Document:

Exhibit 10.2

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

 

Dated as of June 15, 2005

 

Among

 

DIRECTV HOLDINGS LLC,

DIRECTV FINANCING CO., INC.

 

and

 

THE GUARANTORS NAMED HEREIN,

 

as Issuers,

 

 

and

 

THE INITIAL PURCHASERS NAMED
HEREIN,

 

6 3/8% Senior Notes due 2015

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is dated as of June 15,
2005, among DIRECTV HOLDINGS LLC, a Delaware limited liability company (the “Company”),
as issuer, DIRECTV FINANCING CO., INC., a Delaware corporation (“Finance Co.”),
as co-issuer, the other entities listed on the signature pages hereto, as
guarantors (the “Guarantors” and, together with the Company and Finance
Co., the “Issuers”), and BANC OF AMERICA SECURITIES LLC and CREDIT
SUISSE FIRST BOSTON LLC (collectively, the “Initial Purchasers”).

 

This Agreement
is entered into in connection with the Purchase Agreement, dated as of June 15,
2005, among the Issuers and the Initial Purchasers (the “Purchase Agreement”),
which provides for, among other things, the sale by the Company and Finance Co.
to the Initial Purchasers of $1,000,000,000 aggregate principal amount of the
Company’s and Finance Co.’s 6 3/8% Senior Notes due 2015 (the “Notes”),
guaranteed by the Guarantors (the “Guarantees”) on a senior basis.  The Notes and the Guarantees are collectively
referred to herein as the “Securities.” 
In order to induce the Initial Purchasers to enter into the Purchase
Agreement, the Issuers have agreed to provide the registration rights set forth
in this Agreement for the benefit of the Initial Purchasers and any subsequent
holder or holders of the Securities.  The
execution and delivery of this Agreement is a condition to the Initial
Purchasers’ obligation to purchase the Securities under the Purchase Agreement.

 

The parties
hereby agree as follows:

 

1.                                       Definitions

 

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

 

Additional
Interest:  See Section 4(a) hereof.

 

Advice:  See the last paragraph of Section 5
hereof.

 

Applicable Period:  See Section 2(b) hereof.

 

Company:  See the introductory paragraphs hereto.

 

Effectiveness
Date:  The 180th
day after the Issue Date; provided, however, that with respect to
any Shelf Registration, if later than the 180th day after the Issue Date, the
Effectiveness Date shall be the 180th day after the delivery of a Shelf Notice
as required pursuant to Section 2(c) hereof; provided, further,
that in the event that applicable law or interpretations of the staff of the
SEC do not permit the Issuers to file a Registration Statement covering the
exchange of the Securities or to complete the Exchange Offer, the Effectiveness
Date shall be extended by 30 days.

 

 

Effectiveness
Period:  See Section 3(a) hereof.

 

Event Date:  See Section 4 hereof.

 

Exchange Act:  The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.

 

Exchange Notes:  See Section 2(a) hereof.

 

Exchange Offer:  See Section 2(a) hereof.

 

Exchange Offer
Registration Statement:  See Section 2(a) hereof.

 

Filing Date:  (A) If no Exchange Offer Registration
Statement has been filed by the Issuers pursuant to this Agreement, the 90th
day after the Issue Date; and (B) with respect to a Shelf Registration
Statement, if later than the 90th day after the Issue Date, the 90th day after
the delivery of a Shelf Notice as required pursuant to Section 2(c) hereof.

 

Finance Co.:  See the introductory paragraphs hereto.

 

Guarantees:  See the introductory paragraphs hereto.

 

Guarantors:  See the introductory paragraphs hereto.

 

Holder:  As the context requires, means any holder of
a Registrable Note or Registrable Notes.

 

Indemnified
Person:  See Section 7(c) hereof.

 

Indemnifying
Person:  See Section 7(c) hereof.

 

Indenture:  The Indenture, dated as of June 15, 2005,
by and among the Issuers and The Bank of New York, as trustee, pursuant to
which the Securities, the Exchange Notes and the Private Exchange Notes, if
any, are being issued, as the same may be amended or supplemented from time to
time in accordance with the terms thereof.

 

Initial
Purchasers:  See
the introductory paragraphs hereto.

 

Initial Shelf
Registration: 
See Section 3(a) hereof.

 

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Inspectors:  See Section 5(m) hereof.

 

Issue Date:  June 15, 2005, the date of original
issuance of the Notes.

 

Issuers:  See the introductory paragraphs hereto.

 

NASD:  See Section 5(r) hereof.

 

Notes:  See the introductory paragraphs hereto.

 

Offering
Memorandum:  The
final offering memorandum of the Company and Finance Co., dated June 8,
2005, in respect of the offering of the Securities.

 

Participant:  See Section 7(a) hereof.

 

Participating
Broker-Dealer: 
See Section 2(b) hereof.

 

Person:  An individual, trustee, corporation,
partnership, limited liability company, joint stock company, trust,
unincorporated association, union, business association, firm or other legal
entity.

 

Private
Exchange:  See Section 2(b) hereof.

 

Private
Exchange Notes: 
See Section 2(b) hereof.

 

Prospectus:  The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act and any term sheet filed
pursuant to Rule 434 under the Securities Act), as amended or supplemented
by any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

Purchase
Agreement:  See
the introductory paragraphs hereto.

 

Records:  See Section 5(m) hereof.

 

Registrable
Notes:  Each
Security upon its original issuance and at all times subsequent thereto, each
Exchange Note (and the related Guarantee) as to which Section 2(c)(iv) hereof
is applicable upon original issuance and at all times subsequent thereto and
each Private Exchange Note (and the related Guarantee) upon original issuance
thereof and at all times subsequent thereto, until (i) a Registration
Statement

 

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(other than, with respect only to any Exchange Note as to which Section 2(c)(iv) hereof
is applicable, the Exchange Offer Registration Statement) covering such
Security, Exchange Note or Private Exchange Note has been declared effective by
the SEC and such Security, Exchange Note or such Private Exchange Note, as the
case may be, has been disposed of in accordance with such effective
Registration Statement, (ii) such Security has been exchanged pursuant to
the Exchange Offer for an Exchange Note or Exchange Notes that may be resold
without restriction under state and federal securities laws, (iii) such
Security, Exchange Note or Private Exchange Note has been disposed of by a
broker-dealer pursuant to the “Plan of Distribution” contemplated by a
Registration Statement pursuant to which such Security, Exchange Note or
Private Exchange Note has been registered (including delivery of the prospectus
contained therein), (iv) such Security, Exchange Note or Private Exchange
Note, as the case may be, ceases to be outstanding for purposes of the
Indenture or (v) such Security, Exchange Note or Private Exchange Note, as
the case may be, may be resold without restriction pursuant to Rule 144
(or any similar provision then in force) under the Securities Act.

 

Registration
Statement:  Any
registration statement of the Issuers that covers any of the Notes, the
Exchange Notes or the Private Exchange Notes filed with the SEC under the
Securities Act, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.

 

Rule 144:  Rule 144 promulgated under the
Securities Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144A) or regulation hereafter adopted
by the SEC providing for offers and sales of securities made in compliance
therewith resulting in offers and sales by subsequent holders that are not
affiliates of the issuer of such securities being free of the registration and
prospectus delivery requirements of the Securities Act.

 

Rule 144A:  Rule 144A promulgated under the
Securities Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144) or regulation hereafter adopted by
the SEC.

 

Rule 415:  Rule 415 promulgated under the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.

 

SEC:  The Securities and Exchange Commission.

 

Securities:  See the introductory paragraphs hereto.

 

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Securities Act:  The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.

 

Shelf Notice:  See Section 2(c) hereof.

 

Shelf
Registration: 
See Section 3(b) hereof.

 

Subsequent
Shelf Registration: 
See Section 3(b) hereof.

 

TIA:  The Trust Indenture Act of 1939, as amended.

 

Trustee:  The trustee under the Indenture and the
trustee (if any) under any indenture governing the Exchange Notes and Private
Exchange Notes.

 

Underwritten
registration or underwritten offering:  A registration in which securities of one or
more of the Issuers are sold to an underwriter for reoffering to the public.

 

2.                                       Exchange
Offer

 

(a)                                  To
the extent not prohibited by any applicable law or applicable interpretation of
the staff of the SEC, the Issuers shall file with the SEC, no later than the
Filing Date, a Registration Statement (the “Exchange Offer Registration
Statement”) on an appropriate registration form with respect to a registered
offer (the “Exchange Offer”) to exchange any and all of the Registrable
Notes for a like aggregate principal amount of notes of the Company and Finance
Co., guaranteed by the Guarantors, that are identical in all material respects
to the Securities (the “Exchange Notes”), except that (i) the
Exchange Notes shall contain no restrictive legend thereon and (ii) interest
thereon shall accrue (A) from the latter of (x) the last interest
payment date on which interest was paid on the Security surrendered in exchange
therefor, or (y) if the Security is surrendered for exchange on a date in a
period which includes the record date for an interest payment date to occur on
or after the date of such exchange and as to which interest will be paid, the
date of such interest payment date or (B) if no interest has been paid on
such Security, from the Issue Date, and which are entitled to the benefits of
the Indenture or a trust indenture which is identical in all material respects
to the Indenture (other than such changes to the Indenture or any such trust
indenture as are necessary to comply with the TIA) and which, in either case,
has been qualified under the TIA.  The
Exchange Offer shall comply with all applicable tender offer rules and
regulations under the Exchange Act and other applicable law.  The Issuers shall use their best efforts to
(x) cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for not less than 20 business days (or
longer if required by applicable law) after the date that notice of the
Exchange Offer is mailed to Holders; and (z) consummate the Exchange Offer
on or prior to the 220th day after the Issue Date.  If, after the Exchange Offer Registration

 

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Statement is initially declared
effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes
thereunder is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, the Exchange
Offer Registration Statement shall be deemed not to have become effective for
purposes of this Agreement during the period of such interference, until the
Exchange Offer may legally resume.

 

Each Holder
that participates in the Exchange Offer will be required, as a condition to its
participation in the Exchange Offer, to represent to the Issuers in writing
(which may be contained in the applicable letter of transmittal) that:

 

(i)                                     any Exchange Notes
to be received by it will be acquired in the ordinary course of its business,

 

(ii)                                  at the time of the
commencement of the Exchange Offer such Holder has no arrangement or
understanding with any Person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes in violation of the
Securities Act,

 

(iii)                               such Holder is not an
affiliate (as defined in Rule 405 promulgated under the Securities Act) of
the Issuers,

 

(iv)                              if such Holder is a broker-dealer,
that it is not engaged in, and does not intend to engage in, the distribution
of Exchange Notes,

 

(v)                                 if such Holder is a
Participating Broker-Dealer (as defined below) that will receive Exchange Notes
for its own account in exchange for Securities that were acquired as a result
of market-making or other trading activities, that it will deliver a prospectus
in connection with any resale of such Exchange Notes and

 

(vi)                              the Holder is not acting
on behalf of any persons or entities who could not truthfully make the
foregoing representations.

 

Such Holder
will also be required to be named as a selling security holder in the related
prospectus and to make such other representations as may be necessary under
applicable SEC rules, regulations or interpretations to render available the
use of Form S-4 or any other appropriate form under the Securities Act.

 

Upon
consummation of the Exchange Offer in accordance with this Section 2, the
provisions of this Agreement shall continue to apply solely with respect to
Registrable Notes that are Private Exchange Notes, Exchange Notes as to which Section 2(c)(iv) is
applicable and Exchange Notes held by Participating Broker-Dealers, and the
Issuers shall have no further obligation to register Registrable Notes (other
than Private Exchange Notes and other than in respect of any Exchange Notes as
to which clause 2(c)(iv) is applicable) pursuant to Section 3
hereof.

 

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No securities
other than the Exchange Notes shall be included in the Exchange Offer
Registration Statement.

 

(b)                                 The
Issuers shall include within the Prospectus contained in the Exchange Offer
Registration Statement a section entitled “Plan of Distribution,”
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential “underwriter” status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a “Participating
Broker-Dealer”), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies represent
the prevailing views of the staff of the SEC. 
Such “Plan of Distribution” section shall also expressly permit, to
the extent permitted by applicable policies and regulations of the SEC, the use
of the Prospectus by all Persons subject to the prospectus delivery
requirements of the Securities Act, including, to the extent permitted by
applicable policies and regulations of the SEC, all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Notes in compliance with
the Securities Act.

 

The Issuers
shall use their best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus contained therein in order
to permit such Prospectus to be lawfully delivered by all Persons subject to
the prospectus delivery requirements of the Securities Act for such period of
time as is necessary to comply with applicable law in connection with any
resale of the Exchange Notes covered thereby; provided, however,
that such period shall not be required to exceed 180 days, or such longer
period if extended pursuant to the last sentence of Section 5(s) (the “Applicable
Period”).

 

If, prior to
consummation of the Exchange Offer, the Initial Purchasers hold any Securities
acquired by them that have the status of an unsold allotment in the initial
distribution, the Issuers upon the request of the Initial Purchasers shall
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to the Initial Purchasers, in exchange (the “Private
Exchange”) for such Securities held by the Initial Purchasers, a like
principal amount of notes (the “Private Exchange Notes”) of the Company
and Finance Co., guaranteed by the Guarantors, that are identical in all material
respects to the Exchange Notes except for the placement of a restrictive legend
on such Private Exchange Notes.  The
Private Exchange Notes shall be issued pursuant to the same indenture as the
Exchange Notes and, if permissible, bear the same CUSIP number as the Exchange
Notes.

 

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In connection
with the Exchange Offer, the Issuers shall:

 

(1)                                  mail,
or cause to be mailed, to each Holder of record entitled to participate in the
Exchange Offer a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of transmittal and
related documents;

 

(2)                                  use
their best efforts to keep the Exchange Offer open for not less than 20
business days after the date that notice of the Exchange Offer is mailed to
Holders (or longer if required by applicable law);

 

(3)                                  utilize
the services of a depositary for the Exchange Offer with an address in the
Borough of Manhattan, The City of New York;

 

(4)                                  permit
Holders to withdraw tendered Securities at any time prior to the close of
business, New York time, on the last business day on which the Exchange Offer
shall remain open; and

 

(5)                                  otherwise
comply in all material respects with all applicable laws, rules and
regulations.

 

As soon as
practicable after the close of the Exchange Offer and the Private Exchange, if
any, the Issuers shall:

 

(1)                                  accept
for exchange all Registrable Notes validly tendered and not validly withdrawn
pursuant to the Exchange Offer and the Private Exchange, if any;

 

(2)                                  deliver
to the Trustee for cancellation all Registrable Notes so accepted for exchange;
and

 

(3)                                  direct
the Trustee to authenticate and deliver promptly to each holder of Securities
Exchange Notes or Private Exchange Notes, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for exchange.

 

The Exchange
Offer and the Private Exchange shall not be subject to any conditions, other
than that (i) the Exchange Offer or the Private Exchange, as the case may
be, does not violate applicable law or any applicable interpretation of the
staff of the SEC, (ii) no action or proceeding shall have been instituted
or threatened in any court or by any governmental agency which might materially
impair the ability of the Issuers to proceed with the Exchange Offer or the
Private Exchange, (iii) all governmental approvals shall have been
obtained, which approvals the Issuers deem necessary for the consummation of
the Exchange Offer or the Private Exchange, (iv) there shall not have been
any material change, or development involving a prospective material change, in
the business or financial affairs of the Issuers which, in the reasonable
judgment of the Issuers, would materially impair the Issuers’ ability to
consummate the Exchange Offer or the Private Exchange, and (v) there

 

8

 

shall not have
been proposed, adopted or enacted any law, statute, rule or regulation
which, in the reasonable judgment of the Issuers, would materially impair the
Issuers’ ability to consummate the Exchange Offer or the Private Exchange or
have a material adverse effect on the Issuers if the Exchange Offer or the
Private Exchange was consummated.  In the
event that the Issuers are unable to consummate the Exchange Offer or the
Private Exchange due to any event listed in clauses (i) through (v) above,
the Issuers shall not be deemed to have breached any covenant under this Section 2.

 

The Exchange
Notes and the Private Exchange Notes shall be issued under the Indenture or
under an indenture identical in all material respects to the Indenture and
which, in either case, has been qualified under the TIA or is exempt from such
qualification and shall provide that the Exchange Notes shall not be subject to
the transfer restrictions set forth in the Indenture.  The Indenture or such other indenture shall
provide that the Exchange Notes, the Private Exchange Notes and the Securities
shall vote and consent together on all matters as one class and that none of the
Exchange Notes, the Private Exchange Notes or the Securities will have the
right to vote or consent as a separate class on any matter.

 

(c)                                  If
(i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Issuers are not permitted to
effect the Exchange Offer, (ii) the Exchange Offer is not consummated
within 220 days of the Issue Date, (iii) a Holder of Private Exchange
Notes notifies the Company in writing within 60 days following the consummation
of the Exchange Offer that (A) such Holder is prohibited by law or SEC
policy from participating in the Exchange Offer or (B) such Holder may not
resell the Exchange Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales
by such Holder or (C) such Holder is a Participating Broker-Dealer and
holds Securities acquired directly from the Company or any of its affiliates
(as defined in Rule 405 promulgated under the Securities Act), or (iv) in
the case of any Holder that participates in the Exchange Offer, such Holder
does not receive Exchange Notes on the date of the exchange that may be sold
without restriction under state and federal securities laws (other than due
solely to the status of such Holder as an affiliate of one of the Issuers
within the meaning of the Securities Act), then in the case of each of clauses (i) to
and including (iv) of this sentence, the Issuers shall promptly deliver to
the Holders and the trustee written notice thereof (the “Shelf Notice”)
and shall file a Shelf Registration pursuant to Section 3 hereof.

 

3.                                       Shelf
Registration

 

If at any time
a Shelf Notice is delivered as contemplated by Section 2(c) hereof,
then:

 

(a)                                  Shelf
Registration.  The Issuers shall file
with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415

 

9

 

covering all
of the Registrable Notes not exchanged in the Exchange Offer, Private Exchange
Notes and Exchange Notes as to which Section 2(c)(iv) is applicable
(the “Initial Shelf Registration”).  The
Issuers shall file with the SEC the Initial Shelf Registration on or before the
applicable Filing Date.  The Initial
Shelf Registration shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Notes for resale by Holders in the
manner or manners designated by them (including, without limitation, one or
more underwritten offerings).  The
Issuers shall not permit any securities other than the Registrable Notes to be
included in the Initial Shelf Registration or any Subsequent Shelf Registration
(as defined below).

 

The Issuers
shall, subject to applicable law or applicable interpretation of the staff of
the SEC, use their commercially reasonable efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date which is two years from the
Issue Date or such shorter period ending when (i) all Registrable Notes
covered by the Initial Shelf Registration have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration or cease to be
outstanding, (ii)  all Registrable Notes are eligible to be sold to the
public pursuant to Rule 144(k) under the Securities Act or (iii) a
Subsequent Shelf Registration covering all of the Registrable Notes covered by
and not sold under the Initial Shelf Registration or an earlier Subsequent
Shelf Registration has been declared effective under the Securities Act (the “Effectiveness
Period”), provided, however, that the Effectiveness Period in
respect of the Initial Shelf Registration shall be extended to the extent
required to permit dealers to comply with the applicable prospectus delivery
requirements of Rule 174 under the Securities Act and as otherwise
provided herein.

 

No Holder of
Registrable Notes may include any of its Registrable Notes in any Shelf
Registration pursuant to this Agreement unless and until such Holder furnishes
to the Company in writing, within 15 business days after receipt of a request
therefor, such information concerning such Holder required to be included in
any Shelf Registration or Prospectus or preliminary prospectus included
therein.  No holder of Registrable Notes
shall be entitled to Additional Interest pursuant to Section 4 hereof
unless and until such Holder shall have provided all such information, if so
requested.  Each Holder of Registrable
Notes as to which any Shelf Registration is being effected agrees to furnish
promptly to the Company all information required to be disclosed so that the
information previously furnished to the Company by such Holder not materially
misleading and does not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading.

 

(b)                                 Subsequent
Shelf Registrations.  If the Initial
Shelf Registration or any Subsequent Shelf Registration ceases to be effective
for any reason at any time during the Effectiveness Period (other than because
of the sale of all of the securities

 

10

 

registered
thereunder), the Issuers shall use their commercially reasonable efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within 30 days of such cessation of effectiveness amend
the Initial Shelf Registration in a manner to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional “shelf”
Registration Statement pursuant to Rule 415 covering all of the
Registrable Notes covered by and not sold under the Initial Shelf Registration
or an earlier Subsequent Shelf Registration (each, a “Subsequent Shelf
Registration”).  If a Subsequent
Shelf Registration is filed, the Issuers shall use their commercially
reasonable efforts to cause the Subsequent Shelf Registration to be declared
effective under the Securities Act as soon as practicable after such filing and
to keep such subsequent Shelf Registration continuously effective for a period
equal to the number of days in the Effectiveness Period less the aggregate
number of days during which the Initial Shelf Registration or any Subsequent
Shelf Registration was previously continuously effective.  As used herein the term “Shelf
Registration” means the Initial Shelf Registration and any Subsequent Shelf
Registration.

 

(c)                                  Supplements
and Amendments.  The Issuers shall
promptly supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement or by any managing
underwriter of such Registrable Notes, provided, however, that the
Issuers shall not be required to supplement or amend any Shelf Registration
upon the request of a Holder or any managing underwriter if such requested
supplement or amendment would, in the good faith judgment of the Company,
violate the Securities Act, the Exchange Act or the rules and regulations
promulgated thereunder.

 

4.                                       Additional
Interest

 

(a)                                  The
Issuers and the Initial Purchasers agree that the Holders of Registerable Notes
will suffer damages if the Issuers fail to fulfill their obligations under Section 2
or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. 
Accordingly, the Issuers agree to pay, as liquidated damages, additional
interest on the Notes (“Additional Interest”) under the circumstances
and to the extent set forth below (each of which shall be given independent
effect) (it being understood that the Additional Interest provided for in this section shall
be the sole remedy at law for the matters set forth in clauses (i) through
(iii) below; provided, however, that nothing contained
herein shall prevent the Holders of a majority of Registrable Notes from
seeking specific performance of the Issuers’ obligations with respect to such
matters):

 

(i)                                     if (A) neither
the Exchange Offer Registration Statement nor the Initial Shelf Registration
has been filed with the SEC on or prior to the date that is 90 days

 

11

 

after the Issue Date or (B) notwithstanding that the Issuers have
consummated or will consummate the Exchange Offer, the Issuers are required to
file a Shelf Registration and such Shelf Registration is not filed on or prior
to the Filing Date applicable thereto, then, commencing on the day after such 90th
day or such Filing Date, Additional Interest shall accrue on the principal
amount of the Securities at a rate of 0.25% per annum for the first 90 days
immediately following each such Filing Date, and such Additional Interest rate
shall increase by an additional 0.25% per annum at the beginning of each
subsequent 90-day period; or

 

(ii)                                  if (A) neither
the Exchange Offer Registration Statement nor the Initial Shelf Registration is
declared effective by the SEC on or prior to the date that is 180 days
after the Issue Date or (B) notwithstanding that the Issuers have
consummated or will consummate the Exchange Offer, the Issuers are required to
file a Shelf Registration and such Shelf Registration is not declared effective
by the SEC on or prior to the Effectiveness Date in respect of such Shelf
Registration, then, commencing on the day after such 180th day or such
Effectiveness Date, Additional Interest shall accrue on the principal amount of
the Securities at a rate of 0.25% per annum for the first 90 days immediately
following such Effectiveness Date, and such Additional Interest rate shall
increase by an additional 0.25% per annum at the beginning of each subsequent 90-day
period; or

 

(iii)                               if (A) the Issuers
have not exchanged Exchange Notes for all Securities validly tendered in
accordance with the terms of the Exchange Offer on or prior to the 220th day
after the Issue Date or (B) if applicable, a Shelf Registration has been
declared effective and such Shelf Registration ceases to be effective at any
time prior to the second anniversary of the Issue Date (other than after such
time as all Notes have been disposed of thereunder or all Notes are eligible to
be sold pursuant to Rule 144(k)), then Additional Interest shall accrue on
the principal amount of the Securities at a rate of 0.25% per annum for the
first 90 days commencing on (x) the 221st day after the Issue Date, in the case
of (A) above, or (y) the day such Shelf Registration ceases to be
effective, in the case of (B) above, and such Additional Interest rate
shall increase by an additional 0.25% per annum at the beginning of each such
subsequent 90-day period;

 

provided,
however, that the Additional Interest rate on the Notes may not accrue
under more than one of the foregoing clauses (i)-(iii) at any one time and
at no time shall the aggregate amount of Additional Interest accruing exceed in
the aggregate 1.00% per annum; provided, further, however,
that (1) upon the filing of the applicable Exchange Offer Registration
Statement or the applicable Shelf Registration as required hereunder (in the
case of clause (i) above of this Section 4), (2) upon the
effectiveness of the Exchange Offer Registration Statement or the applicable
Shelf Registration as required hereunder (in the case of clause (a)(ii) of
this Section 4), or (3) upon the exchange of the applicable Exchange
Notes for all

 

12

 

Securities
tendered (in the case of clause (a)(iii)(A) of this Section 4), or
upon the effectiveness of the applicable Shelf Registration which had ceased to
remain effective (in the case of clause(a)(iii)(B) of this Section 4),
Additional Interest on the Notes as a result of such clause (or the relevant
subclause thereof), as the case may be, shall cease to accrue; provided,
further, however, that notwithstanding the foregoing provisions
of this Section 4(a), Additional Interest shall not be payable if
effectiveness of a Shelf Registration ceased solely as a result of (i) the
filing of a post-effective amendment to such Shelf Registration to incorporate
annual audited financial information with respect to the Issuers required
pursuant to rules or regulations promulgated by the Commission where such
post-effective amendment is not yet effective and needs to be declared
effective to permit Holders to use the related prospectus or (ii) other
material events, with respect to the Issuers that would need to be described in
such Shelf Registration Statement or related prospectus and the Issuers are
proceeding promptly and in good faith to amend or supplement such Shelf
Registration or related prospectus to describe such events; provided,
that in any case if such a Shelf Registration is not declared effective on the
thirtieth day after effectiveness ceased, Additional Interest shall be payable
from the day following such 30-day period until the date on which such Shelf
Registration is declared effective.

 

(b)                                 The
Issuers shall notify the Trustee within three business days after each and
every date on which an event occurs in respect of which Additional Interest is
required to be paid (an “Event Date”). 
Any amounts of Additional Interest due pursuant to clauses (a)(i), (a)(ii) or
(a)(iii) of this Section 4 will be payable in cash semiannually on
each June 15 and December 15 (to the holders of record on the June 1
and December 1 immediately preceding such dates), commencing with the
first such date occurring after any such Additional Interest commences to
accrue.  The amount of Additional
Interest will be determined by multiplying the applicable Additional Interest
rate by the principal amount of the Registrable Notes, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.

 

5.                                       Registration
Procedures

 

In connection
with the filing of any Registration Statement pursuant to Sections 2 or 3
hereof, the Issuers shall effect such registrations to permit the sale of the
securities covered thereby in accordance with the intended method or methods of
disposition thereof, and pursuant thereto and in connection with any
Registration Statement filed by the Issuers hereunder each of the Issuers
shall:

 

(a)                                  Prepare
and file with the SEC no later than the Filing Date, a Registration Statement
or Registration Statements as prescribed by Sections 2 or 3 hereof, and
use their best efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; provided, however,
that, if (1) such filing is pursuant to

 

13

 

Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period relating thereto, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Issuers shall furnish to and afford the Holders of the Registrable Notes
included in such Registration Statement or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing underwriters,
if any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein and
all exhibits thereto) proposed to be filed (in each case at least five days prior
to such filing, or such later date as is reasonable under the circumstances).

 

(b)                                 Prepare
and file with the SEC such amendments and post-effective amendments to each
Shelf Registration or Exchange Offer Registration Statement, as the case may
be, as may be necessary to keep such Registration Statement continuously
effective for the Effectiveness Period or the Applicable Period, as the case
may be; cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; and comply with the provisions of the Securities Act
and the Exchange Act applicable to each of them with respect to the disposition
of all securities covered by such Registration Statement as so amended or in
such Prospectus as so supplemented and with respect to the subsequent resale of
any securities being sold by a Participating Broker-Dealer covered by any such
Prospectus.  The Issuers shall be deemed
not to have used their best efforts to keep a Registration Statement effective
during the Effectiveness Period or the Applicable Period, as the case may be,
relating thereto if any Issuer voluntarily takes any action that would result
in selling Holders of the Registrable Notes covered thereby or Participating
Broker-Dealers seeking to sell Exchange Notes not being able to sell such
Registrable Notes or such Exchange Notes during that period unless such action
is required by applicable law or permitted by this Agreement.

 

(c)                                  If
(1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period relating thereto from whom the Issuers have
received written notice that it will be a Participating Broker-Dealer in the
Exchange Offer, notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, and their counsel promptly
(but in any event within two business days), and confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any applicable Registration
Statement or any post-effective amendment, when the same has become effective
under the Securities Act (including in such notice a written statement that any
Holder may, upon request in writing, obtain, at the sole expense of the
Issuers, one conformed copy of such

 

14

 

Registration Statement or
post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and exhibits),
(ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose, (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Notes or resales of Exchange Notes by Participating Broker-Dealers
the representations and warranties of the Issuers contained in any agreement
(including any underwriting agreement) contemplated by Section 5(l) hereof
cease to be true and correct in all material respects, (iv) of the receipt
by any Issuer of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement or
any of the Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event, the existence of any condition or any information
becoming known that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making
of any changes in or amendments or supplements to such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (vi) of
the Issuers’ determination that a post-effective amendment to a Registration
Statement would be appropriate.

 

(d)                                 If
(1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, use their commercially reasonable efforts
to prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of a
Prospectus or suspending the qualification (or exemption from qualification) of
any of the Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any such
order is issued, to use their commercially reasonable efforts to obtain the
withdrawal of any such order at the earliest possible moment.

 

(e)                                  If
a Shelf Registration is filed pursuant to Section 3 and if requested by
the managing underwriter, the Holders of a majority in aggregate principal
amount of the Registrable Notes being sold in connection with an underwritten
offering or any Participating Broker-Dealer, (i) as promptly as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriter, such Holders, any

 

15

 

Participating Broker-Dealer or
counsel for any of them reasonably request to be included therein, provided,
however, that the Issuers shall not be required to include any such
information upon the request of a Holder or any underwriter if the inclusion of
such information would, in the good faith judgment of the Company, violate the
Securities Act, the Exchange Act or the rules and regulations promulgated
thereunder, (ii) make all required filings of such prospectus supplement
or such post-effective amendment as soon as practicable after an Issuer has
received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment, and (iii) supplement or make
amendments to such Registration Statement.

 

(f)                                    If
(1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, furnish to each selling Holder of
Registrable Notes, a single counsel to such Holders (chosen in accordance with Section 6(b))
and to each such Participating Broker-Dealer who so requests and to its counsel
at the sole expense of the Issuers, one conformed copy of the Registration
Statement or Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested in writing one
copy of any document incorporated or deemed to be incorporated therein by
reference and one copy of any exhibit.

 

(g)                                 If
(1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, deliver to each selling Holder of
Registrable Notes, a single counsel to such Holders (chosen in accordance with Section 6(b)),
or each such Participating Broker-Dealer and its counsel, as the case may be,
at the sole expense of the Issuers, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each amendment
or supplement thereto and if requested in writing, any documents incorporated
by reference therein as such Persons may reasonably request; and, subject to
the last paragraph of Section 5(s), the Issuers hereby consent to the use
of such Prospectus and each amendment or supplement thereto (provided the
manner of such use complies with any limitations resulting from any applicable
state securities “Blue Sky” laws as provided in writing to such Holders by the
Company and subject to the provisions of this Agreement) by each of the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as the
case may be, and the managing underwriters or agents, if any, and dealers (if
any), in connection with the offering and sale of the Registrable Notes covered
by, or the sale by Participating Broker-Dealers of the Exchange Notes pursuant
to, such Prospectus and any amendment or supplement thereto.

 

(h)                                 Prior
to any public offering of Registrable Notes or any delivery of a Prospectus
contained in the Exchange Offer Registration Statement by any Participating

 

16

 

Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use their commercially reasonable
efforts to register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be,
in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder or Participating Broker-Dealer, reasonably request
in writing; provided, however, that where Exchange Notes held by
Participating Broker-Dealers or Registrable Notes are offered other than
through an underwritten offering, the Issuers agree to cause their counsel to
perform Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 5(h), keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable Registration
Statement; provided, however, that no Issuer shall be required to
(A) qualify generally to do business in any jurisdiction where it is not
then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in any such jurisdiction where it is not then so subject.

 

(i)                                     If
a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with
the selling Holders of Registrable Notes to facilitate the timely preparation
and delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the selling Holders may reasonably request.

 

(j)                                     If
(1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, upon the occurrence of any event
contemplated by Sections 5(c)(v) or 5(c)(vi) hereof, as promptly
as practicable prepare and (subject to Section 5(a) hereof) file with
the SEC, at the sole expense of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Notes being sold thereunder or to the
purchasers of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  Notwithstanding the foregoing, the Issuers
shall not be required to amend or supplement a Registration Statement, any
related

 

17

 

Prospectus or any document
incorporated therein by reference, in the event that an event occurs and is
continuing as a result of which the Shelf Registration would, in the good faith
judgment of the Company, contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or,
for a period not to exceed an aggregate of 90 days in any calendar year, (a) the
Company determines in its good faith judgment that the disclosure of such event
at such time would reasonably be expected to have a material adverse effect on
the business, operations or prospects of the Company or (b) the disclosure
otherwise relates to a pending material business transaction that has not yet
been publicly disclosed.

 

(k)                                  Prior
to the effective date of the first Registration Statement elating to the
Registrable Notes, (i) provide the Trustee with certificates for the
Registrable Notes in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes.

 

(l)                                     In
connection with any underwritten offering of Registrable Notes pursuant to a
Shelf Registration, enter into an underwriting agreement as is customary in
underwritten offerings of debt securities similar to the Securities in form and
substance reasonably satisfactory to the Issuers and take all such other
actions as are reasonably requested by the managing underwriter in order to
expedite or facilitate the registration or the disposition of such Registrable
Notes and, in such connection, (i) make such representations and
warranties to, and covenants with, the underwriters with respect to the
business of the Issuers and the subsidiaries of the Issuers (including any
acquired business, properties or entity, if applicable) and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to the
Securities, and confirm the same in writing if and when requested in form and
substance reasonably satisfactory to the Issuers; (ii) upon the request of
any underwriter use all reasonable efforts to obtain the written opinions of
counsel to the Issuers and written updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter, addressed to the
underwriters covering the matters customarily covered in opinions reasonably
requested in underwritten offerings and such other matters as may be reasonably
requested by the managing underwriter; (iii) upon the request of any
managing underwriter use their commercially reasonable efforts to obtain “cold
comfort” letters and updates thereof in form, scope and substance reasonably
satisfactory to the managing underwriter from the independent public
accountants of the Issuers (and, if necessary, any other independent public
accountants of the Issuers, any subsidiary of the Issuers or of any business
acquired by the Issuers for which financial statements and financial data are,
or are required to be, included or incorporated by reference in the
Registration Statement), addressed to each of the underwriters, such letters to
be in customary form and covering matters of the type customarily covered in “cold
comfort” letters in connection with underwritten offerings

 

18

 

of debt securities similar to
the Securities and such other matters as reasonably requested by the managing
underwriter as permitted by the Statement on Auditing Standards No. 72;
and (iv) if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable to the
sellers and underwriters, if any, than those set forth in Section 7 hereof
(or such other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Registrable Notes covered by such Registration
Statement and the managing underwriter or underwriters or agents, if any).  The above shall be done at each closing under
such underwriting agreement, or as and to the extent required thereunder.

 

(m)                               If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, make available for inspection by any
selling Holder of such Registrable Notes being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant or other
agent retained by any such selling Holder or each such Participating Broker-Dealer,
as the case may be, or underwriter (collectively, the “Inspectors”), at
the offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and instruments of
the Issuers and subsidiaries of the Issuers (collectively, the “Records”)
as shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
the Issuers and any of their subsidiaries to supply all information reasonably
requested by any such Inspector in connection with such Registration Statement
and Prospectus.  The foregoing inspection
and information gathering shall be coordinated on behalf of the other parties
by one counsel designated by such parties as described in Section 6(b) hereof.  Each Inspector shall agree in writing that it
will keep the Records confidential and that it will not disclose any of the
Records that the Issuers determine, in good faith, to be confidential unless (i) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, or (ii) the information in such Records
has been made generally available to the public other than through the acts of
such Inspector; provided, however, that prior notice shall be
provided as soon as practicable to the Issuers of the potential disclosure of
any information by such Inspector pursuant to clause (i) of this sentence
to permit the Issuers to obtain a protective order or take other appropriate
action to prevent the disclosure of such information at the Issuers’ sole
expense (or waive the provisions of this paragraph (m)) and that such Inspector
shall take such actions as are reasonably necessary to protect the
confidentiality of such information (if practicable) to the extent such action
is otherwise not inconsistent with, an impairment of or in derogation of the
rights and interests of the Holder or any Inspector.

 

(n)                                 Provide
an indenture trustee for the Registrable Notes or the Exchange Notes, as the
case may be, and cause the Indenture or the trust indenture provided for in

 

19

 

Section 2(a) hereof,
as the case may be, to be qualified under the TIA not later than the effective
date of the first Registration Statement relating to the Registrable Notes; and
in connection therewith, cooperate with the trustee under any such indenture
and the Holders of the Registrable Notes to effect such changes to such
indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use their commercially
reasonable efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable such indenture to be so qualified in a timely
manner.

 

(o)                                 Comply
with all applicable rules and regulations of the SEC and make generally
available to its securityholders with regard to any applicable Registration
Statement, a consolidated earnings statement satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder (or any similar rule promulgated
under the Securities Act) no later than 60 days after the end of any fiscal quarter
(or 120 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Notes are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.

 

(p)                                 Upon
consummation of the Exchange Offer or a Private Exchange, if requested by the
Trustee in writing, obtain an opinion of counsel to the Issuers, in a form
customary for underwritten transactions, addressed to the Trustee for the
benefit of all Holders of Registrable Notes participating in the Exchange Offer
or the Private Exchange, as the case may be, that the Exchange Notes or Private
Exchange Notes, as the case may be, the related guarantee and the related
indenture constitute legal, valid and binding obligations of the Issuers,
enforceable against them in accordance with their respective terms, subject to
customary exceptions and qualifications.

 

(q)                                 If
the Exchange Offer or a Private Exchange is to be consummated, upon delivery of
the Registrable Notes by Holders to the Issuers (or to such other Person as
directed by the Issuers) in exchange for the Exchange Notes or the Private
Exchange Notes, as the case may be, the Issuers shall mark, or cause to be
marked, on such Registrable Notes that such Registrable Notes are being canceled
in exchange for the Exchange Notes or the Private Exchange Notes, as the case
may be; in no event shall such Registrable Notes be marked as paid or otherwise
satisfied, in connection with any such exchange.

 

(r)                                    Cooperate
with each seller of Registrable Notes covered by any Registration Statement and
each underwriter, if any, participating in the disposition of such Registrable
Notes and their respective counsel in connection with any filings required to
be made with the National Association of Securities Dealers, Inc. (the “NASD”).

 

20

 

(s)                                  Use
their commercially reasonable efforts to take all other steps reasonably
necessary to effect the registration of the Registrable Notes covered by a
Registration Statement contemplated hereby.

 

The Issuers
may require each seller of Registrable Notes as to which any registration is
being effected to furnish to the Issuers such information regarding such seller
and the distribution of such Registrable Notes as the Issuers may, from time to
time, reasonably request.  The Issuers
may exclude from such registration the Registrable Notes of any seller so long
as such seller fails to furnish such information within a reasonable time after
receiving such request.  Each seller as
to which any Shelf Registration is being effected agrees to furnish promptly to
the Company all information required to be disclosed so that the information
previously furnished to the Company by such seller is not materially misleading
and does not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading in the light
of the circumstances under which they were made.

 

Each Holder of
Registrable Notes and each Participating Broker-Dealer agrees by its
acquisition of such Registrable Notes or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, that, upon actual receipt of
any notice from the Issuers of the happening of any event of the kind described
in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder’s or Participating Broker-Dealer’s receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(j) hereof, or
until it is advised in writing (the “Advice”) by the Issuers that the use
of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto.  In
the event that the Issuers shall give any such notice, the Applicable Period
shall be extended by the number of days during such periods from and including
the date of the giving of such notice to and including the date when each
seller of Registrable Notes covered by such Registration Statement or Exchange
Notes to be sold by such Participating Broker-Dealer, as the case may be, shall
have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof or (y) the Advice.

 

6.                                       Registration
Expenses

 

(a)                                  All
fees and expenses incident to the performance of or compliance with this
Agreement by the Issuers (other than any underwriting discounts or commissions
which shall not be borne by the Issuers) shall be borne by the Issuers
including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required
to be made with the NASD in connection with an underwritten offering and (B) 
fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of one
counsel in

 

21

 

connection with Blue Sky
qualifications of the Registrable Notes or Exchange Notes and determination of
the eligibility of the Registrable Notes or Exchange Notes for investment under
the laws of such jurisdictions (x) where the holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section 5(h) hereof,
in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter, if any, by the Holders
of a majority in aggregate principal amount of the Registrable Notes included
in any Registration Statement or in respect of Registrable Notes or Exchange
Notes to be sold by any Participating Broker-Dealer during the Applicable
Period, as the case may be, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Issuers, (v) fees
and disbursements of all independent certified public accountants referred to
in Section 5(l)(iii) hereof (including, without limitation, the
expenses of any special audit and “cold comfort” letters required by or
incident to such performance), (vi) Securities Act liability insurance, if
the Issuers desire such insurance, (vii) fees and expenses of all other
Persons retained by the Issuers, (viii) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (ix) the
expense of any annual audit, (x) any fees and expenses incurred in
connection with the listing of the securities to be registered on any
securities exchange, and the obtaining of a rating of the securities, in each
case, if applicable, and (xi) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, indentures and any other documents necessary in order to comply
with this Agreement.

 

(b)                                 The
Issuers shall reimburse the Initial Purchasers for the reasonable fees and
expenses of one counsel in connection with the Exchange Offer, which shall be
Cahill Gordon & Reindel or such other counsel as selected by a
majority in interests of the Holders, and shall not be required to pay any
other legal expenses in connection therewith.

 

7.                                       Indemnification

 

(a)                                  Each
of the Issuers, jointly and severally, agrees to indemnify and hold harmless
each Holder of Registrable Notes and each Participating Broker-Dealer selling
Exchange Notes during the Applicable Period, the affiliates, officers,
directors, representatives, employees and agents of each such Person, and each
Person, if any, who controls any such Person within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act (each, a “Participant”),
from and against any and all losses, claims, damages, judgments, liabilities
and expenses (including, without limitation, the reasonable legal fees and
other expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Registration

 

22

 

Statement (or any amendment
thereto) or Prospectus (as amended or supplemented if the Issuers shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading, except insofar
as such losses, claims, judgments, damages, liabilities or expenses are caused
by any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to any
Participant furnished to the Issuers in writing by such Participant expressly
for use therein and with respect to any preliminary Prospectus, or except to
the extent that any such loss, claim, damage or liability arises solely from
the fact that any Participant sold Notes to a person to whom there was not sent
or given a copy of the Prospectus (as amended or supplemented) at or prior to
the written confirmation of such sale if the Issuers shall have previously
furnished copies thereof to the Participant in accordance herewith and the
Prospectus (as amended or supplemented) would have corrected any such untrue
statement or omission.

 

(b)                                 Each
Participant agrees, severally and not jointly, to indemnify and hold harmless
each Issuer, their respective affiliates, officers, directors, representatives,
employees and agents of each Issuer and each Person who controls each Issuer
within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent (but on a several, and not joint, basis)
as the foregoing indemnity from the Issuers to each Participant under
paragraph (a) above, but only with reference to information relating
to such Participant furnished to the Issuers in writing by such Participant
expressly for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary prospectus.  The liability of any Participant under this
paragraph shall in no event exceed the proceeds received by such Participant
from sales of Registrable Notes or Exchange Notes giving rise to such
obligations.

 

(c)                                  If
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such Person (the “Indemnified Person”) shall
promptly notify the Persons against whom such indemnity may be sought (the “Indemnifying
Persons”) in writing, and the Indemnifying Persons, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others entitled
to indemnification pursuant to this Section 7 that the Indemnifying Person
may reasonably designate in such proceeding and shall pay the reasonable fees
and expenses actually incurred by such counsel related to such proceeding; provided,
however, that the failure to so notify the Indemnifying Persons will not
relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the Indemnifying
Person of substantial rights and defenses and the Indemnifying Person was not
otherwise aware of such action or claim. 
In any such proceeding, any Indemnified Person shall have the right to
retain

 

23

 

its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Persons and the Indemnified Person shall have
mutually agreed to the contrary in writing, (ii) the Indemnifying Persons
shall have failed within a reasonable period of time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named
parties in any such proceeding (including any impleaded parties) include both
any Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them.  It is
understood that the Indemnifying Persons shall not, in connection with such
proceeding or separate but substantially similar related proceeding in the same
jurisdiction arising out of the same general allegations, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed promptly as they are incurred. 
Any such separate firm for the Participants and such control Persons of
Participants shall be designated in writing by Participants who sold a majority
in interest of Registrable Notes and Exchange Notes sold by all such
Participants and shall be reasonably acceptable to the Issuers, and any such
separate firm for the Issuers, their affiliates, officers, directors,
representatives, employees and agents and such control Persons of such Issuer
shall be designated in writing by such Issuer and shall be reasonably
acceptable to the Holders.

 

The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its prior written consent (which consent shall not be
unreasonably withheld or delayed), but if settled with such consent or if there
be a final non-appealable judgment for the plaintiff for which the Indemnified
Person is entitled to indemnification pursuant to this Agreement, each
Indemnifying Person agrees to indemnify and hold harmless each Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment.  No Indemnifying Person shall,
without the prior written consent of the Indemnified Person (which consent
shall not be unreasonably withheld or delayed), effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, or indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional written release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (B) does
not include any statement as to an admission of fault, culpability or failure
to act by or on behalf of such Indemnified Person.

 

(d)                                 If
the indemnification provided for in paragraphs (a) and (b) of this Section 7
is for any reason unavailable to, or insufficient to hold harmless, an
Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect the relative
fault of the

 

24

 

Indemnifying Person or Persons
on the one hand and the Indemnified Person or Persons on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations.  The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Issuers on the one
hand or such Participant or such other Indemnified Person, as the case may be,
on the other, the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.

 

(e)                                  The
parties agree that it would not be just and equitable if contribution pursuant
to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages, judgments, liabilities and
expenses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any reasonable legal or
other expenses actually incurred by such Indemnified Person in connection with
investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 7,
in no event shall a Participant be required to contribute any amount in excess
of the amount by which proceeds received by such Participant from sales of
Registrable Notes or Exchange Notes, as the case may be, exceeds the amount of
any damages that such Participant has otherwise been required to pay or has
paid by reason of such untrue or alleged untrue statement or omission or
alleged omission.  No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

 

(f)                                    Any
losses, claims, damages, liabilities or expenses for which an indemnified party
is entitled to indemnification or contribution under this Section 7 shall
be paid by the Indemnifying Person to the Indemnified Person as such losses,
claims, damages, liabilities or expenses are incurred.  The indemnity and contribution agreements
contained in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Holder or
any person who controls a Holder, the Issuers, their directors, officers,
employees or agents or any person who controls an Issuer, and (ii) any
termination of this Agreement.

 

(g)                                 The
indemnity and contribution agreements contained in this Section 7 will be
in addition to any liability which the Indemnifying Persons may otherwise have
to the Indemnified Persons referred to above.

 

25

 

8.                                       Rules 144
and 144A

 

Each of the
Issuers covenants and agrees that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner in accordance with
the requirements of the Securities Act and the Exchange Act and, for so long as
any Registrable Notes remain outstanding, and if such Issuer is not required to
file such reports, such Issuer will, upon the request of any Holder or
beneficial owner of Registrable Notes, make available such information of the
type specified in Sections 13 and 15(d) of the Exchange Act.  Each of the Issuers further covenants and
agrees, for so long as any Registrable Notes remain outstanding, to make
available to any Holder or beneficial owner of Registrable Notes in connection
with any sale thereof and any prospective purchaser of such Registrable Notes
from such Holder or beneficial owner the information required by Rule 144A(d)(4) and
144(c) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A and Rule 144(k).

 

9.                                       Underwritten
Registrations

 

If any of the
Registrable Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will manage the offering will be selected by the Holders of a
majority in aggregate principal amount of such Registrable Notes included in
such offering and shall be reasonably acceptable to the Issuers.

 

No Holder of
Registrable Notes may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder’s Registrable Notes on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

 

10.                                 Miscellaneous

 

(a)                                  No
Inconsistent Agreements.  The Issuers
have not, as of the date hereof, and the Issuers shall not, after the date of
this Agreement, enter into any agreement with respect to any of their
securities that is inconsistent with the rights granted to the Holders of Registrable
Notes in this Agreement or otherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder
do not in any way conflict with and are not inconsistent with the rights
granted to the holders of the Issuers’ other issued and outstanding securities
under any such agreements.  The Issuers
shall not, after the date of this agreement, enter into any agreement with
respect to any of their securities which will grant to any Person piggy-back
registration rights with respect to any Registration Statement.

 

(b)                                 Adjustments
Affecting Registrable Notes.  The
Issuers shall not, directly or indirectly, take any action with respect to the
Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.

 

26

 

(c)                                  Amendments
and Waivers.  The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, otherwise than with
the prior written consent of (I) the Issuers and (II)(A) the Holders of
not less than a majority in aggregate principal amount of the then outstanding
Registrable Notes and (B) in circumstances that would adversely affect the
Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating
Broker-Dealers; provided, however, that Section 7 and this Section 10(c) may
not be amended, modified or supplemented without the prior written consent of
each Holder and each Participating Broker-Dealer (including any person who was
a Holder or Participating Broker-Dealer of Registrable Notes or Exchange Notes,
as the case may be, disposed of pursuant to any Registration Statement)
affected by any such amendment, modification or supplement.  Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders of Registrable Notes whose
securities are being sold pursuant to a Registration Statement and that does
not directly or indirectly affect, impair, limit or compromise the rights of
other Holders of Registrable Notes may be given by Holders of at least a
majority in aggregate principal amount of the Registrable Notes being sold
pursuant to such Registration Statement.

 

(d)                                 Notices.  All notices and other communications
(including, without limitation, any notices or other communications to the
Trustee) provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or facsimile:

 

(i)                                     if to a Holder of
the Registrable Notes or any Participating Broker-Dealer, at the most current
address of such Holder or Participating Broker-Dealer, as the case may be, set
forth on the records of the registrar under the Indenture.

 

(ii)                                  if to the Issuers, at
the address as follows:

 

DIRECTV
Holdings LLC

2230 East Imperial Highway

El Segundo, California  90245

Facsimile No.:

Attention: General Counsel

 

27

 

with a copy
to:

 

Weil, Gotshal &
Manges LLP

767 Fifth Avenue 

New York, New York 10153

Facsimile No.:  

Attention:  Michael E. Lubowitz

 

All such
notices and communications shall be deemed to have been duly given:  when delivered by hand, if personally
delivered; five business days after being deposited in the mail, postage
prepaid, if mailed; one business day after being timely delivered to a next-day
air courier; and when transmission is confirmed, if sent by facsimile.

 

Copies of all
such notices, demands or other communications shall be concurrently delivered
by the Person giving the same to the Trustee at the address and in the manner
specified in such Indenture.

 

(e)                                  Successors
and Assigns.  This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto, the Holders and the Participating Broker-Dealers; provided,
however, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Registrable Notes in violation of the terms of
the Purchase Agreement or the Indenture.

 

(f)                                    Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(g)                                 Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(h)                                 Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 
EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.

 

(i)                                     Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their commercially reasonable efforts to find and

 

28

 

employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. 
It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.

 

(j)                                     Securities
Held by the Issuers or Their Affiliates. 
Whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the Issuers
or their affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.

 

(k)                                  Third-Party
Beneficiaries.  Holders of
Registrable Notes and Participating Broker-Dealers are intended third-party
beneficiaries of this Agreement, and this Agreement may be enforced by such
Persons.

 

(l)                                     Entire
Agreement.  This Agreement, together
with the Purchase Agreement and the Indenture, is intended by the parties as a
final and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein and any
and all prior oral or written agreements, representations, or warranties,
contracts, understandings, correspondence, conversations and memoranda between
the Holders on the one hand and the Issuers on the other, or between or among
any agents, representatives, parents, subsidiaries, affiliates, predecessors in
interest or successors in interest with respect to the subject matter hereof
and thereof are merged herein and replaced hereby.

 

29

 

WITNESS the
due execution hereof by the respective duly authorized officers of the
undersigned as of the date first written above.

 

	
   

  	
   

  	
  DIRECTV HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIRECTV FINANCING CO., INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIRECTV, INC., as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  USSB II, INC., as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  

 

 

	
   

  	
   

  	
  DIRECTV CUSTOMER SERVICES, INC.,

  
	
   

  	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIRECTV MERCHANDISING, INC.,

  
	
   

  	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIRECTV ENTERPRISES, LLC,

  
	
   

  	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIRECTV OPERATIONS, LLC,

  
	
   

  	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LABC PRODUCTIONS, INC,

  
	
   

  	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  

 

 

	
   

  	
   

  	
  DIRECTV HOME SERVICES, LLC,

  
	
   

  	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIRECTV PROGRAMMING HOLDINGS

  I, LLC,

  
	
   

  	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIRECTV PROGRAMMING HOLDINGS

  II, LLC,

  
	
   

  	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Larry D. Hunter

  
	
   

  	
   

  	
  Title: Executive Vice President

  

 

 

The foregoing Agreement is hereby 

confirmed and accepted by the Initial Purchasers 

as of the date first above written.

 

By: 
BANC OF AMERICA SECURITIES LLC, 

on its own behalf and on behalf of the Initial

Purchasers

 

BANC OF AMERICA SECURITIES LLC

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:Exhibit 10.1

 

$1,200,000,000 REVOLVING CREDIT FACILITY

FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

 

by and among

 

K. HOVNANIAN ENTERPRISES, INC.

(as the Borrower)

 

HOVNANIAN ENTERPRISES, INC.

(as a Guarantor)

 

and

 

THE LENDERS PARTY HERETO

 

and

 

PNC BANK, NATIONAL ASSOCIATION, as
Administrative Agent

 

Bank of America, N.A.

 

Wachovia Bank, National Association,

 

as

 

Syndication Agents

 

and

 

JP Morgan Chase Bank, N.A.

 

The Royal Bank of Scotland plc

 

KeyBank National Association

 

as

 

Documentation Agents

 

PNC Capital Markets, LLC,

 

Wachovia Securities, Inc., and

 

Banc of America Securities LLC

 

as

 

Joint Lead Arrangers and Joint Book
Runners

 

Guaranty Bank

 

SunTrust Bank

 

US Bank National association

 

BNP Paribas

 

Calyon New York Branch

 

 

Comerica Bank

 

Emigrant Savings Bank

 

Citigroup North America, Inc.

 

as

 

Co-Managing Agents

 

Washington Mutual Bank FA

 

National City Bank

 

as

 

Co-Agents

 

Amended and Restated June 14, 2005

 

ii

 

TABLE OF CONTENTS

 

	
  SECTION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  CERTAIN
  DEFINITIONS

  	
   

  
	
  1.1

  	
  Certain Definitions.

  	
   

  
	
  1.2

  	
  Construction.

  	
   

  
	
   

  	
  1.2.1.

  	
  Number;
  Inclusion.

  	
   

  
	
   

  	
  1.2.2.

  	
  Determination.

  	
   

  
	
   

  	
  1.2.3.

  	
  Agent’s
  Discretion and Consent.

  	
   

  
	
   

  	
  1.2.4.

  	
  Documents
  Taken as a Whole.

  	
   

  
	
   

  	
  1.2.5.

  	
  Headings.

  	
   

  
	
   

  	
  1.2.6.

  	
  Implied
  References to this Agreement.

  	
   

  
	
   

  	
  1.2.7.

  	
  Persons.

  	
   

  
	
   

  	
  1.2.8.

  	
  Modifications
  to Documents.

  	
   

  
	
   

  	
  1.2.9.

  	
  From, To
  and Through.

  	
   

  
	
   

  	
  1.2.10.

  	
  Shall;
  Will.

  	
   

  
	
  1.3

  	
  Accounting
  Principles.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  REVOLVING CREDIT
  AND SWING LOAN FACILITIES

  	
   

  
	
  2.1

  	
  Revolving
  Credit Commitments.

  	
   

  
	
   

  	
  2.1.1.

  	
  Revolving
  Credit Loans.

  	
   

  
	
   

  	
  2.1.2.

  	
  Swing Loan
  Commitment.

  	
   

  
	
   

  	
  2.1.3

  	
  Voluntary
  Reduction of Commitment

  	
   

  
	
  2.2

  	
  Nature of
  Lenders’ Obligations with Respect to Revolving Credit Loans.

  	
   

  
	
  2.3

  	
  Commitment
  Fees.

  	
   

  
	
  2.4

  	
  Revolving
  Credit Loan Requests; Swing Loan Requests.

  	
   

  
	
   

  	
  2.4.1.

  	
  Revolving
  Credit Loan Requests.

  	
   

  
	
   

  	
  2.4.2.

  	
  Swing Loan
  Requests.

  	
   

  
	
  2.5

  	
  Making
  Revolving Credit Loans and Swing Loans.

  	
   

  
	
   

  	
  2.5.1.

  	
  Generally.

  	
   

  
	
   

  	
  2.5.2.

  	
  Making
  Swing Loans.

  	
   

  
	
  2.6

  	
  Swing Loan
  Note.

  	
   

  
	
  2.7

  	
  Use of
  Proceeds.

  	
   

  
	
  2.8

  	
  Borrowings to
  Repay Swing Loans.

  	
   

  
	
  2.9

  	
  Letter of
  Credit Subfacility.

  	
   

  
	
   

  	
  2.9.1.

  	
  Issuance
  of Letters of Credit.

  	
   

  
	
   

  	
  2.9.2.

  	
  Letter of
  Credit Fees.

  	
   

  
	
   

  	
  2.9.3.

  	
  Disbursements,
  Reimbursement.

  	
   

  
	
   

  	
  2.9.4.

  	
  Repayment
  of Participation Advances.

  	
   

  
	
   

  	
  2.9.5.

  	
  Documentation.

  	
   

  
	
   

  	
  2.9.6.

  	
  Determinations
  to Honor Drawing Requests.

  	
   

  
	
   

  	
  2.9.7.

  	
  Nature of
  Participation and Reimbursement Obligations.

  	
   

  
	
   

  	
  2.9.8.

  	
  Indemnity.

  	
   

  
	
   

  	
  2.9.9.

  	
  Liability
  for Acts and Omissions.

  	
   

  
	
   

  	
  2.9.10.

  	
  Sharing
  Letter of Credit Documentation.

  	
   

  

 

i

 

	
  2.10

  	
  Extension by
  Lenders of the Expiration Date.

  	
   

  
	
   

  	
  2.10.1.

  	
  Requests;
  Approval by All Lenders.

  	
   

  
	
   

  	
  2.10.2.

  	
  Approval
  by 80% Lenders.

  	
   

  
	
  2.11

  	
  Designation
  of Subsidiaries and Release of Guarantors.

  	
   

  
	
   

  	
  2.11.1.

  	
  Release
  of Guarantors.

  	
   

  
	
   

  	
  2.11.2.

  	
  Designation
  of Non-Restricted Person.

  	
   

  
	
   

  	
  2.11.3.

  	
  Automatic
  Designation of Non-Restricted Person.

  	
   

  
	
   

  	
  2.11.4.

  	
  Designation
  of Restricted Subsidiary.

  	
   

  
	
  2.12

  	
  Increase in
  Commitments.

  	
   

  
	
   

  	
  2.12.1

  	
  Increasing
  Lenders and New Lenders.

  	
   

  
	
   

  	
  2.12.2

  	
  Treatment
  of Outstanding Loans and Letters of Credit.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  INTEREST RATES

  	
   

  
	
  3.1

  	
  Interest Rate
  Options.

  	
   

  
	
   

  	
  3.1.1.

  	
  Revolving
  Credit Interest Rate Options.

  	
   

  
	
   

  	
  3.1.2.

  	
  Rate
  Quotations.

  	
   

  
	
  3.2

  	
  Interest
  Periods.

  	
   

  
	
  3.3

  	
  Interest After
  Default.

  	
   

  
	
   

  	
  3.3.1.

  	
  Default
  Rate.

  	
   

  
	
   

  	
  3.3.2.

  	
  Acknowledgment.

  	
   

  
	
  3.4

  	
  LIBO-Rate
  Unascertainable; Illegality; Increased Costs; Deposits Not Available.

  	
   

  
	
   

  	
  3.4.1.

  	
  Unascertainable.

  	
   

  
	
   

  	
  3.4.2.

  	
  Illegality;
  Increased Costs; Deposits Not Available.

  	
   

  
	
   

  	
  3.4.3.

  	
  Agent’s
  and Lender’s Rights.

  	
   

  
	
  3.5

  	
  Selection of
  Interest Rate Options.

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  PAYMENTS

  	
   

  
	
  4.1

  	
  Payments.

  	
   

  
	
  4.2

  	
  Pro Rata
  Treatment of Lenders.

  	
   

  
	
  4.3

  	
  Interest
  Payment Dates.

  	
   

  
	
  4.4

  	
  Voluntary
  Prepayments.

  	
   

  
	
   

  	
  4.4.1.

  	
  Right to
  Prepay.

  	
   

  
	
   

  	
  4.4.2.

  	
  Replacement
  of a Lender.

  	
   

  
	
   

  	
  4.4.3.

  	
  Change of
  Lending Office.

  	
   

  
	
  4.5

  	
  Mandatory
  Payments.

  	
   

  
	
  4.6

  	
  Additional
  Compensation in Certain Circumstances.

  	
   

  
	
   

  	
  4.6.1.

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

  	
   

  
	
   

  	
  4.6.2.

  	
  Indemnity.

  	
   

  
	
  4.7

  	
  Notes.

  	
   

  
	
  4.8

  	
  Settlement
  Date Procedures.

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
  5.1

  	
  Representations
  and Warranties.

  	
   

  
	
   

  	
  5.1.1.

  	
  Organization
  and Qualification.

  	
   

  

 

ii

 

	
   

  	
  5.1.2.

  	
  Subsidiaries.

  	
   

  
	
   

  	
  5.1.3.

  	
  Power and
  Authority.

  	
   

  
	
   

  	
  5.1.4.

  	
  Validity
  and Binding Effect.

  	
   

  
	
   

  	
  5.1.5.

  	
  No
  Conflict.

  	
   

  
	
   

  	
  5.1.6.

  	
  Litigation.

  	
   

  
	
   

  	
  5.1.7.

  	
  Title to
  Properties.

  	
   

  
	
   

  	
  5.1.8.

  	
  Financial
  Statements.

  	
   

  
	
   

  	
  5.1.9.

  	
  Use of
  Proceeds; Margin Stock.

  	
   

  
	
   

  	
  5.1.10.

  	
  Full
  Disclosure.

  	
   

  
	
   

  	
  5.1.11.

  	
  Taxes.

  	
   

  
	
   

  	
  5.1.12.

  	
  Consents
  and Approvals.

  	
   

  
	
   

  	
  5.1.13.

  	
  No Event
  of Default; Compliance with Instruments.

  	
   

  
	
   

  	
  5.1.14.

  	
  Patents,
  Trademarks, Copyrights, Licenses, Etc.

  	
   

  
	
   

  	
  5.1.15.

  	
  Insurance.

  	
   

  
	
   

  	
  5.1.16.

  	
  Compliance
  with Laws.

  	
   

  
	
   

  	
  5.1.17.

  	
  Burdensome
  Restrictions.

  	
   

  
	
   

  	
  5.1.18.

  	
  Investment
  Companies; Regulated Entities.

  	
   

  
	
   

  	
  5.1.19.

  	
  Plans
  and Benefit Arrangements.

  	
   

  
	
   

  	
  5.1.20.

  	
  Employment
  Matters.

  	
   

  
	
   

  	
  5.1.21.

  	
  Environmental
  Matters.

  	
   

  
	
   

  	
  5.1.22.

  	
  Senior
  Debt Status.

  	
   

  
	
  5.2

  	
  Continuation
  of Representations.

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  CONDITIONS OF
  LENDING AND ISSUANCE OF LETTERS OF CREDIT

  	
   

  
	
  6.1

  	
  First Loans
  and Letters of Credit.

  	
   

  
	
   

  	
  6.1.1.

  	
  Officer’s
  Certificate.

  	
   

  
	
   

  	
  6.1.2.

  	
  Incumbency
  Certificate.

  	
   

  
	
   

  	
  6.1.3.

  	
  Delivery
  of Loan Documents.

  	
   

  
	
   

  	
  6.1.4.

  	
  Opinion of
  Counsel.

  	
   

  
	
   

  	
  6.1.5.

  	
  Legal
  Details.

  	
   

  
	
   

  	
  6.1.6.

  	
  Payment of
  Fees.

  	
   

  
	
   

  	
  6.1.7.

  	
  Consents.

  	
   

  
	
   

  	
  6.1.8.

  	
  Officer’s
  Certificate Regarding MACs.

  	
   

  
	
   

  	
  6.1.9.

  	
  No Actions
  or Proceedings.

  	
   

  
	
   

  	
  6.1.10

  	
  Lien
  Search.

  	
   

  
	
  6.2

  	
  Each
  Additional Loan or Letter of Credit.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  COVENANTS

  	
   

  
	
  7.1

  	
  Affirmative Covenants.

  	
   

  
	
   

  	
  7.1.1.

  	
  Preservation
  of Existence, Etc.

  	
   

  
	
   

  	
  7.1.2.

  	
  Payment of
  Liabilities, Including Taxes, Etc.

  	
   

  
	
   

  	
  7.1.3.

  	
  Maintenance
  of Insurance.

  	
   

  
	
   

  	
  7.1.4.

  	
  Maintenance
  of Properties and Leases.

  	
   

  
	
   

  	
  7.1.5.

  	
  Maintenance
  of Patents, Trademarks, Etc.

  	
   

  
	
   

  	
  7.1.6.

  	
  Visitation
  Rights.

  	
   

  
	
   

  	
  7.1.7.

  	
  Keeping of
  Records and Books of Account.

  	
   

  

 

iii

 

	
   

  	
  7.1.8.

  	
  Compliance
  with Laws.

  	
   

  
	
   

  	
  7.1.9.

  	
  Use of
  Proceeds.

  	
   

  
	
  7.2

  	
  Negative
  Covenants.

  	
   

  
	
   

  	
  7.2.1.

  	
  Indebtedness.

  	
   

  
	
   

  	
  7.2.2.

  	
  Liens.

  	
   

  
	
   

  	
  7.2.3.

  	
  Loans and
  Investments.

  	
   

  
	
   

  	
  7.2.4.

  	
  Liquidations,
  Mergers, Consolidations, Acquisitions.

  	
   

  
	
   

  	
  7.2.5.

  	
  Dispositions
  of Assets or Subsidiaries.

  	
   

  
	
   

  	
  7.2.6.

  	
  Restricted
  Payments; Restricted Investments; Investments in Related Businesses.

  	
   

  
	
   

  	
  7.2.7.

  	
  Subsidiaries,
  Partnerships and Joint Ventures.

  	
   

  
	
   

  	
  7.2.8.

  	
  Continuation
  of or Change in Business.

  	
   

  
	
   

  	
  7.2.9.

  	
  Plans and
  Benefit Arrangements.

  	
   

  
	
   

  	
  7.2.10.

  	
  Borrowing
  Base.

  	
   

  
	
   

  	
  7.2.11.

  	
  Minimum
  ATNW.

  	
   

  
	
   

  	
  7.2.12.

  	
  Leverage
  Ratio.

  	
   

  
	
   

  	
  7.2.13.

  	
  Fixed
  Charge Coverage Ratio.

  	
   

  
	
   

  	
  7.2.14.

  	
  Inventory
  Limits.

  	
   

  
	
   

  	
  7.2.15.

  	
  Fiscal
  Year.

  	
   

  
	
   

  	
  7.2.16.

  	
  Changes
  in Subordinated Debt Documents.

  	
   

  
	
  7.3

  	
  Reporting
  Requirements.

  	
   

  
	
   

  	
  7.3.1.

  	
  Quarterly
  Financial Statements.

  	
   

  
	
   

  	
  7.3.2.

  	
  Annual
  Financial Statements.

  	
   

  
	
   

  	
  7.3.3.

  	
  Certificates
  of the Borrower.

  	
   

  
	
   

  	
  7.3.4.

  	
  Notice of
  Default.

  	
   

  
	
   

  	
  7.3.5.

  	
  Notice of
  Litigation.

  	
   

  
	
   

  	
  7.3.6.

  	
  Notice of
  Change in Debt Rating.

  	
   

  
	
   

  	
  7.3.7.

  	
  Budgets,
  Forecasts, Other Reports and Information.

  	
   

  
	
   

  	
  7.3.8.

  	
  Notices
  Regarding Plans and Benefit Arrangements.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  DEFAULT

  	
   

  
	
  8.1

  	
  Events of
  Default.

  	
   

  
	
   

  	
  8.1.1.

  	
  Payments
  Under Loan Documents.

  	
   

  
	
   

  	
  8.1.2.

  	
  Breach of
  Warranty.

  	
   

  
	
   

  	
  8.1.3.

  	
  Breach of
  Certain Negative Covenants.

  	
   

  
	
   

  	
  8.1.4.

  	
  Breach of
  Other Covenants.

  	
   

  
	
   

  	
  8.1.5.

  	
  Defaults
  in Other Agreements or Indebtedness.

  	
   

  
	
   

  	
  8.1.6.

  	
  Final
  Judgments or Orders.

  	
   

  
	
   

  	
  8.1.7.

  	
  Loan
  Document Unenforceable.

  	
   

  
	
   

  	
  8.1.10.

  	
  Insolvency.

  	
   

  
	
   

  	
  8.1.11.

  	
  Events
  Relating to Plans and Benefit Arrangements.

  	
   

  
	
   

  	
  8.1.12

  	
  Cessation of Business.

  	
   

  
	
   

  	
  8.1.13.

  	
  Change
  of Control.

  	
   

  
	
   

  	
  8.1.14.

  	
  Involuntary
  Proceedings.

  	
   

  
	
   

  	
  8.1.15.

  	
  Voluntary
  Proceedings.

  	
   

  
	
  8.2

  	
  Consequences
  of Event of Default.

  	
   

  
	
   

  	
  8.2.1.

  	
  Events of
  Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.

  	
   

  

 

iv

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2.2.

  	
  Bankruptcy,
  Insolvency or Reorganization Proceedings.

  	
   

  
	
   

  	
  8.2.3.

  	
  Set-off.

  	
   

  
	
   

  	
  8.2.4.

  	
  Suits,
  Actions, Proceedings.

  	
   

  
	
   

  	
  8.2.5.

  	
  Application
  of Proceeds.

  	
   

  
	
   

  	
  8.2.6.

  	
  Other
  Rights and Remedies.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  THE AGENT

  	
   

  
	
  9.1

  	
  Appointment.

  	
   

  
	
  9.2

  	
  Delegation of
  Duties.

  	
   

  
	
  9.3

  	
  Nature of
  Duties; Independent Credit Investigation.

  	
   

  
	
  9.4

  	
  Actions in
  Discretion of Agent; Instructions From the Lenders.

  	
   

  
	
  9.5

  	
  Reimbursement
  and Indemnification of Agent by the Borrower.

  	
   

  
	
  9.6

  	
  Exculpatory
  Provisions; Limitation of Liability.

  	
   

  
	
  9.7

  	
  Reimbursement
  and Indemnification of Agent by Lenders.

  	
   

  
	
  9.8

  	
  Reliance by
  Agent.

  	
   

  
	
  9.9

  	
  Notice of
  Default.

  	
   

  
	
  9.10

  	
  Notices.

  	
   

  
	
  9.11

  	
  Lenders in
  Their Individual Capacities; Agents in its Individual Capacity.

  	
   

  
	
  9.12

  	
  Holders of
  Notes.

  	
   

  
	
  9.13

  	
  Equalization
  of Lenders.

  	
   

  
	
  9.14

  	
  Successor
  Agent.

  	
   

  
	
  9.15

  	
  Agent’s
  Fees.

  	
   

  
	
  9.16

  	
  Availability
  of Funds.

  	
   

  
	
  9.17

  	
  Calculations.

  	
   

  
	
  9.18

  	
  Beneficiaries.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  MISCELLANEOUS

  	
   

  
	
  10.1

  	
  Modifications,
  Amendments or Waivers.

  	
   

  
	
   

  	
  10.1.1.

  	
  Increase
  of Commitment.

  	
   

  
	
   

  	
  10.1.2.

  	
  Extension
  of Payment; Reduction of Principal, Interest or Fees; Modification of Terms
  of Payment.

  	
   

  
	
   

  	
  10.1.3.

  	
  Miscellaneous

  	
   

  
	
  10.2

  	
  No Implied
  Waivers; Cumulative Remedies; Writing Required.

  	
   

  
	
  10.3

  	
  Reimbursement
  and Indemnification of Lenders by the Borrower; Taxes.

  	
   

  
	
  10.4

  	
  Holidays.

  	
   

  
	
  10.5

  	
  Funding by
  Branch, Subsidiary or Affiliate.

  	
   

  
	
   

  	
  10.5.1.

  	
  Notional
  Funding.

  	
   

  
	
   

  	
  10.5.2.

  	
  Actual
  Funding.

  	
   

  
	
  10.6

  	
  Notices.

  	
   

  
	
  10.7

  	
  Severability.

  	
   

  
	
  10.8

  	
  Governing
  Law.

  	
   

  
	
  10.9

  	
  Prior
  Understanding.

  	
   

  
	
  10.10

  	
  Duration;
  Survival.

  	
   

  
	
  10.11

  	
  Successors
  and Assigns.

  	
   

  
	
  10.12

  	
  Confidentiality.

  	
   

  

 

v

 

	
   

  	
  10.12.1.

  	
  General.

  	
   

  
	
   

  	
  10.12.2.

  	
  Sharing
  Information With Affiliates of the Lenders.

  	
   

  
	
  10.13

  	
  Counterparts.

  	
   

  
	
  10.14

  	
  Agent’s or
  Lender’s Consent.

  	
   

  
	
  10.15

  	
  Exceptions.

  	
   

  
	
  10.16

  	
  CONSENT TO
  FORUM; WAIVER OF JURY TRIAL.

  	
   

  
	
  10.17

  	
  Certifications
  From Lenders and Participants.

  	
   

  
	
   

  	
  10.17.1

  	
  Tax
  Withholding Clause.

  	
   

  
	
  10.18

  	
  Joinder of
  Guarantors.

  	
   

  
	
  10.19

  	
  Concerning
  Agent Terms.

  	
   

  
	
  10.20

  	
  Ratification
  of Notes and Loan Documents and Existing Obligations.

  	
   

  
	
  10.21

  	
  No
  Reliance on Agent’s Customer Identification Program.

  	
   

  

 

	
  LIST OF
  SCHEDULES AND EXHIBITS

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1.1(A)(1)

  	
  -

  	
  APPLICABLE MARGIN

  
	
  SCHEDULE 1.1(A)(2)

  	
  -

  	
  AUTHORIZED OFFICERS AS OF THE
  CLOSING DATE

  
	
  SCHEDULE 1.1(B)

  	
  -

  	
  COMMITMENTS OF LENDERS AND ADDRESSES
  FOR NOTICES

  
	
  SCHEDULE 1.1(C)

  	
  -

  	
  LISTING OF RESTRICTED
  SUBSIDIARIES, JOINT VENTURES, MORTGAGE SUBSIDIARIES AND NON-RESTRICTED
  PERSONS AND CORPORATE OFFICE SUBSIDIARIES

  
	
  SCHEDULE 1.1(E)

  	
  -

  	
  INCOME PRODUCING PROPERTIES

  
	
  SCHEDULE 1.1(P)

  	
  -

  	
  PERMITTED LIENS

  
	
  SCHEDULE 2.9.1

  	
  -

  	
  EXISTING LETTERS OF
  CREDIT

  
	
  SCHEDULE 5.1.2

  	
  -

  	
  SUBSIDIARIES

  
	
  SCHEDULE 5.1.8

  	
  -

  	
  MATERIAL EVENTS SINCE
  OCTOBER 31, 2004

  
	
  SCHEDULE 5.1.12

  	
  -

  	
  CONSENTS AND APPROVALS

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 1.1(A)

  	
  -

  	
  ASSIGNMENT AND
  ASSUMPTION AGREEMENT

  
	
  EXHIBIT 1.1(G)(1)

  	
  -

  	
  GUARANTY AGREEMENT

  
	
  EXHIBIT 1.1(G)(2)

  	
  -

  	
  GUARANTOR JOINDER

  
	
  EXHIBIT 1.1(R)

  	
  -

  	
  REVOLVING CREDIT NOTE

  
	
  EXHIBIT 1.1(S)

  	
  -

  	
  SWING LOAN NOTE

  
	
  EXHIBIT 2.4.1

  	
  -

  	
  LOAN REQUEST

  
	
  EXHIBIT 2.4.2

  	
  -

  	
  SWING LOAN REQUEST

  
	
  EXHIBIT 2.12.1-1

  	
  -

  	
  REVOLVING CREDIT
  COMMITMENT INCREASE AGREEMENT

  
	
  EXHIBIT 2.12.1-2

  	
  -

  	
  LENDER JOINDER AND
  ASSUMPTION AGREEMENT

  
	
  EXHIBIT 7.3.3.1

  	
  -

  	
  QUARTERLY COMPLIANCE
  CERTIFICATE

  
	
  EXHIBIT 7.3.3.2

  	
  -

  	
  BORROWING BASE
  CERTIFICATE

  

 

vi

 

FIFTH AMENDED AND RESTATED CREDIT
AGREEMENT

 

THIS FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
is dated June 14, 2005 and is made by and among K. HOVNANIAN ENTERPRISES,
INC., a California corporation (the “Borrower”), HOVNANIAN ENTERPRISES, INC., a
Delaware corporation (“Hovnanian” and a “Guarantor”), the LENDERS (as
hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
administrative agent for the Lenders under this Agreement (hereinafter referred
to in such capacity as the “Agent”).

 

WITNESSETH:

 

WHEREAS, the Lenders
provided a $900,000,000 revolving credit facility to the Borrower pursuant to
an Amended and Restated Credit Agreement dated June 18, 2004 among the
parties hereto  (the “Prior Credit
Agreement”);

 

WHEREAS, the Borrower and
the Lenders have agreed that the Prior Credit Agreement be amended and restated
as provided herein;

 

WHEREAS, the revolving
credit provided hereunder shall be used to refinance existing indebtedness,
provide for letters of credit and provide working capital and funds for general
corporate purposes;

 

NOW, THEREFORE, the
parties hereto, in consideration of their mutual covenants and agreements
hereinafter set forth and intending to be legally bound hereby, covenant and
agree as follows:

 

1.             CERTAIN
DEFINITIONS

 

1.1                                 Certain
Definitions.

 

In addition to words and
terms defined elsewhere in this Agreement, the following words and terms shall
have the following meanings, respectively, unless the context hereof clearly
requires otherwise:

 

Adjusted
Operating Income shall mean for any period the sum of (i) consolidated
net income of Hovnanian for such period, (ii) to the extent deducted in
arriving at such net income, consolidated income taxes, consolidated interest
expense, Letter of Credit Fees, depreciation, amortization, non-cash valuation
charges or adjustments and (iii) cash distributions received by any Loan
Party from Non-Restricted Persons during such period.  Adjusted Operating Income shall exclude net
income or loss of Non-Restricted Persons.

 

Adjusted
Tangible Net Worth (or ATNW) shall mean as of any date
(i) consolidated shareholders equity (including Qualified Preferred
Equity) of Hovnanian as of such date minus, without duplication (ii) (A) Intangibles,
(B) the Dollar amount of Restricted Investments (C) equity
(comprising “cost” according to GAAP minus the amount of debt secured by
applicable mortgages) in residential inventory properties purchased with the
proceeds of, and secured by, Purchase Money Mortgages as of such date, all as
calculated and consolidated in accordance with GAAP.

 

 

Affiliate
as to any Person shall mean any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds 10% or more of any class of
the voting or other equity interests of such Person, or (iii) 10% or more
of any class of voting interests or other equity interests of which is
beneficially owned or held, directly or indirectly, by such Person.  Control, as used in this definition, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power
to elect a majority of the directors or trustees of a corporation or trust, as
the case may be.

 

Agent
shall mean PNC Bank, National Association, and its successors and assigns.

 

Agent’s
Fees shall have the meaning assigned to that term in Section 9.15
[Agent’s Fees].

 

Agent’s
Letters shall have the meaning assigned to that term in Section 9.15
[Agent’s Fees].

 

Agreement
shall mean this Credit Agreement, as the same may be supplemented or amended
from time to time, including all schedules and exhibits.

 

Annual
Statements shall have the meaning assigned to that term in Section 5.1.8((i) [Historical
Statements]).

 

Anti-Terrorism
Laws shall mean any Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws
comprising or implementing the Bank Secrecy Act, and the Laws administered by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing Laws may from time to time be amended, renewed, extended, or
replaced).

 

Applicable
Commitment Fee Rate shall mean the percentage rate per annum
based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A)(1) below
the heading “Commitment Fee.”  The
Applicable Commitment Fee Rate shall be computed in accordance with the
parameters set forth on Schedule 1.1(A)(1).

 

Applicable
Letter of Credit Fee Rate shall mean the Applicable Margin
under the LIBO-Rate Option less 12.5 basis points.

 

Applicable
Margin shall mean, as applicable:

 

(A)          the percentage spread to be added to
Base Rate under the Base Rate Option based on the Leverage Ratio and level of
Debt Rating then in effect according to the pricing grid on Schedule 1.1(A)(1) below
the heading “Base Rate Margin,” and

 

(B)           the percentage spread to be added to
LIBO-Rate under the LIBO-Rate Option based on the Leverage Ratio and level of
Debt Rating then in effect according to the pricing grid on Schedule 1.1(A)(1) below
the heading “Libor Margin”.

 

2

 

The Applicable Margin shall be computed in accordance
with the parameters set forth on Schedule 1.1(A)(1).

 

Assignee
Lender shall have the meaning assigned to such term in Section 2.10.2
[Approval by 80% Lenders].

 

Assignment
and Assumption Agreement shall mean an Assignment and
Assumption Agreement by and among a Purchasing Lender, a Transferor Lender and
the Agent, as Agent and on behalf of the remaining Lenders, substantially in
the form of Exhibit 1.1(A).

 

Authorized
Officer shall mean those individuals listed on Schedule 1.1(A)(2) or
otherwise designated by written notice to the Agent from the Borrower,
authorized to execute notices, reports and other documents on behalf of the
Loan Parties required hereunder.  The
Borrower may amend such list of individuals from time to time by giving written
notice of such amendment to the Agent.

 

Average
Daily Usage Percentage for any period shall mean the average
daily ratio (expressed as a percentage) of the following for such period: (i) the
Revolving Facility Usage to (ii) the Revolving Credit Commitments.

 

Base
Rate shall mean the greater of (i) the interest rate per
annum announced from time to time by the Agent at its Principal Office as its
then prime rate, which rate may not be the lowest rate then being charged commercial
borrowers by the Agent, or (ii) the Federal Funds Open Rate plus 1/2% per
annum.

 

Base
Rate Option shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms and
conditions set forth in Section 3.1.1((i)) [Revolving Credit Base Rate
Option].

 

Benefit
Arrangement shall mean at any time an “employee benefit plan,”
within the meaning of Section 3(3) of ERISA, which is neither a Plan
nor a Multiemployer Plan and which is maintained, sponsored or otherwise
contributed to by the Borrower.

 

Blocked
Person shall have the meaning assigned to such term in
Section 5.1.23.

 

Borrower
shall mean K. Hovnanian Enterprises, Inc., a corporation organized and
existing under the laws of the State of California and wholly-owned by
Hovnanian.

 

Borrowing
Base shall mean at any time, the Dollar amount equal to the
sum of the following items, each owned free and clear of all Liens (except
Permitted Liens of the type described in items (i), (ii), (iii), (iv), (v), (vi) and
(xii) of the definition of “Permitted Liens”) by the Borrower, Hovnanian or a
Restricted Subsidiary:

 

3

 

(i)            100% of Excess Cash;

 

(ii)           95% of Sold Homes;

 

(iii)          70% of Unsold Homes; and

 

(iv)                              55%
of Finished Lots and Land Under Development;

 

provided however that the
Borrowing Base shall exclude in all events the Dollar amount of

 

(i)                                     property
located outside of the United States of America;

 

(ii)                                  Unentitled
Land;

 

(iii)                               any
residential or commercial property owned by Hovnanian or any Subsidiary which
is leased or held for purposes of leasing primarily to unaffiliated third
parties; and

 

(iv)                              properties
subject to any Purchase Money Mortgage.

 

The determination of the
Agent in respect of the Borrowing Base shall be conclusive absent manifest
error.

 

Borrowing
Base Certificate shall mean the Borrowing Base Certificate in
the form of Exhibit 7.3.3.2 duly completed and delivered by the
Borrower pursuant to Section 7.3.3.2 [Borrowing Base Certificate].

 

Borrowing
Date shall mean, with respect to any Loan, the date for the
making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.

 

Borrowing
Tranche shall mean specified portions of Loans outstanding as
follows:  (i) any Loans to which a
LIBO-Rate Option applies which become subject to the same Interest Rate Option
under the same Loan Request by the Borrower and which have the same Interest
Period shall constitute one Borrowing Tranche, and (ii) all Loans to which
a Base Rate Option applies shall constitute one Borrowing Tranche.

 

Business
Day shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be closed
for business at the Principal Office or in New York, New York and if the
applicable Business Day relates to any Loan to which the LIBO-Rate Option
applies, such day must also be a day on which dealings are carried on in the
London interbank market.

 

4

 

Capital
Stock Retirement shall mean any repurchase, redemption,
acquisition or retirement of any capital stock or other ownership interest of
Hovnanian or of any warrants, options or other rights to purchase such capital
stock or other ownership interest; provided that “Capital Stock
Retirement” shall not include the conversion or exchange of any of the
foregoing into shares of capital stock of Hovnanian.

 

Closing
Date shall mean June 14, 2005, which shall be the date
hereof.

 

Commitment
shall mean as to any Lender its Revolving Credit Commitment and, in the case of
the Agent, its Revolving Credit Commitment and its Swing Loan Commitment; and Commitments
shall mean the aggregate of the Revolving Credit Commitments of all of the Lenders,
including the Swing Loan Commitment of the Agent.

 

Commitment
Fee shall have the meaning assigned to that term in Section 2.3
[Commitment Fees].

 

Compliance
Certificate shall have the meaning assigned to such term in Section 7.3.3
[Certificates of the Borrower].

 

Contamination
shall mean the presence or release or threat of release of Regulated Substances
in, on, under or emanating to or from any of the Property, which pursuant to
Environmental Laws requires notification or reporting to an Official Body, or
which pursuant to Environmental Laws requires the investigation, cleanup,
removal, remediation, containment, abatement of or other response action or
which otherwise constitutes a violation of Environmental Laws.

 

Corporate
Office Subsidiary shall mean any Subsidiary that owns, as its
primary asset, an office building which is occupied, in whole or in part,
by Hovnanian or one or more of its Subsidiaries.  Any such Corporate
Office Subsidiary may be a Restricted Subsidiary or Non-Restricted Person in
accordance with the terms of this Agreement.  The Corporate Office
Subsidiaries as of the date hereof are identified as such on Exhibit 1.1(C).

 

Debt
Rating shall mean the rating of Hovnanian’s senior unsecured
long-term debt by each of Standard & Poor’s, Moody’s and Fitch.

 

Default
Rate shall have the meaning assigned to that term in Section 3.3.l
[Default Rate].

 

Dividends
shall mean any dividend or distribution by a Person in respect of its capital
stock or ownership interests, whether in cash, property or securities.

 

Dollar,
Dollars, U.S. Dollars and the symbol $ shall mean
lawful money of the United States of America.

 

Drawing
Date shall mean each date that an amount is paid by the
Letter of Credit Lender under any Letter of Credit.

 

5

 

Dwelling
Unit shall mean a residential housing unit held for sale by a
Loan Party.

 

Environmental
Complaint shall mean any written complaint by any Person or
Official Body setting forth a cause of action for personal injury or property
damage, natural resource damage, contribution or indemnity for response costs,
civil or administrative penalties, criminal fines or penalties, or declaratory
or equitable relief arising under any Environmental Laws or under any order, notice
of violation, citation, subpoena, request for information or other written
notice or demand of any type issued by an Official Body pursuant to any
Environmental Laws.

 

Environmental
Laws shall mean all federal, state, local and foreign Laws
and any consent decrees, settlement agreements, judgments, orders, directives,
policies or programs issued by or entered into with an Official Body pertaining
or relating to: (i) pollution or pollution control; (ii) protection
of human health or the environment; (iii) employee safety in the
workplace; (iv) the presence, use, management, generation, manufacture,
processing, extraction, treatment, recycling, refining, reclamation, labeling,
transport, storage, collection, distribution, disposal or release or threat of
release of Regulated Substances; (v) the presence of Contamination; (vi) the
protection of endangered or threatened species; and (vii) the protection
of Environmentally Sensitive Areas.

 

Environmentally
Sensitive Area shall mean (i) any wetland as defined by
applicable Environmental Laws; (ii) any area designated as a coastal zone
pursuant to applicable Laws, including Environmental Laws; (iii) any area
of historic or archeological significance or scenic area as defined or
designated by applicable Laws, including Environmental Laws; (iv) habitats
of endangered species or threatened species as designated by applicable Laws,
including Environmental Laws; or (v) a floodplain or other flood hazard
area as defined pursuant to any applicable Laws.

 

ERISA
shall mean the Employee Retirement Income Security Act of 1974, as the same may
be amended or supplemented from time to time, and any successor statute of
similar import, and the rules and regulations thereunder, as from time to
time in effect.

 

ERISA
Group shall mean, at any time, the Borrower and any entity
(whether or not incorporated) that is under common control with the Borrower
within the meaning of Section 4001 of ERISA, or the Borrower and all other
entities which, together with the Borrower, are treated as a single employer
under Sections 414 (b) or (c) of the Internal Revenue Code.

 

Event
of Default shall mean any of the events described in Section 8.1
[Events of Default] and referred to therein as an “Event of Default.”

 

Excess
Cash shall mean cash that would appear on a consolidated
balance sheet of Hovnanian (to the extent not pledged or encumbered in any way
(other than in connection with a Permitted Lien of the type described in item
(xii) of the definition of Permitted Liens, but only to the extent that no
outstanding Indebtedness or other

 

6

 

liabilities are owed to the applicable institution or such institution
is a Lender)) in excess of $10,000,000.

 

Executive
Order No. 13224 shall mean the Executive Order No. 13224 on
Terrorist Financing,  effective September
24, 2001, as the same has been, or shall hereafter be, renewed, extended,
amended or replaced.

 

Existing
Lenders shall have the meaning assigned to such term in Section 2.12
[Increases in Revolving Credit Commitments.]

 

Expiration
Date shall mean, with respect to the Revolving Credit
Commitments, July 30, 2009 as such may be extended pursuant to Section 2.10
[Extension by Lenders of the Expiration Date].

 

Extending
Lender shall have the meaning assigned to such term in Section 2.10.2
[Approval by 80% Lender].

 

Federal
Funds Effective Rate for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward
to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York
(or any successor) on such day as being the weighted average of the rates on
overnight federal funds transactions arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank
(or any successor) in substantially the same manner as such Federal Reserve
Bank computes and announces the weighted average it refers to as the “Federal
Funds Effective Rate” as of the date of this Agreement; provided, if
such Federal Reserve Bank (or its successor) does not announce such rate on any
day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.

 

Federal
Funds Open Rate  shall
mean the rate per annum determined by the Agent in accordance with its usual
procedures (which determination shall be conclusive absent manifest error) to
be the “open” rate for federal funds transactions as of the opening of business
for federal funds transactions among members of the Federal Reserve System
arranged by federal funds brokers on such day, as quoted by Garvin Guybutler,
any successor entity thereto, or any other broker selected by the Agent, as set
forth on the applicable Telerate display page; provided, however; that if such
day is not a Business Day, the Federal Funds Open Rate for such day shall be
the “open rate” on the immediately preceding Business Day, or if no such rate
shall be quoted by a Federal funds broker at such time, such other rate as
determined by the Agent in accordance with its usual procedures.

 

Financial
Projections shall have the meaning assigned to that term in Section 5.1.8((ii))
[Financial Projections].

 

Finished
Lots and Land Under Development shall mean the Dollar amount
of the lower of (i) actual cost (including land costs and capitalized
expenses relating thereto) or (ii) the market value (determined in
accordance with GAAP) of any land owned by a Loan Party that has been granted
Preliminary Approvals until a time which is the earlier of when (x) it is “Unsold
Homes” and (y) it is “Sold Homes”.

 

7

 

Fitch shall
mean Fitch IBCA, Duff & Phelps, a division of Fitch, Inc., and
its successors.

 

Fixed Charge Coverage
Ratio shall mean the ratio, as of any date of determination,
of (i) Adjusted Operating Income for the prior twelve (12) months to (ii) four
(4) multiplied by Fixed Charges for the most-recently ended fiscal
quarter.

 

Fixed
Charges shall mean as of the last day of any fiscal quarter
the sum, without duplication, of (i) interest cost incurred on all Senior
Homebuilding Indebtedness over the past fiscal quarter; (ii) interest cost
incurred on the Subordinated Debt over the past fiscal quarter; (iii) 50%
of the interest cost incurred on all Purchase Money Mortgages over the past
fiscal quarter; (iv) Letter of Credit Fees accrued over the past fiscal
quarter; and (v) the interest component of capitalized leases over the
past fiscal quarter.

 

GAAP
shall mean generally accepted accounting principles as are in effect from time
to time, subject to the provisions of Section 1.3 [Accounting Principles],
and applied on a consistent basis both as to classification of items and
amounts.

 

Governmental
Acts shall have the meaning assigned to that term in Section 2.9.8
[Indemnity].

 

Guarantor
shall mean each of the parties to the Guaranty Agreement (and designated as a “Guarantor”
on Schedule 1.1(C)) and each other Person which joins the Guaranty
Agreement as a Guarantor after the date hereof pursuant to Section 10.18
[Joinder of Guarantors].  As of the
Closing Date, Hovnanian shall be a Guarantor and all Restricted Subsidiaries
other than the Borrower shall be Guarantors.

 

Guarantor
Joinder shall mean a joinder by a Person as a Guarantor under
the Guaranty Agreement in the form of Exhibit 1.1(G)(2).

 

Guaranty
of any Person shall mean any obligation of such Person guaranteeing or in
effect guaranteeing any Indebtedness of any other Person in any manner, whether
directly or indirectly.

 

Guaranty
Agreement shall mean the Amended and Restated Guaranty and
Suretyship Agreement dated the Closing Date in the form attached as Exhibit 1.1(G)(1) hereto
and executed and delivered by each of the Guarantors to the Agent for the
benefit of the Lenders, as supplemented by joinders delivered from time to time
in respect of new Guarantors.

 

Hedge
Agreement shall mean, as to any Person, any swap, cap, collar
or similar arrangement entered into by such Person providing for protection
against fluctuations in interest rates or currency exchange rates or the
exchange of nominal interest obligations, either generally or under specific
contingencies.

 

Hedge
Agreement Termination Value shall mean, in respect of any one
or more Hedge Agreements, after taking into account the effect of any legally

 

8

 

enforceable netting agreement relating to such Hedge Agreements, (a) for
any date on or after the date such Hedge Agreements have been closed out at
termination value(s) determined in accordance therewith, such termination
value(s), and (b) for any date prior to the date referenced in clause (a),
the amount(s) determined as the mark-to-market or other readily available
quotations provided by any recognized dealer in such Hedge Agreements (which
may include a Lender or any Affiliate of a Lender).

 

High
Leverage Period shall mean any fiscal quarter for which the
Leverage Ratio as of the end date of such quarter exceeds 2.10 to 1.00.

 

Historical
Statements shall have the meaning assigned to that term in Section 5.1.8((i))
[Historical Statements].

 

Homebuilding
Indebtedness shall mean as of any date the sum of (i) Senior
Homebuilding Indebtedness as of such date and (ii) Subordinated Debt as of
such date.

 

Hovnanian
shall mean Hovnanian Enterprises, Inc., a Delaware corporation, shares of
whose Class A Common Stock are registered pursuant to the Securities
Exchange Act of 1934.

 

Indebtedness
shall mean, as to any Person at any time, any and all indebtedness, obligations
or liabilities (whether matured or unmatured, liquidated or unliquidated,
direct or indirect, absolute or contingent, or joint or several) of such Person
for or in respect of:  (i) borrowed
money, (ii) amounts raised under or liabilities in respect of any note
purchase or acceptance credit facility, (iii) reimbursement obligations
(contingent or otherwise) under any letter of credit, (iv) all net
obligations under any Hedge Agreement (measured as the Hedge Agreement
Termination Value thereof) (v) any other transaction (including forward
sale or purchase agreements, capitalized leases and conditional sales
agreements) having the commercial effect of a borrowing of money entered into
by such Person to finance its operations or capital requirements (but not
including trade payables and accrued expenses incurred in the ordinary course
of business which are not more than ninety (90) days past due or that are being
contested in good faith by appropriate proceedings), if and to the extent any
of the foregoing in this item (v) would appear as a liability on the
balance sheet of such Person prepared on a consolidated basis in accordance
with GAAP, or (vi) any Guaranty of Indebtedness for borrowed money.  Indebtedness shall not include Qualified
Preferred Equity.

 

Insolvency
Proceeding  shall mean,
with respect to any Person, (a) a case, action or proceeding with respect
to such Person (i) before any court or any other Official Body under any
bankruptcy, insolvency, reorganization or other similar Law now or hereafter in
effect, or (ii) for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of any Loan
Party or otherwise relating to the liquidation, dissolution, winding-up or
relief of such Person, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of such Person’s creditors generally or any substantial
portion of its creditors undertaken under any Law.

 

9

 

Intangibles
shall mean all patents, patent applications, copyrights, trademarks,
tradenames, goodwill, organization expenses and other like items of Hovnanian
and its Subsidiaries which are treated as intangibles under GAAP.

 

Interest
Period shall mean the period of time selected by the Borrower
in connection with (and to apply to) any election permitted hereunder by the
Borrower to have Revolving Credit Loans bear interest under the LIBO-Rate
Option.  Subject to the last sentence of
this definition, such period shall be one, two, three or six Months if Borrower
selects the LIBO-Rate Option.  Such
Interest Period shall commence on the effective date of such Interest Rate
Option, which shall be (i) the Borrowing Date if the Borrower is
requesting new Loans, or (ii) the date of renewal of or conversion to the
LIBO-Rate Option if the Borrower is renewing or converting to the LIBO-Rate
Option applicable to outstanding Loans. 
Notwithstanding the second sentence hereof: (A) any Interest Period
which would otherwise end on a date which is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, and (B) the Borrower shall not select,
convert to or renew an Interest Period for any portion of the Loans that would
end after the Expiration Date.

 

Interest
Rate Option shall mean any LIBO-Rate Option or Base Rate
Option.

 

Internal
Revenue Code shall mean the Internal Revenue Code of 1986, as
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as
from time to time in effect.

 

Investment
shall mean any loan or advance to or on behalf of, or purchase, acquisition or
ownership of any stock, bonds, notes or securities of, or any partnership
interest (whether general or limited) or limited liability company interest in,
or any other similar investment or interest in, or any capital contribution made to, any other Person, or any
agreement to become or remain liable to do any of the foregoing.

 

Investment
Grade Level shall mean, with respect to the rating of
Hovnanian’s senior unsecured long-term debt by any of Standard & Poor’s,
Moody’s or Fitch, a rating at or above the following level by such rating
agency:

 

	
  Rating Agency

  	
   

  	
  Minimum Level for

  “Investment Grade” Rating

  
	
   

  	
   

  	
   

  
	
  Standard & Poor’s

  	
   

  	
  BBB-

  
	
   

  	
   

  	
   

  
	
  Moody’s

  	
   

  	
  Baa3

  
	
   

  	
   

  	
   

  
	
  Fitch

  	
   

  	
  BBB-

  

 

10

 

Investment
Grade Period shall mean the period commencing on the date on
which the Borrower delivers to the Agent evidence satisfactory to the Agent
that Hovnanian’s senior unsecured long-term debt is rated at or above the
Investment Grade Level by at least two of any of the three rating agencies
listed below and shall terminate on the date on which Hovnanian’s senior
unsecured long-term debt ceases to be rated at the Investment Grade Level or
higher by at least two of such rating agencies: (i) Moody’s, (ii) Standard &
Poor’s and (iii) Fitch.

 

Investment
in Related Businesses shall have the meaning assigned to
such term in Section 7.2.6.

 

Joint
Ventures shall mean any Person in whom a Loan Party has an
ownership interest and which is not a “Subsidiary” as defined in this
Agreement.  Each of the Joint Ventures as
of the Closing Date is listed on Schedule 1.1(C).

 

Labor
Contracts shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements among any Loan
Party or Subsidiary of a Loan Party and its employees.

 

Law
shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ,
decree, bond, judgment, authorization or approval, lien or award of or
settlement agreement with any Official Body.

 

Letter
of Credit shall have the meaning assigned to that term in Section 2.9.1
[Issuance of Letters of Credit].

 

Letter
of Credit Lender shall have the meaning assigned to that term
in Section 2.9.1 [Issuance of Letters of Credit].

 

Letter
of Credit Borrowing shall have the meaning assigned to such
term in Section 2.9.3.4 [Disbursements, Reimbursement].

 

Letter
of Credit Fee shall have the meaning assigned to that term in
Section 2.9.2 [Letter of Credit Fees].

 

Letter
of Credit Outstandings shall mean at any time the sum of (i) the
aggregate undrawn face amount of outstanding Letters of Credit and (ii) the
aggregate amount of all unpaid and outstanding Reimbursement Obligations and Letter
of Credit Borrowings.

 

Leverage
Ratio shall mean the ratio of 
(x)(i) Homebuilding Indebtedness minus (ii) Excess Cash
to (y) Adjusted Tangible Net Worth.

 

LIBO-Rate
shall mean, with respect to the Loans comprising any Borrowing Tranche to which
the LIBO-Rate Option applies for any Interest Period, the interest rate per
annum determined by the Agent by dividing (the resulting quotient rounded
upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate of interest

 

11

 

determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the average of
the London interbank offered rates for U.S. Dollars quoted by the British Bankers’
Association as set forth on Moneyline Telerate (or appropriate successor or, if
the British Bankers’ Association or its successor ceases to provide such
quotes, a comparable replacement determined by the Agent) display page 3750
(or such other display page on the Moneyline Telerate service as may
replace display page 3750) two (2) Business Days prior to the first
day of such Interest Period for an amount comparable to such Borrowing Tranche
and having a borrowing date and a maturity comparable to such Interest Period
by (ii) a number equal to 1.00 minus the LIBO-Rate Reserve
Percentage.  The LIBO-Rate may also be
expressed by the following formula:

 

	
  LIBO-Rate =

  	
   

  	
  Average of London interbank offered rates quoted

  
	
   

  	
   

  	
  by BBA or appropriate successor as shown on

  
	
   

  	
   

  	
  Moneyline Telerate Service display page 3750

  
	
   

  	
   

  	
  1.00 - LIBO-Rate
  Reserve Percentage

  

 

The LIBO-Rate shall be
adjusted with respect to any Loan to which the LIBO-Rate Option applies that is
outstanding on the effective date of any change in the LIBO-Rate Reserve
Percentage as of such effective date. 
The Agent shall give prompt notice to the Borrower of the LIBO-Rate as
determined or adjusted in accordance herewith, which determination shall be
conclusive absent manifest error.

 

LIBO-Rate
Option shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms and
conditions set forth in Section 3.1.1(ii) [Revolving Credit LIBO-Rate
Option].

 

LIBO-Rate
Reserve Percentage shall mean as of any day the maximum
percentage in effect on such day, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the reserve
requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).

 

Lien
shall mean any mortgage, deed of trust, pledge, lien, security interest, charge
or other encumbrance or security arrangement of any nature whatsoever, whether
voluntarily or involuntarily given, including any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security.

 

LLC
Interests shall have the meaning assigned to such term in Section 5.1.2
[Subsidiaries ].

 

Loan
Documents shall mean this Agreement, the Agent’s Letters, the
Notes, the Guaranty Agreement, and any other instruments, certificates or
documents delivered or contemplated to be delivered hereunder or thereunder or
in connection herewith or therewith, as the same may be supplemented or amended
from time to time in accordance herewith or therewith, and Loan Document
shall mean any of the Loan Documents. 
Each of the Loan Documents under the Prior Credit Agreement shall be
Loan Documents hereunder.

 

12

 

Loan
Parties shall mean the Borrower and the Guarantors.

 

Loan
Request  shall have the
meaning assigned to that term in Section 2.5 [Revolving Credit Loan
Requests; Swing Loan Requests].

 

Loans
shall mean collectively all Revolving Credit Loans and Swing Loans and Loan
shall mean separately, any Revolving Credit Loan or Swing Loan.

 

Material
Adverse Change shall mean any set of circumstances or events
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of this Agreement or any
other Loan Document, (b) is or could reasonably be expected to be material
and adverse to the business, properties, assets, financial condition, results
of operations or business prospects of the Loan Parties taken as a whole, (c) impairs
materially or could reasonably be expected to impair materially the ability of
the Loan Parties taken as a whole to duly and punctually pay or perform their material
Indebtedness for borrowed money, or (d) impairs materially or could
reasonably be expected to impair materially the ability of the Agent or any of
the Lenders, to the extent permitted, to enforce their legal remedies pursuant
to this Agreement, the Notes or the Guaranty Agreement.

 

Month,
with respect to an Interest Period under the LIBO-Rate Option, shall mean the
interval between the days in consecutive calendar months numerically
corresponding to the first day of such Interest Period.  If any LIBO-Rate Interest Period begins on a
day of a calendar month for which there is no numerically corresponding day in
the month in which such Interest Period is to end, the final month of such
Interest Period shall be deemed to end on the last Business Day of such final
month.

 

Moody’s
shall mean Moody’s Investors Service, Inc. and its successors.

 

Mortgage
Subsidiary shall mean each Subsidiary which is in the
business of making residential mortgage loans. Each of the Mortgage
Subsidiaries as of the Closing Date is listed on Schedule 1.1(C).

 

Multiemployer
Plan shall mean any employee benefit plan which is a “multiemployer
plan” within the meaning of Section 4001(a)(3) of ERISA.

 

New
Lender shall have the meaning assigned to such term in Section 2.12
[Increases in Revolving Credit Commitments.]

 

Non-approving
Lender shall have the meaning assigned to such term in Section 2.10.2
[Approval by 80% Lenders].

 

Non-Restricted
Person shall mean any (i) Joint Venture and (ii) Subsidiary
of Hovnanian which is not a Restricted Subsidiary.  Each of the Non-Restricted Persons as of the
Closing Date is listed on Schedule 1.1(C).

 

13

 

Notes
shall mean the Revolving Credit Notes and the Swing Note.

 

Notices
shall have the meaning assigned to that term in Section 10.6 [Notices].

 

Obligation
shall mean any obligation or liability of any of the Loan Parties to the Agent
or any of the Lenders, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due or to
become due, under or in connection with this Agreement, any Notes, the Letters of Credit, the Agent’s Letters
or any other Loan Document.

 

Official
Body shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, board, bureau,
central bank, commission, department or instrumentality of either, or any
court, tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.

 

Participation
Advance shall mean, with respect to any Lender, such Lender’s
payment in respect of its participation in a Letter of Credit Borrowing
according to its Ratable Share pursuant to Section 2.9.4 [Repayment of
Participation Advances].

 

Partnership
Interests shall have the meaning assigned to such term in
5.1.2. [Subsidiaries ].

 

PBGC
shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.

 

Permitted
Acquisitions  shall
have the meaning assigned to such term in Section 7.2.4 [Liquidations,
Mergers, Consolidations, Acquisitions].

 

Permitted
Investments shall mean a Loan Party’s Investment in:

 

(a)           (i)            cash, marketable direct obligations
of the United States of America or any agency thereof, and certificates of
deposit, demand deposits, time deposits, or repurchase agreements issued by any
Lender or any bank with a capital and surplus of at least $25,000,000 organized
under the laws of the United States of America or any state thereof, state or
municipal securities with a rating of A-1 or better by Standard & Poor’s
or P-1 by Moody’s or F-1 by Fitch, provided that such obligations, certificates
of deposit, demand deposits, time deposits, and repurchase agreements have a
maturity of less than one year from the date of purchase;

 

(ii)           investment grade commercial paper or
debt or commercial paper issued by a Lender or a bank holding company of a
Lender having a maturity date of one year or less from the date of purchase;
and

 

14

 

(iii)          funds holding assets primarily
consisting of those described in clause (i) and (ii) hereof;

 

(b)           loans
or advances to employees of a Loan Party in the ordinary course of business;

 

(c)                                  any
Person that is or concurrently becomes a Loan Party;

 

(d)           purchase
money notes not exceeding $25,000,000 principal amount in the aggregate
received incident to sales of property by a Restricted Subsidiary;

 

(e)           trade
credit extended on usual and customary terms in the ordinary course of
business;

 

(f)            loans
to officers and directors to the extent permitted by Section 7.2.6.2
[Restricted Payments; Restricted Investments; Investments in Related
Businesses];

 

(g)           marketable
securities costing at the time of purchase no more than $3,000,000 in the
aggregate of any one or more residential real estate developers and which are
registered under the Securities Exchange Act of 1934;

 

(h)           investments
received in connection with the bankruptcy or reorganization of, or settlement
of delinquent accounts or disputes with or judgments against, contractors,
suppliers or customers, in each case in the ordinary course of business; and

 

(i)            other
Investments not in excess of $25,000,000 in the aggregate.

 

Permitted
Liens shall mean:

 

(i)            Liens for taxes, assessments or
other governmental charges not yet payable or being contested in good faith and
as to which adequate reserves shall have been established in accordance with
GAAP;

 

(ii)           Pledges or deposits made in the
ordinary course of business to secure payment of workers’ compensation, or to
participate in any fund in connection with workers’ compensation, unemployment
insurance, old-age pensions or other social security programs;

 

(iii)          Mechanics’, materialmen’s,
warehousemen’s, carriers’ or other like liens arising in the ordinary course of
business securing obligations which are not overdue for a period longer than 30
days or which are being contested in good faith by appropriate proceedings;

 

(iv)          Pledges or deposits made in the
ordinary course of business to secure performance of bids, tenders, contracts (other
than for the repayment of

 

15

 

borrowed money) or leases, not in excess of the aggregate amount due
thereunder, or to secure statutory obligations, or surety, appeal, indemnity,
performance or other similar bonds required in the ordinary course of business;

 

(v)           Encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real property, none
of which materially impairs the use of such property or the value thereof, and
none of which is violated in any material respect by existing or proposed
structures or land use;

 

(vi)          Liens, security interests and
mortgages in favor of the Agent for the benefit of the Lenders;

 

(vii)         Liens on property leased by any Loan
Party or Subsidiary of a Loan Party under capital and operating leases not
prohibited by this Agreement securing obligations of such Loan Party or
Subsidiary to the lessor under such leases;

 

(viii)        Any Lien existing on the date of this Agreement
and described on Schedule 1.1(P), provided that the
principal amount secured thereby is not hereafter increased, and no additional
assets become subject to such Lien;

 

(ix)           Purchase Money Mortgages and Purchase
Money Security Interests and Liens on the real property owned by Hovnanian or a
Corporate Office Subsidiary and occupied primarily by employees of Hovnanian or
its subsidiaries, including Liens on the real property which serves as
Hovnanian’s headquarters in Red Bank, New Jersey securing Indebtedness not to
exceed in aggregate $25,000,000 principal amount; and

 

(x)            The following, (A) if the
validity or amount thereof is being contested in good faith by appropriate and
lawful proceedings diligently conducted so long as levy and execution thereon
have been stayed and continue to be stayed or (B) if a final judgment is
entered and such judgment is discharged within thirty (30) days of entry, and
they do not in the aggregate materially impair the ability of any Loan Party to
perform its Obligations hereunder or under the other Loan Documents:

 

(1)           Claims
or Liens for taxes, assessments or charges due and payable and subject to
interest or penalty, provided that the applicable Loan Party maintains
such reserves or other appropriate provisions as shall be required by GAAP and
pays all such taxes, assessments or charges forthwith upon the commencement of
proceedings to foreclose any such Lien;

 

(2)           Claims,
Liens or encumbrances upon, and defects of title to, real or personal property,
including any attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits (except to the extent such
attachment constitutes an Event of Default under Section 8.1.8);

 

(3)           Claims
or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory
nonconsensual Liens;

 

16

 

(4)           Liens
resulting from final judgments or orders described in Section 8.1.6 [Final
Judgments or Orders] (to the extent that judgments or orders and related Liens
do not constitute Events of Default under such Section 8.1.6);

 

(xi)           Liens,
security interests, mortgages, or deeds of trust on real estate in conjunction
with purchase contracts for the purchase of the land comprising such real
estate, which secure future payments due to the land sellers at the time of the
sale of the homes on such land and which are contingent on the sale price of
such homes, including (a) adjustments to the land purchase price, (b) profit
participations, (c) community marketing fees and community enhancement
fees, and (d) reimbursable costs paid by the land developer;

 

(xii)          Liens
arising under applicable Law (as opposed to consensual Liens granted by
contract), or confirmations or acknowledgments thereof, created in the ordinary
course of business in favor of banks or other financial institutions over
credit balances in any bank account at such bank or financial institution; and

 

(xiii)         Other
Liens securing obligations not in excess of $5,000,000 in the aggregate, and.

 

Person
shall mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, joint
venture, government or political subdivision or agency thereof, or any other
entity.

 

Plan
shall mean at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the
minimum funding standards under Section 412 of the Internal Revenue Code
in respect of which the Borrower or any member of the ERISA Group is an “employer”
as defined in Section 3(5) of ERISA.

 

PNC
Bank shall mean PNC Bank, National Association, its
successors and assigns.

 

Potential
Default shall mean any event or condition which with notice,
passage of time or a determination by the Agent or the Required Lenders, or any
combination of the foregoing, would constitute an Event of Default.

 

Preliminary
Approvals shall mean the following:  (i) in New Jersey, as defined in the
Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.) and (ii) for states
other than New Jersey, a point in time equivalent thereto.

 

Principal
Office shall mean the main banking office of the Agent in
Pittsburgh, Pennsylvania or such other location so designated by the Agent.

 

Prior
Credit Agreement shall have the meaning assigned to such term
in the preamble to this Agreement.

 

17

 

Prohibited
Transaction shall mean any prohibited transaction as defined
in Section 4975 of the Internal Revenue Code or Section 406 of ERISA
for which neither an individual nor a class exemption has been issued by the
United States Department of Labor.

 

Property
shall mean all real property, both owned and leased, of any Loan Party or
Subsidiary of a Loan Party.

 

Purchase
Money Mortgage shall mean any non-recourse mortgages granted
to secure Indebtedness of any Loan Party.

 

Purchase
Money Security Interest shall mean Liens upon tangible
personal property securing loans to any Loan Party or deferred payments by such
Loan Party or Subsidiary for the purchase of such tangible personal property
and excluding Purchase Money Mortgages.

 

Purchasing
Lender shall mean a Lender which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.

 

Qualified
Preferred Equity shall mean preferred equity issued by
Hovnanian or any wholly-owned subsidiary thereof provided that each of the
following conditions is met: (1) the total book value thereof shall not at
any time exceed $250,000,000, (2) the term thereof shall be perpetual and
such Qualified Preferred Equity shall not contain any mandatory redemption
provisions, put rights in favor of the holders thereof, or any provisions that
may obligate the issuer to repurchase any or all of such Qualified Preferred
Equity at any time, (3) such Qualified Preferred Equity shall not provide
the holders with cumulative dividends rights, and (4) the Borrower shall
have disclosed to the Agent the terms of such Qualified Preferred Equity prior
to the issuance thereof.

 

Ratable
Share shall mean so long as any Commitments are outstanding
the proportion that a Lender’s Commitment (excluding the Swing Loan Commitment)
bears to the Commitments (excluding the Swing Loan Commitment) of all of the
Lenders and after all Commitments have been terminated, the proportion that a
Lender’s Revolving Credit Loans outstanding bears to all Revolving Credit Loans
outstanding of all of the Lenders.

 

Regulated
Substances shall mean any substance, material or waste
defined under Environmental Laws as a “hazardous substance,” “pollutant,” “pollution,”
“contaminant,” “hazardous or toxic substance,” “extremely hazardous substance,”
“toxic chemical,” “toxic substance,” “toxic waste,” “hazardous waste,” “special
handling waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal
waste,” “mixed waste,” “infectious waste,” “chemotherapeutic waste,” “medical
waste,” or “regulated substance” or any other material, substance or waste
which otherwise is regulated by Environmental Laws.

 

Regulation
U shall mean Regulation U, T or X as promulgated by the Board
of Governors of the Federal Reserve System, as amended from time to time.

 

18

 

Reimbursement
Obligation shall mean the obligation of the Borrower to reimburse
a Letter of Credit Lender for draws under a Letter of Credit issued by such
Lender under this Agreement, except to the extent such obligation is
represented by a Revolving Credit Loan.

 

Related
Businesses shall mean business activities incidental, complementary,
or related to the homebuilding business.

 

Reportable
Event shall mean a reportable event described in Section 4043
of ERISA and regulations thereunder with respect to a Plan other than those
events as to which the 30-day notice is waived under the PBGC regulations.

 

Required
Lenders shall mean

 

(i)            if there are no Loans, Reimbursement
Obligations or Letter of Credit Borrowings outstanding, Lenders whose
Commitments (excluding the Swing Loan Commitments) aggregate at least 66 2/3%
of the Revolving Credit Commitments of all of the Lenders, or

 

(ii)           if there are Loans, Reimbursement
Obligations, or Letter of Credit Borrowings outstanding, any Lender or group of
Lenders if the sum of the Loans (excluding the Swing Loans), Reimbursement
Obligations and Letter of Credit Borrowings of such Lenders then outstanding
aggregates at least 66 2/3% of the total principal amount of all of the Loans
(excluding the Swing Loans), Reimbursement Obligations and Letter of Credit
Borrowings then outstanding.

 

Reimbursement Obligations
and Letter of Credit Borrowings shall be deemed, for purposes of this
definition, to be in favor of the Agent and not a participating Lender if such
Lender has not made its Participation Advance in respect thereof and shall be
deemed to be in favor of such Lender to the extent of its Participation Advance
if it has made its Participation Advance in respect thereof.

 

Required
Environmental Permits shall mean all permits, licenses,
bonds, consents, programs, approvals or authorizations required under
Environmental Laws to own, occupy or maintain the Property or which otherwise
are required by Environmental Law for the operations and business activities of
the Loan Parties.

 

Required
Share shall have the meaning assigned to such term in Section 4.8
[Settlement Date Procedures].

 

Restricted
Investment shall mean a Loan Party’s Investment that
constitutes a Subsidiary Investment in any Non-Restricted Person.

 

Restricted
Payments shall mean

 

(i)            Dividends and Capital Stock
Retirement payments after January 31, 2001 by Hovnanian or otherwise to
the shareholders of Hovnanian; and

 

19

 

(ii)           Payments (whether in the form of
principal payments, note repurchases or similar items) to the holder of
Subordinated Debt made on or after January 31, 2001; provided, however,
with respect to this item (ii), a refinancing of the Subordinated Debt to the
extent consisting of the repayment of the Subordinated Debt and the incurring
of new “Subordinated Debt” within 60 days of such repayment shall not
constitute a “Restricted Payment”; and

 

(iii)          Any payments by Hovnanian or its
Subsidiaries in respect of Qualified Preferred Equity.

 

Restricted
Subsidiaries shall mean any Subsidiary that has not been
designated a Non-Restricted Person as of the Closing Date or in accordance with
Section 2.11 [Designation of Subsidiaries and Release of Guarantors].  Each of the Restricted Subsidiaries as of the
Closing Date is listed on Schedule 1.1(C).

 

Revolving
Credit Commitment shall mean, as to any Lender at any time,
the amount set forth opposite its name on Schedule 1.1(B) in
the column labeled “Amount of Commitment for Revolving Credit Loans” or on Schedule I
to the Assignment and Assumption Agreement pursuant to which such Lender became
a party hereto, and Revolving Credit Commitments shall mean the
aggregate Revolving Credit Commitments of all of the Lenders.

 

Revolving
Credit Commitment Increase Date shall have the meaning
assigned to such term in Section 2.12 [Increases in Revolving Credit
Commitments.]

 

Revolving
Credit Loans shall mean collectively and Revolving Credit
Loan shall mean separately all Revolving Credit Loans or any Revolving
Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant
to Section 2.1 [Revolving Credit Commitments] or 2.9.3 [Disbursements,
Reimbursement].

 

Revolving
Credit Note shall mean any Revolving Credit Note of the
Borrower in the form of Exhibit 1.1(R), issued by the Borrower
payable to the order of each Lender (unless a Lender requests that the Borrower
not issue a Note to such Lender) in a face amount equal to such Lender’s
Revolving Credit Commitment pursuant to Section 4.7 [Notes] evidencing the
Revolving Credit Loans to such Lender, together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in whole or in part.

 

Revolving
Facility Usage shall mean at any time the sum of the
Revolving Credit Loans outstanding, Swing Loans outstanding and the Letter of
Credit Outstandings.

 

SEC
shall mean the Securities and Exchange Commission or any governmental agencies
substituted therefor.

 

20

 

Senior
Homebuilding Indebtedness shall mean the sum (without
duplication) of (a) outstanding principal amount of the Obligations, (b) letters
of credit (whether or not issued under this Agreement), (c) Guaranties by
any Loan Party of any obligation of any Person which is not a Restricted
Subsidiary or Hovnanian, (d) Senior Notes, (e) surety bonds (or
similar products) issued by bonding companies in lieu of cash payments or cash
deposits on contracts for any Loan Party to acquire land inventory in respect
of which a Loan Party is obligated and (f) other Indebtedness of Hovnanian
or a Restricted Subsidiary which is permitted under this Agreement; provided
however, that “Senior Homebuilding Indebtedness” shall not include (i) debt
secured by Purchase Money Security Interests and Purchase Money Mortgages and (ii) Subordinated
Debt.

 

Senior
Notes shall mean the (i) $150,000,000 principal amount
10 1/2% Senior Notes of the Borrower and guaranteed by Hovnanian due October 2007;
(ii) $100,000,000 principal amount 8.0% Senior Notes of the Borrower due April 2012
and guaranteed by Hovnanian;  (iii) $215,000,000
principal amount 6.50% Senior Notes of the Borrower due January 2014 and
guaranteed by Hovnanian; (iv) $150,000,000 principal amount 6.375% Senior
Notes of the Borrower due 2014 and guaranteed by Hovnanian; and (v) other
notes sold or guaranteed by Hovnanian or the Borrower from time to time after
the Closing Date on terms not materially less favorable to the Lenders (as
determined by the Agent) as those described in clauses (i) and (ii) above.

 

Settlement
Date shall mean the date selected from time to time by the
Agent (after consulting the Borrower) on which the Agent elects to effect
settlement pursuant to Section 4.8 [Settlement Date Procedures].

 

Sold
Homes shall mean the Dollar amount of the capitalized
construction costs of any Dwelling Unit upon which a third party purchaser has
paid a cash deposit pursuant to an enforceable agreement of sale.  Such cost shall include the proportional
costs of the land under the Dwelling Unit, site improvements and soft costs
incurred to date.

 

Standard &
Poor’s shall mean Standard & Poor’s Ratings
Services, a division of The McGraw-Hill Companies, Inc., and its
successors.

 

Subordinated Debt
shall mean (i) the  $150,000,000
principal amount 8.875% Senior Subordinated Notes due in April 2012; (ii) the
$150,000,000 principal amount 7.75% Senior Subordinated Notes due in 2013; and (iii) any
other unsecured indebtedness of the Borrower, Hovnanian, or any other Loan
Party which is subordinated by its terms to the prior payment in full of the
Obligations evidenced by this Agreement, the Notes and the Letters of Credit,
as may be outstanding from time to time, in a manner no less favorable to the
Lenders in any material respect than the terms of the Subordinated Debt
described in clause (i) above and which contain covenants that are not materially
less favorable to Hovnanian, the Borrower or any other Loan Party than those
contained in the Subordinated Debt described in clause (i) above.

 

21

 

Subsidiary
of any Person at any time, shall mean a corporation, partnership, limited
liability company or other entity (i) whose assets and liabilities are
consolidated with Hovnanian in accordance with GAAP (except for joint
ventures or similar arrangements which would not be considered “Subsidiaries”
of a Loan Party but for the application of FASB Interpretation No. 46
regarding consolidation issued by the Financial Accounting Standards Board (FASB) in January,
2003) and (ii) of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening of
a contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to
a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a
Subsidiary or Subsidiaries of Hovnanian.

 

Subsidiary
Investment shall mean with respect to any Subsidiary or Joint
Venture the sum of (x) loans to such Person by Hovnanian or a Restricted
Subsidiary and (y) Hovnanian’s or a Restricted Subsidiary’s share of equity in
such Person.

 

Subsidiary
Shares shall have the meaning assigned to that term in Section 5.1.2
[Subsidiaries].

 

Swing
Loan Commitment shall mean PNC Bank’s commitment to make
Swing Loans to the Borrower pursuant to Section 2.1.2 [Swing Loan Commitment]
hereof in an aggregate principal amount of up to $30,000,000.

 

Swing
Loan Note shall mean the Swing Loan Note of the Borrower in
the form of Exhibit 1.1(S) evidencing the Swing Loans, together
with all amendments, extensions, renewals, replacements, refinancings or
refundings thereof in whole or in part.

 

Swing
Loan Request shall mean a request for Swing Loans made in
accordance with Section 2.4.2 [ Swing Loan Requests] hereof.

 

Swing
Loans shall mean collectively and Swing Loan shall
mean separately all Swing Loans or any Swing Loan made by PNC Bank to the
Borrower pursuant to Section 2.1.2 [Swing Loan Commitment] hereof.

 

Transferor
Lender shall mean the selling Lender pursuant to an
Assignment and Assumption Agreement.

 

Unentitled
Land shall mean the Dollar value of land owned by a Loan
Party which has not been granted Preliminary Approvals, calculated at the lower
of (i) the actual cost (including land costs and capital expenses relating
thereto) or (ii) the market value (as determined in accordance with GAAP)
thereof.

 

Unsold
Dwelling Units shall mean the number of Dwelling Units owned
by a Loan Party comprising from time to time “Unsold Homes”.

 

22

 

Unsold Homes shall
mean the Dollar amount of capitalized construction costs of any Dwelling Unit
being built by a Loan Party for which the construction of slab (or foundation)
has been completed and upon which
no cash deposit has been paid pursuant to an enforceable agreement of sale.
Such Dollar amount shall include the proportional costs of the land under the
Dwelling Unit, site improvements and soft costs actually incurred to date.

 

USA Patriot Act
shall mean the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or
replaced.

 

1.2                                 Construction.

 

Unless the context of this Agreement
otherwise clearly requires, the following rules of construction shall
apply to this Agreement and each of the other Loan Documents:

 

1.2.1.                     Number;
Inclusion.

 

references to the plural include the
singular, the plural, the part and the whole; “or” has the inclusive meaning
represented by the phrase “and/or,” and “including” has the meaning represented
by the phrase “including without limitation”;

 

1.2.2.                     Determination.

 

references to “determination” of or by the
Agent or the Lenders shall be deemed to include good-faith estimates by the
Agent or the Lenders (in the case of quantitative determinations) and
good-faith beliefs by the Agent or the Lenders (in the case of qualitative
determinations) and such determination shall be conclusive absent manifest
error;

 

1.2.3.                     Agent’s
Discretion and Consent.

 

whenever the Agent or the Lenders are granted
the right herein to act in its or their sole discretion or to grant or withhold
consent such right shall be exercised in good faith;

 

1.2.4.                     Documents
Taken as a Whole.

 

the words “hereof,” “herein,” “hereunder,” “hereto”
and similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document;

 

1.2.5.                     Headings.

 

the section and other headings contained
in this Agreement or such other Loan Document and the Table of Contents (if
any) preceding this Agreement or such other Loan Document are for reference
purposes only and shall not control or affect the

 

23

 

construction of this Agreement or such other Loan Document or the
interpretation thereof in any respect;

 

1.2.6.                     Implied
References to this Agreement.

 

article, section, subsection, clause, schedule and
exhibit references are to this Agreement or other Loan Document, as the case
may be, unless otherwise specified;

 

1.2.7.                     Persons.

 

reference to any Person includes such Person’s
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement or such other Loan Document, as the case may
be, and reference to a Person in a particular capacity excludes such Person in
any other capacity;

 

1.2.8.                     Modifications
to Documents.

 

reference to any agreement (including this
Agreement and any other Loan Document together with the schedules and exhibits
hereto or thereto), document or instrument means such agreement, document or
instrument as amended, modified, replaced, substituted for, superseded or
restated;

 

1.2.9.                     From,
To and Through.

 

relative to the determination of any period
of time, “from” means “from and including,” “to” means “to but excluding,” and “through”
means “through and including”; and

 

1.2.10. Shall;
Will.

 

references to “shall” and “will” are intended
to have the same meaning.

 

1.3                                 Accounting
Principles.

 

Except as otherwise provided in this
Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such terms by GAAP; provided, however,
that all accounting terms used in Section 7.2 [Negative Covenants] (and
all defined terms used in the definition of any accounting term used in Section 7.2
[Negative Covenants] shall have the meaning given to such terms (and defined
terms) under GAAP as in effect on the date hereof applied on a basis consistent
with those used in preparing the Annual Statements referred to in Section 5.1.8((i))
[Historical Statements].  In the event of
any change after the date hereof in GAAP, and if such change would result in
the inability to determine compliance with the financial covenants set forth in
Section 7.2 [Negative Covenants] based upon the Loan Parties’ regularly
prepared

 

24

 

financial statements by reason of the preceding sentence, then the
parties hereto agree to endeavor, in good faith, to agree upon an amendment to
this Agreement that would adjust such financial covenants in a manner that
would not affect the substance thereof, but would allow compliance therewith to
be determined in accordance with the Loan Parties’ financial statements at that
time.

 

2.                                       REVOLVING
CREDIT AND SWING LOAN FACILITIES

 

2.1                                 Revolving
Credit Commitments.

 

2.1.1.                     Revolving
Credit Loans.

 

Subject to the terms and conditions hereof
and relying upon the representations and warranties herein set forth, each
Lender severally agrees to make Revolving Credit Loans to the Borrower at any
time or from time to time on or after the date hereof to the Expiration Date
provided that after giving effect to such Loan (a) the aggregate amount of
Revolving Credit Loans from such Lender shall not exceed such Lender’s
Revolving Credit Commitment minus such Lender’s Ratable Share of the Letter of
Credit Outstandings and its Ratable Share of the outstanding Swing Loans and (b) the
Borrower shall be in compliance with the covenant contained in the first
sentence of Section 7.2.10 [Borrowing Base] (provided that the
requirements of such Section 7.2.10 shall apply only if the Investment
Grade Period is not in effect).  Within
such limits of time and amount and subject to the other provisions of this
Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.

 

The Borrower promises to repay the aggregate
outstanding principal amount of the Revolving Credit Loans in full on the
Expiration Date and to discharge and fulfill when required all other of the
Obligations.

 

2.1.2.                     Swing
Loan Commitment.

 

Subject to the terms and conditions hereof
and relying upon the representations and warranties herein set forth, PNC Bank
shall make swing loans (the “Swing Loans”) to the Borrower at any time or from
time to time after the date hereof to, but not including, the Expiration Date,
in an aggregate principal amount up to but not in excess of the Swing Loan
Commitment.  The Swing Loan Commitment is
a sublimit of the Revolving Credit Commitments and the Revolving Facility Usage
shall not exceed the Revolving Credit Commitments of all the Lenders.  Within such limits of time and amount and
subject to the other provisions of this Agreement, the Borrower may borrow,
repay and reborrow pursuant to this Section 2.1.2.  Swing Loans shall, at the option of PNC Bank
after consultation with the Borrower, be repaid by the proceeds of a Revolving
Credit Loan deemed to have been made for such purpose pursuant to Section 2.8
[Borrowings to Repay Swing Loans] and shall be subject to the provisions of Section 4.8
[Settlement Date Procedures].

 

2.1.3                        Voluntary
Reduction of Commitment

 

The Borrower shall have the right at any time
after the Closing Date (i) upon five (5) days’ prior written notice
to the Agent to permanently reduce (ratably among the

 

25

 

Lenders in proportion to their Ratable Shares) the Revolving Credit
Commitments, in a minimum amount of $500,000 and whole multiples of $100,000
(provided that in no event shall the aggregate Revolving Credit Commitments be
reduced to an amount less than $550,000,000) or (ii) at any time upon
prepayment in full of the Obligations, terminate completely the Commitments,
without penalty or premium except as hereinafter set forth, provided that any
such reduction or termination shall be accompanied by prepayment of the Notes,
together with outstanding Commitment Fees, and the full amount of interest
accrued on the principal sum to be prepaid (and all amounts referred to in Section 4.6.2
[Indemnity] hereof), to the extent that the aggregate amount thereof then
outstanding exceeds the Commitments as so reduced or terminated.  Any notice to reduce the Revolving Credit
Commitments under this Section 2.1. shall be irrevocable.

 

2.2                                 Nature
of Lenders’ Obligations with Respect to Revolving Credit Loans.

 

Each Lender shall be obligated to participate
in each request for Revolving Credit Loans pursuant to Section 2.4
[Revolving Credit Loan Requests; Swing Loan Requests] in accordance with its
Ratable Share.  The aggregate of each
Lender’s Revolving Credit Loans outstanding hereunder to the Borrower at any
time shall never exceed its Revolving Credit Commitment minus its Ratable Share
of the Letter of Credit Outstandings minus its Ratable Share of Swing Loans
outstanding.  The obligations of each
Lender hereunder are several.  The
failure of any Lender to perform its obligations hereunder shall not affect the
Obligations of the Borrower to any other party nor shall any other party be
liable for the failure of such Lender to perform its obligations
hereunder.  The Lenders shall have no
obligation to make Revolving Credit Loans hereunder on or after the Expiration
Date.

 

2.3                                 Commitment
Fees.

 

Accruing from the date hereof until the
Expiration Date, the Borrower agrees to pay to the Agent for the account of
each Lender, as consideration for such Lender’s Revolving Credit Commitment
hereunder, a nonrefundable commitment fee (the “Commitment Fee”) equal to the
Applicable Commitment Fee Rate (computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed) on the average daily
difference between the amount of (i) such Lender’s Revolving Credit
Commitment as the same may be constituted from time to time and the (ii) the
sum of such Lender’s Revolving Credit Loans outstanding (plus, in the case of
PNC Bank, its Swing Loans outstanding) plus its Ratable Share of Letter of
Credit Outstandings.  All Commitment Fees
shall be payable quarterly in arrears on the fifteenth (15) day of each
calendar quarter (for the calendar quarter most recently ended) after the date
hereof and on the Expiration Date or upon acceleration of the Obligations.

 

2.4                                 Revolving
Credit Loan Requests; Swing Loan Requests.

 

2.4.1.                     Revolving
Credit Loan Requests.

 

Except as otherwise provided herein, the
Borrower may from time to time prior to the Expiration Date request that the
Lenders make Revolving Credit Loans, or renew or convert the Interest Rate
Option applicable to existing Revolving Credit Loans or pursuant to Section 3.2
[Interest Periods], by delivering to the Agent, not later than

 

26

 

11:00 a.m., Eastern time, (i) three (3) Business Days prior
to the proposed Borrowing Date with respect to the making of Revolving Credit
Loans to which the LIBO-Rate Option applies or the conversion to or the renewal
of the LIBO-Rate Option for any Loans; and (ii) on the day of either the
proposed Borrowing Date with respect to the making of a Revolving Credit Loan
to which the Base Rate Option applies or the last day of the preceding Interest
Period with respect to the conversion to the Base Rate Option for any Loan, of
a duly completed request therefor substantially in the form of Exhibit 2.4.1
or a request by telephone promptly confirmed in writing by letter or facsimile
in such form (each, a “Loan Request”), it being understood that the Agent may
rely on the authority of any individual making such a telephonic request
without the necessity of receipt of such written confirmation.  Each Loan Request shall be irrevocable and
shall specify (i) the proposed Borrowing Date; (ii) the aggregate
amount of the proposed Loans comprising each Borrowing Tranche, which shall be
in integral multiples of $500,000 and not less than $2,500,000 for each
Borrowing Tranche to which the LIBO-Rate Option applies and which shall be in
integral multiples of $100,000 and not less than $500,000 for Borrowing
Tranches to which the Base Rate Option applies; (iii) whether the
LIBO-Rate Option or Base Rate Option shall apply to the proposed Loans
comprising the applicable Borrowing Tranche; and (iv) in the case of a
Borrowing Tranche to which the LIBO-Rate Option applies, an appropriate Interest
Period for the Loans comprising such Borrowing Tranche.

 

2.4.2.                     Swing
Loan Requests.

 

Except as otherwise provided herein, the
Borrower may from time to time prior to the Expiration Date request that PNC
Bank make Swing Loans by delivery to PNC Bank not later than 2:00 p.m.
Eastern time on the proposed Borrowing Date of a duly completed request
therefor substantially in the form of Exhibit 2.4.2 hereto or a
request by telephone promptly confirmed in writing by letter or facsimile
(each, a “Swing Loan Request”), it being understood that the Agent may rely on
the authority of any individual making such a telephonic request without the
necessity of receipt of such written confirmation.  Each Swing Loan Request shall be irrevocable
and shall specify the proposed Borrowing Date and the principal amount of such
Swing Loan, which shall be not less than $100,000.

 

2.5                                 Making
Revolving Credit Loans and Swing Loans.

 

2.5.1. Generally.

 

The Agent shall, promptly after receipt by it
of a Loan Request pursuant to Section 2.4.1 [Revolving Credit Loan
Requests], but not later than 12:00 noon, Eastern time, notify the Lenders of
its receipt of such Loan Request specifying: 
(i) the proposed Borrowing Date and the time and method of
disbursement of the Revolving Credit Loans requested thereby; (ii) the
amount and type of each such Revolving Credit Loan and the applicable Interest
Period (if any); and (iii) the apportionment among the Lenders of such
Revolving Credit Loans as determined by the Agent in accordance with Section 2.2
[Nature of Lenders’ Obligations with Respect to Revolving Credit Loans].  Each Lender shall remit the principal amount
of each Revolving Credit Loan to the Agent such that the Agent is able to, and
the Agent shall, to the extent the Lenders have made funds available to it for
such purpose and subject to Section 6.2 [Each Additional Loan or Letter of
Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars and
immediately available funds at the Principal Office

 

27

 

prior to 2:30 p.m., Eastern time, on the applicable Borrowing
Date, provided that if any Lender fails to remit such funds to the Agent
in a timely manner, the Agent may elect in its sole discretion to fund with its
own funds the Revolving Credit Loans of such Lender on such Borrowing Date, and
such Lender shall be subject to the repayment obligation in Section 9.16
[Availability of Funds].

 

2.5.2.                     Making
Swing Loans.

 

Subject to the other provisions of this
Agreement, PNC Bank shall, after receipt by it of a Swing Loan Request pursuant
to Section 2.4.2 [Swing Loan Requests], fund such Swing Loan to the
Borrower in Dollars and immediately available funds at the Principal Office as
soon as reasonably practicable after receipt by PNC Bank of said Swing Loan
Request but in any event by the close of business on the same Business Day.

 

2.6                                 Swing
Loan Note.

 

The obligation of the Borrower to repay the
unpaid principal amount of the Swing Loans made to it by PNC Bank together with
interest thereon shall, if requested by PNC Bank, be evidenced by the Swing
Loan Note dated the Closing Date payable to the order of PNC Bank in a face
amount equal to the Swing Loan Commitment.

 

2.7                                 Use
of Proceeds.

 

The proceeds of the Revolving Credit Loans shall
be used to refinance existing indebtedness and provide for Letters of Credit
and provide working capital and funds for general corporate purpose for the
Borrower, Hovnanian and the Restricted Subsidiaries, all in accordance with Section 7.1.10
[Use of Proceeds].

 

2.8                                 Borrowings
to Repay Swing Loans.

 

PNC Bank may, at its option, and upon
consultation with the Borrower, exercisable at any time for any reason
whatsoever, demand that each Lender shall make a Revolving Credit Loan in an
amount equal to such Lender’s Ratable Share of the aggregate principal amount
of the outstanding Swing Loans made in accordance with Section 2.5.2
[Making Swing Loans], plus, if PNC Bank so requests, accrued interest thereon, provided
that no Lender shall be obligated in any event to make Revolving Credit Loans
in excess of its Revolving Credit Commitment minus its Ratable Share of Letters
of Credit Outstanding minus its Ratable Share of Swing Loans outstanding.  Revolving Credit Loans made pursuant to the
preceding sentence shall bear interest at the Base Rate Option and shall be
deemed to have been properly requested in accordance with Section 2.4.1
[Revolving Credit Loan Requests] without regard to any of the requirements of
that provision.  PNC Bank shall provide
notice to the Lenders (which may be telephonic or written notice by letter,
facsimile or telex) that such Revolving Credit Loans are to be made under this Section 2.8
and of the apportionment among the Lenders, and the Lenders shall be
unconditionally obligated to fund such Revolving Credit Loans (whether or not
the conditions specified in Section 2.4.1 [Revolving Credit Loan Requests]
or Section 6.2 [Each Additional Loan or Letter of Credit] are then
satisfied) by the

 

28

 

time PNC Bank so requests, which shall not be earlier than three o’clock
(3:00) p.m. Eastern time on the Business Day next after the date the
Lenders receive such notice from PNC Bank.

 

2.9                                 Letter
of Credit Subfacility.

 

2.9.1.                     Issuance
of Letters of Credit.

 

The Borrower may request the issuance of a
letter of credit (each a “Letter of Credit”) on behalf of itself or another
Loan Party by the Agent or any Lender which issues a Letter of Credit hereunder
(such Lender, with respect to the issuance of the Letter of Credit so requested
by the Borrower, being a “Letter of Credit Lender”) by delivering to the Agent
and the Letter of Credit Lender a completed application and agreement for
letters of credit in such form as the Letter of Credit Lender and the Agent may
specify from time to time by no later than 10:00 a.m., Eastern time, at
least three (3) Business Days, or such shorter period as may be agreed to
by the Letter of Credit Lender, in advance of the proposed date of
issuance.  Each letter of credit issued
by any Lender and described on Schedule 2.9.1 shall be deemed to be
a “Letter of Credit” hereunder as of the Closing Date. Subject to the terms and
conditions hereof and in reliance on the agreements of the other Lenders set
forth in this Section 2.9, the Letter of Credit Lender will issue a Letter
of Credit.  Each Letter of Credit shall
have a maximum stated maturity of no later than one (1) Business Day prior
to the Expiration Date.  For purposes of
this subsection, “stated maturity” is the expiration date of the Letter of
Credit without giving effect to any future extension thereof under an automatic
renewal provision, provided that such automatic renewal provision permits the
Letter of Credit Lender to elect not to extend by giving written notice of
cancellation to the beneficiary.  In no
event shall Letter of Credit Outstandings exceed, at any one time,
$500,000,000.

 

2.9.2.                     Letter
of Credit Fees.

 

The Borrower
shall pay (i) to the Agent for the ratable account of the Lenders a fee
(the “Letter of Credit Fee”) equal to the Applicable Letter of Credit Fee Rate
(computed on the daily average Letter of Credit Outstandings) and (ii) to
the Agent on behalf of each respective Letter of Credit Lender for its own
account a fronting fee for Letters of Credit issued by such Letter of Credit
Lender equal to .125% per annum 
(computed on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed) and shall be payable quarterly in arrears commencing
with the fifteenth (15) day of each calendar quarter following issuance of each
Letter of Credit and on the Expiration Date. 
The Borrower shall also pay to the Letter of Credit Lender for the
Letter of Credit Lender’s sole account the Letter of Credit Lender’s then in
effect customary fees and administrative expenses payable with respect to the
Letters of Credit as the Letter of Credit Lender may generally charge or incur
from time to time in connection with the issuance, maintenance, modification
(if any), assignment or transfer (if any), negotiation,
and administration of Letters of Credit.

 

2.9.3.                     Disbursements,
Reimbursement.

 

2.9.3.1               Immediately upon
the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to,

 

29

 

purchase from the Letter of Credit Lender a participation in such
Letter of Credit and each drawing thereunder in an amount equal to such Lender’s
Ratable Share of the maximum amount available to be drawn under such Letter of
Credit and the amount of such drawing, respectively.

 

2.9.3.2               In the event of any
request for a drawing on or before 11:00 a.m. under a Letter of Credit by
the beneficiary or transferee thereof, the Letter of Credit Lender shall
promptly notify the Agent upon such request. 
Provided that it shall have received such notice, the Agent will
promptly notify the Borrower and each Lender thereof, and the Borrower shall be
deemed to have requested that Revolving Credit Loans be made by the Lenders in
an amount equal to the amount so paid by the Letter of Credit Lender under the
Base Rate Option to be disbursed on the Drawing Date under such Letter of
Credit, subject to the amount of the unutilized portion of the Revolving Credit
Commitment and not subject to the conditions set forth in Section 6.2
[Each Additional Loan or Letter of Credit]. 
Any notice given by the Letter of Credit Lender or the Agent pursuant to
this Section 2.9.3.2 may be oral if immediately confirmed in writing;
provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.

 

2.9.3.3               Each Lender shall
upon any notice pursuant to Section 2.9.3.2 [Disbursements, Reimbursement]
make available to the Agent on behalf of the Letter of Credit Lender an amount
in immediately available funds equal to its Ratable Share of the amount of the
drawing, whereupon the participating Lenders shall (subject to Section 2.9.3.4
[Disbursements, Reimbursement]) each be deemed to have made a Revolving Credit
Loan under the Base Rate Option to the Borrower in that amount.  If any Lender so notified fails to make
available to the Agent for the account of the Agent on behalf of the Letter of
Credit Lender the amount of such Lender’s Ratable Share of such amount by no
later than two o’clock (2:00) p.m., Eastern time on the Drawing Date, then
interest shall accrue on such Lender’s obligation to make such payment from the
Drawing Date to the date on which such Lender makes such payment (i) at a
rate per annum equal to the Federal Funds Effective Rate during the first three
days following the Drawing Date and (ii) at a rate per annum equal to the
rate applicable to Loans under the Base Rate Option on and after the fourth day
following the Drawing Date.  The Agent
will promptly give notice of the occurrence of the Drawing Date, but failure of
the Agent to give any such notice on the Drawing Date or in sufficient time to
enable any Lender to effect such payment on such date shall not relieve such
Lender from its obligation under this Section 2.9.3.3.

 

2.9.3.4               With respect to any
unreimbursed drawing that is not converted into Revolving Credit Loans under
the Base Rate Option to the Borrower in whole or in part as contemplated by Section 2.9.3.2
[Disbursements, Reimbursement], the Borrower shall be deemed to have incurred
from the Agent a borrowing (each a “Letter of Credit Borrowing”) in the amount
of such drawing.  Such Letter of Credit
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at the rate per annum applicable to the Revolving Credit Loans
under the Base Rate Option.  Each Lender’s
payment to the Agent pursuant to Section 2.9.3.3 [Disbursements,
Reimbursement] shall be deemed to be a payment in respect of its participation
in such Letter of Credit Borrowing and shall constitute a “Participation
Advance” from such Lender in satisfaction of its participation obligation under
Section 2.9.3 [Disbursements, Reimbursement].

 

30

 

2.9.4.                     Repayment
of Participation Advances.

 

2.9.4.1               Upon (and only
upon) receipt by the Agent on behalf of the Letter of Credit Lender of
immediately available funds from the Borrower (i) in reimbursement of any
payment made by the on behalf of the Letter of Credit Lender under the Letter
of Credit with respect to which any Lender has made a Participation Advance to
the Agent on behalf of the Letter of Credit Lender or (ii) in payment of
interest on such a payment made by the Agent under such a Letter of Credit, the
Agent will pay to each Lender, in the same funds as those received by the
Agent, the amount of such Lender’s Ratable Share of such funds, except the
Agent shall retain the amount of the Ratable Share of such funds of any Lender
that did not make a Participation Advance in respect of such payment by
Agent.  If the Letter of Credit Lender
receives any such payment prior to 1:00 p.m. on a Business Day and does
not make payment to any such Lender which has made such a Participation Advance
on the same Business Day, then such Lender shall be entitled to receive such
Letter of Credit Lender interest at the Federal Funds Effective Rate for each
day until such payment is made to such Lender.

 

2.9.4.2               If the Agent or the
Letter of Credit Lender is required at any time to return to any Loan Party, or
to a trustee, receiver, liquidator, custodian, or any official in any
Insolvency Proceeding, any portion of the payments made by any Loan Party
pursuant to Section 2.9.4.1 [Repayment of Participation Advances] in
reimbursement of a payment made under the Letter of Credit or interest or fee
thereon, each Lender shall, on demand of the Agent on behalf of the Letter of
Credit Lender, forthwith return to the Agent the amount of its Ratable Share of
any amounts so returned by the Agent or such Letter of Credit Lender plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Lender to the Agent, at a rate per annum equal to the Federal
Funds Effective Rate in effect from time to time.

 

2.9.5.                     Documentation.

 

Each Loan Party agrees to be bound by the
terms of the Letter of Credit Lender’s application and agreement for letters of
credit and the Letter of Credit Lender’s written regulations and customary
practices relating to letters of credit, though such interpretation may be
different from such Loan Party’s own.  In
the event of a conflict between such application or agreement and this
Agreement, this Agreement shall govern. 
It is understood and agreed that, except in the case of gross negligence
or willful misconduct, the Letter of Credit Lender shall not be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following any Loan Party’s instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.

 

2.9.6.                     Determinations
to Honor Drawing Requests.

 

In determining whether to honor any request
for drawing under any Letter of Credit by the beneficiary thereof, the Letter
of Credit Lender shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit.

 

31

 

2.9.7.                     Nature
of Participation and Reimbursement Obligations.

 

Each Lender’s obligation in accordance with
this Agreement to make the Revolving Credit Loans or Participation Advances, as
contemplated by Section 2.9.3 [Disbursements, Reimbursement], as a result
of a drawing under a Letter of Credit, and the obligations of the Borrower to
reimburse the Agent upon a draw under a Letter of Credit, shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Section 2.9 [Letter of Credit Subfacility] under
all circumstances, including the following circumstances:

 

(i)                                     any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against the Agent, any Loan Party or any other Person for any reason
whatsoever;

 

(ii)                                  the
failure of any Loan Party or any other Person to comply, in connection with a
Letter of Credit Borrowing, with the conditions set forth in Section 2.1
[Revolving Credit Commitments], 2.4 [Revolving Credit Loan Requests; Swing Loan
Requests], 2.4.2 [Swing Loan Requests] or 6.2 [Each Additional Loan or Letter
of Credit], if applicable, or as otherwise set forth in this Agreement for the
making of a Revolving Credit Loan, it being acknowledged that such conditions
are not required for the making of a Letter of Credit Borrowing and the
obligation of the Lenders to make Participation Advances under Section 2.9.3
[Disbursements, Reimbursement];

 

(iii)                               any
lack of validity or enforceability of any Letter of Credit;

 

(iv)                              the
existence of any claim, set-off, defense or other right which any Loan Party or
any Lender may have at any time against a beneficiary or any transferee of any
Letter of Credit (or any Persons for whom any such transferee may be acting),
the Agent, the Letter of Credit Lender or any Lender or any other Person or,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction (including any underlying transaction between any
Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any
Letter of Credit was procured);

 

(v)                                 any
draft, demand, certificate or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect even if the
Letter of Credit Lender has been notified thereof;

 

(vi)                              payment
by the Letter of Credit Lender under any Letter of Credit against presentation
of a demand, draft or certificate or other document which does not comply with
the terms of such Letter of Credit;

 

(vii)                           any
adverse change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of any Loan Party or Subsidiaries of a
Loan Party;

 

32

 

(viii)                        any breach
of this Agreement or any other Loan Document by any party thereto;

 

(ix)                                the
occurrence or continuance of an Insolvency Proceeding with respect to any Loan
Party;

 

(x)                                   the
fact that an Event of Default or a Potential Default shall have occurred and be
continuing;

 

(xi)                                the
fact that the Expiration Date shall have passed or this Agreement or the
Commitments hereunder shall have been terminated; and

 

(xii)                             any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing.

 

2.9.8.                     Indemnity.

 

In addition to amounts payable as provided in
Section 9.5 [Reimbursement and Indemnification of Agent by the Borrower], the Borrower hereby agrees to protect,
indemnify, pay and save harmless the Agent and any Letter of Credit Lender from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable fees, expenses and disbursements of
counsel and allocated costs of internal counsel) which the Agent or any Letter
of Credit Lender may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Letter of Credit, other than as a result of (A) the
gross negligence or willful misconduct of the Agent or any Letter of Credit
Lender as determined by a final judgment of a court of competent jurisdiction
or (B) the wrongful dishonor by the Letter of Credit Lender of a proper
demand for payment made under any Letter of Credit, except if such dishonor
resulted from any act or omission, whether rightful or wrongful, of any present
or future de jure or de facto government or governmental authority (all such
acts or omissions herein called “Governmental Acts”).

 

2.9.9.                     Liability
for Acts and Omissions.

 

As between any Loan Party and the Agent or
any Letter of Credit Lender, such Loan Party assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. 
In furtherance and not in limitation of the foregoing, neither the Agent
nor any Letter of Credit Lender shall be responsible for:  (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for an issuance of any such Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (even if the Agent or any Letter
of Credit Lender shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the
beneficiary of any such Letter of Credit, or any other party to which such
Letter of Credit may be transferred, to comply fully with any conditions
required in order to draw upon such Letter of Credit or any other claim of any
Loan Party against any beneficiary of

 

33

 

such Letter of Credit, or any such transferee, or any dispute between
or among any Loan Party and any beneficiary of any Letter of Credit or any such
transferee; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in interpretation
of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by
the beneficiary of any such Letter of Credit of the proceeds of any drawing
under such Letter of Credit; or (viii) any consequences arising from
causes beyond the control of the Agent or Letter of Credit Lender, including
any Governmental Acts, and none of the above shall affect or impair, or prevent
the vesting of, any of the Agent’s or any Letter of Credit Lender’s rights or
powers hereunder.  Nothing in the
preceding sentence shall relieve the Agent or any Letter of Credit Lender from
liability for the Agent’s or any Letter of Credit Lender’s gross negligence or
willful misconduct in connection with actions or omissions described in such
clauses (i) through (viii) of such sentence.

 

In furtherance and extension and not in
limitation of the specific provisions set forth above, any action taken or
omitted by the Agent or any Letter of Credit Lender under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put the Agent or any
Letter of Credit Lender under any resulting liability to any Loan Party or any
Lender.

 

2.9.10.               Sharing Letter of Credit
Documentation.

 

Each Letter of Credit Lender shall furnish to
the Agent copies of any letter of credit application and related documentation
to which such Letter of Credit Lender and a Loan Party are parties and promptly
after issuance, a copy of any Letter of Credit or amendment to any Letter of
Credit issued by such Lender.

 

2.10                           Extension
by Lenders of the Expiration Date.

 

2.10.1.               Requests; Approval by All Lenders.

 

After delivery
by the Borrower of the annual financial statements to be provided under Section 7.3.2
[Annual Financial Statements] for the fiscal year ending October 31, 2005
or any subsequent fiscal year, the Borrower may request either a one-year or
two-year extension (provided that any such extension may not cause the
remaining term of this Agreement to exceed 4 years) of the Expiration Date, by
written notice to the Lenders made by May 30 of the year in which such
financial statements are due, and the Lenders agree to respond to the Borrower’s
request for an extension no later than thirty (30) days following receipt of
the request; provided, however, that the failure of any Lender to
respond within such time period shall not in any manner constitute an agreement
by such Lender to extend the Expiration Date. 
If all Lenders elect to extend, the Expiration Date shall be extended
for a period of one year or two years, as requested by the Borrower.  If one or more Lenders decline to extend or
do not respond to Borrower’s request, the provisions of Section 2.10.2
[Approval by 80% Lenders] shall apply.

 

34

 

2.10.2.               Approval by 80% Lenders.

 

In the event that one or more Lenders do not
agree to extend the Expiration Date or do not respond to Borrower’s request for
an extension within the time required under Section 2.10.1 [Requests;
Approval by All Lenders] (each a “Non-approving Lender”), but 80% of the
Lenders (measured by their Ratable Shares and not per capita) agree to such
extension within such time (each such agreeing Lender being an “Extending
Lender”), then the Borrower may, at the Borrower’s option, on or before July 31
of the year in which the Borrower made its request for an extension, notify the
Agent and the Lenders that the Borrower intends to employ one or more of the
following three (3) options:  (i) cause
the Commitment of each Non-approving Lender to be terminated (after which time
such Non-approving Lender shall cease to be a “Lender” hereunder) and cause the
aggregate Commitments to be reduced by the amount of such terminated
Commitments, or (ii) require the Non-approving Lenders to sell, and allow
(upon prior notice to the Agent) the Extending Lenders which have agreed to
such extension within the time required under Section 2.10.1 [Requests;
Approval by All Lenders] or any financial institution approved by the Agent and
(absent an Event of Default) the Borrower (each such Person referred to in this
clause (ii) being an “Assignee Lender”) to purchase all of the outstanding
Loans if any, of the Non-approving Lenders and succeed to and assume the
Commitments and all other rights, interests and obligations of the
Non-approving Lenders under this Agreement and the other Loan Documents, or (iii) require
the Non-approving Lender to remain a Lender and require it to maintain its
Commitment and retain for such Non-approving Lender’s Commitment the “Expiration
Date” established prior to the extension referred to in this Section 2.10.2,
all subject to the other provisions of this Agreement.  Any such purchase and assumption pursuant to
clause (ii) above shall be (1) pursuant to an Assignment and
Assumption Agreement and (2) subject to and in accordance with Section 10.11
[Successors and Assigns].  The Borrower
shall pay all amounts due and payable to the Non-approving Lender on the
effective date of such Assignment and Assumption Agreement.  In the event that the Agent shall become a
Non-approving Lender, the provisions of this Section 2.10 [Extension by
Lenders of the Expiration Date] shall be subject to Section 9.14
[Successor Agent].  In the event that the
Borrower has selected the option described in clause (ii) above and if the
Loans and Commitments of a Non-approving Lender are, nevertheless, not fully
assigned and assumed pursuant to this Section 2.10.2, or terminated or
retained pursuant to clause (i) or clause (iii) above, as applicable,
on or before August 31 of the year in which the Borrower made its request
for an extension, then the Expiration Date shall not be extended for any
Lender.  Nothing in this Section 2.10.2
shall expand the options provided in Section 4.4.2 [Replacement of a
Lender].

 

2.11                           Designation
of Subsidiaries and Release of Guarantors.

 

2.11.1.               Release of Guarantors.

 

At any time when the Borrower
wishes to cause the Lenders to release a Guarantor from its obligations under
the Guaranty Agreement (whether directly or in connection with the designation
of a Restricted Subsidiary as a Non-Restricted Person), the consent of the
Lenders shall be required as described below and shall be subject to the other
provisions of this Section 2.11.

 

35

 

(a)                                  For the release of (i) any
Guarantor whose assets are principally comprised of residential or commercial
property which is leased or held for the purposes of leasing to unaffiliated
third parties or (ii) any Guarantor in which any Loan Party (or Loan
Parties in the aggregate) has, at the time of such release, a Subsidiary
Investment less than $1,000,000, (iii) Corporate Office Subsidiary
incident to it becoming a Non-Restricted Person, or (iv) any Guarantor at
the time that such Guarantor enters into a newly-formed Joint Venture with a
person which is not an Affiliate of the Loan Parties and transfers all or a
substantial portion of its assets
to such Joint Venture provided that such Guarantor is a Non-Restricted Person
(or simultaneously with the Borrower’s request for such release the Borrower
has designated such Guarantor as a “Non-Restricted Person” in compliance with Section 2.11.2),
no consent of the Lenders shall be required and such request of the Borrower
shall be granted absent an Event of Default or Potential Default, effective on
the date specified by the Borrower which shall not be earlier than five (5) Business
Days after the receipt by the Agent of such request;

 

(b)                                 For the release of any
Guarantor (not described in item (a)(i) hereof) in which any Loan Party
(or Loan Parties in the aggregate) has, at the time of such release,  a Subsidiary Investment greater than or equal
to $1,000,000 and less than $5,000,000 (except Corporate Office Subsidiary, if
otherwise applicable), the consent of Required Lenders shall be required;

 

(c)                                  For the release of
Hovnanian or any Guarantor (not described in item (a)(i) hereof) in which
any Loan Party (or Loan Parties in the aggregate) has, at the time of such
release, a Subsidiary Investment greater than or equal to $5,000,000 (except
Corporate Office Subsidiary, if otherwise applicable), the consent of 100% of
the Lenders shall be required; and

 

(d)                                 The designation of a
Person as a Non-Restricted Person for any reason shall not itself constitute a
release of any Guarantor and any such release of such Person from its Guaranty
shall be in accordance with this Section 2.11.

 

2.11.2.               Designation of Non-Restricted Person.

 

The Borrower may, by written
notice delivered to the Agent, designate as a Non-Restricted Person a
Subsidiary formerly designated a Restricted Subsidiary or a newly formed or
acquired Subsidiary, subject to:  (i) the
provisions of subsection 2.11.1 hereof in relation to Guaranties, (ii) the
requirements of Section 7 [Covenants] and in particular Section 7.2.10
[Borrowing Base] (provided that the requirements of such Section 7.2.10
shall apply only if the Investment Grade Period is not in effect); and (iii) the
requirement that such designation not cause an Event of Default or Potential
Default.  Such designation shall be
effective on the date specified by the Borrower which shall not be earlier than
five (5) Business Days after the receipt by the Agent of such notice.

 

2.11.3.               Automatic Designation of
Non-Restricted Person.

 

Upon the occurrence of any
event described in Section 8.1.10 [Insolvency], Section 8.1.14
[Involuntary Proceedings], Section 8.1.15 [Voluntary Proceedings], or the
winding-up or termination of business, with respect to any Restricted
Subsidiary, such

 

36

 

Subsidiary shall automatically become a Non-Restricted Person.  Such designation as a Non-Restricted Person
shall, with respect such Person’s obligations under the Guaranty Agreement, if
any, be subject to the requirements of Section 2.11.1 [Release of
Guarantors] and such Subsidiary shall continue to be a Guarantor until such
time as it is released from the Guaranty Agreement pursuant to such
Section.  The release of any Subsidiary
which is a Guarantor from its obligations under the Guaranty Agreement pursuant
to Section 2.11.1 [Release of Guarantors] shall automatically cause such
Subsidiary to be a Non-Restricted Person.

 

2.11.4.               Designation of Restricted Subsidiary.

 

The Borrower may by written
notice delivered to the Agent designate as a Restricted Subsidiary a Subsidiary
formerly designated a Non-Restricted Person or a newly formed or acquired
Subsidiary.  Such designation is subject
to (i) compliance with Section 10.18 [Joinder of Guarantors]; (ii) the
requirements of Section 7 [Covenants] and in particular Section 7.2.10
[Borrowing Base] (provided that the requirements of such Section 7.2.10
shall apply only if the Investment Grade Period is not in effect); and (iii) the
requirement that such designation not cause an Event of Default or Potential
Default. Such designation shall be effective on the date specified by the
Borrower which shall not be earlier than five (5) Business Days after the
receipt by the Agent of such notice.

 

2.12                           Increase
in Commitments.

 

2.12.1                  Increasing
Lenders and New Lenders.

 

The Borrower may, at any time prior to the
second anniversary of the Closing Date, request that (1) the current Lenders
(the “Existing Lenders”) increase their Revolving Credit Commitments (any
Existing Lender which elects to increase its Revolving Credit Commitment shall
be referred to as an “Increasing Lender”) or (2) one or more new banks
(each a “New Lender”) join this Agreement and provide a Revolving Credit
Commitment hereunder, subject to the following terms and conditions:

 

(i)                                     No
Obligation to Increase.  No Existing
Lender shall be obligated to increase its Revolving Credit Commitment and any
increase in the Revolving Credit Commitment by any Existing Lender shall be in
the sole discretion of such Existing Lender.

 

(ii)                                  Defaults.  There shall exist no Events of Default or
Potential Default on the effective date of such increase (the “Revolving Credit
Commitment Increase Date”) after giving effect to such increase.

 

(iii)                               Aggregate
Revolving Credit Commitments.  After
giving effect to such increase, the total Revolving Credit Commitments shall
not exceed $1,300,000,000.

 

(iv)                              Minimum
Revolving Credit Commitments.  After
giving effect to such increase, the amount of the Revolving Credit Commitments
provided by each of the New Lenders and each of the Increasing Lenders shall be
at least $20,000,000; and

 

37

 

(v)                                 Resolutions;
Opinion.  The Loan Parties shall
deliver to the Agent on or before the Revolving Credit Commitment Increase Date
the following documents in a form reasonably acceptable to the Agent: (1) certifications
of their corporate secretaries with attached resolutions certifying that the
increase in the Revolving Credit Commitment has been approved by such Loan
Parties, and (2) an opinion of counsel addressed to the Agent and the
Lenders addressing the authorization and execution of the Loan Documents by,
and enforceability of the Loan Documents against, the Loan Parties.

 

(vi)                              Notes.  The Borrower shall execute and deliver (1) to
each Increasing Lender a replacement Note (except if such Increasing Lender
requests that it not receive a Note) reflecting the new amount of such
Increasing Lender’s Revolving Credit Commitment after giving effect to the
increase (and the prior Note issued to such Increasing Lender shall be deemed
to be terminated) and (2) to each New Lender a Note (except if such New
Lender requests that it not receive a Note) reflecting the amount of such New
Lenders’ Revolving Credit Commitment.

 

(vii)                           Approval.  The Agent shall have approved of such
increase (such approval not to be unreasonably withheld) and the Increasing
Lender or New Lender, as the case may be, that is providing such increase.

 

(viii)                        Increasing
Lenders.  If any portion of the
increase in Revolving Credit Commitments is being provided by one or more
Increasing Lenders, then such Increasing Lenders shall confirm their agreement
to increase their Revolving Credit Commitment pursuant to a Revolving Credit
Commitment Increase Agreement in substantially the form of Exhibit 2.12.1-1
attached hereto signed by them and the Loan Parties and delivered to the Agent
at least five (5) Business Days before the Revolving Credit Commitment
Increase Date.

 

(ix)                                New Lenders—Joinder.  If the Borrower desires that one or more New
Lenders provide all or a portion of such increase in Revolving Credit
Commitments, then each New Lender, the Loan Parties and the Agent shall execute
a Lender Joinder and Assumption Agreement in substantially the form of Exhibit 2.12.1-2
hereto, pursuant to which the New Lender shall join and become a party to this
Agreement and the other Credit Documents effective on the Revolving Credit
Commitment Increase Date with a Revolving Credit Commitment in the amount set
forth in Schedule I to such Lender Joinder and Assumption Agreement.

 

2.12.2                  Treatment
of Outstanding Loans and Letters of Credit.

 

2.12.2.1                                                         Repayment
of Outstanding Loans; Borrowing of New Loans.

 

On the Revolving Credit Commitment Increase
Date, the Borrower shall repay all Loans outstanding on the Revolving Credit
Commitment Increase Date, subject to the Borrower’s indemnity obligations under
Section 4.6.2 [Indemnity] provided that it may borrow new Loans with a
Borrowing Date on the Revolving Credit Commitment Increase Date. Each of the
Lenders shall participate in any new Loans made on or after the Revolving

 

38

 

Credit Commitment Increase Date in accordance with their respective
Ratable Shares after giving effect to the increase in Revolving Credit
Commitments contemplated by this Section 2.12.

 

2.12.2.2                                                         Outstanding
Letters of Credit.

 

On the Commitment Increase Date, each
Increasing Lender and each New Lender (a) will be deemed to have purchased
a participation in each then outstanding Letter of Credit equal to its Ratable
Share of each such Letter of Credit and the participation of each other Lender
in each such Letter of Credit shall be adjusted accordingly and (b) will
acquire, (and will pay to the Agent, for the account of each Lender, in
immediately available funds, an amount equal to) its Ratable Share of all
outstanding Participation Advances.

 

3.                                       INTEREST
RATES

 

3.1                                 Interest
Rate Options.

 

The Borrower shall pay interest in respect of
the outstanding unpaid principal amount of the Loans as selected by it from the
Base Rate Option or LIBO-Rate Option set forth below applicable to the Loans,
it being understood that, subject to the provisions of this Agreement, the
Borrower may select different Interest Rate Options and different Interest
Periods to apply simultaneously to the Loans comprising different Borrowing
Tranches and may convert to or renew one or more Interest Rate Options with
respect to all or any portion of the Loans comprising any Borrowing Tranche, provided
that there shall not be at any one time outstanding more than ten (10) Borrowing
Tranches in the aggregate among all of the Loans, and provided further
that only the Base Rate Option shall apply to the Swing Loans.  If at any time the designated rate applicable
to any Loan made by any Lender exceeds such Lender’s highest lawful rate, the
rate of interest on such Lender’s Loan shall be limited to such Lender’s
highest lawful rate.

 

3.1.1.                     Revolving
Credit Interest Rate Options.

 

The Borrower shall have the right to select
from the following Interest Rate Options applicable to the Revolving Credit
Loans (subject to the provisions above regarding Swing Loans):

 

(i)                                     Revolving
Credit Base Rate Option:  A
fluctuating rate per annum (computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed) equal to the Base Rate plus the
Applicable Margin, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Base Rate; or

 

(ii)                                  Revolving
Credit LIBO-Rate Option:  A rate per
annum (computed on the basis of a year of 360 days and actual days elapsed)
equal to the LIBO-Rate plus the Applicable Margin.

 

39

 

3.1.2.                     Rate
Quotations.

 

The Borrower may call the Agent on or before
the date on which a Loan Request is to be delivered to receive an indication of
the rates then in effect, but it is acknowledged that such projection shall not
be binding on the Agent or the Lenders nor affect the rate of interest which
thereafter is actually in effect when the election is made.

 

3.2                                 Interest
Periods.

 

At any time when the Borrower shall select,
convert to or renew a LIBO-Rate Option, the Borrower shall notify the Agent
thereof at least three (3) Business Days prior to the effective date of
such LIBO-Rate Option by delivering a Loan Request.  The notice shall specify an Interest Period
during which such Interest Rate Option shall apply.  Notwithstanding the preceding sentence, in
the case of the renewal of a LIBO-Rate Option at the end of an Interest Period,
the first day of the new Interest Period shall be the last day of the preceding
Interest Period, without duplication in payment of interest for such day.

 

3.3                                 Interest
After Default.

 

3.3.1.                     Default
Rate.

 

To the extent permitted by Law, upon the
occurrence of an Event of Default under Section 8.1.1 [Payment Under Loan
Documents], Section 8.1.10 [Insolvency], Section 8.1.14 [Involuntary
Proceedings], Section 8.1.15 [Voluntary Proceedings] or the Obligations
are accelerated under this Agreement and until such time such Event of Default
shall have been cured or waived, all past due principal and all past due
accrued interest thereon and fees and expenses and each other past due
Obligation payable hereunder shall bear interest at a rate per annum equal to
the sum of the rate of interest applicable under the Base Rate Option plus an
additional 3.0% per annum from the time such Obligation becomes due and payable
and until it is paid in full (the “Default Rate”).

 

3.3.2.                     Acknowledgment.

 

The Borrower acknowledges that the increase
in rate referred to in Section 3.3.1 [Default Rate] reflects, among other
things, the fact that such Loans or other amounts have become a substantially
greater risk given their default status and that the Lenders are entitled to
additional compensation for such risk; and all such interest shall be payable
by Borrower upon demand by Agent.

 

3.4                                 LIBO-Rate
Unascertainable; Illegality; Increased Costs; Deposits Not Available.

 

3.4.1.                     Unascertainable.

 

If on any date on which a LIBO-Rate would
otherwise be determined, the Agent shall have determined that:

 

(i)                                     adequate
and reasonable means do not exist for ascertaining such LIBO-Rate, or

 

40

 

(ii)                                  a
contingency has occurred which materially and adversely affects the London
interbank eurodollar market relating to the LIBO-Rate, the Agent shall have the
rights specified in Section 3.4.3 [Agent’s and Lender’s Rights].

 

3.4.2.                     Illegality;
Increased Costs; Deposits Not Available.

 

If at any time any Lender shall have
determined that:

 

(i)                                     the
making, maintenance or funding of any Loan to which a LIBO-Rate Option applies
has been made impracticable or unlawful by compliance by such Lender in good
faith with any Law or any interpretation or application thereof by any Official
Body or with any request or directive of any such Official Body (whether or not
having the force of Law), or

 

(ii)                                  such
LIBO-Rate Option will not adequately and fairly reflect the cost to such Lender
of the establishment or maintenance of any such Loan, or

 

(iii)                               after
making all reasonable efforts, deposits of the relevant amount in Dollars for
the relevant Interest Period for a Loan, or to banks generally, to which a
LIBO-Rate Option applies, respectively, are not available to such Lender with
respect to such Loan, or to banks generally, in the interbank eurodollar market,

 

then the Agent
and such Lender shall have the rights specified in Section 3.4.3 [Agent’s
and Lender’s Rights].

 

3.4.3.                     Agent’s
and Lender’s Rights.

 

In the case of any event specified in Section 3.4.1
[Unascertainable] above, the Agent shall promptly so notify the Lenders and the
Borrower thereof, and in the case of an event specified in Section 3.4.2
[Illegality; Increased Costs; Deposits Not Available] above, such Lender shall
promptly so notify the Agent and endorse a certificate to such notice as to the
specific circumstances of such notice, and the Agent shall promptly send copies
of such notice and certificate to the other Lenders and the Borrower.  Upon such date as shall be specified in such
notice (which shall not be earlier than the date such notice is given), the
obligation of (A) the Lenders, in the case of such notice given by the
Agent, or (B) such Lender, in the case of such notice given by such
Lender, to allow the Borrower to select, convert to or renew a LIBO-Rate Option
shall be suspended until the Agent shall have later notified the Borrower, or
such Lender shall have later notified the Agent, of the Agent’s or such Lender’s,
as the case may be, determination that the circumstances giving rise to such
previous determination no longer exist. 
If at any time the Agent makes a determination under Section 3.4.1
[Unascertainable] and the Borrower has previously notified the Agent of its
selection of, conversion to or renewal of a LIBO-Rate Option and such Interest
Rate Option has not yet gone into effect, such notification shall be deemed to
provide for selection of, conversion to or renewal of the Base Rate Option
otherwise available with respect to such Loans. 
If any Lender notifies the Agent of a determination under Section 3.4.2
[Illegality; Increased Costs; Deposits Not Available], the Borrower shall,
subject to the Borrower’s indemnification Obligations under Section 4.6.2
[Indemnity], as to any Loan of the Lender to which a LIBO-Rate

 

41

 

Option applies, on the date specified in such notice either convert
such Loan to the Base Rate Option otherwise available with respect to such Loan
or prepay such Loan in accordance with Section 4.4 [Voluntary
Prepayments].  Absent due notice from the
Borrower of conversion or prepayment, such Loan shall automatically be
converted to the Base Rate Option otherwise available with respect to such Loan
upon such specified date.

 

3.5                                 Selection
of Interest Rate Options.

 

If the Borrower fails to select a new Interest
Period to apply to any Borrowing Tranche of Loans under the LIBO-Rate Option at
the expiration of an existing Interest Period applicable to such Borrowing
Tranche in accordance with the provisions of Section 3.2 [Interest
Periods], the Borrower shall be deemed to have converted such Borrowing Tranche
to the Base Rate Option, commencing upon the last day of the existing Interest
Period.

 

4.                                       PAYMENTS

 

4.1                                 Payments.

 

All payments and prepayments to be made in
respect of principal, interest, Commitment Fees, Letter of Credit Fees, Agent’s
Fees or other fees or amounts due from the Borrower hereunder shall be payable
prior to eleven o’clock (11:00) a.m., Eastern time, on the date when due
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by the Borrower, and without set-off, counterclaim or
other deduction of any nature, and an action therefor shall immediately
accrue.  Such payments shall be made to
the Agent at the Principal Office for the account of PNC Bank with respect to
the Swing Loans and for the ratable accounts of the Lenders with respect to the
Revolving Credit Loans in Dollars and in immediately available funds, and the
Agent shall promptly distribute such amounts to the Lenders in immediately available
funds, provided that in the event payments are received by eleven o’clock
(11:00) a.m., Eastern time, by the Agent with respect to the Loans and
such payments are not distributed to the Lenders on the same day received by
the Agent, the Agent shall pay the Lenders the Federal Funds Effective Rate
with respect to the amount of such payments for each day held by the Agent and
not distributed to the Lenders.  The
Agent’s and each Lender’s statement of account, ledger or other relevant record
shall, in the absence of manifest error, be conclusive as the statement of the
amount of principal of and interest on the Loans and other amounts owing under
this Agreement and shall be deemed an “account stated.”

 

4.2                                 Pro
Rata Treatment of Lenders.

 

Each borrowing shall be allocated to each
Lender according to its Ratable Share, and each selection of, conversion to or
renewal of any Interest Rate Option and each payment or prepayment by the
Borrower with respect to principal, interest, Commitment Fees, Letter of Credit
Fees, or other fees (except for the Agent’s Fees) or amounts due from the
Borrower hereunder to the Lenders with respect to the Loans, shall (except as
provided in Section 3.4.3 [Agent’s and Lender’s Rights] in the case of an
event specified in Sections 3.4 [LIBO-Rate Unascertainable; Illegality,
Increased Costs, Deposits Not Available], 4.4.2 [Replacement of a Lender] or
4.6 [Additional Compensation in Certain Circumstances]) be made in proportion
to the applicable Loans outstanding from each Lender and, if no such Loans are
then outstanding,

 

42

 

in proportion to the Ratable Share of each Lender.  Notwithstanding any of the foregoing, each
borrowing or payment or prepayment by the Borrower of principal, interest, fees
or other amounts from the Borrower with respect to Swing Loans shall be made by
or to PNC Bank according to Section 2 [Revolving Credit and Swing Loan
Facilities].

 

4.3                                 Interest
Payment Dates.

 

Interest on Loans to which the Base Rate
Option applies shall be due and payable in arrears on the first Business Day of
each calendar month after the date hereof and on the Expiration Date or upon
acceleration of the Loan.  Interest on
Loans to which the LIBO-Rate Option applies shall be due and payable on the
last day of each Interest Period for those Loans and, if such Interest Period
is longer than three (3) Months, also on the 90th day of such Interest
Period.  Interest on mandatory
prepayments of principal under Section 4.5 [Mandatory Payments] shall be
due on the date such mandatory prepayment is due.  Interest on the principal amount of each Loan
or other monetary Obligation shall be due and payable on demand after such
principal amount or other monetary Obligation becomes due and payable (whether on
the stated maturity date, upon acceleration or otherwise).

 

4.4                                 Voluntary
Prepayments.

 

4.4.1.                     Right
to Prepay.

 

The Borrower shall have the right at its
option at any time and from time to time to prepay the Loans in whole or part
without premium or penalty (except as provided in Section 4.4.2
[Replacement of a Lender] below or in Section 4.6 [Additional Compensation
in Certain Circumstances]).

 

Whenever the Borrower desires to prepay any
part of the Loans, it shall provide a prepayment notice to the Agent no later
than (A) 11:00 a.m., Eastern time, at least two (2) Business
Days prior to the date of prepayment of the Revolving Credit Loans to which the
LIBO-Rate Option applies, (B) 11:00 a.m., Eastern time, on the date
of prepayment of Revolving Credit Loans to which the Base Rate Option applies
or (C) 2:00 p.m., Eastern time, on the date of prepayment of Swing
Loans, setting forth the following information:

 

(x)                                   the date, which
shall be a Business Day, on which the proposed prepayment is to be made;

 

(y)                                 a statement indicating
the application of the prepayment between the Swing Loans and the Revolving
Credit Loans; and

 

(z)                                   the total principal
amount of such prepayment, which shall not be less than (i) $100,000 and
in increments of $100,000 for any Swing Loans, (ii) $500,000 and in
increments of $100,000 for any Revolving Credit Loan to which the Base Rate
Option applies or (iii) $2,500,000 and in increments of $500,000 for any
Revolving Credit Loan to which the LIBO-Rate Option applies.

 

43

 

All prepayment notices shall be
irrevocable.  The principal amount of the
Loans for which a prepayment notice is given, together with interest on such
principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be made.  Except as provided in Section 3.4.3
[Agent’s and Lender’s Rights], if the Borrower prepays a Loan but fails to
specify the applicable Borrowing Tranche which the Borrower is prepaying, the
prepayment shall be applied first to Swing Loans, then to Loans to which the
Base Rate Option applies, and then to Loans to which the LIBO-Rate Option
applies.  Any prepayment hereunder shall
be subject to the Borrower’s Obligation to indemnify the Lenders under Section 4.6.2
[Indemnity].

 

4.4.2.                     Replacement
of a Lender.

 

In the event any Lender (i) gives notice
under Section 3.4 [LIBO-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available] or Section 4.6.1 [Increased Costs or Reduced
Return Resulting from Taxes, Reserves, Capital Adequacy Requirements, Expenses,
Etc.], (ii) does not fund Revolving Credit Loans because the making of
such Loans would contravene any Law applicable to such Lender, or (iii) becomes
subject to the control of an Official Body (other than normal and customary
supervision), then the Borrower shall have the right at its option, with the
consent of the Agent, which shall not be unreasonably withheld, to prepay the
Loans of such Lender in whole, together with all interest accrued thereon and
all other Obligations owing to such Lender, and terminate such Lender’s
Commitment within ninety (90) days after (x) receipt of such Lender’s
notice under Section 3.4 [LIBO-Rate Unascertainable; Illegality; Increased
Costs; Deposits Not Available] or 4.6.1 [Increased Costs or Reduced Return
Resulting from Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc.],
(y) the date such Lender has failed to fund Revolving Credit Loans because
the making of such Loans would contravene Law applicable to such Lender, or
(z) the date such Lender became subject to the control of an Official
Body, as applicable; provided that the Borrower shall also pay to such
Lender at the time of such prepayment any amounts required under Section 4.6
[Additional Compensation in Certain Circumstances] and any accrued interest due
on such amount and any related fees; provided, further, the remaining
Lenders shall have no obligation hereunder to increase their Commitments.  Notwithstanding the foregoing, the Agent may
only be replaced subject to the requirements of Section 9.14 [Successor
Agent].

 

4.4.3.                     Change
of Lending Office.

 

Each Lender agrees that upon the occurrence
of any event giving rise to increased costs or other special payments under Section 3.4.2
[Illegality; Increased Costs; Deposits Not Available] or 4.6.1 [Increased Costs
or Reduced Return Resulting from Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc.] with respect to such Lender, it will if requested
by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any
Loans or Letters of Credit affected by such event, provided that such
designation is made on such terms that such Lender and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section.  Nothing in this Section 4.4.3
[Change of Lending Office] shall affect or postpone any of the

 

44

 

Obligations of the Borrower or any other Loan Party or the rights of
the Agent or any Lender provided in this Agreement.

 

4.5                                 Mandatory
Payments.

 

The Borrower shall make mandatory payments of
principal (together with accrued interest thereon) to the Agent to the extent
by which Revolving Facility Usage exceeds at any time the Commitments (as they
may be reduced pursuant to Section 2.1. [Voluntary Reduction of
Commitment], Section 2.10.2 [Approval by 80% Lenders] or otherwise) within
three (3) Business Days after such excess is calculated.

 

4.6                                 Additional
Compensation in Certain Circumstances.

 

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

 

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

 

(i)                                     subjects
any Lender to any tax or changes the basis of taxation (including in both cases
withholding taxes) with respect to this Agreement, the Notes, the Loans or
payments by the Borrower of principal, interest, Commitment Fees, or other
amounts due from the Borrower hereunder (except for taxes on the overall net
income of such Lender, franchise taxes, any branch profits taxes, any U.S.
withholding taxes imposed on a foreign Lender at the time such Lender becomes a
party to this Agreement, and any taxes attributable to a failure of such Lender
to comply with the requirements of Section 10.17.1 of this Agreement),

 

(ii)                                  imposes,
modifies or deems applicable any reserve, special deposit or similar
requirement against credits or commitments to extend credit extended by, or
assets (funded or contingent) of, deposits with or for the account of, or other
acquisitions of funds by, any Lender, or

 

(iii)                               imposes,
modifies or deems applicable any capital adequacy or similar requirement (A) against
assets (funded or contingent) of, or letters of credit, other credits or
commitments to extend credit extended by, any Lender, or (B) otherwise
applicable to the obligations of any Lender under this Agreement,

 

and the result of any of the foregoing is to
increase the cost to, reduce the income receivable by, or impose any expense
upon any Lender with respect to this Agreement, or the making, maintenance or
funding of any part of the Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Lender’s capital, taking into consideration such Lender’s customary policies
with respect to capital adequacy) by an amount which such Lender in its sole
discretion deems to be material, such Lender shall from time to time notify the
Borrower and the Agent of the amount determined in good faith (using

 

45

 

any averaging and attribution methods
employed in good faith) by such Lender to be necessary to compensate such
Lender for such increase in cost, reduction of income, additional expense or
reduced rate of return.  Such notice
shall set forth in reasonable detail the basis for such determination, provided
however, that any such determination shall be conclusive and binding absent
manifest error.  Such amount shall be due
and payable by the Borrower to such Lender ten (10) Business Days after
such notice is given.

 

If any Lender receives a refund in respect of
any amounts paid by the Borrower pursuant to this Section 4.6.1, which
refund in the good faith judgment of such Lender is allocable to such payment,
it shall notify the Borrower of such refund and repay such refund to the
Borrower net of all out-of-pocket expenses of such Lender; provided, however,
that the Borrower, upon the request of such Lender, agrees to repay the amount
paid over to the Borrower to such Lender in the event such Lender is required
to repay such refund.

 

4.6.2.                     Indemnity.

 

In addition to the compensation required by Section 4.6.1
[Increased Costs or Reduced Return Resulting from Taxes, Reserves, Capital
Adequacy Requirements, Expenses, Etc.], the Borrower shall indemnify each
Lender against all liabilities, losses or expenses (including actual loss of
margin, any loss or expense incurred in liquidating or employing deposits from
third parties and any loss or expense incurred in connection with funds
acquired by a Lender to fund or maintain Loans subject to a LIBO-Rate Option)
which such Lender sustains or incurs as a consequence of any:

 

(i)                                     payment,
prepayment, conversion or renewal of any Loan to which a LIBO-Rate Option
applies on a day other than the last day of the corresponding Interest Period
(whether or not such payment or prepayment is mandatory, voluntary or automatic
and whether or not such payment or prepayment is then due),

 

(ii)                                  attempt
by the Borrower to revoke (expressly, by later inconsistent notices or
otherwise) in whole or part any Loan Requests under Section 2.4 [Revolving
Credit Loan Requests; Swing Loan Requests] or Section 3.2 [Interest
Periods] or notice relating to prepayments under Section 4.4 [Voluntary
Prepayments], or

 

(iii)                               default
by the Borrower in the performance or observance of any covenant or condition
contained in this Agreement or any other Loan Document, including any failure
of the Borrower to pay when due (by acceleration or otherwise) any principal,
interest, Commitment Fee, Letter of Credit Fees, or any other amount due
hereunder.

 

If any Lender sustains or incurs any such
loss or expense, it shall from time to time notify the Borrower of the amount
determined in good faith by such Lender (which determination may include such
assumptions, allocations of costs and expenses and averaging or attribution
methods as such Lender shall deem reasonable) to be necessary to indemnify such
Lender for such loss or expense.  Such
notice shall set forth in reasonable detail the basis for such
determination.  Such amount shall be due
and payable by the Borrower to such Lender ten (10) Business Days after
such notice is given.

 

46

 

4.7                                 Notes.

 

The Revolving Credit Loans made by each
Lender shall (unless a Lender requests that the Borrower not issue a Note to
such Lender) be evidenced by a Revolving Credit Note.

 

4.8                                 Settlement
Date Procedures.

 

The Borrower may borrow, repay and reborrow
Swing Loans and PNC Bank may make Swing Loans as provided in Section 2.1.2
[Swing Loan Commitment] hereof.  On any
Business Day, the Agent may notify each Lender of its Ratable Share of the
total of the Revolving Credit Loans and the Swing Loans (each a “Required Share”).  Prior to 2:30 p.m., Eastern time, on the
date following the date of such notice, each Lender shall pay to the Agent the
amount equal to the difference between its Required Share and its Revolving
Credit Loans, and the Agent shall pay to each Lender its Ratable Share of all payments
made by the Borrower to the Agent with respect to the Revolving Credit
Loans.  The Agent shall also effect
settlement in accordance with the foregoing sentence on the proposed Borrowing
Dates for Revolving Credit Loans and on any date when payments of principal of
any Loan is required to be paid by any Loan Party hereunder and may at its
option, and in consultation with the Borrower, effect settlement on any other
Business Day.  These settlement
procedures are established solely as a matter of administrative convenience,
and nothing contained in this Section 4.8 shall relieve the Lenders of
their obligations to fund Revolving Credit Loans on dates other than a
Settlement Date pursuant to Section 2.8 [Borrowings to Repay Swing
Loans].  The Agent may at any time at its
option for any reason whatsoever require each Lender to pay immediately to the
Agent such Lender’s Ratable Share of the outstanding Revolving Credit Loans and
each Lender may at any time require the Agent to pay immediately to such Lender
its Ratable Share of all payments made by the Borrower to the Agent with
respect to the Revolving Credit Loans.

 

5.                                       REPRESENTATIONS
AND WARRANTIES

 

5.1                                 Representations
and Warranties.

 

The Borrower and Hovnanian, jointly and
severally, represent and warrant to the Agent and to each of the Lenders as
follows:

 

5.1.1.                     Organization
and Qualification.

 

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

 

47

 

5.1.2.                     Subsidiaries.

 

As of the Closing Date, Schedule 5.1.2
states the name of each of Hovnanian’s Subsidiaries and its jurisdiction of
incorporation. Hovnanian and each Loan Party has good and marketable title to
all of the Subsidiary Shares, Partnership Interests and LLC Interests it
purports to own, free and clear in each case of any Lien.  All Subsidiary Shares, Partnership Interests
and LLC Interests have been validly issued, and all Subsidiary Shares are fully
paid and nonassessable.  All capital
contributions and other consideration required to be made or paid in connection
with the issuance of the Partnership Interests and LLC Interests have been made
or paid, as the case may be.  Schedule 5.1.2
also sets forth, as to each of Hovnanian’s Subsidiaries, the percentage
ownership of each owner of:  the issued
and outstanding shares (referred to herein as the “Subsidiary Shares”) if such
Subsidiary is a corporation, its outstanding partnership interests (the “Partnership
Interests”) if such Subsidiary is a partnership and its outstanding limited
liability company interests (the “LLC Interests”) if such Subsidiary is a
limited liability company. Schedule 5.1.2 also footnotes the
controlling interests of each Subsidiary if such controlling interest is held
by a Person other than Hovnanian or a Subsidiary of Hovnanian.

 

5.1.3.                     Power
and Authority.

 

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

 

5.1.4.                     Validity
and Binding Effect.

 

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

 

5.1.5.                     No
Conflict.

 

Neither the execution and delivery of this
Agreement or the other Loan Documents by any Loan Party nor the consummation of
the transactions herein or therein contemplated or compliance with the terms
and provisions hereof or thereof by any of them will conflict with, constitute
a default under or result in any breach of (i) the terms and conditions of
the certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other

 

48

 

organizational documents of any Loan Party or (ii) any Law or any
material agreement or instrument or order, writ, judgment, injunction or decree
to which any Loan Party is a party or by which it is bound or to which it is
subject, or result in the creation or enforcement of any Lien, charge or
encumbrance whatsoever upon any property (now or hereafter acquired) of any
Loan Party (other than Liens granted under the Loan Documents) which could,
individually or in the aggregate, reasonably be expected to cause a Material
Adverse Change.

 

5.1.6.                     Litigation.

 

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

 

5.1.7.                     Title
to Properties.

 

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

 

5.1.8.                     Financial
Statements.

 

(i)                                     Historical
Statements.  The Borrower has
delivered to the Agent copies of Hovnanian’s audited consolidated year-end
financial statements for and as of the end of the fiscal year ended October 31,
2004(the “Annual Statements”) and unaudited consolidated quarter-end financial
statements for and as of the end of the fiscal quarter ended January 31, 2005.  (The Annual Statements are also sometimes
referred to as 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 in all material respects the consolidated
financial condition 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.

 

(ii)                                  Financial
Projections.  The Borrower has
delivered to the Agent and the Lenders financial projections of Hovnanian and
its Subsidiaries for the period ending October 31, 2009 derived from
various assumptions of Hovnanian’s management (the “Financial Projections”).  The Financial Projections represent a
reasonable range of possible results in light of the history of the business,
present and foreseeable conditions and the intentions of Hovnanian’s management
(it being understood that actual results may vary materially from the Financial
Projections).

 

49

 

(iii)                               Accuracy
of Financial Statements.  As of the
Closing Date, 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 which may cause a Material Adverse Change.  Except as disclosed on Schedule 5.1.8,
since October 31, 2004, no Material Adverse Change has occurred.

 

5.1.9.                     Use
of Proceeds; Margin Stock.

 

5.1.9.1               General.

 

The Loan Parties intend to use the proceeds
of the Loans in accordance with Sections 2.7 [Use of Proceeds] and 7.1.10
[Use of Proceeds].

 

5.1.9.2               Margin Stock.

 

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

 

5.1.10.               Full Disclosure.

 

Neither this Agreement nor any other Loan
Document, nor any certificate, statement, agreement or other documents
furnished to the Agent or any Lender in connection herewith or therewith,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances under which they were made, not misleading in any
material respect.  There is no fact known
to any Loan Party which materially adversely affects the business, property,
assets, financial condition, results of operations or business prospects of the
Loan Parties taken as a whole which has not been set forth in this Agreement or
in the certificates, statements, agreements or other documents furnished in
writing to the Agent and the Lenders prior to or at the date hereof in
connection with the transactions contemplated hereby.

 

5.1.11.               Taxes.

 

All federal, state, local and other tax
returns required to have been filed with respect to the Loan Parties have been
filed, and payment or adequate provision has been made for the payment of all
taxes, fees, assessments and other governmental

 

50

 

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

 

5.1.12.               Consents and Approvals.

 

No consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official Body or any
other Person is required by any Law or any agreement in connection with the
execution, delivery and carrying out of this Agreement and the other Loan
Documents by any Loan Party, except as listed on Schedule 5.1.12,
all of which shall have been obtained or made on or prior to the Closing Date
except as otherwise indicated on Schedule 5.1.12.

 

5.1.13.               No Event of Default; Compliance with
Instruments.

 

No event has occurred and is continuing and
no condition exists or will exist after giving effect to the borrowings or
other extensions of credit to be made on the Closing Date under or pursuant to
the Loan Documents which constitutes an Event of Default or Potential
Default.  None of the Loan Parties is in
violation of (i) any term of its certificate of incorporation, bylaws,
certificate of limited partnership, partnership agreement, certificate of
formation, limited liability company agreement or other organizational
documents or (ii) any material agreement or instrument to which it is a
party or by which it or any of its properties may be subject or bound where
such violation would constitute a Material Adverse Change.

 

5.1.14.               Patents, Trademarks, Copyrights,
Licenses, Etc.

 

Each Loan Party owns or possesses all the
material patents, trademarks, service marks, trade names, copyrights, licenses,
registrations, franchises, permits and rights necessary to own and operate its
properties and to carry on its business as presently conducted and planned to
be conducted by such Loan Party, without known possible, alleged or actual
material conflict with the rights of others.

 

5.1.15.               Insurance.

 

No notice has been given or claim made and no
grounds exist to cancel or avoid any of insurance policies of the type
described in Section 7.1.3 [Maintenance of Insurance] or to reduce the
coverage provided thereby.

 

5.1.16.               Compliance with Laws.

 

The Loan Parties are in compliance in all
material respects with all applicable Laws (other than Environmental Laws which
are specifically addressed in Section 5.1.21 [Environmental Matters]) in
all jurisdictions in which any Loan Party is presently

 

51

 

or will be doing business except where the failure to do so would not
constitute a Material Adverse Change.

 

5.1.17.               Burdensome Restrictions.

 

None of the Loan Parties is bound by any
contractual obligation, or subject to any restriction in any organization
document, or any requirement of Law which could reasonably be expected to
constitute a Material Adverse Change.

 

5.1.18.               Investment Companies; Regulated
Entities.

 

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

 

5.1.19.               Plans and Benefit Arrangements.

 

(i)                                     Except
where the liability that could reasonably be expected to result therefrom would
not, individually or in the aggregate, result in a Material Adverse Change, (a) the
Loan Parties and each other member of the ERISA Group are in compliance in all
material respects with any applicable provisions of ERISA with respect to all
Plans and, as to the Borrower, Benefit Arrangements; (b) there has been no
Prohibited Transaction with respect to any such Benefit Arrangement or any Plan
which could result in any material liability of the Loan Parties or any other
member of the ERISA Group; (c) the Loan Parties and all other members of
the ERISA Group have made when due any and all payments required to be made
under any agreement relating to a Multiemployer Plan or any Law pertaining
thereto; (d) with respect to each Plan the Loan Parties and each other
member of the ERISA Group (i) have fulfilled in all respects their
obligations under the minimum funding standards of ERISA, (ii) have not
incurred any liability to the PBGC, except for premiums in the ordinary course
which are not overdue and (iii) have not had asserted against them any
penalty for failure to fulfill the minimum funding requirements of Section 302
of ERISA; and (e) all Plans and Benefit Arrangements have been
administered in material compliance with their terms and applicable Law.

 

(ii)                                  Except
where the liability that could reasonably be expected to result therefrom would
not, individually or in the aggregate, result in a Material Adverse Change, no
event requiring notice to the PBGC under Section 302(f)(4)(A) of
ERISA has occurred or is reasonably expected to occur with respect to any Plan,
and no amendment with respect to which security is required under Section 307
of ERISA has been made or is reasonably expected to be made to any Plan.

 

(iii)                               Except
where the liability that could reasonably be expected to result therefrom would
not, individually or in the aggregate, result in a Material

 

52

 

Adverse Change, neither the Loan Parties nor any other member of the
ERISA Group has incurred or reasonably expects to incur any material withdrawal
liability under Section 4201 of ERISA to any Multiemployer Plan or under Section 4063
or 4064 of ERISA to any Plan;.  Neither
the Loan Parties nor any other member of the ERISA Group has been notified by
any Multiemployer Plan or Plan that such Multiemployer Plan or Plan has been
terminated within the meaning of Sections 4041 A or 4064, respectively,  of ERISA and, to the best knowledge of the
Borrower, no Multiemployer Plan is reasonably expected to be reorganized or
terminated, within the meaning of Title IV of ERISA.

 

(iv)                              To
the best knowledge of Borrower, neither the Borrower nor any other member of
the ERISA Group has, within the preceding five years, entered into a
transaction to which either Section 4069 or Section 4212(c) of
ERISA could apply so as to subject Borrower or other member of the ERISA Group
to a liability, except where the liability that could reasonably be expected to
result therefrom would not result in a Material Adverse Change.

 

5.1.20.               Employment Matters.

 

Each of the Loan Parties is in compliance
with the Labor Contracts and all applicable Federal, state and local labor and
employment Laws including those related to equal employment opportunity and
affirmative action, labor relations, minimum wage, overtime, child labor,
medical insurance continuation, worker adjustment and relocation notices,
immigration controls and worker and unemployment compensation, where such
failure to comply would constitute a Material Adverse Change.  There are no outstanding grievances,
arbitration awards or appeals therefrom arising out of the Labor Contracts or
current or threatened strikes, picketing, handbilling or other work stoppages or
slowdowns at facilities of any of the Loan Parties which in any case would
constitute a Material Adverse Change.

 

5.1.21.               Environmental Matters.

 

None of the Loan Parties has received any
Environmental Complaint, including but not limited to those from any Official
Body or private Person alleging that such Loan Party or any prior owner,
operator or occupant of any of the Property is a potentially responsible party
under the Comprehensive Environmental Response, Cleanup and Liability Act, 42
U.S.C. § 9601, et  seq., the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901, et  seq. or any analogous
state or local Law, which could reasonably be expected to constitute a Material
Adverse Change and none of the Loan Parties has any reason to believe that such
an Environmental Complaint might be received. 
There are no pending or, to any Loan Party’s knowledge, threatened
Environmental Complaints relating to any Loan Party or, to any Loan Party’s
knowledge, any prior owner, operator or occupant of any of the Properties
pertaining to, or arising out of, any Contamination or violations of
Environmental Laws or Required Environmental Permits which could reasonably be
expected to constitute a Material Adverse Change.

 

53

 

 

5.1.22.               Senior
Debt Status.

 

The Obligations of each Loan Party under this
Agreement, the Guaranty Agreement and each of the other Loan Documents to which
it is a party do rank and will rank at least pari  passu in
priority of payment with all other Indebtedness of such Loan Party except
Indebtedness of such Loan Party to the extent secured by Permitted Liens.  There is no Lien upon or with respect to any
of the properties or income of any Loan Party which secures Indebtedness or
other obligations of any Person except for Permitted Liens.

 

5.1.23                  Anti-Terrorism
Laws.

 

None of the Loan Parties nor or any Affiliate of any Loan Party,  is in violation of any Anti-Terrorism Law or
engages in or conspires to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.

 

5.1.23.1                                                     Executive
Order No. 13224.

 

None of the Loan Parties, nor or any Affiliate of any Loan Party,  or their respective agents acting or
benefiting in any capacity in connection with the Loans, Letters of Credit or
other transactions hereunder, is any of the following (each a “Blocked Person”):

 

(i)            a Person that is
listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order No. 13224;

 

(ii)           a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

 

(iii)          a Person or entity
with which any Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law;

 

(iv)          a Person or entity
that commits, threatens or conspires to commit or supports “terrorism” as
defined in the Executive Order No. 13224;

 

(v)           a Person or entity
that is named as a “specially designated national” on the most current list
published by the U.S. Treasury Department Office of Foreign Asset Control at
its official website or any replacement website or other replacement official
publication of such list, or

 

(vi)          a Person or entity
who is affiliated or associated with a person or entity listed above. 

 

No Loan Party or to the knowledge of any Loan Party, any of its agents
acting in any capacity in connection with the Loans, Letters of Credit or other
transactions hereunder (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (ii) deals in, or otherwise engages in any
transaction

 

54

 

relating to, any property or interests in property blocked pursuant to
the Executive Order No. 13224.

 

5.2                                 Continuation
of Representations.

 

The Borrower and Hovnanian make the
representations and warranties in this Section 5 on the date hereof and on
the Closing Date and each date thereafter on which a Loan is made or a Letter
of Credit is issued as provided in and subject to Sections 6.1 [First Loans and
Letters of Credit] and 6.2 [Each Additional Loan or Letter of Credit].

 

6.             CONDITIONS OF LENDING AND
ISSUANCE OF LETTERS OF CREDIT

 

The obligation of each Lender to make Loans
and of the Agent and the Letter of Credit Lenders to issue Letters of Credit
hereunder is subject to the performance by each of the Loan Parties of its
Obligations to be performed hereunder at or prior to the making of any such
Loans or issuance of such Letters of Credit and to the satisfaction of the
following further conditions:

 

6.1                                 First
Loans and Letters of Credit.

 

On the Closing Date:

 

6.1.1.                     Officer’s
Certificate.

 

The representations and warranties of each of
the Loan Parties contained in Section 5 [Representation and Warranties]
and in each of the other Loan Documents shall be true and correct on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date (except representations and
warranties which relate solely to an earlier date or time, which
representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and each of the Loan Parties
shall have performed and complied with all covenants and conditions hereof and
thereof, no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; and there shall be delivered to the Agent for the
benefit of each Lender a certificate of each of Hovnanian and the Borrower,
dated the Closing Date and signed by the Chief Executive Officer, President or
Chief Financial Officer of each of the Loan Parties, to each such effect.

 

6.1.2.                     Incumbency
Certificate.

 

There shall be delivered to the Agent for the
benefit of each Lender a certificate dated the Closing Date and signed by the
Secretary or an Assistant Secretary or the managing member (or equivalent), as
the case may be, of each of the Loan Parties, certifying as appropriate as to:

 

(i)            all
action taken by each Loan Party in connection with this Agreement and the other
Loan Documents;

 

55

 

(ii)           the
names of the officer or officers authorized to sign this Agreement and the
other Loan Documents and the true signatures of such officer or officers and
specifying the Authorized Officers permitted to act on behalf of each Loan
Party for purposes of this Agreement and the true signatures of such officers,
on which the Agent and each Lender may conclusively rely; and

 

(iii)          as
to Hovnanian and the Borrower only, copies of its organizational documents,
including its certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, and limited
liability company agreement as in effect on the Closing Date certified by the
appropriate state official where such documents are filed in a state office
together with certificates from the appropriate state officials as to the
continued existence and good standing of such Loan Party in each state where
organized.

 

6.1.3.                     Delivery
of Loan Documents.

 

The Notes, the Guaranty Agreement and the
other Loan Documents shall have been duly executed and delivered by Hovnanian
to the Agent on or before the date hereof for the benefit of the Lenders.

 

6.1.4.                     Opinion
of Counsel.

 

There shall be delivered to the Agent for the
benefit of each Lender a written opinion of Peter Reinhart, Esquire, in-house
counsel for the Loan Parties, dated the Closing Date and in form and substance
reasonably satisfactory to the Agent and its counsel.

 

6.1.5.                     Legal
Details.

 

All legal details and proceedings in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be in form and substance reasonably satisfactory to the
Agent and counsel for the Agent, and the Agent shall have received all such
other counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance
reasonably satisfactory to the Agent and said counsel, as the Agent or said
counsel may reasonably request.

 

6.1.6.                     Payment
of Fees.

 

The Borrower shall have paid or caused to be
paid to the Agent for itself and for the account of the Lenders to the extent
not previously paid, all commitment and other fees accrued through the Closing
Date and the costs and expenses for which the Agent and the Lenders are
entitled to be reimbursed.

 

6.1.7.                     Consents.

 

All material consents required to effectuate
the transactions contemplated hereby as set forth on Schedule 5.1.12
shall have been obtained.

 

56

 

6.1.8.                     Officer’s
Certificate Regarding MACs.

 

Since October 31, 2004, no Material
Adverse Change shall have occurred, and there shall have been delivered to the
Agent for the benefit of each Lender a certificate dated the Closing Date and
signed by the Chief Executive Officer, President or Chief Financial Officer of
each Loan Party to each such effect.

 

6.1.9.                     No
Actions or Proceedings.

 

No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain
or prohibit, or to obtain damages in respect of, this Agreement, the other Loan
Documents or the consummation of the transactions contemplated hereby or
thereby.

 

6.1.10                  Lien Search.

 

The Borrower shall have delivered
satisfactory results of a lien search to the Agent evidencing no liens on
Hovnanian or the Borrower which are not Permitted Liens.

 

6.2                                 Each
Additional Loan or Letter of Credit.

 

At the time of making any Loans or issuing any Letters of Credit other
than Loans made or Letters of Credit issued on the Closing Date and after
giving effect to the proposed extensions of credit:  the representations and warranties of the
Loan Parties contained in Section 5 [Representations and Warranties] and
in the other Loan Documents shall be true and correct in all material respects
on and as of the date of such additional Loan or Letter of Credit with the same
effect as though such representations and warranties had been made on and as of
such date (except representations and warranties which expressly relate solely
to an earlier date or time, which representations and warranties shall be true
and correct in all material respects on and as of the specific dates or times
referred to therein); no Event of Default or Potential Default shall have
occurred and be continuing or shall exist; and the Borrower shall have
delivered to the Agent a duly executed and completed Loan Request or
application for a Letter of Credit as the case may be (each such application
shall be deemed to be a representation by the Borrower that the conditions
under this Section 6.2 for the issuance of such additional Letter of
Credit have been satisfied even if not so stated in such application).

 

7.             COVENANTS

 

7.1                                 Affirmative
Covenants.

 

The Borrower and Hovnanian, jointly and severally, covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter
of Credit Borrowings, and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations
(other than any contingent indemnity obligations not then due) under

 

57

 

the Loan Documents and
termination of the Commitments, they shall, and shall cause the other Loan Parties
to, comply at all times with the following affirmative covenants:

 

7.1.1.                     Preservation
of Existence, Etc.

 

Each Loan Party shall maintain its legal
existence as a corporation, limited partnership or limited liability company
and its license or qualification and good standing in each jurisdiction in
which its ownership or lease of property or the nature of its business makes
such license or qualification necessary, except as otherwise expressly
permitted in Section 7.2.4 [Liquidations, Mergers, Consolidations,
Acquisitions] and except where failure to do so could not reasonably be
expected to constitute a Material Adverse Change with respect to the Borrower
or Hovnanian or with respect to the Loan Parties taken as a whole.

 

7.1.2.                     Payment
of Liabilities, Including Taxes, Etc.

 

Each Loan Party shall duly pay and discharge
all material liabilities to which it is subject or which are asserted against
it, promptly as and when the same shall become due and payable, including all
material taxes, assessments and governmental
charges upon it or any of its properties, assets, income or profits, prior to
the date on which penalties attach thereto, except to the extent that such
liabilities, including taxes, assessments or charges, are being contested in
good faith and by appropriate and lawful proceedings diligently conducted and
for which such reserve or other appropriate provisions, if any, as shall be
required by GAAP shall have been made, or to the extent that failure to
discharge any such liabilities would not result in any additional liability
which would adversely affect to a material extent the financial condition of
the Borrower or Hovnanian or of the Loan Parties taken as a whole, provided
that the Loan Parties will pay all such liabilities forthwith upon the
commencement of proceedings to foreclose any material Lien which may have
attached as security therefor.

 

7.1.3.                     Maintenance
of Insurance.

 

Each Loan Party shall insure its properties
and assets against loss or damage by fire and such other insurable hazards as
such assets are commonly insured (including fire, extended coverage, property
damage, workers’ compensation, public liability, flood and business
interruption insurance) and against other risks (including errors and
omissions) in such amounts as similar properties and assets are insured by
prudent companies in similar circumstances carrying on similar businesses, and
with reputable and financially sound insurers, including self-insurance to the
extent customary.

 

7.1.4.                     Maintenance
of Properties and Leases.

 

Each Loan Party shall maintain in good
repair, working order and condition (ordinary wear and tear excepted) in
accordance with the general practice of other businesses of similar character
and size, all of those properties necessary to its business, and from time to
time, such Loan Party will make or cause to be made all appropriate repairs,
renewals or replacements thereof.

 

58

 

7.1.5.                     Maintenance
of Patents, Trademarks, Etc.

 

Each Loan Party shall maintain in full force
and effect all patents, trademarks, service marks, trade names, copyrights,
licenses, franchises, permits and other authorizations necessary for the
ownership and operation of its properties and business if the failure so to
maintain the same would constitute a Material Adverse Change.

 

7.1.6.                     Visitation
Rights.

 

Each Loan Party shall permit any of the
officers or authorized employees or representatives of the Agent or (at the
expense of such Lender) any of the Lenders to visit and inspect any of its
properties and to examine and make excerpts from its books and records and
discuss its business affairs, finances and accounts with its officers, all in
such detail and at such times and as often as any of the Lenders may reasonably
request, provided that each Lender shall provide the Borrower and the
Agent with reasonable notice prior to any visit or inspection.  In the event any Lender desires to conduct an
audit of any Loan Party, such Lender shall make a reasonable effort to conduct
such audit contemporaneously with any audit to be performed by the Agent.

 

7.1.7.                     Keeping
of Records and Books of Account.

 

The Loan Parties shall maintain and keep
proper books of record and account which enable Hovnanian and its Subsidiaries
to issue financial statements in accordance with GAAP and as otherwise required
by applicable Laws of any Official Body having jurisdiction over Hovnanian or
any Subsidiary of Hovnanian, and in which full, true and correct entries shall
be made in all material respects of all its dealings and business and financial
affairs.

 

7.1.8.                     Plans
and Benefit Arrangements.

 

The Loan Parties shall, and shall cause each
member of the ERISA Group that is a Subsidiary to, and shall use its reasonable
best efforts to cause each other member of the ERISA Group to, comply with
ERISA, the Internal Revenue Code and other applicable Laws applicable to Plans
and, as to the Borrower, Benefit Arrangements, except where such failure, alone
or in conjunction with any other failure, would not result in a Material
Adverse Change.  Without limiting the
generality of the foregoing, the Loan Parties shall cause all of their Plans
and shall use reasonable best efforts to cause all Plans maintained by any
member of the ERISA Group, to be funded in accordance with the minimum funding
requirements of ERISA and shall make, and cause each Subsidiary to, and shall
use its reasonable best efforts to cause each member of the ERISA Group to
make, in a timely manner, all contributions due to Plans and Multiemployer
Plans except where such failure, alone or in conjunction with any other
failure, would not result in a Material Adverse Change.

 

7.1.9.                     Compliance
with Laws.

 

Each Loan Party shall comply with all
applicable Laws, including all Environmental Laws, in all respects, provided
that it shall not be deemed to be a

 

59

 

violation of this Section 7.1.9
if any failure to comply with any Law would not result in fines, penalties,
remediation costs, other similar liabilities or injunctive relief which in the
aggregate would constitute a Material Adverse Change.

 

7.1.10.               Use of Proceeds.

 

The Loan Parties will use the Letters of
Credit and the proceeds of the Loans only for general corporate purposes and
for working capital for the Borrower, Hovnanian and the Restricted
Subsidiaries.

 

7.1.11                  Anti-Terrorism
Laws.

 

The Loan Parties and their respective Affiliates and agents shall not (i) conduct
any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person, (ii) deal in, or otherwise
engage in any transaction relating to, any property or interests in property
blocked pursuant to the Executive Order No. 13224; or (iii) engage in
or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in the Executive Order No. 13224, the USA Patriot Act or any
other Anti-Terrorism Law.  The Borrower
shall deliver to Lenders any certification or other evidence requested from
time to time by any Lender in its reasonable discretion, confirming Borrower’s
compliance with this Section 7.1.11.

 

7.2                                 Negative
Covenants.

 

The Borrower and Hovnanian, jointly and severally, covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter
of Credit Borrowings and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations
hereunder (other than any contingent indemnity obligations not then due) and
termination of the Commitments, they shall, and shall cause the other Loan
Parties to, comply with the following negative covenants:

 

7.2.1.                     Indebtedness.

 

Each of the Loan Parties shall
not at any time create, incur, assume or suffer to exist any secured
indebtedness, except Indebtedness secured by Permitted Liens.

 

7.2.2.                     Liens.

 

Each of the Loan Parties shall not at any time
create, incur, assume or suffer to exist any Lien on any of its property or
assets, tangible or intangible, now owned or hereafter acquired, or agree or
become liable to do so, except
Permitted Liens.

 

7.2.3.                     Loans
and Investments.

 

Each of the Loan Parties shall not, at any
time, make or suffer to remain outstanding any Investment except Permitted
Investments and, to the extent

 

60

 

permitted by Section 7.2.6
[Restricted Payments; Restricted Investments; Investments in Related
Businesses], Restricted Investments and Investments in Related Businesses.

 

7.2.4.                     Liquidations,
Mergers, Consolidations, Acquisitions.

 

Each of the Loan Parties shall not dissolve,
liquidate or wind-up its affairs, or become a party to any merger or
consolidation, or acquire by purchase, lease or otherwise all or substantially
all of the assets or capital stock of any other Person, provided that

 

(1)           any
Loan Party other than the Borrower or Hovnanian may consolidate or merge into
another Loan Party (or any Person that concurrently becomes a Loan Party), and

 

(2)           any
Loan Party may consolidate or merge with a Person who is not a Loan Party if
the common stockholders of Hovnanian prior to such transaction maintain at
least 50% of the voting control (direct or indirect) of the combined entity
after consummation of the transaction, and

 

(3)           any
Loan Party may acquire, whether by purchase or by merger, (A) all or
substantially all of the ownership interests of another Person or (B) all
or substantially all of assets of another Person or of a business or division
of another Person (each, a “Permitted Acquisition”), provided that each
of the following requirements is met:

 

(i)            if
the Loan Parties are acquiring the ownership interests in such Person, and such
Person is, or concurrently will be, designated a Restricted Subsidiary, such
Person shall execute a Guarantor Joinder and join this Agreement as a Guarantor
pursuant to Section 10.18 [Joinder of Guarantors] and the Borrower shall
have otherwise complied with Section 2.11.4 [Designation of Restricted
Subsidiary] on or before the date of such Permitted Acquisition;

 

(ii)           if
such Person’s shares are registered as “public” shares under applicable law,
the board of directors or other equivalent governing body of such Person shall
have approved such Permitted Acquisition;

 

(iii)          the
business acquired, or the business conducted by the Person whose ownership
interests are being acquired, as applicable, shall comply with Section 7.2.8
[Continuation of or Change in Business]; and

 

(iv)          no
Potential Default or Event of Default shall exist immediately prior to and
after giving effect to such Permitted Acquisition.

 

(4)           the
Loan Parties may make, whether by purchase or merger or otherwise, Permitted
Investments and, to the extent permitted by Section 7.2.6 [Restricted
Investments; Restricted Payments; Investments in Related Businesses],
Restricted Investments, Restricted Payments and Investments in Related
Businesses;

 

61

 

(5)           the
Loan Parties may liquidate or wind-up Restricted Subsidiaries of Hovnanian
which are not individually material to Hovnanian, the Borrower or to the Loan
Parties taken as a whole; provided  that the Loan Parties shall
satisfy the requirements of Section 2.11 [Designation of Subsidiaries and
Release of Guarantors], to the extent applicable;

 

(6)           the Loan Parties may effectuate any
sale permitted by Section 7.2.5 as a merger or consolidation; and

 

(7)           for
the avoidance of doubt, any Loan Party may effect or allow the liquidation or
winding-up of any Non-Restricted Person.

 

7.2.5.                     Dispositions
of Assets or Subsidiaries.

 

Each of the Loan Parties shall
not sell, convey, assign, lease, abandon or otherwise transfer or dispose of,
voluntarily or involuntarily, any of its properties or assets, tangible or
intangible (including sale, assignment, discount or other disposition of
accounts, contract rights, chattel paper, equipment or general intangibles with
or without recourse or of capital stock, shares of beneficial interest,
partnership interests or limited liability company interests of a Subsidiary of
such Loan Party, but excluding Investments in Non-Restricted Persons), except:

 

(i)            any
sale, transfer or lease of assets in the ordinary course of business which are
no longer necessary or required in the conduct of such Loan Party’s business;

 

(ii)           any
sale, transfer or lease of assets to a Loan Party;

 

(iii)          any
sale, transfer or lease of assets in the ordinary course of business which are
replaced by substitute assets acquired not in violation of this Agreement;

 

(iv)          any
sale, transfer or lease of assets by a Non-Restricted Subsidiary; or

 

(v)           any
other sale, transfer or lease of assets not included in clauses (i) through
(iv) above provided that (1) after giving effect to such sale the
Loan Parties are in compliance with the covenants under this agreement
(including the financial covenants in Sections 7.2.11 [Minimum ATNW], 7.2.12
[Leverage Ratio], and 7.2.13 [Fixed Charge Coverage Ratio]) and no Potential
Default or Event of Default, and (2) any such sale does not constitute all
or substantially all of the assets of the Loan Parties taken as a whole;

 

62

 

7.2.6.                     Restricted
Payments; Restricted Investments; Investments in Related Businesses.

 

7.2.6.1      The Loan Parties shall not pay or make
Restricted Payments, Restricted Investments or Investments by Loan Parties in
other Loan Parties engaged in Related Businesses (“Investments in Related
Businesses”) from and after January 31, 2001 which exceed in the aggregate
the sum of:

 

(i)            $45,000,000;

 

(ii)           50%
of net income of Hovnanian (calculated and consolidated in accordance with
GAAP) for all fiscal quarters commencing on February 1, 2001 and
thereafter; and

 

(iii)          50%
of the proceeds (less costs of issuance) of any issuance or sale of equity,
including Qualified Preferred Equity, of Hovnanian to any Person other than a
Loan Party during all fiscal quarters commencing on February 1, 2001 and
thereafter.

 

7.2.6.2     Each of the Loan Parties shall not enter
into or carry out any transaction with any Affiliate (including purchasing
property or services from or selling property or services to any Affiliate of
any Loan Party or other Person but excluding transactions between Loan Parties)
unless such transaction is not otherwise prohibited by this Agreement, is
entered into in the ordinary course of business upon fair and reasonable arm’s-length
terms and is in accordance with all applicable Law. Without limiting the
foregoing, the aggregate amount of all Indebtedness for owed or borrowed money
owing to any Loan Party by any officer or director, or relative thereof, shall
not exceed $1,000,000 in the aggregate owing at any one time and all such
Indebtedness shall bear interest at a rate not less than the coupon rate on six
month U.S. Treasury bills as of the date such Indebtedness is incurred.

 

7.2.6.3     The Loan Parties shall not pay or make any
Restricted Payment in respect of Dividends or Subordinated Debt if an Event of
Default or Potential Default exists at the time of such payment or would exist
after giving effect thereto.

 

7.2.7.                     Subsidiaries,
Partnerships and Joint Ventures.

 

Each of the Loan Parties shall not own or
create directly or indirectly any Subsidiaries other than (i) any
Subsidiary which has executed the Guaranty Agreement as Guarantor on the
Closing Date, (ii) any Subsidiary formed or acquired after the Closing
Date which joins the Guaranty Agreement as a Guarantor pursuant to Section 10.18
[Joinder of Guarantors] or (iii) any Non-Restricted Person.

 

7.2.8.                     Continuation
of or Change in Business.

 

Each of the Loan Parties existing on the
Closing Date shall not engage in any business other than the homebuilding
business.  Each of the Loan Parties

 

63

 

organized or acquired after the
Closing Date shall not engage in any business other than the homebuilding
business or Related Businesses.

 

7.2.9.                     Plans
and Benefit Arrangements.

 

Each of the Loan Parties shall not engage in
a Prohibited Transaction with any Plan, Benefit Arrangement or Multiemployer
Plan which, alone or in conjunction with any other circumstances or set of
circumstances, results in liability under ERISA, except where the liability
that could reasonably be expected to result therefrom would not result in a
Material Adverse Change.

 

7.2.10.               Borrowing
Base.

 

At any time that the Investment Grade Period
is not in effect, the Loan Parties shall not permit Senior Homebuilding
Indebtedness minus the face amount of outstanding letters of credit (whether “Letters
of Credit” or not) in respect of which a Loan Party is obligated and which is
issued to guaranty or assure the installation of site improvements on (or
appurtenant to) land owned by a Loan Party to exceed the Borrowing Base at such
time.  Pursuant thereto, the Borrower
shall make (or cause to be made), on the Business Day following the date on
which any such excess is calculated, payments of principal of Senior
Homebuilding Indebtedness sufficient to reduce to zero ($0) on such date any
such excess.

 

7.2.11.     Minimum
ATNW.

 

The Loan Parties shall not permit Adjusted
Tangible Net Worth as of the last day of any fiscal quarter to be less than the
sum of: (i) $696,402,000 and (ii) 50% of Hovnanian’s consolidated net
income (calculated and consolidated in accordance with GAAP) for each fiscal
quarter commencing on February 1, 2005 and thereafter in which net income
was earned (as opposed to a net loss), (iii) 50% of the proceeds (less
costs of issuance) of any issuance or sale of equity of Hovnanian (including
Qualified Preferred Equity) to any Person other than a Loan Party during each
fiscal quarter commencing on February 1, 2005 and thereafter.

 

7.2.12.     Leverage
Ratio.

 

The Loan Parties shall not permit the
Leverage Ratio as of the last day of any fiscal quarter to exceed 2.25 to 1.0.

 

7.2.13.     Fixed
Charge Coverage  Ratio.

 

The Loan Parties shall not permit the Fixed
Charge Coverage Ratio as of the last day of any fiscal quarter to be less than
the 1.75 to 1.0 for each of any two (2) consecutive fiscal quarters if the
second such fiscal quarter constitutes a High Leverage Period.

 

64

 

7.2.14.     Inventory
Limits.

 

At any time when the Investment
Grade Period is not in effect, the Loan Parties shall not permit:

 

(i)            The
Dollar value of Unentitled Land to exceed twenty percent (20%) of the sum of
Adjusted Tangible Net Worth and the principal amount of the Subordinated Debt,
as calculated as of the end of each fiscal quarter;

 

(ii)           The
Dollar value of Finished Lots and Land under Development plus Unentitled Land
to exceed the sum of Adjusted Tangible Net Worth and the principal amount of
the Subordinated Debt, as calculated as of the end of each fiscal quarter; or

 

(iii)          The
number of Unsold Dwelling Units existing as of the end of any fiscal quarter to exceed 25% of the number of Dwelling
Units conveyed by any Person who is a Loan Party on the date of determination
or any Person that was acquired and merged or consolidated with and into a
Person who is a Loan Party on the date of determination to third party
purchasers within the previous twelve (12) months.

 

7.2.15.               Fiscal
Year.

 

The Loan Parties shall not change their
fiscal year from the twelve-month period ending October 31.

 

7.2.16.               Changes
in Subordinated Debt Documents.

 

The Loan Parties shall not amend or modify
any provisions of the documents relating to the Subordinated Debt without
providing at least ten (10) calendar days’ prior written notice to the
Agent, and, if the same would adversely affect the interests of the Agent and
the Lenders in any material respect, obtaining the prior written consent of the
Required Lenders.  No Loan Party shall
directly or indirectly make any payment on the Subordinated Debt which would
violate the provisions of any applicable subordination agreement or
provision.  Neither the Senior Notes nor
the Subordinated Debt shall become secured.

 

7.3                                 Reporting
Requirements.

 

The Borrower and Hovnanian, jointly and severally, covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter
of Credit Borrowings and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations
hereunder and under the other Loan Documents (other than any contingent
indemnity obligations not then due) and termination of the Commitments, they
shall, and shall cause the other Loan Parties to, to the extent applicable,
furnish or cause to be furnished to the Agent:

 

7.3.1.                     Quarterly
Financial Statements.

 

As soon as available and in any event within
fifty-five (55) calendar days after the end of each of the first three fiscal
quarters in each fiscal year of Hovnanian, financial statements of Hovnanian,
consisting of a consolidated balance sheet as of

 

65

 

the end of such fiscal quarter
and related consolidated statements of income, stockholders’ equity and cash
flows for the fiscal quarter then ended and the fiscal year through that date,
all in reasonable detail and certified (subject to normal year-end audit
adjustments) by the Chief Executive Officer, President, Treasurer or Chief
Financial Officer or principal accounting officer of Hovnanian as having been
prepared in accordance with GAAP, consistently applied, and setting forth in
comparative form the respective financial statements for the corresponding date
and period in the previous fiscal year. 
The Loan Parties will be deemed to have complied with the delivery requirements
of this Section 7.3.1 if within fifty-five (55) days after the end of
their fiscal quarter, the Borrower delivers to the Agent a copy of Hovnanian’s Form 10-Q
as filed with the SEC and the financial statements contained therein meets the
requirements described in this Section 7.3.1.

 

7.3.2.                     Annual
Financial Statements.

 

As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Hovnanian, financial
statements of Hovnanian consisting of a consolidated balance sheet as of the
end of such fiscal year, and related consolidated statements of income,
stockholders’ equity and cash flows for the fiscal year then ended, all in
reasonable detail and setting forth in comparative form the financial
statements as of the end of and for the preceding fiscal year, and certified by
independent certified public accountants of nationally recognized standing
reasonably satisfactory to the Agent. 
The certificate or report of accountants shall be free of qualifications
(other than any consistency qualification that may result from a change in the
method used to prepare the financial statements as to which such accountants
concur) and shall not indicate the occurrence or existence of any event,
condition or contingency which would materially impair the prospect of payment
or performance of any covenant, agreement or duty of any Loan Party under any
of the Loan Documents or cause or constitute an Event of Default.  The Loan Parties will be deemed to have
complied with the delivery requirements of this Section 7.3.2 if within
ninety (90) days after the end of Hovnanian’s fiscal year, the Borrower
delivers to the Agent a copy of Hovnanian’s Annual Report and Form 10-K as
filed with the SEC and the financial statements and separately delivers the
above-referenced certification of public accountants.

 

7.3.3.                     Certificates
of the Borrower.

 

7.3.3.1                     Compliance Certificate.  Concurrently with the financial statements of
Hovnanian furnished to the Agent and to the Lenders pursuant to Sections 7.3.1
[Quarterly Financial Statements] and 7.3.2 [Annual Financial Statements]:

 

(a)           a certificate of the
Borrower signed by the Chief Executive Officer, President, Treasurer or Chief
Financial Officer or principal accounting officer of the Borrower, in the form
of Exhibit 7.3.3.1 (each a “Compliance Certificate”), to the effect
that, except as described pursuant to Section 7.3.3.2 [Borrowing Base
Certificate], (i) the representations and warranties of the Borrower
contained in Section 5.1 [Representations and Warranties] and in the other
Loan Documents are true and correct in all material respects on and as of the
date of such certificate with the same effect as though such representations
and warranties had been made on and as of such date (except representations and
warranties which expressly relate solely to an earlier date or time), (ii) no
Event of Default or Potential Default

 

66

 

exists and is continuing on the
date of such certificate and (iii) containing calculations in sufficient
detail to demonstrate compliance as of the date of such financial statements
with all financial covenants contained in Section 7.2 [Negative
Covenants].

 

(b)           summary consolidated
financial statements for each of (i) the Non-Restricted Persons as a group
and (ii) the Borrower, Hovnanian and the Restricted Subsidiaries as a
group; provided that the statements provided in footnote 20 entitled “Financial
Information of Subsidiary Issuer and Subsidiary” of the Borrower’s consolidated
financial statements in Form 10-K and in footnote 16 in Form 10-Q
shall be deemed to satisfy this requirement;

 

(c)           summary financial
statements for each Joint Venture in which any Loan Party has a Subsidiary
Investment greater than an amount equal to 4% of Adjusted Tangible Net Worth as
of the last day of the previous fiscal quarter of Hovnanian; and

 

(d)           to the extent not
previously disclosed in writing to the Agent, a report of any changes to Schedule 1.1(C) including
changes arising under Section 2.11 [Designation of Subsidiaries and
Release of Guarantors].

 

7.3.3.2     Borrowing Base Certificate.

 

As soon as
available, but not later than fifty-five (55) days after the end of each month,
a Borrowing Base Certificate as of the end of such month, appropriately
completed, executed and delivered by an Authorized Officer, together with a
certificate of the Borrower signed by the Chief Executive Officer, President,
Treasurer or Chief Financial Officer or principal accounting officer of the
Borrower, in the form of Exhibit 7.3.3.2, to the effect that,
except as described pursuant to Section 7.3.4 [Notice of Default], no
Event of Default or Potential Default exists and is continuing on the date of
such Borrowing Base Certificate; provided, however, the Borrowing
Base Certificate delivered with respect to the month of October, in any year,
may be in draft form, subject to change as a result of the year-end audit, but
in no event shall be executed and delivered in final form later than ninety
(90) days after the end of such fiscal year. 
The Borrower shall be required to deliver a Borrowing Base Certificate
as of the end of a month even if the Investment Grade Period is in effect as of
such month-end.

 

7.3.4.                     Notice
of Default.

 

Promptly after any officer of any Loan Party
has learned of the occurrence of an Event of Default or Potential Default, a
certificate signed by the Chief Executive Officer, President or Chief Financial
Officer or principal accounting officer of such Loan Party setting forth the
details of such Event of Default or Potential Default and the action which such
Loan Party proposes to take with respect thereto.

 

7.3.5.                     Notice
of Litigation.

 

Promptly after the commencement thereof,
notice of all actions, suits, proceedings or investigations before or by any
Official Body or any other Person

 

67

 

against any Loan Party that
involve a claim or series of claims in excess of $1,000,000 which is not
covered by insurance or which could reasonably be expected to constitute a
Material Adverse Change.

 

7.3.6.                     Notice
of Change in Debt Rating.

 

Within two (2) Business Days after
Standard & Poor’s, Moody’s or Fitch announces a change in Hovnanian’s
Debt Rating, notice of such change. 
Hovnanian will deliver together with such notice a copy of any written
notification which Hovnanian received from the applicable rating agency
regarding such change of Debt Rating.

 

7.3.7.                     Budgets,
Forecasts, Other Reports and Information.

 

Promptly upon their becoming available to any
Loan Party:

 

(i)            any
reports, notices or proxy statements generally distributed by Hovnanian to its
stockholders,

 

(ii)           regular
or periodic reports, including Forms 10-K, 10-Q and 8-K, registration
statements and prospectuses, filed by Hovnanian with the SEC, and

 

(iii)          such
other reports and information as the Agent may from time to time reasonably
request.  The Loan Parties shall also
notify the Agent promptly of the enactment or adoption of any Law which could
reasonably be expected to constitute a Material Adverse Change.

 

7.3.8.                     Notices
Regarding Plans and Benefit Arrangements.

 

7.3.8.1     Certain Events.

 

Promptly after learning of the occurrence
thereof, notice (including the nature of the event and, when known, any action
taken or threatened by the Internal Revenue Service or the PBGC with respect
thereto) of any of the following events, or series of such events, if,
individually or in the aggregate, any liabilities or penalties resulting from
such event(s) could reasonably be expected to result in a Material Adverse
Change:

 

(i)            any
Reportable Event with respect to any Plan,

 

(ii)           any
Prohibited Transaction which could subject any Loan Party or any other member
of the ERISA Group to a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in
connection with any Plan, any Benefit Arrangement or any trust created
thereunder,

 

(iii)          any
withdrawal from a Multiemployer Plan by the Borrower or any other member of the
ERISA Group under Title IV of ERISA or assertion by a Multiemployer Plan that
such a withdrawal has occurred,

 

68

 

(iv)          any
cessation of operations (by any Loan Party or any other member of the ERISA
Group) at a facility in the circumstances described in Section 4062(e) of
ERISA,

 

(v)           withdrawal
by any Loan Party or any other member of the ERISA Group from a Plan in the
circumstances described in Section 4063 of ERISA or the termination of
such Plan in the circumstances described in Section 4064 of ERISA,

 

(vi)          a
failure to make any required contribution to a Plan or the creation of any Lien
in favor of the PBGC or a Plan,

 

(vii)         the
adoption of an amendment to a Plan requiring the provision of security to such
Plan pursuant to Section 307 of ERISA, or

 

(viii)        the
distress termination of a Plan, under Title IV of ERISA, which has insufficient
assets to pay all liabilities.

 

7.3.8.2     Notices of Involuntary Termination and Annual Reports.

 

Promptly after receipt thereof, copies of (a) all
notices received by any Loan Party or any other member of the ERISA Group of
the PBGC’s intent to terminate any Plan administered or maintained by the
Borrower or any member of the ERISA Group, or to have a trustee appointed to
administer any such Plan; and (b) at the request of the Agent or any
Lender each annual report (IRS Form 5500 series) and all accompanying
schedules, the most recent actuarial reports, the most recent financial
information concerning the financial status of each Plan administered or maintained
by any Loan Party or any other member of the ERISA Group, and schedules showing
the amounts contributed to each such Plan by or on behalf of the Borrower or
any other member of the ERISA Group in which any of their personnel participate
or from which such personnel may derive a benefit, and each Schedule B
(Actuarial Information) to the annual report filed by any Loan Party or any
other member of the ERISA Group with the Internal Revenue Service with respect
to each such Plan.

 

7.3.8.3     Notice of Voluntary Termination.

 

Where a termination of any Plan would result in a Material Adverse
Change, promptly upon the filing thereof, copies of any Form 5310, or any
successor or equivalent form to Form 5310, filed with the PBGC in
connection with the termination of any Plan.

 

8.             DEFAULT

 

8.1                                 Events
of Default.

 

An Event of Default shall mean the occurrence or existence of any one
or more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):

 

69

 

8.1.1.                     Payments
Under Loan Documents.

 

The Borrower shall fail to pay (i) any
principal of any Loan (including scheduled installments, mandatory prepayments
or the payment due at maturity), Reimbursement Obligation or Letter of Credit
Borrowing when such principal is due hereunder or (ii) any interest on any
Loan, Reimbursement Obligation or Letter of Credit Borrowing or any other
amount owing hereunder or under the other Loan Documents within three (3) Business
Days after such interest or other amount becomes due in accordance with the
terms hereof or thereof;

 

8.1.2.                     Breach
of Warranty.

 

Any representation or warranty made at any
time by any of the Loan Parties herein or by any of the Loan Parties in any
other Loan Document, or in any certificate, other instrument or statement
furnished pursuant to the provisions hereof or thereof, shall prove to have
been false or misleading in any material respect as of the time it was made or
furnished;

 

8.1.3.                     Breach
of Certain Negative Covenants.

 

Any of the Loan Parties shall default in the
observance or performance of any covenant contained in Sections 7.2.10
[Borrower Base], 7.2.11 [Minimum ATNW], 7.2.12 [Leverage Ratio], 7.2.13 [Fixed
Charge Coverage Ratio] or 7.2.14 [Inventory and Land Purchase Limits];

 

8.1.4.                     Breach
of Other Covenants.

 

Any of the Loan Parties shall default in the
observance or performance of any other covenant, condition or provision hereof
or of any other Loan Document and such default shall continue unremedied for a
period of thirty (30) Business Days after notice to the Borrower from the
Agent;

 

8.1.5.                     Defaults
in Other Agreements or Indebtedness.

 

Either (i) a default or event of default
shall occur at any time under the terms of any other agreement involving
borrowed money or the extension of credit or any other Indebtedness (excluding
any surety bonds) under which any Loan Party may be obligated as a borrower or
guarantor in excess of $10,000,000 in the aggregate, and such breach, default
or event of default consists of the failure to pay (beyond any period of grace
permitted with respect thereto, whether waived or not) any Indebtedness when
due (whether at stated maturity, by acceleration or otherwise) or if such
breach or default permits or causes the acceleration of any Indebtedness
(whether or not such right shall have been waived) or the termination of any
commitment to lend, or (ii) draws shall be made on surety bonds in excess
of $10,000,000 in the aggregate issued on behalf of any Loan Party and such
Loan Party shall fail to reimburse the providers thereof within 60 days after
the date of the applicable draws;

 

70

 

8.1.6.                     Final
Judgments or Orders.

 

Any final judgments or orders for the payment
of money in excess of $10,000,000 in the aggregate (excluding amounts covered
by insurance with respect to which the relevant insurer acknowledged such
coverage) shall be entered against any Loan Party by a court having
jurisdiction, which judgment is not discharged, vacated, bonded or stayed
pending appeal within a period of thirty (30) days from the date of entry;

 

8.1.7.                     Loan
Document Unenforceable.

 

Any of the Loan Documents shall cease to be
legal, valid and binding agreements enforceable against the party executing the
same or such party’s successors and assigns (as permitted under the Loan
Documents) in accordance with the respective terms thereof or shall in any way
be terminated (except in accordance with its terms or as permitted under the
Loan Documents) or become or be declared ineffective or inoperative or shall in
any way be challenged or contested or cease to give or provide the respective
Liens, security interests, rights, titles, interests, remedies, powers or
privileges intended to be created thereby;

 

8.1.8.                     Uninsured
Losses; Proceedings Against Assets.

 

Any of the Loan Parties’ assets come within
the possession of any receiver, trustee, custodian or assignee for the benefit
of creditors and the same is not cured within thirty (30) days thereafter and
could reasonably be expected to constitute a Material Adverse Change;

 

8.1.9.                     Notice
of Lien or Assessment.

 

Any taxes or debts owing in excess of
$10,000,000 in the aggregate at any time or times hereafter to any of the
United States, or any department, agency or instrumentality thereof, or by any
state, county, municipal or other governmental agency, including the PBGC
become payable and the same are not paid within thirty (30) days after the same
become payable;

 

8.1.10.               Insolvency.

 

Any of (i) Hovnanian, (ii) the
Borrower or (iii) Restricted Subsidiaries owning as of the date of any
event described in this Section 8.1.10 three percent (3%) or more of the
Dollar value of all of the assets of all of the Subsidiaries of Hovnanian taken
as a whole ceases to be solvent or admits in writing its inability to pay its
debts as they mature;

 

8.1.11.               Events
Relating to Plans and Benefit Arrangements.

 

Any of the following occurs:  (i) any Reportable Event with respect to
a Plan, which the Agent reasonably determines in good faith constitutes grounds
for the termination of any Plan by the PBGC or the appointment of a trustee to
administer or liquidate any Plan, shall have occurred and be continuing; (ii) proceedings
shall have been instituted or other action taken to terminate any Plan, or a
termination notice shall have been

 

71

 

filed with respect to any Plan;
(iii) a trustee shall be appointed to administer or liquidate any Plan; (iv) the
PBGC shall give notice of its intent to institute proceedings to terminate any
Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and,
in the case of the occurrence of (i), (ii), (iii) or (iv) above, the
Agent reasonably determines in good faith that the amount of any Loan Party’s
liability is likely to exceed 10% of the Consolidated Tangible Net Worth of the
Loan Parties; (v) any “accumulated funding deficiency” (as defined in Section 302
of ERISA) shall exist with respect to any Plan, or any Lien in favor of the
PBGC or a Plan shall arise on the assets of the Borrower or any other member of
the ERISA Group,  (vi) any Loan
Party or any other member of the ERISA Group shall make any amendment to a Plan
with respect to which security is required under Section 307 of ERISA; (vii) any
Loan Party or any other member of the ERISA Group shall incur any liability in
connection with a withdrawal from a Multiemployer Plan; (viii) any Loan
Party or any other member of the ERISA Group shall withdraw under Section 4063
of ERISA (or shall be deemed under Section 4062(e) of ERISA to
withdraw) from a Plan; or (ix) any applicable Law is adopted, changed or
interpreted by any Official Body with respect to or otherwise affecting one or
more Plans, Multiemployer Plans or Benefit Arrangements and, with respect to
any of the events specified in (v), (vi), (vii), (viii) or (ix), the Agent
reasonably determines in good faith that any such occurrence, together with all
other such events, would be reasonably likely to result in a Material Adverse
Change;

 

8.1.12.               Cessation of Business.

 

Any Loan Party is enjoined, restrained or in
any way prevented by court order from conducting all or any material part of
its business and such injunction, restraint or other preventive order is not
dismissed within thirty (30) days after the entry thereof and any of the
foregoing could reasonably be expected to constitute a Material Adverse Change;

 

8.1.13.               Change
of Control.

 

(i)            Any person or group of persons (within the meaning of
Sections 13(d) or 14(a) of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership of (within the meaning of Rule 13d-3
promulgated by the SEC under said Act) 40% or more of the voting capital stock
of Hovnanian; or (ii) within a period of twelve (12) consecutive calendar
months, individuals who were directors of the Borrower on the first day of such
period, or who were nominated by a majority of such directors, shall cease to
constitute a majority of the board of directors of the Borrower;

 

8.1.14.               Involuntary
Proceedings.

 

A proceeding shall have been instituted in a
court having jurisdiction seeking a decree or order for relief in respect of
any of (i) Hovnanian, (ii) the Borrower or (iii) Restricted
Subsidiaries owning as of the date of any event described in this Section 8.1.14
three percent (3%) or more of the Dollar value of all of the assets of all of
the Subsidiaries of Hovnanian taken as a whole in an involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or similar official)
of any Loan Party for any substantial part of its property, or for the
winding-up

 

72

 

or liquidation of its affairs,
and such proceeding shall remain undismissed or unstayed and in effect for a
period of sixty (60) consecutive days or such court shall enter a decree or order
granting any of the relief sought in such proceeding; or

 

8.1.15.               Voluntary
Proceedings.

 

Any of (i) Hovnanian, (ii) the
Borrower or (iii) Restricted Subsidiaries owning as of the date of any
event described in this Section 8.1.15 three percent (3%) or more of the
Dollar value of all of the assets of all of the Subsidiaries of Hovnanian taken
as a whole shall commence a voluntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case under
any such law, or shall consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or other similar official) of itself or for any substantial part of its
property or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take any
action in furtherance of any of the foregoing.

 

8.2                                 Consequences
of Event of Default.

 

8.2.1.                     Events
of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.

 

If an Event of Default specified under
Sections 8.1.1 [Payments Under Loan Documents] through 8.1.13 [Change of
Control] shall occur and be continuing, the Lenders and the Agent shall be
under no further obligation to make Loans or issue Letters of Credit, as the
case may be, and the Agent may, and upon the request of the Required Lenders,
shall (i) by written notice to the Borrower, declare the unpaid principal
amount of the Loan then outstanding and all interest accrued thereon, any
unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder
and thereunder to be forthwith due and payable, and the same shall thereupon
become and be immediately due and payable to the Agent for the benefit of each
Lender without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, and (ii) require the Borrower
to, and the Borrower shall thereupon, deposit in an interest-bearing account
with the Agent, as cash collateral for its Obligations under the Loan
Documents, an amount equal to the maximum amount currently or at any time
thereafter available to be drawn on all outstanding Letters of Credit, and the
Borrower hereby pledges to the Agent and the Lenders, and grants to the Agent
and the Lenders a security interest in, all such cash as security for such
Obligations.  Upon the curing of all
existing Events of Default, the Agent shall return such cash collateral to the
Borrower; and

 

8.2.2.                     Bankruptcy,
Insolvency or Reorganization Proceedings.

 

If an Event of Default specified under Section 8.1.14
[Involuntary Proceedings] or 8.1.15 [Voluntary Proceedings] shall occur, the
Lenders shall be under no further obligations to make Loans or issue Letters of
Credit hereunder and the unpaid principal amount of the Loans then outstanding
and all interest accrued thereon, any unpaid fees and all other Indebtedness of
the Borrower to the Lenders hereunder and thereunder shall be

 

73

 

immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived and the Borrower shall upon such occurrence, deposit in
an interest-bearing account with the Agent, as cash collateral for its
Obligations under the Loan Documents, an amount equal to the maximum amount
currently or at any time thereafter available to be drawn on all outstanding
Letters of Credit, and the Borrower hereby pledges to the Agent and the
Lenders, and grants to the Agent and the Lenders a security interest in, all
such cash as security for such Obligations; and

 

8.2.3.                     Set-off.

 

If an Event of Default shall occur and be
continuing, any Lender to whom any Obligation is owed by any Loan Party
hereunder or under any other Loan Document or any participant of such Lender
which has agreed in writing to be bound by the provisions of Section 9.13
[Equalization of Lenders] and any branch, Subsidiary or Affiliate of such
Lender or participant anywhere in the world shall have the right, in addition
to all other rights and remedies available to it, without notice to such Loan
Party, to set-off against and apply to the then unpaid balance of all past-due
Loans and all other past-due Obligations of the Borrower and the other Loan
Parties hereunder or under any other Loan Document any debt owing to, and any
other funds held in any manner for the account of, the Borrower or such other
Loan Party by such Lender or participant or by such branch, Subsidiary or
Affiliate, including all funds in all deposit accounts (whether time or demand,
general or special, provisionally credited or finally credited, or otherwise)
now or hereafter maintained by the Borrower or such other Loan Party for its
own account (but not including funds held in custodian or trust accounts) with
such Lender or participant or such branch, Subsidiary or Affiliate; and

 

8.2.4.                     Suits,
Actions, Proceedings.

 

If an Event of Default shall occur and be
continuing, and whether or not the Agent shall have accelerated the maturity of
Loans pursuant to any of the foregoing provisions of this Section 8.2
[Consequences of Event of Default], the Agent or any Lender, if owed any amount
with respect to the Loans, may proceed to protect and enforce its rights by
suit in equity, action at law and/or other appropriate proceeding, whether for
the specific performance of any covenant or agreement contained in this
Agreement or the other Loan Documents, including as permitted by applicable Law
the obtaining of the ex  parte appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of the Agent
or such Lender; and

 

8.2.5.                     Application
of Proceeds.

 

From and after the date on which the Agent
has taken any action pursuant to this Section 8.2 [Consequences of Event
of Default] and until all Obligations of the Loan Parties have been paid in
full, any and all proceeds received by the Agent from the exercise of any
remedy by the Agent, shall be applied as follows:

 

(i)            first,
to reimburse the Agent and the Lenders for out-of-pocket costs, expenses and
disbursements, including reasonable attorneys’ and paralegals’

 

74

 

fees and legal expenses,
incurred by the Agent or the Lenders in connection with collection of any
Obligations of any of the Loan Parties under any of the Loan Documents;

 

(ii)           second,
to the repayment of all Indebtedness then due and unpaid of the Loan Parties to
the Lenders incurred under this Agreement or any of the other Loan Documents,
whether of principal, interest, fees, expenses or otherwise, in such manner as
the Agent may determine in its discretion; and

 

(iii)          the
balance, if any, as required by Law.

 

8.2.6.                     Other
Rights and Remedies.

 

In addition to all of the rights and remedies
contained in this Agreement or in any of the other Loan Documents, the Agent
shall have all of the rights and remedies under applicable Law, all of which
rights and remedies shall be cumulative and non-exclusive, to the extent
permitted by Law.  The Agent may, and
upon the request of the Required Lenders shall, exercise all post-default rights
granted to the Agent and the Lenders under the Loan Documents or applicable
Law.

 

9.             THE AGENT

 

9.1                                 Appointment.

 

Each Lender hereby irrevocably designates, appoints and authorizes PNC
Bank to act as Agent for such Lender under this Agreement and to execute and
deliver or accept on behalf of each of the Lenders the other Loan
Documents.  Each Lender hereby
irrevocably authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and any other
instruments and agreements referred to herein, and to exercise such powers and
to perform such duties hereunder as are specifically delegated to or required
of the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto.  PNC Bank agrees to
act as the Agent on behalf of the Lenders to the extent provided in this
Agreement.

 

9.2                                 Delegation
of Duties.

 

The Agent may perform any of its duties hereunder by or through agents
or employees (provided such delegation does not constitute a
relinquishment of its duties as Agent) and, subject to Sections 9.5
[Reimbursement and Indemnification of Agent by the Borrower] and 9.6
[Exculpatory Provisions; Limitation of Liability], shall be entitled to engage
and pay for the advice or services of any attorneys, accountants or other
experts concerning all matters pertaining to its duties hereunder and to rely
upon any advice so obtained.

 

9.3                                 Nature
of Duties; Independent Credit Investigation.

 

The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or otherwise exist.  The duties
of the Agent shall be mechanical and administrative in nature; the Agent shall
not have by reason of this Agreement a

 

75

 

fiduciary or trust relationship
in respect of any Lender; and nothing in this Agreement, expressed or implied,
is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement except as expressly set forth
herein.  Without limiting the generality
of the foregoing, the use of the term “agent” in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable Law.  Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.  Each Lender expressly acknowledges (i) that
the Agent has not made any representations or warranties to it and that no act
by the Agent hereafter taken, including any review of the affairs of any of the
Loan Parties, shall be deemed to constitute any representation or warranty by
the Agent to any Lender; (ii) that it has made and will continue to make,
without reliance upon the Agent, its own independent investigation of the
financial condition and affairs and its own appraisal of the creditworthiness
of each of the Loan Parties in connection with this Agreement and the making
and continuance of the Loans hereunder; and (iii) except as expressly
provided herein, that the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of any Loan or at any time or times thereafter.

 

9.4                                 Actions
in Discretion of Agent; Instructions From the Lenders.

 

The Agent agrees, upon the written request of the Required Lenders, to
take or refrain from taking any action of the type specified as being within
the Agent’s rights, powers or discretion herein, provided that the Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or any other Loan Document or
applicable Law.  In the absence of a
request by the Required Lenders, the Agent shall have authority, in its sole
discretion, to take or not to take any such action, unless this Agreement
specifically requires the consent of the Required Lenders or all of the
Lenders.  Any action taken or failure to
act pursuant to such instructions or discretion shall be binding on the Lenders,
subject to Section 9.6 [Exculpatory Provisions; Limitation of
Liability].  Subject to the provisions of
Section 9.6 [Exculpatory Provisions; Limitation of Liability], no Lender
shall have any right of action whatsoever against the Agent as a result of the
Agent acting or refraining from acting hereunder in accordance with the
instructions of the Required Lenders, or in the absence of such instructions,
in the absolute discretion of the Agent.+

 

9.5                                 Reimbursement
and Indemnification of Agent by the Borrower.

 

The Borrower unconditionally agrees to pay or reimburse the Agent, its
Affiliates and their respective directors, officers, employees, agents and
advisors and hold such Persons harmless against (a) liability for the
payment of all reasonable out-of-pocket costs, expenses and disbursements,
including fees and expenses of counsel (including the allocated costs of staff
counsel), incurred by such Persons (i) in connection with the development,
negotiation, preparation, printing, execution, administration, syndication,
interpretation and performance of this Agreement and the other Loan Documents, (ii) relating
to any requested amendments, waivers or consents pursuant to the provisions
hereof, (iii) in connection with the enforcement of this Agreement or any
other Loan Document or collection of amounts due hereunder or thereunder or the
proof and allowability of any claim arising under this Agreement or any other

 

76

 

Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (iv) in any
workout or restructuring or in connection with the protection, preservation,
exercise or enforcement of any of the terms hereof or of any rights hereunder
or under any other Loan Document or in connection with any foreclosure,
collection or bankruptcy proceedings, and (b) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against such Persons, in their capacity as such, in
any way relating to or arising out of this Agreement or any other Loan
Documents or any action taken or omitted by such Persons hereunder or
thereunder, provided that the Borrower shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements if the same results from
such Persons’ gross negligence or willful misconduct or from the gross
negligence or willful misconduct of any of such Person’s Affiliates, directors,
officers, employees, agents or advisors, or if the Borrower was not given
notice of the subject claim and the opportunity to participate in the defense
thereof, at its expense (except that the Borrower shall remain liable to the
extent such failure to give notice does not result in a loss to the Borrower),
or if the same results from a compromise or settlement agreement entered into
without the consent of the Borrower, which shall not be unreasonably
withheld.  In addition, after the
occurrence and during the continuance of an Event of Default, the Borrower
agrees to reimburse and pay all reasonable out-of-pocket expenses of the Agent’s
regular employees and agents engaged periodically to perform audits of the Loan
Parties’ books, records and business properties.

 

9.6                                 Exculpatory
Provisions; Limitation of Liability.

 

Neither the Agent nor any of its directors, officers, employees,
agents, attorneys or Affiliates shall (a) be liable to any Lender for any
action taken or omitted to be taken by it or them hereunder, or in connection
herewith including pursuant to any Loan Document, unless caused by its or their
own gross negligence or willful misconduct, (b) be responsible in any
manner to any of the Lenders for the effectiveness, enforceability,
genuineness, validity or the due execution of this Agreement or any other Loan
Documents or for any recital, representation, warranty, document, certificate,
report or statement herein or made or furnished under or in connection with
this Agreement or any other Loan Documents, or (c) be under any obligation
to any of the Lenders to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions hereof or thereof on
the part of the Loan Parties, or the financial condition of the Loan Parties,
or the existence or possible existence of any Event of Default or Potential
Default.  No claim may be made by any of
the Loan Parties, any Lender, the Agent or any of their respective Subsidiaries
against the Agent, any Lender or any of their respective directors, officers,
employees, agents, attorneys or Affiliates, or any of them, for any special,
indirect or consequential damages or, to the fullest extent permitted by Law, for
any punitive damages in respect of any claim or cause of action (whether based
on contract, tort, statutory liability, or any other ground) based on, arising
out of or related to any Loan Document or the transactions contemplated hereby
or any act, omission or event occurring in connection therewith, including the
negotiation, documentation, administration or collection of the Loans, and each
of the Loan Parties (for itself and on behalf of each of its Subsidiaries), the
Agent and each Lender hereby waive, release and agree never to sue upon any
claim for any such damages, whether such claim now exists or hereafter arises
and whether or not it is now known or

 

77

 

suspected to exist in its
favor.  The Agent shall promptly
distribute to each Lender copies of financial statements delivered by the
Borrower pursuant to Section 7.3.1 and Section 7.3.2 and the
Borrowing Base Certificates delivered pursuant to Section 7.3.3.2.  Each Lender agrees that, except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Agent hereunder or given to the Agent for the account of or with copies
for the Lenders, the Agent and each of its directors, officers, employees,
agents, attorneys or Affiliates shall not have any duty or responsibility to
provide any Lender with credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Loan Parties which may come into the possession of the
Agent or any of its directors, officers, employees, agents, attorneys or
Affiliates.

 

9.7                                 Reimbursement
and Indemnification of Agent by Lenders.

 

Each Lender agrees to reimburse and indemnify the Agent (to the extent
not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), its Affiliates and their respective directors, officers,
employees, agents and advisors in proportion to such Lender’s Ratable Share
from and against all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements, including
attorneys’ fees and disbursements (including the allocated costs of staff
counsel), and costs of appraisers and environmental consultants, of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Persons, in its capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken or omitted by such
Persons hereunder or thereunder, provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements (a) if the
same results from such Persons’ gross negligence or willful misconduct, or (b) if
such Lender was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that such Lender
shall remain liable to the extent such failure to give notice does not result
in a loss to the Lender), or (c) if the same results from a compromise and
settlement agreement entered into without the consent of such Lender, which
shall not be unreasonably withheld.  In
addition, each Lender agrees promptly upon demand to reimburse such Persons (to
the extent not reimbursed by the Borrower and without limiting the obligation
of the Borrower to do so) in proportion to its Ratable Share for all amounts
due and payable by the Borrower to the Agent in connection with the Agent’s periodic
audit of the Loan Parties’ books, records and business properties.

 

9.8                                 Reliance
by Agent.

 

The Agent shall be entitled to rely upon any writing, telegram, telex
or teletype message, electronic mail, resolution, notice, consent, certificate,
letter, cablegram, statement, order or other document or conversation by
telephone or otherwise believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon the advice
and opinions of counsel and other professional advisers selected by the
Agent.  The Agent shall be fully
justified in failing or refusing to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

 

78

 

9.9                                 Notice
of Default.

 

The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower referring to this
Agreement, describing such Potential Default or Event of Default and stating
that such notice is a “notice of default.”

 

9.10                           Notices.

 

The Agent shall promptly send to each Lender a copy of all notices
received from the Borrower pursuant to the provisions of this Agreement or the
other Loan Documents promptly upon receipt thereof.  The Agent shall promptly notify the Borrower
and the other Lenders of each change in the Base Rate and the effective date
thereof.

 

9.11                           Lenders
in Their Individual Capacities; Agents in its Individual Capacity.

 

With respect to its Revolving Credit Commitment, the Revolving Credit
Loans made by it and any other rights and powers given to it as a Lender
hereunder or under any of the other Loan Documents, the Agent shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not the Agent, and the term “Lender” and “Lenders” shall,
unless the context otherwise indicates, include the Agent in its individual
capacity.  PNC Bank and its Affiliates
and each of the Lenders and their respective Affiliates may, without liability
to account, except as prohibited herein, make loans to, issue letters of credit
for the account of, acquire equity interests in, accept deposits from, discount
drafts for, act as trustee under indentures of, and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business
with, the Loan Parties and their Affiliates, in the case of the Agent, as
though it were not acting as Agent hereunder and in the case of each Lender, as
though such Lender were not a Lender hereunder, in each case without notice to
or consent of the other Lenders.  The
Lenders acknowledge that, pursuant to such activities, the Agent or its
Affiliates may (i) receive information regarding the Loan Parties or any
of their Subsidiaries or Affiliates (including information that may be subject
to confidentiality obligations in favor of the Loan Parties or such Subsidiary
or Affiliate) and acknowledge that the Agent shall be under no obligation to
provide such information to them, and (ii) accept fees and other
consideration from the Loan Parties for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.

 

9.12                           Holders
of Notes.

 

The Agent may deem and treat any payee of any Note as the owner thereof
for all purposes hereof unless and until written notice of the assignment or
transfer thereof shall have been filed with the Agent.  Any request, authority or consent of any
Person who at the time of making such request or giving such authority or
consent is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.

 

79

 

9.13                           Equalization
of Lenders.

 

The Lenders and the holders of any participations in any Commitments or
Loans or other rights or obligations of a Lender hereunder agree among
themselves that, with respect to
all amounts received by any Lender or any such holder for application on any
Obligation hereunder or under any such participation, whether received by
voluntary payment, by realization upon security, by the exercise of the right
of set-off or banker’s lien, by counterclaim or by any other non-pro rata
source, equitable adjustment will be made in the manner stated in the following
sentence so that, in effect, all such excess amounts will be shared ratably
among the Lenders and such holders in proportion to their interests in payments
on the Loans, except as otherwise provided in Section 3.4.3 [Agent’s and
Lender’s Rights], 4.4.2 [Replacement of a Lender] or 4.6 [Additional
Compensation in Certain Circumstances]. 
The Lenders or any such holder receiving any such amount shall purchase
for cash from each of the other Lenders an interest in such Lender’s Loans in
such amount as shall result in a ratable participation by the Lenders and each
such holder in the aggregate unpaid amount of the Loans, provided that
if all or any portion of such excess amount is thereafter recovered from the
Lender or the holder making such purchase, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by law (including court order) to
be paid by the Lender or the holder making such purchase.

 

9.14                           Successor
Agent.

 

The Agent (i) may resign as Agent or (ii) shall resign if
such resignation is requested by the Required Lenders (if the Agent is a
Lender, the Agent’s Loans and its Commitment shall be considered in determining
whether the Required Lenders have requested such resignation) or required by Section 4.4.2
[Replacement of a Lender], in either case of (i) or (ii) by giving
not less than thirty (30) days’ prior written notice to the Borrower.  If the Agent shall resign under this
Agreement, then either (a) the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, subject to the consent of the
Borrower, such consent not to be unreasonably withheld, or (b) if a
successor agent shall not be so appointed and approved within the thirty (30)
day period following the Agent’s notice to the Lenders of its resignation, then
the Agent shall appoint from among the Lenders, with the consent of the
Borrower, such consent not to be unreasonably withheld, a successor agent who
shall serve as Agent until such time as the Required Lenders appoint and the
Borrower consents to the appointment of a successor agent.  Upon its appointment pursuant to either
clause (a) or (b) above, such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term “Agent” shall mean such
successor agent, effective upon
its appointment, and the former Agent’s rights, powers and duties as Agent
shall be terminated without any other or further act or deed on the part of
such former Agent or any of the parties to this Agreement.  After the resignation of any Agent hereunder,
the provisions of this Section 9 shall inure to the benefit of such former
Agent and such former Agent shall not by reason of such resignation be deemed
to be released from liability for any actions taken or not taken by it while it
was an Agent under this Agreement.

 

80

 

9.15                           Agent’s
Fees.

 

The Borrower shall pay to the Agents nonrefundable fees (the “Agent’s
Fees”) under the terms of a letters (the “Agent’s Letters”) between the
Borrower and Agents, as amended from time to time.

 

9.16                           Availability
of Funds.

 

The Agent may assume that each Lender has made or will make the
proceeds of a Loan available to the Agent unless the Agent shall have been
notified by such Lender on or before the later of (1) the close of
Business on the Business Day preceding the Borrowing Date with respect to such
Loan or two (2) hours before the time on which the Agent actually funds
the proceeds of such Loan to the Borrower (whether using its own funds pursuant
to this Section 9.16 or using proceeds deposited with the Agent by the
Lenders and whether such funding occurs before or after the time on which
Lenders are required to deposit the proceeds of such Loan with the Agent).  The Agent may, in reliance upon such
assumption (but shall not be required to), make available to the Borrower a
corresponding amount.  If such
corresponding amount is not in fact made available to the Agent by such Lender,
the Agent shall be entitled to recover such amount on demand from such Lender
(or, if such Lender fails to pay such amount forthwith upon such demand from
the Borrower) together with interest thereon, in respect of each day during the
period commencing on the date such amount was made available to the Borrower
and ending on the date the Agent recovers such amount, at a rate per annum
equal to (i) the Federal Funds Effective Rate during the first three (3) days
after such interest shall begin to accrue and (ii) the applicable interest
rate in respect of such Loan after the end of such three-day period.

 

9.17                           Calculations.

 

In the absence of gross negligence or willful misconduct, the Agent
shall not be liable for any error in computing the amount payable to any Lender
whether in respect of the Loans, fees or any other amounts due to the Lenders
under this Agreement.  In the event an
error in computing any amount payable to any Lender is made, the Agent, the
Borrower and each affected Lender shall, forthwith upon discovery of such
error, make such adjustments as shall be required to correct such error, and
any compensation therefor will be calculated at the Federal Funds Effective
Rate.

 

9.18                           Beneficiaries.

 

Except as expressly provided herein, the provisions of this Section 9
[The Agent] are solely for the benefit of the Agent and the Lenders, and the
Loan Parties shall not have any rights to rely on or enforce any of the
provisions hereof.  In performing its
functions and duties under this Agreement, the Agent shall act solely as agent
of the Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any of the
Loan Parties.

 

81

 

10.           MISCELLANEOUS

 

10.1                           Modifications,
Amendments or Waivers.

 

With the written consent of the Required Lenders, the Agent, acting on
behalf of all the Lenders, and the Borrower, on behalf of the Loan Parties, may
from time to time enter into written agreements amending or changing any
provision of this Agreement or any other Loan Document or the rights of the
Lenders or the Loan Parties hereunder or thereunder, or may grant written
waivers or consents to a departure from the due performance of the Obligations
of the Loan Parties hereunder or thereunder. 
Any such agreement, waiver or consent made with such written consent
shall be effective to bind all the Lenders and the Loan Parties; provided,
that, without the written consent of all the Lenders, no such agreement, waiver
or consent may be made which will:

 

10.1.1.               Increase
of Commitment.

 

Increase the amount of the aggregate
Revolving Credit Commitments;

 

10.1.2.               Extension
of Payment; Reduction of Principal, Interest or Fees; Modification of Terms of
Payment.

 

Subject to Section 2.10 [Extension by
Lenders of the Expiration Date], but whether or not any Loans are outstanding,
extend the time for payment of principal or interest of any Loan (excluding the
due date of any mandatory prepayment of a Loan or any mandatory Commitment
reduction in connection with such a mandatory prepayment hereunder except for
mandatory reductions of the Commitments on the Expiration Date), the Commitment
Fee or any other fee payable to any Lender, or reduce the principal amount of
or the rate of interest borne by any Loan or reduce the Commitment Fee or any
other fee payable to any Lender, or otherwise directly affect the terms of
payment of the principal of or interest of any Loan, the Commitment Fee or any
other fee payable to any Lender;

 

10.1.3.               Miscellaneous

 

Amend Section 2.11.1 [Release of
Guarantors],  4.2 [Pro Rata Treatment of Lenders], 9.6 [Exculpatory
Provisions; Limitation of Liability], 9.13 [Equalization of Lenders] or this Section 10.1
[Modifications, Amendments or Waivers] change the pro rata treatment of the
Lenders, change the definition of Required Lenders, or change any requirement
providing for the Lenders or the Required Lenders to authorize the taking of
any action hereunder;

 

provided, that no agreement, waiver or consent
which would modify the interests, rights or obligations of the Agent in its
capacity as Agent shall be effective without the written consent of the Agent
and provided further, that no provision of Sections 2.1.2 [Swing Loan
Commitment], 2.4.2 [Swing Loan Requests], 2.5.2 [Making Swing Loans], 2.6
[Swing Loan Note], 2.8 [Borrowings to Repay Swing Loans] and 4.8 [Settlement
Date Procedures] may be amended or modified without the consent of PNC Bank.

 

82

 

10.2                           No
Implied Waivers; Cumulative Remedies; Writing Required.

 

No course of dealing and no delay or failure of the Agent or any Lender
in exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or
operate as a waiver thereof, nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such a right, power,
remedy or privilege preclude any further exercise thereof or of any other
right, power, remedy or privilege.  The
rights and remedies of the Agent and the Lenders under this Agreement and any
other Loan Documents are cumulative and not exclusive of any rights or remedies
which they would otherwise have.  Any
waiver, permit, consent or approval of any kind or character on the part of any
Lender of any breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing.

 

10.3                           Reimbursement
and Indemnification of Lenders by the Borrower; Taxes.

 

The Borrower agrees unconditionally upon demand to pay or reimburse to
each Lender (other than the Agent, as to which the Borrower’s Obligations are
set forth in Section 9.5 [Reimbursement and Indemnification of Agent by
the Borrower]) and its Affiliates, and their respective directors, officers,
employees, agents and advisors and to save such Persons harmless against (i) liability
for the payment of all reasonable out-of-pocket costs, expenses and
disbursements (including fees and expenses of counsel (including allocated
costs of staff counsel) for each such Person except with respect to (a) and
(b) below), incurred by such Person (a) in connection with the
administration and interpretation of this Agreement, and other instruments and
documents to be delivered hereunder, (b) relating to any amendments,
waivers or consents pursuant to the provisions hereof, (c) in connection
with the enforcement of this Agreement or any other Loan Document, or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether
in bankruptcy or receivership proceedings or otherwise, and (d) in any
workout or restructuring or in connection with the protection, preservation,
exercise or enforcement of any of the terms hereof or of any rights hereunder
or under any other Loan Document or in connection with any foreclosure,
collection or bankruptcy proceedings, or (ii) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against such Person, in its capacity as such, in
any way relating to or arising out of this Agreement or any other Loan
Documents or any action taken or omitted by such Person hereunder or
thereunder, provided that the Borrower shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (A) if the same results
from such Person’s gross negligence or willful misconduct or from the gross
negligence or willful misconduct of any of such Person’s Affiliates, directors,
officers, employees, agents or advisors, or (B) if the Borrower was not
given notice of the subject claim and the opportunity to participate in the
defense thereof, at its expense (except that the Borrower shall remain liable
to the extent such failure to give notice does not result in a loss to the
Borrower), or (C) if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower, which shall not be
unreasonably withheld. The Borrower agrees unconditionally to pay all stamp,
document, transfer, recording or filing taxes or fees and similar impositions
now or hereafter determined by the Agent or any Lender to be

 

83

 

payable in connection with this
Agreement or any other Loan Document, and the Borrower agrees unconditionally
to save the Agent and the Lenders harmless from and against any and all present
or future claims, liabilities or losses with respect to or resulting from any omission
to pay or delay in paying any such taxes, fees or impositions.

 

10.4                           Holidays.

 

Whenever payment of a Loan to be made or taken hereunder shall be due
on a day which is not a Business Day such payment shall be due on the next
Business Day (except as provided in Section 3.2 [Interest Periods] with
respect to Interest Periods under the LIBO-Rate Option) and such extension of
time shall be included in computing interest and fees, except that the Loans
shall be due on the Business Day preceding the Expiration Date if the
Expiration Date is not a Business Day. 
Whenever any payment or action to be made or taken hereunder (other than
payment of the Loans) shall be stated to be due on a day which is not a
Business Day, such payment or action shall be made or taken on the next
following Business Day, and such extension of time shall not be included in
computing interest or fees, if any, in connection with such payment or action.

 

10.5                           Funding
by Branch, Subsidiary or Affiliate.

 

10.5.1.               Notional Funding.

 

Each Lender shall have the right from time to
time, without notice to the Borrower, to deem any branch, Subsidiary or
Affiliate (which for the purposes of this Section 10.5 shall mean any
corporation or association which is directly or indirectly controlled by or is
under direct or indirect common control with any corporation or association
which directly or indirectly controls such Lender) of such Lender to have made,
maintained or funded any Loan to which the LIBO-Rate Option applies at any
time, provided that immediately following (on the assumption that a
payment were then due from the Borrower to such other office), and as a result
of such change, the Borrower would not be under any greater financial
obligation (including pursuant to Section 4.6 [Additional Compensation in
Certain Circumstances]) than it would have been in the absence of such
change.  Notional funding offices may be
selected by each Lender without regard to such Lender’s actual methods of
making, maintaining or funding the Loans or any sources of funding actually
used by or available to such Lender.

 

10.5.2.               Actual Funding.

 

Each Lender shall have the right from time to
time to make or maintain any Loan by arranging for a branch, Subsidiary or
Affiliate of such Lender to make or maintain such Loan subject to the last
sentence of this Section 10.5.2.  If
any Lender causes a branch, Subsidiary or Affiliate to make or maintain any
part of the Loans hereunder, all terms and conditions of this Agreement shall,
except where the context clearly requires otherwise, be applicable to such part
of the Loans to the same extent as if such Loans were made or maintained by
such Lender, but in no event shall any Lender’s use of such a branch,
Subsidiary or Affiliate to make or maintain any part of the Loans hereunder
cause such Lender or such branch, Subsidiary or Affiliate to incur any cost or
expenses payable by the Borrower hereunder or

 

84

 

require the Borrower to pay any
other compensation to any Lender (including any expenses incurred or payable
pursuant to Section 4.6 [Additional Compensation in Certain
Circumstances]) which would otherwise not be incurred.

 

10.6                           Notices.

 

Any notice, request, demand, direction or other communication (for
purposes of this Section 10.6 only, a “Notice”) to be given to or made
upon any party hereto under any provision of this Agreement shall be given or
made by telephone or in writing (which includes means of electronic
transmission (i.e., “e-mail”) or facsimile transmission or by setting forth
such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of
such Website Posting (including the information necessary to access such site)
has previously been delivered to the applicable parties hereto by another means
set forth in this Section 10.6 in accordance with this Section 10.6.  Any such Notice must be delivered to the
applicable parties hereto at the addresses and numbers set forth under their
respective names on Schedule 1.1(B) hereof or in accordance
with any subsequent unrevoked Notice from any such party that is given in
accordance with this Section 10.6. 
Any Notice shall be effective:

 

(i)            In
the case of hand-delivery, when delivered;

 

(ii)           If
given by mail, four (4) days after such Notice is deposited with the
United States Postal Service, with first-class postage prepaid, return receipt
requested;

 

(iii)          In
the case of a telephonic Notice, when a party is contacted by telephone, if
delivery of such telephonic Notice is confirmed no later than the next Business
Day by hand delivery, a facsimile or electronic transmission, a Website Posting
or overnight courier delivery of a confirmatory notice (received at or before
noon on such next Business Day);

 

(iv)          In
the case of a facsimile transmission, when sent to the applicable party’s
facsimile machine’s telephone number if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile machine;

 

(v)           In
the case of electronic transmission, when actually received;

 

(vi)          In
the case of a Website Posting, upon delivery of a Notice of such posting
(including the information necessary to access such web site) by another means
set forth in this Section 10.6; and

 

(vii)         If
given by any other means (including by overnight courier), when actually
received.

 

Any Lender giving a Notice to a Loan Party shall concurrently send a
copy thereof to the Agent, and the Agent shall promptly notify the other
Lenders of its receipt of such Notice.

 

85

 

10.7                           Severability.

 

The provisions of this Agreement are intended to be severable.  If any provision of this Agreement shall be
held invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.

 

10.8                           Governing
Law.

 

Each Letter of Credit and Section 2.10 [Letter of Credit
Subfacility] shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be revised or amended from time to
time, and to the extent not inconsistent therewith, the internal laws of the
State of New Jersey without regard to its conflict of laws principles, and the
balance of this Agreement shall be deemed to be a contract under the Laws of
the State of New Jersey and for all purposes shall be governed by and construed
and enforced in accordance with the internal laws of the State of New Jersey
without regard to its conflict of laws principles.

 

10.9                           Prior
Understanding.

 

This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.

 

10.10                     Duration;
Survival.

 

All representations and warranties of the Borrower and Hovnanian
contained herein or made in connection herewith shall survive the making of
Loans and issuance of Letters of Credit and shall not be waived by the
execution and delivery of this Agreement, any investigation by the Agent or the
Lenders, the making of Loans, issuance of Letters of Credit, or payment in full
of the Loans.  All covenants and
agreements of the Borrower and Hovnanian contained in Sections 7.1
[Affirmative Covenants], 7.2 [Negative Covenants] and 7.3 [Reporting
Requirements] herein shall continue in full force and effect from and after the
date hereof so long as the Borrower may borrow or request Letters of Credit
hereunder and until termination of the Commitments and payment in full of the
Loans and expiration or termination of all Letters of Credit.  All covenants and agreements of the Borrower
contained herein relating to the payment of principal, interest, premiums,
additional compensation or expenses and indemnification, including those set
forth in Section 4 [Payments] and Sections 9.5 [Reimbursement and
Indemnification of Agent by the Borrower], 9.7 [Reimbursement and
Indemnification of Agent by Lenders] and 10.3 [Reimbursement and
Indemnification of Lenders by Borrower; Taxes], shall survive payment in full
of the Loans, expiration or termination of the Letters of Credit and
termination of the Commitments.

 

86

 

10.11                     Successors
and Assigns.

 

10.11.1    This
Agreement shall be binding upon and shall inure to the benefit of the Lenders,
the Agent, the Loan Parties a party hereto and their respective successors and
assigns, except that none of the Loan Parties a party hereto may assign or
transfer any of its rights and obligations hereunder or any interest
herein.  Each Lender may, at its own
cost, make assignments of or sell participations in all or any part of its
Commitments and the Loans made by it to one or more banks or other entities,
subject to the consent of the Borrower and the Agent with respect to any
assignee, such consent not to be unreasonably withheld provided that (1) no
consent of the Borrower shall be required (A) if an Event of Default
exists and is continuing, (B) in the case of an assignment by a Lender to
an Affiliate of such Lender, or (C) in respect of the sale of a
participation, (2) any assignment by a Lender to a Person other than an
Affiliate of such Lender may not be made in amounts less than the lesser of
$10,000,000 or the amount of the assigning Lender’s Commitment and (3) no
consent of the Agent shall be required in the case of an assignment by a Lender
to an Affiliate of such Lender.  In the
case of an assignment, upon receipt by the Agent of the Assignment and
Assumption Agreement, the assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights, benefits and obligations
as it would have if it had been a signatory Lender hereunder, the Commitments
shall be adjusted accordingly, and upon surrender of any Note subject to such
assignment, the Borrower shall execute and deliver a new Note to the assignee,
if such assignee requests such a Note in an amount equal to the amount of the
Revolving Credit Commitment assumed by it and a new Revolving Credit Note to
the assigning Lender, if the assigning Lender requests such a Note, in an
amount equal to the Revolving Credit Commitment or retained by it
hereunder.  Any Lender which assigns any
or all of its Commitment or Loans to a Person other than an Affiliate of such
Lender shall pay to the Agent a service fee in the amount of $3,500 for each
assignment.  In the case of a
participation, the participant shall only have the rights specified in Section 8.2.3
[Set-off] (the participant’s rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such Lender in
favor of the participant relating thereto and not to include any voting rights
except with respect to changes of the type referenced in Sections 10.1.1
[Increase of Commitment, Extension of Expiration Date], or 10.1.2 [Extension of
Payment; Reduction of Principal, Interest or Fees; Modification of Terms of
Payment]), all of such Lender’s obligations under this Agreement or any other
Loan Document shall remain unchanged, and all amounts payable by any Loan Party
hereunder or thereunder shall be determined as if such Lender had not sold such
participation.

 

10.11.2    Each
Lender or assignee or participant of a Lender that is not incorporated under
the laws of the United States of America or a state thereof (and, upon the
written request of the Agent, each other Lender or assignee or participant of a
Lender) shall deliver to the Borrower and the Agent a Withholding Certificate
as described in Section 10.17 [Tax Withholding Clause] relating to federal
income tax withholding.  Each Lender may
furnish any publicly available information concerning Hovnanian or any Loan
Party and any other information concerning Hovnanian or any Loan Party in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees or participants), provided that such
assignees and participants agree to be bound by the provisions of Section 10.12
[Confidentiality].

 

87

 

10.11.3    Notwithstanding
any other provision in this Agreement, any Lender may at any time pledge or
grant a security interest in all or any portion of its rights under this
Agreement, its Note (if any) and the other Loan Documents to any Federal
Reserve Lender in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14 without notice to or consent of the
Borrower or the Agent.  No such pledge or
grant of a security interest shall release the transferor Lender of its obligations
hereunder or under any other Loan Document.

 

10.12                     Confidentiality.

 

10.12.1.      General.

 

The Agent and
the Lenders each agree to keep confidential all information obtained from any
Loan Party or its Subsidiaries which is nonpublic and confidential or proprietary
in nature (including any information the Borrower specifically designates as
confidential), except as provided below, and to use such information only in
connection with their respective capacities under this Agreement and for the
purposes contemplated hereby.  The Agent
and the Lenders shall be permitted to disclose such information (i) to
outside legal counsel, accountants and other professional advisors who need to
know such information in connection with the administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the
confidentiality, (ii) to Moody’s, Standard & Poor’s and similar
rating agencies, (iii) to assignees and participants as contemplated by Section 10.11
[Successors and Assigns], and prospective assignees and participants subject to
an agreement of such Persons to maintain the confidentiality, (iv) to the
extent requested by any bank regulatory authority or, with notice to the
Borrower, as otherwise required by applicable Law or by any subpoena or similar
legal process, or in connection with any investigation or proceeding arising
out of the transactions contemplated by this Agreement, (v) if it becomes
publicly available other than as a result of a breach of this Agreement or
becomes available from a source not known to be subject to confidentiality
restrictions, or (vi) if the Borrower shall have consented to such
disclosure.

 

10.12.2.         Sharing Information
With Affiliates of the Lenders.

 

Each Loan
Party a party hereto acknowledges that from time to time financial advisory,
investment banking and other services (including the provision of swaps,
derivatives, securitizations or other financial products) may be offered or
provided to the Borrower or one or more of its Affiliates (in connection with
this Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and each of the Loan Parties a party hereto hereby
authorizes each Lender to share any information delivered to such Lender by
such Loan Party and its Subsidiaries pursuant to this Agreement, or in
connection with the decision of such Lender to enter into this Agreement, to
any such Subsidiary or Affiliate of such Lender, it being understood that any
such Subsidiary or Affiliate of any Lender receiving such information shall be
bound by the provisions of Section 10.12 [Confidentiality] as if it were a
Lender hereunder.  Such Authorization
shall survive the repayment of the Loans and other Obligations and the
termination of the Commitments.

 

88

 

10.13                     Counterparts.

 

This Agreement may be executed by different parties hereto on any
number of separate counterparts, each of which, when so executed and delivered,
shall be an original, and all such counterparts shall together constitute one
and the same instrument.

 

10.14                     Agent’s
or Lender’s Consent.

 

Whenever the Agent’s or any Lender’s consent is required to be obtained
under this Agreement or any of the other Loan Documents as a condition to any
action, inaction, condition or event, unless specifically otherwise provided
herein, the Agent and each Lender shall be authorized to give or withhold such
consent in its sole and absolute discretion and to condition its consent upon
the giving of additional collateral, the payment of money or any other matter.

 

10.15                     Exceptions.

 

The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.

 

10.16                 CONSENT TO
FORUM; WAIVER OF JURY TRIAL.

 

EACH LOAN PARTY A PARTY HERETO HEREBY
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE SUPERIOR COURT OF
NEW JERSEY, LAW DIVISION, MIDDLESEX COUNTY AND THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN PARTY AT THE ADDRESSES
PROVIDED FOR IN SECTION 10.6 [NOTICES] AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. 
EACH LOAN PARTY A PARTY HERETO WAIVES ANY OBJECTION TO JURISDICTION AND
VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO
ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.  EACH LOAN PARTY A PARTY HERETO, THE AGENT AND
THE LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT OR ANY COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

 

89

 

10.17                     Certifications
From Lenders and Participants.

 

10.17.1            Tax Withholding Clause.

 

Each Lender or
assignee or participant of a Lender that is not incorporated under the Laws of
the United States of America or a state thereof (and, upon the written request
of the Agent, each other Lender or assignee or participant of a Lender) agrees
that it will deliver to each of the Borrower and the Agent two (2) duly
completed appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16)
of the Income Tax Regulations (“Regulations”)) certifying its status (i.e., U.S.
or foreign person) and, if appropriate, making a claim of reduced, or exemption
from, U.S. withholding tax on the basis of an income tax treaty or an exemption
provided by the Internal Revenue Code. Such delivery may be made by electronic
transmission as described in §1.1441-1(e)(4)(iv) of the Regulations if the
Agent establishes an electronic delivery system. The term “Withholding Certificate”
means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY
and the related statements and certifications as required under §1.1441-1(e)(3) of
the Regulations; a statement described in §1.871-14(c)(2)(v) of the
Regulations; or any other certificates under the Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or
foreign person. Each Lender, assignee or participant required to deliver to the
Borrower and the Agent a valid Withholding Certificate pursuant to the
preceding sentence shall deliver such valid Withholding Certificate as follows:
(A) each Lender which is a party hereto on the Closing Date shall deliver
such valid Withholding Certificate at least five (5) Business Days prior
to the first date on which any interest or fees are payable by the Borrower
hereunder for the account of such Lender; (B) each assignee or participant
shall deliver such valid Withholding Certificate at least five (5) Business
Days before the effective date of such assignment or participation (unless the
Agent in its sole discretion shall permit such assignee or participant to
deliver such Withholding Certificate less than five (5) Business Days
before such date in which case it shall be due on the date specified by the Agent).
Each Lender, assignee or participant which so delivers a valid Withholding
Certificate further undertakes to deliver to each of the Borrower and the Agent
two (2) additional copies of such Withholding Certificate (or a successor
form) on or before the date that such Withholding Certificate expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent Withholding Certificate so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably requested by the
Borrower or the Agent. Notwithstanding the submission of a Withholding
Certificate claiming a reduced rate of, or exemption from, United States
withholding tax, the Agent shall be entitled to withhold United States federal income
taxes at the full 30% withholding rate if in its reasonable judgment it is
required to do so under the due diligence requirements imposed upon a
withholding agent under §1.1441-7(b) of the Regulations. Further, the
Agent is indemnified under §1.1461-1(e) of the Regulations against any
claims and demands of any Lender or assignee or participant of a Lender for the
amount of any tax it deducts and withholds in accordance with regulations under
§1441 of the Internal Revenue Code.

 

10.17.2    USA Patriot Act.

 

Each Lender or
assignee or participant of a Lender that is not incorporated under the Laws of
the United States of America or a state thereof (and is not excepted from the
certification requirement contained in Section 313 of the USA Patriot Act
and

 

90

 

the applicable regulations
because it is both (i) an affiliate of a depository institution or
foreign Lender that maintains a physical presence in the United States or
foreign country, and (ii) subject to supervision by a banking authority
regulating such affiliated depository institution or foreign bank) shall
deliver to the Agent the certification, or, if applicable, recertification,
certifying that such Lender is not a “shell” and certifying to other matters as
required by Section 313 of the USA Patriot Act and the applicable
regulations: (1) within 10 days after the Closing Date, and (2) as
such other times as are required under the USA Patriot Act.

 

10.18                     Joinder
of Guarantors.

 

Any Subsidiary of Hovnanian which is required to join the Guaranty
Agreement as a Guarantor pursuant to Section 7.2.7 [Subsidiaries,
Partnerships and Joint Ventures] or which is to become, a Restricted Subsidiary
shall execute and deliver to the Agent or the Agent’s counsel (i) a Guarantor
Joinder pursuant to which it shall join as a Guarantor the Guaranty Agreement;
and (ii) at the request of the Agent or its counsel, documents in the
forms described in Section 6.1 [First Loans and Letters of Credit]
modified as appropriate to relate to such new Guarantor.  Hovnanian and Borrower shall deliver such
Guarantor Joinder and any related documents that the Agent or its counsel may
reasonably request to the Agent or its counsel after the formation thereof and
its designation as a Restricted Subsidiary; such Subsidiary shall not be a
Restricted Subsidiary until the delivery and effectiveness of the items
required herein.

 

10.19       Concerning Agent Terms.

 

Notwithstanding anything contained herein which may be construed to the
contrary, none of the Syndication Agents, the Documentation Agents, Co-Managing
Agents and the Joint Lead Arrangers and Joint Book Runners shall exercise any
of the rights or have any of the responsibilities of the Agent hereunder, or
any other rights or responsibilities other than their respective rights and
responsibilities (if any) as Lenders hereunder.

 

10.20                     Ratification
of Notes and Loan Documents and Existing Obligations.

 

All of the terms, conditions, provisions and covenants in the Prior
Credit Agreement, the Notes and other Loan Documents delivered in connection
therewith, and all other documents delivered to the Agent and the Lenders in
connection with any of the foregoing documents and obligations evidenced or
secured thereby shall remain unaltered and in full force and effect and are
hereby ratified and confirmed in all respects, except as specifically modified
herein.  This Agreement amends and
restates, and supersedes, the Prior Credit Agreement and is in no way intended to
constitute a novation of the “Obligations” under the Prior Credit
Agreement.  On the date this Agreement
becomes effective, and subject to the satisfaction (or waiver by Agent in its
sole discretion) of all applicable conditions to advances hereunder, all sums
owing under the Prior Credit Agreement and the Loan Documents thereunder shall
be deemed to be outstanding and owing under, evidenced by, and governed by the
terms of this Agreement, the new Notes, and the other existing Loan Documents.

 

91

 

10.21                     No
Reliance on Agent’s Customer Identification Program.

 

Each Lender acknowledges and agrees that neither such Lender, nor any
of its Affiliates, participants or assignees, may rely on the Agent to carry
out such Lender’s, Affiliate’s, participant’s or assignee’s customer
identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP
Regulations”), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with any of
the Loan Parties, their Affiliates or their agents, the Loan Documents or the
transactions hereunder or contemplated hereby: (1) any identity
verification procedures, (2) any recordkeeping, (3) comparisons with
government lists, (4) customer notices or (5) other procedures
required under the CIP Regulations or such other Laws. 

 

[SIGNATURES CONTINUED ON NEXT
PAGE]

 

92

 

[SIGNATURE PAGE 1 OF 27 TO THE CREDIT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first written.

 

	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ J. Larry Sorsby

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief

  Financial Officer

  
				

 

 

[SIGNATURE PAGE 2 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  PNC BANK, NATIONAL ASSOCIATION

  
	
   

  	
  as Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Douglas G. Paul

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Douglas G. Paul

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  

 

 

[SIGNATURE PAGE 3 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  John D. Powers

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John D. Powers

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  

 

 

[SIGNATURE PAGE 4 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Mark W. Lariviere

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Mark W. Lariviere

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  
				

 

 

[SIGNATURE PAGE 5 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  J.P. MORGAN CHASE BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Michael P. O’Keefe

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Michael P. O’Keefe

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Associate

  

 

 

[SIGNATURE PAGE 6 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  THE ROYAL BANK OF SCOTLAND

  plc

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  David Apps

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  David Apps

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  
				

 

 

[SIGNATURE PAGE 7 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  KEYBANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Jeff V. Aycock

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jeff V. Aycock

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice President

  
				

 

 

[SIGNATURE PAGE 8 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  GUARANTY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Randy Reid

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Randy Reid

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  
				

 

 

[SIGNATURE PAGE 9 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  W. John Wendler

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  W. John Wendler

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  

 

 

[SIGNATURE PAGE 10 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Michael Raarup

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Michael Raarup

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  
				

 

 

[SIGNATURE PAGE 11 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  BNP PARIBAS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Duane Helkowski

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Duane Helkowski

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Simone Vinocour

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Simone Vinocour

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice President

  

 

 

[SIGNATURE PAGE 12 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  CALYON NEW YORK BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Attila Coach

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Attila Coach

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  James Gibson

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  James Gibson

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Managing Director

  

 

 

[SIGNATURE PAGE 13 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Charles Weddell

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Charles Weddell

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice President

  

 

 

[SIGNATURE PAGE 14 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  WASHINGTON MUTUAL BANK, FA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Paul S. Ulrich

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Paul S. Ulrich

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  
				

 

 

[SIGNATURE PAGE 15 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  EMIGRANT SAVINGS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Patricia Goldstein

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Patricia Goldstein

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Executive V.P. and

  Chief Credit Officer

  
				

 

 

[SIGNATURE PAGE 16 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  NATIONAL CITY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Brian Gallagher

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian Gallagher

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice President

  

 

 

[SIGNATURE PAGE 17 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  CITICORP NORTH AMERICA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Jeanne M. Craig

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Jeanne M. Craig

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice President

  

 

 

[SIGNATURE PAGE 18 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  SOVEREIGN BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  T. Gregory Donahue

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  T. Gregory Donahue

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  

 

 

[SIGNATURE PAGE 19 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  AMSOUTH BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Ronny Hudspeth

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Ronny Hudspeth

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  
				

 

 

[SIGNATURE PAGE 20 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  UNION BANK OF CALIFORNIA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Gary L. Roberts

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Gary L. Roberts

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice President

  

 

 

[SIGNATURE PAGE 21 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  CREDIT SUISSE, CAYMAN ISLANDS

  BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Bill O’Daly

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Bill O’Daly

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Cassandra Droogan

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Cassandra Droogan

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Associate

  

 

 

[SIGNATURE PAGE 22 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Wilfred V. Saun

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Wilfred V. Saun

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Joselin Fernandes

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Joselin Fernandes

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Associate Director

  

 

 

[SIGNATURE PAGE 23 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  LASALLE BANK NATIONAL

  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Leticia Ruiz

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Leticia Ruiz

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice President

  

 

 

[SIGNATURE PAGE 24 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  CITY NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Mary Bowman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Mary Bowman

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  

 

 

[SIGNATURE PAGE 25 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  CALIFORNIA BANK & TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Stephanie L. Lantz

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Stephanie L. Lantz

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice President

  
				

 

 

[SIGNATURE PAGE 26 OF 27 TO THE CREDIT AGREEMENT]

 

	
   

  	
  COMPASS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
  Johanna Duke Paley

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Johanna Duke Paley

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  

 

 

[SIGNATURE PAGE 27 OF 27 TO THE CREDIT AGREEMENT]

 

	
  ACCEPTED AND AGREED:

  
	
   

  	
   

  	
   

  
	
  HOVNANIAN ENTERPRISES, INC.

  
	
  as a Guarantor

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ J. Larry Sorsby

  	
   

  
	
   

  	
   

  	
   

  
	
  Name: 

  	
  J. Larry Sorsby

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Executive Vice President and

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  
							

 

 

SCHEDULE 1.1(A)(1)

 

PRICING
GRID—

VARIABLE
PRICING AND FEES

 

(expressed in basis points)

 

The following Grid shall apply based on the rating of Hovnanian’s
senior unsecured long-term debt (i.e. based on whether the Investment Grade
Period is in effect) and the Leverage Ratio.

 

	
  Level

  	
   

  	
  Investment Grade Period

  	
   

  	
  Leverage Ratio

  	
   

  	
  Commitment

  Fee (1)

  	
   

  	
  Base Rate Spread

  	
   

  	
  LIBO-Rate Spread

  	
   

  
	
   

  	
   

  	
  In effect

  	
   

  	
  Any Level

  	
   

  	
  20

  	
   

  	
  0

  	
   

  	
  100

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
   

  	
   

  	
  Less than or equal to 1.0
  to 1.0

  	
   

  	
  20

  	
   

  	
  0

  	
   

  	
  105

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
   

  	
   

  	
  Greater than 1.0 to 1.0 but
  less than or equal to 1.25 to 1.0

  	
   

  	
  25

  	
   

  	
  0

  	
   

  	
  125

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
   

  	
   

  	
  Greater than 1.0 to 1.25
  but less than or equal to 1.75 to 1.0

  	
   

  	
  25

  	
   

  	
  0

  	
   

  	
  145

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
   

  	
   

  	
  Greater than 1.75 to 1.0
  but less or equal to 2.00

  	
   

  	
  25

  	
   

  	
  0

  	
   

  	
  170

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
   

  	
   

  	
  Greater than 2.0 to 1.0

  	
   

  	
  30

  	
   

  	
  0

  	
   

  	
  195

  	
   

  

 

(1)                              The
Commitment Fee set forth in the grid at each level shall be increased by 10
basis points for any calendar quarter if both (i) the Average Daily Usage
Percentage in such quarter is less than 25%, and (ii) the Average Daily
Usage Percentage in the immediately preceding calendar quarter was less than
25%.

 

For purposes of determining the Applicable Margin and the Applicable
Commitment Fee Rate:

 

(a)           The Applicable
Margin and the Applicable Commitment Fee Rate shall be determined on the
Closing Date based on the Leverage Ratio computed as of January 31, 2005
pursuant to a Compliance Certificate to be delivered on the Closing Date.

 

(b)           The Applicable
Margin and the Applicable Commitment Fee Rate shall be recomputed as of January 31,
2005 and the end of each subsequent fiscal quarter based on the Leverage Ratio
as of such quarter end.  Any increase or
decrease in the Applicable Margin or the Applicable Commitment Fee Rate
computed as of a quarter end shall be effective on the date on

 

(A) - 1

 

which the Compliance
Certificate evidencing such computation is due to be delivered under Section 7.3.3,
except that if the Applicable Margin and the Applicable Commitment Fee Rate
change as a result of a change in the rating of Hovnanian’s senior unsecured
long-term debt, such change shall occur on the effective date of such change in
the rating, provided that any reduction in the Applicable Margin and the
Applicable Commitment Fee Rate resulting from a change in such rating shall not
occur until the Borrower has notified the Agent of such change.

 

(A) - 2

 

SCHEDULE 1.1(A)(2)

AUTHORIZED OFFICERS AS OF THE CLOSING DATE

 

J.
Larry Sorsby, Executive Vice President and Chief Financial Officer

 

Peter
Reinhart, Senior Vice President and General Counsel

 

Paul
Buchanan, Senior Vice President and Corporate Controller

 

Kevin
C. Hake, Senior Vice President and Treasurer

 

Brad
O’Connor, Vice President and Associate Corporate Controller

 

Nancy
Marrazzo, Assistant Vice President and Assistant Treasurer

 

(A) - 3

 

SCHEDULE
1.1(B)

 

COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES

 

(Amended and Restated June 14, 2005)

 

Part 1 –
Addresses Commitments of Lenders and Addresses for Notices to Lenders

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name (also Agent):

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PNC Bank, National Association

  	
   

  	
  $

  	
  85,000,000

  	
   

  	
  7.0833333

  	
  %

  
	
  Address for Notices:

  Two Tower Center, 18th Floor

  E. Brunswick, NJ 08816

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Douglas G. Paul

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (732) 220-3566

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (732) 220-3744

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  PNC Firstside Center

  500 First Avenue, 4th Floor

  Pittsburgh, PA 15219

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Rini Davis

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (412) 762-7638 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (412) 762-8672

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  85,000,000

  	
   

  	
  7.0833333

  	
  %

  
	
  Address for Notices:

  231 S. LaSalle Street

  Mail Code IL 1-231-10-35

  Chicago, IL 60697

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Mark Lariviere

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (312) 828-2513

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (312) 974-4970

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  901 Main Street

  14th Floor

  Dallas, TX 75202

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Eldred Sholars

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (214) 209-3044

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (214) 290-9429

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 1

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  $

  	
  85,000,000

  	
   

  	
  7.0833333

  	
  %

  
	
  Address for Notices:

  Commercial Real Estate Group

  2840 Morris Avenue; 3rd Floor

  Union, NJ 07083

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  John Powers

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (908) 624-2857

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (908) 624-2870

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  Commercial Real Estate Group

  2840 Morris Avenue; 3rd Floor

  Union, NJ 07083

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  John Powers

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (908) 624-2857

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (908) 624-2870

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  82,000,000

  	
   

  	
  6.8333333

  	
  %

  
	
  Address for Notices:

  131 South Dearborn, Floor 5

  Chicago, IL 60603

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Kenneth Nelson

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (312) 325-3129

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (312) 325-3122 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:
131 South Dearborn, Floor 5

  Chicago, IL 60603

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Josh Barcelona

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (312) 385-7015

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (312) 385-7101

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 2

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Royal Bank of Scotland plc

  	
   

  	
  $

  	
  82,000,000

  	
   

  	
  6.8333333

  	
  %

  
	
  Address for Notices:

  101 Park Avenue, 12th Floor

  New York, New York 10178

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  David Apps

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (212) 401-3745

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 401-3456

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  101 Park Avenue, 12th Floor

  New York, New York 10178

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Caroline Cancel

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (212) 401-1407

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 401-1494

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KeyBank National Association

  	
   

  	
  $

  	
  73,000,000

  	
   

  	
  6.0833333

  	
  %

  
	
  Address for Notices
1200 Abernathy Road, Suite 1550

  Atlanta, GA 30328

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Jeff V. Aycock

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (770) 510-2105

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (770) 510-2195

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  KeyBank Real Estate Capital

  1200 Abernathy Road, Suite 1550

  Atlanta, GA 30328

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Jacky Krieger 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (770) 510-2109 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (770) 510-2197

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 3

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Guaranty Bank

  	
   

  	
  $

  	
  57,000,000

  	
   

  	
  4.7500000

  	
  %

  
	
  Address for Notices:

  8333 Douglas Avenue

  Dallas, Texas 75225 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Randall S. Reid

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (214) 360-2735

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (214) 360-4892

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  8333 Douglas Avenue

  Dallas, Texas 75225

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Jill Fallows

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (214) 360-1681

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (214) 360-1661

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SunTrust Bank 

  	
   

  	
  $

  	
  50,000,000

  	
   

  	
  4.1666666

  	
  %

  
	
  Address for Notices:

  8245 Boone Boulevard

  Suite 820

  Vienna, VA 22182

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  John Wendler

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (703) 442-1563

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (703) 442-1570

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  10710 Midlothian Turnpike,

  Richmond, VA 23235

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn:

  	
  DeCar Jeter 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  804-594-1072

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  804-594-1139

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 4

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.S. Bank National Association

  	
   

  	
  $

  	
  50,000,000

  	
   

  	
  4.1666666

  	
  %

  
	
  Address for Notices:

  US Bancorp Commercial Real Estate

  800 Nicollet Mall, 3rd Floor

  Minneapolis, MN 55402-7020

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Leslie Lynch

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (612) 303-3595

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (612) 303-2270

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  U.S. Bank National Association

  800 Nicollet Mall

  Minneapolis, MN 55402

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Michael Raarup

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (612) 303-3586

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (612) 303-2270

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BNP PARIBAS 

  	
   

  	
  $

  	
  47,000,000

  	
   

  	
  3.9166666

  	
  %

  
	
  Address for Notices:

  787 Seventh Avenue

  New York, NY 10019

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Duane Helkowski

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (212) 841-2940 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 841-3830 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  787 Seventh Avenue

  New York, NY 10019

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Duane Helkowski 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (212) 841-2940 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 841-3830

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 5

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CALYON New York Branch 

  	
   

  	
  $

  	
  47,000,000

  	
   

  	
  3.9166666

  	
  %

  
	
  Address for Notices:
2200 Ross Avenue, Suite 4400

  West

  Dallas, TX 75201

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Robert Smith

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (214) 220-2311 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (214) 220-2323

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  1301 Avenue of the Americas

  New York NY 10019

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  George Lewis

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (212) 261-7641

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 261-7696

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Comerica Bank 

  	
   

  	
  $

  	
  47,000,000

  	
   

  	
  3.9166666

  	
  %

  
	
  Address for Notices:

  500 Woodward Avenue

  MC 3256

  Detroit, MI 48226

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Charles Weddell 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (313) 222-3323

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (313) 222-9295 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  500 Woodward Avenue

  MC 3256

  Detroit, MI 48226

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Keshia Boone

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (313) 222-9284

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (313) 222-9295

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 6

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Washington Mutual Bank, FA 

  	
   

  	
  $

  	
  45,000,000

  	
   

  	
  3.7500000

  	
  %

  
	
  Address for Notices:

  620 W. Germantown Pike

  Plymouth Meeting, PA 19462

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Paul Ulrich

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (610) 238-6929

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (610) 828-7293

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Emigrant Savings Bank 

  	
   

  	
  $

  	
  42,000,000

  	
   

  	
  3.5000000

  	
  %

  
	
  Address for Notices:

  335 Madison Avenue, Floor 15

  New York, NY 10017

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Tom Devine

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (212) 850-4827

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 850-4608 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  5 East Forty-Second Street

  6th Floor

  New York, NY 10017

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Rosemary Granza

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (212) 850-4608

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 850-4811

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 7

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citicorp North America, Inc.

  	
   

  	
  $

  	
  42,000,000

  	
   

  	
  3.5000000

  	
  %

  
	
  Address for Notices:

  390 Greenwich Street

  New York, NY 10013

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Thomas Flanagan

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (212) 723-6927

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (646) 862-8866 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  Two Penn’s Way

  First Floor

  New Castle, DE 19720

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Lenora Durant

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (302) 894-6062

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 994-0849

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National City Bank 

  	
   

  	
  $

  	
  38,000,000

  	
   

  	
  3.1666666

  	
  %

  
	
  Address for Notices:

  One South Broad Street

  13th Floor

  Philadelphia, PA 19107

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Brian Gallagher

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (267) 256-4088

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (267) 256-4001 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  One South Broad Street, 13th Floor

  Philadelphia, PA 19107

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Marie Pascale

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (267) 256-4042

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (267) 256-4001

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 8

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sovereign Bank 

  	
   

  	
  $

  	
  33,000,000

  	
   

  	
  2.7500000

  	
  %

  
	
  Address for Notices:

  75 State Street

  Mail Code MA1 SST 04-11

  Boston, MA 02109

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Erin Aslakson

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (617) 757-5564

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (617) 757-5652

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AmSouth Bank 

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  2.5000000

  	
  %

  
	
  Address for Notices:

  1900 5th Avenue North

  Birmingham, AL 35203

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Ronny Hudspeth 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (205) 307-4227

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (205) 801-0138 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  1900 5th Avenue North

  Birmingham, AL 35203

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Ronny Hudspeth 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (205) 307-4227

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (205) 801-0138

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 9

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Union Bank of California, N.A.

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  2.5000000

  	
  %

  
	
  Address for Notices:

  350 California Street, 7th Floor

  San Francisco, CA 94104

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Gary Roberts

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (415) 705-5035

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (415) 433-7438 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  350 California Street, 7th Floor

  San Francisco, CA 94104

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Gary Roberts 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (415) 705-5035

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (415) 433-7438

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Suisse, Cayman Islands
  Branch 

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  2.5000000

  	
  %

  
	
  Address for Notices:

  Eleven Madison Avenue

  New York, NY 10010

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Williams O’Daly 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (212) 325-1986

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 743-2254 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  One Madison Avenue

  New York, NY 10010

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Ed Markowski

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (212) 538-3380

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (212) 325-9049

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 10

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UBS Loan Finance LLC 

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  2.5000000

  	
  %

  
	
  Address for Notices:

  UBS AG, Stamford Branch

  677 Washington Blvd., 6-South

  Stamford, CT 06901

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Wilfred Saint 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (203) 719-4330 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (203) 719-3888

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  UBS AG, Stamford Branch

  677 Washington Blvd., 6-South

  Stamford, CT 06901

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Anthony Finocchi

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (203) 719-3377 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (203) 719-3888

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LaSalle Bank National
  Association 

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  2.0833333

  	
  %

  
	
  Address for Notices:

  610 Newport Center Drive

  Suite 660

  Newport Beach, CA 92660

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention: 

  	
  Leticia Ruiz

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (949) 219-8968

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (949) 219-8977 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  135 South LaSalle

  Chicago, IL 60603

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Gloria Favela 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (312) 904-5417

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (312) 904-6691

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 11

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  City National Bank

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  2.0833333

  	
  %

  
	
  Address for Notices:

  2001 No. Main Street, Suite 200

  Walnut Creek, CA 94596

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Mary Bowman 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (925) 274-2793 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (925) 274-2758 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  9701 Wilshire Boulevard

  Suite 600

  Beverly Hills, CA 90212

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Laurel Burns 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (310) 888-6484

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (310) 888-6493

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  California Bank &
  Trust 

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  1.6666666

  	
  %

  
	
  Address for Notices:

  2929 N. Central Avenue

  Suite 1200

  Phoenix, AZ 85012

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Stephanie L. Lanty 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (602) 241-2227

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (602) 230-1345 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  2929 N. Central Avenue

  Suite 1200

  Phoenix, AZ 85012

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Stephanie L. Lanty 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (602) 241-2227 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (602) 230-1345

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B) - 12

 

	
  Lender

  	
   

  	
  Amount of

  Commitment for

  Revolving

  Credit Loans

  	
   

  	
  Ratable
  Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender Name: 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Compass Bank 

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  1.6666666

  	
  %

  
	
  Address for Notices:

  15 South 20th Street

  Birmingham, AL 35233

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Johanna Duke Paley 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (205) 297-3851 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (205) 297-7994 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Lending Office:

  15 South 20th Street

  Birmingham, AL 35233

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Johanna Duke Paley 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (205) 297-3851

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  (205) 297-7994

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  1,200,000,000

  	
   

  	
  100

  	
  %

  

 

(B) - 13

 

	
  AGENT

  	
   

  
	
  Name:

  	
  Douglas G. Paul, Senior Vice President

  	
   

  
	
  Address:

  	
  PNC Bank, National Association

  	
   

  
	
   

  	
  Two Tower Center, 18th Floor

  	
   

  
	
   

  	
  East Brunswick, New Jersey 08816

  	
   

  
	
  Telephone:

  	
  (732) 220-3566

  	
   

  
	
  Telecopy:

  	
  (732) 220-3744

  	
   

  
	
   

  	
   

  
	
  BORROWER:

  	
   

  
	
  Name:

  	
  K. HOVNANIAN ENTERPRISES, INC.

  	
   

  
	
  Address:

  	
  10 Route 35, P.O. Box 500

  	
   

  
	
   

  	
  Red Bank, NJ 07701

  	
   

  
	
  Attention:

  	
  Kevin C. Hake

  	
   

  
	
  Telephone:

  	
  (732) 747-7800

  	
   

  
	
  Telecopy:

  	
  (732) 747-6835

  	
   

  
	
   

  	
   

  
	
  GUARANTORS:

  	
   

  
	
  Name:

  	
  [name of Guarantor]

  	
   

  
	
  Address:

  	
  c/o K. Hovnanian Enterprises, Inc.

  	
   

  
	
   

  	
  10 Route 35, P.O. Box 500

  	
   

  
	
   

  	
  Red Bank, NJ 07701

  	
   

  
	
  Attention:

  	
  Kevin C. Hake

  	
   

  
	
  Telephone:

  	
  (732) 747-7800

  	
   

  
	
  Telecopy:

  	
  (732) 747-6835

  	
   

  

 

(B) - 14

 

SCHEDULE 1.1(C)

LISTING OF RESTRICTED SUBSIDIARIES, JOINT
VENTURES,

MORTGAGE SUBSIDIARIES AND NON-RESTRICTED PERSONS

 

See Schedule 5.1.2.

 

 

SCHEDULE 1.1(E)

INCOME PRODUCING PROPERTIES

 

1.     96 unit
rental property located at Ocean, New Jersey, know as Whalepond Village.

 

2.     75 unit rental property located at Mahwah,
New Jersey, know as Norfolk Village.

 

 

SCHEDULE 1.1(P)

PERMITTED LIENS

 

None.

 

 

SCHEDULE 5.1.8

MATERIAL ADVERSE EVENTS SINCE OCTOBER 31,
2004

 

None.

 

 

SCHEDULE 5.1.12

CONSENTS AND APPROVALS

 

None.

 

 

EXHIBIT 1.1(A)

 

FORM OF

ASSIGNMENT
AND ASSUMPTION AGREEMENT

 

This ASSIGNMENT AND ASSUMPTION AGREEMENT (the
“Assignment”) is dated as of the Effective Date set forth below and is
entered into by and between [Insert name of Assignor]
(the “Assignor”) and [Insert name of Assignee]
(the “Assignee”).  Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (as amended, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment as if set forth herein in full.

 

For an agreed consideration, the Assignor
hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby
irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by the Agent as contemplated below, the interest
in and to all of the Assignor’s rights and obligations under the Credit
Agreement and any other documents or instruments delivered pursuant thereto
that represents the amount and percentage interest identified below of all of
the Assignor’s outstanding rights and obligations under the respective
facilities identified below (including, to the extent included in any such
facilities, letters of credit and swingline loans) (the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment, without
representation or warranty by the Assignor.

 

	
  1.

  	
   

  	
  Assignor:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
   

  	
   [and
  is an Affiliate(1)]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower:

  	
   

  	
  K. Hovnanian Enterprises, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Agent:

  	
   

  	
  PNC Bank, National Association, as the
  agent under the Credit Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Credit Agreement:

  	
   

  	
  The Fifth Amended and Restated Credit
  Agreement dated June 14, 2005 among K. Hovnanian Enterprises, Inc.
  (the “Borrower”), Hovnanian Enterprises, Inc., as a Guarantor, the
  Lenders now or hereafter party thereto and PNC Bank, National Association, as
  administrative agent (the “Agent”)

  

 

(1)          Insert if applicable.

 

 

6.                                       Assigned
Interest:

	
  Facility Assigned

  	
   

  	
  Aggregate

  Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage

  Assigned of

  Commitment/Loans(2)

  	
   

  
	
   

  	
  (3)

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  

 

Effective Date:                   
      , 20     [TO BE
INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.](4)

 

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

 

	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

[Consented to and](5) Accepted:

 

	
  PNC BANK, NATIONAL ASSOCIATION, as

  
	
   Agent

  
	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

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

(3)   Fill in the
appropriate terminology for the types of facilities under the Credit Agreement
that are being assigned under this Assignment (e.g. “Revolving Credit
Commitment”, “Term Loan Commitment”, etc.) The same percentage of each facility
owned by the Assignor shall be assigned to the Assignee.

(4)  Assignor shall pay a fee of $3,500 to the Agent in connection
with the Assignment.

(5)   To be added only if
the consent of the Agent is required by the terms of the Credit Agreement.

 

2

 

[Consented to:](6)

 

	
  [NAME OF BORROWER OR OTHER RELEVANT PARTY]

  
	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

(6)   To be added only if
the consent of the Borrower and/or other parties (e.g. Swingline Lender, L/C
Issuer) is required by the terms of the Credit Agreement.

 

3

 

ANNEX 1

 

[                  ](7)

 

STANDARD TERMS AND CONDITIONS
FOR ASSIGNMENT

AND ASSUMPTION AGREEMENT

 

1.                                       Representations
and Warranties.

 

1.1                                 Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with
respect to (i) any statements, warranties or representations made in or in
connection with any Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or
any other instrument or document delivered pursuant thereto, other than this
Assignment (herein collectively the “Loan Documents”), or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

 

1.2.                              Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements, if any, of an eligible assignee under the Credit
Agreement, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.3 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision, and (v) if Assignee is not incorporated
or organized under the laws of the United States of America or any State
thereof, attached to the Assignment is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

 

2.                                       Payments.  From and after the Effective Date, the Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.(8)

 

3.                                       General
Provisions.  This Assignment shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.  This
Assignment may be executed in any number of counterparts, which together shall
constitute one instrument.  Delivery of
an executed counterpart of a signature page of this Assignment by telecopy
shall be effective as delivery of a manually executed counterpart of this
Assignment.  This Assignment shall be
governed by, and construed in accordance with, the laws of the State of New
Jersey.

 

(7)   Describe Credit
Agreement at option of Agent.

(8)   Agent should consider
whether this method conforms to its systems. 
In some circumstances, the following alternative language may be
appropriate:  “From and after the
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignee whether such amounts have accrued prior to or on or after the
Effective Date.  The Assignor and the
Assignee shall make all appropriate adjustments in payments by the Agent for
periods prior to the Effective Date or with respect to the making of this
assignment directly between themselves.”

 

 

EXHIBIT 1.1(G)(1)

 

FORM OF

AMENDED AND RESTATED GUARANTY AND SURETYSHIP AGREEMENT

 

THIS AMENDED AND RESTATED GUARANTY AND SURETYSHIP
AGREEMENT (the “Guarantee”) is made and entered into June 14, 2005, by
each of the entities listed on the signature pages hereto (each a “Guarantor”
and collectively, the “Guarantors”), in favor of PNC BANK, NATIONAL
ASSOCIATION, including its successors and assigns, as administrative agent for
the Lenders under the Credit Agreement described below (the “Agent”).

 

BACKGROUND:

 

In order to induce the Lenders to make loans to K.
Hovnanian Enterprises, Inc., a California corporation (the “Borrower”), in
accordance with that certain Fifth Amended and Restated Credit Agreement of
even date herewith (as it may hereafter from time to time be amended, restated,
modified or supplemented, the “Credit Agreement”) by and among the Borrower,
Hovnanian Enterprises, Inc. (one of the Guarantors), the Agent, and the
Lenders now or hereafter party thereto (the “Lenders”), each Guarantor hereby
unconditionally and irrevocably guarantees and becomes surety as though it was
a primary obligor for the full and timely payment when due, whether at
maturity, by declaration, acceleration or otherwise, of the principal of and
interest and fees on all Obligations (as defined in the Credit Agreement), both
those now in existence and those that shall hereafter be made, of the Borrower
to the Agent and the Lenders under the Credit Agreement and the Notes issued by
the Borrower in connection therewith and any extensions, renewals, replacements
or refundings thereof, and each and every other obligation or liability (both
those now in existence and those that shall hereafter arise and including,
without limitation, all costs and expenses of enforcement and collection,
including reasonable attorney’s fees) of the Borrower to the Lenders under the
Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement), and any extensions, renewals, replacements or refundings thereof
(hereinafter referred to as the “Guaranteed Indebtedness”), whether or not such
Guaranteed Indebtedness or any portion thereof shall hereafter be released or
discharged or is for any reason invalid or unenforceable.

 

1.                                       Capitalized terms used herein and not otherwise
defined herein shall have such meanings given to them in the Credit Agreement.

 

2.                                       Each Guarantor agrees to make such full payment
forthwith upon demand of the Agent when the Guaranteed Indebtedness or any
portion thereof is due to be paid by the Borrower to the Lenders, whether at
stated maturity, by declaration, acceleration or otherwise.  Each Guarantor agrees to make such full
payment irrespective of whether or not any one or more of the following events
has occurred:  (i) the Agent has
made any demand on the Borrower or the other Guarantors; (ii) the Agent
has taken any action of any nature against the Borrower or the other
Guarantors; (iii) the Agent has pursued any rights which it has against
any other Person who may be liable for the Guaranteed Indebtedness; (iv) the
Agent holds or has resorted to any security for the Guaranteed Indebtedness; or
(v) the Agent has invoked any other remedy or right it has available with
respect to the Guaranteed Indebtedness. 
Each Guarantor further agrees to

 

 

make full payment to the Lenders even if circumstances exist which
otherwise constitute a legal or equitable discharge of such Guarantor as surety
or guarantor.

 

3.                                       The terms, conditions and provisions of Section 5.1
[Representations and Warranties] of the Credit Agreement are incorporated
herein by reference as if fully set forth in this Guarantee.  The Guarantors, jointly and severally,
without any further act or undertaking or the occurrence of any other event,
make the representations and warranties set forth in Section 5.1
[Representations and Warranties] of the Credit Agreement to the Agent and to
each of the Lenders on the date hereof and on the Closing Date and each date
thereafter on which a Loan is made or a Letter of Credit is issued as provided
in and subject to Section 6.1 [First Loans and Letters of Credit] and Section 6.2
[Each Additional Loan or Letter of Credit] of the Credit Agreement.  In addition, each Guarantor warrants to the
Agent and the Lenders that: (i) no other agreement, representation or
special condition exists between such Guarantor and the Agent or any Lender
regarding the liability of such Guarantor hereunder, nor does any understanding
exist between such Guarantor and any Lender that the obligations of such
Guarantor hereunder are or will be other than as set forth herein; and (ii) as
of the date hereof, such Guarantor has no defense whatsoever to any action or
proceeding that may be brought to enforce this Guarantee.

 

4.                                       Until all of the Guaranteed Indebtedness is paid
in full, each Guarantor waives and agrees not to enforce any of the rights of
such Guarantor against the Borrower or the other Guarantors, including, but not
limited to: (i) any right of such Guarantor to be subrogated in whole or
in part to any right or claim with respect to any Guaranteed Indebtedness or
any portion thereof to the Lenders which might otherwise arise from payment by
any Guarantor to the Lenders on the account of the Guaranteed Indebtedness or
any portion thereof; and (ii) any right of any Guarantor to require the
marshalling of assets of the Borrower or the other Guarantors which might
otherwise arise from payment by any Guarantor to the Lenders on account of the
Guaranteed Indebtedness or any portion thereof. 
If any amount shall be paid to any Guarantor in violation of the
preceding sentence, such amount shall be deemed to have been paid to such
Guarantor for the benefit of, and held in trust for the benefit of, the Lenders
and shall forthwith be paid to the Agent and the Lenders to be credited and
applied upon the Guaranteed Indebtedness, whether matured or unmatured, in
accordance with the terms of the Credit Agreement.  Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the waivers set forth in this Section are
knowingly made in contemplation of such benefits.

 

5.                                       Each Guarantor waives promptness and diligence by
the Lenders with respect to its rights under the Credit Agreement or any of the
other Loan Documents, including, but not limited to, this Guarantee.

 

6.                                       Each Guarantor waives any and all notice with
respect to:  (i) acceptance by the
Agent on behalf of the Lenders of this Guarantee; (ii) the provisions of
any note, instrument or agreement relating to the Guaranteed Indebtedness; and (iii) any
default in connection with the Guaranteed Indebtedness.

 

7.                                       Each Guarantor waives any presentment, demand,
notice of dishonor or nonpayment, protest, and notice of protest in connection
with the Guaranteed Indebtedness.

 

2

 

8.                                       Each Guarantor agrees that the Lenders may from
time to time and as many times as the Lenders, in their sole discretion, deem
appropriate, do any of the following without notice to any Guarantor and
without adversely affecting the validity or enforceability of this Guarantee: (i) release,
surrender, exchange, compromise, or settle the Guaranteed Indebtedness or any
portion thereof; (ii) change, renew, or waive the terms of the Guaranteed
Indebtedness or any portion thereof; (iii) change, renew, or waive the
terms, including without limitation, the rate of interest charged to the
Borrower or any Guarantor, of any note, instrument, or agreement relating to
the Guaranteed Indebtedness or any portion thereof; (iv) grant any
extension or indulgence with respect to the payment to the Lenders of the
Guaranteed Indebtedness or any portion thereof; (v) enter into any
agreement of forbearance with respect to the Guaranteed Indebtedness or any
portion thereof; (vi) release, surrender, exchange or compromise any
security held by the Agent on behalf of the Lenders for the Guaranteed
Indebtedness; (vii) release any Person who is a guarantor or surety or who
has agreed to purchase the Guaranteed Indebtedness or any portion thereof; and (viii) release,
surrender, exchange or compromise any security or lien held by the Agent on
behalf of the Lenders for the liabilities of any Person who is a guarantor or
surety for the Guaranteed Indebtedness or any portion thereof.  Each Guarantor agrees that the Agent on
behalf of the Lenders may do any of the above as it deems necessary or
advisable, in its sole discretion, without giving any notice to any Guarantor,
and that each Guarantor will remain liable for full payment to the Lenders of
the Guaranteed Indebtedness.

 

9.                                       Each Guarantor agrees to be jointly and severally
bound by the terms of this Guarantee and jointly and severally liable under this
Guarantee.  As a result of such
liability, each Guarantor acknowledges that the Lenders may, in their sole
discretion, elect to enforce this Guarantee for the total Guaranteed
Indebtedness against any Guarantor without any duty or responsibility to pursue
the other Guarantors and that such an election by the Lenders shall not be a
defense to any action the Agent on behalf of the Lenders may elect to take
against any Guarantor.

 

10.                                 If any amount owing hereunder shall have become
due and payable (by acceleration or otherwise), any Lender and any branch,
subsidiary or affiliate of any Lender anywhere in the world shall each have the
right, at any time and from time to time to the fullest extent permitted by
Law, in addition to all other rights and remedies available to it, without
prior notice to any Guarantor, to set-off against and to appropriate and apply
to such due and payable amounts any debt owing to, and any other funds held in
any manner for the account of any Guarantor by any Lender or any such branch,
subsidiary or affiliate including, without limitation, all funds in all deposit
accounts (whether time or demand, general or special, provisionally credited or
finally credited, or otherwise) now or hereafter maintained by any Guarantor
with any Lender or such branch, subsidiary or affiliate.  Such right shall exist whether or not any
Lender shall have given notice or made any demand hereunder or under any of the
Notes or Loan Documents, whether or not such debt owing to or funds held for
the account of any Guarantor is or are matured or unmatured, and regardless of
the existence or adequacy of any collateral, guarantee or any other security,
right or remedy available to any Lender. 
Each Guarantor hereby consents to and confirms the foregoing arrangements,
and confirms each Lenders rights and each such branch’s, subsidiary’s and
affiliate’s rights of banker’s lien and set-off.

 

11.                                 Each Guarantor recognizes and agrees that the
Borrower, after the date hereof, may incur additional Obligations or other obligations,
fees and expenses to the Lenders under the

 

3

 

Credit Agreement, refinance existing Guaranteed Indebtedness or pay
existing Guaranteed Indebtedness and subsequently incur additional Obligations
to the Lenders under the Credit Agreement, and that in any such transaction,
even if such transaction is not now contemplated, the Lenders will rely in any
such case upon this Guarantee and the enforceability thereof against each
Guarantor and that this Guarantee shall remain in full force and effect with
respect to such future Obligations of the Borrower to the Lenders and such
Obligations shall for all purposes constitute Guaranteed Indebtedness.

 

12.                                 Each Guarantor further agrees that, if at any time
all or any part of any payment, from whomever received, theretofore applied by
the Lenders to any of the Guaranteed Indebtedness is or must be rescinded or
returned by the Lenders for any reason whatsoever including, without
limitation, the insolvency, bankruptcy or reorganization of any Guarantor, such
liability shall, for the purposes of this Guarantee, to the extent that such
payment is or must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by any Lender, and this Guarantee
shall continue to be effective or be reinstated, as the case may be, as to such
liabilities, all as though such application by the Lenders had not been made.

 

13.                                 Each Guarantor agrees that no failure or delay on
the part of any Lender or of the Agent on behalf of the Lenders to exercise any
of its rights, powers or privileges under this Guarantee shall be a waiver of
such rights, powers or privileges or a waiver of any default, nor shall any
single or partial exercise of any of the Agent’s or of any Lenders’ rights,
powers or privileges preclude other or further exercise thereof or the exercise
of any other right, power or privilege or be construed as a waiver of any
default.  Each Guarantor further agrees
that no waiver or modification of any rights of the Lenders or of the Agent
under this Guarantee shall be effective unless in writing and signed by each
Lender and the Agent.  Each Guarantor
further agrees that each written waiver shall extend only to the specific
instance actually recited in such written waiver and shall not impair the
rights of any Lender or of the Agent in any other respect.

 

14.                                 Each Guarantor unconditionally agrees to pay all
costs and expenses, including attorney’s fees, incurred by the Agent on behalf
of the Lenders in enforcing this Guarantee against any Guarantor.

 

15.                                 Each Guarantor agrees that this Guarantee and the
rights and obligations of the parties hereto shall for all purposes be governed
by and construed and enforced in accordance with the substantive law of the
State of New Jersey without giving effect to its principles of conflict of
laws.

 

16.                                 Each Guarantor acknowledges that in addition to
binding itself to this Guarantee, at the time of execution of this Guarantee
the Agent offered to such Guarantor a copy of this Guarantee in the form in
which it was executed and that by acknowledging this fact such Guarantor may
not later be able to claim that a copy of the Guarantee was not received by it.

 

17.                                 Each Guarantor agrees that this Guarantee shall be
binding upon each Guarantor and its successors and assigns; provided, however,
that no Guarantor may assign or transfer any of its rights and obligations
hereunder or any interest herein.  Each
Guarantor further agrees that (i) this Guarantee is freely assignable and
transferable by the Lenders in connection with any

 

4

 

assignment or transfer of the Guaranteed Indebtedness and (ii) this
Guarantee shall inure to the benefit of the Lenders, and their successors and
assigns.

 

18.                                 Each Guarantor agrees that if any Guarantor fails
to perform any covenant or agreement hereunder or if there occurs and continues
to exist an Event of Default under the Credit Agreement, all or any part of the
Guaranteed Indebtedness may be declared to be forthwith due and payable and, in
the case of an Event of Default described in Section 8.1.14 [Involuntary
Proceedings] or Section 8.1.15 [Voluntary Proceedings] of the Credit
Agreement, the Guaranteed Indebtedness shall be immediately due and payable, in
any case without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived.

 

19.                                 Each Guarantor agrees that the enumeration of the
Lenders’ rights and remedies set forth in this Guarantee is not intended to be
exhaustive and the exercise by any of the Lenders of any right or remedy shall
not preclude the exercise of any other rights or remedies, all of which shall
be cumulative and shall be in addition to any other right or remedy given
hereunder or under any other agreement among the parties to the Loan Documents
or which may now or hereafter exist at law or in equity or by suit or
otherwise.

 

20.                                 Each Guarantor agrees that all notices,
statements, requests, demands and other communications under this Guarantee
shall be given to each of the Guarantors at the address set forth below their
respective names on the signature page hereof in the manner provided in Section 10.6
[Notices] of the Credit Agreement.

 

21.                                 (a)                                  Each Guarantor agrees that the provisions of this
Guarantee are severable, and in an action or proceeding involving any state or
federal bankruptcy, insolvency or other law affecting the rights of creditors
generally:

 

(i)                                     if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision in this Guarantee in any jurisdiction.

 

(ii)                                  if
this Guarantee would be held or determined to be void, invalid or unenforceable
on account of the amount of a Guarantor’s aggregate liability under this
Guarantee, then, notwithstanding any other provision of this Guarantee to the
contrary, the aggregate amount of such liability shall, without any further
action by the Lenders, such Guarantor or any other Person, be automatically
limited and reduced to the highest amount which is valid and enforceable as
determined in such action or proceeding, which (without limiting the generality
of the foregoing) may be an amount which is not greater than the greater of:

 

(A)                              the
fair consideration actually received by such Guarantor under the terms of and as
a result of the Loan Documents, including, without limiting the generality of
the foregoing, and to the extent not inconsistent with applicable federal and
state laws affecting the enforceability of guarantees, distributions or
advances made to such Guarantor with the proceeds of any credit extended under
the Loan Documents in exchange for its guaranty of the Guaranteed Indebtedness,
or

 

5

 

(B)                                the
excess of (1) the amount of the fair saleable value of the assets of such
Guarantor as of the date of this Guarantee as determined in accordance with
applicable federal and state laws governing determinations of the insolvency of
debtors as in effect on the date thereof over (2) the amount of all
liabilities of such Guarantor as of the date of this Guarantee, also as
determined on the basis of applicable federal and state laws governing the
insolvency of debtors as in effect on the date thereof.

 

(b)                                 If
the guarantee by any one or more Guarantors of the Guaranteed Indebtedness is
held or determined to be void, invalid or unenforceable, in whole or in part,
such holding or determination shall not impair or affect:

 

(i)                                     the
validity and enforceability of the guarantee hereunder by any other Guarantor,
which shall continue in full force and effect in accordance with its terms; or

 

(ii)                                  the
validity and enforceability of any clause or provision not so held to be void,
invalid or unenforceable.

 

22.                                 EACH GUARANTOR HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS GUARANTEE. 
EACH GUARANTOR (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER,
AND EXECUTION AND DELIVERY HEREOF BY EACH GUARANTOR, AND (ii) ACKNOWLEDGES
THAT THE ENTERING INTO OF THE CREDIT AGREEMENT BY THE LENDERS HAS BEEN INDUCED
BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS SET FORTH IN THIS
SECTION.

 

23.                                 Each Guarantor (i) hereby irrevocably submits
to the nonexclusive jurisdiction of the Superior Court of New Jersey, Law
Division, Middlesex County, or any successor to said court, and to the
nonexclusive jurisdiction of the United States District Court for the District
of New Jersey, or any successor to said court (hereinafter referred to as the “New
Jersey Courts”) for purposes of any suit, action or other proceeding which
relates to this Guarantee or any other Loan Document, (ii) to the extent
permitted by applicable Law, hereby waives and agrees not to assert by way of
motion, as a defense or otherwise in any such suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of the New Jersey Courts;
that such suit, action or proceeding is brought in an inconvenient forum; that
the venue of such suit, action or proceeding is improper; or that this
Guarantee or any Loan Document may not be enforced in or by the New Jersey
Courts, (iii) hereby agrees not to seek, and hereby waives, any collateral
review by any other court, which may be called upon to enforce the judgment of
any of the New Jersey Courts, of the merits of any such suit, action or
proceeding or the jurisdiction of the New Jersey Courts, and (iv) waives
personal service of any and all process upon it and consents that all such
service of process be made by certified or registered mail addressed as
provided in Section 20 hereof and service so made shall be deemed to be
completed upon actual receipt thereof. 
Nothing herein shall limit any Lenders right to bring any suit, action
or other proceeding

 

6

 

against any Guarantor or any of any Guarantor’s assets or to serve process
on any Guarantor by any means authorized by Law.

 

24.                                 Each Guarantor waives all defenses based on
suretyship not specifically waived.

 

25.                                 At any time when the
Borrower wishes to cause the Lenders to release a Guarantor from its
obligations under this Guarantee (whether directly or in connection with the
designation of a Restricted Subsidiary as a Non-Restricted Person), the consent
of the Lenders shall be required as described below and shall be subject to the
other provisions of this Section 25.

 

(a)                                  For the release of (i) any
Guarantor whose assets are principally comprised of residential or commercial
property which is leased or held for the purposes of leasing to unaffiliated
third parties or (ii) any Guarantor in which any Loan Party (or Loan
Parties in the aggregate) has, at the time of such release, a Subsidiary
Investment less than $1,000,000 or (iii) Corporate Office Subsidiary
incident to it becoming an Non-Restricted Person or (iv) any Guarantor at
the time such Guarantor enters into a newly-formed Joint Venture with a person
which is not an Affiliate of the Loan Parties and transfers all or a
substantial portion of its assets to such Joint Venture provided that such
Guarantor is a Non-Restricted Person (or simultaneously with Borrower’s request
for such release the Borrower has designated such Guarantor as a “Non-Restricted
Person” in compliance with Section 2.11.2 of the Credit Agreement), no
consent of the Lenders shall be required and such request of the Borrower shall
be granted absent an Event of Default or Potential Default, effective on the
date specified by the Borrower which shall not be earlier than five (5) Business
Days after the receipt by the Agent of such request;

 

(b)                                 For the release of any
Guarantor (not described in clause 26(a)(i) hereof) in which any Loan
Party (or Loan Parties in the aggregate) has, at the time of such release, a
Subsidiary Investment greater than or equal to $1,000,000 and less than
$5,000,000 (except Corporate Office Subsidiary, if otherwise applicable), the
consent of Required Lenders shall be required; and

 

(c)                                  For the release of
Hovnanian or any Guarantor (not described in clause 26(a)(i) hereof) in
which any Loan Party (or Loan Parties in the aggregate) has, at the time of
such release, a Subsidiary Investment greater than or equal to $5,000,000
(except Corporate Office Subsidiary, if otherwise applicable), the consent of
100% of the Lenders shall be required.

 

(d)                                 The designation of a
Person as a Non-Restricted Person for any reason shall not itself constitute a
release of any Guarantor and any such release of such Person shall be in
accordance with Section 2.11 of the Credit Agreement.

 

26.                                 All of the terms,
conditions and provisions of Sections 7.1 [Affirmative Covenants], Section 7.2
[Negative Covenants] and Section 7.3 [Reporting Requirements] of the
Credit Agreement are incorporated herein by reference as if fully set forth
herein.  Each of the Guarantors, jointly
and severally, without any further act or undertaking or the occurrence of any
other event, covenant and agree that until payment in full of the Loans,
Reimbursement Obligations and Letter of Credit Borrowings and interest thereon,
expiration or termination of all

 

7

 

Letters of Credit, satisfaction of all of the Loan Parties’ other
Obligations under the Credit Agreement and the satisfaction of the Guaranteed
Indebtedness under this Guarantee and termination of the Commitments, they shall
comply with the affirmative covenants set forth in Section 7.1
[Affirmative Covenants] of the Credit Agreement, comply with the negative
covenants set forth in Section 7.2 [Negative Covenants] of the Credit
Agreement and comply Letters of Credit, satisfaction of all of the Loan Parties’
other Obligations under the Credit Agreement and the satisfaction of the
Guaranteed Indebtedness under this Guarantee and termination of the
Commitments, they shall comply with the affirmative covenants set forth in Section 7.1
[Affirmative Covenants] of the Credit Agreement, comply with the negative
covenants set forth in Section 7.2 [Negative Covenants] of the Credit
Agreement and comply with Section 7.3 [Reporting Requirements] of the
Credit Agreement.  In particular, each of
the Guarantors shall not own or create directly or indirectly any Subsidiaries
other than (i) any Subsidiary which has joined this Guarantee as a
Guarantor on the Closing Date, (ii) any Subsidiary formed or acquired
after the Closing Date which joins this Guarantee as a Guarantor pursuant to Section 27
below or (iii) any Non-Restricted Person. 
To the extent that the obligations set forth in Section 7.3
[Reporting Requirements] are obligations which, by their nature, can only be
performed and/or satisfied by the Borrower and/or by Hovnanian, each of the
Guarantors shall fully cooperate with the Borrower and with Hovnanian in their
respective efforts to comply with their respective obligations set forth
therein.

 

27.           Any
Subsidiary of Hovnanian which is required to join this Guarantee as a Guarantor
pursuant to Section 26 hereof or which is to become a Restricted
Subsidiary shall execute and deliver to the Agent (i) a Guarantor Joinder
pursuant to which it shall join as a Guarantor this Guarantee; and (ii) at
the request of the Agent, documents in the forms described in Section 6.1
[First Loans and Letters of Credit] of the Credit Agreement, modified as
appropriate to relate to such new Guarantor. 
Such new Guarantor shall deliver such Guarantor Joinder and any related
documents that the Agent may reasonably request to the Agent after the
formation thereof and its designation as a Restricted Subsidiary, and such
Subsidiary shall not be a Restricted Subsidiary until the delivery and
effectiveness of the items required herein.

 

28.           All
of the representations and warranties of the Guarantors contained herein
(either directly or indirectly) or made in connection herewith shall survive
the making of Loans and issuance of Letters of Credit and shall not be waived
by the execution and delivery of the Credit Agreement by any other party,
including the Agent and the Lenders, any investigation by the Agent or the
Lenders, the making of Loans, issuance of Letters of Credit, or payment in full
of the Loans.  All covenants and
agreements of the Guarantors contained in this Guarantee shall continue in full
force and effect from and after the date hereof so long as the Borrower may
borrow or request Letters of Credit under the Credit Agreement, and until
termination of the Commitments and payment in full of the Loans and expiration
or termination of all Letters of Credit.

 

29.           Notwithstanding
the other provisions contained herein, at such time as the Guaranteed
Indebtedness shall have been paid in full, this Guarantee and all obligations
of the Agent and each Guarantor hereunder shall terminate, all without delivery
of any instrument or performance of any act by any party.  At the request and sole expense of the
Guarantors, following any such termination, the Agent shall execute and deliver
to the Guarantors such documents as the Guarantors shall reasonably request to
evidence such termination.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

8

 

[SIGNATURE
PAGE 1 OF 35 TO THE GUARANTY AGREEMENT]

 

IN
WITNESS WHEREOF, each Guarantor and the Agent, intending to be legally bound,
have executed this Guarantee on the date first above written.

 

	
   

  	
  HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  J. Larry Sorsby

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARROW PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN DEVELOPMENTS
  OF FLORIDA,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOV INTERNATIONAL,
  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOV IP, II, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOV IP, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  ACQUISITIONS, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  BALLANTRAE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  BERNARDS IV, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  BRANCHBURG III, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  BRIDGEPORT, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT BRIDGEWATER VI, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  BURLINGTON III, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  BURLINGTON, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  CALABRIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT CARMEL DEL MAR, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  CASTILE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  CHAPARRAL, INC.

  

 

 

[SIGNATURE
PAGE 2 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN AT CLARKSTOWN,
  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  CRESTLINE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  DOMINGUEZ HILLS, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT EAST
  WHITELAND I, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  FREEHOLD TOWNSHIP I,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  HERSHEY’S MILL, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  HACKETTSTOWN, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  HIGHLAND VINEYARDS,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  HOPEWELL IV, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  HOPEWELL VI, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT HOWELL
  TOWNSHIP,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT KINGS
  GRANT I, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  KLOCKNER FARMS, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LA
  TERRAZA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LA
  TROVATA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  LAKEWOOD, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LOWER
  SAUCON, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MAHWAH
  II, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MAHWAH
  V, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MAHWAH VI, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MAHWAH
  VII, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  MANALAPAN, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  MARLBORO II, INC.

  

 

 

[SIGNATURE
PAGE 3 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN AT
  MARLBORO TOWNSHIP

  IV, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT METRO
  DC SOUTH, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  MONTCLAIR NJ, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  MONTGOMERY I, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MONROE
  II, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  NORTHERN

  WESTCHESTER, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  NORTHLAKE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT OCEAN
  TOWNSHIP, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT OCEAN
  WALK, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT PERKIOMEN I, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  PERKIOMEN II, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  PLAINSBORO III, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  PRINCETON, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT RANCHO
  CRISTIANITOS,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  RESERVOIR RIDGE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT SAN
  SEVAINE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  SARATOGA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  SAWMILL, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT SCOTCH
  PLAINS II, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT SCOTCH
  PLAINS, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT SMITHVILLE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT SOUTH
  BRUNSWICK III,

  INC.

  

 

 

[SIGNATURE
PAGE 4 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN AT SOUTH
  BRUNSWICK V,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT STONE
  CANYON, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT STONY
  POINT, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  SYCAMORE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT TANNERY
  HILL, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT THE
  BLUFF, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT THE
  CEDARS, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  THORNBURY, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT TIERRASANTA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT TUXEDO,
  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT UNION
  TOWNSHIP I, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT UPPER
  FREEHOLD

  TOWNSHIP I, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT UPPER
  MAKEFIELD I,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT VAIL
  RANCH, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT WALL
  TOWNSHIP VI,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT WALL
  TOWNSHIP VIII,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  WASHINGTONVILLE,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT WAYNE
  III, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT WAYNE
  V, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  WILDROSE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES
  NORTHEAST,

  INC.

  

 

 

[SIGNATURE
PAGE 5 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN COMPANIES
  OF

  CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES
  OF

  MARYLAND, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES
  OF METRO

  WASHINGTON, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES
  OF NEW YORK,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES
  OF NORTH

  CAROLINA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES OF

  PENNSYLVANIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES
  OF SOUTHERN

  CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  CONSTRUCTION II, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  CONSTRUCTION III, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  CONSTRUCTION

  MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENT OF METRO

  WASHINGTON, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF

  ARIZONA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF

  CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF D.C.,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF

  DELAWARE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF

  ILLINOIS, INC.

  

 

 

[SIGNATURE
PAGE 6 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF

  MARYLAND, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF METRO

  WASHINGTON, 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 OHIO,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF

  PENNSYLVANIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF SOUTH

  CAROLINA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF TEXAS,

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  DEVELOPMENTS OF WEST

  VIRGINIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN EQUITIES,
  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN FORECAST
  HOMES, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES OF
  NORTH

  CAROLINA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES OF
  VIRGINIA, INC.

  

 

 

[SIGNATURE
PAGE 7 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN INVESTMENT
  PROPERTIES

  OF NEW JERSEY, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN PA REAL
  ESTATE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN PORT
  IMPERIAL URBAN

  RENEWAL, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN PROPERTIES
  OF NEWARK

  URBAN RENEWAL CORPORATION, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN PROPERTIES
  OF NORTH

  BRUNSWICK V, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN PROPERTIES
  OF WALL, INC.

  
	
   

  	
   

  
	
   

  	
  KHC ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
  LANDARAMA, INC.

  
	
   

  	
   

  
	
   

  	
  M&M AT LONG BRANCH,
  INC.

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD OF
  DELAWARE, INC.

  
	
   

  	
   

  
	
   

  	
  MCNJ, INC.

  
	
   

  	
   

  
	
   

  	
  PINE BROOK COMPANY,
  INC.

  
	
   

  	
   

  
	
   

  	
  REFLECTIONS OF YOU
  INTERIORS, INC.

  
	
   

  	
   

  
	
   

  	
  SEABROOK ACCUMULATION

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  STONEBROOK HOMES, INC.

  
	
   

  	
   

  
	
   

  	
  THE MATZEL &
  MUMFORD ORGANIZATION,

  INC.

  
	
   

  	
   

  
	
   

  	
  WASHINGTON HOMES, INC.

  
	
   

  	
   

  
	
   

  	
  WESTMINSTER HOMES OF
  TENNESSEE, INC.

  
	
   

  	
   

  
	
   

  	
  WESTMINSTER HOMES, INC.

  
	
   

  	
   

  
	
   

  	
  WH LAND I, INC.

  

 

 

[SIGNATURE
PAGE 8 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  WH PROPERTIES,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
  On behalf of,
  and as Executive Vice

  President and Chief Financial Officer of

  each of the foregoing corporations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian
  Developments of D.C., Inc.,

  as the sole member of the foregoing limited

  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive
  Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND
  INVESTMENT GROUP OF

  MARYLAND, L.L.C.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND
  INVESTMENT GROUP OF

  NORTH CAROLINA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND
  INVESTMENT GROUP,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  COMPANIES OF METRO D.C.

  NORTH, L.L.C.

  
									

 

 

[SIGNATURE PAGE 9 OF 35 TO THE
GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT KENT

  ISLAND CONDOMINIUMS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT KENT

  ISLAND, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT ST.

  MARGARETS LANDING, L.L.C.

  
	
   

  	
   

  
	
   

  	
  RIDGEMORE UTILITY,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
  WASHINGTON HOMES AT
  COLUMBIA TOWN

  CENTER, L.L.C.

  
	
   

  	
   

  
	
   

  	
  WESTMINSTER HOMES OF
  ALABAMA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  WESTMINSTER HOMES OF
  MISSISSIPPI,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  WOODLAND LAKES CONDOS @
  BOWIE

  NEWTOWN, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian
  Developments of Maryland,

  Inc., as the sole member of each of the

  foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J.
  Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
  DULLES COPPERMINE,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND
  INVESTMENT GROUP OF

  VIRGINIA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LAKE
  RIDGE CROSSING,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
						

 

 

[SIGNATURE
PAGE 10 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN FOUR
  SEASONS AT

  HISTORIC VIRGINIA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT
  CAMERON

  STATION, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT
  LAUREL

  HIGHLANDS, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT

  ASHBURN VILLAGE, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT VINT

  HILL, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian
  Developments of Metro

  Washington, Inc., as the sole member of

  each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J.
  Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
  EDISON CONTRACT
  SERVICES, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT BLUE
  HERON PINES,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
						

 

 

[SIGNATURE
PAGE 11 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  DEPTFORD TOWNSHIP,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT EGG
  HARBOR

  TOWNSHIP, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT FOREST
  MEADOWS,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  FREEHOLD TOWNSHIP,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  HACKETTSTOWN II,

  L.L.C.

  

 

 

[SIGNATURE
PAGE 12 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  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 JACKSON
  I, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT JERSEY
  CITY V URBAN

  RENEWAL COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  LAFAYETTE ESTATES,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LITTLE
  EGG HARBOR

  TOWNSHIP II, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LITTLE
  EGG HARBOR

  CONTRACTORS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LITTLE EGG HARBOR,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  MARLBORO TOWNSHIP

  IX, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  MARLBORO TOWNSHIP

  V, L.L.C.

  

 

 

[SIGNATURE
PAGE 13 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN AT MARLBORO
  TOWNSHIP

  VIII, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MENDHAM
  TOWNSHIP,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MIDDLE
  TOWNSHIP,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MT. OLIVE
  TOWNSHIP,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT NORTH
  BRUNSWICK VI,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT NORTH
  CALDWELL II,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT NORTH
  CALDWELL,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT NORTH
  WILDWOOD,

  L.L.C.

  

 

 

[SIGNATURE
PAGE 14 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  PARSIPPANY-TROY

  HILLS, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT SOUTH
  BRUNSWICK,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT UNION
  TOWNSHIP II,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT UPPER
  FREEHOLD

  TOWNSHIP II, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT UPPER
  FREEHOLD

  TOWNSHIP III, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT WARREN
  TOWNSHIP,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  

 

 

[SIGNATURE
PAGE 15 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT WOODHILL
  ESTATES,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN CENTRAL
  ACQUISITIONS,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  INVESTMENTS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN NORTH
  CENTRAL

  ACQUISITIONS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN NORTH
  JERSEY

  ACQUISITIONS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN NORTHEAST
  SERVICES,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN SHORE
  ACQUISITIONS,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN SOUTHERN
  NEW JERSEY,

  L.LC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN SOUTH
  JERSEY

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

  INVESTMENT, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S PRIVATE
  HOME

  PORTFOLIO, L.L.C.

  

 

 

[SIGNATURE
PAGE 16 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  KHIP, L.L.C.By:        K.
  Hovnanian Holdings NJ,

  L.L.C., as the sole member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New

  Jersey, Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  J.
  Larry Sorsby

  
	
   

  	
   

  	
   

  	
   

  	
  Executive Vice
  President and

  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New

  Jersey II, Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  J.
  Larry Sorsby

  
	
   

  	
   

  	
   

  	
   

  	
  Executive Vice
  President and

  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND
  INVESTMENT GROUP OF

  CALIFORNIA, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  

 

 

[SIGNATURE PAGE 17 OF 35 TO THE
GUARANTY AGREEMENT]

 

	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT CITY IN
  THE HILLS,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  ENCINITAS RANCH,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT GASLAMP
  SQUARE,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LA HABRA KNOLLS,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT RANCHO
  SANTA

  MARGARITA, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT ROWLAND
  HEIGHTS,

  L.L.C.

  

 

 

[SIGNATURE PAGE 18 OF 35 TO THE
GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN AT SHELF
  COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT
  THOMPSON RANCH,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN T&C
  MANAGEMENT CO.,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT

  BAKERSFIELD, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT

  HEMET, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT

  MENIFEE VALLEY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT PALM

  SPRINGS, L.L.C.

  

 

 

[SIGNATURE PAGE 19 OF 35 TO THE GUARANTY
AGREEMENT]

 

	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian
  Developments of California,

  Inc., as the sole member of each of the

  foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J.
  Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey,

  Inc., as member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J.
  Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey

  II, Inc., as member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J.
  Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  

 

 

[SIGNATURE PAGE 20 OF 35 TO THE
GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN AT LOWER
  MACUNGIE

  TOWNSHIP I, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LOWER
  MACUNGIE

  TOWNSHIP II, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LOWER
  MAKEFIELD

  TOWNSHIP I, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LOWER
  MORELAND I,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LOWER
  MORELAND II,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT UPPER UWCHLAN II,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES OF
  PENNSYLVANIA,

  L.L.C. 

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN
  PENNSYLVANIA

  ACQUISITIONS, L.L.C.

  

 

 

[SIGNATURE PAGE 21 OF 35 TO THE
GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN SUMMIT
  HOMES OF

  PENNSYLVANIA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Companies
  of Pennsylvania,

  Inc., as the sole member of each of the

  foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J.
  Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND
  INVESTMENT GROUP OF

  FLORIDA, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT
  CAMP SPRINGS,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT
  FOREST RUN,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT
  RENAISSANCE

  PLAZA, L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  

 

 

[SIGNATURE
PAGE 22 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN HOMES OF MARYLAND,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Hovnanian Developments of Florida, Inc., as

  the sole member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Enterprises, Inc., as member

  of the foregoing limited liability company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey

  II, Inc., as member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
							

 

 

[SIGNATURE
PAGE 23 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN EASTERN PENNSYLVANIA,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian at Perkiomen II, Inc., as the

  sole member of the foregoing limited

  liability company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN FOUR SEASONS AT GOLD

  HILL, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES OF SOUTH

  CAROLINA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of South

  Carolina, Inc., as the sole member of each of

  the foregoing limited liability companies.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN GREAT WESTERN BUILDING

  COMPANY, LLC

  
							

 

 

[SIGNATURE
PAGE 24 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN GREAT WESTERN HOMES,

  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Arizona, Inc., as the

  sole member of each of the foregoing limited

  liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT HIGHLAND SHORES,

  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES OF MINNESOTA,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Minnesota,

  Inc., as the sole member of each of the

  foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
							

 

 

[SIGNATURE
PAGE 25 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  MIDWEST BUILDING PRODUCTS &

  CONTRACTOR SERVICES, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Ohio, Inc.,

  as the sole member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES OF WEST VIRGINIA,

  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN SUMMIT HOMES OF WEST

  VIRGINIA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of West

  Virginia, Inc., as the sole member of each of

  the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
							

 

 

[SIGNATURE
PAGE 26 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN SUMMIT HOMES OF

  MICHIGAN, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Michigan,

  Inc., as the sole member of the foregoing

  limited liability company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  KINGS COURT AT MONTGOMERY, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

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

  
							

 

 

[SIGNATURE
PAGE 27 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

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

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD AT CRANBURY

  KNOLL, L.L.C.

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD AT EGG
  HARBOR,

  L.L.C.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD AT HERITAGE

  LANDING, L.L.C.

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD AT MONTGOMERY,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD AT PHILLIPSBURG,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD AT SOUTH

  BRUNSWICK, L.L.C.

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD AT WOODLAND

  CREST, L.L.C.

  
	
   

  	
   

  
	
   

  	
  THE LANDINGS AT SPINNAKER POINTE,

  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  The Matzel & Mumford Organization, Inc.,

  as the sole member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
							

 

 

[SIGNATURE
PAGE 28 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  M&M AT WHEATENA URBAN RENEWAL,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  MATZEL & MUMFORD AT SOUTH BOUND

  BROOK URBAN RENEWAL, L.L.C.

  
	
   

  	
   

  
	
   

  	
  MMIP, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  M&M Investments, LP, as the sole member

  of each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT FAIRWOOD,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT MAXWELL

  PLACE. L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT MAXWELL

  PLACE. L.L.C.

  
	
   

  	
   

  
	
   

  	
  PADDOCKS, L.L.C.

  
							

 

 

[SIGNATURE
PAGE 29 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  PINE AYR, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Homes of Maryland, L.L.C.,

  as the sole member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND INVESTMENT GROUP OF

  TEXAS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Goodman Family of Builders, L.P., as the

  sole member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of

  Florida, as general partner of each of

  the foregoing limited partnerships.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
   

  	
  Secretary

  
											

 

 

[SIGNATURE
PAGE 30 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  NORTH MANATEE, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Hovnanian Land Investment Group of

  Florida, L.L.C., as the sole member of the

  foregoing limited liability company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
							

 

 

[SIGNATURE
PAGE 31 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian at Northern Westchester, Inc.,

  as the sole member of each of the foregoing

  limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR SEASONS AT

  DULLES DISCOVERY CONDOMINIUM, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR SEASONS AT

  DULLES DISCOVERY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Development of Metro

  Washington, Inc., as the sole member of

  each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
							

 

 

[SIGNATURE
PAGE 32 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN HOMES OF DELAWARE,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Delaware,

  Inc., as the sole member of the foregoing

  limited liability company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MENIFEE VALLEY

  CONDOMINIUMS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian’s Four Seasons At Menifee

  Valley, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
							

 

 

[SIGNATURE
PAGE 33 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  GOODMAN FAMILY OF BUILDERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Florida, as

  general partner of the foregoing limited

  partnership.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN OF HOUSTON II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  K. HOVNANIAN OF HOUSTON, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Texas, Inc.,

  as general partner of each of the foregoing

  limited partnerships.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
							

 

 

[SIGNATURE
PAGE 34 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  M&M INVESTMENTS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  The Matzel & Mumford Organization, Inc.,

  as general partner of the foregoing limited

  partnership.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  J. Larry Sorsby

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices for each of the foregoing

  Guarantors:

  
	
   

  	
   

  	
   

  
	
   

  	
  c/o K. Hovnanian Enterprises, Inc.

  
	
   

  	
  10 Route 35, P.O. Box 500

  
	
   

  	
  Red Bank, NJ 07701

  
	
   

  	
  Attention: Kevin C. Hake

  
	
   

  	
  Telephone: (732) 747-7800

  
	
   

  	
  Telecopy: (732) 747-6835

  
							

 

 

[SIGNATURE
PAGE 35 OF 35 TO THE GUARANTY AGREEMENT]

 

	
   

  	
  PNC BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

 

EXHIBIT 1.1.(G)(2)

 

FORM OF

JOINDER AND ASSUMPTION AGREEMENT

 

This JOINDER AND ASSUMPTION
AGREEMENT is made                      
by                                  ,
a                                 
(the “New Guarantor”).

 

BACKGROUND

 

Reference is made to (i) the
Fifth Amended and Restated Credit Agreement dated June 14, 2005 as the same has
been made and may be modified, supplemented or amended, including on the date
hereof, (the “Agreement”) among K. HOVNANIAN ENTERPRISES, INC. (the “Borrower”),
HOVNANIAN ENTERPRISES, INC., as a Guarantor, the Lenders now or hereafter party
thereto and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for itself
and the other Lenders under the Credit Agreement (the “Agent”), (ii) the
Guaranty Agreement of each of the Guarantors issued to Lenders and Agent, as
the same may be modified, supplemented or amended, and (iii) the other
Loan Documents referred to in the Agreement, as the same may be modified,
supplemented or amended.  Capitalized
terms defined in the Agreement are used herein as defined therein.

 

In consideration of the New
Guarantor becoming a Guarantor entitled to receive loans or advances from
Borrower under the terms of the Agreement and in consideration of the value of
the synergistic benefits received by New Guarantor as a result of becoming
affiliated with Borrower and the Guarantors, the New Guarantor hereby agrees
that effective as of the date hereof it hereby is, and shall be deemed to be, a
Guarantor under the Agreement, the Guaranty Agreement and each of the other
Loan Documents to which the Guarantors are a party and agrees that from the
date hereof and so long as the Commitment of any Lender shall remain
outstanding and until the payment in full of the Loans and the Notes and the
performance of all other obligations of Borrower under the Loan Documents, New
Guarantor has assumed the obligations of a Guarantor under, and New Guarantor
shall perform, comply with and be subject to and bound by, jointly and
severally, each of the terms, provisions and waivers of the Agreement, the
Guaranty Agreement and each of the other Loan Documents which are stated to
apply to or are made by a Guarantor. 
Without limiting the generality of the foregoing, the New Guarantor hereby
represents and warrants that (i) each of the representations and
warranties set forth in Section 5 of the Agreement is true and correct as
to New Guarantor on and as of the date hereof as if made on and as of the date
hereof by New Guarantor and (ii) New Guarantor has heretofore received a true
and correct copy of the Agreement, the Guaranty Agreement and each of the other
Loan Documents (including any modifications thereof or supple­ments or waivers
thereto) as in effect on the date hereof.

 

New Guarantor hereby makes,
affirms, and ratifies in favor of the Lenders and the Agent the Agreement, the
Guaranty Agreement and each of the other Loan Documents given by the Guarantors
to Agent and any of the Lenders.

 

 

In furtherance of the foregoing,
New Guarantor shall execute and deliver or cause to be executed and delivered
at any time and from time to time such further instruments and documents and do
or cause to be done such further acts as may be reasonably necessary or proper
in the opinion of Agent to carry out more effectively the provisions and
purposes of this Joinder and Assumption Agreement.

 

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

 

 

	
   

  	
  [NAME OF NEW GUARANTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and accepted:

  	
   

  
	
   

  	
   

  
	
  PNC BANK, NATIONAL ASSOCIATION, as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
												

 

2

 

EXHIBIT 1.1 (R)

 

FORM OF 

[AMENDED AND RESTATED] REVOLVING CREDIT NOTE

 

	
   

  	
  Pittsburgh,
  Pennsylvania

  
	
  $

  	
  , 2005

  	
   

  

 

FOR VALUE RECEIVED, the undersigned, K. HOVNANIAN ENTERPRISES, INC., a
California corporation (herein called the “Borrower”), hereby promises to pay
to the order of                                        
(the “Lender”) the lesser of (i) the principal sum of                                        
U.S. Dollars (U.S. $                           ),
and (ii) the aggregate unpaid principal balance of all Revolving Credit
Loans made by the Lender to the Borrower pursuant to Section 2.1 of the Fifth
Amended and Restated Credit Agreement dated June 14, 2005 among the Borrower,
Hovnanian Enterprises, Inc., as a Guarantor, the Lenders now or hereafter party
thereto, PNC Bank, National Association, as administrative agent for the
Lenders (the “Agent”) and the Lender (the “Credit Agreement”), payable on the
Expiration Date.

 

The Borrower shall pay interest on the unpaid principal balance hereof
from time to time outstanding from the date hereof at the rate or rates per
annum specified by the Borrower pursuant to Section 3.1 of, or as
otherwise provided in, the Credit Agreement.

 

To the extent permitted by Law, upon the occurrence of an Event of
Default under Sections 8.1.1, 8.1.10, 8.1.14 and/or 8.1.15 of the Credit
Agreement, or the Obligations are accelerated under the Credit Agreement, and
until such time such Event of Default shall have been cured or waived, the
Borrower shall pay interest on all past due principal and all past due accrued
interest thereon and fees and expenses and each other past due Obligation at a
rate per annum equal to the sum of the rate of interest applicable under the
Base Rate Option plus an additional three hundred basis points (3.0% per
annum) from the time such Obligation becomes due and payable and until it is
paid in full (the “Default Rate”).

 

Interest on this Revolving Credit Note will be payable as provided in
the Credit Agreement.

 

If any payment or action to be made or taken hereunder shall be stated
to be or become due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day (or the prior
Business Day in respect of certain Revolving Credit Loans to which the
LIBO-Rate Option applies) and such extension of time shall be included in
computing interest or fees, if any, in connection with such payment or action.

 

Subject to the provisions of the Credit Agreement, payments of both
principal and interest shall be made without setoff, counterclaim or other
deduction of any nature at the Principal Office of the Agent, in lawful money
of the United States of America in immediately available funds.

 

1

 

This Note is one of the Revolving Credit Notes referred to in, and is
entitled to the benefits of, the Credit Agreement and the other Loan Documents,
including the representations, warranties, covenants, conditions, security
interests or liens contained or granted therein.  The Credit Agreement among other things
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayment, in certain circumstances, on
account of principal hereof prior to maturity upon the terms and conditions
therein specified.

 

All capitalized terms used herein shall, unless otherwise defined
herein, have the same meanings given to such terms in the Credit Agreement.

 

Except as otherwise provided in the Credit Agreement, the Borrower
waives presentment, demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or
enforcement of this Note and the Credit Agreement.

 

This Note shall bind the Borrower and its successors and assigns, and
the benefits hereof shall inure to the benefit of the Lender, the Agent and
their successors and assigns.  All
references herein to the “Borrower”, the “Lender” and the “Agent” shall be
deemed to apply to the Borrower, the Lender and the Agent, respectively, and
their respective successors and assigns.

 

[This Note replaces and supersedes the Amended and Restated Revolving
Credit Note dated June 18, 2004, in the principal amount of $                        ,
(the “Prior Note”).  To the extent that
the principal balance of this Note includes the Borrower’s indebtedness
hitherto evidenced by the Prior Note, this Note (i) merely re-evidences the
indebtedness hitherto evidenced by the Prior Note, (ii) is given as
substitution for, and not as payment of, the Prior Note, and (iii) is in no way
intended to constitute a novation of the Prior Note.  Maker hereby agrees that this Note shall in
all respects take the place of and include the principal amount of the Prior
Note.]

 

This Note and any other documents delivered in connection herewith and the
rights and obligations of the parties hereto and thereto shall for all purposes
be governed by and construed and enforced in accordance with the internal laws
of the State of New Jersey without giving effect to its conflicts of law
principles.

 

2

 

[SIGNATURE PAGE 1 OF 1 TO REVOLVING CREDIT
NOTE]

 

IN WITNESS WHEREOF, the undersigned has executed this Note by its duly
authorized officers.

 

 

	
   

  	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

3

 

EXHIBIT
1.1(S)

 

FORM
OF

SWING LOAN NOTE

 

	
  $

  	
   

  	
  East Brunswick, New Jersey

  

 

 

FOR VALUE RECEIVED, the undersigned, K.
HOVNANIAN ENTERPRISES, INC., a California corporation (herein called the “Borrower”),
hereby promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the “Lender”),
the lesser of (i) the principal sum of                         U.S.
Dollars (U.S. $                     )
and (ii) the aggregate unpaid principal amount of all “Swing Loans” made by the
Lender to the Borrower pursuant to the Fifth Amended and Restated Credit
Agreement dated June 14, 2005, among the Borrower, Hovnanian Enterprises, Inc.,
as Guarantor, the Lenders now or hereafter party thereto and PNC Bank, National
Association, as administrative agent (the “Agent”) (as amended, the “Credit
Agreement”), payable on the Expiration Date. 
The Borrower shall pay interest on the unpaid principal balance hereof
from time to time outstanding from the date hereof at the rate provided in the
Credit Agreement.

 

Interest hereon will be payable at the times specified in the Credit
Agreement.

 

If any payment of principal or interest on this Note shall be requested
or is payable on a day which is not a Business Day, such payment shall be made
on the next succeeding Business Day and such extension of time shall in such
case be included in computing interest in connection with payment.

 

Subject to the provisions of the Credit Agreement, payments of both
principal and interest shall be made without setoff, counterclaim or other
deduction of any nature at the Principal Office of the Agent in lawful money of
the United States of America in immediately available funds.

 

This Note is the Swing Loan Note and is subject to the provisions of,
and is entitled to the security provided for in and the other benefits of the
Credit Agreement and the other Loan Documents.

 

Except as otherwise provided in the Credit Agreement, the Borrower
waives presentment, demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or
enforcement of this Note and the Credit Agreement.

 

All capitalized terms used herein shall, unless otherwise defined
herein, have the same meanings assigned to such terms in the Credit Agreement.

 

This Note shall bind the Borrower and its respective successors and
assigns, and the benefits hereof shall inure to the benefit of the Agent, the
Lenders and their successors and

 

 

assigns.  All references herein to the “Borrower,” the “Agent”
and the “Lenders” shall be deemed to apply to the Borrower, the Agent and the
Lenders, respectively, and their respective successors and assigns.

 

This Note and any other documents delivered in connection herewith and
the rights and obligations of the parties hereto and thereto shall for all
purposes be governed by and construed and enforced in accordance with the
substantive law of the State of New Jersey without giving effect to the
principles of conflict of laws.

 

2

 

[SIGNATURE PAGE 1 0F 1 TO SWING LOAN NOTE]

 

IN WITNESS WHEREOF, the undersigned has executed this Note by its duly
authorized officers.

 

	
   

  	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						

 

3

 

EXHIBIT 2.4.1

 

FORM OF 

LOAN REQUEST

 

	
  TO:

  	
   

  	
  PNC BANK, NATIONAL ASSOCIATION, as agent

  
	
   

  	
   

  	
  Telephone No.: 732-220-3566

  
	
   

  	
   

  	
  Telecopier No.: 732-220-3744

  
	
   

  	
   

  	
  Attention: Mr. Douglas G. Paul

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RE:          Fifth
  Amended and Restated Credit Agreement (the “Credit Agreement”) dated
  June 14, 2005 by and 

  
	
  between K. HOVNANIAN ENTERPRISES, INC. (the “Company”), HOVNANIAN ENTERPRISES, INC., as a Guarantor, the Lenders
  from time to time parties thereto, and PNC BANK, NATIONAL ASSOCIATION, as
  administrative agent for the Lenders (the “Agent”).  Capitalized terms used but not defined
  herein shall have the meanings given to them in the Credit Agreement.

  

 

 

A.            Pursuant
to Section 2.4 of the Credit Agreement the undersigned hereby makes the
following Loan Request:

 

	
  1.

  	
   

  	
  Aggregate Principal Amount of Loan [amount shall be in integral
  multiples of $500,000 and not be less than $2,500,000 for each Borrowing
  Tranche to which the LIBO-Rate Option applies and amount shall be in integral
  multiples of $100,000 and not be less than $500,000 for each Borrowing
  Tranche to which to the Base Rate Option applies]

  	
   

  	
  U.S. $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Proposed Borrowing Date: [must be
  at least 3 Business Days after receipt by 11:00 a.m. by Agent of this Loan
  Request with respect to Loans to which the LIBO-Rate Option applies and no
  earlier than the same day with respect to Loans to which the Base Rate Option
  applies]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Place of Payment:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Length of Interest Period

  (if LIBO-Rate Option elected):

  [must be: one, two, three or six months]

  	
   

  	
   

  

 

 

B.         Borrower elects that
interest on the Loan requested hereby shall be based on the LIBO-Rate
Option/Base Rate Option (circle one) and shall be calculated in accordance with
Section 3 of the Credit Agreement.

 

C.         As of the date hereof and
the date of making of the Loan:  the
representations and warranties contained in Section 5 of the Credit Agreement
are and will be true in all material respects (except representations and warranties
that expressly relate solely to an earlier date or time, which representations
and warranties were true in all material respects on and as of the specific
date referred to therein); and no Event of Default or Potential Default has
occurred and is continuing or shall exist. The undersigned certifies to the
accuracy of the foregoing.

 

	
   

  	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
						

 

 

EXHIBIT 2.4.2

 

FORM OF

SWING LOAN REQUEST

 

	
  TO:

  	
   

  	
  PNC BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
  Telephone No.: 732-220-3566

  
	
   

  	
   

  	
  Telecopier No.: 732-220-3744

  
	
   

  	
   

  	
  Attention: Mr. Douglas G. Paul

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  
	
  RE:

  	
   

  	
  Fifth Amended and Restated Credit Agreement (the “Credit Agreement”)
  dated June 14, 2005 by and among K. HOVNANIAN ENTERPRISES, INC. (the
  “Borrower”), HOVNANIAN ENTERPRISES, INC., as a Guarantor, the Lenders now or
  hereafter party thereto, and PNC BANK, NATIONAL ASSOCIATION, in its capacity
  as administrative agent for the Lenders (the “Agent”), as amended, restated,
  supplemented or modified from time to time.

  

 

Capitalized terms used but not defined herein shall have the meanings
given to them in the Credit Agreement.

 

Pursuant to Section 2.4.2 of the Credit Agreement, the undersigned
hereby makes the following Swing Loan Request:

 

	
  1.

  	
   

  	
  Aggregate Principal Amount of Swing Loans:

  [amount shall not be less than $100,000]

  	
   

  	
  US$

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Proposed Borrowing Date: [this Swing Loan Request must be delivered
  to PNC Bank not later than 2:00 p.m. Eastern time on the proposed Borrowing
  Date]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  As of the date hereof and the date of making of the Swing Loan
  requested hereby: the representations and 

  

warranties of the Loan Parties contained in Section 5 of the
Credit Agreement and in the other Loan Documents are and will be true in all
material respects (except representations and warranties that expressly relate
solely to an earlier date or time, which representations and warranties were
true in all material respects on and as of the specific dates or times referred
to therein); and no Event of Default or Potential Default has occurred and is
continuing or shall exist.

 

 

The undersigned hereby certifies the accuracy of the foregoing.                               

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
														

 

2

 

EXHIBIT 2.12.1-1

 

FORM OF

REVOLVING CREDIT COMMITMENT INCREASE AGREEMENT

 

This Revolving Credit Commitment Increase Agreement (the “Acknowledgement”)
is made                           
by                          ,
a                                                                            
(the “Increasing Bank”).

 

Background

 

Reference is made to the Fifth Amended and Restated Credit Agreement
dated June 14, 2005 (the “Agreement”) by and among K. HOVNANIAN ENTERPRISES,
INC. (the “Borrower”), HOVNANIAN ENTERPRISES, INC., as a Guarantor, the Lenders
now or hereafter party thereto, and PNC BANK, NATIONAL ASSOCIATION, as
administrative agent for itself and the other Lenders under the Credit Agreement
(the “Agent”).  Capitalized terms defined
in the Agreement are used herein as defined therein.

 

Agreement

 

The Increasing Lender, and each of the other parties hereto agree that,
except as set forth below, effective as of the date hereof it shall increase
its commitment by $                         
 so that its total commitment shall be $                       .  The Increasing Lender hereby acknowledges
that it has heretofore received a new Note in the amount of the commitment as
increased as set forth above.

 

Reference is made to Section 2.12 [Increase in Commitments] of the
Agreement.  Schedule 1.1(B) hereto sets
forth the Commitments of the Increasing Lender and each of the other Lenders
after giving effect to the increase on the date hereof.  Schedule 1.1(B) to the Agreement is being
amended and restated effective on the date hereof to read as set forth on
Schedule 1.1(B) hereto.  Schedule 1
hereto lists as of the date hereof the amount of Loans under each outstanding
Borrowing Tranche.  Notwithstanding the
foregoing (a) on the date hereof the Borrower shall repay all outstanding
Loans to which either of the Base Rate Option or the LIBO-Rate Option applies
and simultaneously reborrow a like amount of Loans under each such Interest
Rate Option from the Lenders (including the Increasing Lender) according to the
Ratable Shares set forth on attached Schedule 1.1(B) and shall be subject to
breakage fees and other indemnities provided in Section 4.6.2.

 

IN WITNESS WHEREOF, the Increasing Lender has duly executed and
delivered this Joinder as of the date and year first above written.

 

 

	
   

  	
  [INCREASING LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  ACKNOWLEDGED AND AGREED TO:

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGENT AND LENDERS:

  
	
   

  	
   

  
	
   

  	
  PNC BANK, NATIONAL ASSOCIATION,

  as Agent

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
										

 

 

2

 

 

EXHIBIT 7.3.3.1

 

FORM OF

QUARTERLY COMPLIANCE CERTIFICATE

 

                           ,
200

 

PNC Bank, National Association, as Agent

Two Tower Center, 18th Floor

East Brunswick, New Jersey  08816

Attn: 
Douglas G. Paul, Senior Vice President

Telecopy: (732) 220-3744

 

Ladies/Gentlemen:

 

1.             I refer to the Fifth Amended and Restated Credit Agreement
dated June 14, 2005 (the “Credit Agreement”) by and among K.
HOVNANIAN ENTERPRISES, INC. (the “Borrower”), HOVNANIAN ENTERPRISES,
INC., as a Guarantor the several LENDERS and other financial institutions from
time to time parties thereto and PNC BANK, NATIONAL ASSOCIATION, as
administrative agent for the Lenders (the “Agent”).  Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
with the same meanings.  I,                                                   
the                    
of the Borrower do hereby certify as of the [month/quarter/year] ended                              ,
200   (the “Report Date”), that the Borrower is in compliance
with the following covenants as more fully set forth and calculated on the spreadsheets
attached hereto as Exhibit A - “Borrowing Base Compliance Calculations”,
Exhibit B - “Summary Covenant Compliance Calculations”, and Exhibit C - “Detailed
Covenant Compliance Calculations”.

 

2.             Transactions subject
to the restrictions set forth in Section 7.2.4 of the Credit Agreement with
respect to Liquidations, Mergers, Consolidations and Acquisitions are described
on the additional page attached hereto.

 

	
  Compliance?

  	
   

  	
  Yes

  	
   

  	
  No 

  

 

3.             Transactions subject
to the restrictions set forth in Section 7.2.5 of the Credit Agreement with
respect to Dispositions of Assets or Subsidiaries are described on the
additional page attached hereto.

 

	
  Compliance?

  	
   

  	
  Yes

  	
   

  	
  No 

  

 

 

4.             Transactions subject
to the restrictions set forth in Section 7.2.7 of the Credit Agreement with
respect to Subsidiaries, Partnerships and Joint Ventures are described on the
additional page attached hereto.

 

	
  Compliance?

  	
   

  	
  Yes

  	
   

  	
  No 

  

 

5.             Debt
Rating. Based on the Debt Rating and the
Leverage Ratio, the Applicable Margin to become effective as of                                   
shall be                      .

 

6.             The Loan Parties are
in compliance with, and since the most recent prior Report Date has at all
times complied with, the provisions of the Credit Agreement, including, without
limitation, the representations and warranties contained in Article 6 thereof,
except as follows:                                                                 .

 

7.             No event has occurred
that is continuing which constitutes an Event of Default or Potential Default,
except as follows:                                                                                              .

 

8.             With respect to all
financial statements delivered by or on behalf of the Loan Parties
contemporaneously herewith, such statements are true and correct in all
material respects.

 

 

IN WITNESS WHEREOF, the undersigned has executed this Compliance
Certificate this          day of                      ,
200  .

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
														

 

 

Exhibit A to Exhibit 7.3.3.1

 

Borrowing Base Compliance Calculations

 

 

Exhibit B to Exhibit 7.3.3.1

 

Summary Covenant Compliance Calculations

 

 

Exhibit C to Exhibit 7.3.3.1

 

Detailed Covenant Compliance Calculations

 

 

EXHIBIT 7.3.3.2

 

FORM OF

BORROWING BASE CERTIFICATE

 

                            ,
         

 

PNC BANK, NATIONAL ASSOCIATION,
Agent

Two Tower Center, 18th Floor

East Brunswick, New Jersey  08816

Telecopy (732) 220-3744

 

Attn.:  Douglas G. Paul, Senior
Vice President

 

Ladies/Gentlemen:

 

I refer to the Fifth Amended and Restated Credit Agreement dated June
14, 2005 (the “Credit Agreement”) among

K. HOVNANIAN ENTERPRISES, INC. (the “Borrower”), HOVNANIAN ENTERPRISES,
INC., as a Guarantor, the LENDERS now or hereafter party thereto and PNC BANK,
NATIONAL ASSOCIATION, as administrative agent for the Lenders (the “Agent”).

 

Unless otherwise defined herein, terms defined in the Credit Agreement
are used herein with the same meanings. 
I,                                                   
Chief Executive Officer, President, Treasurer, Chief Financial Officer or
principal accounting officer of the Borrower, do hereby certify on behalf of
the Borrower as of the end of the month ended                       ,
        (the “Report Date”), that the
“Borrowing Base” and the components thereof are calculated and set forth on the
spreadsheet attached hereto as Exhibit A - “Borrowing Base Compliance
Calculations”.

 

The undersigned further certifies as follows:

 

1.             The Loan Parties are
in compliance with, and since the most recent prior Report Date have at all
times complied with, the provisions of the Credit Agreement.

 

2.             No event has occurred
that is continuing which constitutes an Event of Default or Potential Default.

 

3.             With respect to all
financial statements delivered by or on behalf of the Loan Parties
contemporaneously herewith, such statements are true and correct in all
material respects.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

 

IN WITNESS WHEREOF, the undersigned has executed this Borrowing Base
Certificate this       day of                       ,
       .

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  K. HOVANIAN
  ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer, President,

  Treasurer, Chief Financial Officer or

  principal accounting officer

  
											

 

 

Exhibit A to Exhibit 7.3.3.2

 

Borrowing Base Compliance Calculations

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