Document:

ex_102495.htm

Exhibit 10.3

 

GSO Capital Partners LP

345 Park Ave 

New York, NY 10154 

 

 

December 28, 2017

 

HOVNANIAN ENTERPRISES, INC.

K. HOVNANIAN ENTERPRISES, INC.

110 West Front Street

Red Bank, New Jersey 07701

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

 

 

TERMINATION PAYMENT LETTER

 

Ladies and Gentlemen:

 

Reference is made to that certain (a) Commitment Letter, dated as of the date hereof (including the schedules, annexes, exhibits and other attachments thereto, and as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Commitment Letter”), by and among Hovnanian Enterprises, Inc. (“Holdings”), K. Hovnanian Enterprises, Inc. (the “Borrower” and, together with Holdings, “you”, and the Borrower, together with its subsidiaries, the “Company”) and GSO Capital Partners LP (“GSO”, “we” or “us”) pursuant to which we have agreed, on our behalf and on behalf of the GSO Entities (as defined in the Commitment Letter) to provide the Borrower with certain financing, as described more fully therein and (b) Support Agreement, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Support Agreement”), by and among Holdings, the Borrower, GSO and each of the other persons or entities party thereto as Supporting Holders (as defined therein). Capitalized terms used but not defined in this letter (as the same may be amended, restated, supplemented or otherwise modified from time to time, this “Termination Payment Letter”) have the meanings ascribed to them in the Commitment Letter or the Support Agreement, as applicable. 

 

1.      Termination Payment. By accepting the Commitment Letter and the Support Agreement, and in consideration for GSO’s time and effort in connection with the Transactions, you agree to pay (or cause to be paid) to GSO and/or, at GSO’s direction, one or more GSO Entities and/or other persons or entities designated by GSO, a termination payment in an amount equal to $17.5 million in cash (the “Termination Payment”), which Termination Payment shall be deemed to be fully earned on, and shall payable in full in cash within thirty (30) calendar days of, the earlier of (i) the date of your withdrawal or termination of the 8% Notes Exchange or (ii) March 1, 2018 or such later date as you and GSO mutually agree upon in writing (the “Outside Date”), in the event that the 8% Notes Exchange is not consummated on or prior to such date; provided, however, that, you shall not be obligated to pay GSO the Termination Payment in the event that (a) you and GSO mutually agree in writing to terminate, withdraw or modify in a material manner the 8% Notes Exchange, (b) any court or governmental agency of competent jurisdiction has issued an order or decree (i) that prohibits or prevents consummation of the 8% Notes Exchange effective on or beyond February 28, 2018 or (ii) that would have the effect of allowing the Initial Supporting Holders (as defined in the Support Agreement) to terminate the Support Agreement pursuant to Section 8(d) or Section 8(e) thereof and the Initial Supporting Holders actually terminate the Support Agreement as a result thereof, (c) you terminate the Commitment Letter or the Support Agreement based upon a material breach of either agreement by GSO, directly or indirectly through a GSO Entity, (d) GSO and/or one or more GSO Entity finances the entire amount of indebtedness for an Alternative Transaction, (e) the Exchange Offer is consummated on or prior to the Outside Date, or (f) the 8% Notes Exchange is not consummated solely because of the occurrence of an event specified in clauses (a) (other than with respect to Holdings’ securities), (c) (other than with respect to Holding’s debt securities) and (d) through (g) of the fifth bullet under “Conditions to the Exchange Offer—General Conditions,” of the Offering Memorandum.

 

 

 

 

2.        General. 

 

Your obligation to pay the Termination Payment shall be in addition to any other payment or reimbursement obligations of the Company provided for in the Commitment Letter, the Credit Facilities Documentation and any other documents or agreements relating to the Transactions. The Termination Payment shall (a) subject to Paragraph 1 above, be paid in U.S. Dollars, in cash, in immediately available funds, (b) once paid, not be refundable in whole or in part under any circumstances and (c) not be subject to counterclaim or set-off for, or be otherwise affected by, any claim or dispute relating to any other matter.

 

Your agreement under this Termination Payment Letter shall be legally binding upon and enforceable against you and your successors and assigns, may be enforced by us and our successors and assigns, and shall be enforceable without regard to any act, event or circumstance except as expressly set forth herein. This Termination Payment Letter is an integral part of the Commitment Letter and the Support Agreement, and may not be amended or waived except by an instrument in writing signed by the parties hereto. It is understood that this Termination Payment Letter shall not constitute or give rise to any obligation on the part of GSO or any of the GSO Entities to provide or arrange any financing; such an obligation will arise only under, and solely to the extent provided for in, the Commitment Letter, if accepted by you in accordance with its terms.

 

This Termination Payment Letter is delivered to you on the understanding that neither this Termination Payment Letter, nor any of its terms or substance, nor the activities of GSO, the GSO Entities or you pursuant hereto or in connection with the Transactions shall be disclosed, directly or indirectly, by you to any other person prior to the date of such information becoming publicly available in accordance with clause (c) below, except (a) to your affiliates (including Holdings) and your and their respective Representatives, in each case, solely on a confidential and need-to-know basis, (b) pursuant to the order of any court or administrative agency of competent jurisdiction, or as required by applicable law or compulsory legal process (including to defend against any claim brought pursuant to such process), or to the extent required by governmental and/or regulatory authorities (in which case you agree, to the extent not prohibited by applicable law, rule or regulation, to use commercially reasonable efforts to provide GSO with prior written notice thereof), (c) in connection with any public or regulatory filing requirements, including filings with the U.S. Securities and Exchange Commission by Holdings or the Borrower, in each case, which shall comply with the requirements for public filings set forth in the Support Agreement and (d) to the extent required, upon advice of counsel, to be disclosed in connection with the 8% Notes Exchange. Notwithstanding anything to the contrary herein, the parties hereto agree that you or the Company may file this Termination Payment Letter in its entirety with the U.S. Securities and Exchange Commission, through a filing by Holdings or the Borrower on Form 8-K or other applicable form, which shall comply with the requirements for public filings set forth in the Support Agreement.

 

2

 

 

This Termination Payment Letter, and all rights and obligations hereunder, shall be governed by, and construed in accordance with, the laws of the state of New York without regard to such state’s choice of law provisions which would require the application of the law of any other jurisdiction. By its execution and delivery of this Termination Payment Letter, each of the parties hereto hereby irrevocably and unconditionally (a) consents to submit to the exclusive jurisdiction of the courts of the State of New York sitting in New York County and of the United States of America located in the Southern District of New York for any actions, suits or proceedings arising out of or relating to this Termination Payment Letter or the Termination Payment, or for recognition or enforcement of any judgment, and agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court, and further agrees that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth above shall be effective service of process for any action, suit or proceeding brought against the parties in any such court, (b) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Termination Payment Letter or the Termination Payment in any such New York State court or in any such Federal court and (c) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action, suit or proceeding in any such court. 

 

This Termination Payment Letter may be executed and delivered in counterparts, each of which, when so executed and delivered, shall be deemed an original and all of which taken together shall constitute one and the same original agreement. Delivery of an executed counterpart of a signature page of this Termination Payment Letter by facsimile or other electronic transmission (e.g., “pdf”) shall be effective as delivery of a manually executed counterpart of this Termination Payment Letter. This Termination Payment Letter is intended to be for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, and may not be relied on by, any persons other than the parties hereto. Section headings used herein are for convenience of reference only, are not part of this Termination Payment Letter and are not to affect the construction of, or to be taken into consideration in interpreting, this Termination Payment Letter.

 

We look forward to working with you. Please confirm that the foregoing is our mutual understanding by signing in the appropriate space below and returning an executed counterpart of this Termination Payment Letter to GSO.

 

 

 

[Remainder of Page Intentionally Left Blank]

 

3

 

 

	 	GSO CAPITAL PARTNERS LP
	 	on behalf of itself and certain funds managed, advised or sub-advised by it
	 	 	 
	 	 	 
	 	
			By 

				
			/s/ Marisa Beeney                                                      

			Name: Marisa Beeney

			Title:   Authorized Signatory

			

 

 

 

Hovnanian/GSO Letter Agreement

 

 

 

 

Accepted and agreed to as of

the date first above written:

 

K. HOVNANIAN ENTERPRISES, INC.

 

 

By /s/ J. Larry Sorsby

Name: J. Larry Sorsby

Title:  Executive Vice President and Chief Financial Officer

 

 

 

HOVNANIAN ENTERPRISES, INC.

 

 

By /s/ J. Larry Sorsby

Name: J. Larry Sorsby

Title:  Executive Vice President and Chief Financial Officer

 

 

 

Hovnanian/GSO Letter AgreementExhibit 4.1

 

AMENDMENT AGREEMENT

 

This AMENDMENT AGREEMENT
(the “Amendment”), dated as of December 28, 2017, is made by and between Ener-Core, Inc., a Delaware corporation,
with headquarters located at 8965 Research Drive, Suite 100, Irvine, California 92618 (the “Company”),
and the investor listed on the signature page attached hereto (the “Holder”). Capitalized terms used herein
and not otherwise defined herein shall have the respective meanings set forth in the applicable SPA (as defined below), as applicable.

 

RECITALS

 

A.       Reference
is made to that certain Securities Purchase Agreement dated as of April 22, 2015, by and among the Company, the Holder (if applicable)
and the other investors (the “April 2015 Other Holders”) listed on the signature pages attached thereto (the
“April 2015 SPA”) and, if applicable, the Senior Secured Notes issued to the Holder pursuant thereto, as amended
and restated on December 2, 2016 pursuant to certain amendment agreements (as amended from time to time prior to the date hereof,
the “April 2015 Notes”);

 

B.       Reference
is made to that certain Securities Purchase Agreement dated as of May 7, 2015, by and among the Company, the Holder (if applicable)
and the other investors (the “May 2015 Other Holders” and together with the April 2015 Other Holders, the “Other
Holders” and together with the Holder, the “Holders”) listed on the signature pages attached thereto
(the “May 2015 SPA” and together with the April 2015 SPA, individually, an “SPA” and collectively,
the “SPAs”), and, if applicable, the Senior Secured Notes issued to the Holder pursuant thereto, as amended
and restated on December 2, 2016 pursuant to certain amendment agreements (as amended from time to time prior to the date hereof,
the “May 2015 Notes” and together with the April 2015 Notes, the “2015 Notes”);

 

C.       The
Company and the Holder desire to amend the SPAs and each of the 2015 Notes as set forth herein; and

 

D.       In
compliance with Section 15 of the 2015 Notes and the SPAs, this Amendment shall only be effective upon the execution and delivery
of this Amendment and agreements in form and substance identical to this Amendment (other than with respect to the identity of
the Holder and any provision regarding the reimbursement of legal fees) (the “Other Agreements” and together
with this Amendment, the “Amendments”) by Other Holders of the 2015 Notes (each an “Other Holder”)
representing on the Closing Date at least the Required Holders (as defined in each of the 2015 Notes) (such time, the “Effective
Time”).

 

AGREEMENT

 

NOW THEREFORE, in
consideration of the foregoing mutual premises and the covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt, and legal adequacy of which is hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:

 

ARTICLE I

SECURITIES PURCHASE AGREEMENTS

 

1.       Extension
of Listing Deadline. The first sentence of Section 4(f) of each of the SPAs is hereby amended and restated as follows:

 

“The Company shall commence
trading of its Common Stock on either The New York Stock Exchange, Inc., the NYSE American, The NASDAQ Capital Market, The NASDAQ
Global Select Market or The NASDAQ Global Market (collectively, the “Qualified Eligible Markets”) no later than
June 30, 2018 (the “Listing Deadline”).”

 

    

     

    

 

ARTICLE II

NOTES

 

1.       Optional
Redemption at the Holder’s Election. The first sentence of Section 7 of the 2015 Notes is hereby amended and restated
as follows:

 

“At
any time from and after July 1, 2018 and provided that the Company shall not have received either (i) initial deposits for at least
eight 2 megawatt (MW) Power Oxidizer units or (ii) firm purchase orders totaling not less than $3,500,000 and initial payment collections
of at least $1,600,000, in each case during the period commencing on the Issuance Date and ending on June 30, 2018 (inclusive),
the Holder shall have the right, in its sole and absolute discretion, at any time or times, to require that the Company redeem
(a “Holder Optional Redemption”) all or any portion of the Conversion Amount of this Note then outstanding by
delivering written notice thereof (a “Holder Optional Redemption Notice” and the date the Holder delivers such
notice, the “Holder Optional Redemption Notice Date”) to the Company, which notice shall state (i) the portion
of this Note that is being redeemed and (ii) the date on which the Holder Optional Redemption shall occur, which date shall be
not less than three (3) Business Days from the Holder Optional Redemption Notice Date (the “Holder Optional Redemption
Date”).

 

2.       Eligible
Market Deadline. Section 30(m) of the 2015 Notes is hereby amended and restated as follows.

 

“Eligible
Market” means The New York Stock Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital
Market or the NYSE American or, on or prior to June 30, 2018, the Principal Market.”

 

article
III

MISCELLANEOUS

 

1.       Effect
of this Amendment. This Amendment shall form a part of the 2015 Notes and SPAs for all purposes, and each holder of 2015 Notes
and each party to the SPAs shall be bound hereby. This Amendment shall only be deemed to be in full force and effect from and after
both the execution of this Amendment by the parties hereto and the execution of Amendments substantially identical to this Amendment
by the Company and “Holders” holding at least a majority of the aggregate principal amount of the 2015 Notes outstanding,
including the Lead Investor, as well as the Collateral Agent, that, together with undersigned, constitute the Required Holders
under each of the 2015 Notes and SPAs. From and after such effectiveness, any reference to the 2015 Notes and the SPAs shall be
deemed to be a reference to the 2015 Notes and SPAs, as amended hereby. Except as specifically amended as set forth herein, each
term and condition of the 2015 Notes and SPAs shall continue in full force and effect.

 

2.       Entire
Agreement. This Amendment, together with the SPAs and 2015 Notes, as amended and/or amended and restated to date, contains
the entire agreement of the parties with respect to the matters contemplated hereby and thereby, and supersedes any prior or contemporaneous
written or oral agreements between them concerning the subject matter of this Amendment.

  

3.       Governing
Law. This Amendment shall be governed by the internal law of the State of New York.

 

4.       Counterparts.
This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and
the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document. This Amendment may be executed by fax or electronic mail,
in PDF format, and no party hereto may contest this Amendment’s validity solely because a signature was faxed or otherwise
sent electronically.

 

[Signature Page Follows]

 

    	 	2	 

     

    

 

IN WITNESS WHEREOF,
the Holder and the Company have caused their respective signature pages to this Amendment to be duly executed as of the date first
written above.

 

	 	COMPANY:
	 	 
	 	ENER-CORE, INC.
	 	 
	 	By:	
    
	 	 	Name:	      
	 	 	Title:	 

 

Signature
Page to Amendment Agreement— December 2017

 

    

     

    

 

IN WITNESS WHEREOF,
the Holder and the Company have caused their respective signature pages to this Amendment to be duly executed as of the date first
written above.

 

	 	HOLDER:
	 	 
	 	By:	

	 	 	Name:	 

  

Signature
Page to Amendment Agreement— December 2017

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