forth in the Intercreditor Agreement.


 


ARTICLE 11

COLLATERAL AND SECURITY


 


Section 11.01.  Security
Documents.  The payment of the
principal of and interest and premium, if any, on the Notes when due, whether
on an interest payment date, at maturity, by acceleration, repurchase,
redemption or otherwise and whether by the Issuer pursuant to the Notes or by
any Guarantor pursuant to 


 


95

















 


its Guarantees, the payment of all other
Second-Priority Lien Obligations and the performance of all other obligations
of the Issuer and the Guarantors under the Indenture, the Notes, the Guarantees
and the Security Documents are secured by Second-Priority Liens on the
Collateral, subject to Permitted Liens, as provided in the Security Documents
which the Issuer and the Guarantors have entered into simultaneously with the
execution of this Indenture, or in certain circumstances, subsequent to the
Issue Date, and will be secured as provided in the Security Documents hereafter
delivered as required or permitted by this Indenture.


 


Section 11.02.  Collateral
Agent.


 


(a)      The Issuer hereby
appoints Deutsche Bank National Trust Company to act as Collateral Agent, and
the Collateral Agent shall have the privileges, powers and immunities as set
forth herein and in the Security Documents. 
The Issuer and the Guarantors hereby agree that the Collateral Agent
shall hold the Collateral in trust for the benefit of all of the Holders and
the Trustee, in each case, pursuant to the terms of the Security Documents and
the Collateral Agent is hereby authorized to execute and deliver the Security
Documents.  Subject to the Intercreditor
Agreement, the Collateral Agent is authorized and empowered to appoint one or
more co-Collateral Agents as it deems necessary or appropriate.


 


(b)      Subject to Section 7.01,
neither the Trustee nor the Collateral Agent nor any of their respective
officers, directors, employees, attorneys or agents will be responsible or
liable for the existence, genuineness, value or protection of any Collateral,
for the legality, enforceability, effectiveness or sufficiency of the Security
Documents, for the creation, perfection, priority, sufficiency or protection of
any Second-Priority Lien, or for any defect or deficiency as to any such
matters, or for any failure to demand, collect, foreclose or realize upon or
otherwise enforce any of the Second-Priority Liens or Security Documents or any
delay in doing so.


 


(c)      The Collateral Agent will
be subject to such directions as may be given it by the Trustee from time to
time (as required or permitted by this Indenture).  Except as directed by the Trustee as required
or permitted by this Indenture or as required or permitted by the Security
Documents, the Collateral Agent will not be obligated:


 


(1)           to
act upon directions purported to be delivered to it by any other Person;


 


(2)           to
foreclose upon or otherwise enforce any Second-Priority Lien; or


 


(3)           to
take any other action whatsoever with regard to any or all of the
Second-Priority Liens, Security Documents or Collateral.


 


96

















 


(d)      The Collateral Agent will
be accountable only for amounts that it actually receives as a result of the
enforcement of the Second-Priority Liens or the Security Documents.


 


(e)      In acting as Collateral
Agent or co-Collateral Agent, the Collateral Agent and each co-Collateral Agent
may rely upon and enforce for its own benefit each and all of the rights,
powers, immunities, indemnities and benefits of the Trustee under Article 7
hereof, each of which shall also be deemed to be for the benefit of the
Collateral Agent.


 


(f)       At all times when the
Trustee is not itself the Collateral Agent, the Issuer will deliver to the
Trustee copies of all Security Documents delivered to the Collateral Agent and
copies of all documents delivered to the Collateral Agent pursuant to the
Security Documents.


 


Section 11.03. 
Authorization of Actions to be Taken.


 


(a)      Each Holder of Notes, by
its acceptance thereof, consents and agrees to the terms of each Security
Document, as originally in effect on the Issue Date and as amended,
supplemented or replaced from time to time in accordance with its terms or the
terms of this Indenture, authorizes and directs the Trustee and the Collateral
Agent to execute and deliver the Security Documents to which it is a party and
authorizes and empowers the Trustee and the Collateral Agent to bind the
Holders of Notes and other holders of Second-Priority Lien Obligations as set
forth in the Security Documents to which it is a party and to perform its
obligations and exercise its rights and powers thereunder.


 


(b)      The Collateral Agent and
the Trustee are authorized and empowered to receive for the benefit of the
Holders of Notes any funds collected or distributed under the Security
Documents to which the Collateral Agent or Trustee is a party and to make
further distributions of such funds to the Holders of Notes according to the
provisions of this Indenture.


 


(c)      Subject to the provisions
of Section 7.01, Section 7.02, Article 10 and the Intercreditor
Agreement, the Trustee may, in its sole discretion and without the consent of
the Holders of Notes, direct, on behalf of the Holders of Notes, the Collateral
Agent to take all actions it deems necessary or appropriate in order to:


 


(1)           foreclose
upon or otherwise enforce any or all of the Second-Priority Liens;


 


(2)           enforce
any of the terms of the Security Documents to which the Collateral Agent or
Trustee is a party; or


 


97

















 


(3)           collect
and receive payment of any and all Second-Priority Lien Obligations.


 


Subject to the
Intercreditor Agreement, Section 7.01, Section 7.02 and Article 10,
the Trustee is authorized and empowered to institute and maintain, or direct
the Collateral Agent to institute and maintain, such suits and proceedings as
it may deem expedient to protect or enforce the Second-Priority Liens or the
Security Documents to which the Collateral Agent or Trustee is a party or to
prevent any impairment of Collateral by any acts that may be unlawful or in
violation of the Security Documents to which the Collateral Agent or Trustee is
a party or this Indenture, and such suits and proceedings as the Trustee or the
Collateral Agent may deem expedient to preserve or protect its interests and
the interests of the Holders of Notes in the Collateral, including power to
institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or
order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the
security interest hereunder or be prejudicial to the interests of Holders of
Notes, the Trustee or the Collateral Agent.


 


Section 11.04.  Release of
Second-Priority Liens.


 


(a)      The Second-Priority Liens
will be released, with respect to the Notes and the Guarantees:


 


(1)           in
whole, in accordance with Section 5.1 of the Intercreditor Agreement;


 


(2)           in
whole, upon payment in full of the principal of, accrued and unpaid interest
and premium, if any, on the Notes and payment in full of all other
Second-Priority Lien Obligations in respect thereof that are due and payable at
or prior to the time such principal, accrued and unpaid interest and premium,
if any, on the Notes are paid;


 


(3)           in
whole, upon satisfaction and discharge of this Indenture pursuant to Section 8.08;


 


(4)           in
whole, upon a legal defeasance or covenant defeasance pursuant to Article 8;


 


(5)           in
part, as to any property constituting Collateral that (a) is sold or
otherwise disposed of by the Issuer or one of the Restricted Subsidiaries to
any Person other than the Company, the Issuer or any of its Restricted
Subsidiaries (but excluding any transaction subject to Section 4.14 where
the recipient is required to become the obligor on the Notes or 


 


98

















 


a Guarantee)
in a transaction permitted by this Indenture, at the time of such sale or
disposition, to the extent of the interest sold or disposed of, (b) is to
be released, in whole or in part, pursuant to Section 5.1 of the
Intercreditor Agreement, (c) is owned or at any time acquired by a
Restricted Subsidiary that has been released from its Guarantee under this
Indenture, concurrently with the release of such Guarantee, or (d) consists
of securities of a Guarantor of the Issuer to be released as contemplated by Section 4.18(c);
or


 


(6)           In
accordance with and subject to the provisions of Article 9, with the
consent of Holders of a majority in principal amount of the outstanding Notes or
each Holder affected if required by Section 9.02(b)(ix) (including
consents obtained in connection with a tender offer or exchange offer).


 


(b)      If
an instrument confirming the release of the Second-Priority Liens pursuant to Section 11.04(a) is
requested by the Issuer or a Guarantor, then upon delivery to the Trustee of an
Officers’ Certificate requesting execution of such an instrument, accompanied
by:


 


(1)           an
Opinion of Counsel confirming that such release is permitted by Section 11.04(a);


 


(2)           all
instruments requested by the Issuer to effectuate or confirm such release; and


 


(3)           such
other certificates and documents as the Trustee or Collateral Agent may
reasonably request to confirm the matters set forth in Section 11.04(a) that
are required by this Indenture or the Security Documents,


 


the Trustee
will, if such instruments and documents are reasonably satisfactory to the
Trustee and Collateral Agent, instruct the Collateral Agent to execute and
deliver, and the Collateral Agent will promptly execute and deliver, such
instruments.


 


(c)      All
instruments effectuating or confirming any release of any Second-Priority Liens
will have the effect solely of releasing such Second-Priority Liens as to the
Collateral described therein, on customary terms and without any recourse,
representation, warranty or liability whatsoever.


 


(d)      The
Issuer will bear and pay all costs and expenses associated with any release of
Second-Priority Liens pursuant to this Section 11.04, including all
reasonable fees and disbursements of any attorneys or representatives acting
for the Trustee or for the Collateral Agent.


 


99
















 


Section 11.05.  Filing,
Recording and Opinions.


 


(a)      The Issuer will comply
with the provisions of TIA §314(b) and §314(d), in each case following
qualification of this Indenture pursuant to the TIA.  Any certificate or opinion required by TIA
§314(d) may be made by an Officer of the Issuer except in cases where TIA
§314(d) requires that such certificate or opinion be made by an
independent engineer, appraiser or other expert, who shall be reasonably
satisfactory to the Trustee. Notwithstanding anything to the contrary herein,
the Issuer and the Guarantors will not be required to comply with all or any
portion of TIA §314(d) if they determine, in good faith based on advice of
counsel (which may be internal counsel), that under the terms of that section
and/or any interpretation or guidance as to the meaning thereof of the
Commission and its staff, including ‘‘no action’’ letters or exemptive orders,
all or any portion of TIA §314(d) is inapplicable to the released
Collateral.  Following the qualification
of this Indenture pursuant to the TIA, to the extent the Issuer is required to
furnish to the Trustee an Opinion of Counsel pursuant to TIA §314(b)(2), the
Issuer will furnish such opinion prior to each May 27.


 


Any release of
Collateral permitted by Section 11.04 hereof or the Security Documents
will be deemed not to impair the Liens under the Indenture and the Security
Documents in contravention thereof and any person that is required to deliver a
certificate or opinion pursuant to Section 314(d) of the TIA or
otherwise under this Indenture or the Security Documents, shall be entitled to
rely upon the foregoing as a basis for delivery of such certificate or
opinion.  The Trustee may, to the extent
permitted by Section 7.01 and 7.02 hereof, accept as conclusive evidence
of compliance with the foregoing provisions the appropriate statements
contained in such documents and opinion.


 


(b)      If any Collateral is
released in accordance with this Indenture or any Security Document at a time
when the Trustee is not itself also the Collateral Agent and if the Issuer has
delivered the certificates and documents required by the Security Documents and
permitted to be delivered by Section 11.04 (if any), the Trustee will
determine whether it has received all documentation required by TIA §314(d) in
connection with such release and, based on such determination and the Opinion
of Counsel delivered pursuant to Section 11.04, if any, will, upon
request, deliver a certificate to the Collateral Agent setting forth such
determination.


 


ARTICLE 12

RELEASE OF ISSUER AND GUARANTORS


 


Section 12.01.  Release of
Issuer.  (a) The Issuer
shall be released from its obligations under this Indenture and the Notes,
without the consent of the Holders, if: (1) the Company or any successor
to the Company has assumed the 


 


100

















 


obligations of the Issuer under this
Indenture and the Notes, by supplemental indenture executed and delivered to
the Trustee and satisfactory in form to the Trustee, (2) the Company
delivers an Opinion of Counsel to the Trustee to the effect that Holders will
not recognize income, gain or loss for United States federal income tax
purposes as a result of such release and such Holders will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such release had not occurred and (3) the
Issuer shall (w) become a Guarantor subject to the provisions of Article 6
and Section 4.11 hereof, (x) execute a Guarantee, (y) execute a
supplemental indenture evidencing its Guarantee and (z) deliver an Opinion
of Counsel to the Trustee to the effect that the supplemental indenture has
been duly authorized, executed and delivered by the Issuer and constitutes a valid
and binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms (subject to customary exceptions).


 


(b)      A Guarantor may be
released from its obligations under the Indenture, the Notes and its Guarantee
in accordance with the provisions contained in Section 6.03 herein.


 


ARTICLE 13

MISCELLANEOUS


 


Section 13.01.  Trust
Indenture Act of 1939.  The
Indenture shall incorporate and be governed by the provisions of the Trust
Indenture Act that are required to be part of and to govern indentures
qualified under the Trust Indenture Act. 
To the extent permitted by applicable law, in the event of any
inconsistency between the terms of the Notes and the terms of the Indenture,
the terms of the Indenture will control; provided
however that provisions of TIA §314(b) and §314(d), in each
case, shall not apply until qualification of this Indenture under the TIA.


 


Section 13.02.  Holder
Communications; Holder Actions.  (a) The
rights of Holders to communicate with other Holders with respect to the
Indenture or the Notes are as provided by the Trust Indenture Act, and the
Company and the Issuer shall comply with the requirements of Trust Indenture
Act Section 312(a).  Neither the
Company, the Issuer nor the Trustee will be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.


 


(b)        (i)          any request, demand, authorization,
direction, notice, consent to amendment, supplement or waiver or other action
provided by this Indenture to be given or taken by a Holder (an “act”) may be evidenced by an instrument
signed by the Holder delivered to the Trustee. 
The fact and date of the 


 


101

















 


execution of the instrument, or the authority
of the person executing it, may be proved in any manner that the Trustee deems
sufficient.


 


(ii)         The
Trustee may make reasonable rules for action by or at a meeting of
Holders, which will be binding on all the Holders.


 


(c)        Any act by the Holder
of any Note binds that Holder and every subsequent Holder of a Note that
evidences the same debt as the Note of the acting Holder, even if no notation
thereof appears on the Note.  Subject to
paragraph (d), a Holder may revoke an act as to its Notes, but only if the
Trustee receives the notice of revocation before the date the amendment or
waiver or other consequence of the act becomes effective.


 


(d)        The Issuer may, but is
not obligated to, fix a record date (which need not be within the time limits
otherwise prescribed by Trust Indenture Act Section 316(c)) for the
purpose of determining the Holders entitled to act with respect to any
amendment or waiver or in any other regard, except that during the continuance
of an Event of Default, only the Trustee may set a record date as to notices of
Default, any declaration or acceleration or any other remedies or other
consequences of the Event of Default.  If
a record date is fixed, those Persons that were Holders at such record date and
only those Persons will be entitled to act, or to revoke any previous act,
whether or not those Persons continue to be Holders after the record date.  No act will be valid or effective for more
than 90 days after the record date.


 


Section 13.03.  Notices.  (a) Any notice or communication
to the Issuer or the Company will be deemed given if in writing (i) when
delivered in person or (ii) five days after mailing when mailed by first
class mail or (iii) when sent by facsimile transmission, with transmission
confirmed.  Notices or communications to
a Guarantor will be deemed given if given to the Company.  Any notice to the Trustee will be effective
only upon receipt.  In each case the
notice or communication should be addressed as follows:


 


102

















 


if to the Issuer or the Company:


 


K. Hovnanian
Enterprises, Inc.

110 West Front Street

Box 500

Red Bank, NJ 07701

Facsimile: (732) 383-2945

Attention:  General Counsel


 


if to the Trustee:


 


Deutsche Bank
National Trust Company

Trust & Securities Services

222 South Riverside Plaza

25th floor, MS CH105-2502

Chicago, IL  60606-5808

Facsimile:  (312) 537-1009


Attention:  Corporate Trust & Securities


 


The Issuer or
the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.


 


(b)        Except as otherwise
expressly provided with respect to published notices, any notice or
communication to a Holder will be deemed given when mailed to the Holder at its
address as it appears on the Register by first class mail or, as to any Global
Note registered in the name of DTC or its nominee, as agreed by the
Issuer,  the Trustee and DTC.  Copies of any notice or communication to a
Holder, if given by the Issuer or the Company, will be mailed to the Trustee at
the same time.  Defect in mailing a
notice or communication to any particular Holder will not affect its
sufficiency with respect to other Holders.


 


(c)        Where the Indenture
provides for notice, the notice may be waived in writing by the Person entitled
to receive such notice, either before or after the event, and the waiver will
be the equivalent of the notice.  Waivers
of notice by Holders must be filed with the Trustee, but such filing is not a
condition precedent to the validity of any action taken in reliance upon such
waivers.


 


Section 13.04.  Certificate
and Opinion as to Conditions Precedent.  Upon
any request or application by the Issuer or the Company to the Trustee to take
any action under the Indenture, the Issuer or the Company will furnish to the Trustee:


 


(a)      an
Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in the Indenture relating to the
proposed action have been complied with; and


 


103

















 


(b)      an
Opinion of Counsel stating that all such conditions precedent relating to the
proposed action have been complied with.


 


Section 13.05.  Statements
Required in Certificate or Opinion.  Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in the Indenture must include:


 


(a)      a
statement that each person signing the certificate or opinion has read the
covenant or condition and the related definitions;


 


(b)      a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in the certificate or opinion is
based;


 


(c)      a
statement that, in the opinion of each such person, that person has made such
examination or investigation as is necessary to enable the person to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and


 


(d)      a
statement as to whether or not, in the opinion of each such person, such
condition or covenant has been complied with, provided,
that an Opinion of Counsel may rely on an Officers’ Certificate or certificates
of public officials with respect to matters of fact.


 


Any
certificate, statement or opinion of an Officer of the Issuer or the Company,
as applicable, may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such Officer
knows that the certificate or opinion or representations with respect to the
matters upon which such certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous.  Any certificate,
statement or Opinion of Counsel may be based, insofar as it relates to factual
matters on information with respect to which is in the possession of the
Issuer, or the Company, as applicable, upon the certificate, statement or
opinion of or representations by an officer or officers of the Issuer, or the
Company, as applicable, unless such counsel knows that the certificate, statement
or opinion or representations with respect to the matters upon which such
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous.


 


Any
certificate, statement or opinion of an Officer of the Issuer or the Company,
as applicable, or of counsel may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants in the employ of the Issuer or the Company, as
applicable, unless such Officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting
matters 


 


104

















 


upon which such certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.


 


Any
certificate or opinion of any independent firm of public accountants filed with
and directed to the Trustee shall contain a statement that such firm is
independent.


 


Section 13.06.  Payment
Date Other Than a Business Day.  If
any payment with respect to a payment of any principal of, premium, if any, or
interest or Additional Interest, if any, on any Note (including any payment to
be made on any date fixed for redemption or purchase of any Note) is due on a
day which is not a Business Day, then the payment need not be made on such
date, but may be made on the next Business Day with the same force and effect
as if made on such date, and no interest will accrue for the intervening
period.


 


Section 13.07.  Governing
Law.  The Indenture, the
Guarantees and the Notes shall be governed by, and construed in accordance
with, the laws of the State of New York.


 


Section 13.08.  No Adverse
Interpretation of Other Agreements.  The
Indenture may not be used to interpret another indenture or loan or debt
agreement of the Issuer, the Company or any Subsidiary of the Company, and no
such indenture or loan or debt agreement may be used to interpret the
Indenture.


 


Section 13.09.  Successors.  All agreements of the Issuer, the
Company or any Guarantor in the Indenture and the Notes will bind its
successors.  All agreements of the
Trustee in the Indenture will bind its successor.


 


Section 13.10.  Duplicate
Originals.  The parties may
sign any number of copies of the Indenture. 
Each signed copy shall be an original, but all of them together
represent the same agreement.


 


Section 13.11.  Separability.  To the extent permitted by
applicable law, in case any provision in the Indenture or in the Notes is
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions will not in any way be affected or impaired thereby.


 


Section 13.12.  Table of
Contents and Headings.  The
Table of Contents, Cross-Reference Table and headings of the Articles and
Sections of the Indenture have been inserted for convenience of reference only,
are not to be considered a part of the Indenture and in no way modify or
restrict any of the terms and provisions of the Indenture.


 


105

















 


Section 13.13.  No
Liability of Directors, Officers, Employees, Partners, Incorporators and
Stockholders.  No recourse
under or upon any obligation, covenant or agreement contained in this
Indenture, or in the Notes, or because of any indebtedness evidenced thereby,
shall be had against any incorporator, as such or against any past, present or
future stockholder, officer, director or employee, as such, of the Issuer, the
Company or the Guarantors or any partner of the Issuer, the Company or the
Guarantors or of any successor, either directly or through the Issuer, the
Company or the Guarantors or any successor, under any rule of law, statute
or constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Notes by the Holders thereof and
as part of the consideration for the issue of the Notes.


 


Section 13.14.  Provisions
of Indenture for the Sole Benefit of Parties and Holders of Notes.  Nothing in this Indenture or in
the Notes, expressed or implied, shall give or be construed to give to any
Person, other than the parties hereto and their successors and the Holders of
Notes, any legal or equitable right, remedy or claim under this Indenture or
under any covenant or provision herein contained, all such covenants and
provisions being for the sole benefit of the parties hereto and their
successors and of the Holders of Notes.


 


106

















 


SIGNATURES


 


IN WITNESS
WHEREOF, the parties hereto have caused the Indenture to be duly executed as of
the date first written above.


 


	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.,

  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Name: 

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
  Title: Senior Vice President and

  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOVNANIAN ENTERPRISES, INC.,

  as the Company and a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
  Name: 

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
  Title: Senior Vice President and 

  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  On behalf of each entity named in 

  Schedule A hereto, as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
  Name: 

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
  Title: Authorized
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DEUTSCHE BANK NATIONAL

  TRUST COMPANY, as Trustee

  
	
   

  
	
   

  
	
  By:

  	
   /s/

  	
  George F.
  Kubin

  	
   

  
	
   

  	
  Name: 

  	
  George F.
  Kubin

  	
   

  
	
   

  	
  Title:  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/

  	
  Victoria Y.
  Douyon

  	
   

  
	
   

  	
  Name: 

  	
  Victoria Y.
  Douyon

  	
   

  
	
   

  	
  Title:  Vice
  President

  	
   

  
							



 


107
















 


SCHEDULE A


 


GUARANTORS


 


ALFORD,
L.L.C.


AUDDIE
ENTERPRISES, L.L.C.


BUILDER
SERVICES NJ, L.L.C.


BUILDER
SERVICES NY, L.L.C.


BUILDER
SERVICES PA, L.L.C.


DULLES
COPPERMINE, L.L.C.


EASTERN
TITLE AGENCY, INC.


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


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


FOUNDERS
TITLE AGENCY, INC.


GOVERNOR’S
ABSTRACT CO., INC.


GREENWAY
FARMS UTILITY ASSOCIATES, L.L.C.


HOMEBUYERS
FINANCIAL SERVICES, L.L.C.


HOVNANIAN
DEVELOPMENTS OF FLORIDA, INC.


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


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


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


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


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


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


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


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


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


HOVNANIAN
LAND INVESTMENT GROUP, L.L.C.


HUDSON
POINTE JOINT DEVELOPMENT, L.L.C.


K.
HOV IP, INC.


K.
HOV INTERNATIONAL, INC.


K.
HOV IP, II, INC.


K.
HOVNANIAN ACQUISITIONS, INC.


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


K.
HOVNANIAN AT 4S, LLC


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


K.
HOVNANIAN AT ACQUA VISTA, LLC


K.
HOVNANIAN AT ALISO, LLC


K.
HOVNANIAN AT ALLENBERRY, L.L.C.


K.
HOVNANIAN AT ALLENDALE, L.L.C.


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


K.
HOVNANIAN AT ARBOR HEIGHTS, LLC


K.
HOVNANIAN AT AVENUE ONE, 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 BELLA LAGO, LLC


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


K.
HOVNANIAN AT BERNARDS IV, INC.


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


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


K.
HOVNANIAN AT BRANCHBURG III, INC.


K.
HOVNANIAN AT BRIDGEPORT, INC.


 


A-1

















 


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


K.
HOVNANIAN AT BRIDGEWATER VI, INC.


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


K.
HOVNANIAN AT BROAD AND WALNUT, L.L.C.


K.
HOVNANIAN AT BURLINGTON III, INC.


K.
HOVNANIAN AT BURLINGTON, INC.


K.
HOVNANIAN AT CALABRIA, INC.


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


K.
HOVNANIAN AT CAMERON CHASE, INC.


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


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


K.
HOVNANIAN AT CARMEL DEL MAR, INC.


K.
HOVNANIAN AT CARMEL VILLAGE, LLC


K.
HOVNANIAN AT CASTILE, INC.


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


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


K.
HOVNANIAN AT CHAPARRAL, INC.


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


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


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


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


K.
HOVNANIAN AT CLARKSTOWN, INC.


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


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


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


K.
HOVNANIAN AT CORTEZ HILL, LLC


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


K.
HOVNANIAN AT CRESTLINE, INC.


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 DOMINGUEZ HILLS, INC.


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


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


K.
HOVNANIAN AT EAST WHITELAND I, INC.


K.
HOVNANIAN AT EASTLAKE, LLC


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


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


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


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


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


K.
HOVNANIAN AT ENCINITAS RANCH, LLC


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


K.
HOVNANIAN AT EWING, 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 FORKS TWP. I, L.L.C.


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


K.
HOVNANIAN AT FREEHOLD TOWNSHIP I, INC.


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


K.
HOVNANIAN AT GALLOWAY, L.L.C.


 


A-2

















 


K.
HOVNANIAN AT GASLAMP SQUARE, 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 HACKETTSTOWN, INC.


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 HERSHEY’S MILL, INC.


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


K.
HOVNANIAN AT HIGHLAND VINEYARDS, INC.


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


K.
HOVNANIAN AT HILLTOP, L.L.C.


K.
HOVNANIAN AT HOPEWELL IV, INC.


K.
HOVNANIAN AT HOPEWELL VI, INC.


K.
HOVNANIAN AT HOWELL TOWNSHIP, INC.


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


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


K.
HOVNANIAN AT KINGS GRANT I, INC.


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


K.
HOVNANIAN AT LA COSTA, LLC


K.
HOVNANIAN AT LA HABRA KNOLLS, LLC


K.
HOVNANIAN AT LA TERRAZA, INC.


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


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


K.
HOVNANIAN AT LAKE RANCHO VIEJO, LLC


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


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


K.
HOVNANIAN AT LAKEWOOD, INC.


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


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


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


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


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


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


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


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 LOWER MORELAND III, L.L.C.


K.
HOVNANIAN AT LOWER SAUCON, INC.


K.
HOVNANIAN AT MACUNGIE, L.L.C.


K.
HOVNANIAN AT MAHWAH II, INC.


K.
HOVNANIAN AT MAHWAH VI, INC.


K.
HOVNANIAN AT MAHWAH VII, INC.


 


A-3

















 


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


K.
HOVNANIAN AT MANALAPAN, INC.


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, L.L.C.


K.
HOVNANIAN AT MARLBORO II, INC.


K.
HOVNANIAN AT MARLBORO TOWNSHIP III, INC.


K.
HOVNANIAN AT MARLBORO TOWNSHIP IV, INC.


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 MATSU, L.L.C.


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


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


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


K.
HOVNANIAN AT MIDDLE TOWNSHIP II, 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.


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 MOCKINGBIRD CANYON, L.L.C.


K.
HOVNANIAN AT MONROE II, INC.


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 MONTGOMERY I, INC.


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


K.
HOVNANIAN AT MOSAIC, LLC


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


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


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


K.
HOVNANIAN AT NORTHERN WESTCHESTER, INC.


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


K.
HOVNANIAN AT NORTHLAKE, INC.


K.
HOVNANIAN AT OCEAN TOWNSHIP, INC.


K.
HOVNANIAN AT OCEAN WALK, INC.


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


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


K.
HOVNANIAN AT OLDE ORCHARD, LLC


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


 


A-4

















 


K.
HOVNANIAN AT PACIFIC BLUFFS, LLC


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


K.
HOVNANIAN AT PARK LANE, LLC


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


K.
HOVNANIAN AT PEAPACK-GLADSTONE, L.L.C.


K.
HOVNANIAN AT PERKIOMEN I, INC.


K.
HOVNANIAN AT PERKIOMEN II, INC.


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


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


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


K.
HOVNANIAN AT PIAZZA D’ORO,  L.L.C.


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


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


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


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


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


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


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


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


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


K.
HOVNANIAN AT RANCHO CRISTIANITOS, INC.


K.
HOVNANIAN AT RANCHO SANTA MARGARITA, LLC


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


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


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


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


K.
HOVNANIAN AT RESERVOIR RIDGE, INC.


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


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


K.
HOVNANIAN AT RIVERBEND, LLC


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


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


K.
HOVNANIAN AT ROWLAND HEIGHTS, LLC


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


K.
HOVNANIAN AT SAN SEVAINE, INC.


K.
HOVNANIAN AT SARATOGA, INC.


K.
HOVNANIAN AT SAWMILL, INC.


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


K.
HOVNANIAN AT SCOTCH PLAINS II, INC.


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


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


K.
HOVNANIAN AT SKYE ISLE, LLC


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


K.
HOVNANIAN AT SMITHVILLE, INC.


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


K.
HOVNANIAN AT SOUTH BRUNSWICK V, INC.


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


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


K.
HOVNANIAN AT SPRINGCO, L.L.C.


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


K.
HOVNANIAN AT STONE CANYON, INC.


K.
HOVNANIAN AT STONY POINT, INC.


K.
HOVNANIAN AT SUNSETS, LLC


 


A-5

















 


K.
HOVNANIAN AT SYCAMORE, INC.


K.
HOVNANIAN AT TANNERY HILL, INC.


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


K.
HOVNANIAN AT THE BLUFF, INC.


K.
HOVNANIAN AT THE CROSBY, LLC


K.
HOVNANIAN AT THE GABLES, LLC


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


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


K.
HOVNANIAN AT THOMPSON RANCH, LLC


K.
HOVNANIAN AT THORNBURY, INC.


K.
HOVNANIAN AT TIERRASANTA, INC.


K.
HOVNANIAN AT TRAIL RIDGE, LLC


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


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


K.
HOVNANIAN AT TROVATA, INC.


K.
HOVNANIAN AT TUXEDO, INC.


K.
HOVNANIAN AT UNION TOWNSHIP I, INC.


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


K.
HOVNANIAN AT UPPER FREEHOLD TOWNSHIP I, INC.


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


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


K.
HOVNANIAN AT UPPER MAKEFIELD I, INC.


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


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


K.
HOVNANIAN AT VAIL RANCH, INC.


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


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


K.
HOVNANIAN AT WALL TOWNSHIP VI, INC.


K.
HOVNANIAN AT WALL TOWNSHIP VIII, INC.


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


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


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


K.
HOVNANIAN AT WASHINGTONVILLE, INC.


K.
HOVNANIAN AT WAYNE III, INC.


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


K.
HOVNANIAN AT WAYNE V, INC.


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


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


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


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


K.
HOVNANIAN AT WILDROSE, INC.


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


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


K.
HOVNANIAN AT WINCHESTER, LLC


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


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


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


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


K.
HOVNANIAN CHESTERFIELD INVESTMENT, L.L.C.


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


K.
HOVNANIAN CLASSICS, L.L.C.


K.
HOVNANIAN COMMUNITIES, INC.


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


 


A-6

















 


K.
HOVNANIAN COMPANIES NORTHEAST, INC.


K.
HOVNANIAN COMPANIES OF CALIFORNIA, INC.


K.
HOVNANIAN COMPANIES OF MARYLAND, INC.


K.
HOVNANIAN COMPANIES OF NEW YORK, INC.


K.
HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.


K.
HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.


K.
HOVNANIAN COMPANIES OF VIRGINIA, INC.


K.
HOVNANIAN COMPANIES, LLC


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


K.
HOVNANIAN CONSTRUCTION II, INC


K.
HOVNANIAN CONSTRUCTION III, INC


K.
HOVNANIAN CONSTRUCTION MANAGEMENT, INC.


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


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


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.


K.
HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC.


K.
HOVNANIAN DEVELOPMENTS OF INDIANA, INC.


K.
HOVNANIAN DEVELOPMENTS OF KENTUCKY, 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 VIRGINIA, INC.


K.
HOVNANIAN DEVELOPMENTS OF WEST VIRGINIA, INC.


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


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


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


K.
HOVNANIAN FORECAST HOMES NORTHERN, INC.


K.
HOVNANIAN FOUR SEASONS @ HISTORIC VIRGINIA, LLC


K.
HOVNANIAN FOUR SEASONS AT GOLD HILL, LLC


K.
HOVNANIAN FRANCISCUS HOMES, L.L.C.


K.
HOVNANIAN GREAT WESTERN BUILDING COMPANY, LLC


K.
HOVNANIAN GREAT WESTERN HOMES, LLC


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


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


K.
HOVNANIAN HOMES AT BELMONT OVERLOOK, L.L.C.


K.
HOVNANIAN HOMES AT CAMERON STATION, LLC


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


K.
HOVNANIAN HOMES AT CIDER MILL, L.L.C.


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


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


 


A-7

















 


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


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


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


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


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


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


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


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


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


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


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


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


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


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


K.
HOVNANIAN HOMES OF NORTH CAROLINA, INC.


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


K.
HOVNANIAN HOMES OF SOUTH CAROLINA, LLC


K.
HOVNANIAN HOMES OF VIRGINIA, INC.


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


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


K.
HOVNANIAN INTERNATIONAL, L.L.C.


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


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


K.
HOVNANIAN OSTER HOMES, L.L.C.


K.
HOVNANIAN PA REAL ESTATE, INC.


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


“K.
HOVNANIAN POLAND, SP .Z.O.O.


LISTED
AS: K. HOVNANIAN POLAND”


K.
HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.


K.
HOVNANIAN PROPERTIES OF NORTH BRUNSWICK V, INC.


K.
HOVNANIAN PROPERTIES OF RED BANK, INC.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


 


A-8

















 


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


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


K.
HOVNANIAN WINDWARD HOMES, LLC


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


K.
HOVNANIAN’S FOUR SEASONS AT BAILEY’S GLENN, L.L.C.


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


K.
HOVNANIAN’S FOUR SEASONS AT BEAUMONT, LLC


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 HAMPTONBURGH, L.L.C.


K.
HOVNANIAN’S FOUR SEASONS AT HEMET, LLC


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


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


K.
HOVNANIAN’S FOUR SEASONS AT OLDE LIBERTY, L.L.C.


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


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


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


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


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


K.
HOVNANIAN’S FOUR SEASONS, LLC


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


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


KHC
ACQUISITION, INC.


KHIP,
L.L.C.


LANDARAMA,
INC.


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


M &
M AT LONG BRANCH, INC


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


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


M&M
AT COPPER BEECH, L.L.C.


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


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


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


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


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


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


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


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


M&M
AT STATION SQUARE, L.L.C.


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


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


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


M&M
AT UNION, L.L.C.


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


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


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


M&M
INVESTMENTS, L.P.


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


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


 


A-9

















 


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


MCNJ,
INC.


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


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


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


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


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


MILLENNIUM
TITLE AGENCY, LTD


MMIP,
L.L.C.


NATOMAS
CENTRAL NEIGHBORHOOD HOUSING, L.L.C.


NEW
LAND TITLE AGENCY, L.L.C.


PADDOCKS,
L.L.C.


PARK
TITLE COMPANY, LLC


PI
INVESTMENTS II, L.L.C.


PINE
AYR, LLC


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


RIDGEMORE
UTILITY L.L.C.


SEABROOK
ACCUMULATION CORPORATION


STONEBROOK
HOMES, INC.


TERRAPIN
REALTY, L.L.C.


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


THE
MATZEL & MUMFORD ORGANIZATION, INC


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


WASHINGTON
HOMES, INC.


WESTMINSTER
HOMES OF ALABAMA, L.L.C.


WESTMINSTER
HOMES OF MISSISSIPPI, LLC


WESTMINSTER
HOMES OF TENNESSEE, INC.


WESTMINSTER
HOMES, INC.


WH
LAND I, INC


WH
PROPERTIES, INC.


WH/PR
LAND COMPANY, L.L.C.


WOODLAND
LAKE CONDOMINIUMS AT BOWIE NEW TOWN, L.L.C.


 


A-10
















 


EXHIBIT A


 


[FACE OF NOTE]


 


K. HOVNANIAN ENTERPRISES,
INC.


 


111/2% Senior Notes Due 2013


 


	
   

  	
  CUSIP No.:

  	
                                                 

  
	
   

  	
   

  	
   

  
	
  No.

  	
   

  	
   

  	
  $                                                 

  



 


K. Hovnanian Enterprises, Inc., a California
corporation (the “Issuer,” which
term includes any successor under the Indenture hereinafter referred to), for
value received, promises to pay to
                                        ,
or its registered assigns, the principal sum of
                        
DOLLARS
($            ),
[or such other amount as is provided in a schedule attached hereto](1), on May 1,
2013.


 


Interest Rate:   111/2% per annum.


 


Interest Payment Dates:  May 1 and November 1,
commencing November 1, 2008.


 


Record Dates:  April 15 and October 15.


 


Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which will for all purposes have the
same effect as if set forth at this place.


 






(1) For Global Notes.


 


A-1

















 


IN WITNESS WHEREOF, the Issuer has caused this Note to
be signed manually or by facsimile by its duly authorized officer.


 


	
  Dated: May 27, 2008

  	
   

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-2

















 


[Form of] Trustee’s
Certificate of Authentication


 


This is one of the 111/2% Senior Notes Due 2013 described in the Indenture
referred to in this Note.


 


 


	
   

  	
  DEUTSCHE BANK NATIONAL

  TRUST COMPANY, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
    Authorized Signatory

  



 


A-3

















 


[REVERSE SIDE OF NOTE]


 


K. HOVNANIAN ENTERPRISES,
INC.


 


111/2% Senior Notes Due 2013


 


Capitalized terms used herein are used as defined in
the Indenture referred to below unless otherwise indicated.


 


1.                                       Principal and Interest.


 


K. Hovnanian Enterprises, Inc. (the “Issuer,” which term includes any successor
under the Indenture hereinafter referred to), a California corporation,
promises to pay the principal of this Note on May 1, 2013.


 


The Issuer promises to pay interest on the principal
amount of this Note on each interest payment date, as set forth on the face of
this Note, at the rate of 111/2% per annum.


 


Interest will be payable semiannually (to the holders
of record of the Notes at the close of business on the April 15 or October 15
immediately preceding the interest payment date) on each interest payment date,
commencing November 1, 2008.


 


[The Holder of this Note is entitled to the benefits
of the Registration Rights Agreement, dated May 27, 2008, among the
Issuer, the Guarantors party thereto and the Initial Purchasers named therein
(the “Registration Rights Agreement”).
In the event of a Registration Default (as defined in the Registration Rights
Agreement), the Holder shall be entitled to Additional Interest as specified in
the Registration Rights Agreement until the Registration Default is cured.](2)


 


Interest on this Note will accrue from the most recent
date to which interest has been paid on this Note or the Note surrendered in
exchange for this Note (or, if there is no existing default in the payment of
interest and if this Note is authenticated between a regular record date and
the next interest payment date, from such interest payment date) or, if no
interest has been paid, from May 27, 2008. 
Interest will be computed on the basis of a 360-day year of twelve
30-day months.


 


2.                                       Paying Agent and
Registrar.


 


Initially, Deutsche Bank National Trust Company (the “Trustee”) will act as Paying Agent and
Registrar.  The Issuer may change or
appoint any Paying Agent,


 






(2) For Initial Notes only.


 


A-4

















 


Registrar or co-Registrar without notice to any
Holder.  The Issuer or any of its
Subsidiaries may act as Paying Agent, Registrar or co-Registrar.


 


3.                                       Indenture; Guarantees.


 


This is one of the Notes issued under an Indenture
dated as of May 27, 2008 (as amended from time to time, the “Indenture”), among the Issuer, the
Guarantors party thereto and the Trustee. 
The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act.  The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms.  To the
extent permitted by applicable law, in the event of any inconsistency between
the terms of this Note and the terms of the Indenture, the terms of the
Indenture will control.


 


The Notes are general obligations of the Issuer,
secured by Liens on the Collateral as described in the Indenture.  The Indenture limits the original aggregate
principal amount of the Notes issued thereunder to $600,000,000.  This Note is guaranteed by the Guarantors as
set forth in the Indenture and the Guarantee endorsed hereon.


 


Reference is hereby made to the Indenture for a
statement of the respective rights, duties and obligations thereunder of the
Guarantors, the Trustee and the Holders.


 


4.             Optional Redemption; Redemption with
Proceeds of Equity Offering.


 


At any time and from time to time on or after November 1,
2010, the Issuer may redeem the Notes, in whole or in part, at a redemption
price equal to the percentage of principal amount set forth below plus accrued
and unpaid interest and Additional Interest thereon, if any, to the applicable
redemption date.


 


	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  November 1,
  2010

  	
   

  	
  102

  	
  %

  
	
  May 1, 2011

  	
   

  	
  101

  	
  %

  
	
  May 1, 2012

  	
   

  	
  100

  	
  %

  



 


At any time and from time to time prior to May 1,
2011, the Issuer may redeem Notes with the net cash proceeds received by the
Issuer from any Equity Offering at a redemption price equal to 111.50% of the
principal amount plus accrued and unpaid interest to the redemption date, in an
aggregate principal amount for all such redemptions not to exceed 35% of the
original aggregate principal amount of the Notes, provided that:


 


(i)            in each case the redemption takes place
not later than 60 days after the closing of the related Equity Offering, and


 


A-5

















 


(ii)           not less than 65% of the original
aggregate principal amount of the Notes remains outstanding immediately
thereafter.


 


If less than all of the Notes are to be redeemed at
any time, the Trustee will select Notes for redemption on a pro rata basis, by lot or by such other
method as the Trustee in its sole discretion shall deem appropriate and fair.


 


No Notes of $2,000 in original principal amount or
less shall be redeemed in part.  Notices
of redemption may not be conditional.


 


If any Note is to be redeemed in part only, the notice
of redemption that relates to that Note shall state the portion of the
principal amount thereof to be redeemed. 
A new Note in principal amount equal to the unredeemed portion of the
original Note will be issued in the name of the Holder thereof upon
cancellation of the original Note.  Notes
called for redemption become due on the date fixed for redemption.  On and after the redemption date, interest
ceases to accrue on Notes or portions thereof called for redemption.


 


5.             Mandatory Redemption.


 


There is no sinking fund for, or mandatory redemption
of, the Notes.


 


6.             Discharge and Defeasance.


 


If the Issuer deposits with the Trustee money and/or
U.S. Government Obligations sufficient to pay the then outstanding principal
of, premium, interest and Additional Interest, if any, and accrued interest on
the Notes to redemption or maturity, as the case may be, the Issuer, the
Company and the Guarantors may in certain circumstances be discharged from the
Indenture, the Notes, the Guarantees and the Security Documents or may be
discharged from certain of their obligations under certain provisions of the
Indenture.


 


7.             Registered Form; Denominations;
Transfer; Exchange.


 


The Notes are in registered form only without coupons
in denominations of $2,000 principal amount and any multiple of $1,000 in
excess thereof.  A Holder may register
the transfer or exchange of Notes in accordance with the Indenture.  The Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.  Pursuant to the Indenture, there are certain
periods during which the Trustee will not be required to issue, register the
transfer of, or exchange any Note or certain portions of a Note.


 


A-6

















 


8.                                       Persons Deemed Owners.


 


The registered Holder of this Note shall be treated as
the owner of it for all purposes.


 


9.                                       Defaults and Remedies.


 


If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Notes may
declare all the Notes to be due and payable immediately.  If a bankruptcy or insolvency default with
respect to the Issuer or the Company occurs and is continuing, the Notes
automatically become immediately due and payable.  Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. 
The Trustee may require indemnity satisfactory to it before it enforces
the Indenture or the Notes.  Subject to
certain limitations, Holders of a majority in principal amount of the Notes
then outstanding may direct the Trustee in its exercise of remedies.


 


10.                                 Amendment, Supplement
and Waiver.


 


Subject to certain exceptions, the Indenture, the Notes,
the Guarantees and the Security Documents may be amended or supplemented, or
future compliance therewith may be waived, with the consent of the Holders of a
majority in principal amount of the outstanding Notes.  Without notice to or the consent of any
Holder, the Issuer, the Company, the Guarantors and the Trustee may amend or
supplement the Indenture, the Notes or the Guarantees to, among other things,
cure any ambiguity, defect or inconsistency or if such amendment or supplement
does not adversely affect the legal rights of any Holder.


 


11.                                 Lien Subordination and
Sharing.


 


These Notes and the Guarantees are secured by
Second-Priority Liens upon the Collateral pursuant to certain Security
Documents.  The Second-Priority Liens
upon any and all Collateral are, to the extent and in the manner provided in
the Intercreditor Agreement, subordinate in ranking to all present and future
First-Priority Liens as set forth in Article 10 of the Indenture and in
the Intercreditor Agreement.


 


12.                                 Trustee Dealings With
Issuer.


 


The Trustee, in its individual or any other capacity,
may become the owner or pledgee of Notes and may otherwise deal with the Issuer
or its affiliates, with the same rights as if it were not Trustee; however, if it acquires any conflicting interest
(as defined in the Trust Indenture Act), it must eliminate such conflict, apply
to the Commission for permission to continue or resign.


 


A-7

















 


13.                                 No Recourse Against
Others.


 


An incorporator, and any past, present or future
director, officer, partner, employee or stockholder, as such, of the Issuer,
the Company or the Guarantors shall not have any liability for any obligations
of the Issuer, the Company or the Guarantors under the Notes, the Indenture or
the Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation.  Each
Holder by accepting a Note waives and releases all such liability.  The waiver and release are part of the
consideration for the issue of the Notes.


 


14.                                 Governing Law.


 


THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


 


15.                                 CUSIP Numbers.


 


Pursuant to a recommendation promulgated by the
Committee on Uniform Note Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers
in notices as a convenience to Holders. 
No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice and reliance may be placed
only on the other identification numbers placed thereon.


 


16.                                 Authentication.


 


This Note is not valid until the Trustee (or
Authenticating Agent) manually signs the certificate of authentication on the
other side of this Note.


 


17.                                 Abbreviations.


 


Customary abbreviations may be used in the name of a
Holder or an assignee, such as:  TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act).


 


The Issuer will furnish a copy of the Indenture to any
Holder upon written request and without charge.


 


A-8

















 


[FORM OF TRANSFER
NOTICE]


 


FOR VALUE RECEIVED the undersigned registered holder
hereby sell(s), assign(s) and transfer(s) unto


 


Insert Social Security or Taxpayer Identification No.


 


	
   

  
	
   

  
	
  Please print or
  typewrite name and address, including zip code, of assignee

  
	
   

  
	
   

  
	
   

  
	
  the within Note and all
  rights thereunder, hereby irrevocably constituting and appointing

  
	
   

  



 


agent to transfer this Note on the books of the Issuer
with full power of substitution in the premises.


 


 


	
  Dated:

  	
                                                                                 

  	
   

  	
  Signed:

  	
                                                                                                    

  
	
   

  	
   

  	
  (sign exactly as name appears on the other side of
  this

  Note)

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee(3):

  	
                                                                                                                                                                                

  
						



 






(3) Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Registrar, which requirements include membership or participation in the
Note Transfer Agent Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.


 


A-9

















 


[THE FOLLOWING PROVISION
TO BE INCLUDED ON ALL CERTIFICATES BEARING A RESTRICTED LEGEND]


 


In connection with any transfer of this Note occurring
prior to the date which is the date following the first anniversary of the
original issuance of this Note, the undersigned confirms that such transfer is
made without utilizing any general solicitation or general advertising in
connection with the transfer and further as follows:


 


Check
One


 


o                                    (1) This Note is being transferred
to a “qualified institutional buyer” in compliance with Rule 144A under
the Securities Act of 1933, as amended, and certification in the form of Exhibit F
to the Indenture is being furnished herewith.


 


o                                    (2) This Note is being transferred
to a non-”U.S. Person,” as defined in Rule 902 of Regulation S under the
Securities Act in compliance with the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S thereunder, and
certification in the form of Exhibit E to the Indenture is being furnished
herewith.


 


or


 


o                                    (3) This Note is being transferred
other than in accordance with (1) or (2) above and documents are
being furnished herewith which comply with the conditions of transfer set forth
in this Note and the Indenture.


 


If none of the foregoing boxes is checked, the Trustee
is not obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in the Indenture have been satisfied.


 


 


	
  Dated:

  	
                                                                    

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
                                                                                                            

  
	
   

  	
   

  	
  Transferor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signed:

  	
                                                                                              

  
	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:  The
  signature to this assignment must correspond with the name as written upon
  the face of the within-mentioned instrument in every particular, without
  alteration or any change whatsoever.

  



 


A-10

















 


	
  Signature Guarantee:(4)

  	
   

  	
   

  



 


	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  (To be executed by an executive officer)

  	
   

  



 






(4) Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Registrar, which requirements include membership or participation in the
Note Transfer Agent Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.


 


A-11

















 


OPTION OF HOLDER TO ELECT
PURCHASE


 


If you wish to have all of this Note purchased by the
Issuer pursuant to Section 4.10 or Section 4.12 of the Indenture,
check the box: o


 


If you wish to have a portion of this Note purchased
by the Issuer pursuant to Section 4.10 or Section 4.12 of the Indenture,
state the amount (in original principal amount) below:


 


$                                          .


 


	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Sign exactly as your name appears on the other side
  of this Note)

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee:(5)

  	
   

  	
   

  
						



 






(5) Signatures must be
guaranteed by an “eligible guarantor
institution” meeting the requirements of the Trustee, which
requirements include membership or participation in the Note Transfer Agent
Medallion Program (“STAMP”) or
such other “signature guarantee program”
as may be determined by the Trustee in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.


 


A-12

















 


SCHEDULE OF EXCHANGES OF
INTERESTS IN GLOBAL NOTES(6)


 


The following exchanges of a part of this Global Note
for Certificated Notes or an interest in another Global Note, or exchanges of a
part of another Global Note or Certificated Note for an interest in this Global
Note, have been made:


 


	
  Date of
  Exchange

  	
   

  	
  Amount
  of

  decrease in

  principal amount

  of this Global Note

  	
   

  	
  Amount
  of

  increase in

  principal amount

  of this Global Note

  	
   

  	
  Principal
  amount

  of this Global Note

  following such

  decrease or

  increase

  	
   

  	
  Signature
  of

  authorized officer

  of Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






(6) For Global Notes


 


A-13
















 


[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]


 


GUARANTEE


 


The undersigned (the “Guarantors”)
have unconditionally guaranteed, jointly and severally (such guarantee by each
Guarantor being referred to herein as the “Guarantee”)
(i) the due and punctual payment of the principal of and interest and
Additional Interest, if any, on the Issuer’s 111/2% Senior Notes
due 2013 (the “Notes”), whether at
maturity or on an interest payment date, by acceleration or otherwise, on the
Notes, to the extent lawful, and of all other obligations of the Issuer to the
Holders or the Trustee all in accordance with the terms set forth in Article 6
of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.


 


No past,
present or future stockholder, officer, director, employee, partner or
incorporator, as such, of any of the Guarantors shall have any liability under
the Guarantee evidenced hereby by reason of such person’s status as
stockholder, officer, director, employee, partner or incorporator. Each Holder
of a Note by accepting a Note waives and releases all such liability. This
waiver and release are part of the consideration for the issuance of the
Guarantee.


 


Each Holder of
a Note by accepting a Note agrees that any Guarantor named below shall have no
further liability with respect to its Guarantee if such Guarantor otherwise
ceases to be liable in respect of its Guarantee in accordance with the terms of
the Indenture.


 


The Guarantee
evidenced hereby shall not be valid or obligatory for any purpose until the
certificate of authentication on the Notes upon which the Guarantee is noted
shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.


 


This Guarantee
shall be governed by, and construed in accordance with, the laws of the State
of New York.


 


HOVNANIAN ENTERPRISES, INC.


ALFORD, L.L.C.


AUDDIE ENTERPRISES, L.L.C.


BUILDER SERVICES NJ, L.L.C.


BUILDER SERVICES NY, L.L.C.


BUILDER SERVICES PA, L.L.C.


DULLES COPPERMINE, L.L.C.


EASTERN TITLE AGENCY, INC.


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


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


FOUNDERS TITLE AGENCY, INC.


 


A-14

















 


GOVERNOR’S ABSTRACT CO.,
INC.


GREENWAY FARMS UTILITY
ASSOCIATES, L.L.C.


HOMEBUYERS FINANCIAL
SERVICES, L.L.C.


HOVNANIAN DEVELOPMENTS OF
FLORIDA, INC.


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


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


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


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


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


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


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


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


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


HOVNANIAN LAND INVESTMENT
GROUP, L.L.C.


HUDSON POINTE JOINT
DEVELOPMENT, L.L.C.


K. HOV I P, INC.


K. HOV INTERNATIONAL, INC.


K. HOV IP, II, INC.


K. HOVNANIAN ACQUISITIONS,
INC.


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


K. HOVNANIAN AT 4S, LLC


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


K. HOVNANIAN AT ACQUA VISTA,
LLC


K. HOVNANIAN AT ALISO, LLC


K. HOVNANIAN AT ALLENBERRY,
L.L.C.


K. HOVNANIAN AT ALLENDALE,
L.L.C.


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


K. HOVNANIAN AT ARBOR
HEIGHTS, LLC


K. HOVNANIAN AT AVENUE ONE,
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 BELLA LAGO,
LLC


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


K. HOVNANIAN AT BERNARDS IV,
INC.


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


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


K. HOVNANIAN AT BRANCHBURG
III, INC.


K. HOVNANIAN AT BRIDGEPORT,
INC.


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


K. HOVNANIAN AT BRIDGEWATER
VI, INC.


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


K. HOVNANIAN AT BROAD AND
WALNUT, L.L.C.


K. HOVNANIAN AT BURLINGTON
III, INC.


K. HOVNANIAN AT BURLINGTON,
INC.


K. HOVNANIAN AT CALABRIA,
INC.


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


K. HOVNANIAN AT CAMERON
CHASE, INC.


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


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


K. HOVNANIAN AT CARMEL DEL
MAR, INC.


K. HOVNANIAN AT CARMEL
VILLAGE, LLC


K. HOVNANIAN AT CASTILE,
INC.


 


A-15

















 


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


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


K. HOVNANIAN AT CHAPARRAL,
INC.


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


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


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


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


K. HOVNANIAN AT CLARKSTOWN,
INC.


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


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


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


K. HOVNANIAN AT CORTEZ HILL,
LLC


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


K. HOVNANIAN AT CRESTLINE,
INC.


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 DOMINGUEZ
HILLS, INC.


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


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


K. HOVNANIAN AT EAST
WHITELAND I, INC.


K. HOVNANIAN AT EASTLAKE,
LLC


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


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


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


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


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


K. HOVNANIAN AT ENCINITAS
RANCH, LLC


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


K. HOVNANIAN AT EWING,
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 FORKS TWP.
I, L.L.C.


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


K. HOVNANIAN AT FREEHOLD
TOWNSHIP I, INC.


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


K. HOVNANIAN AT GALLOWAY,
L.L.C.


K. HOVNANIAN AT GASLAMP
SQUARE, 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
HACKETTSTOWN, INC.


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 HERSHEY’S
MILL, INC.


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


K. HOVNANIAN AT HIGHLAND
VINEYARDS, INC.


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


K. HOVNANIAN AT HILLTOP,
L.L.C.


 


A-16

















 


K. HOVNANIAN AT HOPEWELL IV,
INC.


K. HOVNANIAN AT HOPEWELL VI,
INC.


K. HOVNANIAN AT HOWELL
TOWNSHIP, INC.


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


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


K. HOVNANIAN AT KINGS GRANT
I, INC.


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


K. HOVNANIAN AT LA COSTA,
LLC


K. HOVNANIAN AT LA HABRA
KNOLLS, LLC


K. HOVNANIAN AT LA TERRAZA,
INC.


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


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


K. HOVNANIAN AT LAKE RANCHO
VIEJO, LLC


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


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


K. HOVNANIAN AT LAKEWOOD,
INC.


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


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


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


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


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


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


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


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 LOWER
MORELAND III, L.L.C.


K. HOVNANIAN AT LOWER
SAUCON, INC.


K. HOVNANIAN AT MACUNGIE,
L.L.C.


K. HOVNANIAN AT MAHWAH II,
INC.


K. HOVNANIAN AT MAHWAH VI,
INC.


K. HOVNANIAN AT MAHWAH VII,
INC.


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


K. HOVNANIAN AT MANALAPAN,
INC.


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, L.L.C.


K. HOVNANIAN AT MARLBORO II,
INC.


K. HOVNANIAN AT MARLBORO
TOWNSHIP III, INC.


K. HOVNANIAN AT MARLBORO
TOWNSHIP IV, INC.


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.


 


A-17

















 


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


K. HOVNANIAN AT MATSU,
L.L.C.


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


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


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


K. HOVNANIAN AT MIDDLE
TOWNSHIP II, 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.


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 MOCKINGBIRD
CANYON, L.L.C.


K. HOVNANIAN AT MONROE II,
INC.


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 MONTGOMERY
I, INC.


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


K. HOVNANIAN AT MOSAIC, LLC


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


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


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


K. HOVNANIAN AT NORTHERN
WESTCHESTER, INC.


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


K. HOVNANIAN AT NORTHLAKE,
INC.


K. HOVNANIAN AT OCEAN
TOWNSHIP, INC.


K. HOVNANIAN AT OCEAN WALK,
INC.


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


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


K. HOVNANIAN AT OLDE
ORCHARD, LLC


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


K. HOVNANIAN AT PACIFIC
BLUFFS, LLC


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


K. HOVNANIAN AT PARK LANE,
LLC


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


K. HOVNANIAN AT
PEAPACK-GLADSTONE, L.L.C.


K. HOVNANIAN AT PERKIOMEN I,
INC.


K. HOVNANIAN AT PERKIOMEN
II, INC.


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


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


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


K. HOVNANIAN AT PIAZZA D’ORO,  L.L.C.


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


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


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


 


A-18

















 


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


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


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


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


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


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


K. HOVNANIAN AT RANCHO
CRISTIANITOS, INC.


K. HOVNANIAN AT RANCHO SANTA
MARGARITA, LLC


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


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


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


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


K. HOVNANIAN AT RESERVOIR
RIDGE, INC.


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


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


K. HOVNANIAN AT RIVERBEND,
LLC


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


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


K. HOVNANIAN AT ROWLAND
HEIGHTS, LLC


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


K. HOVNANIAN AT SAN SEVAINE,
INC.


K. HOVNANIAN AT SARATOGA,
INC.


K. HOVNANIAN AT SAWMILL,
INC.


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


K. HOVNANIAN AT SCOTCH
PLAINS II, INC.


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


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


K. HOVNANIAN AT SKYE ISLE,
LLC


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


K. HOVNANIAN AT SMITHVILLE,
INC.


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


K. HOVNANIAN AT SOUTH
BRUNSWICK V, INC.


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


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


K. HOVNANIAN AT SPRINGCO,
L.L.C.


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


K. HOVNANIAN AT STONE CANYON,
INC.


K. HOVNANIAN AT STONY POINT,
INC.


K. HOVNANIAN AT SUNSETS, LLC


K. HOVNANIAN AT SYCAMORE,
INC.


K. HOVNANIAN AT TANNERY
HILL, INC.


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


K. HOVNANIAN AT THE BLUFF,
INC.


K. HOVNANIAN AT THE CROSBY,
LLC


K. HOVNANIAN AT THE GABLES,
LLC


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


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


K. HOVNANIAN AT THOMPSON
RANCH, LLC


K. HOVNANIAN AT THORNBURY,
INC.


K. HOVNANIAN AT TIERRASANTA,
INC.


K. HOVNANIAN AT TRAIL RIDGE,
LLC


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


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


 


A-19

















 


K. HOVNANIAN AT TROVATA,
INC.


K. HOVNANIAN AT TUXEDO, INC.


K. HOVNANIAN AT UNION
TOWNSHIP I, INC.


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


K. HOVNANIAN AT UPPER FREEHOLD
TOWNSHIP I, INC.


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


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


K. HOVNANIAN AT UPPER
MAKEFIELD I, INC.


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


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


K. HOVNANIAN AT VAIL RANCH,
INC.


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


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


K. HOVNANIAN AT WALL
TOWNSHIP VI, INC.


K. HOVNANIAN AT WALL
TOWNSHIP VIII, INC.


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


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


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


K. HOVNANIAN AT
WASHINGTONVILLE, INC.


K. HOVNANIAN AT WAYNE III,
INC.


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


K. HOVNANIAN AT WAYNE V,
INC.


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


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


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


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


K. HOVNANIAN AT WILDROSE,
INC.


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


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


K. HOVNANIAN AT WINCHESTER,
LLC


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


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


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


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


K. HOVNANIAN CHESTERFIELD
INVESTMENT, L.L.C.


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


K. HOVNANIAN CLASSICS,
L.L.C.


K. HOVNANIAN COMMUNITIES,
INC.


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


K. HOVNANIAN COMPANIES
NORTHEAST, INC.


K. HOVNANIAN COMPANIES OF
CALIFORNIA, INC.


K. HOVNANIAN COMPANIES OF
MARYLAND, INC.


K. HOVNANIAN COMPANIES OF
NEW YORK, INC.


K. HOVNANIAN COMPANIES OF
PENNSYLVANIA, INC.


K. HOVNANIAN COMPANIES OF
SOUTHERN CALIFORNIA, INC.


K. HOVNANIAN COMPANIES OF
VIRGINIA, INC.


K. HOVNANIAN COMPANIES, LLC


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


K. HOVNANIAN CONSTRUCTION
II, INC


K. HOVNANIAN CONSTRUCTION
III, INC


K. HOVNANIAN CONSTRUCTION
MANAGEMENT, INC.


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


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


 


A-20

















 


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.


K. HOVNANIAN DEVELOPMENTS OF
ILLINOIS, INC.


K. HOVNANIAN DEVELOPMENTS OF
INDIANA, INC.


K. HOVNANIAN DEVELOPMENTS OF
KENTUCKY, 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
VIRGINIA, INC.


K. HOVNANIAN DEVELOPMENTS OF
WEST VIRGINIA, INC.


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


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


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


K. HOVNANIAN FORECAST HOMES
NORTHERN, INC.


K. HOVNANIAN FOUR SEASONS @
HISTORIC VIRGINIA, LLC


K. HOVNANIAN FOUR SEASONS AT
GOLD HILL, LLC


K. HOVNANIAN FRANCISCUS
HOMES, L.L.C.


K. HOVNANIAN GREAT WESTERN
BUILDING COMPANY, LLC


K. HOVNANIAN GREAT WESTERN
HOMES, LLC


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


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


K. HOVNANIAN HOMES AT
BELMONT OVERLOOK, L.L.C.


K. HOVNANIAN HOMES AT
CAMERON STATION, LLC


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


K. HOVNANIAN HOMES AT CIDER
MILL, L.L.C.


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


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


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


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


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


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


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


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


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


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


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


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


 


A-21

















 


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


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


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


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


K. HOVNANIAN HOMES OF NORTH
CAROLINA, INC.


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


K. HOVNANIAN HOMES OF SOUTH
CAROLINA, LLC


K. HOVNANIAN HOMES OF
VIRGINIA, INC.


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


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


K. HOVNANIAN INTERNATIONAL,
L.L.C.


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


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


K. HOVNANIAN OSTER HOMES,
L.L.C.


K. HOVNANIAN PA REAL ESTATE,
INC.


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


“K. HOVNANIAN POLAND, SP .Z.O.O.


LISTED AS: K. HOVNANIAN
POLAND”


K. HOVNANIAN PORT IMPERIAL
URBAN RENEWAL, INC.


K. HOVNANIAN PROPERTIES OF
NORTH BRUNSWICK V, INC.


K. HOVNANIAN PROPERTIES OF
RED BANK, INC.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


K. HOVNANIAN WINDWARD HOMES,
LLC


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


K. HOVNANIAN’S FOUR SEASONS
AT BAILEY’S GLENN, L.L.C.


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


K. HOVNANIAN’S FOUR SEASONS
AT BEAUMONT, LLC


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 HAMPTONBURGH, L.L.C.


K. HOVNANIAN’S FOUR SEASONS
AT HEMET, LLC


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


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


 


A-22

















 


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


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


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


K. HOVNANIAN’S FOUR SEASONS
AT OLDE LIBERTY, L.L.C.


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


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


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


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


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


K. HOVNANIAN’S FOUR SEASONS,
LLC


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


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


KHC ACQUISITION, INC.


KHIP, L.L.C.


LANDARAMA, INC.


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


M & M AT LONG
BRANCH, INC


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


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


M&M AT COPPER BEECH,
L.L.C.


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


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


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


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


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


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


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


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


M&M AT STATION SQUARE, L.L.C.


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


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


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


M&M AT UNION, L.L.C.


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


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


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


M&M INVESTMENTS, L.P.


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


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


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


MCNJ, INC.


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


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


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


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


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


MILLENNIUM TITLE AGENCY, LTD


MMIP, L.L.C.


NATOMAS CENTRAL NEIGHBORHOOD
HOUSING, L.L.C.


NEW LAND TITLE AGENCY,
L.L.C.


PADDOCKS, L.L.C.


PARK TITLE COMPANY, LLC


PI INVESTMENTS II, L.L.C.


 


A-23

















 


PINE AYR, LLC


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


RIDGEMORE UTILITY L.L.C.


SEABROOK ACCUMULATION
CORPORATION


STONEBROOK HOMES, INC.


TERRAPIN REALTY, L.L.C.


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


THE MATZEL &
MUMFORD ORGANIZATION, INC


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


WASHINGTON HOMES, INC.


WESTMINSTER HOMES OF
ALABAMA, L.L.C.


WESTMINSTER HOMES OF
MISSISSIPPI, LLC


WESTMINSTER HOMES OF
TENNESSEE, INC.


WESTMINSTER HOMES, INC.


WH LAND I, INC


WH PROPERTIES, INC.


WH/PR LAND COMPANY, L.L.C.


WOODLAND LAKE CONDOMINIUMS
AT BOWIE NEW TOWN, L.L.C.


 


 


	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:   Authorized
  Officer

  



 


[This
Guarantee relates to K. Hovnanian’s 111/2%
Senior Secured Notes due 2013 – CUSIP No.:
                         ]


 


A-24
















 


EXHIBIT B


 


SUPPLEMENTAL INDENTURE


 


dated as of
             ,       


 


among


 


K. HOVNANIAN ENTERPRISES, INC.


 


HOVNANIAN ENTERPRISES, INC.


 


The Other Guarantors Party
Hereto


 


and


 


DEUTSCHE BANK NATIONAL TRUST
COMPANY


 


as Trustee


 






 


111/2% Senior Notes due 2013


 


B-1

















 


THIS
[          ] SUPPLEMENTAL
INDENTURE (this “[         ] Supplemental Indenture”), entered into as
of
                    ,
        , among K. Hovnanian
Enterprises, Inc., a California corporation (the “Issuer”), Hovnanian Enterprises, Inc.
(the “Company”), [list each new
guarantor and its jurisdiction of incorporation] (each an “Undersigned”) and Deutsche Bank National
Trust Company, as Trustee (the “Trustee”).


 


RECITALS


 


WHEREAS, the
Issuer, Company, the other Guarantors party thereto and the Trustee entered
into an indenture, dated as of May 27, 2008 (the “Indenture”), relating to the Company’s 111/2% Senior Secured Notes due 2013 (the “Notes”);


 


WHEREAS, as a
condition to the purchase of the Notes by the Holders, the Company agreed
pursuant to the Indenture to cause any newly acquired or created Restricted
Subsidiaries to provide Guarantees.


 


AGREEMENT


 


NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and intending to be legally bound, the parties hereto hereby agree as
follows:


 


SECTION 1.  Capitalized
terms used herein and not otherwise defined herein are used as defined in the
Indenture.


 


SECTION 2.  Each
Undersigned, by its execution of this
[         ] Supplemental
Indenture, agrees to be a Guarantor under the Indenture and to be bound by the
terms of the Indenture applicable to Guarantors, including, but not limited to,
Article 6 thereof.


 


SECTION 3.  This
[         ] Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York.


 


SECTION 4.  This
[         ] Supplemental Indenture
may be signed in various counterparts which together will constitute one and
the same instrument.


 


SECTION 5.  This
[         ] Supplemental Indenture
is an amendment supplemental to the Indenture and the Indenture and this
[         ] Supplemental Indenture
will henceforth be read together.


 


B-2

















 


IN WITNESS
WHEREOF, the parties hereto have caused this
[         ] Supplemental Indenture
to be duly executed as of the date first above written.


 


 


	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.,

       as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


	
   

  	
  HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


	
   

  	
  [GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


	
   

  	
  DEUTSCHE BANK NATIONAL

      TRUST COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


B-3
















 


EXHIBIT C


 


RESTRICTED LEGEND


 


THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE.  BY ITS ACQUISITION HEREOF OR
OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:


 


(1)         REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A “QIB”), (B) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT
IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(a) (1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN “IAI”),


 


(2)         AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT (A) TO
THE ISSUER, HOVNANIAN OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF
REGULATION S OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER AND THE TRUSTEE THAT SUCH TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER AND THE TRUSTEE) OR (G) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE 


 


C-1

















 


WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND


 


(3)         AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.


 


AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTIONS” AND “UNITED STATES”
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT.  THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING.


 


C-2
















 


EXHIBIT D


 


DTC LEGEND


 


UNLESS THIS NOTE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC”), TO THE ISSUER
OR ANY OF ITS SUBSIDIARIES OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL
INTEREST HEREIN.


 


THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED.  TRANSFERS OF THIS GLOBAL NOTE
ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, BY DTC TO A NOMINEE OF DTC
OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY AND
TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE TRANSFER PROVISIONS OF THE INDENTURE.


 


D-1
















 


EXHIBIT E


 


Regulation S Certificate


 


                  ,         


 


Deutsche Bank National Trust Company


Trust & Securities Services


222 South Riverside Plaza


25th floor, MS CH105-2502


Chicago, IL  60606-5808


Facsimile:  312-537-1009


Attention:  Corporate Trust &
Securities


 


	
   

  	
  Re:

  	
  K. Hovnanian Enterprises, Inc.

  
	
   

  	
  111/2%
  Senior Secured Notes due 2013 (the “Notes”)

  
	
   

  	
  Issued under the Indenture (the “Indenture”)
  dated as

  
	
   

  	
  as of May 27, 2008 relating to the Notes

  	
   

  



 


Dear Sirs:


 


Terms are used in this Certificate as used in
Regulation S (“Regulation S”) under the
Securities Act of 1933, as amended (the “Securities Act”),
except as otherwise stated herein.


 


[CHECK A OR B AS
APPLICABLE.]


 


o  A.                           This
Certificate relates to our proposed transfer of
$         principal amount of Notes
issued under the Indenture.  We hereby
certify as follows:


 


1.                                       The
offer and sale of the Notes was not and will not be made to a person in the
United States (unless such person is excluded from the definition of “U.S.
person” pursuant to Rule 902(k)(2)(vi) or the account held by it for
which it is acting is excluded from the definition of “U.S. person” pursuant to
Rule 902(k)(2)(i) under the circumstances described in Rule 902(g)(3))
and such offer and sale was not and will not be specifically targeted at an
identifiable group of U.S. citizens abroad.


 


2.                                       Unless
the circumstances described in the parenthetical in paragraph 1 above are
applicable, either (a) at the 


 


E-1

















 


time the buy order was originated, the buyer
was outside the United States or we and any person acting on our behalf
reasonably believed that the buyer was outside the United States or (b) the
transaction was executed in, on or through the facilities of a designated
offshore securities market, and neither we nor any person acting on our behalf
knows that the transaction was pre-arranged with a buyer in the United States.


 


3.                                       Neither
we, any of our affiliates, nor any person acting on our or their behalf has
made any directed selling efforts in the United States with respect to the
Notes.


 


4.                                       The
proposed transfer of Notes is not part of a plan or scheme to evade the
registration requirements of the Securities Act.


 


5.                                       If
we are a dealer or a person receiving a selling concession, fee or other
remuneration in respect of the Notes, and the proposed transfer takes place
during the Restricted Period (as defined in the Indenture), or we are an
officer or director of the Company or an Initial Purchaser (as defined in the
Indenture), we certify that the proposed transfer is being made in accordance
with the provisions of Rule 904(b) of Regulation S. 


 


o  B.                             This
Certificate relates to our proposed exchange of
$         principal amount of Notes
issued under the Indenture for an equal principal amount of Notes to be held by
us.  We hereby certify as follows:


 


1.                                       At
the time the offer and sale of the Notes was made to us, either (i) we
were not in the United States or (ii) we were excluded from the definition
of “U.S. person” pursuant to Rule 902(k)(2)(vi) or the account held
by us for which we were acting was excluded from the definition of “U.S. person”
pursuant to Rule 902(k)(2)(i) under the circumstances described in Rule 902(g)(3);
and we were not a member of an identifiable group of U.S. citizens abroad.


 


2.                                       Unless
the circumstances described in paragraph 1(ii) above are applicable,
either (a) at the time our buy order was originated, we were outside the
United States or (b) the transaction was executed in, on or through the 


 


E-2

















 


facilities of a designated offshore
securities market and we did not pre-arrange the transaction in the United
States.


 


3.                                       The
proposed exchange of Notes is not part of a plan or scheme to evade the
registration requirements of the Securities Act.


 


You and the Issuer are entitled to rely upon
this Certificate and are irrevocably authorized to produce this Certificate or
a copy hereof to any interested party in any administrative or legal proceeding
or official inquiry with respect to the matters covered hereby.


 


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  SELLER (FOR

  TRANSFERS) OR OWNER (FOR

  EXCHANGES)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  



 


	
  Date:

  	
   

  	
   

  



 


Upon transfer of certificated Notes, the
Notes would be registered in the name of the new beneficial owner as follows:


 


	
  By:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  
	
  Taxpayer ID number: 

  	
   

  	
   

  
						



 


E-3
















 


EXHIBIT
F


 


Rule 144A Certificate


 


                  ,        


 


Deutsche Bank National Trust Company


Trust & Securities Services


222 South Riverside Plaza


25th floor, MS CH105-2502


Chicago, IL  60606-5808


Facsimile: 312-537-1009


Attention:  Corporate Trust &
Securities


 


	
   

  	
  Re:

  	
  K. Hovnanian Enterprises, Inc.

  
	
   

  	
  111/2%
  Senior Secured Notes due 2013 (the “Notes”)

  
	
   

  	
  Issued under the Indenture (the “Indenture”)
  dated as

  
	
   

  	
  as of May 27, 2008 relating to the Notes

  	
   

  



 


Ladies and Gentlemen:


 


This Certificate relates to:


 


[CHECK A OR B AS APPLICABLE.]


 


o  A.                           Our
proposed purchase of $        
principal amount of Notes issued under the Indenture.


 


o  B.                             Our
proposed transfer or exchange of
$         principal amount of Notes
issued under the Indenture for an equal principal amount of Notes to be held by
us.


 


We and, if applicable, each account for which
we are acting, are a qualified institutional buyer within the meaning of Rule 144A
(“Rule 144A”) under the Securities
Act of 1933, as amended (the “Securities Act”).  If we are acting on behalf of an account, we
exercise sole investment discretion with respect to such account. We are aware
that the transfer of Notes to us, or such exchange, as applicable, is being
made in reliance upon the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A. 
Prior to the date of this Certificate we have received such information
regarding the Company as we have requested pursuant to Rule 144A(d)(4) or
have determined not to request such information.


 


F-1

















 


You and the Issuer are entitled to rely upon
this Certificate and are irrevocably authorized to produce this Certificate or
a copy hereof to any interested party in any administrative or legal proceeding
or official inquiry with respect to the matters covered hereby.


 


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  PURCHASER (FOR

      TRANSFERS) OR OWNER (FOR

      EXCHANGES)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  



 


	
  Date:

  	
   

  	
   

  



 


Upon transfer of certificated Notes, the
Notes would be registered in the name of the new beneficial owner as follows:


 


	
  By:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  
	
  Taxpayer ID number: 

  	
   

  	
   

  
							



 


F-2
















 


EXHIBIT G


 


Institutional Accredited Investor Certificate


 


Deutsche Bank
National Trust Company


Trust &
Securities Services


222 South
Riverside Plaza


25th floor, MS
CH105-2502


Chicago,
IL  60606-5808


Facsimile:
312-537-1009


Attention:  Corporate Trust & Securities


 


	
   

  	
  Re:

  	
  K. Hovnanian
  Enterprises, Inc.

  
	
   

  	
   

  	
  111/2%
  Senior Secured Notes due 2013 (the “Notes”)

  
	
   

  	
   

  	
  Issued under
  the Indenture (the “Indenture”)
  dated as

  
	
   

  	
   

  	
  as of
  May 27, 2008 relating to the Notes

  	
   

  



 


Ladies and
Gentlemen:


 


This
Certificate relates to:


 


[CHECK A, B OR C AS APPLICABLE.]


 


o  A.         Our
proposed purchase of $        
principal amount of Notes issued under the Indenture.


 


o  B.         Our
proposed purchase of $        
principal amount of a beneficial interest in a Global Note


 


o  C.         Our
proposed transfer or exchange of
$         principal amount of Notes
issued under the Indenture for an equal principal amount of Notes to be held by
us.


 


We hereby
confirm that:


 


1.             We are an institutional “accredited
investor” as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) (an “Institutional Accredited Investor”).


 


2.             Any acquisition of Notes by us will be for
our own account or for the account of one or more other Institutional Accredited
Investors as to which we exercise sole investment discretion.


 


G-1

















 


3.             We have such knowledge and experience in
financial and business matters that we are capable of evaluating the merits and
risks of an investment in the Notes and we and any accounts for which we are
acting are able to bear the economic risks of and an entire loss of our or
their investment in the Notes.


 


4.             We are not acquiring the Notes or
beneficial interest therein with a view to any distribution thereof in a
transaction that would violate the Securities Act or the securities laws of any
State of the United States or any other applicable jurisdiction; provided, that the disposition of our
property and the property of any accounts for which we are acting as fiduciary
will remain at all times within our and their control.


 


5.             We acknowledge that the Notes have not
been registered under the Securities Act and that the Notes may not be offered
or sold within the United States or to or for the benefit of U.S. persons
except as set forth below.


 


6.             The principal amount of Notes to which
this Certificate relates is at least equal to $250,000.


 


We agree for
the benefit of the Issuer and the Guarantors, on our own behalf and on behalf
of each account for which we are acting, that we will not resell or otherwise
transfer this note or any beneficial interest herein except (A) to the
Issuer, the Company or any of its subsidiaries, (B) to a person whom we
reasonably believe is a QIB purchasing for its own account or for the account
of a QIB in a transaction meeting the requirements of Rule 144A, (C) in
an offshore transaction meeting the requirements of Rule 903 or 904 of
Regulation S of the Securities Act, (D) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (E) to an
Institutional Accredited Investor that, prior to such transfer, furnishes the
Trustee a signed letter containing certain representations and agreements
relating to the transfer of the Notes (the form of which can be obtained from
the Trustee) and, if such transfer is in respect of an aggregate principal
amount of Notes less than $250,000, an opinion of counsel acceptable to the
Issuer and the Trustee that such transfer is in compliance with the Securities Act,
(F) in accordance with another exemption form the registration
requirements of the Securities Act (and based upon an opinion of counsel
acceptable to the Issuer and the Trustee) or (G) pursuant to an effective
Registration Statement and, in each case, in accordance with the applicable
securities laws of any state of the United States or any other applicable
jurisdiction.


 


G-2

















 


Prior to the
registration of any transfer or exchange, we acknowledge that the Issuer
reserves the right to require the delivery of such legal opinions,
certifications or other evidence as may reasonably be required in order to
determine that the proposed transfer or exchange is being made in compliance
with the Securities Act and applicable state securities laws.  We acknowledge that no representation is made
as to the availability of any Rule 144 exemption from the registration
requirements of the Securities Act.


 


We understand
that the Trustee will not be required to accept for registration of transfer or
exchange any Notes acquired by us, except upon presentation of evidence
satisfactory to the Issuer and the Trustee that the foregoing restrictions on
transfer have been complied with.  We
further agree to deliver to each person acquiring any of the 


 


Notes or any
beneficial interest therein from us a notice advising such person that resales
of the Notes are restricted as stated herein.


 


We agree to
notify you promptly in writing if any of our acknowledgments, representations
or agreements herein ceases to be accurate and complete.


 


We represent
to you that we have full power to make the foregoing acknowledgments,
representations and agreements on our own behalf and on behalf of any account
for which we are acting.


 


You and the
Issuer are entitled to rely upon this Certificate and are irrevocably
authorized to produce this Certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF PURCHASER (FOR 

  TRANSFERS) OR OWNER (FOR 

  EXCHANGES)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
					



 


G-3

















 


Upon transfer
of certificated Notes, the Notes would be registered in the name of the new
beneficial owner as follows:


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Taxpayer ID
  number:

  	
   

  	
   

  
					



 


G-4
















 


EXHIBIT H


 


[COMPLETE FORM I OR FORM II AS APPLICABLE.]


 


[FORM I]


 


Certificate of Beneficial Ownership


 


To:                              Deutsche Bank
National Trust Company


Trust & Securities
Services

222 South Riverside Plaza

25th floor, MS CH105-2502

Chicago, IL  60606-5808

Facsimile:  312-537-1009

Attention:  Corporate Trust &
Securities


 


	
   

  	
  [Euroclear Bank S.A./N.V.,
  as operator of the Euroclear System] OR

  
	
   

  	
   

  
	
   

  	
  [Clearstream Banking, société anonyme]

  
	
   

  	
   

  
	
   

  	
  Re:

  	
  K. Hovnanian
  Enterprises, Inc.

  
	
   

  	
   

  	
  111/2% Senior
  Secured Notes due 2013 (the “Notes”)

  
	
   

  	
   

  	
  Issued under the Indenture
  (the “Indenture”) dated as

  
	
   

  	
   

  	
  as of May 27, 2008
  relating to the Notes

  	
   

  



 


Ladies and Gentlemen:


 


We are the beneficial owner
of $         principal amount of Notes
issued under the Indenture and represented by a Regulation S Temporary Global
Note (as defined in the Indenture).


 


[CHECK A
OR B AS APPLICABLE.]


 


o  A.                        We are a
non-U.S. person (within the meaning of Regulation S under the Securities Act of
1933, as amended).


 


o  B.                          We are a U.S.
person (within the meaning of Regulation S under the Securities Act of 1933, as
amended) that purchased the Notes in a transaction that did not require
registration under the Securities Act of 1933, as amended.


 


You and the Issuer are
entitled to rely upon this Certificate and are irrevocably authorized to
produce this Certificate or a copy hereof to any


 


H-1

















 


interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF BENEFICIAL OWNER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
					



 


[FORM II]


 


Certificate of Beneficial Ownership


 


	
  To:

  	
  Deutsche Bank National Trust Company

  	
   

  
	
   

  	
  Trust & Securities Services

  	
   

  
	
   

  	
  222 South Riverside Plaza

  	
   

  
	
   

  	
  25th floor, MS CH105-2502

  	
   

  
	
   

  	
  Chicago, IL 60606-5808

  	
   

  
	
   

  	
  Facsimile: 312-537-1009

  	
   

  
	
   

  	
  Attention: Corporate Trust & Securities

  	
   

  
	
   

  	
   

  
	
   

  	
  Re:

  	
  K. Hovnanian Enterprises, Inc.

  
	
   

  	
   

  	
  111/2% Senior Secured Notes due 2013 (the “Notes”)

  
	
   

  	
   

  	
  Issued under the Indenture (the “Indenture”) dated as

  
	
   

  	
   

  	
  as of May 27, 2008 relating to the Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  Ladies and Gentlemen:

  
					



 


This is to certify that
based solely on certifications we have received in writing, by tested telex or
by electronic transmission from member organizations (“Member Organizations”) appearing in our
records as persons being entitled to a portion of the principal amount of Notes
represented by a Regulation S Temporary Global Note issued under the
above-referenced Indenture, that as of the date hereof,
$         principal amount of Notes
represented by the Regulation S Temporary Global Note being submitted herewith
for exchange is beneficially owned by persons that are either (i) non-U.S.
persons (within the meaning of Regulation S under the Securities Act of 1933,
as amended) or (ii) U.S. persons


 


H-2

















 


that purchased the Notes in
a transaction that did not require registration under the Securities Act of
1933, as amended.


 


We further certify that (i) we
are not submitting herewith for exchange any portion of such Regulation S
Temporary Global Note excepted in such Member Organization certifications and (ii) as
of the date hereof we have not received any notification from any Member
Organization to the effect that the statements made by such Member Organization
with respect to any portion of such Regulation S Temporary Global Note
submitted herewith for exchange are no longer true and cannot be relied upon as
of the date hereof.


 


You and the Issuer are
entitled to rely upon this Certificate and are irrevocably authorized to
produce this Certificate or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.


 


	
   

  	
  Yours faithfully,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [EUROCLEAR
  BANK S.A./N.V., as

  operator of the Euroclear System] 

  
	
   

  	
   

  
	
   

  	
  OR

  
	
   

  	
   

  
	
   

  	
  [CLEARSTREAM
  BANKING, société

  anonyme]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
					



 


 


H-3
















 


EXHIBIT I


 


THIS NOTE IS A TEMPORARY
GLOBAL NOTE.  PRIOR TO THE EXPIRATION OF
THE RESTRICTED PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT
BE HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S.
PERSON THAT PURCHASED SUCH INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  BENEFICIAL INTERESTS HEREIN ARE NOT
EXCHANGEABLE FOR CERTIFICATED NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN
ACCORDANCE WITH THE TERMS OF THE INDENTURE. TERMS IN THIS LEGEND ARE USED AS
USED IN REGULATION S UNDER THE SECURITIES ACT.


 


I-1
















 


EXHIBIT J


 


UNRESTRICTED
SUBSIDIARIES


 


WINDWARD HOME MORTGAGE, LLC


77 HUDSON STREET JOINT DEVELOPMENT, L.L.C.


COBBLESTONE SQUARE DEVELOPMENT, LLC


HERITAGE PINES, LLC


HOVSTONE HOLDINGS, L.L.C.


HOVSTONE PROPERTIES FLORIDA, L.L.C.


HOVSTONE PROPERTIES ILLINOIS, L.L.C.


HOVSTONE PROPERTIES MINNESOTA, L.L.C.


INGLEWOOD NORTH, L.L.C.


JAEGER ROAD 530, LLC


K. HOVNANIAN 77 HUDSON STREET INVESTMENTS, L.L.C.


K. HOVNANIAN AT 77 HUDSON STREET URBAN RENEWAL
COMPANY, L.L.C.


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


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


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


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


K. HOVNANIAN INVESTMENTS I, L.L.C.


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


LAUREL HIGHLANDS, LLC


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


MM-BEACHFRONT NORTH I, L.L.C.


MM-BEACHFRONT NORTH II, L.L.C.


MSHOV HOLDING COMPANY, L.L.C.


NORTH MANATEE, L.L.C.


NRD, LLC


OLD CITY DELAWARE, LLC


OLD CITY DEVELOPMENT, INC.


OLD CITY JOINT DEVELOPMENT, L.L.C.


PI INVESTMENTS I, LLC


RR HOUSTON DEVELOPERS, LLC


RR HOUSTON INVESTORS, LLC


THOMPSON RANCH JOINT DEVELOPMENT, LLC


WHI-REPUBLIC, LLC


WRIGHT FARM, L.L.C.


MARTIN’S RUN LIMITED PARTNERSHIP II


PRESTON PARKER, LLC


RR HOUSTON DEVELOPMENT, L.P.


RR HOUSTON INVESTMENT, L.P.


12TH* STREET RESIDENTIAL, LTD.


BRIGHTBEACH DEVELOPMENT, LTD.


BRIGHTCHASE, LTD.


BRIGHTON HOMES AT WALDEN MANAGEMENT, L.L.C.


BRIGHTON HOMES AT WALDEN, LTD.


FIRST MORTGAGE LENDERS OF FLORIDA, LLC


HEXTER-FAIR LAND TITLE COMPANY I, INC.


K. HOVNANIAN AMERICAN MORTGAGE, L.L.C.


K. HOVNANIAN MORTGAGE FUNDING, LLC


NEW HOMEBUYERS TITLE CO. (VIRGINIA) LLC


 


J-1

















 


NEW HOMEBUYER’S TITLE COMPANY, INC.


NEW HOMEBUYER’S TITLE LLC


PRESTON GRANDE HOMES, INC.


TOWN HOMES AT MONTGOMERY, L.L.C.


WOODMORE RESIDENTIAL, L.L.C.


WTC
VENTURES, L.L.C.


 


J-2