may result in any
Material Adverse Change.
None of the Loan Parties is in violation of any order,
writ, injunction or any decree of any Official Body that may result in any
Material Adverse Change.
SECTION 3.07.
TITLE TO PROPERTIES.
Each Loan Party has good and marketable title to or a valid leasehold interest
in all properties, assets and other rights that it purports to own or lease or
that are reflected as owned or leased on its books and records, free and clear
of all Liens and encumbrances, except Permitted Liens, and subject to the terms
and conditions of the applicable leases.
All leases of property are in full
force and effect without the necessity for any consent which has not previously
been obtained upon consummation of the transactions contemplated hereby.
SECTION 3.08.
FINANCIAL STATEMENTS.
(A)
HISTORICAL STATEMENTS.
THE COMPANY HAS
DELIVERED TO THE ADMINISTRATIVE AGENT COPIES OF HOVNANIAN'S AUDITED AND
CONSOLIDATED YEAR-END FINANCIAL STATEMENTS FOR AND AS OF THE END OF THE FISCAL
YEAR ENDED OCTOBER 31, 2005 (THE "ANNUAL STATEMENTS") AND UNAUDITED CONSOLIDATED
QUARTER-END STATEMENTS FOR AND AS OF THE END OF THE FISCAL QUARTERS ENDED
JANUARY 31, 2006, APRIL 30, 2006 AND JULY 31, 2006 (THE "QUARTERLY STATEMENTS",
AND, TOGETHER WITH THE ANNUAL STATEMENTS, THE "HISTORICAL STATEMENTS").
THE
HISTORICAL STATEMENTS WERE COMPILED FROM THE BOOKS AND RECORDS MAINTAINED BY
HOVNANIAN'S MANAGEMENT, ARE CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS AND
FAIRLY REPRESENT (SUBJECT, IN THE CASE OF QUARTERLY STATEMENTS, TO YEAR-END
ADJUSTMENTS) IN ALL MATERIAL RESPECTS THE CONSOLIDATED FINANCIAL CONDITIONS OF
HOVNANIAN AND ITS SUBSIDIARIES AS OF THEIR DATES AND THE RESULTS OF OPERATIONS
FOR THE FISCAL PERIODS THEN ENDED AND HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP
CONSISTENTLY APPLIED.
THE HISTORICAL STATEMENTS ACCURATELY REFLECT THE
LIABILITIES IN ALL MATERIAL RESPECTS OF HOVNANIAN AND ITS SUBSIDIARIES AS OF THE
RESPECTIVE DATES OF THE HISTORICAL STATEMENTS.
(B)
ACCURACY OF FINANCIAL STATEMENTS.
AS OF THE
DATE HEREOF, NEITHER HOVNANIAN NOR ANY SUBSIDIARY OF HOVNANIAN HAS ANY
LIABILITIES, CONTINGENT OR OTHERWISE, OR FORWARD OR LONG-TERM COMMITMENTS THAT
ARE REQUIRED BY GAAP TO BE, BUT ARE NOT, DISCLOSED IN THE HISTORICAL STATEMENTS
OR IN THE NOTES THERETO, AND EXCEPT AS DISCLOSED THEREIN THERE ARE NO UNREALIZED
OR ANTICIPATED LOSSES FROM ANY COMMITMENTS OF HOVNANIAN OR ANY SUBSIDIARY OF
HOVNANIAN THAT MAY CAUSE A MATERIAL ADVERSE CHANGE.
EXCEPT AS DISCLOSED IN
REPORTS FILED BY THE COMPANY OR HOVNANIAN WITH THE SEC PRIOR TO THE DATE HEREOF,
SINCE OCTOBER 31, 2005, NO MATERIAL ADVERSE CHANGE HAS OCCURRED.
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SECTION 3.09.
DISCLOSURE.
Each of the reports required to be filed by the Company or Hovnanian under
Section 13(a) of the Exchange Act on or prior to the date hereof has been filed
and, as of the respective dates thereof and the date hereof, such reports, taken
as a whole, did not contain and do not contain an untrue statement of a material
fact and did not omit and do not omit to state a material fact necessary in
order to make the